AZAPP Blog

Dometri v. Lind (2/26/2008): Arizona Court of Appeals Division One Holds That Where Real Property is Transferred by Affidavit of Succession Outside of Formal Probate Pursuant to A.R.S. § 14-3971, a Subsequent Purchaser of the Property Who Relies Upon the Affidavit Takes Title Free and Clear of Any Other Person’s Interest in the Estate.

In 1983, Warren Parker, Jr. purchased real property “as his sole an separate property” and his wife, Ruth, simultaneously recorded a Disclaimer Deed, disclaiming any right against the real property.  Years later, Mr. Parker created a trust, named his adult children as beneficiaries, and prepared a pour-over will, directing that any property in his estate at the time of his death be placed in the trust.  Mr. Parker then placed the real property into the trust.  In 1995, Mr. Parker transferred title to the real property back to himself as sole and separate property by Quit Claim Deed.  Mr. Parker died in 2004 but his adult children did not act to return the real property to the trust.  Instead, Mrs. Parker recorded and filed an Affidavit for Transfer of Title to Real Property in the Arizona Superior Court, stating that Mr. Parker died without a will and that Mrs. Parker was the sole successor-in-interest to the property.  Mrs. Parker subsequently signed a deed transferring the property to Choice Property Group, LLC (“Choice”) and Choice then deeded the property to Dometri.  After being served with warranty deeds, Ms. Lind, one of Mr. Parker’s adult children, filed a Notice of Objection to Distribution of Estate and a Notice of Lis Pendens, arguing that Mrs. Parker possessed no title to the property and no power to convey it.  Dometri filed a quiet title action.  Both parties later filed cross-motions for summary judgment.  Dometri argued that it was entitled to rely upon Mrs. Parker’s Affidavit and Ms. Lind argued that Dometri could not purchase any rights in the property because Mrs. Parker possessed none.  The Arizona Superior Court agreed with Dometri and granted summary judgment in its favor.  This appeal followed.

The Arizona Appeals Court explained that the probate code provides a procedure whereby real property can be transferred by affidavit, outside of formal probate, when the value of the real property is less than $75,000.  In order to qualify, the affidavit must meet the requirements of A.R.S. § 14-3971(E).  When those requirements are met, the statute protects anyone who later purchases the real property, regardless of the propriety of the sale.  The Court clarified that the statute provides a cause of action against those who fraudulently transfer real property using an affidavit, but it does not provide heirs any recourse against subsequent purchasers. And neither does the statute require subsequent purchasers to inquire into the propriety of the transaction or the authority of the person entering into it.  Thus, because Mrs. Parker’s Affidavit met all the requirements of § 14-3971(E), Dometri and Choice were statutorily protected against Ms. Lind’s claims.

Judge Portley authored the opinion; Judges Hall and Snow concurred.

Hornbeck v. Lusk (2/26/2008): Arizona Court Of Appeals Division Two Holds That For Purposes Of Arizona Rules Of Criminal Procedure 10.2, 10.5(A), And 10.6, The Presiding Judge In Any County With Two Or More Justice Courts Is The Presiding Justice Of The Peace Of That County.

After Hornbeck's DUI case was assigned to Apache Junction Justice Court Judge Lusk, she filed a notice of change of judge as a matter of right pursuant to Rule 10, Ariz. R. Crim. P, requesting that the presiding judge of the Pinal County Justice Courts determine the reassignment of the case.  Instead, Judge Lusk reassigned the case himself.  Hornbeck filed a petition special action in Pinal County Superior Court, claiming the respondent judge had abused his discretion by reassigning the case himself.  This special action was dismissed by the Superior Court.  Hornbeck appealed.

The Arizona Court of Appeals reversed the judgment of the Superior Court and remanded, holding that when a county has two or more justice courts, the designated presiding judge shall serve as the presiding justice of the peace for that county for purposes of the rules of Arizona Criminal Procedure.  Under Rule 10.5(a), when a notice of change of judge is given, the case must be transferred to the presiding judge for reassignment.  To interpret the meaning of “presiding judge” in Rule 10.5(a), the court referenced the definition provided in Rule 1.4(a) and Arizona Revised Statutes § 22-103, which authorizes the justices of the peace of a county with multiple justice courts to designate a presiding judge.  The court also cited Administrative Order 2005-22, explaining that this administrative order “unequivocally assigns” those duties given to a presiding judge under the Supreme Court Rules to the presiding justice of the peace.  The court concluded that to construe Rule 10.5(a) in this manner accomplishes the goal of the rule by preventing the judge whom the litigant perceives is biased from taking further action in that case.

