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Monday, April 30, 2007
Veronica Antone v. Greater Arizona Auto Auction, Inc. (04/20/2007): Division Two Holds that Auction Facility Is Not A Seller Subject to Arizona’s Strict Liability Under Arizona’s Product Liability Statutes
GAAA, an automobile auction facility, auctioned a truck belonging to Jim Click Ford to Truck Stop, Inc., which then sold the vehicle to the Antones. The Antones were in a motor vehicle accident and filed a personal injury accident against Jim Click Ford, GAAA, and Truck Stop. GAAA filed a motion for partial summary judgment on the Antones’ strict liability claim. After a hearing, the trial court granted GAAA’s motion. The Antone’s appealed, raising the issue of whether GAAA is a seller under Arizona’s product liability statutes and is therefore subject to strict liability if it sells a defective and unreasonably dangerous product.
Judge Vasquez, writing for a unanimous panel, affirmed the trial court’s decision that GAAA is not a seller under A.R.S. § 12-681(9). The court rejected the Antone’s position that strict liability applies to GAAA because it “participates in the chain of distribution,” noting that GAAA never interacted with an ultimate consumer, at no time took title to or sold the vehicle, and sold the vehicles “as is,” without performing any repairs to the vehicle. Instead, the court found that GAAA provides a service of facilitating sales transactions of used vehicles between commercial buyers and sellers. The court declined GAAA’s request that the court adopt Restatement (Third) of Torts: Products Liability § 20, noting that the resolution of the case rested on settled principles of Arizona law.
GAAA, an automobile auction facility, auctioned a truck belonging to Jim Click Ford to Truck Stop, Inc., which then sold the vehicle to the Antones. The Antones were in a motor vehicle accident and filed a personal injury accident against Jim Click Ford, GAAA, and Truck Stop. GAAA filed a motion for partial summary judgment on the Antones’ strict liability claim. After a hearing, the trial court granted GAAA’s motion. The Antone’s appealed, raising the issue of whether GAAA is a seller under Arizona’s product liability statutes and is therefore subject to strict liability if it sells a defective and unreasonably dangerous product.
Judge Vasquez, writing for a unanimous panel, affirmed the trial court’s decision that GAAA is not a seller under A.R.S. § 12-681(9). The court rejected the Antone’s position that strict liability applies to GAAA because it “participates in the chain of distribution,” noting that GAAA never interacted with an ultimate consumer, at no time took title to or sold the vehicle, and sold the vehicles “as is,” without performing any repairs to the vehicle. Instead, the court found that GAAA provides a service of facilitating sales transactions of used vehicles between commercial buyers and sellers. The court declined GAAA’s request that the court adopt Restatement (Third) of Torts: Products Liability § 20, noting that the resolution of the case rested on settled principles of Arizona law.
Posted by azapp @ Mon, Apr 30, 2007
Fulton Homes Corp. v. BBP Concrete (4/24/07): Party Filing Third Party Complaint For Indemnification That Stipulated To Dismiss Complaint After Plaintiffs Clarified Basis for Liability Held Liable For Attorneys’ Fees In Trial Court and In an Appeal Challenging the Fee Award.
In connection with a construction defect action against it, Fulton filed a third-party complaint against BBP and Trojan, the concrete subcontractors for the construction project, alleging that they had a contractual duty to defend and indemnify Fulton if the court awarded damages arising from BBP’s or Trojan’s concrete installation. After the Plaintiffs stated that the basis for Fulton’s liability had to do only with design defects, rather than installation problems, Fulton stipulated to dismiss BBP and Trojan from the action. Trojan and BBP then moved for attorneys’ fees pursuant to Arizona Revised Statutes section 12-341.01 (2003). The court awarded each of them $6,054.75. Fulton appealed.
Judge Irvine, writing for a unanimous panel, upheld the award of attorneys’ fees and awarded BBP and Trojan attorneys fees and costs on appeal. The panel held that the trial court did not abuse its discretion in awarding attorneys’ fees to BBP and Trojan. “Assuming that Fulton’s third-party complaint was entirely proper under Rule 14 and that Fulton did not delay dismissing the complaint for even one minute longer than necessary, that fact would not protect Fulton from a fee award under A.R.S. § 12-341.01.”
