Robert Ray Perez and Rhonda Lee Arevalo v. Arturo Zepeda Arredondo, CUSA KBC, LLC D/B/A Kerrville Bus Company

Opinion

Fourth Court of Appeals San Antonio, Texas DISSENTING OPINION No. 04-13-00646-CV

Robert Ray PEREZ and Rhonda Lee Arevalo, Appellants

v. Arturo Zepeda Arredondo, CUSA KBC, LLC d/b/a Kerrville Bus s Arturo Zepeda ARREDONDO, and CUSA KBC, LLC d/b/a Kerrville Bus Company, Appellees

From the 79th Judicial District Court, Brooks County, Texas Trial Court No. 10-07-15670-CV Honorable Joaquin Villarreal III, Judge Presiding

Opinion by: Karen Angelini, Justice Dissenting Opinion by: Rebeca C. Martinez, Justice

Sitting: Catherine Stone, Chief Justice Karen Angelini, Justice Rebeca C. Martinez, Justice

Delivered and Filed: December 3, 2014

I respectfully dissent because I believe there was sufficient evidence to support a

reasonable jury’s finding that both the objective and subjective prongs of the gross negligence

claim were met.

GROSS NEGLIGENCE

As noted in the majority opinion, the jury found that the harm to Perez and Arevalo resulted

from gross negligence attributable to KBC and awarded $1 million in exemplary damages against

KBC. The trial court, however, concluded there was no evidence to support the jury’s gross Dissenting Opinion 04-13-00646-CV

negligence finding and entered a JNOV disregarding the finding and exemplary damages award.

In my opinion, the trial court erred in finding there was “no evidence” to support the jury’s finding

and exemplary damages award.

Standard of Review

In reviewing the entry of a JNOV, we determine whether there is any evidence upon which

the jury could have made the disregarded finding. Tanner v. Nationwide Mut. Fire Ins. Co., 289

S.W.3d 828, 830 (Tex. 2009) (entry of judgment notwithstanding the verdict is subject to review

under a no-evidence standard). In doing so, we view the evidence in the light most favorable to

the verdict, crediting favorable evidence and inferences if reasonable jurors could, and

disregarding contrary evidence unless reasonable jurors could not. City of Keller v. Wilson, 168

S.W.3d 802, 822 (Tex. 2005). In this case, our review of the evidence in the light most favorable

to the jury’s finding is informed by the elevated standard of proof applicable to a gross negligence

claim. Perez and Arevalo had the burden to establish KBC’s gross negligence by “clear and

convincing” evidence. TEX. CIV. PRAC. & REM. CODE ANN. § 41.003(a)(3) (West Supp. 2014)

(claimant may be entitled to exemplary damages for gross negligence claim only if he “proves by

clear and convincing evidence that the harm with respect to which the claimant seeks recovery of

exemplary damages results from . . . gross negligence”); U-Haul Int’l, Inc. v. Waldrip, 380 S.W.3d

118, 138 (Tex. 2012). “‘Clear and convincing’ means the measure or degree of proof that will

produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations

sought to be established.” TEX. CIV. PRAC. & REM. CODE ANN. § 41.001(2) (West 2008). Thus,

when we are reviewing the sufficiency of the evidence to support a jury finding under a “clear and

convincing” standard of proof, we look at all the evidence in the light most favorable to the finding

to determine whether a reasonable trier of fact could have formed a firm belief or conviction that

its finding was true. Sw Bell Tel. Co. v. Garza, 164 S.W.3d 607, 627 (Tex. 2004). In looking at -2- Dissenting Opinion 04-13-00646-CV

the evidence in the light most favorable to the finding, we assume the factfinder resolved disputed

facts in favor of its finding if a reasonable factfinder could do so. Id.

Analysis

Gross negligence involves two components, requiring an act or omission (1) “which when

viewed objectively from the standpoint of the actor at the time of its occurrence involves an

extreme degree of risk, considering the probability and magnitude of the potential harm to others,”

and (2) “of which the actor has actual, subjective awareness of the risk involved, but nevertheless

proceeds with conscious indifference to the rights, safety, or welfare of others.” TEX. CIV. PRAC.

& REM. CODE ANN. § 41.001(11) (West 2008). We therefore examine the record to determine

whether the evidence, when viewed in the light most favorable to the jury’s finding, supports a

“firm belief or conviction” that both prongs of gross negligence were met. Id.; Garza, 164 S.W.3d

at 627.

