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Thursday, October 28, 2004
UPCOMING EVENT: The State Bar's annual "Working With the Arizona Court of Appeals" CLE will be held Friday, November 5, 2004. Click here for more information.
Posted by azapp @ Thu, Oct 28, 2004
Prop. 200 Ruling
Here is a copy of Judge Downie's Minute Entry in the recent Prop. 200 challenge.
Here is a copy of Judge Downie's Minute Entry in the recent Prop. 200 challenge.
Posted by azapp @ Thu, Oct 28, 2004
Superior Court Dismisses Prop. 200 Challenge
The Arizona Republic is reporting in this story that Superior Court Judge Downie has dismissed a challenge to Prop. 200, the so-called Protect Arizona Now initiative. The Court apparently ruled that the challenge was barred by laches and mootness.
The Arizona Republic is reporting in this story that Superior Court Judge Downie has dismissed a challenge to Prop. 200, the so-called Protect Arizona Now initiative. The Court apparently ruled that the challenge was barred by laches and mootness.
Posted by azapp @ Thu, Oct 28, 2004
Wednesday, October 27, 2004
Arizona Supreme Court Issues Minutes
The Arizona Supreme Court has issued minutes for Tuesday, October 26, in two parts, Part A and Part B. Among other actions, the Court declined to accept jurisdiction of four special action petitions, denied 44 petitions for review, and granted one -- a juvenile case from Division Two (Kent K./Sherry K. v. Bobby M./Leeh M.). The Court also ordered depublished Division Two's decision in Waterfall Economidis v. Pima County, which was the subject of a previous posting.
The Arizona Supreme Court has issued minutes for Tuesday, October 26, in two parts, Part A and Part B. Among other actions, the Court declined to accept jurisdiction of four special action petitions, denied 44 petitions for review, and granted one -- a juvenile case from Division Two (Kent K./Sherry K. v. Bobby M./Leeh M.). The Court also ordered depublished Division Two's decision in Waterfall Economidis v. Pima County, which was the subject of a previous posting.
Posted by azapp @ Wed, Oct 27, 2004
Friday, October 22, 2004
Case Summaries for November 4 Oral Arguments Before the Arizona Supreme Court
The Arizona Supreme Court Staff Attorney's Office has issued summaries of the cases to be argued before the Court on Thursday, November 4. The summaries are prepared solely for educational purposes and should not be considered official commentary by the Court or any member of the Court. The Court will hear three cases: 1) Tucson v. Clear Channel, involving the question of whether A.R.S. 12-505(B), which imposes a limitations period, can be applied to a lawsuit that was filed before the statute was enacted, 2) Phelps v. Firebird Raceway, involving the question of whether Article 18, section 5 of the Arizona Constitution, which provides that the defenses of contributory negligence and assumption of risk present a question of fact that must be decided by a jury, applies to written "releases," and (3) State v. Rio Stroud, involving the question of whether the meaning of the term "custody" in the escape statute, A.R.S. 13-2503(A)(2), varies depending on how the defendant is charged.
The Arizona Supreme Court Staff Attorney's Office has issued summaries of the cases to be argued before the Court on Thursday, November 4. The summaries are prepared solely for educational purposes and should not be considered official commentary by the Court or any member of the Court. The Court will hear three cases: 1) Tucson v. Clear Channel, involving the question of whether A.R.S. 12-505(B), which imposes a limitations period, can be applied to a lawsuit that was filed before the statute was enacted, 2) Phelps v. Firebird Raceway, involving the question of whether Article 18, section 5 of the Arizona Constitution, which provides that the defenses of contributory negligence and assumption of risk present a question of fact that must be decided by a jury, applies to written "releases," and (3) State v. Rio Stroud, involving the question of whether the meaning of the term "custody" in the escape statute, A.R.S. 13-2503(A)(2), varies depending on how the defendant is charged.
Posted by azapp @ Fri, Oct 22, 2004
Thursday, October 14, 2004
Clean Elections Institute, Inc. et. al. v. Brewer et. al.: The Arizona Supreme Court Holds That Proposition 106 Violates the “Single Amendment Rule” of the Arizona Constitution.