The court found that BBP and Trojan were the prevailing parties on appeal and were entitled to an award of costs and reasonable attorneys’ fees on appeal.
In connection with a construction defect action against it, Fulton filed a third-party complaint against BBP and Trojan, the concrete subcontractors for the construction project, alleging that they had a contractual duty to defend and indemnify Fulton if the court awarded damages arising from BBP’s or Trojan’s concrete installation. After the Plaintiffs stated that the basis for Fulton’s liability had to do only with design defects, rather than installation problems, Fulton stipulated to dismiss BBP and Trojan from the action. Trojan and BBP then moved for attorneys’ fees pursuant to Arizona Revised Statutes section 12-341.01 (2003). The court awarded each of them $6,054.75. Fulton appealed.
Judge Irvine, writing for a unanimous panel, upheld the award of attorneys’ fees and awarded BBP and Trojan attorneys fees and costs on appeal. The panel held that the trial court did not abuse its discretion in awarding attorneys’ fees to BBP and Trojan. “Assuming that Fulton’s third-party complaint was entirely proper under Rule 14 and that Fulton did not delay dismissing the complaint for even one minute longer than necessary, that fact would not protect Fulton from a fee award under A.R.S. § 12-341.01.”
The court found that BBP and Trojan were the prevailing parties on appeal and were entitled to an award of costs and reasonable attorneys’ fees on appeal.
Posted by azapp @ Mon, Apr 30, 2007
Arizona Department of Economic Security v. Redlon (4/24/07): Division Two Finds State Employee Who Involuntarily Resigned Is Entitled to Appeal of Termination
Faced with an ultimatum to resign or be fired, Redlon submitted an involuntary resignation of her job at a state government agency. She was not informed that, by resigning, she would waive her right to an appeal of the charges against her to the Arizona State Personnel Board. She later filed an appeal with the Board, which ordered a hearing on the merits of her claim. The agency, however, filed suit in superior court, seeking a stay of the hearing and review of the Board’s decision to accept jurisdiction. The court stayed the hearing and ruled that the Board lacked jurisdiction because Redlon had not been dismissed but had instead resigned. Redlon appealed.
The Court of Appeals ruled that Redlon was entitled to a hearing because she had resigned under threat of dismissal and had not been informed that tendering a resignation would result in a waiver of her right to file an appeal of the charges against her. Redlon’s failure to timely file appeal was excused for good cause because the agency had declined to inform her of her rights to, or the deadlines for, an appeal. The agency’s claim that it would suffer prejudice from the late filing was not supported by evidence. The Court of Appeals reversed the trial court and remanded with instructions that the matter be referred back to the Board for a hearing on the merits.
Faced with an ultimatum to resign or be fired, Redlon submitted an involuntary resignation of her job at a state government agency. She was not informed that, by resigning, she would waive her right to an appeal of the charges against her to the Arizona State Personnel Board. She later filed an appeal with the Board, which ordered a hearing on the merits of her claim. The agency, however, filed suit in superior court, seeking a stay of the hearing and review of the Board’s decision to accept jurisdiction. The court stayed the hearing and ruled that the Board lacked jurisdiction because Redlon had not been dismissed but had instead resigned. Redlon appealed.
The Court of Appeals ruled that Redlon was entitled to a hearing because she had resigned under threat of dismissal and had not been informed that tendering a resignation would result in a waiver of her right to file an appeal of the charges against her. Redlon’s failure to timely file appeal was excused for good cause because the agency had declined to inform her of her rights to, or the deadlines for, an appeal. The agency’s claim that it would suffer prejudice from the late filing was not supported by evidence. The Court of Appeals reversed the trial court and remanded with instructions that the matter be referred back to the Board for a hearing on the merits.
Posted by azapp @ Mon, Apr 30, 2007
Friday, April 27, 2007
Lopez v. Cole (4/12/07): Division One Holds That a Parent’s Failure to Bring a Claim For Medical Expenses For an Injured Minor Child Within the Two-Year Statute of Limitations Does Not Constitute Consent to Recovery By the Child Such That the Claim Would Pass to the Minor Child.