Judge Eckerstrom wrote the opinion, in which Judges Espinosa and Vásquez concurred.

 

        

Mathews v. Life Care Centers of America, Inc. (2/21/2008): Arizona Court of Appeals Division One Holds That Agreement to Arbitrate Does Not Conflict with Elder Abuse Statute, and Is Not Voided by Unavailability of Designated Arbitration Firm.

Plaintiff alleged negligence and vulnerable adult abuse pursuant to A.R.S. § 46-455, the Arizona Adult Protective Services Act (“APSA”).  Defendant moved to compel arbitration under a voluntary arbitration agreement signed on Plaintiff’s behalf upon his admission into Defendant’s long term health-care facility.  Plaintiff argued that the arbitration agreement was void because it called for an AAA arbitration panel, which was not available because AAA no longer arbitrates disputes between patients and health-care facilities under pre-dispute arbitration agreements.  The trial court rejected that argument, but denied the motion to arbitrate on the separate ground that it limited remedies provided by the liberal civil remedy provisions of the APSA. 

On appeal, the Court of Appeals reversed the denial of the motion to arbitrate.  The trial court had correctly ruled that the unavailability of an AAA arbitration panel did not render the arbitration agreement void.  See A.R.S. § 12-1503 (on application of a party, court shall appoint replacement arbitrator(s) if designated arbitrator(s) are unable to act).  But the trial court erred by finding the agreement unenforceable because of a perceived conflict with the APSA.  The arbitration agreement incorporated Arizona law, thus allowing the arbitrator to apply the APSA in resolving the case, and the APSA does not prevent a party from voluntarily waiving a right to a jury trial.

Judge Irvine authored the decision for the panel; Judges Barker and Johnsen concurred.

Munari v. Hotham ( 2/19/2008):  Arizona Court of Appeals Division One Holds That a Court May Hold a Relocating Parent in Contempt for Failure to Comply with Orders Concerning a Grandparent's Visitation Rights.

The trial court held Melody Munari (“Mother”) in contempt for violating court orders requiring her to make her child available for court-ordered visitation with the child’s  grandparents before relocating from Arizona to Missouri and for not providing telephone access thereafter.  The child’s stepfather, Brian Munari (“Stepfather”), who had not been a party to the action, moved to join as a party.  The trial court granted his request, held him in contempt for violating the same visitation orders, and ordered him to pay sanctions and attorneys’ fees.  Noting that contempt orders cannot be appealed, the Arizona Court of Appeals accepted special action jurisdiction.

Petitioners argued the trial court lacked jurisdiction to issue the contempt order, because, under Sheehan v. Flower, 217 Ariz. 39, 170 P.3d 288 (App. 2007), only a parent, and not a grandparent, may contest a child’s relocation under A.R.S. § 25-408.  The Arizona Appeals Court dismissed this argument.  The Court explained that although A.R.S. § 25-409(F) automatically terminates a grandparent’s visitation rights if the child has been adopted or placed for adoption, a grandparent’s statutory visitation rights do not automatically terminate upon a child’s relocation.  Additionally, per Sheehan a relocation that is not contested by the non-relocating parent may not be challenged by a grandparent under A.R.S. § 25-408, but any existing visitation orders remain in place after the relocation unless otherwise modified by the superior court after hearing.  The Court thus found the orders concerning the grandparents’ visitation rights valid.

The Court further explained that failing to comply with the court’s valid orders concerning the grandparents’ visitation rights was sanctionable through contempt proceedings.  Where a grandparent has a right to visitation, both the grandparent and the court have the authority to enforce that continuing visitation through contempt proceedings under A.R.S. § 25-414(A)(1) even though the parent may choose to relocate the child.  A trial court also has the inherent power to hold a party in contempt for violating a court order.

Notwithstanding the above, the Court agreed with Petitioners that the trial court abused its discretion by holding the stepfather in contempt because he was not a party to the action until after the mother had already violated the trial court’s order.  The Court explained that the trial court simply could not hold a party in contempt for violating orders to which he was never subject.  The Court also explained that, as only the child’s stepfather, he did not have the legal ability to control the child, and therefore had no ability to comply with the trial court’s order even if he had been subject to it.  Accordingly, the Court vacated the contempt order against the stepfather, but denied the mother relief.

Judge Snow authored the opinion, with Presiding Judge Ehrlich and Judge Hall concurring.