In June, 2004, the political committee “No Taxpayer Money for Politicians” filed an initiative seeking to qualify for the ballot Proposition 106—a voter proposition seeking a constitutional amendment that would trump the provisions of Arizona’s Citizens Clean Elections Act, codified as A.R.S. §§ 16-940 to 16-961. The Clean Elections Institute and other individuals brought an action in state court to enjoin the Secretary of State from certifying the Proposition, arguing that it violated the “single amendment rule” of Article 21, Section 1 of the Arizona Constitution, because it incorporated two separate constitutional amendments. The superior court agreed, and ordered that the matter not be certified and placed on the ballot.
On direct appeal to the Arizona Supreme Court, the superior court’s judgment was affirmed. Writing for the majority, Vice Chief Justice McGregor carefully walked through the requirements of Article 21, Section 1, comparing its “single amendment rule” to the “single subject rule” contained in Article 4, Section 13 of the Arizona Constitution. While both rules require that voters be allowed to express separate opinions as to each proposed facet of the proposition at issue, the single amendment rule requires a stricter test than does the single subject rule. For the single amendment rule, it is insufficient that several sections of the proposed amendment relate to the same general subject as that expressed in the title of the proposed amendment. And, the single amendment rule does not permit a court to sever an offending provision from a multiple-proposal constitutional amendment. Rather, if the proposal includes more than one amendment, the entire proposal falls within the constitutional prohibition. The relevant test is that announced in Kerby v. Luhrs, which held that “if any one of the propositions, although not directly contradicting the others, does not refer to such matters, or if it is not such that the voter supporting it would be expected to support the principle of the others, than there are in reality two or more amendments to be submitted, and the proposed amendment falls within the constitutional prohibition.”
Applying the Kerby test, the Court found that subsections A and C of Proposition 106 advanced no common purpose or principle, and that the Proposition therefore violated the single amendment rule. Section A, prohibiting the use of taxpayer money to finance political campaigns, sought to end public financing of the same. Section C, on the other hand, broadly required all money currently in the Clean Elections Fund to be deposited in the general treasury, the purpose and effect of which was to strip the Clean Elections Commission of its independence from legislative appropriation. Analyzing these separate provisions, the Court found that the question posed by section C, whether Arizona’s voters would choose to change the funding source for the Commission and make the Commission dependent upon legislative appropriation, involves a different principle from the question posed by Section A, whether the voters would choose to end public funding for political campaigns. The Court thus affirmed the superior court’s order requiring that Proposition 106 not be certified for placement on the ballot.
In a separate concurring opinion, Justice Hurwitz questioned the continuing utility of the Kerby test, questioning the wisdom of a test that requires the Court to predict somewhat subjective voter preferences and behavior and that will expose most proposed multi-faceted constitutional amendments to challenge. Justice Hurwitz suggested that a test focusing on objective factors, such as whether one proposal flows logically from another and is necessary for implementation of the first, would be more useful. Because the parties had neither briefed nor argued the issue, he concurred in the result and the majority’s application of the Kerby test.
Vice Chief Justice McGregor authored the opinion; Chief Justice Jones and Justices Ryan and Berch concurred. Justice Hurwitz wrote a separate concurring opinion.
In June, 2004, the political committee “No Taxpayer Money for Politicians” filed an initiative seeking to qualify for the ballot Proposition 106—a voter proposition seeking a constitutional amendment that would trump the provisions of Arizona’s Citizens Clean Elections Act, codified as A.R.S. §§ 16-940 to 16-961. The Clean Elections Institute and other individuals brought an action in state court to enjoin the Secretary of State from certifying the Proposition, arguing that it violated the “single amendment rule” of Article 21, Section 1 of the Arizona Constitution, because it incorporated two separate constitutional amendments. The superior court agreed, and ordered that the matter not be certified and placed on the ballot.
On direct appeal to the Arizona Supreme Court, the superior court’s judgment was affirmed. Writing for the majority, Vice Chief Justice McGregor carefully walked through the requirements of Article 21, Section 1, comparing its “single amendment rule” to the “single subject rule” contained in Article 4, Section 13 of the Arizona Constitution. While both rules require that voters be allowed to express separate opinions as to each proposed facet of the proposition at issue, the single amendment rule requires a stricter test than does the single subject rule. For the single amendment rule, it is insufficient that several sections of the proposed amendment relate to the same general subject as that expressed in the title of the proposed amendment. And, the single amendment rule does not permit a court to sever an offending provision from a multiple-proposal constitutional amendment. Rather, if the proposal includes more than one amendment, the entire proposal falls within the constitutional prohibition. The relevant test is that announced in Kerby v. Luhrs, which held that “if any one of the propositions, although not directly contradicting the others, does not refer to such matters, or if it is not such that the voter supporting it would be expected to support the principle of the others, than there are in reality two or more amendments to be submitted, and the proposed amendment falls within the constitutional prohibition.”