Lopez, the Guardian Ad Litem for a minor child injured more than eight years prior, brought suit to recover for the child’s injuries and medical expenses. Defendants moved for summary judgment on the claim for medical expenses, arguing that such a claim belonged to the parents of the minor child and was time-barred by their failure to bring the claim within the two-year statue of limitations. The trial court granted partial summary judgment against Lopez on the question of medical expenses, and following a trial on the merits for damages, Lopez timely appealed.
On appeal, both sides conceded that Pearson & Dickerson Contractors Inc. v. Harrington, 60 Ariz. 354, 137 P.2d 381 (1943) controlled. In Pearson, the Arizona Supreme Court held that a claim for damages for the medical expenses of an injured minor child belongs to the parents and not the child, unless “the parents have consented to” recovery by the child. Lopez argued that the court should recognize consent by waiver to recovery by the minor child when parents fail to timely bring the medical expenses claim on their own behalf. The Court of Appeals rejected this argument, noting that consent and waiver are different legal concepts, the former operating as a type of assignment of the right, while the latter operates to relinquish the right entirely. Thus, the court declined to craft a new rule in which minor children would be permitted to pursue claims for medical expenses any time their parents failed to bring such a claim within the two-year statutory period.
The Court also rejected Lopez’s argument that the doctrine of necessaries provided the minor child with a right to sue for medical expenses. The doctrine of necessaries applies when a child himself is personally liable for medical expenses because his parents cannot afford to pay them. Lopez argued that because AHCCCS paid the medical expenses in question, and AHCCCS is entitled to a lien for those expenses, the minor child may personally owe a duty to reimburse AHCCCS. The Court declined to consider the application of this doctrine because Lopez had failed to show that AHCCCS had exercised its right to record a lien within the time-frame set forth by statute, and Lopez had failed to make any showing that the parents in this case were unable or unwilling to pay the medical expenses.
Judge Orozco authored the unanimous opinion, joined by Judge Johnsen and Judge Portley.
Lopez, the Guardian Ad Litem for a minor child injured more than eight years prior, brought suit to recover for the child’s injuries and medical expenses. Defendants moved for summary judgment on the claim for medical expenses, arguing that such a claim belonged to the parents of the minor child and was time-barred by their failure to bring the claim within the two-year statue of limitations. The trial court granted partial summary judgment against Lopez on the question of medical expenses, and following a trial on the merits for damages, Lopez timely appealed.
On appeal, both sides conceded that Pearson & Dickerson Contractors Inc. v. Harrington, 60 Ariz. 354, 137 P.2d 381 (1943) controlled. In Pearson, the Arizona Supreme Court held that a claim for damages for the medical expenses of an injured minor child belongs to the parents and not the child, unless “the parents have consented to” recovery by the child. Lopez argued that the court should recognize consent by waiver to recovery by the minor child when parents fail to timely bring the medical expenses claim on their own behalf. The Court of Appeals rejected this argument, noting that consent and waiver are different legal concepts, the former operating as a type of assignment of the right, while the latter operates to relinquish the right entirely. Thus, the court declined to craft a new rule in which minor children would be permitted to pursue claims for medical expenses any time their parents failed to bring such a claim within the two-year statutory period.
The Court also rejected Lopez’s argument that the doctrine of necessaries provided the minor child with a right to sue for medical expenses. The doctrine of necessaries applies when a child himself is personally liable for medical expenses because his parents cannot afford to pay them. Lopez argued that because AHCCCS paid the medical expenses in question, and AHCCCS is entitled to a lien for those expenses, the minor child may personally owe a duty to reimburse AHCCCS. The Court declined to consider the application of this doctrine because Lopez had failed to show that AHCCCS had exercised its right to record a lien within the time-frame set forth by statute, and Lopez had failed to make any showing that the parents in this case were unable or unwilling to pay the medical expenses.
Judge Orozco authored the unanimous opinion, joined by Judge Johnsen and Judge Portley.
Posted by azapp @ Fri, Apr 27, 2007
Multari v. Gress (4/24/2007): A Developer May Not Use Private Deed Restrictions to Circumvent Applicable Uniform Covenants and Restrictions
When the Gresses tried to build a "small accessory building" on their property in Ocotillo Hills, their neighbors, the Multaris, objected, citing a private deed restriction recorded in 1976 that prohibited any structure smaller than 1400 square feet or taller than 13 feet. When the Gresses persisted in constructing the building, citing their right, under the 1973 Uniform Covenants to build, without restriction, "residences and accessory buildings" on their property, the Multaris sued. They sought a declaration that the 1976 Deed Restriction is valid and enforceable. The trial court granted the Multaris cross motion for summary judgment.