Thompson v. Thompson (2/21/08):  Arizona Court of Appeals Division One Holds That a Relocating Parent May Move Up to 100 Miles From Her Physical Location With a Child As of the Date of the Court Order or Written Agreement Granting Custody or Parenting Time

Mother petitioned for and obtained temporary custody of the children.  Thereafter, with the court’s approval, Mother mad a first move to a community approximately 73 miles away.  In May 2005, the court entered a final divorce decree, granting custody to Mother.  One year later, Mother notified the court she intended to make a second move, a distance of approximately 90 miles.  Father objected to Mother’s second move under A.R.S. § 25-408(B), which allowed him to object if Mother sought “to relocate the child more than one hundred miles within the state.”  The court refused to enjoin mother’s second move, finding A.R.S. § 25-408 inapplicable because Mother was only moving 90 miles.  Father moved for a new trial and argued that the statute required the court to calculate the miles of Mother’s relocation by adding the miles of the first move to the second move; he also argue that the mileage should be calculated from Father’s residence to Mother’s new location.  The court denied the motion and this appeal followed.

The Arizona Court of Appeals rejected both of Father’s arguments.  As to Father’s first argument, the Court of Appeals found that the plain language A.R.S. § 25-408(E) rendered A.R.S. § 25-408(B) inapplicable to the first move, which had been made with court permission within one year of the proposed relocation.  As to Father’s second argument, the Court of Appeals agreed that A.R.S. § 25-408(B) does not identify the starting point for the calculation of the 100 miles.  The Court concluded that the statute “should be construed as allowing a parent granted joint custody or parenting time the right to move up to 100 miles from that parent’s physical location with the child as of the date of the written agreement or court order entitling both parents to custody or parenting time.” 

Judge Norris authored the opinion; Judges Timer and Brown concurred. 

Employers Mutual Casualty Co. v. DGG & Car, Inc. (2/14/2008):  Arizona Supreme Court Holds That a Standard Form Insurance Policy Treats the Loss from a Series of Thefts by a Single Employee as One “Occurrence” of Loss.

Appellee DGG purchased employee fidelity insurance policies from Appellant EMC, which covered loss of property resulting from employee dishonesty.  The policy promised that EMC would pay up to $50,000 for each “occurrence” of loss, which was defined as “all loss caused by, or involving, one or more ‘employees,’ whether the result of a single act or series of acts.”  A DGG employee embezzled $500,000 during a five-year period forging multiple company checks.  DGG filed a claim seeking reimbursement of the full amount; EMC countered that the series of thefts constituted a “single occurrence,” which entitled DGG to only $50,000.  EMC filed a declaratory action, seeking a ruling it only owed $50,000.  After the superior court determined that DGC could recover $50,000 for each theft, the parties stipulated to a judgment in favor of DGG with EMC preserving its right to appeal.  The Court of Appeals reversed in an unpublished decision, finding that the series of acts constituted one occurrence.  DGG petitioned the Supreme Court. 

The Supreme Court agreed with the Court of Appeals that the series of acts constituted one occurrence, but vacated its memorandum decision, and reversed the judgment of the superior court.  The Supreme Court found that the policy’s plain language considers the loss resulting from the embezzlement of a single employee “an occurrence,” which meant that the $50,000 limit applied.  The Court rejected DGG’s claims that the policy was ambiguous, that a literal reading of the policy would “nullify” coverage, or that the policy language violated Arizona ’s public policy. 

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

State of Arizona v. City of Kingman  (2/14/2008):  Arizona Court of Appeals Division One Holds that City Does Not “Actually Control” a State Roadway For Purposes of Establishing Liability for Failing to Keep It Safe By Merely Offering Design Suggestions.

Maria Minjares was injured at an intersection in Kingman, Arizona, and sued both the City and the State for their negligent operation and maintenance of the intersection.  The parties agreed that the intersection is wholly within the State’s jurisdiction and control under ARS 28-332(A), which vests “exclusive control and jurisdiction over state highways [and] state routes … in the department of transportation.”  The trial court granted the City’s motion for judgment as a matter of law, observing that the City did not exercise control over the intersection.  The jury returned a verdict in favor of Minjares and against the State.  The State appealed. 

