AZAPP Blog

Article on Long v. City of Glendale Decision

An article on azcentral.com states that the City of Glendale plans to seek review of the Court of Appeals' decision in Long v. City of Glendale, which was the subject of a recent posting.

Posted by azapp @ Thu, Jul 29, 2004

Article on Division One Decision Regarding "Three Strikes" Law

An article on azcentral.com discusses Division One's recent decision in State v. Reinhardt, in which the Court held that the defendant's three drug offenses committed on the same occasion should have been considered as one "time" of conviction with respect to the three-strikes law.

Posted by azapp @ Mon, Jul 26, 2004

Ninth Circuit Addresses Arizona Law Community Property Issue

An article on azcentral.com discusses a Ninth Circuit decision holding that, under Arizona law, a spouse may be responsible for a judgment rendered in a non-community-property state even if the spouse was not named in the lawsuit.

Posted by azapp @ Fri, Jul 23, 2004

Appellate Court Commission Appointments

An item on the Governor's website announces that the Governor has appointed Robert M. Gallo of Casa Grande, Randolph Lumm of Phoenix, and Dewey Schade of Scottsdale to the Appellate Court Commission. Positions on the Commission require senate confirmation.

Posted by azapp @ Thu, Jul 22, 2004

Article on Stanley v. McCarver Decision

An article on azcentral.com discusses the Arizona Supreme Court's Stanley v. McCarver decision, in which the Court held that a radiologist could be liable to a person whose x-ray he examined despite the absence of any doctor-patient relationship between them.  The decision was the subject of a recent posting.

Posted by azapp @ Thu, Jul 22, 2004

American Pepper Supply Co. v. Federal Ins. Co.: Arizona Supreme Court Holds that Burden of Proof Applicable to Insurance Defense of Concealment or Misrepresentation is Preponderance of the Evidence.
 
An insurance company found that its claimant's reporting of a theft of equipment was "suspicious."  The equipment, supposed to be worth $87,000, had been left in an unfenced and unguarded area.  The claimant no longer used the equipment.  The claimant's account of the theft seemed to change over time.  And the claimant was eager to settle the claim quickly for two-thirds of the equipment's alleged value.  The insurer investigated and denied the claim, asserting that the claimant had actually sold the equipment for scrap metal and citing the policy's misrepresentation/concealment provisions.  The claimant sued the insurer, alleging breach of contract and bad faith.  In defense, the insurer asserted misrepresentation and concealment by the claimant.  The jury, after being instructed that the insurer was required to prove its defenses by "clear and convincing evidence," found for the claimant.  In a decision that was the subject of a previous posting, the Court of Appeals affirmed, approving the burden-of-proof instruction.  But the Supreme Court granted the insurer's petition for review and disagreed, holding that the proper standard is preponderance of the evidence.  The Court noted that the Court of Appeals had decided to require the higher standard in light of the harm to an individual's reputation that can arise from allegations of misrepresentation or concealment.  Although the Court agreed with the general proposition that "burdens of proof correlate positively with the significance of the interests at stake," it determined that "countervailing concerns" made a preponderance standard appropriate.  The application of the lower standard tends to reduce juror confusion, recognizes the inherent difference between the tort of fraud and the contract defenses of concealment and misrepresentation, is supported by major commentators, and is consistent with the approach taken by the majority of jurisdictions.  Finding that the jury might have returned a different verdict if instructed according to the preponderance standard, the Court remanded the case for a new trial. 
 
Justice Berch wrote the opinion for a unanimous Court.

Posted by azapp @ Fri, Jul 16, 2004

North Valley Emergency Specialists v. Santana: Supreme Court Rules that Mandatory Arbitration Clauses in Employment Contracts are Unenforceable Under A.R.S. § 12-1517

A.R.S. § 12-1517 provides that Arizona’s arbitration act (the “Act”) has “no application to arbitration agreements between employers and employees or their respective representatives.” The employment contract at issue in this case contained an arbitration clause, which the trial court enforced, ruling that that section 12-1517 was intended to apply only to collective bargaining agreements. The Court of Appeals declined to accept special action jurisdiction, but the Supreme Court took the case. It reversed the trial court and held that under the plain language of § 12-1517 “an arbitration agreement between an employer and employee is not subject to the provisions of the Act, whether the agreement is found in a contract between a single employer and a single employee or in a collectively bargained contract.”

The court rejected the employer’s argument that the legislative history of § 12-1517 compels another reading of the statute. The court recounted that prior to adopting the Uniform Arbitration Act, Arizona law specifically excluded collective bargaining contracts from being subject to compulsory arbitration. Based in part on concerns about such provisions in various states, the Uniform Arbitration Act was drafted to expressly apply “to arbitration agreements between employers and employees or between their respective representatives.” However, the Arizona Legislature, when adopting the Act, modified that language and cast it in the negative. The Supreme Court presumed that in so doing the legislature intended to make a change from existing law, which excluded only collective bargaining agreements, to exclude all employer-employee arbitration agreements.