On appeal, the Gresses argued that the 1973 Covenants permitted their construction because the 1973 Covenants could not be modified without an agreement by 2/3 of the owners of the lots. Because the 1976 Deed Restrictions altered the 1973 Covenants by taking away the unfettered right to construction accessory buildings, but were adopted without the agreement of 2/3 of the owners, the 1973 Covenants trumped the later deed restrictions. The appellate court agreed, holding that to permit developers to circumvent original covenants and restrictions through adoption of private deed restrictions "would destroy the right to rely on restrictive covenants and completely upset the orderly plan of the subdivision." The court noted, however, that its decision does not address the scenario in which a private property owner, instead of a developer acting on multiple lots, conveys property subject to certain private deed restrictions.
Opinion by Judge Barker, in which Presiding Judge Norris and Judge Thompson concurred.
When the Gresses tried to build a "small accessory building" on their property in Ocotillo Hills, their neighbors, the Multaris, objected, citing a private deed restriction recorded in 1976 that prohibited any structure smaller than 1400 square feet or taller than 13 feet. When the Gresses persisted in constructing the building, citing their right, under the 1973 Uniform Covenants to build, without restriction, "residences and accessory buildings" on their property, the Multaris sued. They sought a declaration that the 1976 Deed Restriction is valid and enforceable. The trial court granted the Multaris cross motion for summary judgment.
On appeal, the Gresses argued that the 1973 Covenants permitted their construction because the 1973 Covenants could not be modified without an agreement by 2/3 of the owners of the lots. Because the 1976 Deed Restrictions altered the 1973 Covenants by taking away the unfettered right to construction accessory buildings, but were adopted without the agreement of 2/3 of the owners, the 1973 Covenants trumped the later deed restrictions. The appellate court agreed, holding that to permit developers to circumvent original covenants and restrictions through adoption of private deed restrictions "would destroy the right to rely on restrictive covenants and completely upset the orderly plan of the subdivision." The court noted, however, that its decision does not address the scenario in which a private property owner, instead of a developer acting on multiple lots, conveys property subject to certain private deed restrictions.
Opinion by Judge Barker, in which Presiding Judge Norris and Judge Thompson concurred.
Posted by azapp @ Fri, Apr 27, 2007
Thursday, April 19, 2007
Polanco v. Industrial Comm’n of Arizona (03/29/07): Division Two Holds That Subjective Pain Alone, Unaccompanied by an Objective Physical Change, Cannot Support a Petition to Reopen a Worker’s Compensation Claim
Mont Polanco injured his back in September 2001 in the course and scope of his employment. He received worker’s compensation benefits and his case was closed in February 2003. Polanco continued to receive treatment for his back injury, including epidural injections for pain, that allowed him to work full-time. In August 2004, he was in an industrial motor vehicle accident. The epidurals became less effective, and in late 2005, Polanco’s physician suggested Polanco have a spinal cord stimulator implanted to control his pain.
Polanco filed a petition to reopen his claim in November 2005, which the insurer denied. At a subsequent hearing on the petition, Polanco’s physician testified that scarring in Polanco’s spine had worsened and was causing more pain. He also testified that a radiologist’s report that he had reviewed demonstrated some changes in the scar tissue near Polanco’s spinal nerve roots. Polanco’s physician did not review the MRI films that the radiologist reviewed in making his report. Another physician, Dr. Schroeder, testified that he had reviewed the MRI films and that the images contained “no objective evidence of a new, additional or previously undiscovered condition” or of any “worsening between 2002 and 2006 of [Polanco’s] scar tissue.”
After the hearing, the ALJ denied Polanco’s petition to reopen his claim, finding that there were no objective changes shown on the MRI films. A statutory special action followed. Division Two, reviewing the ALJ’s factual findings deferentially and constitutional issues de novo, affirmed the ALJ’s decision. The Court began by laying out worker’s compensation principles.