The State argued that the City exercised control over the intersection and could be held liable to Minjares under Sanchez ex rel. Gordon v. City of Tucson, 191 Ariz. 128, 953 P.2d 168 (1998), which held that a city may assume joint liability for a failure to keep a roadway safe even absent the existence of an intergovernmental agreement.  The State pointed out that the City participated in design meetings with ADOT regarding solutions for traffic problems at the intersection and objected to some solutions offered by ADOT.  The Court of Appeals disagreed that this participation amounted to “actual control” over the intersection, holding that before a city can be held liable for actual control of a roadway it “must assume responsibility for the planning or design…or it must actually participate in maintaining or operating it.” 

Judge Snow authored the opinion, with Presiding Judge Ehrlich and Judge Hall concurring.

Salt River Project Agricultural Improvement and Power District v. Miller Park, L.L.C. (2/14/2008): Arizona Supreme Court Holds that Rule 68 Sanctions May Be Awarded in Favor of Landowner Based on Offer of Judgment in Condemnation Case

The Plaintiff (“SRP”) brought a condemnation action to determine compensation owed to two L.L.C.s (“Miller Park”) for land condemned to build an electric transmission line in Buckeye, Arizona.  The trial court granted Miller Park’s motion in limine to exclude evidence from its April 2001 protest of the county’s property tax assessment of the property.  After trial, the jury determined that SRP owed Miller Park just compensation of $4.7 million – more than double the $2.3 million settlement proposed by Miller Park’s Offer of Judgment under Rule 68, Ariz. R. Civ. P.  The trial court, however, declined to award Rule 68 sanctions, reasoning that Rule 68 conflicted with A.R.S. § 12-1128(A), which permits discretionary cost awards in condemnation cases.

SRP appealed the exclusion of the 2001 tax-protest evidence and Miller Park cross-appealed the denial of Rule 68 sanctions.  The Court of Appeals held that the trial court did not abuse its discretion by excluding the evidence, but erred by finding Rule 68 sanctions could not be awarded.  On subsequent appeal, the Arizona Supreme Court accepted review and affirmed the Court of Appeals on both rulings.

The Supreme Court explained that the trial court did not abuse its discretion by finding the tax protest evidence inadmissible under Arizona Evidence Rules 402 (relevance) and 403 (risk of undue prejudice, confusion, or waste of time).  Whereas just compensation for a condemnation action determines fair-market value based on the highest and best use of the land, valuation for property tax purposes considers only a property’s current use.  Because the trial court did not specify whether it was excluding the evidence under Rule 402, Rule 403, or both, and SRP failed to ask the trial court to clarify any ambiguity in the ruling, the appellate court would uphold the decision if supportable under either rule.  The trial court acted within its discretion to exclude the tax-protest evidence because of its minimal relevance and potential to waste time and confuse the jury. 

The trial court erred, however, by finding Rule 68 in conflict with A.R.S. § 12-1128(A).  The Supreme Court overruled in part Pima County v. Hogan, 197 Ariz. 138 (App. 1999), which found Rule 68 sanctions impermissible in a condemnation action because of the apparent conflict with A.R.S. § 12-1128(A), and because allowing sanctions in that case against the landowner would arguably undermine the landowner’s constitutional entitlement to just compensation.  Because the sanctions here ran in favor of the landowner, the Supreme Court did not address whether sanctions against a landowner would remain impermissible under the “just compensation” reasoning of Hogan. 

Justice Bales wrote the opinion for the unanimous en banc Court.

Friedman v. Burgess (2/12/2008): Arizona Court of Appeals Division One Holds Indirect Injury from Court Ruling Does Not Give Standing to Appeal, the Probate Court Cannot Require Heirs to Pay for Investigation of Elder Abuse Claim Unless Claim Was Reported with Malice, and Appellate Ruling Can Extend to Non-Appealing Parties When Justice Requires

During the probate of Victor Friedman’s estate, Dennis and Libby Friedman filed a petition accusing Jo Ann Friedman of elder abuse against Victor, which would have prevented Jo Ann from inheriting from the estate.  A special administrator investigated the claim and found that there was no basis for the elder abuse claim. The Court ordered Dennis and Libby to pay the costs of the investigation from their share of the estate.  Dennis appealed on behalf of Libby and himself.

On appeal, the Arizona Appeals Court held Dennis did not have standing to appeal on behalf of Libby because he was not aggrieved by the judgment against her.  Dennis argued he was aggrieved by the judgment against Libby, because Libby and he had agreed to share attorneys’ fees, and if Libby received less money from the estate, she would be less able to contribute to the attorneys’ fees.  The Court held the judgment against Libby affected Dennis only indirectly due to the separate agreement concerning fees, and that a party cannot make an argument on a non-appealing party’s behalf.

