AZAPP Blog

Martinez v. The Industrial Commission of Arizona (10/26/06): Division One Holds That a Petition For Special Action Mistakenly Filed With the Industrial Commission of Arizona Will Be Deemed Timely Filed With the Court of Appeals.

The Claimant in this case timely filed a petition for special action from an adverse decision by the Industrial Commission of Arizona (ICA). However, Claimant filed the petition with the ICA rather than with Division One of the Court of Appeals as required by A.R.S. § 23-943.H. The petition was ultimately forwarded to the clerk of the court after the time for appeal had expired. The Court, sua sponte, examined its jurisdiction over the special action. The Court noted that pursuant to A.R.S. § 12-120.00.B (2003), and ARCAP 4(a) a petition mistakenly but timely filed in division two or the supreme court will be transferred to division one and deemed timely filed. Although both the statute and the rule refer to an appeal filed in the incorrect “court or division,” because the ICA functions as a quasi-judicial body, the Court held that Rule 4(a) should similarly be applied to petitions filed with the ICA. Thus, a petition timely but mistakenly filed with the ICA must be transmitted to division one where it will be deemed timely filed. The Court cautioned, however, that ARCAP 4(a) “is not intended as a rule of filing convenience for lawyers.” Opinion at ¶ 12 (quoting Wilkinson v. Fabry, 177 Ariz. 506, 507, 869 P.2d 182, 183 (App. 1992)).


Judge Orozco authored the unanimous opinion joined by Judges Hall and Timmer.

Meiners v. University of Arizona (10/27/06): Res Judicata Precludes Reduction of Worker’s Compensation Benefits Absent Petition for Rearrangement by Insurer.

In the context of a hearing requested by the employee to determine whether the employee’s physical condition or earning capacity has changed after a benefit award has become final, an Administrative Law Judge may not find the employee’s earning capacity has increased absent a petition for rearrangement filed by the employer or carrier pursuant to A.R.S. § 23-1044(F). Absent such a petition, res judicata principles preclude an Administrative Law Judge from reducing a petitioner employee’s workers’ compensation benefits.
Judge Brammer authored the opinion; Judges Eckerstrom and Espinosa concurred.

Cudiff v. State Farm Mutual Automobile Insurance Company (10/27/06): Arizona Court of Appeals Division Two Holds That Underinsured Motorist Insurance Coverage Can Be Offset By Injured Driver’s Workers’ Compensation Benefits

Jean Cundiff was injured in a two-car collision while on duty when her patrol car was struck from behind by Elizabeth Kozma. Cundiff sustained injuries and sought payment from her insurer, State Farm, of the full amount of underinsured motorist coverage (UIM coverage). State Farm contended that the payment from the tortfeasor’s insurer had fully compensated Cundiff and refused to pay any UIM benefits under its policy. Cudiff requested arbitration of her claim and was awarded $40,000 as full compensation for her claim against State Farm. Cundiff then filed an action against State Farm for breach of contract and for a declaratory judgment that she and a putative class were entitled to full benefits of their uninsured and underinsured motorist coverage upon their claims without any offset of workers’ compensation benefits.

After cross-motions for summary judgment, the trial court ruled that the offset provision was enforceable by State Farm as long as it did not interfere with Cundiff’s right to receive full compensation for her loss, upheld the arbitration award, and granted summary judgment to State Farm.