A.R.S § 23-1061(H) governs the reopening of workers’ compensation claims and requires an employee to prove the existence of a “new, additional or previously undiscovered temporary or permanent condition” to reopen a claim. Section 23-1061(H) also provides that a claim “shall not be reopened because of increased pain if the pain is not accompanied by a change in objective physical findings.” For a worker to be compensated for an injury, he must prove both legal and medical causation; legal causation concerns whether the injury arose out the employment, and medical causation usually requires expert medical testimony that the industrial accident caused the injury.
Polanco argued that the objective physical findings requirement in Section 23-1061(H) was unconstitutional as applied to his case. He reasoned that Section 23-1061(H) impermissibly limits legal causation because the Arizona Constitution “requires compensation for all workers – not just those who can provide objective evidence of subjective complaints.” The Court disagreed, noting that while the legislature may not define legal causation in a way that conflicts with Article XVIII, Section 8 of the Arizona Constitution [link], the legislature has latitude to enact legislation affecting medical causation. Although the Constitution and the worker’s compensation statutes do not define “injury,” case law has held that an injury occurs when exertion leads to “something actually breaking or letting go with an obvious sudden organic or structural change in the body” (emphasis added).
The Court held that “subjective pain does not fall under Arizona’s definition of an injury. Therefore, because subjective pain is not an injury within the meaning of Art. XVIII, § 8 . . . Section 23-1061(H) does not unconstitutionally eliminate it as a type of compensable injury. And the objective physical findings requirement of Section 23-1061(H) does not address either medical or legal causation. The requirement instead makes clear that subjective pain alone cannot support a petition to reopen a claim. Rather, subjective pain must be directly related to the degree of impairment resulting from an objective physical change.”
Judge Brammer authored the opinion, with Judge Eckerstrom, Presiding Judge, and Judge Espinosa concurring.
Mont Polanco injured his back in September 2001 in the course and scope of his employment. He received worker’s compensation benefits and his case was closed in February 2003. Polanco continued to receive treatment for his back injury, including epidural injections for pain, that allowed him to work full-time. In August 2004, he was in an industrial motor vehicle accident. The epidurals became less effective, and in late 2005, Polanco’s physician suggested Polanco have a spinal cord stimulator implanted to control his pain.
Polanco filed a petition to reopen his claim in November 2005, which the insurer denied. At a subsequent hearing on the petition, Polanco’s physician testified that scarring in Polanco’s spine had worsened and was causing more pain. He also testified that a radiologist’s report that he had reviewed demonstrated some changes in the scar tissue near Polanco’s spinal nerve roots. Polanco’s physician did not review the MRI films that the radiologist reviewed in making his report. Another physician, Dr. Schroeder, testified that he had reviewed the MRI films and that the images contained “no objective evidence of a new, additional or previously undiscovered condition” or of any “worsening between 2002 and 2006 of [Polanco’s] scar tissue.”
After the hearing, the ALJ denied Polanco’s petition to reopen his claim, finding that there were no objective changes shown on the MRI films. A statutory special action followed. Division Two, reviewing the ALJ’s factual findings deferentially and constitutional issues de novo, affirmed the ALJ’s decision. The Court began by laying out worker’s compensation principles.
A.R.S § 23-1061(H) governs the reopening of workers’ compensation claims and requires an employee to prove the existence of a “new, additional or previously undiscovered temporary or permanent condition” to reopen a claim. Section 23-1061(H) also provides that a claim “shall not be reopened because of increased pain if the pain is not accompanied by a change in objective physical findings.” For a worker to be compensated for an injury, he must prove both legal and medical causation; legal causation concerns whether the injury arose out the employment, and medical causation usually requires expert medical testimony that the industrial accident caused the injury.
Polanco argued that the objective physical findings requirement in Section 23-1061(H) was unconstitutional as applied to his case. He reasoned that Section 23-1061(H) impermissibly limits legal causation because the Arizona Constitution “requires compensation for all workers – not just those who can provide objective evidence of subjective complaints.” The Court disagreed, noting that while the legislature may not define legal causation in a way that conflicts with Article XVIII, Section 8 of the Arizona Constitution [link], the legislature has latitude to enact legislation affecting medical causation. Although the Constitution and the worker’s compensation statutes do not define “injury,” case law has held that an injury occurs when exertion leads to “something actually breaking or letting go with an obvious sudden organic or structural change in the body” (emphasis added).
