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Tuesday, August 31, 2004
Superior Court Rules that Protect Arizona Now Initiative May Remain on Ballot
Azcentral.com reports that the Maricopa County Superior Court has ruled that the Protect Arizona Now Initiative may remain on the ballot. No word whether an appeal can or will be mounted.
Azcentral.com reports that the Maricopa County Superior Court has ruled that the Protect Arizona Now Initiative may remain on the ballot. No word whether an appeal can or will be mounted.
Posted date: Tue, Aug 31, 2004
Monday, August 30, 2004
Article on Proposition 106
The Arizona Capitol Times reports that another effort to curb or repeal public campaign funding will be made in 2006. As covered in a previous post, the Arizona Supreme Court has upheld a lower court order keeping Proposition 106, the so-called "No Taxpayer Money for Politicians Act" initiative, off of the November 2004 ballot as violative of the Arizona constitution's "single subject" rule.
The Arizona Supreme Court has not yet issued its opinion in the Proposition 106 case. AZAPP will post it when it comes out.
The Arizona Capitol Times reports that another effort to curb or repeal public campaign funding will be made in 2006. As covered in a previous post, the Arizona Supreme Court has upheld a lower court order keeping Proposition 106, the so-called "No Taxpayer Money for Politicians Act" initiative, off of the November 2004 ballot as violative of the Arizona constitution's "single subject" rule.
The Arizona Supreme Court has not yet issued its opinion in the Proposition 106 case. AZAPP will post it when it comes out.
Posted date: Mon, Aug 30, 2004
Friday, August 27, 2004
Mackey v. Mayor of Tucson: Division Two Rules that a City’s Exchange of Land of Unequal Appraised Value Does Not Constitute a Sale under A.R.S. § 28-7204
A.R.S. § 28-7204 provides that a governing body may sell a part of a roadway, but requires notice and grants a preference in the sale to abutting land owners. Under A.R.S. § 28-7203, a governing body may exchange part of a roadway—notice and appraisal are not specifically required. In this case, Plaintiffs sought to void the City of Tucson’s transfer of title to a portion of a street to a third party because the notice requirements of § 28-7204 were not met. The City argued, among other things, that it exchanged the land and, thus was not required to give notice.
A panel of Division Two of the Court of Appeals held that the transaction was an exchange not a sale. This, despite Fain v. Hassell, Arizona Supreme Court precedent declaring that “an exchange occurs only if no value is assigned to either of the exchanged properties.” In this case, the city land was appraised at $44,000 greater value than the land the City received in exchange. To account for this, the City required the third party to develop a small park-like area on a portion of the transferred land. The court of appeals noted that Fain dealt with a constitutional provision and did not address the interaction between §§ 28-7203 & -7204. The court looked to the legislative intent behind those sections and concluded that the legislature intended to distinguish an exchange from a sale and provided expedited process for the former. According to the court, nothing in these or analogous provisions, suggests that the legislature intended to limit exchanges to parcels of substantially equivalent value or to parcels where no value has been set.
Ruling on the narrowest grounds, the court did not address the City’s argument that A.R.S. § 28-7204 did not apply to it at all because the matter was one of solely local concern. The court allowed the appeal to proceed as in the public interest even though the transaction was complete, Plaintiffs had not posted a bond, and the third-party owner was not a party to the action.
The decision was written by Judge Howard. Judges Pelander and Florez concurred.
A.R.S. § 28-7204 provides that a governing body may sell a part of a roadway, but requires notice and grants a preference in the sale to abutting land owners. Under A.R.S. § 28-7203, a governing body may exchange part of a roadway—notice and appraisal are not specifically required. In this case, Plaintiffs sought to void the City of Tucson’s transfer of title to a portion of a street to a third party because the notice requirements of § 28-7204 were not met. The City argued, among other things, that it exchanged the land and, thus was not required to give notice.
A panel of Division Two of the Court of Appeals held that the transaction was an exchange not a sale. This, despite Fain v. Hassell, Arizona Supreme Court precedent declaring that “an exchange occurs only if no value is assigned to either of the exchanged properties.” In this case, the city land was appraised at $44,000 greater value than the land the City received in exchange. To account for this, the City required the third party to develop a small park-like area on a portion of the transferred land. The court of appeals noted that Fain dealt with a constitutional provision and did not address the interaction between §§ 28-7203 & -7204. The court looked to the legislative intent behind those sections and concluded that the legislature intended to distinguish an exchange from a sale and provided expedited process for the former. According to the court, nothing in these or analogous provisions, suggests that the legislature intended to limit exchanges to parcels of substantially equivalent value or to parcels where no value has been set.