On appeal, Cundiff contended that State Farm’s offset clause violated the uninsured and underinsured motorist coverage statutes, A.R.S. § 20-259.01 . On de novo review, the Court of Appeals held that is does not and affirmed the grant of summary judgment in favor of State Farm. The Court cited earlier case law holding that a provision in an insurance policy reducing uninsured motorist coverage by workers’ compensation benefits is invalid and against public policy. See State Farm Mut. Auto. Ins. Co. v. Karasek, 22 Ariz. App. 87, 90 (1974) ; Allied Mut. Ins. Co. v. Larriva, 19 Airz. App. 385, 388 (1973) . However, the case to which Karasek and Larriva had cited, Bacchus v. Farmer’s Ins. Grp. Exch., 106 Ariz. 280 (1970), had been overruled by the Supreme Court in Shultz v. Farmers Ins. Grp. Of Cos., 167 Ariz. 148, 152 (1991) . Therefore, given the Supreme Court’s rejection of Bacchus in Shultz, the Court of Appeals found the underlying reasoning of Larriva and Karasek no longer persuasive. Moreover, the Court noted that a more recent case out of Division One was directly on point, Terry v. Auto-Owners Ins. Co., 184 Ariz. 246, 250 (App. 1995), and chose to follow its reasoning. The Court therefore held that an insurer may offset UIM coverage by the insured’s worker’s compensation benefits so long as the insured is not deprived of full recovery.

Judge Brammer wrote the opinion; Chief Judge Pelander and Judge Eckerstrom concurred.

Falcon v. Maricopa County (10/26/06): Supreme Court Holds that Under
Rule 4.1(i), Notice of Claim Must be Delivered to all Members of the Board of Supervisors Before a County May Be Sued.

After Guadalupe Falcon died while receiving care at Maricopa County Medical Center, a facility owned and operated by Maricopa County, her surviving children sued Maricopa County, among others, for medical malpractice. Attempting to comly with A.R.S. 12-821.01, which requires a plaintiff to file of a notice of claim on a person authorized to accept service for the public entity, and Rule 4.1(i), which authorizes service on public entities through "the chief executive officer, the secretary, clerk or recording officer thereof," they delivered a notice of claim letter to one member of the Maricopa County Board of Supervisors. It is unclear whether that member actually received the notice. The Board did not respond to the notice and the children sued. The County filed for summary judgment, arguing that no notice of claim letter had been filed as required by A.R.S. 12-821.01. The trial court agreed and granted summary judgment to the County. A divided appellate court reversed, holding that while the Board of Supervisors is the chief executive officer of the county, service on one member of a county board satisfies Rule 4.1(i).

The Supreme Court reversed in part. Though the Court agreed that the Board of Supervisors is the "chief executive officer" of the county, the Court then rejected the plaintiffs' argument that service upon one Board member qualifies as service on the "chief executive officer." The Court noted that the Board acts collectively and not through its individual members. Pointing out that one member of the Board could not accomplish, by herself, an important goal identified in A.R.S. 12-821.01 (consider the claim and possibly settle it), the Court held that to comply with Rule 4.1(i), the notice of claim must be served on each member of the Board.

Unanimous opinion authored by Justice Ryan.

Western Water Works v. Industrial Commission of Arizona(10/17/06): Division One Holds that Parties May be Joined in Timely-Filed Workers’ Compensation Case after Limitations Period has Run.

A worker was injured by a passing vehicle while working on a road construction project. He filed a worker’s compensation claim, which was accepted for benefits by the Special Fund Division/No Insurance Section. His employer – the subcontractor on the project – protested, and a hearing was scheduled before the Industrial Commission of Arizona. The Special Fund filed a motion to join general contractor Western Water Works Contracting, Inc. (“Western”) as the worker’s statutory employer. The Administrative Law Judge granted the motion, and Western appealed, arguing that joinder was improper because the one-year statute of limitations for workers’ compensation claims (A.R.S. § 23-1061(A)) had expired by the time its joinder was sought. The Division One panel first rejected the Special Fund’s argument that the appeal of the joinder order was premature, citing its statutory authority to review an “award” issued by the Industrial Commission. A.R.S. § 23-951(A). The Court next addressed the statute of limitations argument, focusing on the joinder rule set forth in Arizona Administrative Code R20-5-150f, which allows joinder of a party “over whom the [Industrial] Commission may acquire jurisdiction.” Western argued that jurisdiction over it was improper after the limitations period had run. The Special Fund argued that jurisdiction over additional parties was proper as long as the initial claim was timely filed. The Court held that the plain language of Section 23-1061(A) supported the Special Fund’s interpretation, and that the joinder was proper.

The decision was authored by Judge Hall and joined by Judges Barker and Gemmill.