The Court then held the probate Court may have erred in ordering the costs of the investigation to be paid from Dennis and Libby’s share of the estate.  Balancing the probate code’s interest in efficiently administering estates with the public policy of encouraging good faith inquiries into cases of elder abuse, the Court held an heir is only required to pay the costs of an elder abuse investigation if the heir raised the issue with malice.  Malice requires the primary purpose in raising the elder abuse claim was other than to protect the adult or the estate.  The Court’s reasoning was bolstered by A.R.S. § 46-453(A), which immunizes reporters of elder abuse from civil liability, unless they acted with malice.  Accordingly, the Court remanded the case to determine if Dennis and Libby acted with malice in reporting the elder abuse claim.

Finally, the Court held both Dennis and Libby would be entitled to relief from costs if they did not act with malice, even though Libby did not join in the appeal.  Although the general rule requires a party to join in an appeal in order to benefit from it, the Court borrowed an exception from other states that allows the Court to extend an appellate ruling to benefit a non-appealing party if justice so requires.  The Court believed justice required an exception in this case, because both Dennis and Libby were in an identical position.

Judge Kessler authored the opinion, with Presiding Judge Brown and Judge Winthrop Concurring.

Golob v. Arizona Medical Board (2/5/2008): Arizona Court of Appeals Division One Holds That Doctor Providing Prescriptions Over the Internet Without Examining Patients May Be Disciplined.

Following an investigation in 2004, the Arizona State Board of Pharmacy notified appellee the Arizona Medical Board (the “Board”) that Dr. Golub was issuing prescriptions over the internet without ever having physically examined the patients for whom the prescriptions were written. The Board investigated and issued several findings against Dr. Golub. The Board imposed discipline on Dr. Golub in the form of a Decree of Censure, 5 years of professional probation, a $10,000 civil penalty and a suspension of her license of no more than 12 months, to terminate upon her completion of various ethics courses. After her appeal to the Board was denied, she petitioned the superior court, which affirmed the Board’s order.

In her appeal, Dr. Golub first questioned the jurisdiction of the Board, arguing that no proof existed that her patients were in Arizona. The Court of Appeals rejected this argument, explaining, among other reasons, that her licensure in Arizona was sufficient to subject her to the jurisdiction of the Board.

Reviewing Dr. Golub’s challenge to the sufficiency of the evidence presented, the Arizona Appeals Court applied the substantial evidence standard, while giving “great weight” to the Board’s interpretation of the statutes in question here. Relying in part on the doctor’s admission that in no case did she examine any of these patients, the precedents of several courts of other states, and the policies of the American Medical Association, the Court found substantial evidence supported the Board’s findings of unprofessional conduct.

Finally, the Court of Appeals addressed Dr. Golub’s claim that ARS § 32-1401(27)(q) and (ss) are unconstitutionally vague. Citing the decision of a Colorado court in the parallel case of Brighton Pharmacy, Inc. v. Colorado State Pharmacy Board, 160 P.3d 412 (Colo App. 2007), the Court rejected Dr. Golub’s argument.

Judge Ehrlich authored the decision in which judges Thompson and Johnsen joined.

Phoenix New Times v. Arpaio (2/5/2008): Arizona Court of Appeals Division One Holds that Sheriff Arpaio Failed to Promptly Furnish Public Records Requested by the New Times, and the New Times May Be Entitled to Recover its Fees and Costs.

Between May and September of 2004, during Sheriff Arpaio’s reelection campaign, the New Times made a series of public records requests of the Maricopa County Sheriff’s Office. On September 23, 2004, having received no documents, the New Times filed a special action asking the court to order the MCSO to produce responsive public records. After the special action was filed, the MCSO provided the previously requested records.

The principal issue before the trial court was the New Times’ request for attorneys’ fee pursuant to A.R.S. 39-121.02(B), which provides that if “if the court finds that the custodian of such public record acted in bad faith, or in an arbitrary or capricious manner, the superior court may award” attorneys’ fees. Without holding an evidentiary hearing, the trial court denied New Times’ fee petition, finding that the MCSO had not acted in bad faith because it had produced the records requested.

