AZAPP Blog

Ruesga v. Kindred Nursing Centers West (7/18/2007): Division Two Holds That A Wife Has Actual Agency Authority to Bind Her Husband to an Arbitration Agreement Even Without A Power of Attorney, Legal Guardianship, or His Express Authorization.

On November 10, 2003, Robert Ruesga was admitted to Desert life Rehabilitation and Care Center in a severely compromised state. At the time Robert was admitted, his wife Florentine Ruesga was given several admission documents including an Alternative Dispute Resolution (“ADR”) agreement that required disputes to proceed to binding arbitration and waived Robert’s right to a jury trial. Florentine signed the ADR agreement as Robert’s legal representative and brought this action against the hospital several months later.

The Court affirmed, holding that: (1) failure to request an evidentiary hearing on the existence of an agency relationship allows the Court to decide the issue on the record even where there are genuinely disputed factual issues; (2) sufficient evidence supported the trial court’s determination that Florentine had an implied actual agency relationship with her husband.

Practice Note: The court found that it lacked subject matter jurisdiction but exercised its discretion to treat the appeal as a petition for special action because there was no equally plain, speedy, or adequate remedy by appeal and some of the issues raised were purely legal.

Judge Pelander wrote for the unanimous panel. Judges Howard and Vasquez concurred.

Posted by azapp @ Tue, Jul 31, 2007

Town of Gilbert Prosecutor’s Office v. Downie (7/24/2007): Arizona Court of Appeals Division One Holds That The Amount Of Restitution Required For The Crime Of Contracting Without A License Is The Full Amount Of Payments Received From The Victim.

In Gilbert Municipal Court, Mitchell Michael Matykiewicz was convicted of contracting without a license for his work on a Gilbert residence. See A.R.S. §§ 32-1151, -1164. The victim-homeowners, therefore, were entitled to restitution. The municipal court held that the amount of restitution was the full amount that the homeowners had paid to Matykiewicz, notwithstanding the value of any improvements to their home or costs to Matykiewicz. On appeal, Judge Margaret Downie of the Maricopa County Superior Court vacated the restitution order and remanded for a new determination of the homeowners’ economic loss. The Town of Gilbert Prosecutor’s Office then filed this special action to preserve the restitution award.

The Arizona Court of Appeals accepted jurisdiction and granted the relief requested. The court concluded that State v. Wilkinson, 202 Ariz. 27, 39 P.3d 1131 (2002), at least implicitly mandated that the amount of restitution for contracting without a license was the full amount that the victims had paid to the defendant. Furthermore, notwithstanding the likelihood of a windfall to homeowners, the court justified its decision on deterrent and retributive grounds, noting the legislative intent to punish unlicensed contractors harshly.

Judge Hall dissented. He distinguished Wilkinson, noting the fact that it dealt with the inapposite issue of consequential loss. He also disagreed with the result because the majority’s holding would lead to windfalls for victims. Moreover, he noted that it would be unduly harsh on defendants and inconsistent with the reparative and rehabilitative purposes of restitution.

Judge Winthrop authored the opinion, which Judge Johnsen joined.

Posted by azapp @ Tue, Jul 31, 2007

Robson Ranch Quail Creek v. Pima County (7/13/07): Arizona Court of Appeals Division Two Holds That County Funding Mechanisms Adopted Under A.R.S. § 11-821 Must Satisfy the Statute’s “Reasonable Relationship” Requirement

Appellants sued Pima County, alleging that the County’s 2005 sewer connection fee ordinance violated the reasonable relationship requirement of A.R.S. § 11-821, and impaired the contractual relationship established in an existing agreement between the parties. The County moved for summary judgment, which the trial court granted. This appeal followed.

The Arizona Court of Appeals reversed in part and remanded the case. Based on the statute’s express mandate, the court held that “where a county adopts a funding mechanism identified under A.R.S. § 11-821(D)(4), that mechanism must ‘bear a reasonable relationship to the burden imposed on the county to provide additional necessary public facilities to the development.” The court found that Appellants presented sufficient evidence to raise a genuine issue of material fact concerning the sewer connection fees. The court rejected the impairment of contract claim, however, concluding that the parties’ agreement did not give rise to any expectations regarding how the County would use fee revenue.

Judge Howard authored the opinion; Judges Pelander and Vásquez concurred.