The Court held that “subjective pain does not fall under Arizona’s definition of an injury. Therefore, because subjective pain is not an injury within the meaning of Art. XVIII, § 8 . . . Section 23-1061(H) does not unconstitutionally eliminate it as a type of compensable injury. And the objective physical findings requirement of Section 23-1061(H) does not address either medical or legal causation. The requirement instead makes clear that subjective pain alone cannot support a petition to reopen a claim. Rather, subjective pain must be directly related to the degree of impairment resulting from an objective physical change.”
Judge Brammer authored the opinion, with Judge Eckerstrom, Presiding Judge, and Judge Espinosa concurring.
Posted by azapp @ Thu, Apr 19, 2007
Wednesday, April 11, 2007
NEWS COVERAGE: A recent article in the Arizona Capitol Times discusses the Arizona Supreme Court decision that both businesses and people, cited for violating certain city ordinances, are entitled to get their costs paid if they win the case.
Posted by azapp @ Wed, Apr 11, 2007
Gorman v. State (4/5/07): Court Holds That Under Probate Code's Provision for Paying Contingent Claims by an Estate, "Allow[ing] or Establish[ing]" a Claim Does Not Make a Claim Certain
In January 2002, the Arizona Department of Environmental Quality sent a letter to the estate of William Headstream ordering the estate to pay a claim of $2.2 million to the State for the cost of closing two underground storage tanks and cleaning up the contamination caused by the tanks. The letter explained that the "exact amount of the State of Arizona's claim is currently unknown" and made no reference to penalties proscribed by statute for failure to properly close the tanks and take corrective action. The estate did not deny the claim or otherwise respond.
In May 2005, the State filed an application for allowance of the claim, seeking $2.2 million or an order directing the estate to provide future payment for closing the tanks and cleaning up the site. The estate objected, noted that among other objections, the claim remained unliquidated, citing the "estimate" provided in the State's 2002 claim letter. The State's reply attached an itemized list of costs -- including a line item for remediation "unknowns" and describing the costs as "estimates." (The reply further argued that the State was entitled to more than $175 million in statutory penalties.) The court allowed the State's claim, and the estate appealed.
The appellate court held that the claim for corrective action remained unliquidated by the State's own admissions. The court rejected the State's argument that the probate court could and did fix the amount of claim under A.R.S. 14-3810(A), which permits a "contingent or unliquidated claim" that "becomes due or certain before the distribution of the estate" and "has been allowed or established by a proceeding," to be "paid in the same manner as presently due and absolute claims of the same class." The court rejected the State's suggestion that "establishment of the claim" refers to the fixing the amount of the claim, reading the statute to require an allowance or establishment of the fact of the claim, in addition to establishing the claim's certainty (liquidation). Though the fact of the claim had been established by the estate's failure to timely deny the claim, the amount of the claim remained unliquidated and subject to challenge by the estate.
(The court also found that the absence of any reference to statutory penalties in the 2002 claim letter precluded the State from recovering penalties, rejecting the State's argument that mere reference to the statute preserved the claim.)
Judge Irvine authored the opinion in which Presiding Judge Maurice Portley and Judge Kessler concurred.
In January 2002, the Arizona Department of Environmental Quality sent a letter to the estate of William Headstream ordering the estate to pay a claim of $2.2 million to the State for the cost of closing two underground storage tanks and cleaning up the contamination caused by the tanks. The letter explained that the "exact amount of the State of Arizona's claim is currently unknown" and made no reference to penalties proscribed by statute for failure to properly close the tanks and take corrective action. The estate did not deny the claim or otherwise respond.
In May 2005, the State filed an application for allowance of the claim, seeking $2.2 million or an order directing the estate to provide future payment for closing the tanks and cleaning up the site. The estate objected, noted that among other objections, the claim remained unliquidated, citing the "estimate" provided in the State's 2002 claim letter. The State's reply attached an itemized list of costs -- including a line item for remediation "unknowns" and describing the costs as "estimates." (The reply further argued that the State was entitled to more than $175 million in statutory penalties.) The court allowed the State's claim, and the estate appealed.