(1) Objective Prong

The first issue is whether there is evidence of an act or omission by KBC that, viewed

objectively from KBC’s standpoint at the time, involved an extreme risk of harm to others. TEX.

CIV. PRAC. & REM. CODE ANN. § 41.001(11). In this context, an extreme risk is not merely “a

remote possibility of injury or even a high probability of harm, but rather the likelihood of serious

injury to the plaintiff.” Boerjan v. Rodriguez, 436 S.W.3d 307, 311 (Tex. 2014) (quoting Mobil

Oil Corp. v. Ellender, 968 S.W.2d 917, 921 (Tex. 1998)). We examine this risk “prospectively

from the perspective of the actor, not in hindsight.” Columbia Med. Ctr. of Las Colinas, Inc. v.

Hogue, 271 S.W.3d 238, 248 (Tex. 2008).

In support of this element, Perez and Arevalo cite to the evidence of Arredondo’s bad

driving history with KBC, KBC’s knowledge of that history, KBC’s own policy with regard to

driver operations and safety, and KBC’s actions and inactions with respect to Arredondo. -3- Dissenting Opinion 04-13-00646-CV

Under KBC’s written “Rules of Conduct: Discharge and Discipline,” a progressive

discipline policy is applied to safety infractions, with a written warning given for the first (optional

counseling), second, and third offenses; a driver may be suspended or discharged upon committing

a third offense. Discharge is mandatory when a driver commits a fourth safety offense. 1 KBC’s

policy defines a “Safety Infraction” offense as: (1) failure to operate the vehicle in a safe and

proper manner; (2) failure to comply with State traffic laws; failure to observe and adhere to posted

street signs, traffic instructions, hazard warnings, etc.; (3) failure to comply with DOT regulations;

(4) involvement in a chargeable (preventable) accident with minimal damage; (5) violation of

safety or health rules; and (6) failure to comply with any other safety rule enumerated in an

appendix attached to the policy.

The record shows KBC hired Arredondo and trained him to drive its commercial buses on

about July 20, 2007. During the three-month span from July 20, 2007 to October 26, 2007,

Arredondo committed two accidents, both of which involved his bus hitting a fixed object—the

first time, Arredondo hit a parked vehicle; the second time, he hit a pedestrian walk sign. These

accidents occurred on the same day. Arredondo received two written warnings from KBC

informing him that these incidents amounted to two “chargeable accidents” under its progressive

discipline policy for safety infractions. After the two warnings, Arredondo received re-training.

From October 26, 2007 to January 23, 2008, Arredondo was still employed by KBC but did not

drive a bus at all during that period. Thus, during the first six months he was employed by KBC,

Arredondo received two warnings for accidents within the first three months, and did not drive at

all during the last three months. On January 23, 2008, Arredondo was involuntarily terminated by

1 KBC’s policy contains the qualifying phrase “[d]epending on the seriousness of the offense” at the beginning of Sections 2 and 3 prescribing the progressive discipline that will be imposed for the designated Safety Infractions and Operating Infractions.

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KBC. Christopher Robertson, Safety Director of KBC in 2008, testified that Arredondo was fired

for “inactivity” and failure to properly keep his DOT logs. KBC has a policy that a worker is

dismissed after six months of inactivity. A “DO NOT RE-HIRE” notation was written on

Arredondo’s personnel action form, which was placed in his personnel file. Robertson testified he

did not write the notation and did not know the reason for it.

After Arredondo was fired in January 2008, KBC began re-qualifying him for re-hiring

five months later in June 2008—despite the fact that Arredondo’s file contained a “DO NOT RE-

HIRE” directive. Arredondo had not driven a bus since the previous October, a period of eight

months. An operator pre-trip evaluation form dated June 27, 2008 documented that Arredondo

was “weak on vehicle control knowledge,” and recommended follow-up training and follow-up

evaluation; it also noted his driver log was not filled out correctly. A personnel action form in the

record shows KBC re-hired Arredondo on July 18, 2008. A subsequent pre-trip evaluation in

August 2008 indicates that Arredondo received more training and improved on his driving skills.