The Arizona Court of Appeals reversed the trial court’s determination with respect to all but one of the nine public records requests made by the New Times. Noting that records subject to disclosure are to be produced “promptly” under A.R.S. § 39-121.01(D))(1) and failure to timely produce records is deemed a denial of access, the Court analyzed each records request separately, finding that in all but one instance, the MCSO could not sustain his burden of establishing that its response was prompt or that it had adequately searched for responsive documents. The Court of Appeals remanded the case to the trial court to determine whether the Sheriff acted in bad faith or in an arbitrary or capricious manner in denying access to the documents and whether, under the circumstances, the New Times is entitled to an award of its fees.

Presiding Judge Snow authored the opinion, with Judges Barker and Kessler concurring.

Hounshell v. White (1/29/2008): Arizona Court of Appeals Division One Holds That County Board of Supervisors May Not Discipline Classified Employees of Other County Officers

The Apache County manager suspended an Apache County Sheriff’s Office employee for alleged misconduct. The Apache County sheriff filed a special action against the manager and the county Board of Supervisors seeking a declaration that only the sheriff had authority to discipline classified Sheriff’s Office employees. On cross motions for summary judgment, the trial court granted summary judgment in favor of the sheriff, and against the Board of Supervisors and manager, finding that, under A.R.S. § 11-356, only the appointing authority (here, the sheriff) may discipline a classified county employee.

On an appeal by the Board of Supervisors, the Arizona Appellate Court upheld the trial court’s ruling. Under A.R.S. § 11-409, county officers enumerated at A.R.S. § 11-401(A) are empowered to appoint employees to perform the work of their offices. In turn, A.R.S. § 11-356(A) provides that, under the merit system, an employee’s “appointing authority” is authorized to discipline the employee. The Board of Supervisors and its agent, the county manager, possess only that authority granted by the legislature, which did not grant them authority to discipline employees of the Sheriff’s Office. Any requirement that the Board of Supervisors consent to the appointment of a given employee does not make the Board a separate appointing authority. Thus, only the sheriff may discipline employees of his office.

Judge Barker wrote the opinion; Judges Timmer and Orozco concurred.

Best v. Edwards (2/1/2008): Arizona Court Of Appeals Division One Holds That Modification Of A Real Estate Option Contract That Extends The Life Of An Option Is A Material Modification That Must Be In Writing.

In 2003, the parties entered into a written contract giving Best an option to purchase certain real property within a specified period. Before the option expired, Best recorded an amendment, extending the option for one year. Though any extension was required to be agreed to by all parties, the amendment was only signed by Best. When the Defendants attempted to sell the property to a third party, Best refused to release the property, claiming that an oral agreement to extend the option was in effect. Best brought an action for specific performance of the option contract, and the Defendants moved for summary judgment on statute of frauds grounds. Best argued that the statute of frauds did not bar enforcement of the extension, and even if it did, the defendants were equitably estopped from asserting such a defense because Plaintiff had relied on the oral extension. The trial court granted the Defendants’ motion, declaring that any extension to the contract was required by the statute of frauds to be in writing. Plaintiff appealed.

The Arizona Appeals Court, affirmed the summary judgment, holding that the extension to the option contract was required to be in writing. The Court reasoned that because the parties had made time of the essence by setting an expiration date for the option, an extension of the time frame was a material modification. The Court cited Kammert Bros. Enter., Inc. v. Tanque Verde Plaza Co., 4 Ariz. App. 349, 360, 420 P.2d 592, 603 (1966), vacated on other grounds, 102 Ariz. 301, 428 P.2d 678 (1967), for the proposition that a modification to a contract that was required to be in writing by the statute of frauds must also be in writing. The Court went on to hold that Best could not rely on equitable estoppel to defeat the writing requirement because he had not alleged any particular detriment arising out of his reliance upon the oral extension other than the loss of the benefit of the agreement itself.

Judge Weisberg wrote the opinion, in which Judges Irvine and Norris concurred.

1800 Ocotillo, L.L.C. v. The WLB Group, Inc. (1/29/2008):Arizona Court of Appeals Division One Holds Limitation-of-Liability Clauses in Personal Service Contracts are Not Void as Against Public Policy, but as a Form of Assumption of Risk a Jury Must Decide Their Enforceability

Real estate developer 1800 Ocotillo, L.L.C. contracted with The WLB Group, Inc. for surveying, engineering and landscape architecture services. The contract included a limitation-of-liability provision that limited WLB’s liability for negligence to the amount paid under the contract. When WLB’s survey failed to identify an existing right-of-way on Ocotillo’s land, Ocotillo sued for breach of contract and professional negligence. The trial court granted partial summary judgment in favor of WLB, holding the limitation-of-liability provision in the contract was enforceable, to which Ocotillo appealed.