Ruling on the narrowest grounds, the court did not address the City’s argument that A.R.S. § 28-7204 did not apply to it at all because the matter was one of solely local concern. The court allowed the appeal to proceed as in the public interest even though the transaction was complete, Plaintiffs had not posted a bond, and the third-party owner was not a party to the action.
The decision was written by Judge Howard. Judges Pelander and Florez concurred.
Posted date: Fri, Aug 27, 2004
Wednesday, August 25, 2004
Premium Cigars International et. al. v. Farmer-Butler-Leavitt Insurance Agency et. al.: Division One Holds That Negligence Claims Against An Insurance Company Are Not Assignable
Premium Cigars International (“Premium”) was insured by Farmer-Butler-Leavett Insurance Agency (“Insurance Agency”) and an excess insurer to provide, among other things, hired auto and non-owned automobile liability insurance (“HNO”) coverage. The excess insurer was obtained through an insurance broker. Although Premium claims Insurance Agency assured it that the HNO policy would be effective as of September 10, 1997, the Insurance Agency did not add the HNO coverage to Premium’s policy until September 18, 1997. Two days before that date, Charleston, a Premium employee, was involved in a car accident while taking Premium clients from the airport to the Premium office in his personal car. The accident victims sued Premium and Charleston. Insurance Agency denied defense and liability of the claims, asserting that the HNO coverage was not effective on the date of the accident. Premium hired a law firm to defend it and Charleston, and the dispute ended in a Settlement Agreement and Covenant Not to Execute. In the Settlement Agreement, Premium allowed default judgment to be entered against it in the amount of $3.825 million, and assigned Premium’s claims against the Insurance Agency and the insurance broker who obtained the excess coverage to the accident victims, who subsequently sued those parties for breach of contract and negligence in Premium’s name. Insurance Agency moved for summary judgment, asserting a statute of limitations defense, which was denied. Insurance Agency and the insurance broker then moved again for summary judgment, arguing that Premium’s claims were not assignable to third parties, which the trial court granted.
On appeal, Division One affirmed the trial court’s ruling that negligence claims against an insurance agent are not assignable. The Court analogized the duties arising out of the insurer-insured relationship to those between an attorney and client, and held that the public policy concerns that prevented the assignability of legal malpractice claims also applied to professional negligence claims against an insurer. As to the insurance broker, the Court of Appeals held that liability could attach only if the broker was Premium’s apparent agent. If an agency relationship did not exist, the broker owed Premium no duty. If an agency relationship did exist, then the only duties owed to the insured were those owed by the insurance company, which were not assignable. In either case, summary judgment was appropriate. The Court remanded to the trial court the issue of whether a valid breach of contract claim existed, noting that such a claim may be properly assigned to a third party if it is one based upon a contract implied-in-fact rather than one implied-in-law. The Court also remanded to the trial court the issue of when the cause of action for breach of contract arose, if it did at all. The Court also resolved certain evidentiary issues and denied the moving parties attorneys fees.
Judge Ehrlich authored the opinion; Judges Thompson and Lankford concurred.
Premium Cigars International (“Premium”) was insured by Farmer-Butler-Leavett Insurance Agency (“Insurance Agency”) and an excess insurer to provide, among other things, hired auto and non-owned automobile liability insurance (“HNO”) coverage. The excess insurer was obtained through an insurance broker. Although Premium claims Insurance Agency assured it that the HNO policy would be effective as of September 10, 1997, the Insurance Agency did not add the HNO coverage to Premium’s policy until September 18, 1997. Two days before that date, Charleston, a Premium employee, was involved in a car accident while taking Premium clients from the airport to the Premium office in his personal car. The accident victims sued Premium and Charleston. Insurance Agency denied defense and liability of the claims, asserting that the HNO coverage was not effective on the date of the accident. Premium hired a law firm to defend it and Charleston, and the dispute ended in a Settlement Agreement and Covenant Not to Execute. In the Settlement Agreement, Premium allowed default judgment to be entered against it in the amount of $3.825 million, and assigned Premium’s claims against the Insurance Agency and the insurance broker who obtained the excess coverage to the accident victims, who subsequently sued those parties for breach of contract and negligence in Premium’s name. Insurance Agency moved for summary judgment, asserting a statute of limitations defense, which was denied. Insurance Agency and the insurance broker then moved again for summary judgment, arguing that Premium’s claims were not assignable to third parties, which the trial court granted.