Despite receiving remedial retraining, Arredondo had several more accidents and incidents during

his second period of employment before the accident involving Perez and Arevalo. From April

2009 to April 2010, Arredondo received four more warnings from KBC under its progressive

discipline policy for the following “Safety “Infraction” offenses: (1) an incident in April 2009 in

which he drove to the wrong city with a bus full of children; (2) an accident 2 on the way to Eagle

Pass in July 2009; (3) an accident in which his bus hit a fixed object, an awning, in April 2010;

and (4) a series of DOT log violations. Arredondo received retraining after each warning. Under

KBC’s own progressive discipline policy, these four safety offenses during a one-year period

2 The record does not contain any detail regarding the nature of the accident in Eagle Pass, other than it was characterized as a “chargeable (preventable) accident with minimal damage” under KBC’s policy.

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should have resulted in Arredondo’s mandatory discharge upon the fourth offense—prior to the

accident involving Perez and Arevalo that occurred in June 2010.

KBC argues that the accidents reflected on Arredondo’s driving history during the three

years of his employment 3 were all minor and none involved significant injuries, unlike the accident

involving Perez and Arevalo. KBC stresses that, for several of these accidents, no passengers were

even on the bus at the time. 4 Thus, given the relatively minor nature of Arredondo’s prior

accidents, KBC asserts its actions and inactions with regard to Arredondo did not objectively

involve an extreme risk of harm to the public.

The fact that Arredondo’s previous accidents were relatively minor is not determinative of

the objective risk issue. “[A]wareness of an extreme risk does not require proof that the defendant

anticipated the precise manner in which the injury would occur or be able to identify to whom the

injury would befall.” U-Haul, 380 S.W.3d at 139; see Montemayor v. Heartland Transp., Inc.,

No. B-07-CV-151, 2008 WL 4777004 (S.D. Tex. Oct. 30, 2008) (“common sense suggests that

often only the most infinitesimal of contingencies separate a minor accident from becoming a

major one”). A foreseeable risk does not require proof that the defendant anticipated “the precise

manner in which the injury will occur.” U-Haul, 380 S.W.3d at 138 (quoting Lee Lewis Constr.,

Inc. v. Harrison, 70 S.W.3d 778, 785 (Tex. 2001)). The record here shows a continuous pattern

of accidents by Arredondo, beginning right after he was hired in July 2007 and continuing

throughout his employment with KBC, with the latest accident occurring as late as April 2010,

two months before the accident with Perez and Arevalo. This is not a situation where a new bus

3 KBC’s statement that Arredondo drove their buses for three years before the Perez/Arevalo accident is somewhat misleading since he was inactive for three months and was terminated for five months during that three-year period. 4 This argument that no passengers on Arredondo’s bus were harmed is inapposite because the statute merely requires an extreme degree of risk to “others.”

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driver was involved in several accidents at the beginning of his training and then improved.

Despite multiple retraining sessions, Arredondo kept having accidents throughout the entire term

of his employment with KBC. Moreover, the accidents involved Arredondo hitting objects with

the bus—a parked car; a pedestrian “walk” sign; an awning. Thus, there was evidence upon which

the jury could form a firm belief that an extreme risk existed, based on probability, that Arredondo

would again collide with an object, whether fixed or not, while driving a KBC bus. As to the

magnitude of the potential harm to others, it was dependent on what the object was that Arredondo

hit and who was inside it. Colliding into the back of a stopped vehicle turning left from an active

lane of traffic on a public thoroughfare would be more likely to cause serious injury to the vehicle’s

passengers than hitting an empty vehicle parked on the side of the road. Viewed objectively from

KBC’s standpoint, there was sufficient evidence to support a firm belief that an extreme degree of

risk existed that Arredondo would hit another vehicle on the roadway, resulting in the likelihood

of serious injury to others. See U-Haul, 380 S.W.3d at 139 (awareness of an extreme risk does not

require proof that the defendant anticipated the precise manner in which the injury would occur or

be able to identify to whom the injury would befall).

Therefore, viewing the evidence in the light most favorable to the jury’s finding of the

objective prong for gross negligence, I believe there is sufficient evidence upon which a reasonable

jury could form a firm belief that KBC’s decisions to terminate indefinitely, and yet rehire

Arredondo as a driver despite a driving record with two collisions, and/or its subsequent decision

to maintain his employment after four additional safety offenses mandating discharge, when

viewed objectively from KBC’s perspective at the time, involved an extreme risk of harm to other

drivers and their passengers.

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(2) Subjective Prong

A defendant must also have subjective awareness of the specific risk at issue, and

consciously disregard the risk, to be grossly negligent. See TEX. CIV. PRAC. & REM. CODE ANN.