On appeal, Ocotillo argued that limitation-of-liability provisions in personal service contracts are void as against public policy. To support their argument, Ocotillo pointed to A.R.S. § 10-2234, which states that shareholders of a professional corporation remain liable for negligence. The Court held the plain language of § 10-2234 did not support Ocotillo’s position. Ocotillo also argued that because indemnity clauses in construction contracts are considered void as against public policy under A.R.S. § 32-1159, limitation-of-liability clauses should be void as well. The Court disagreed, noting that indemnity clauses completely exonerate from liability, while limitation-of-liability clauses only cap the amount of liability. In addition, the Court noted that nothing in the legislative history of § 32-1159 supported Ocotillo’s public policy argument, and that absent public policy to the contrary, parties in Arizona are free to contract as they wish. Accordingly, the Court held limitation-of-liability clauses in personal service contracts are not void as against public policy.

Ocotillo next argued that Article 18, Section 5 of the Arizona Constitution, which requires juries to decide the defenses of contributory negligence and assumption of risk, also requires juries to decide the enforceability of limitation-of-liability clauses. Relying on Phelps v. Firebird Raceway, Inc., 210 Ariz. 403, 111 P.3d 1003 (2005), the Court held limitation-of-liability clauses are a form of assumption of risk; therefore, their enforceability must always be decided by a jury. The Court reversed and remanded for a jury trial on the issue.

Judge Timer authored the majority opinion, with Chief Judge Gemmill and Judge Orozco concurring.

Southwest Airlines Co. v. Arizona Department of Revenue (1/29/2008): Arizona Court of Appeals Division One Holds That Avionics Software Installed in Flight Computers on Commercial Aircrafts Can Be Included Within the Aircraft’s Valuation For Purposes of an Airline’s Personal Property Taxes.

During the 2004 tax year, the Arizona Department of Revenue (the “Department”) calculated a full cash value of $155,319,100 for Southwest Airlines Co.’s (“Southwest”) flight property. Southwest took issue with the Department’s calculation, contending that the avionics software loaded onto its aircraft was not taxable. As a result, Southwest appealed the Department’s calculation to the State Board of Equalization (the “Board”). On appeal, the Board similarly refused to deduct the value of the software from the full cash value of Southwest’s flight property. Southwest thereafter appealed to the tax court where Southwest and the Department filed cross motions for summary judgment. The tax court granted the Department’s motion, holding that the Department was not required to deduct the value of avionics software from the value of Southwest’s personal property. This appeal followed.

The Arizona Appeals Court held that the tax court correctly refused to deduct the value of the avionics software from the value of Southwest’s personal property. The Court reasoned that the Department, in valuing and taxing airline companies, is statutorily required to determine the full cash value of each airline’s “flight property” in use in the state, and “flight property” broadly means all airline company aircraft used in the state except aircraft that are permanently removed from operations. A.R.S. § 42-14251(6) (2006). Moreover, “aircraft” is statutorily defined as “any device that is used or designed for navigation or flight through the air.” Id. § 42-14251(2). The Court also explained that the Arizona statutes require the full cash value of flight property to be determined, in part, by the capitalized acquisition cost of the “airframes,” which include every component of an airplane with the exception of the airplane’s power plant. Thus, “airframes” necessarily include avionics software installed on airplanes at the time of purchase. In this case, the FAA required the software at issue to be installed in order for an airplane to be certified as “airworthy” and thus the tax court correctly concluded that the Department could include the software in its valuation of Southwest’s personal property. Finally, the Court distinguished its prior opinion in Honeywell Information Systems, Inc. v. Maricopa County, 118 Ariz. 171, 575 P.2d 801 (App. 1977), on grounds that Honeywell dealt more with the value of computer consulting services than it did with the value of software, and that the current air-property tax scheme clearly provides a procedural mechanism (e.g., an informal conference and several layers of appeal) for equalizing the taxation of avionics software.

