AZAPP Blog

Hamblin v. State (9/26/2006): Division One Elaborates on Causation Limits in Tort Cases Against Public Entities

Russell Hamblin was shot and killed by Roy Salinas while the Salinas was on probation for assaulting a corrections officer. Hamblin's estate sued the Probation Department, alleging that the Department breached its duty to supervise Salinas and was grossly negligent and willfully indifferent for failing to arrest Salinas for probation violations. The trial court granted summary judgment to the Probation Department on the grounds that the Hamblins presented insufficient evidence of causation and insufficient evidence of indifference exhibited by the Department. The Hamblins appealed.

In an unanimous memorandum decision, the appellate court affirmed on the grounds that the Hamblins could not satisfy both prongs of the causation requirement -- causation in fact and proximate cause. Even if the Department's failure to supervise or arrest Salinas was a case in fact of Hamblin's death, the court determined that it would be "untenable to hold probation officers liable for all crimes committed by a person on probation." Explaining that proximate cause requires a "natural and continuous sequence, unbroken by any efficient intervening cause," the court held that the exercise of probation officer's statutorily authorized discretion to bring probationers into court would be derogated if the exercise of such discretion was ruled a proximate cause of a subsequent tort.

Judge Thompson authored the opinion, in which Presiding Judge Winthrop and Judge Lankford concurred.

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 65 petitions for review, granting one, from Division One’s decision in Gipson v. Kasey, which was the subject of this posting. The Court also granted a petition for special action the Division One case of Haywood Securities v. Honorable Erlich/Barker et al., No. 1 CA-CV 05-0457.

In Re: MH 2005-001290 (9/14/2006): Division One Holds That Court May Give Notice of Subject’s Release From Involuntary Mental Health Treatment Even When Subject Has Not Been Declared a “Danger to Others ”

After the appellant made statements threatening to harm himself and members of his family, petitions for involuntary court-ordered mental health evaluation and court-ordered treatment were filed. The superior court held a hearing, determined that appellant is persistently or acutely disabled as a result of a mental disorder, and ordered that he receive treatment. Three days later, the family members whom appellant had threatened filed petitions asking that they be given notice prior to appellant’s release from treatment. Although A.R.S. § 36-541.01(B), the statute cited by the family members, provided for notice only when the subject of treatment has been declared a “danger to others,” the court invoked its discretion under A.R.S. § 36-509(A)(3) to grant the requests for notice.

Division One affirmed. The Court first noted that although appellant’s release from treatment had mooted the issue, the issue was “capable of repetition yet evading review,” and therefore could be addressed. Appellant argued that allowing A.R.S. § 36-509(A)(3) to authorize notice in these circumstances effectively rendered A.R.S. § 36-541.01(B) “purposeless.” The Court disagreed, noting that the two statutes “are distinct and serve separate purposes.” Observing that the nature of the statements the appellant had made was extremely threatening. The Court concluded that the trial court had not abused its discretion in deciding to give appellant’s family members notice of his release from treatment.

The decision was authored by Judge Portley and joined by Judges Norris and Snow.

SW Transmission Coop. v. Ariz. Corp. Comm’n (9/12/2006): Division One Holds Non- Profit Wholesale Rural Electric Transmission Coop. is a Public Service Corporation

Southwest Transmission Cooperative, Inc. (“SWTC”) sought a declaration from the Arizona Corporation Commission that it was not a public service corporation, and therefore not subject to public regulation under Article 15, Section 3 of the Arizona Constitution. The Commission disagreed. SWTC sought judicial review, and the superior court affirmed the Commission. On appeal by SWTC, the Court of Appeals affirmed the superior court.

The Court of Appeals first found that SWTC met the literal language of Article 15, Section 2, defining a public service corporation as a corporation other than municipal “engaged in furnishing gas, oil or electricity for light, fuel, or power.” Next, it concluded that SWTC’s business and activity were such “as to make its rates, charges, and methods of operations a matter of public concern” under the eight factors articulated in Natural Gas Serv. Co. v. Serv-Yu Coop., 70 Ariz. 235, 219 P.2d 324 (1950), even though SWTC does not claim monopoly rights, does not accept all requests for service, and provides service by contracts. The Court found that SWTC “provides and transmits a commodity in which the public has a vital interest,” a fact “no less true because SWTC is one step removed from providing electricity to the consumer directly.”

Judge Orozco authored the opinion; Judges Kessler and Gemmill concurred.

The Forty-seventh Legislature of the State of Arizona v. Janet Napolitano (9/12/2006): Supreme Court Holds That Governor Exceeded Her Constitutional Authority in Exercising the Item Veto

In 1996, the Legislature granted State employees a pay raise. Section 5 of the legislation also exempted certain employees hired after December 31, 2006, from the State merit system. The Governor vetoed Section 5, explaining that the item “would have created an additional expense to the State” because exempt employees accrue leave differently than merit system employees. In response, the Legislature authorized an action to challenge the constitutional validity of the Governor’s item veto of Section 5. The Court determined the case presented legal, not political, issues, that the Legislature had standing to bring the action, and that it would exercise its discretion to consider the dispute.