Lubin v. Thomas (10/24/06): Supreme Court Affirms That County Recorder May Invalidate Nomination Petition Signatures for Reasons Other Than Those Alleged by Challenger

Lubin filed a lawsuit challenging 160 of the signatures on nomination petitions filed by Thomas to be placed on the ballot as a candidate for a school district governing board. The County Recorder reviewed the challenged signatures and found 110 of them invalid. Thomas argued that the County Recorder had exceeded her authority by invalidating some signatures on grounds other than those alleged in Lubin’s complaint. The superior court rejected Thomas’ argument. Relying on the policy and legislative history behind A.R.S. § 16-351(A), the Court affirmed, holding that a County Recorder, in reviewing challenged nomination petition signatures, may invalidate signatures for legitimate reasons other than those specifically alleged in the challenger’s complaint. The Court further noted that it could have dismissed the appeal on the equitable doctrine of laches because of Thomas’ unreasonable delay in prosecuting his election appeal and cautioned that it may do so in future election cases.

Justice Bales authored the opinion for a unanimous court.

Arizona Supreme Court Issues Minutes

The Arizona Supreme Court issued its Minutes yesterday in two parts, Part A and Part B. The Court ruled on 52 petitions for review, granting three. The Court granted review of Division One's decision in State el rel v. Daniel Graham, Division Two's decision in David Garcia v. Hon. Christopher Browning/State, and Division One's decision in Deer Valley v. Hon. Robert Houser/Pamela McDonald.

State of Arizona v. Medrano (Gottsfield) (10/24/2006): Division One Holds That the Rules of Civil Procedure and Ethical Rule 4.2 Apply to Sexually Violent Person’s Post-Commitment Proceedings

In connection with a post-commitment proceeding for a sexually violent person (an “SVP”), the SVP’s counsel sought to informally interview employees of the Arizona Department of Health Services, Arizona State Hospital and the Arizona Community Protection and Treatment Center (“ACPTC”). After the State resisted those efforts, the superior court held that the criminal rules for conducting interviews would be applied in the context of an SVP post-commitment hearing because the proceeding was more analogous to a criminal proceeding. The trial court explained that under the criminal rules, the defense may request an interview, and if the State fails to set up an interview, the defense may contact the ACPTC employee directly. If the employee refuses to be interviewed, the defense may take the employee’s deposition at the State’s expense.

The Court of Appeals accepted special action jurisdiction, and held that the Arizona Rules of Civil Procedure and Ethical Rule 4.2 govern such proceedings because the legislature expressly provided that the civil rules apply, A.R.S. § 36-3704(B), and because ACPTC employees are agents/employees of the State. The Court nevertheless observed that the trial court has considerable discretion under the civil rules and has discretion to order and control discovery. However, it expressed no opinion on whether or how that discretion could properly be applied in this context to achieve the same result. The Court also expressed no opinion on whether discovery costs in an SVP case may be shifted to the State under the civil rules or some other statutory or constitutional authority.

Judge Irvine authored the opinion; Judges Timmer and Kessler concurred.

Tritschler v. Allstate Ins. Co. (10/12/06): Division Two Rules on Insurance Contract Construction, Propriety of Protective Order and on Award of Attorney's Fees

Tritschler appealed from the Superior Court's grant of summary judgment and award of attorney's fees against him in his action against Allstate, his homeowner's insurer, and Better Way Services, Inc., a contractor recommended by Allstate and hired by him to repair rain damage to his home. Tritschler's action was for breach of contract and bad faith against Allstate and for breach of implied contract against Better Way.

After Tritschler's home was damaged, he made a claim with Allstate, which referred him to Better Way, one of its "Quality Vendors." Better Way made emergency repairs and gave an estimate for other repairs for $44,417. After work was partially completed, Tritschler complained about shoddy workmanship to Allstate, which offered to "cash out" Tritschler by paying him the difference between the total cost of repairs and the cost of work already performed by Better Way. Tritschler accepted and was paid over 11,000 dollars. Months later, Tritschler submitted another claim, based on an independent adjuster he hired, for an additional $36,377, including several thousand dollars for "contractor's overhead and profit fees." Allstate paid a portion of the additional claim; Tritschler then sued.