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

State of Arizona v. David C. Lee (1/29/2008): Arizona Court of Appeals Division One Holds That Parent’s Child Support Obligation for a Post-Majority Child Continues While Child Is Making a Sincere Effort to Graduate From High School

Father of a post-majority child argued that, pursuant to A.R.S. §§ 25-320(F) and -501(A), his child support obligation should have ended when the child turned 18 or when the child should have graduated from high school. These virtually identical statutes provide in relevant part that “if a child reaches the age of majority while the child is attending high school… support shall continue to be provided while the child is actually attending high school….” Father contended the child was not “actually attending high school” given his poor attendance record and poor academic performance. The Court of Appeals found that whether a child is “actually attending” high school should be decided on a case-by-case basis after considering factors such as (1) whether the child is regularly present in class; (2) the reasons for any absences; and (3) whether the child is taking affirmative steps in pursuit of an education. The Court of Appeals affirmed the trial court’s ruling that there was substantial evidence that the child was making a sincere effort to graduate from high school, and thus Father’s child support obligation continued through the date that the child actually graduated.

Judge Hall authored the opinion; Judges Snow and Portley concurred.

Warner v. Southwest Desert Images, LLC (1/28/2008): Arizona Court of Appeals Division Two Holds That (1) an Employee Is Not Immune from Negligence Simply Because the Employer Is also Liable Under the Respondeat Superior Doctrine; (2) an Expert Opinion Affidavit Under A.R.S. § 12-2602 Is Not Necessary For a Vicarious Liability Claim Against a Licensed Professional; (3) Evidence of Workers’ Compensation Benefits Could Be Excluded in Negligence Action; and (4) Offer of Judgment Sanction Cannot Be Imposed When Plaintiff’s Workers’ Compensation Carrier With a Lien Greater Than the Amount of the Offer Does Not Consent to the Offer of Judgment.

Catherine Warner suffered a heart attack after Southwest Desert Images, LLC, through its employee, negligently sprayed herbicide around Warner’s office building. The spraying lasted for over one hour and entered the building’s ventilation system, causing emergency services to evacuate the building. Warner “began having difficulty breathing, was coughing violently, and felt burning in her eyes, nose, and throat.” She then began feeling “‘extreme chest pain’ and ‘heart palpitations.’” Her doctor later determined that Warner, who had suffered previous heart attacks, suffered a heart attack on “the day of the evacuation.” She sued Southwest Desert Images, its employee, and the related parties who held the “qualifying license” to spray herbicide for negligence, and sought punitive damages. Although the trial court dismissed several other defendants, the jury found Southwest Desert Images responsible and awarded Warner compensatory damages. The trial court, however, granted defendants’ “motions for offer-of-judgment sanctions pursuant to Rule 68, Ariz. R. Civ. P” because Warner’s award was less than the offers of judgment.

The Arizona Appeals Court affirmed in part, reversed in part, and remanded the case for further proceedings. First, the Court concluded that the trial court had erred by dismissing the negligent employee because his employer (Southwest Desert Images) was liable under the respondeat superior doctrine. That doctrine did not relieve the employee of liability; rather it made both the employee and employer liable. Second, the Court concluded that the trial court had erred by dismissing certain defendants for Warner’s failure to serve a preliminary expert affidavit under A.R.S. § 12-2602, which requires such affidavits for negligence claims against licensed professionals. The affidavit was unnecessary because (1) the defendants were liable only by respondeat superior, not their own negligence and (2) the trial court never ordered that Warner serve the affidavit, which must be done before the trial court may dismiss defendants for failure to comply. Third, the Court concluded that the trial court had properly rejected Warner’s punitive damage claim because the evidence did not show an “evil mind” to disregard a substantial risk of bodily injury. Moreover, it was unclear whether having unlicensed employees apply the herbicide was illegal so long as they were supervised by a licensed employee, which they seemingly were. Fourth, the Court concluded that the trial court properly had rejected Warner’s attempt to introduce evidence of workers’ compensation benefits and her carrier’s lien on any recovery. Fifth, and finally, the Court reversed and remanded the trial court’s award of offer-of-judgment sanctions against Warner. Warner’s workers’ compensation carrier held a lien against any recovery she might obtain. Because the lien exceeded the amount of the offers of judgment, A.R.S. § 23-1023(C) required that Warner obtain written approval from the carrier before compromising the claim. Therefore, “if Warner intended to accept [Southwest Desert Image’s] offer of judgment, requested permission from the lien holder to do so, and the lien holder refused, the trial court’s Rule 68 sanctions against Warner were not proper.” Because the record was unclear on this point, and because it was “unfair to have expected the parties or the trial court to have anticipated the standard we adopt today,” “we therefore . . . remand this matter to the trial court so it can determine whether Warner can demonstrate that she intended to accept the offer and had not been given permission to settle the claim before the time to accept the offer of judgment would have expired.”

Judge Brammer authored the opinion; Chief Judge Pelander and Judge Howard concurred.