On appeal, Division One affirmed the trial court’s ruling that negligence claims against an insurance agent are not assignable. The Court analogized the duties arising out of the insurer-insured relationship to those between an attorney and client, and held that the public policy concerns that prevented the assignability of legal malpractice claims also applied to professional negligence claims against an insurer. As to the insurance broker, the Court of Appeals held that liability could attach only if the broker was Premium’s apparent agent. If an agency relationship did not exist, the broker owed Premium no duty. If an agency relationship did exist, then the only duties owed to the insured were those owed by the insurance company, which were not assignable. In either case, summary judgment was appropriate. The Court remanded to the trial court the issue of whether a valid breach of contract claim existed, noting that such a claim may be properly assigned to a third party if it is one based upon a contract implied-in-fact rather than one implied-in-law. The Court also remanded to the trial court the issue of when the cause of action for breach of contract arose, if it did at all. The Court also resolved certain evidentiary issues and denied the moving parties attorneys fees.
Judge Ehrlich authored the opinion; Judges Thompson and Lankford concurred.
Posted date: Wed, Aug 25, 2004
Saturday, August 21, 2004
Arizona v. Phoenix Union High School District No. 210: Division One Holds that Phoenix Union District Retirement Plans Do Not Constitute Unlawful Age Discrimination.
The Arizona Attorney General found reasonable cause in an age-discrimination complaint filed with the Department of Law's Civil Rights Division, and filed suit against the Phoenix Union High School District under the Arizona Civil Rights Act, alleging that the District's early-retirement plans constituted unlawful age discrimination. The District offered two overlapping categories of early-retirement plans to its teachers, with eligibility determined by a combination of years of service and age. The plans provided generally that teachers with ten years of service could take early retirement, in return for which they would receive financial and other benefits and would agree to perform a certain amount of substitute teaching for the District. The substitute teaching would be compensated at a "premium" rate under these programs, but participants would be returned to the standard rate after they had reached age 65. The Superior Court held that the dropoff in substitute-teaching compensation after age 65 under these plans constituted age discrimination facially violating A.R.S. 41-1463(B)(1) and (2). The Court of Appeals disagreed. The Court held that the Superior Court had erred in concluding that unlawful discrimination was present based on discriminatory effect alone, with no finding of discriminatory motive. The Court rejected the State's attempt to attach a "sinister" motive to the plans' differentiation between substitute-teaching compensation for over-65 and under-65 teachers, reasoning that a "more obvious and less sinister explanation is that, at age sixty-five, the agreement that induced a teacher to retire early has ended." Rather than reflecting age-based animus, the Court concluded, the plans' differentiations with respect to age correlated to the points at which the participants had "received the full benefit of their bargain with the District." The Court accordingly reversed the judgment for the State and award of back pay.
The decision was authored by Judge Erlich and joined by Judges Kessler and Hall.
The Arizona Attorney General found reasonable cause in an age-discrimination complaint filed with the Department of Law's Civil Rights Division, and filed suit against the Phoenix Union High School District under the Arizona Civil Rights Act, alleging that the District's early-retirement plans constituted unlawful age discrimination. The District offered two overlapping categories of early-retirement plans to its teachers, with eligibility determined by a combination of years of service and age. The plans provided generally that teachers with ten years of service could take early retirement, in return for which they would receive financial and other benefits and would agree to perform a certain amount of substitute teaching for the District. The substitute teaching would be compensated at a "premium" rate under these programs, but participants would be returned to the standard rate after they had reached age 65. The Superior Court held that the dropoff in substitute-teaching compensation after age 65 under these plans constituted age discrimination facially violating A.R.S. 41-1463(B)(1) and (2). The Court of Appeals disagreed. The Court held that the Superior Court had erred in concluding that unlawful discrimination was present based on discriminatory effect alone, with no finding of discriminatory motive. The Court rejected the State's attempt to attach a "sinister" motive to the plans' differentiation between substitute-teaching compensation for over-65 and under-65 teachers, reasoning that a "more obvious and less sinister explanation is that, at age sixty-five, the agreement that induced a teacher to retire early has ended." Rather than reflecting age-based animus, the Court concluded, the plans' differentiations with respect to age correlated to the points at which the participants had "received the full benefit of their bargain with the District." The Court accordingly reversed the judgment for the State and award of back pay.