Turning to the merits, the Court noted that Arizona’s Constitution limits the Governor’s veto power to “items of appropriation.” An appropriation is “the setting aside from public revenue of a certain sum of money for a specified object . . . .” Section 5, the Court explained, does not, on its face, set aside any sum, and moreover did not indirectly appropriate monies by specifying any other fund from which payment for accrued leave or payment to exempt employees could be made. Thus, although the employment statutes may obligate the State to make certain payments, they do not set aside any sum of money from the public revenue, and thus cannot be regarded as making an appropriation. Because Section 5 is not an appropriation, the Governor’s item veto of that provision exceeded her constitutional authority. Section 5 should be given full force and effect.

Kay S. v. Mark S. (9/07/2006) : Division One Holds That Lawyer's Service as Judge Pro Tem Created Appearance of Impropriety in Client's Matter Pending in Same Division in Which Lawyer Served

Steven Everts was counsel for Father in this dissolution proceeding in Maricopa County Superior Court. Everts had, both before and during the pendency of this proceeding, served as a judge pro tempore in the division of the superior court in which this proceeding was heard. His service as a judge pro tem included Everts filling in for Judge Oberbillig, the judge before whom this dissolution proceeding was heard. After learning of Everts' service, Mother moved to disqualify Judge Oberbillig and to vacate his prior determinations. Presiding Judge Armstrong denied the motions. As to whether Everts' service in Judge Oberbillig's court created an appearance of impropriety under Ariz. R. Sup. Ct. 81, Division One first considered applications D(3) and D(4) of that Rule. The Court held that neither of these applications, which govern a lawyer's service as a judge pro tem, conclusively resolved whether a lawyer can, as here, serve repeatedly but at irregular intervals, as a pro tem judge in the specialized division of a court in which he practices. The Court thus turned to Rule 81, Canon 3 (E)(1)(a), asking whether Judge Oberbillig's impartiality, under the circumstances, "might reasonably be questioned." The Court held that the unique circumstances of the case allowed for reasonable questioning of Judge Oberbillig's impartiality and thus the Judge should have been disqualified. Having concluded that the judge should have been disqualified, the Court then concluded that the circumstances required that it vacate Judge Oberbillig's judgment. Applying State v. Salazar, 182 Ariz. 604 (App. 1995), the Court here determined that the critical inquiry was whether there was a risk of injustice to the parties. The Court reasoned that the appropriate test of the risk is whether the challenged decisions would have been made by a judge whose partiality was not reasonably subject to question. The Court went on to note that once an appearance of impropriety has been established, the burden shifts to the party defending the judgment to show that the outcome would have been the same before such a judge. Here, the Court concluded that the record did not support a conclusion that the nuanced, difficult decisions made by Judge Oberbillig would have been substantially the same before a judge whose impartiality was unquestioned. Thus, the Court vacated the judgment and remanded with instructions to the superior court.

Judge Snow authored the opinion in which Presiding Judge Ehrlich and Judge Gemmill joined.

Mago v. Mercedes-Benz (9/07/2006): Division One Holds That Lessee Is Not Entitled to Recover Under Arizona’s “Lemon Law” But Can Recover Under the Magnuson Moss Warranty Act Where the Lessee Acquired the Vehicle After a Sale From a Dealer to a Lessor

Mago leased a new Mercedes-Benz E430 (“the car”) from a dealer (Phoenix Motor Company), that simultaneously sold the vehicle and assigned the lease to a lessor (Mercedes-Benz Credit Corporation). The car was manufactured by Mercedes-Benz U.S.A. Inc. The manufacturer issued a written warranty that covered the car for four years or fifty thousand miles, and the warranty rights were assigned to Mago as part of the lease agreement. The vehicle exhibited numerous problems that were never resolved, and Mago eventually revoked his acceptance of the car. The manufacturer refused the revocation and declined to pay damages. Mago filed a complaint in superior court seeking remedies under A.R.S. § 44-1261 et seq. (“Lemon Law”) and the Magnuson Moss Warranty Act, 15 U.S.C. §§ 2301-2312 (“Warranty Act”). The manufacturer moved for summary judgment, arguing that the statutes do not apply to leased vehicles. The trial court agreed, finding that Mago, as a lessee, is not a “consumer” as used in either the Lemon Law or the Warranty Act.

The Court of Appeals reversed, based on its then-recent decision in Parrot v. DaimlerChrysler Corp., 210 Ariz. 143, 108 P.3d 922 (App. 2005), which held that a lessee may seek remedies under either statute because a lessee constitutes a “consumer” under both statutes. The Supreme Court, however, vacated that decision, and remanded the Mago case for reconsideration in light of its holding in Parrot v. DaimlerChrysler Corp., 212 Ariz. 255, 130 P.3d 530 (2006).

