AZAPP Blog

Quintero v. Rodgers (11/18/2008): Arizona Court of Appeals Division One Holds That A.R.S. § 14-3110 Precludes Damages for Loss of Enjoyment of Life But Does Not Preclude Recovery of Punitive Damages.

After filing a lawsuit against the defendant, Matthew Rodgers, for injuries suffered in a motor vehicle accident, Plaintiff Luis Anaya Soto died in an unrelated workplace accident.  Soto’s wife, Elizabeth Quintero, was substituted as the personal representative of Soto in the suit.  Rodgers filed a motion for partial summary judgment on the grounds that Arizona’s survival statute, A.R.S. § 14-3110, precludes recovery of punitive damages and damages for loss of enjoyment of life.  Rogers also argued that Quintero failed to meet the clear and convincing standard required for recovery of punitive damages.  The trial court granted the motion without explaining its reasons.  Following a settlement agreement that preserved Quintero’s rights to appeal the ruling on the motion for partial summary judgment, Quintero appealed.

The Arizona Appellate Court affirmed in part and reversed in part.  The Court held that A.R.S. § 14-3110 precludes recovery of damages for loss of enjoyment of life.  Arizona’s survival statute precludes recovery for damages for pain and suffering.  The Court explained that damages for loss of enjoyment of life were meant to be included as part of pain and suffering under the statute and reasoned that to find otherwise would be contrary to the Legislature’s intent.  Additionally, the Court distinguished its holding in Ogden v. J.M. Steel Erecting, Inc., 201 Ariz. 32, 31 P.3d 806 (Ariz. App. 2001), which stated that when a jury makes a general damages determination, a court can properly instruct the jury on damages for loss of enjoyment of life as a component of those general damages without necessarily duplicating damages for pain and suffering.   

In regard to the punitive damages, the Court held that punitive damages survive the death of both the plaintiff and the tortfeasor, noting that § 14-3110 does not preclude recovery of punitive damages.  The Court went on to explain that because the trial court did not provide any reasoning for its grant of the motion for partial summary judgment, it would address the evidence supporting the claim for punitive damages.  Citing Rodgers’ guilty plea to reckless driving and additional circumstantial evidence re Rodgers’ speed at the time of the collision, the Court found that a reasonable jury could find that Rodgers acted with sufficient recklessness to support an award of punitive damages. 

Therefore, the Court affirmed the trial court’s decision regarding damages for loss of enjoyment of life but reversed its decision regarding punitive damages.   

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

Transportation Infrastructure Moving Arizona’s Economy v. Brewer ( 11/18/2008):  Arizona Supreme Court Holds that the Ten-Day Limitation for Judicial Review Contained in A.R.S. § 19-122(A) Applies to Challenges to the Secretary of State’s Actions Under A.R.S. § 19-121.01, Including the Disqualification of Signature Sheets and Signatures Submitted in Support of an Initiative. 

On July 2, 2008, Transportation Infrastructure Moving Arizona’s Economy (“TIME”) submitted initiative signature sheets with the Secretary of State (“the Secretary”), who, on July 24, issued a receipt stating that TIME had filed 19,945 signature sheets containing 238,874 signatures.  The Secretary stated that she had removed various sheets and signatures and explained the reasons for so doing.  The Secretary then created a five-percent sample of the 238,874 signatures  and transmitted them to the county recorders for verification.  After review, the county records disqualified 5,021 signatures (42.02% of the sample).  On August 11, 2008 the Secretary notified TIME that after applying the 42% error rate to the 238,874 eligible signatures, the number of valid signatures was 138,452, below the constitutionally-required minimum number of signatures to place an initiative on the ballot.

On August 13, 2008, TIME filed a complaint against the Secretary and the Maricopa County Recorder, alleging that the Secretary improperly removed 9,168 signatures before creating her sample.  In response, the Secretary moved to dismiss TIME’s claims, arguing that A.R.S. § 19-122(A) required TIME to challenge her removal of petition sheets and signatures within ten days of July 24, 2008.  The trial court granted the Secretary’s motion and this appeal followed.

The Arizona Supreme Court first explained that A.R.S. § 19-122(A) provides, in relevant part, that “[w]ithin ten calendar days after the [Secretary’s] refusal [to transmit the facsimiles of a signature sheet or sheets to the county recorders for certification] any citizen may apply to the superior court for a writ of mandamus to compel the secretary of state to . . . transmit the facsimiles . .  . .”  The Court rebuffed TIME’s argument that § 19-122(A) does not apply because its claims challenged the Secretary’s ultimate certification, rather than the Secretary’s failure to transmit certain signature sheets.  The Court reasoned that TIME did not contend that the Secretary made any mathematical blunders in her calculation and, regardless, TIME cannot circumvent § 19-122(A)’s limitations by characterizing its claims as a challenge to the Secretary’s calculations.

