Arizona Case Law Update

Author: J.P. Harrington

Negligence – Duty of Care

Alcombrack v. Ciccarelli, No. CV-13-0148, 2015 WL 7770684 (Ariz. December 3, 2015)

Facts and Procedural History

In 2008, Robert and Dixie Ciccarelli leased a house to Jeffrey Harrison. By early 2009, the Ciccarellis had defaulted on a loan secured by the house and foreclosure had begun. They did not tell Harrison about the foreclosure. After the notice of trustee’s sale was issued, the beneficiaries of the deed of trust hired LPS Field Services, Inc. to inspect the house. LPS hired Sentinel Field Services, Inc., a locksmith company, to change the locks on the house. Sentinel employee, Kyle Alcombrack mistakenly thought the house was vacant and drilled out the lock on the front door. Mistakenly thinking the house was being broken into, Harrison shot at the door, seriously injuring Alcombrack.

Alcombrack sued the Ciccarellis alleging they had a duty to him and that they had created an unreasonably dangerous condition by not telling Harrison the house was in foreclosure and that someone might inspect the house and/or change the locks. The superior court granted the Ciccarellis’ motion for summary judgment finding: 1) Alcombrack was a licensee; 2) the Ciccarellis did not owe him a duty; 3) the Ciccarellis did not owe a duty to tell Harrison about the foreclosure and, even if they did, that duty did not extend to Alcombrack to protect him from Harrison. Alcombrack appealed.

Holding

In order to succeed on a common law negligence claim, a plaintiff must show: 1) a duty requiring the defendant to conform to a certain standard of care; 2) defendant’s breach of that duty; 3) cause in fact; 4) legal cause; and 5) actual damages. Duty can be determined as a matter of law and, absent duty, an action for negligence fails. The landlord-licensee/invitee relationship can give rise to a duty, however, a landowner not in possession of property owes no duty to a third party who is injured on the property. Alcombrack did not show that the Ciccarellis owed a relevant duty based on a landowner-licensee/invitee relationship.

Alcombrack’s argument that a duty arose when the Ciccarellis defaulted on their loan, thereby empowering the beneficiaries of the deed of trust to change the locks on the house fails. The Ciccarellis argued they had no duty to notify Harrison of foreclosure, and even if they did, such a duty would not extend to third parties like Alcombrack. Because no Arizona case resolves this issue, the court of appeals had the parties prepare supplemental briefing on whether Alcombrack preserved for appellate review an argument that the Ciccarellis owed a duty on any basis other than as an invitee or a licensee, and if so, the applicability of specified legal authorities to this case. In the supplemental brief, Alcombrack argued that a duty should be recognized under La Raia v. Superior Court, 150 Ariz. 118 (1986) and Maldonado v. Southern Pacific Transportation Co., 129 Ariz. 165 (App. 1981), Restatement (Second) of Torts §§321 and 322 and Restatement (Third) of Torts Liability for Physical and Emotional Harm §§7 and 39.

Arizona has adopted the Restatement (Second) of Torts §322 which states:

If the actor knows or has reason to know that by his conduct, whether tortious or innocent, he has caused such bodily harm to another as to make him helpless and in danger of further harm, the actor is under a duty to exercise reasonable care to prevent such further harm.

The court found it was clear this section does not apply to Alcombrack’s claim. Alcombrack did not assert that the Ciccarellis owed then breached a duty after he was shot. He alleged the duty was owed before he was shot. Moreover, Arizona case law in La Raia v. Superior Court, 150 Ariz. 118 (1986) and Maldonado v. Southern Pacific Transportation Co., 129 Ariz. 165 (App. 1981) addresses a defendant’s duty to mitigate further harm after the defendant’s actions have caused physical injury to the plaintiff in violation of a duty, not whether the defendant owed plaintiff a duty in the first instance.  Thus, La Raia, Maldonado, and Restatement Second §322 do not apply to Alcombrack’s claims against the Ciccarellis.

Alcombrack did not demonstrate that Restatement (Third) of Torts §7 should be adopted here. It would provide a standard that “an actor ordinarily has a duty to exercise reasonable care when the actor’s conduct creates a risk of physical harm.” Restatement (Third) §7 has not been adopted as a standard under Arizona law. Arizona courts have noted that the Third Restatement approach significantly lessens the role of the court as legal arbiter of whether society should recognize the existence of a duty in particular categories of cases, for this reason, adopting the Third Restatement would increase the expense of litigation. This section is significantly broader that Restatement (Second) of Torts §315 which has been adopted in Arizona and applied in support of no-duty determinations absent a special relationship. Alcombrack does not allege the Ciccarellis owed a duty here based on Restatement (Second) of Torts §315. The court thus found Restatement (Third) §7 did not apply.

Alcombrack did not cite Restatement (Third) §39 or Restatement (Second) §321 in briefing before the superior court, nor did he rely on the provisions in his opening or reply briefs. Accordingly, he waived any argument they should apply.

The superior court properly granted summary judgment.

Workers Compensation Injury During Course and Scope of Employment

Hill v. Bowman, No. CV-14-0535, 2015 WL 8163813, (Ariz. December 8, 2015) (Memorandum Decision)

Facts and Procedural History

M.J. Hill was employed by Above and Beyond Delivery, Inc., a delivery logistics company owned by James Bowman. Her job was to manage and expand the business from existing and new clients. While in Hawaii to inspect a related company, she and Bowman participated in a golf tournament sponsored by their client Foodland. During the tournament, Hill was injured when she was thrown from a golf cart driven by Bowman. She filed a negligence action, and the Bowmans moved to dismiss arguing the superior court lacked subject matter jurisdiction because Hill’s exclusive remedy was through the Arizona Workers’ Compensation Act, A.R.S. §§23-901 through 23-1104. Hill argued her injury did not arise in the course and scope of her employment. She also argued that the court should deny the motion because Above and Beyond had not incurred workers’ compensation liability for her injury. The court granted the motion finding it lacked subject matter jurisdiction because the facts presented clearly established Hill was acting within the scope of her employment when she was injured. Hill appealed.