The decision was authored by Judge Erlich and joined by Judges Kessler and Hall.
Posted date: Sat, Aug 21, 2004
Thursday, August 19, 2004
Supreme Court to Decide Whether the Validity of a Written Release is Exclusively A Jury Question Under Ariz. Const. Art. 18, § 5
On June 29th, the Supreme Court granted review of Phelps v. Firebird Raceway Inc., 1 CA-CV 03-0404, a decision covered in a previous post. The court will determine whether Article 18, Section 5 of the Arizona Constitution requires that the validity and enforceability of a written release be submitted to a jury in all cases. Article 18, Section 5 declares that "[t]he defense of contributory negligence or of assumption of risk shall, in all cases whatsoever, be a question of fact and shall, at all times, be left to the jury." Plaintiff argued that a written release is an express assumption of the risk and is exclusively a jury question. The Court of Appeals disagreed, holding that contractual agreements releasing a party from liability and covenanting not to sue it for negligence are distinct from the common-law doctrine of assumption of risk referred to in Article 18, section 5.
Copies of the Briefs
Petition for Review
Response to Petition for Review
AzTLA Amicus Brief in Support of Petition for Review
Brewer Amicus Brief in Support of Petition for Review
Response to Amici
Supplemental Brief of Petitioner (merits brief)
Supplemental Brief of Respondent (merits brief)
On June 29th, the Supreme Court granted review of Phelps v. Firebird Raceway Inc., 1 CA-CV 03-0404, a decision covered in a previous post. The court will determine whether Article 18, Section 5 of the Arizona Constitution requires that the validity and enforceability of a written release be submitted to a jury in all cases. Article 18, Section 5 declares that "[t]he defense of contributory negligence or of assumption of risk shall, in all cases whatsoever, be a question of fact and shall, at all times, be left to the jury." Plaintiff argued that a written release is an express assumption of the risk and is exclusively a jury question. The Court of Appeals disagreed, holding that contractual agreements releasing a party from liability and covenanting not to sue it for negligence are distinct from the common-law doctrine of assumption of risk referred to in Article 18, section 5.
Copies of the Briefs
Petition for Review
Response to Petition for Review
AzTLA Amicus Brief in Support of Petition for Review
Brewer Amicus Brief in Support of Petition for Review
Response to Amici
Supplemental Brief of Petitioner (merits brief)
Supplemental Brief of Respondent (merits brief)
Posted date: Thu, Aug 19, 2004
Friday, August 13, 2004
Clean Elections Order
The Supreme Court has released its Order in the appeal regarding the No Taxpayer Money for Politicians Act ballot initiative, which was discussed in a previous posting.
The Supreme Court has released its Order in the appeal regarding the No Taxpayer Money for Politicians Act ballot initiative, which was discussed in a previous posting.
Posted date: Fri, Aug 13, 2004
Thursday, August 12, 2004
Supreme Court Keeps "No Taxpayer Money for Politicians Act" Initiative Off Ballot
The Arizona Supreme Court has affirmed an earlier trial court ruling that the so-called No Taxpayer Money for Politicians Act ballot initiative violates the single-subject rule of the Arizona Constitution (Article XXI § 1) and, thus, may not appear on the ballot. If passed, the ballot initiative would have, among other things, eliminated public funding for Clean Elections in Arizona.
Following its typical practice in ballot challenges, the Court issued an order stating the disposition of the case and indicating that an opinion would follow.
News Story: Here is a link to a story on azcentral.com about the ruling.
Trial Court Ruling: Here is a link to a copy of the trial court's ruling.
The Arizona Supreme Court has affirmed an earlier trial court ruling that the so-called No Taxpayer Money for Politicians Act ballot initiative violates the single-subject rule of the Arizona Constitution (Article XXI § 1) and, thus, may not appear on the ballot. If passed, the ballot initiative would have, among other things, eliminated public funding for Clean Elections in Arizona.
Following its typical practice in ballot challenges, the Court issued an order stating the disposition of the case and indicating that an opinion would follow.