Applying the Kerby test, the Court found that subsections A and C of Proposition 106 advanced no common purpose or principle, and that the Proposition therefore violated the single amendment rule. Section A, prohibiting the use of taxpayer money to finance political campaigns, sought to end public financing of the same. Section C, on the other hand, broadly required all money currently in the Clean Elections Fund to be deposited in the general treasury, the purpose and effect of which was to strip the Clean Elections Commission of its independence from legislative appropriation. Analyzing these separate provisions, the Court found that the question posed by section C, whether Arizona’s voters would choose to change the funding source for the Commission and make the Commission dependent upon legislative appropriation, involves a different principle from the question posed by Section A, whether the voters would choose to end public funding for political campaigns. The Court thus affirmed the superior court’s order requiring that Proposition 106 not be certified for placement on the ballot.
In a separate concurring opinion, Justice Hurwitz questioned the continuing utility of the Kerby test, questioning the wisdom of a test that requires the Court to predict somewhat subjective voter preferences and behavior and that will expose most proposed multi-faceted constitutional amendments to challenge. Justice Hurwitz suggested that a test focusing on objective factors, such as whether one proposal flows logically from another and is necessary for implementation of the first, would be more useful. Because the parties had neither briefed nor argued the issue, he concurred in the result and the majority’s application of the Kerby test.
Vice Chief Justice McGregor authored the opinion; Chief Justice Jones and Justices Ryan and Berch concurred. Justice Hurwitz wrote a separate concurring opinion.
Posted by azapp @ Thu, Oct 14, 2004
Wednesday, October 13, 2004
U.S. Supreme Court Denies Review of Peasley Disbarment
According to an article appearing on azcentral.com, the U.S. Supreme Court yesterday denied review of the Arizona Supreme Court's decision disbarring former Pima County prosecutor Kenneth Peasley from the practice of law in Arizona. The Arizona Supreme Court found that Peasley had knowingly elicited false testimony in a capital murder case.
According to an article appearing on azcentral.com, the U.S. Supreme Court yesterday denied review of the Arizona Supreme Court's decision disbarring former Pima County prosecutor Kenneth Peasley from the practice of law in Arizona. The Arizona Supreme Court found that Peasley had knowingly elicited false testimony in a capital murder case.
Posted by azapp @ Wed, Oct 13, 2004
Tuesday, October 12, 2004
Arizona-American Water Co. v. Arizona Corporation Commission: Division One Holds that Direct Appeal to Court of Appeals from Corporation Commission is not Available with Respect to Orders that Merely Affect Rates
A water company filed an application with the Arizona Corporation Commission seeking either approval of its merger with another company or a declaration that the Commission's rules did not apply to the merger. The Commission issued an order approving the merger subject to fifteen conditions, among which were (i) a three-year moratorium on non-emergency rate increases, (ii) a requirement that any affiliate produce its books and records upon request by the Commission, and (iii) a ceiling on the cost of debt to be used for setting rates in any rate proceeding brought by the company for three years after the closing of the merger transaction. The company filed an application for rehearing objecting to the conditions, which was denied, and then filed a direct appeal to Division One. Both parties to the appeal agreed that the Court of Appeals had jurisdiction over the appeal pursuant to A.R.S. 40-254.01. The Court of Appeals, however, disagreed. The Court first noted that jurisdiction over appeals from Commission decisions is generally governed by A.R.S. 40-254, which broadly entitles parties "dissatisfied" with a Commission decision or order to "commence an action" in the Superior Court. The only exception applies to matters covered by section 40-254.01, which allows for a direct appeal to the Court of Appeals from "any order of the commission involving public service corporations and relating to rate making or rate design" pursuant to certain statutes. The Court held that the company's appeal did not "relat[e] to rate making or rate design." The Court noted that the broad language of section 40-254 made plain the Legislature's intent that court challenges to Commission orders that merely "affect" rates should be brought in Superior Court. A direct appeal to the Court of Appeals, by contrast, "must arise from a process in which the Commission is involved in rate-making or rate-designing." This does not mean, the Court stressed, that section 254.01 appeals can be taken only from "rate cases." It does mean, however, that the order appealed from should involve determinations of the fair value of a utility's property, determinations of a reasonable rate of return on that property, or the approval, disapproval, or establishment of rates. Although the conditions placed on the merger by the Commission likely would affect rates, the Court held, the order did not involve rate-making or rate-designing. The Court accordingly dismissed the appeal.