As to Allstate, the Court of Appeals first addressed the grant of summary judgment in its favor on its obligation to pay overhead and profit fees as part of Tritschler's claim for the "actual cash value" of his loss. Reversing, as a matter of first impression in Arizona, the Court surveyed decisions by other state and federal courts. Based on these precedents and as a matter of public policy, the Court held that under the Policy "actual cash value" includes any cost that would be reasonably likely incurred in repair or replacement of a covered loss. p.20. Rather than rule on the inclusion of overhead and profit in Tritschler's case, however, the Court remanded for additional discovery and a ruling by the superior court.

The Court then resolved several other claims against and pertaining to Allstate. First, it reversed the superior court's summary judgment on Tritschler's bad faith claims on the theory that the Court of Appeals could not determine the basis for the superior court's grant of summary judgment to Allstate. Next, the Court affirmed summary judgment on Tritschler's claim for punitive damages because Tritschler had presented no evidence of Allstate's evil mind or intent to injure him such as would sustain a bad faith claim.

Ruling next on the superior court's protective order entered against various topics Tritschler noticed in his 30(b)(6) notice for Allstate's deposition, the Court affirmed. Tritschler's requests called for information from all litigation nationwide in which Allstate had confronted issues of actual cash value and overhead and profits. The Court of Appeals agreed with the trial court that such requests were unduly burdensome and unlikely to lead to the discovery of admissible evidence.

Finally as to Allstate, the Court reversed the Superior Court's award of attorneys fees in its favor. Because the Court of Appeals reversed the Superior Court's summary judgments, Allstate was no longer the successful party and thus was not entitled to an award of fees under Rule 68.

As to Better Way, the Court affirmed summary judgment in its favor on Tritschler's implied contract claims and confirmed that ARS 12-341.01 allows for an award of fees on any contract case, whether express or implied.

The Court concluded by awarding attorney's fees on appeal to Tritschler under ARS 12-341.01

Judge Howard authored the decision, in which Chief Judge Pelander and Judge Vasquez concurred.

NEWS COVERAGE: A recent article in the National Law Journal discusses the 9th US Circuit Court of Appeals decision that lay opinion in a pot trial was not improper.

Ninth Circuit Grants Emergency Relief Enjoining Proposition 200's Proof of Citizenship and Identification Requirements for the November 2006 Election.

See orders below:

Order Granting Motion for Emergency Injunction Pending Appeal

Order Denying Motions for Reconsiderationion

See briefing below:

Emergency and Urgent Motion for Injunction Pending Appeal

Response of Coconino County

Counties Response

State of Arizona Response

Prop 200 Reply Supporting Emergency and Urgent Motion for Injunction Pending Appeal

See news articles below:

Voter ID Action Called Victory for Poor

Voter ID Rules Suspeneded

9th Circuit Court Blocks Arizona Voter ID Law

Court Bars Voter ID Enforcement

What Valley Residents Have to Say

20,000 Voters Out in the Cold

A Court's Solution to Phony Problem Draws Fake Outrage

Election Season Brings Flurry of Challenges to Voter ID Laws

Election Deform: The Supreme Court Messes Up Election Law. Again.

Northwest Fire District v. U.S. Home of Arizona Construction Company (9/29/06): Division Two Upholds A Fire District’s Authority Under A.R.S. § 48-805 To Impose a Facilities Benefit Assessment On Homes Not Yet Constructed.

Under state law a fire district is required to provide certain emergency services to all homes in its jurisdiction. For newly constructed homes, the fire district is required to provide emergency services from the date construction begins. These fire districts rely heavily on property tax revenue to fund the facilities and services they provide. For newly constructed homes, however, property taxes are not collected for up to fifteen months after construction is completed. Thus, recognizing a gap between services provided and funding for those services, the Northwest Fire District (the “District”) adopted a resolution to impose a “facilities benefit assessment” on homes for which a building permit has issued but which have not yet been constructed. US Home, a homebuilder in the district, refused to pay the assessment and the District brought an action in superior court to compel US Home to pay. US Home argued that the assessment was merely a broad tax disguised as a fee, and that the District did not have authority to impose such a tax. The trial court granted summary judgment in favor of US Home, and the District appealed.