Posted by azapp @ Tue, Jul 31, 2007

Sun City Grand Community Association v. Maricopa County (07/26/07): Arizona Court of Appeals Division One Affirms That Public’s De Minimis Actual Use of Property Does Not Preclude “Common Area” Property Tax Valuation

The Tax Assessor qualified the Taxpayer’s clubhouse and surrounding property as “commercial property,” with an annual property tax of $130,611.42, rather than as a “common area,” which would have been subject to a lower tax rate of less than ten dollars. The Tax Assessor contended that the general public’s use of property disqualifies it as a “common area,” and instead makes it a commercial property. The Taxpayer filed a complaint and a motion for summary judgment in Arizona Tax Court regarding whether the property qualified for common area valuation. The trial court granted summary judgment to the Taxpayer. The Arizona Court of Appeals affirmed, relying on the plain language of A.R.S. § 42-13404 and the statute’s legislative history, and concluding that the public’s relatively de minimis actual use does not preclude a common area valuation.

Judge Winthrop authored the opinion; Judges Thompson and Irvine concurred.

Posted by azapp @ Tue, Jul 31, 2007

Stonecreek Building Company, Inc. v. Shure (07/26/2007): Arizona Appeals Court, Division One, Holds That “Prompt Pay Act” Prohibits Owners From Withholding Payment On An Invoice For Allegedly Defective Work That Does Not Actually Appear On Such Invoice

Appellants (“Owners”) entered into a contract with Stonecreek to construct a custom residence. During construction, Owners complained of defective workmanship, particularly with the masonry work. In April 2004, Owners’ attorney sent a letter to Stonecreek expressing dissatisfaction with the masonry work as well as the HVAC system. Two days later, Owners received Pay Application No. 8 (“the invoice”) from Stonecreek, which was approved by the architect and billed $122,447 for a variety of work, including the HVAC system, but not masonry. Owners withheld $100,000 of the invoice based on alleged deficiencies in masonry work and the HVAC. Stonecreek suspended performance, and Owners terminated the contract alleging Stonecreek failed to remedy deficiencies in construction.

The parties sued each other, and the trial court granted Stonecreek summary judgment, finding that under the Prompt Pay Act, A.R.S. §§ 32-1129-1129.06, an owner can withhold payment only to the extent that it disapproves work included in the invoice on which the owner is withholding payment.

Division One affirmed, rejecting Owners’ argument that they were entitled to withhold payments for work other than that billed in the invoice. The Court noted that on this point, the Act contains arguably conflicting provisions. Compare § 32-1129.01(D) (providing that a billing is deemed approved unless the owner issues a written statement “detailing those items in the billing” that are not approved) with § 32-1129.01(E) (providing that an owner “may withhold from a progress payment only an amount that is sufficient to pay the direct expenses the owner reasonably expects to incur to correct any items set forth in the writing in subsection D”) (emphasis added). Finding no guidance in the legislative history of the Act, the court looked to other provisions of the Act to conclude that “the primary purpose of the Act is to establish a framework for ensuring timely payments from the owner to the contractor and down the line to the subcontractors and suppliers whose work has been approved.” Thus, the statute links progress payments from the owner to work done by subcontractors and suppliers, whose particular work or supplies are billed in the contractor’s application for that progress payment.

The Court concluded that if owners can simply wait until a later billing statement to disapprove and withhold payment for work already completed and deemed approved, the time limits in the Act within which payments must be made become ineffective. Although Owners argued that some defects are latent and may not reveal themselves within the time limits to disapprove work and withhold payments, the Court found that this does not “deprive the owner of a remedy for latent defects” because “the owner retains all civil remedies for breach of contract and tort claims against a contractor.”

Judge Portley, Presiding Judge, authored the opinion, with Judge Kessler and Judge Irvine concurring.

Posted by azapp @ Tue, Jul 31, 2007

Melgar v. Campo (7/26/07): Arizona Appeals Court Division One Holds That an Arizona Court May Not Modify an Out-Of-State Child Custody Order Unless the Out-Of-State Court First Relinquishes Its Exclusive Continuing Jurisdiction.

Mr. Melgar and Ms. Campo had a child in 2003. The family lived together in North Carolina until 2004 when Ms. Campo left the state with the child and cut off all contact with Mr. Melgar. Mr. Melgar initiated a paternity suit in North Carolina, and the North Carolina court ultimately awarded custody of the minor child to Mr. Melgar. Mr. Melgar then tracked Ms. Campo and the child to Arizona where he filed an action in superior court to register and enforce the North Carolina custody order. Ms. Campo defended and alleged domestic violence against Mr. Melgar. After an evidentiary hearing, the Arizona family court registered the North Carolina custody order and modified it giving sole custody to Ms. Campo. Mr. Melgar timely appealed.