News Story: Here is a link to a story on azcentral.com about the ruling.
Trial Court Ruling: Here is a link to a copy of the trial court's ruling.
Posted date: Thu, Aug 12, 2004
Monday, August 9, 2004
California Casualty Insurance Company v. American Family Mutual Insurance Company: Division One Holds That The “Owned Premises” Exclusion In A Renter’s Insurance Policy Precluded Coverage For A Dog Bite Incident Occurring At A Home Other Than the Rented Premises
While Raul and Elvia Lujan were caring for their daughter and her roommate’s dog, the dog bit the Lujans’ postal carrier. The postal carrier sued the Lujans. The Lujans’ homeowner insurer, California Casualty Insurance Company (“CCI”), settled the claim. CCI then filed this equitable contribution action against American Family Mutual Insurance Company (“American”), who provided the Lujans’ daughter renter insurance. The Court of Appeals affirmed the trial court’s holding that the “owned premises” policy exclusion in the American policy precluded coverage for the dog bite that occurred at the Lujans’ home, thereby barring CCI’s contribution claim.
The Court further held that CCI’s claim for equitable contribution, although sounding in tort, “arose out of contract,” thereby bringing the claim within the scope of A.R.S. § 12-341.01. The Court affirmed the trial court’s attorneys’ fee award, and also awarded CCI fees on appeal.
Judge Kessler authored the opinion; Judges Portley and Irvine concurred.
Friday, August 6, 2004
Articles: Long v. Glendale Decision, Navajo Supreme Court Ruling, Arizona Supreme Court Filing Involving Proposition 200
An article on azcentral.com discusses Division One's decision in Long v. City of Glendale, which was the subject of a recent posting. The article states that the City is seeking review of the Court of Appeals decision in the Arizona Supreme Court, and that the City is continuing its work on the airport while the case is pending. Another article discusses a ruling of the Navajo Supreme Court finding that members of the Navajo Nation Council erred in approving their own pay raise, rather than seeking a two-thirds vote of the Navajo Nation's 110 chapters. Another article describes a challenge filed Wednesday in the Arizona Supreme Court to the summary of Proposition 200 ("Protect Arizona Now") set for inclusion on the upcoming ballot. The challengers allege that the summary fails to give appropriate prominence to severe components of the Proposition. The article states that Justice Hurwitz has directed the parties to file briefs by August 11.
An article on azcentral.com discusses Division One's decision in Long v. City of Glendale, which was the subject of a recent posting. The article states that the City is seeking review of the Court of Appeals decision in the Arizona Supreme Court, and that the City is continuing its work on the airport while the case is pending. Another article discusses a ruling of the Navajo Supreme Court finding that members of the Navajo Nation Council erred in approving their own pay raise, rather than seeking a two-thirds vote of the Navajo Nation's 110 chapters. Another article describes a challenge filed Wednesday in the Arizona Supreme Court to the summary of Proposition 200 ("Protect Arizona Now") set for inclusion on the upcoming ballot. The challengers allege that the summary fails to give appropriate prominence to severe components of the Proposition. The article states that Justice Hurwitz has directed the parties to file briefs by August 11.
Thursday, August 5, 2004
John C. Lincoln Hospital, et al., v. Maricopa County, et al.: Division One Affirms Judgment In Favor Of Hospitals Against Maricopa County For Payment Of Emergency Medical Treatment Rendered To Indigent Patients
Division One affirmed a judgment in favor of John C. Lincoln Hospital Corporation, Scottsdale Memorial Health Systems, Inc., Chandler Regional Hospital, St. Luke’s Medical Center, and Phoenix Children’s Hospital (“Hospitals”) against Maricopa County for reimbursement to the Hospitals for emergency medical treatment rendered to indigent patients pursuant to A.R.S. § 11-291.01 (1997). (Note: A.R.S. §§ 11-291.01 and 11-297 were repealed effective October 1, 2001.) In May 2000, the County began litigating disputed claims for reimbursement to hospitals for emergency medical treatment provided to indigent county residents, rather than attempting to settle such claims. 461 claims were involved in this case. The Court of Appeals rejected the myriad challenges raised by the County on appeal to the judgment following a bench trial, including challenges to a variety of evidentiary errors. The Court of Appeals held, however, that the trial court should have awarded the Hospitals prejudgment interest on the claims because although the liability issues were difficult, the amount of the claims was subject to precise calculation. The Court rejected the Hospitals’ claim for attorneys’ fees pursuant to A.R.S. § 12-2030(A) (the mandamus fee statute), finding that until the amount owed pursuant to the claims was reduced to judgment, the County had no duty to pay the disputed claims.