 The Court also concluded that § 19-122(A) should not be read to apply only “to refusals to accept and file an entire initiative petition or to transmit to the county recorders facsimiles created by the Secretary under § 19-121.01(C).”  The Court feared that such an interpretation would result in a lack of “judicial review of either the Secretary’s decision to disqualify sheets or and signatures under § 19-121.01 or the Secretary’s consequent failure to create a sufficiently large random sample for recorder review.”  This fear also stemmed in part from the fact that the general mandamus statute would not apply because TIME’s challenge (and others like it) does not involve a failure on the Secretary’s part to perform her statutory duties.  Thus, § 19-122(A) governed TIME’s claims, which the Court held were properly dismissed because they were brought more than ten days after July 24, 2008.

At the end of its decision, the Court suggested that Title 19 deserves a thorough legislative reexamination because it imposes onerous burdens on parties to litigation and election officials alike. 

Justice Hurwitz authored the opinion; Chief Justice McGregor, Vice Chief Justice Berch, and Justices Ryan and Bales concurred.

M.T. Builders, L.L.C. v. Fisher Roofing Inc. (11/13/2008): Arizona Court of Appeals Division One Holds That “Narrow Form” Indemnity Provision That Limits Indemnity Obligation to the Extent of Indemnitor’s Fault Does Not Create Any Up-Front Duty to Defend Suit Against Indemnitee.

A condominium association (“Plaintiff”) sued a general contractor (“Builder”) for alleged construction defects.  Builder filed a cross-complaint and a third-party complaint against a subcontractor (“Subcontractor”) and others for indemnity and for alleged breach of a duty to defend Builder.  An indemnity provision in Builder’s contract with Subcontractor obligated Subcontractor to indemnify and hold harmless the Builder against all claims, damages, losses and expenses “to the extent caused in whole or in part by any negligent act or omission of the Subcontractor” or of persons employed by the Subcontractor.  After settling with Plaintiff, Builder obtained summary judgment for its indemnity claim against Subcontractor.  The trial court awarded to Builder the Subcontractor’s allocated share of indemnity damages, attorneys’ fees and defense costs.  Subcontractor appealed.

The Court of Appeals held that the trial court erred by granting summary judgment to Builder in the face of disputed facts regarding the extent that Subcontractor’s fault caused Builder’s damages, and without a determination that the relevant portions of Builder’s settlement with Plaintiff were reasonable and prudent.

The Court rejected Subcontractor’s threshold arguments that the settlement between Plaintiff and Builder had eliminated Builder’s indemnity claim by failing to discharge the Plaintiff’s claims against Subcontractor.  Nor was Builder’s indemnity claim defeated by Plaintiff’s assignment to Builder of its claims against Subcontractor. 

The Court agreed with Subcontractor, however, that the indemnity clause of the contract between Builder and Subcontractor provided for indemnification only to the extent that Builder’s damages and expenses were caused by Subcontractor’s negligence – an issue that was never decided.  Subcontractor’s refusal to accept Builder’s tender of defense did not preclude Subcontractor from disputing the extent of its indemnity liability, because Subcontractor’s limited indemnity obligation did not create any up-front duty to defend Builder.  Because the contract’s “narrow form” indemnity provision limited Subcontractor’s indemnity obligation to the extent of Subcontractor’s fault, the provision imposed no duty to defend Builder prior to a determination of Subcontractor’s fault.

 Finally, the trial court erred by entering summary judgment against Subcontractor without determining whether the portion of the Plaintiff/Builder settlement attributable to Subcontractor’s fault was reasonable and prudent under the circumstances.  The Court therefore reversed and remanded to the trial court for further proceedings.

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

South West Sand & Gravel, Inc. v. Central Arizona Water Conservation District (11/10/2008): Division One Holds That Land Owner Does Not Have Taking or Tort Claims Where Increase of River’s Water Levels Interfered with Mining Operation

Pursuant to permits issued by the Arizona Department of Water Resources, the Central Arizona Water Conservation District (“District”) diverted water from a Central Arizona Project canal into the Agua Fria River so that surplus water could flow downstream for storage in an underground storage facility.  As a result of the diverted water, the water table beneath South West Sand & Gravel’s (“South West”) property elevated and interfered with the company’s mining business.  After South West sued on various tort theories and for a taking without compensation, the superior court granted summary judgment against South West.  This appeal followed.

Judge Thompson, writing for a unanimous panel, held that summary judgment was appropriate.  The court explained that Arizona has long recognized a right to use a natural stream to move and store water, and that A.R.S. § 45-173 (1994) expressly authorizes the use of a natural channel to deliver water to an underground storage facility.  Relying on West Maricopa Combine, Inc. v. Arizona Department of Water Resources, 200 Ariz. 400, 26 P.3d 1171 (Ariz. App. 2001), the court held that such use of a natural channel could not constitute a taking because South West’s ownership was always subject to Arizona’s reservation of natural channels to move and store water, and therefore the District’s actions under the permits did not alter South West’s pre-existing rights.