On appeal, Mr. Melgar asserted that the family court abused its jurisdiction by modifying the custody order in violation of the Uniform Child Custody Jurisdiction and Enforcement Act (“UCCJEA”). See A.R.S. §§ 25-1001 to -1067 (2001). The Court of Appeals agreed. The Court noted that the primary purpose of the UCCJEA was to avoid jurisdictional competition among state courts in child custody matters. Thus, the UCCJEA establishes exclusive, continuing jurisdiction in the court that enters the first child custody determination concerning a particular child unless, (a) both parents and the child move out of the forum state, or (b) the original court relinquishes its jurisdiction. A.R.S. § 25-1033. Because Mr. Melgar remained a resident of North Carolina and there was no indication in the record that the North Carolina court had relinquished its jurisdiction, the Arizona family court did not have jurisdiction to modify the North Carolina custody order.

Presiding Judge Portley authored the opinion; Judge Barker and Judge Ehrlich concurred.

Posted by azapp @ Tue, Jul 31, 2007

PLM Tax Certificate Program 1991-92 L.P. v. Schweikert (7/17/07): Arizona Court of Appeals Division One Rules County Not Liable to Buyer of Tax Liens That Were Found to Be Invalid

Plaintiff (“PLM”) purchased tax liens from the Maricopa County treasurer. The tax liens were later found to be invalid because the property was in receivership when the liens would have attached to the property. Upon remand from a prior appeal, the trial court granted summary judgment against PLM on its claims for unjust enrichment, negligent misrepresentation and rescission. PLM appealed.

The Arizona Court of Appeals affirmed. The negligent misrepresentation claim failed as a matter of law because the relevant statutes impose no duty on the county treasurer to determine the validity of a tax lien offered for sale. Nor is the contract remedy of rescission available under the statutory scheme, which provides that a purchaser may seek to recover the purchase price only in a case in which the tax lien is sold on property for which no tax is due. See A.R.S. § 42-18125. The risk that a tax lien is invalid for any other reason thus falls on the purchaser. The Court declined to consider PLM’s argument regarding the unjust enrichment claim because PLM could have raised the issue in its previous appeal but did not.

Judge Weisberg wrote the opinion; Judges Winthrop and Ehrlich concurred.

Posted by azapp @ Tue, Jul 24, 2007

Northwest Fire District v. U.S. Home of Arizona Construction Company (06/29/2007): Arizona Supreme Court Holds That Fire District’s “Facilities Benefit Assessment” Exceeds District’s Authority Under A.R.S. § 48-805(B)(14)

Northwest Fire District (“Northwest”) provides emergency services to residents in the district, which covers more than 140 square miles in northwest Tucson – an area that has experienced rapid development in the last decade. A.R.S. § 48-805(B)(14) permits fire districts to “adopt resolutions establishing fee schedules for providing fire protection services and services for the preservation of life including emergency fire and medical services . . . facilities benefit assessments or any other fee schedule that may be required.” The rapidly developing district put a strain on Northwest because the value of a new residential structure is not included in the tax assessment until construction is complete, and even then, the value may not be placed on the tax rolls for up to fifteen months.

In 2003, Northwest responded to fires at three partially constructed new homes, and because the value of these structures was not on the tax rolls, Northwest’s resources were expended to protect property that had not yet been fully taxed. This prompted Northwest to impose a fee under § 48-805(B)(14). In December 2004, Northwest authorized a “facilities benefit assessment” on new construction and began assessing it in January 2005. U.S. Home of Arizona Construction Company and U.S. Home Corporation (“U.S. Home”) refused to pay the assessment, and Northwest sued. The superior court granted summary judgment in favor of U.S. Home. Division Two of the Arizona Court of Appeals reversed.

On de novo review, the Arizona Supreme Court held that the “facilities benefit assessment” charged by Northwest was not a valid exercise of its statutory authority. The Court noted that fire districts are statutory entities and can only exercise those limited powers granted to them by the legislature. One of those powers is the power to raise revenue, which districts may only do through certain means, including “charging fees in accordance with permitted fee schedules” per § 48-805(B)(14). The legislature did not define “facilities benefit assessment.” The superior court interpreted the statute narrowly, while the court of appeals gave it a broader interpretation, finding that it permitted “a special assessment against real property for public improvements.”

The Supreme Court held that it need not decide between the two interpretations, as the facilities benefit assessment is not a special assessment. A special assessment is “an assessment against real property based on the proposition that, due to a public improvement of some nature, such real property has a received a benefit.” But such assessment cannot be levied against a particular property if the property will not receive a specific benefit from the improvement funded by the assessment, i.e. a benefit “over and above that received by the general public.” Here, Northwest did not demonstrate, inter alia, “that the funds collected under this assessment will be spent on facilities that uniquely benefit the assessed property.” The assessment was thus not a special assessment and not authorized under § 48-805(B)(14).

Justice Ryan authored the opinion for a unanimous Court.