Judge Hall authored the opinion; Judges Timmer and Garbarino concurred.
Practice Note: The Court of Appeals found that the County had waived an issue that it had raised in a denied motion for partial summary judgment. The Court cited the general rule that the denial of a summary judgment motion is not reviewable on appeal after a final judgment is entered after a trial on the merits. Rather, except for purely legal issues that do not depend on any predicate facts, a party wishing to preserve a summary judgment issue for appeal must do so by reasserting it in a Rule 50 motion for judgment as a matter of law or other appropriate trial/post-trial motion. For further discussion of this issue, click here.
Division One affirmed a judgment in favor of John C. Lincoln Hospital Corporation, Scottsdale Memorial Health Systems, Inc., Chandler Regional Hospital, St. Luke’s Medical Center, and Phoenix Children’s Hospital (“Hospitals”) against Maricopa County for reimbursement to the Hospitals for emergency medical treatment rendered to indigent patients pursuant to A.R.S. § 11-291.01 (1997). (Note: A.R.S. §§ 11-291.01 and 11-297 were repealed effective October 1, 2001.) In May 2000, the County began litigating disputed claims for reimbursement to hospitals for emergency medical treatment provided to indigent county residents, rather than attempting to settle such claims. 461 claims were involved in this case. The Court of Appeals rejected the myriad challenges raised by the County on appeal to the judgment following a bench trial, including challenges to a variety of evidentiary errors. The Court of Appeals held, however, that the trial court should have awarded the Hospitals prejudgment interest on the claims because although the liability issues were difficult, the amount of the claims was subject to precise calculation. The Court rejected the Hospitals’ claim for attorneys’ fees pursuant to A.R.S. § 12-2030(A) (the mandamus fee statute), finding that until the amount owed pursuant to the claims was reduced to judgment, the County had no duty to pay the disputed claims.
Judge Hall authored the opinion; Judges Timmer and Garbarino concurred.
Practice Note: The Court of Appeals found that the County had waived an issue that it had raised in a denied motion for partial summary judgment. The Court cited the general rule that the denial of a summary judgment motion is not reviewable on appeal after a final judgment is entered after a trial on the merits. Rather, except for purely legal issues that do not depend on any predicate facts, a party wishing to preserve a summary judgment issue for appeal must do so by reasserting it in a Rule 50 motion for judgment as a matter of law or other appropriate trial/post-trial motion. For further discussion of this issue, click here.
Lamb Excavation v. Chase Manhattan Mortgage et. al.: Division Two Clarifies Legal Standard For Applying Doctrine Of Equitable Subrogation
This case arises out of a home construction project. A married couple obtained a construction loan from Commercial Federal Bank to build a house. The couple employed several sub-contractors to complete the project, including Lamb. The sub-contractors properly filed 20-day lien notices on the home-builders and the bank. Sometime later, the couple obtained permanent financing from Chase Manhattan to satisfy the CFB loan, which it did. The Chase loan was properly executed and recorded. Shortly thereafter, Lamb and the other sub-contractors, who had not been fully paid, recorded mechanics’ liens against the property. In February, 2001, Lamb filed an action to foreclose its lien, naming Chase and the other lien-holders as defendants. Chase filed a motion for summary judgment, arguing that it had priority over Lamb because Chase was subrogated to the extent of the CFB loan. Lamb filed a cross-motion, arguing that Chase was not entitled to subrogation. The trial court granted judgment in favor of Lamb.
Chase appealed, arguing that the trial court had misapplied the doctrine of equitable subrogation in granting Lamb’s motion. On appeal, Division Two clarified the appropriate legal standard to determine the proper application of that doctrine. After reviewing several approaches adopted in different jurisdictions and the Restatement, the Court of Appeals determined that equitable subrogation will apply when there is an express or implied agreement to subrogate, which is concordant with a party’s having a reasonable expectation of receiving a security interest, and when an intervening lien claimant suffers no prejudice. Applying this standard to the facts of the case, the Court held that Chase was entitled to subrogation. It therefore reversed the trial court’s judgment for Lamb and remanded for further proceedings.