Turning to the tort claims, the court held that there could be no action for trespass because, although its property is in and around the natural water channel, South West had no right to exclude others from using the river.  Under West Maricopa Combine, the right to use natural water channels is not limited to natural water flow, and South West had no entitlement to a fixed water table level. 

Finally, the court held that the Arizona Department of Water Resources did not have to consider non-existing future uses in determining whether unreasonable harm would result from the issuance of a permit like the one the District received.

Judge Thompson authored the opinion; Judges Johnsen and Timmer concurred.

1800 Ocotillo, LLC v. The WLB Group, Inc. (11/3/2008): Arizona Supreme Court Holds Liability-Limitation Clauses Do Not Violate Public Policy, and Do Not Require Submission To A Jury As An Assumption of Risk Defense.

The WLB Group, Inc. (“WLB”) contracted with 1800 Ocotillo, LLC (“Ocotillo”) to provide surveying services for Ocotillo’s construction project.  A flaw in WLB’s survey resulted in additional costs to Ocotillo, so Ocotillo sued WLB for damages.  However, the contract limited WLB’s liability to the amount Ocotillo paid for its services.  The trial court held the clause did not violate public policy.  The Court of Appeals agreed, but held the clause was an assumption of risk defense, and therefore a jury must decide its enforceability.  WLB petitioned the Supreme Court for review of the assumption of risk issue, and Ocotillo cross-petitioned for review of the public policy issue.

To demonstrate a public policy against liability-limitation clauses, Ocotillo relied on A.R.S. § 32-1159, which states that indemnity clauses in construction contracts are against public policy.  However, the Supreme Court noted that indemnity clauses are distinguishable from liability limitations, because the former remove all incentive for a party to exercise due care, whereas the latter do not.

Ocotillo also relied on various laws that retain personal liability for members of professional corporations, limited liability companies, and partnerships.  The Court explained that these laws are irrelevant to the issue of limiting liability by contract, and that WLB is a traditional corporation, for which none of the cited statutes applied.  The Court also rejected Ocotillo’s argument that liability-limitation clauses are contrary to judicially created public policy.  The Court held the liability-limitation clause was not unenforceable for being against public policy.

With respect to the second issue, the Arizona Constitution states that “[t]he defense of … assumption of risk shall, in all cases whatsoever … be left to the jury.”  Ariz. Const. art XVIII, § 5.  The Court explained that the drafters of the Constitution intended this section to apply to defenses that would operate as a complete bar to a plaintiff’s recovery, which a liability-limitation clause does not.  Therefore, the Court vacated the opinion of the court of appeals on this issue, and remanded the case for further proceedings.

Justice Bales authored the opinion, Chief Justice McGregor, Vice Chief Justice Berch, and Justices Ryan and Hurwitz concurred.

Queen Creek Summit, LLC v. Davis (10/30/2008): Arizona Court of Appeals Division One Holds that in a Condemnation Proceeding in Which the State’s compliance with A.R.S. § 12-1115(A) Is Challenged, The Landowner Bears the Burden of Proof by Clear and Convincing Evidence, And on the Merits, The Trial Court Correctly Concluded that the Public Good of Gilbert’s Water Pipeline Outweighed the Private Injury to the Landowner. 

Queen Creek Summit, LLC (QCS) owns the land on which Canyon State Academy sits.  The Town of Gilbert instituted proceedings against QCS to condemn a pipeline easement through the middle of Canyon State Academy.  The trial court found that QCS failed to meet its burden of proving that Gilbert had improperly decided that the public good of locating the water pipeline through the middle of campus outweighed the private injury to QCS.  QCS appealed.     

The Arizona Appeals Court affirmed.  A.R.S. § 12-1115(A) provides that “[w]here land is required for public use, the state, or its agents in charge of such use, may survey and locate the land, but it shall be located in the manner which will be most compatible with the greatest public good and the least private injury.”  Relying on language in the Supreme Court’s opinion in Chambers v. State ex rel. Morrison, 82 Ariz. 278, 312 P.2d 155 (1957), the Court concluded that the landowner, here QCS, bears the burden of proof – by clear and convincing evidence – that the state actor, here the Town of Gilbert, failed to comply with A.R.S. § 12-1115(A).  Turning to the merits, the Court concluded that the trial court properly balanced the “greatest public good” and “least private injury” requirements of the statute.  In particular, QCS failed to prove that Gilbert did not consider QCS’s private injury or that its private injury justified the substantial time and expense of placing the pipeline in an alternative location.  Finally, using rational basis review, the Court rejected QCS’s equal protection challenge on similar grounds because Gilbert offered testimony that an alternative location “would involve additional costs, complications, obstacles, and delays beyond those involved with the proposed route.”                 

Judge Barker authored the opinion; Judges Brown and Timmer concurred.