The Supreme Court also rejected the employer’s arguments that the legislature intended to adopt construction placed on the uniform act by its drafters, noting that this rule has no application since section 12-1517 is a departure from the uniform act. Arguments based on the policy favoring arbitration and grammatical constructions of section 12-1517 involving use of the plural were likewise unavailing.

Justice Ryan wrote the opinion for a unanimous court.

Previous posts regarding this case:

1/13/04
1/9/04

Posted by azapp @ Wed, Jul 14, 2004

Guenther & Drannan v. Allstate & Gaub: Division Two Issues Revised Opinion

Division Two has vacated its earlier opinion, described in this post, and issued a revised opinion, "in light of certain points raised" in motions for reconsideration filed by both sides. The disposition of the case remains unchanged.

Posted by azapp @ Mon, Jul 12, 2004

Ry-Tan Construction v. Washington Elementary School Dist.: Division One determines rights arising out of breach of construction contract.

This case arises out of a public school construction project. The Governing Board of the Washington Elementary School District determined to accept bids on the project, and ultimately voted to award to the contract to Ry-Tan, the lowest bidder. A dispute between the parties arose when Ry-Tan began work on the contract before the contract documents had been formally executed, and presumably before asbestos had been removed from property as required by state regulations. The Board cancelled the award to Ry-Tan and proceeded to award the contract to the next lowest bidder. Ry-Tan sued the School District on a number of breach of contract and related issues, seeking appropriate damages. The trial court ruled in favor of Ry-Tan, and this appeal followed.

On appeal, the School District argued first that the trial court had erred in ruling as matter of law that a contract had been formed. The court of appeals upheld the trial court’s ruling, rejecting the School District’s argument that the bid and award were formalities and that a formal contract needed to have been executed. Applying Restatement (Second) Contracts § 27, the Court held that the circumstances were such that both parties exhibited an intent to be bound by the terms established during the bid process. The Court noted that no facts indicated that the Board’s acceptance of Ry-Tan’s bid was conditional. The execution of a formal contract was a formality.

Next, the Court affirmed the trial court’s holding that Ry-Tan was not precluded from suing the School District for failure to submit a notice of claim pursuant to A.R.S. 12-821.01.
Rather, the contract required Ry-Tan to follow only the claims procedures of the Procurement Code—the notice of claim statute was irrelevant. The Court of Appeals also affirmed the trial court’s conclusion that the School District did not have a right to terminate the contract for convenience. Reviewing the doctrine of “constructive termination for convenience”—a doctrine applicable to governmental entities—the court declined to apply it in this case, where the doctrine’s application would permit the School District to act in unbounded discretion, and where the contract terms at hand could not be construed to allow the application of the doctrine. Finally, the court rejected a series of arguments related to Ry-Tan’s alleged breach of the contract and evidentiary rulings, but vacated the court’s award of prejudgment interest in Ry-Tan’s favor.

Judge Winthrop authored the opinion; Judges Lankford and Norris concurred.

Posted by azapp @ Mon, Jul 12, 2004

New Court of Appeals Policy Treats Motions for Publication as Motions for Reconsideration

An item on myazbar.org discusses a recent policy change by both Divisions of the Arizona Court of Appeals, whereby motions for publication are treated as motions for reconsideration. This language appears in the policy section of Division One's website:

VIII. REQUESTS FOR PUBLICATION
The Court treats motions or requests for publication of a
memorandum decision as an opinion as motions for reconsideration.
Such requests may be captioned as motions for reconsideration.
ARCAP 22 applies, and therefore such motions must be filed within
15 days of the Court’s decision.

Posted by azapp @ Mon, Jul 12, 2004

Article on Long v. Glendale Decision

An article appearing on azcentral.com discusses Division One's recent decision in Long v. City of Glendale, the subject of a recent posting.

Posted by azapp @ Fri, Jul 9, 2004

You may have noticed the new look of the AZAPP blog, which coincides with the launch of Osborn Maledon's revamped website. Click on contact AZAPP in the upper right of your screen and let us know what you think.

Posted by azapp @ Thu, Jul 8, 2004

Articles on Grammatico v. Industrial Commission and Dispute Over Production of Prison Hostage-Taker's Letter

An article on azcentral.com discusses the implications of Division One's decision in Grammatico v. Industrial Commission, which involved employers' rights to deny worker's compensation to employees who test positive for drugs. Another article discusses Division One's remand of a case involving a dispute over the production of the original of a letter written by a prison hostage-taker.

Posted by azapp @ Tue, Jul 6, 2004

John F. Long v. City of Glendale: Division One Holds That a Municipality’s Public Meeting Is Not Sufficient to Toll the Statute of Limitations on a Contract Claim and That a Donor May Obtain Reformation of a Donative Transfer Contract Without a Showing of Fraud, Inequitable Conduct or Donee’s Knowledge of Mistake.