The decision was authored by Judge Snow and joined by Judges Garbarino and Gemmill.
A water company filed an application with the Arizona Corporation Commission seeking either approval of its merger with another company or a declaration that the Commission's rules did not apply to the merger. The Commission issued an order approving the merger subject to fifteen conditions, among which were (i) a three-year moratorium on non-emergency rate increases, (ii) a requirement that any affiliate produce its books and records upon request by the Commission, and (iii) a ceiling on the cost of debt to be used for setting rates in any rate proceeding brought by the company for three years after the closing of the merger transaction. The company filed an application for rehearing objecting to the conditions, which was denied, and then filed a direct appeal to Division One. Both parties to the appeal agreed that the Court of Appeals had jurisdiction over the appeal pursuant to A.R.S. 40-254.01. The Court of Appeals, however, disagreed. The Court first noted that jurisdiction over appeals from Commission decisions is generally governed by A.R.S. 40-254, which broadly entitles parties "dissatisfied" with a Commission decision or order to "commence an action" in the Superior Court. The only exception applies to matters covered by section 40-254.01, which allows for a direct appeal to the Court of Appeals from "any order of the commission involving public service corporations and relating to rate making or rate design" pursuant to certain statutes. The Court held that the company's appeal did not "relat[e] to rate making or rate design." The Court noted that the broad language of section 40-254 made plain the Legislature's intent that court challenges to Commission orders that merely "affect" rates should be brought in Superior Court. A direct appeal to the Court of Appeals, by contrast, "must arise from a process in which the Commission is involved in rate-making or rate-designing." This does not mean, the Court stressed, that section 254.01 appeals can be taken only from "rate cases." It does mean, however, that the order appealed from should involve determinations of the fair value of a utility's property, determinations of a reasonable rate of return on that property, or the approval, disapproval, or establishment of rates. Although the conditions placed on the merger by the Commission likely would affect rates, the Court held, the order did not involve rate-making or rate-designing. The Court accordingly dismissed the appeal.
The decision was authored by Judge Snow and joined by Judges Garbarino and Gemmill.
Posted by azapp @ Tue, Oct 12, 2004
Article: Arizona Supreme Court to Hear Argument at University of Arizona in Case Involving Retroactive Application of Statute of Limitations.
An article appearing on azcentral.com reports that the Arizona Supreme Court will hear oral arguments next month at the University of Arizona Law School in a case involving the retroactive application of a statute of limitations to bar the City of Tucson's action against Clear Channel to restrict billboard advertising.
An article appearing on azcentral.com reports that the Arizona Supreme Court will hear oral arguments next month at the University of Arizona Law School in a case involving the retroactive application of a statute of limitations to bar the City of Tucson's action against Clear Channel to restrict billboard advertising.
Posted by azapp @ Tue, Oct 12, 2004
Monday, October 4, 2004
U.S. Supreme Court Denies Review of Firefighter Drug-Testing Case
According to an article on azcentral.com, the U.S. Supreme Court has denied review of an Arizona Supreme Court decision striking down as unconstitutional a drug-testing program applicable to Mesa firefighters. The decision was the subject of a previous posting.
According to an article on azcentral.com, the U.S. Supreme Court has denied review of an Arizona Supreme Court decision striking down as unconstitutional a drug-testing program applicable to Mesa firefighters. The decision was the subject of a previous posting.
Posted by azapp @ Mon, Oct 4, 2004
Arizona State Democratic Party v. State of Arizona: Division One Finds That Contributions by Corporations and Labor Unions to the Arizona Democratic Party for Operating Expenses Are Prohibited.
The Arizona Constitution prohibits corporations from contributing money “for the purpose of influencing any election.” Ariz. Const. Art. 14 § 18. The Arizona Legislature enacted A.R.S. § 16-919(A) to implement this constitutional provision, making it “unlawful for a corporation or a limited liability company to make any contribution of money or anything of value for the purpose of influencing an election.” The Legislature imposed the same prohibition on labor organizations. A.R.S. § 16-919(B). For some time, the Arizona Democratic Party has solicited donations from corporations and labor unions to pay its operating expenses. It deposited these monies into a separate administrative account, which it used to pay staff salaries, rent, and other administrative expenses. It kept the funds separate from accounts used to support candidates. The State of Arizona challenged these administrative contributions as violating the constitutional and statutory provisions that prohibit contributions from corporations and labor unions “for the purpose of influencing elections.”
