DBT Yuma, L.L.C. v. Yuma County Airport Authority – 11/24/2015
Arizona Supreme Court holds that, under A.R.S. § 28-8424, a non-profit corporation that leases airport property is not an agent of the county in which the airport resides.
In 1965, a nonprofit corporation began operating a county airport under a lease from the county. Appellant began subleasing the property in 2008, but was evicted by the nonprofit a few years later. Appellant sued the nonprofit and later added the county, alleging that the county was vicariously liable because the nonprofit was the county’s political subdivision, agent, or alter ego. The Court of Appeals held that the nonprofit was not the county’s alter ego, and that A.R.S. § 28-8424 does not impose vicarious liability on counties for activities of airport operators that are nonprofit corporate lessees of county airport land. The Supreme Court granted review because the meaning of § 28-8424 is a legal issue of first impression and statewide importance.
The Supreme Court affirmed, holding that A.R.S. § 28-8424 does not make a nonprofit lessee the agent or alter ego of the county. Section 28-8424 states that a nonprofit lessee of county airport land is a “body politic and corporate.” Following courts in other states, the Court held that a “body politic and corporate” serving a public function is a public corporation, and that a public corporation is not a subdivision, agent, or alter ego of the county.
Other language in § 28-8424 indicates that a lessee airport authority “[p]erforms an essential governmental function as an agency or instrumentality” of the county. The Court held that the use of the terms “agency or instrumentality” did not change that a “body politic and corporate” is not an agent or alter ego of the county because the phrase “agency or instrumentality” is merely descriptive of an airport’s public role in performing an essential governmental function. These terms were not meant to establish a principal-agent relationship, especially given the separate “body politic and corporate” status.
Vice Chief Justice Pelander authored the opinion; Chief Justice Bales and Justices Brutinel, Timmer, and Berch concurred.