The Court of Appeals reversed the trial court’s ruling. The Court first noted that Arizona Revised Statutes (“A.R.S.”) § 48-805 explicitly authorizes fire districts to adopt resolutions imposing, among other things, “facilities benefit assessments.” In ascertaining whether the District’s assessment constitutes a “facilities benefit assessment” under the statute, the Court looked to judicial interpretations of similar statutes in other jurisdictions, and the legislative history of ARS § 48-805. The Court determined that the legislature intended to grant fire districts broad discretion to impose fees and assessments for the services they are required to provide. Moreover, the Court found that “the District’s characterization of its facilities benefit assessment – as a fee ‘to help pay for the costs of developing facilities from which to provide services to new building construction areas’ – fits squarely within the meaning other jurisdictions have given the term.” Finally, the Court applied the standards set forth in May v. McNally, 203 Ariz. 425, ¶ 24, 55 P.3d 768, 773-74 (2002), for determining whether an assessment is a fee or a tax and held that the assessment at issue here was not a discriminatory property tax cloaked as an assessment.

Judge Eckerstrom authored the unanimous opinion joined by Judges Brammer and Espinosa.

Green v. Nygaard (9/28/2006): Arizona Court of Appeals Division Two Holds That Work Product Protection Of Expert’s File Was Restored By Withdrawing Witness Designation, Even After Expert Testified About Preliminary Matters, Where Parties Had Reached Stipulation Regarding Subject Matter Of Expert’s Testimony

A discovery dispute arose from a dissolution of marriage action after a pre-decree hearing was convened to address the parties’ possession of liquid assets pendente lite. Wife had called Byron Fox, a financial consultant, to testify at the hearing on March 24, 2006 and had designated him as an expert witness for trial. On March 28, 2006, Husband subpoenaed Fox’s entire file to be produced at a continued hearing set for March 31, 2006. Wife objected to the subpoena and Fox did not produce the file at the March 31st hearing. The superior court judge allowed Husband’s attorney to cross-examine Fox.

Sometime after the hearing, wife produced only those portion of Fox’s file that she believed were related to the subject matter of his expected testimony at trial. Husband filed a motion to compel and a hearing on the motion was set for June 27, 2006. Before that hearing, however, two “critical” events occurred: (1) on May 26, the judge approved a stipulation of the parties resolving the distribution of liquid assets pendente lite and (2) on June 6, 2006, wife withdrew her designation of Fox as a trial witness. After the June 27, 2006 hearing on the motion to compel, the judge concluded that wife had waived any privilege that may have existed regarding Mr. Fox as a consulting expert, regardless of whether Mr. Fox has testified to the issues to date or not.

Division Two accepted special action jurisdiction and vacated the judge’s order. The court noted that although the scope of discovery is expansive for expert witnesses, Ariz. R. Civ. Pro. 26(b)(4) “distinguishes sharply between testimonial and consulting experts.” Pursuant to that rule, discovery from consulting experts is prohibited except “upon a showing of exceptional circumstances.” The majority approach is that when a party changes its expert’s designation from “testifying expert” to “non-testifying” expert under Rule 26(b)(4), discovery by the other party is limited to the restriction set forth for non-testifying experts. This remains true even where, as here, the expert has testified at a pretrial proceeding on issues subsequently resolved by stipulation.

The court noted, however, that its holding was limited to the facts before it, and “do[es] not suggest that work product protection may always be restored by withdrawing a witness designation, even after an expert has testified about preliminary matters,” because “the subjects of pretrial testimony might not always be as readily segregated from trial issues as they are here.”

Chief Judge Pelander wrote the opinion; Judge Howard and Judge Vasquez concurred.