The Court found the phrase “influencing an election” ambiguous in both the Arizona Constitution and implementing statutes, but found that in light of the statutes’ overall purpose, structure, and context, they prohibited corporations and labor unions from making contributions to political parties for operating expenses. Having decided the issue on the basis of the statutes, the Court did not address whether the Constitutional provision likewise banned such contributions. The Court further held that the statutory ban did not run afoul of the freedom of expression guarantees of either the United States or Arizona Constitutions, noting that other courts have upheld similar prohibitions.
Judge Barker authored the Opinion and Judge Garbarino concurred. Judge Timmer dissented, explaining that she would construe A.R.S. § 16-919(A) and (B) as applying to contributions to candidates, prospective candidates, or their campaign representatives for the purpose of influencing elections involving those candidates.
The Arizona Constitution prohibits corporations from contributing money “for the purpose of influencing any election.” Ariz. Const. Art. 14 § 18. The Arizona Legislature enacted A.R.S. § 16-919(A) to implement this constitutional provision, making it “unlawful for a corporation or a limited liability company to make any contribution of money or anything of value for the purpose of influencing an election.” The Legislature imposed the same prohibition on labor organizations. A.R.S. § 16-919(B). For some time, the Arizona Democratic Party has solicited donations from corporations and labor unions to pay its operating expenses. It deposited these monies into a separate administrative account, which it used to pay staff salaries, rent, and other administrative expenses. It kept the funds separate from accounts used to support candidates. The State of Arizona challenged these administrative contributions as violating the constitutional and statutory provisions that prohibit contributions from corporations and labor unions “for the purpose of influencing elections.”
The Court found the phrase “influencing an election” ambiguous in both the Arizona Constitution and implementing statutes, but found that in light of the statutes’ overall purpose, structure, and context, they prohibited corporations and labor unions from making contributions to political parties for operating expenses. Having decided the issue on the basis of the statutes, the Court did not address whether the Constitutional provision likewise banned such contributions. The Court further held that the statutory ban did not run afoul of the freedom of expression guarantees of either the United States or Arizona Constitutions, noting that other courts have upheld similar prohibitions.
Judge Barker authored the Opinion and Judge Garbarino concurred. Judge Timmer dissented, explaining that she would construe A.R.S. § 16-919(A) and (B) as applying to contributions to candidates, prospective candidates, or their campaign representatives for the purpose of influencing elections involving those candidates.
Posted by azapp @ Mon, Oct 4, 2004
Friday, October 1, 2004
Pima County v. Pima County Law Enforcement Merit System Council: Division Two Holds that Police Merit System Council Must Apply Deferential Review to Disciplinary Decisions
Testifying in a criminal trial, a Pima County Deputy Sheriff conceded that he had straddled and slapped a wounded suspect partly with the intent to elicit incriminating statements. He also testified that another reason for the slap was to keep the suspect awake until medical personnel arrived. Concluding that the Deputy Sheriff had used poor judgment and excessive force, the County Sheriff terminated the Deputy Sheriff. The Deputy Sheriff appealed his termination to the Pima County Law Enforcement Merit System Council. At a hearing before a hearing officer, the Deputy Sheriff testified that his only purpose in slapping the suspect had been to render first aid. The hearing officer credited the Deputy Sheriff's testimony and recommended that he be reinstated. The Council agreed, revoking the Deputy Sheriff's termination. The Sheriff filed a complaint for special action in Superior Court, which denied relief. The Sheriff appealed to Division Two. He argued that the Council's rules exceeded its statutory authority insofar as they provided for non-deferential review of disciplinary decisions. The Court agreed. The Court noted that the Council's enabling legislation, A.R.S. 38-1003, limited the Council's powers to those exercised pursuant to "recognized merit system principles." The Court concluded that "recognized merit system principles" included the principle of deferential review, for several reasons. First, a later-enacted statute creating procedural rules for the state personnel board reflected the Legislature's judgment that merit system review boards should show deference to the discretionary personnel decisions of an employing agency. Second, Arizona cases supported the conclusion that "recognized merit system principles" include a deferential standard of review. Deferential review was also more consistent with the broader purpose of the enabling legislation, which was to protect employees from arbitrary termination, rather than to empower "a politically appointed lay commission [to] second-guess the specific personnel judgments of an agency when that agency has applied the correct merit-based criteria." The Court accordingly reversed the trial court's denial of special action relief and remanded the case for further proceedings.