Judge Espinosa authored the opinion; Judges Eckerstom and Howard concurred.
This case arises out of a home construction project. A married couple obtained a construction loan from Commercial Federal Bank to build a house. The couple employed several sub-contractors to complete the project, including Lamb. The sub-contractors properly filed 20-day lien notices on the home-builders and the bank. Sometime later, the couple obtained permanent financing from Chase Manhattan to satisfy the CFB loan, which it did. The Chase loan was properly executed and recorded. Shortly thereafter, Lamb and the other sub-contractors, who had not been fully paid, recorded mechanics’ liens against the property. In February, 2001, Lamb filed an action to foreclose its lien, naming Chase and the other lien-holders as defendants. Chase filed a motion for summary judgment, arguing that it had priority over Lamb because Chase was subrogated to the extent of the CFB loan. Lamb filed a cross-motion, arguing that Chase was not entitled to subrogation. The trial court granted judgment in favor of Lamb.
Chase appealed, arguing that the trial court had misapplied the doctrine of equitable subrogation in granting Lamb’s motion. On appeal, Division Two clarified the appropriate legal standard to determine the proper application of that doctrine. After reviewing several approaches adopted in different jurisdictions and the Restatement, the Court of Appeals determined that equitable subrogation will apply when there is an express or implied agreement to subrogate, which is concordant with a party’s having a reasonable expectation of receiving a security interest, and when an intervening lien claimant suffers no prejudice. Applying this standard to the facts of the case, the Court held that Chase was entitled to subrogation. It therefore reversed the trial court’s judgment for Lamb and remanded for further proceedings.
Judge Espinosa authored the opinion; Judges Eckerstom and Howard concurred.
Tuesday, August 3, 2004
Arizona v. Shipman: Division Two Holds that Rule 11 Does Not Apply in a Special Action Arising from a Criminal Prosecution
After a justice of the peace granted a DUI defendant's motion for a judgment of acquittal on technical grounds, the State filed a special action petition in Superior Court challenging the dismissal. The defendant moved to dismiss the petition and for sanctions under Ariz. R. Civ. P. 11. The Superior Court awarded fees and costs to the defendant under Rule 11. The Court of Appeals held that the Superior Court had erred, because the plain language of the Arizona Rules of Civil Procedure indicate that Ariz. R. Civ. P. 11 does not apply to criminal proceedings. The Court noted that Ariz. R. P. Spec. Actions 4(g) provides for fee awards in special action proceedings, but held that this Rule's language indicated that it was not intended to apply to special action petitions arising out of criminal proceedings. The Court accordingly vacated the fee award.
The decision was authored by Judge Espinosa and joined by Judges Pelander and Eckerstrom.
Practice Note: The Court noted that the State had failed to address the Rule 11 issue until its reply brief. Although it observed that this could be treated as a waiver of the issue, the Court nevertheless addressed it because it was joined by both parties below, and because it raised "an important point of law." The Court raised the Rule 4(g) issue sua sponte and directed the parties to file supplemental briefs addressing it, noting that it could "consider alternative grounds for upholding a challenged ruling."
After a justice of the peace granted a DUI defendant's motion for a judgment of acquittal on technical grounds, the State filed a special action petition in Superior Court challenging the dismissal. The defendant moved to dismiss the petition and for sanctions under Ariz. R. Civ. P. 11. The Superior Court awarded fees and costs to the defendant under Rule 11. The Court of Appeals held that the Superior Court had erred, because the plain language of the Arizona Rules of Civil Procedure indicate that Ariz. R. Civ. P. 11 does not apply to criminal proceedings. The Court noted that Ariz. R. P. Spec. Actions 4(g) provides for fee awards in special action proceedings, but held that this Rule's language indicated that it was not intended to apply to special action petitions arising out of criminal proceedings. The Court accordingly vacated the fee award.
The decision was authored by Judge Espinosa and joined by Judges Pelander and Eckerstrom.
Practice Note: The Court noted that the State had failed to address the Rule 11 issue until its reply brief. Although it observed that this could be treated as a waiver of the issue, the Court nevertheless addressed it because it was joined by both parties below, and because it raised "an important point of law." The Court raised the Rule 4(g) issue sua sponte and directed the parties to file supplemental briefs addressing it, noting that it could "consider alternative grounds for upholding a challenged ruling."