In Mago, the Court of Appeals held that the Supreme Court’s decision in Parrot compelled a conclusion that Mago does not possess any remedies under the Lemon Law, reasoning that as a lessee, Mago does not hold title to the car and therefore has no title to transfer to the manufacturer. Transfer of title is necessary in order to obtain, in return, a replacement vehicle or refund as contemplated by the Lemon Law. However, the Court found that Parrot does not dictate resolution of the Warranty Act issues. Unlike the situation examined by the Supreme Court in Parrot, the record here “reflects a second sale – one from Dealer to Lessor.” Thus, the Court had to decide (1) whether that sale constituted a “qualifying sale” under the Warranty Act, and if so, (2) whether Mago demonstrated he is a “consumer” as defined by the Warranty Act.

The Court held that “a qualifying sale must only occur sometime within the sequence of events that ultimately places the consumer product with the consumer,” and because Mago produced evidence that the sale from Dealer to Lessor led to his lease of the car, his status as a lessee (rather than a buyer) did not preclude his seeking relief under the Warranty Act. The Court also held that Mago constitutes a “consumer” under the Warranty Act. The Warranty Act defines a consumer as, inter alia, one who “is transferred [a consumer product] during the duration of . . . [a] written warranty.” 15 U.S.C. § 2301(3). The Court found that “transfer,” which is not defined in the Act, should be given its plain meaning and should apply to a change in possession and control of the product, but does not require a change is asset ownership. Thus Mago’s lease of the car qualifies as a transfer under the Warranty Act. The Court further found that the transfer occurred during the applicability of the written warranty. Thus, the Court held that Mago could seek relief under the Warranty Act and reversed the trial court’s grant of summary judgment on this count.

Judge Timmer authored the opinion; Judge Winthrop and Judge Barker concurred.

Phelps Dodge v. El Paso Corporation (9/07/2006): Division One Affirms That Superior Court Lacked Subject Matter Over Lawsuit Indirectly Attacking FERC Decision

Phelps Dodge filed a complaint in 2001 with the Federal Energy Regulatory Commission (FERC) under the Natural Gas Act (NGA), claiming that El Paso Natural Gas violated the NGA. FERC rejected the claim and the District of Columbia Court of Appeals affirmed FERC’s orders. Phelps Dodge subsequently sued El Paso in Maricopa County Superior Court alleging various claims arising out of state statutes. El Paso moved to dismiss on multiple grounds and the trial court granted the motion on the basis of federal pre-emption. This appeal followed. Judge Portley, writing for a unanimous panel, noted that Section 19(b) of the NGA precludes de novo litigation between the parties of all issues inhering to the controversy. The Court found that that Phelps Dodge’s claims were an impermissible indirect challenge to the earlier FERC decision, depriving the superior court of subject matter jurisdiction to hear Phelps Dodge’s lawsuit.

Judge Portley wrote the opinion, Judges Snow and Winthrop concurred.

State Farm Insurance Companies v. Premier Manufactured Systems, Inc. (8/29/2006): Division One Holds That the Principles of Comparative Fault Established In A.R.S. § 12-2506 Are Applicable To the Participants In the Chain of Distribution of a Defective Product In a Strict Products Liability Case.

State Farm filed a strict products liability case against the manufacturer and distributor (and others not relevant to the appeal) of a defective water filtration system that had leaked and flooded the home of an insured. State Farm received a default judgment against the manufacturer, but the distributor answered and alleged that the trier of fact would be required to determine the comparative fault of all parties and other persons. State Farm moved for summary judgment on this issue, asserting that all entities in the chain of distribution in a strict products liability action are jointly and severally liable. The Superior Court denied State Farm’s motion, holding that the comparative fault principles set forth in A.R.S. § 12-2506 applied to strict products liability cases and that entities in the chain of distribution were severally at fault. State Farm timely appealed.

The Court of Appeals affirmed the trial court’s ruling. The Court acknowledged the difficulty of grafting a “faultless” strict products liability system onto a fault allocation system; however, the Court held that “the plain language of A.R.S. § 12-2506 requires the fault of all members of the distribution chain to be compared and allocated.” In so holding, the Court of Appeals rejected State Farm’s argument that the legislature had only intended to eliminate joint liability in those situations in which the negligence of multiple tortfeasors “coalesced to form a single injury.” See Wiggs v. City of Phoenix, 198 Ariz. 367, 371 10 P.3d 625, 629 (2000). In Wiggs, the Supreme Court declined to apply comparative fault to an employer vicarious liability case. Although the Court of Appeals recognized that the justifications for imposing vicarious liability and for imposing strict liability on the members of the chain of distribution of a defective product were similar, the Court declined to extend the Wiggs analysis to strict products liability cases.

Judge Norris authored the unanimous opinion joined by Judge Sult and Judge Orozco.