The decision was authored by Judge Eckerstrom and joined by Judges Howard and Brammer.
Testifying in a criminal trial, a Pima County Deputy Sheriff conceded that he had straddled and slapped a wounded suspect partly with the intent to elicit incriminating statements. He also testified that another reason for the slap was to keep the suspect awake until medical personnel arrived. Concluding that the Deputy Sheriff had used poor judgment and excessive force, the County Sheriff terminated the Deputy Sheriff. The Deputy Sheriff appealed his termination to the Pima County Law Enforcement Merit System Council. At a hearing before a hearing officer, the Deputy Sheriff testified that his only purpose in slapping the suspect had been to render first aid. The hearing officer credited the Deputy Sheriff's testimony and recommended that he be reinstated. The Council agreed, revoking the Deputy Sheriff's termination. The Sheriff filed a complaint for special action in Superior Court, which denied relief. The Sheriff appealed to Division Two. He argued that the Council's rules exceeded its statutory authority insofar as they provided for non-deferential review of disciplinary decisions. The Court agreed. The Court noted that the Council's enabling legislation, A.R.S. 38-1003, limited the Council's powers to those exercised pursuant to "recognized merit system principles." The Court concluded that "recognized merit system principles" included the principle of deferential review, for several reasons. First, a later-enacted statute creating procedural rules for the state personnel board reflected the Legislature's judgment that merit system review boards should show deference to the discretionary personnel decisions of an employing agency. Second, Arizona cases supported the conclusion that "recognized merit system principles" include a deferential standard of review. Deferential review was also more consistent with the broader purpose of the enabling legislation, which was to protect employees from arbitrary termination, rather than to empower "a politically appointed lay commission [to] second-guess the specific personnel judgments of an agency when that agency has applied the correct merit-based criteria." The Court accordingly reversed the trial court's denial of special action relief and remanded the case for further proceedings.
The decision was authored by Judge Eckerstrom and joined by Judges Howard and Brammer.
Posted by azapp @ Fri, Oct 1, 2004
Associated Aviation Underwriters v. Wood: Division Two Addresses Applicability of Morris and Trigger-of-Coverage in Mass-Tort Case.
This declaratory relief action ("DRA") relates to insurance coverage for a mass-toxic-tort action brought by some 1600 individuals against the Tucson Airport Authority and the City of Tucson (collectively, "TAA") for exposure to groundwater contaminated with the toxin TCE. The history of the DRA and the underlying mass-tort action stretches back some 20 years. The essential facts are that after the insurer Associated Aviation Underwriters ("AAU"), which was defending TAA in the underlying action under a reservation of rights, brought this DRA contesting coverage, TAA and the plaintiffs entered into a “Morris agreement.” Under the Morris agreement, the TAA stipulated to entry of judgment against it for approximately $35 million in the underlying action, and assigned its rights against AAU to the plaintiffs, in return for a covenant not to execute on the judgment. The plaintiffs thereafter intervened in the DRA to establish TAA's coverage rights, which the trial court ultimately upheld prompting this appeal.
The court of appeal’s lengthy opinion (some 104 pages) addresses, among other things, three important issues: 1) whether, under Morris, an insurer is estopped from contesting in the coverage dispute facts that were necessary to establish its insured's underlying liability; 2) whether the underlying plaintiffs’ exposure to TCE caused harm to them during AAU’s policy period sufficient to trigger coverage; and 3) whether, in determining if the Morris agreement was reasonable in fact and amount, the trial court was required to evaluate the merits of each particular plaintiff’s claim and determine a specific reasonable dollar amount for each plaintiff.
Morris Estoppel Issue
Consistent with Morris, the DRA was broken into a coverage phase and a reasonableness phase. Regarding the coverage phase, “AAU essentially argue[d] that in this DRA [plaintiffs] were required, and failed, to prove liability against TAA[] . . . , a causal relationship between TCE and [plaintiffs’] alleged injuries, and each [plaintiff’s] damages in order to establish coverage under AAU’s policies.” The court rejected this position, holding instead, that an insurer is prohibited from litigating tort liability and damages issues in the guise of a coverage defense. The court noted that in Morris itself, the insureds had stipulated that their actions were either intentional or negligent. Because the insurer’s policy excluded coverage for intentional acts, on remand the insurer was permitted to litigate the exact nature of insureds’ conduct. By contrast, AAU sought to litigate in the coverage phase whether TAA would have been held liable in the first instance. According to the court, that question was precluded by the adverse stipulated judgment between TAA and the plaintiffs.* A contrary result, the court said, would defeat the entire purpose of permitting Morris agreements.