Posted by azapp @ Tue, Jul 24, 2007

Hanson v. Tempe Life Care Village, Inc. (7/12/2007): Division One Holds That, Under The Terms Of The Contract Between A Resident And Her Retirement Care Facility, The Resident Is Entitled To A Full Refund Of Her Entrance Fee After Giving Timely Written Notice And Vacating The Facility.

The estate of Amy Hanson sought reimbursement for the entrance fee that Hanson had paid to her former care facility because she gave timely written notice to the facility and vacated her room. After the facility denied its requests, the estate filed an action for breach of the refund provisions of the residency contract. The trial court granted summary judgment for the facility and awarded attorneys’ fees without explanation or oral argument.

The Arizona Court of Appeals reversed. It held that, under the terms of the addendum to the residency contract, the estate was entitled to a refund of the entrance fee and was not responsible for monthly fees after the decedent had vacated the premises. According to the court, the facility’s proffered construction to the contrary was inconsistent with the terms of the parties’ addendum. Because the facility was no longer the prevailing party under A.R.S. § 12-341.01, it was no longer eligible to recover its attorneys’ fees. The court instead awarded the estate its reasonable attorneys’ fees incurred on the appeal.

Judge Irvine authored the opinion, which Judges Portley and Kessler joined.

Posted by azapp @ Mon, Jul 23, 2007

Dube v. Likins (06/28/2007): Division Two Holds That Communications Between Two Agents of the Same Principal Constitute Publications, Subject to Qualified Privilege, for Purposes of Defamation Claim

Plaintiff sued his former university faculty advisor for allegedly interfering tortiously with Plaintiff’s efforts to obtain a Ph.D. and subsequent employment. He later amended the complaint to add claims of defamation and tortious interference with a business expectancy against university officials. The officials moved to dismiss on the ground that the new claims failed as a matter of law, and were also time barred. The trial court granted the motion to dismiss and entered judgment in favor of the officials. Plaintiff appealed.

The Court of Appeals held that questions of fact regarding when Plaintiff should have known the basis for his claim precluded dismissal on statute-of-limitations grounds of some of the tortious interference claims. The claims failed, however, as a matter of law because (1) Plaintiff did not allege that the officials acted pursuant to a “common design” or “substantially aided” the alleged tortious interference, so as to state a claim under Plaintiff’s aiding and abetting theory, and (2) Plaintiff failed to allege a valid business expectancy with any specific employer. The trial court did not err by refusing to allow Plaintiff to amend his complaint prior to dismissal because the proposed amendment would not have cured the complaint’s defects.

Regarding the defamation claim, the Court of Appeals held that the claim was timely under the facts as alleged in the complaint. On an issue of first impression in Arizona, the Court held that a communication may be a publication for purposes of a defamation claim even though the communication is only between two agents of the same principal. Questions of fact precluded judgment on the pleadings regarding whether the communications at issue were privileged. The Court ruled as a matter of law that certain alleged statements were not capable of defamatory meaning; other alleged statements, however, were, and the issue of whether they actually conveyed defamatory meaning presented a question of fact precluding dismissal of those claims. See Yetman v. English, 168 Ariz. 71, 79 (1991).

The Court affirmed the dismissal of the claims of tortious interference with a business expectancy, and remanded for consideration of the remaining defamation claims.

Judge Howard authored the opinion; Judges Pelander and Vásquez concurred.

Posted by azapp @ Fri, Jul 6, 2007

Yes on Prop 200 v. Napolitano (6/28/07): Division One Finds That Trial Court Erred When it Dismissed Case and Denied Plaintiffs’ Motion to Amend Complaint to Assert Claims for Declaratory Relief Against Governor and Other State Officials

Plaintiff filed a complaint seeking declaratory and mandamus relief from Arizona’s Attorney General, Secretary of State, and Governor regarding the State’s implementation of Proposition 200. The trial court dismissed the complaint for failure to state a claim and denied Plaintiff’s motion to amend the complaint as futile. This appeal followed.

The court of appeals affirmed the dismissal of all pending and proposed mandamus claims against all defendants, noting that none of the defendants had failed to perform a duty required by law. The court also affirmed the dismissal of the claims for declaratory relief against the Attorney General and Secretary of State, noting that the complaint failed to assert facts necessary for claims against them. The court reversed the dismissal of the claim for declaratory relief against the Governor, finding to successfully bring a declaratory action challenging the State’s implementation of Proposition 200, Plaintiffs must name as a defendant an entity or official that has the ability to control the implementation of that proposition, and that the Governor was the appropriate official. The court also reversed the trial court’s decision to deny the motion to amend the complaint to seek declaratory relief from various agency officials in their official capacity, finding that Plaintiffs set forth sufficient facts to establish a real dispute based on an actual controversy.

Judge Snow authored the opinion; Judges Lankford and Timmer concurred.

Posted by azapp @ Fri, Jul 6, 2007