John F. Long donated a parcel of land, B-3, to the City of Glendale for the purpose of improving the airport. Long claims that his donation was contingent on the City’s agreement to construct a second runway at the airport on parcel B-3. Glendale leased property adjacent to B-3 for commercial development which prevented construction of a second runway on B-3. Long’s complaint included causes of action for specific performance, promissory estoppel, equitable reformation, rescission, equitable resulting trust and quiet title. The trial court dismissed the complaint, and Long appealed.

The Court of Appeals affirmed the trial court’s denial of Long’s claims for specific performance, quiet title, resulting trust and equitable estoppel. The Court of Appeals found that the contract provisions for reversion and use restriction were not specific enough to be triggered by the City’s actions. The extrinsic evidence offered by Long was barred by the parol evidence rule because the writing was not “reasonably susceptible” to the interpretation suggested by the extrinsic evidence offered. The Court of Appeals also found that his claim for promissory estoppel was barred because there was no allegation or evidence of written promises made by authorized persons, which is necessary to satisfy the equitable estoppel doctrine’s “considerable formalism” requirement.

The Court of Appeals reversed the trial court’s dismissal of Long’s rescission and reformation claims finding that the trial court had incorrectly determined the statute of limitations and statute of frauds issues. The trial court erred in holding that the municipality’s public meeting to delete the provision of the airport plan for a second runway on B-3 tolled the statute of limitations. Under the applicable statute, a cause of action accrues when the damaged party “realizes” he or she has been damaged, an issue which is a question of fact. Additionally, Long’s full performance by donating B-3 put his claims based on an alleged oral contract outside of the statute of frauds. Finally, because Long made a donative transfer, Long did not have to show fraud, inequitable conduct or knowledge of the mistake on the City’s part; he needed only establish, by clear and convincing evidence, that he did not give what he intended to support a claim for reformation.

Judge Snow wrote the opinion; Judges Sult and Portley concurred.

Posted by azapp @ Tue, Jul 6, 2004

Stanley v. McCarver: Arizona Supreme Court Holds that Radiologist Evaluating Non-Patient's Chest X-Ray in Pre-Employment Tuberculosis Screening May Be Liable to Examinee for Failure to Notify Her of Serious Abnormalities Observed in the X-Ray.

A radiologist evaluated a nurse's chest x-ray as part of a pre-employment tuberculosis screening, pursuant to a contract between the x-ray company and the nurse's prospective employer. The radiologist noted in his report to the x-ray company that the x-ray revealed certain abnormalities, but he did not notify the nurse of these findings directly. The x-ray company forwarded the report to the prospective employer, which, although it had a policy requiring it to notify the nurse of the results within seventy-two hours, failed to pass the information on to her. About ten months later, the nurse was diagnosed with lung cancer. She sued the prospective employer, the x-ray company, and the radiologist, alleging that she was injured by their failure to convey information to her that would have enabled her to begin treating the cancer earlier. The trial court granted summary judgment for the radiologist, but the Court of Appeals reversed, holding that the radiologist owed a duty of care to the nurse notwithstanding the absence of a doctor-patient relationship between them.

The Arizona Supreme Court agreed. The Court acknowledged that under the "traditional rule," tort liability could not be imposed on a doctor for negligent diagnosis or care in the absence of a doctor-patient relationship. But the Court noted that the rule has been "quietly eroding" in Arizona and other jurisdictions, and chose to follow the recent trend. The Court stressed that the radiologist "should have anticipated" that the nurse would want to know of the potentially life-threatening implications of the report, and "should have acted with reasonable care" in light of that conclusion. The Court also emphasized the public policy benefits of imposing a duty that will encourage doctors with "specific individualized knowledge of an examinee's serious abnormalities" to disclose the information to the examinee. The Court noted that its holding was limited to the conclusion that a doctor in these circumstances is not immunized from liability by the absence of a doctor-patient relationship, and stressed that the question of whether the duty has been violated in any particular case will depend on a number of factors. The Court also suggested that doctors could contract around the duty by "for example, requir[ing] x-ray subjects to consent to having the results reported only to the employers."

Chief Justice Jones dissented. In his view, the majority had failed to identify any legimate legal basis for imposing of a duty of care on the radiologist in light of the "remoteness of any connection" between the nurse's general health and the radiologist's "narrow undertaking" of reviewing the x-ray for the purpose of a pre-employment tuberculosis screening. The Chief Justice noted that there are numerous situations in which an actor may be subject to a moral obligation, but is not subject to any legal obligation.

Posted by azapp @ Mon, Jul 5, 2004

Arizona Supreme Court Issues Minutes

The Arizona Supreme Court has issued its minutes in two parts, Part A and Part B. The Court considered 51 petitions for review, granting five. It also continued one, dismissed one as moot, declined three special action petitions, and accepted jurisdiction of a certified question.

Posted by azapp @ Fri, Jul 2, 2004