Trigger-of-Coverage
TAA had insurance policies from AAU between 1960 and 1972. AAU contested whether its “accident” policies (1960-68) covered the plaintiffs’ claims.** These policies provided coverage for liability due to a “bodily injury, sickness or disease.” After determining that earlier Arizona precedents addressing bodily injury policies were not directly on point, the court declared that it was faced with the following issue of first impression: “does exposure to a toxic substance, cellular damage resulting therefrom, and the biological processes initiated by such damage constitute a ‘bodily injury, sickness or disease’ such that coverage is triggered under a CGL insurance policy.”
This is a question that numerous courts across the country have addressed and several trigger of coverage theories have emerged, including the exposure theory, the manifestation theory, and the continuous trigger theory. Under the exposure theory, an insurance policy is triggered when the plaintiff is exposed to the harmful substance, while under the manifestation theory, the policy is not triggered until the harm becomes diagnosable. The continuous trigger theory, which the court adopted, holds that “the initial exposure to a toxic agent, ‘exposure-in-residence,’ and disease manifestation all constitute ‘bodily injuries’ under an insurance policy.” The court favored the continuous trigger approach because “based on the policy language, ‘selecting one or another of the phases [of disease] as the exclusive trigger of liability is inappropriate.” The court also cited public policy in support of its decision, noting that the continuous trigger approach has the tendency to spread the risk to the largest possible group of policyholders or claimants.
Morris Reasonableness Issue
Under Morris, the insured or assignee (i.e., the underlying plaintiff) must establish that the settlement was reasonable and prudent under the circumstances. The test is “what a reasonably prudent person in the insureds’ position would have settled for on the merits of the claimant’s case.” AAU challenged the global settlement because the trial court had not evaluated the merits of the individual claims of each plaintiff. Indeed, the trial court found that when the TAA settled, it lacked any information about the vast majority of plaintiffs, but noted that “it is unknown, and perhaps unknowable, when or if each and every individual plaintiff’s claim could have been individually evaluated, as a practical matter.” Nonetheless, the court upheld the trial court’s approval of the global settlement because the record reflected that TAA “to some extent” considered the merits of the plaintiffs’ claims and the substantial risks it faced if it chose to defend and lost at trial.
The opinion was written by Chief Judge Pelander; Judges Espinosa and Eckerstrom concurred.
*The court noted that its decision is consistent with a previous opinion it entered in this case in 1995. Smith v. Tucson Airport Auth., 183 Ariz. 1 (1995). The Smith opinion was depublished by the Supreme Court. Although depublication may indicate disapproval of some aspect of a court’s opinion, according to the Court of Appeals, Smith remains law of the case. Moreover, the court specifically reaffirmed its previous holding and “decline[d] AAU’s invitation to overrule or abandon Smith.”
**A sub-group of plaintiffs whose claims related to the AAU policies from 1969-72, which were so-called “occurrence” policies, cross-appealed the trial courts rejection of coverage. Relying on the same trigger-of-coverage rationale it applied to the “accident” policies, the court of appeals reversed the trial court.
This declaratory relief action ("DRA") relates to insurance coverage for a mass-toxic-tort action brought by some 1600 individuals against the Tucson Airport Authority and the City of Tucson (collectively, "TAA") for exposure to groundwater contaminated with the toxin TCE. The history of the DRA and the underlying mass-tort action stretches back some 20 years. The essential facts are that after the insurer Associated Aviation Underwriters ("AAU"), which was defending TAA in the underlying action under a reservation of rights, brought this DRA contesting coverage, TAA and the plaintiffs entered into a “Morris agreement.” Under the Morris agreement, the TAA stipulated to entry of judgment against it for approximately $35 million in the underlying action, and assigned its rights against AAU to the plaintiffs, in return for a covenant not to execute on the judgment. The plaintiffs thereafter intervened in the DRA to establish TAA's coverage rights, which the trial court ultimately upheld prompting this appeal.