§ 41.001(11). Thus, the next issue is whether there is evidence that would support the jury’s firm

belief that KBC was subjectively aware of the extreme risk to the public and proceeded with

conscious indifference to the safety of others by disregarding its own directive (i.e., “Do Not

Rehire”) and re-hiring Arredondo and/or failing to fire Arredondo after his fourth safety offense,

which occurred as early as April 2010. Id. “In examining proof of the subjective component,

courts focus on the defendant’s state of mind, examining whether the defendant knew about the

peril caused by his conduct but acted in a way that demonstrates he did not care about the

consequences to others.” Reeder v. Wood Cnty. Energy, LLC, 395 S.W.3d 789, 796 (Tex. 2013).

“[W]hat separates ordinary negligence from gross negligence is the defendant’s state of mind; in

other words, the plaintiff must show that the defendant knew about the peril, but his acts or

omissions demonstrate that he did not care.” Diamond Shamrock Refining Co., L.P. v Hall, 168

S.W.3d 164, 173 (Tex. 2005). A defendant is not grossly negligent when it “actually and

subjectively believes circumstances pose no risk to the injured party, even if they are wrong.”

U-Haul, 380 S.W.3d at 141.

KBC claims there is no clear and convincing evidence that it actually knew Arredondo’s

driving ability presented an extreme degree of risk to the public and proceeded with conscious

indifference to that risk. KBC contends it could not have known that Arredondo would injure a

member of the public by hitting another vehicle while driving one of its buses.

Yet, KBC had itself documented, and thus had actual knowledge of, Arredondo’s driving

record filled with accidents from the date of his initial hire in July 2007 through his accident in

April 2010, a mere two months before the Perez/Arevalo accident. KBC required Arredondo to -8- Dissenting Opinion 04-13-00646-CV

undergo retraining on multiple occasions, further supporting a finding that KBC was aware of the

danger posed by Arredondo’s reckless driving. Indeed, KBC documented Arredondo’s weakness

on “vehicle control knowledge” right before it re-hired him. Most revealing, KBC’s records

include the personnel action form documenting Arredondo’s termination in January 2008, which

shows that an internal decision was made at KBC to involuntarily fire him as a bus driver and

another decision was made to add a directive stating “DO NOT RE-HIRE” Arredondo. This

documentary evidence shows, or at least supports a reasonable inference, that KBC was

subjectively aware of Arredondo’s risk to the public’s safety before his rehiring. Indeed, KBC

decided to indefinitely terminate Arredondo’s employment with KBC and deemed him ineligible

for rehire. This action may show that the company cared about the consequences to others in firing

him. What does it show that KBC ignored its own directive and rehired him if not conscious

indifference to the safety of others?

Notwithstanding speculative argument as to KBC’s reason(s) for rehiring Arredondo, the

mere fact that KBC did rehire Arredondo five months after his termination, contrary to its own

mandate not to rehire him, shows that KBC consciously disregarded its own internal decision not

to rehire him and consciously ignored the risk to the public posed by his reckless driving record.

Further, despite Arredondo’s additional accidents involving collisions and his accumulation of

four warnings mandating discharge after his rehiring (in addition to his two previous warnings for

collisions), KBC failed to act and did not terminate him in April 2010 in accordance with its own

policy. This evidence supports a firm belief that KBC was consciously indifferent to the extreme

risk that Arredondo posed to the public. Robertson recognized KBC’s dangerous decisions when

confronted with the laundry list of incidents involving Arredondo at trial, and conceded that he

would give himself a grade of “D or F” on safety supervision in this situation.

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Viewing this evidence in the light most favorable to the jury’s finding of the subjective

prong for gross negligence, I believe it is sufficient to support a firm belief or conviction that KBC

had actual, subjective awareness of the extreme risk posed by Arredondo’s continued driving, but

proceeded with conscious indifference to the risk to public safety when it fired him indefinitely

and then re-hired him in June 2008, and again when it did not fire him in April 2010 even though

mandated by its own policy.

In conclusion, because I believe the evidence presented at trial was sufficient to support

the jury’s finding that KBC was grossly negligent, I would reverse the portion of the trial court’s

judgment disregarding the jury’s gross negligence award and render judgment on the jury’s verdict

in its entirety, subject to the statutory cap on exemplary damages. See TEX. CIV. PRAC. & REM.

CODE ANN. § 41.008 (West Supp. 2014).

Rebeca C. Martinez, Justice

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