The appellate court held that the claim for corrective action remained unliquidated by the State's own admissions. The court rejected the State's argument that the probate court could and did fix the amount of claim under A.R.S. 14-3810(A), which permits a "contingent or unliquidated claim" that "becomes due or certain before the distribution of the estate" and "has been allowed or established by a proceeding," to be "paid in the same manner as presently due and absolute claims of the same class." The court rejected the State's suggestion that "establishment of the claim" refers to the fixing the amount of the claim, reading the statute to require an allowance or establishment of the fact of the claim, in addition to establishing the claim's certainty (liquidation). Though the fact of the claim had been established by the estate's failure to timely deny the claim, the amount of the claim remained unliquidated and subject to challenge by the estate.
(The court also found that the absence of any reference to statutory penalties in the 2002 claim letter precluded the State from recovering penalties, rejecting the State's argument that mere reference to the statute preserved the claim.)
Judge Irvine authored the opinion in which Presiding Judge Maurice Portley and Judge Kessler concurred.
Posted by azapp @ Wed, Apr 11, 2007
Thursday, April 5, 2007
Liberty Insurance Underwriters, Inc. v. The Weitz Company, LLC (3/27/07): Division One Holds That Builder’s Risk Insurance Policy Constitutes Inland Marine Insurance and Is Thus Exempt from Arizona Standard Fire Policy Requirements
A fire destroyed a student dormitory under construction in Phoenix. An insurance company (“Insurer”) filed a declaratory judgment action seeking a declaration that its policy did not cover the damage because the insured (“Insured”) had failed to abide by terms of three warranty endorsements that required specified fire-prevention measures at the job site. Insured counterclaimed for an order that the policy covered the damage, and argued that the warranty endorsements were unenforceable because contrary to the terms of the Arizona Standard Fire Policy mandated by A.R.S. § 20-1503(A). The superior court ruled in favor of Insured’s motion for summary judgment. Insurer appealed, contending that the builder’s risk policy at issue was an “inland marine” insurance policy, and thus, under A.R.S. § 20-1501, exempt from the requirements of the Arizona Standard Fire Policy.
The Arizona Court of Appeals overturned the summary judgment. The Court concluded as a matter of law, based on the language of the policy and the definitions of “marine insurance” at A.R.S. § 20-255 and A.A.C. R20-6-602, that the policy constituted inland marine insurance within the meaning of Arizona law. The policy therefore was exempt from the requirements of the Arizona Standard Fire Policy, and the warranty endorsements that Insured was alleged to have breached were not void. The Court declined to segregate for distinct treatment the fire coverage portion of the policy because to do so would render meaningless the exemption at A.R.S. § 20-1501 of inland marine coverages (including fire) from the requirements of the Arizona Standard Fire Policy. The Court remanded to the superior court for further proceedings.
Judge Johnsen wrote the opinion; Judges Timmer and Norris concurred.
A fire destroyed a student dormitory under construction in Phoenix. An insurance company (“Insurer”) filed a declaratory judgment action seeking a declaration that its policy did not cover the damage because the insured (“Insured”) had failed to abide by terms of three warranty endorsements that required specified fire-prevention measures at the job site. Insured counterclaimed for an order that the policy covered the damage, and argued that the warranty endorsements were unenforceable because contrary to the terms of the Arizona Standard Fire Policy mandated by A.R.S. § 20-1503(A). The superior court ruled in favor of Insured’s motion for summary judgment. Insurer appealed, contending that the builder’s risk policy at issue was an “inland marine” insurance policy, and thus, under A.R.S. § 20-1501, exempt from the requirements of the Arizona Standard Fire Policy.
The Arizona Court of Appeals overturned the summary judgment. The Court concluded as a matter of law, based on the language of the policy and the definitions of “marine insurance” at A.R.S. § 20-255 and A.A.C. R20-6-602, that the policy constituted inland marine insurance within the meaning of Arizona law. The policy therefore was exempt from the requirements of the Arizona Standard Fire Policy, and the warranty endorsements that Insured was alleged to have breached were not void. The Court declined to segregate for distinct treatment the fire coverage portion of the policy because to do so would render meaningless the exemption at A.R.S. § 20-1501 of inland marine coverages (including fire) from the requirements of the Arizona Standard Fire Policy. The Court remanded to the superior court for further proceedings.
Judge Johnsen wrote the opinion; Judges Timmer and Norris concurred.
Posted by azapp @ Thu, Apr 5, 2007