The court of appeal’s lengthy opinion (some 104 pages) addresses, among other things, three important issues: 1) whether, under Morris, an insurer is estopped from contesting in the coverage dispute facts that were necessary to establish its insured's underlying liability; 2) whether the underlying plaintiffs’ exposure to TCE caused harm to them during AAU’s policy period sufficient to trigger coverage; and 3) whether, in determining if the Morris agreement was reasonable in fact and amount, the trial court was required to evaluate the merits of each particular plaintiff’s claim and determine a specific reasonable dollar amount for each plaintiff.
Morris Estoppel Issue
Consistent with Morris, the DRA was broken into a coverage phase and a reasonableness phase. Regarding the coverage phase, “AAU essentially argue[d] that in this DRA [plaintiffs] were required, and failed, to prove liability against TAA[] . . . , a causal relationship between TCE and [plaintiffs’] alleged injuries, and each [plaintiff’s] damages in order to establish coverage under AAU’s policies.” The court rejected this position, holding instead, that an insurer is prohibited from litigating tort liability and damages issues in the guise of a coverage defense. The court noted that in Morris itself, the insureds had stipulated that their actions were either intentional or negligent. Because the insurer’s policy excluded coverage for intentional acts, on remand the insurer was permitted to litigate the exact nature of insureds’ conduct. By contrast, AAU sought to litigate in the coverage phase whether TAA would have been held liable in the first instance. According to the court, that question was precluded by the adverse stipulated judgment between TAA and the plaintiffs.* A contrary result, the court said, would defeat the entire purpose of permitting Morris agreements.
Trigger-of-Coverage
TAA had insurance policies from AAU between 1960 and 1972. AAU contested whether its “accident” policies (1960-68) covered the plaintiffs’ claims.** These policies provided coverage for liability due to a “bodily injury, sickness or disease.” After determining that earlier Arizona precedents addressing bodily injury policies were not directly on point, the court declared that it was faced with the following issue of first impression: “does exposure to a toxic substance, cellular damage resulting therefrom, and the biological processes initiated by such damage constitute a ‘bodily injury, sickness or disease’ such that coverage is triggered under a CGL insurance policy.”
This is a question that numerous courts across the country have addressed and several trigger of coverage theories have emerged, including the exposure theory, the manifestation theory, and the continuous trigger theory. Under the exposure theory, an insurance policy is triggered when the plaintiff is exposed to the harmful substance, while under the manifestation theory, the policy is not triggered until the harm becomes diagnosable. The continuous trigger theory, which the court adopted, holds that “the initial exposure to a toxic agent, ‘exposure-in-residence,’ and disease manifestation all constitute ‘bodily injuries’ under an insurance policy.” The court favored the continuous trigger approach because “based on the policy language, ‘selecting one or another of the phases [of disease] as the exclusive trigger of liability is inappropriate.” The court also cited public policy in support of its decision, noting that the continuous trigger approach has the tendency to spread the risk to the largest possible group of policyholders or claimants.
Morris Reasonableness Issue
Under Morris, the insured or assignee (i.e., the underlying plaintiff) must establish that the settlement was reasonable and prudent under the circumstances. The test is “what a reasonably prudent person in the insureds’ position would have settled for on the merits of the claimant’s case.” AAU challenged the global settlement because the trial court had not evaluated the merits of the individual claims of each plaintiff. Indeed, the trial court found that when the TAA settled, it lacked any information about the vast majority of plaintiffs, but noted that “it is unknown, and perhaps unknowable, when or if each and every individual plaintiff’s claim could have been individually evaluated, as a practical matter.” Nonetheless, the court upheld the trial court’s approval of the global settlement because the record reflected that TAA “to some extent” considered the merits of the plaintiffs’ claims and the substantial risks it faced if it chose to defend and lost at trial.
The opinion was written by Chief Judge Pelander; Judges Espinosa and Eckerstrom concurred.
*The court noted that its decision is consistent with a previous opinion it entered in this case in 1995. Smith v. Tucson Airport Auth., 183 Ariz. 1 (1995). The Smith opinion was depublished by the Supreme Court. Although depublication may indicate disapproval of some aspect of a court’s opinion, according to the Court of Appeals, Smith remains law of the case. Moreover, the court specifically reaffirmed its previous holding and “decline[d] AAU’s invitation to overrule or abandon Smith.”
**A sub-group of plaintiffs whose claims related to the AAU policies from 1969-72, which were so-called “occurrence” policies, cross-appealed the trial courts rejection of coverage. Relying on the same trigger-of-coverage rationale it applied to the “accident” policies, the court of appeals reversed the trial court.
Posted by azapp @ Fri, Oct 1, 2004