Holding

The Workers’ Compensation Act grants the Industrial Commission of Arizona exclusive jurisdiction and bars employees, to whom it affords coverage, from suing their employer over injuries arising out of and in the course of employment. “Arising out of” and “in the course of” are not synonymous. “Arising out of” is construed to refer to the origin or cause of the injury while “in the course of” refer to the time, place, and circumstances under which it occurred. Whether an injury is covered by the Act depends on the totality of the circumstances.

Hill argues her injury did not occur during the course of her employment, and the Act is thus not her exclusive remedy. Five factors are considered when determining whether an activity arises during the course of employment: 1) did the activity inure to the substantial benefit of the employer; 2) was the activity engaged in with the permission or at the direction of the employer; 3) did the employer knowingly furnish the instrumentalities by which the activity was to be carried out; 4) could the employee reasonably expect compensation or reimbursement for the activity engaged in; and 5) was the activity primarily for the personal enjoyment of the employee?

The evidence established Hill’s employment responsibilities included business development. Above and Beyond facilitated Hill attending the golf tournament for the purpose of obtaining additional business for Above and Beyond. Above and Beyond paid Hill’s $7,500 entry fee and other expenses for the golf tournament held in Hawaii. Above and Beyond did not require Hill to use any paid leave time for the tournament because it anticipated attendance might expand its business relationship with Foodland. The evidence thus established Hill attended the golf tournament in order to further Above and Beyond’s business interests and supports the finding that the injury occurred during the course of her employment. Hill’s perception that the tournament was voluntary does not change the analysis. Arizona law does not require that an activity be performed as a condition of employment in order to qualify as employment-related activity and be within the course of employment.

Because workers’ compensation offered the exclusive remedy for Hill’s injury, the fact that she did not timely avail herself of that remedy does not require a finding of subject matter jurisdiction for her to pursue an otherwise unavailable negligence claim against the Bowmans. The superior court properly granted summary judgment.

Anti-Retaliation Under the Fair Labor Standards Act

Rosenfield v. GlobalTranz Enterprises, Inc., No. 13-15292, 2015 WL 8599403 (Ninth Cir. December 14, 2015)

Facts and Procedural History

In April 2010, GlobalTranz hired Alla Rosenfield as manager of human resources. The company promoted her later that year to director of human resources. In early 2011, she was promoted to director of human resources and corporate training. Throughout her employment she reported to her superiors that the company was not compliant with the Fair Labor Standards Act of 1938 (“FLSA”), and she repeatedly sought changes to attain statutory compliance. Rosenfield was not responsible for FLSA compliance, but still complained to management orally on at least eight occasions that the company was not in compliance.  She raised the subject of FLSA compliance in at least 27 weekly and monthly reports to her superiors. Her boss disapproved of her complaints and expressed frustration with her actions. However, he agreed to take some actions aimed at addressing her FLSA complaints but he made clear to her that he did not want or expect her to determine whether the company was actually implementing those changes. She later discovered the changes had not been implemented. She documented the non-compliance with the FLSA and complained to her boss. Five days later she was fired.

Rosenfield then filed an action alleging GlobalTranz and its executives had violated FLSA’s anti-retaliation provision, 29 USC §215(a)(3). She alleged GlobalTranz fired her for engaging in protected activity, that is, for complaining to other managers and to executives that GlobalTranz was failing to comply with the FLSA. The district court granted summary judgment in favor of GlobalTranz noting that even though she had advocated consistently and vigorously on behalf of GlobalTranz’s employees whose FLSA rights she thought were being violated, she was not entitled to the protections of §215(a)(3) because she had not filed any complaint for purposes of that provision. Rosenfield appealed.

Holding

In Kasten v. Saint-Gobain Performance Plastics Corp., 563 U.S. 1, 131 S.Ct. 1325, 1335 (2011), the Supreme Court established a “fair notice” test for deciding whether an employee has “filed any complaint” under the anti-retaliation provision of the FLSA, 29 U.S.C. §215(a)(3): A complaint must be sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection. The Ninth Circuit held that a complaining employee’s position as a manager is an important part of the “context” that the fact-finder must consider. A reasonable employer would understand many actions taken by a non-managerial employee differently than it would understand the same actions taken by a manager. But the Ninth Circuit declined to formulate or adopt a special bright line rule to apply when considering whether a manager has “filed any complaint” within the meaning of §215(a)(3). It further held that on this record, applying the “fair notice” rule, a jury could reasonably find Rosenfield, a managerial employee, filed such a complaint. The district court’s grant of summary judgment was reversed and the matter remanded for further proceedings.

Insurance Agent Negligence

Glasser v. M&O Agencies, Inc. and Bradley, CA-CV-14-0708, 2015 WL 909676 (Ariz. December 15, 2015) (Memorandum Decision)

Facts and Procedural Background

Glasser bought a large commercial property in March 2010 (“the McDowell Property”) that was previously an automobile dealership. Glasser’s employees began cleaning and making repairs at the McDowell Property, but Glasser did not lease the property or occupy it himself. Through his insurance agent, Mahoney, Glasser added the McDowell Property as a scheduled location on his existing commercial policy from Great American Insurance Company which covered the McDowell Property with property and liability insurance. In April 2010, at the direction of an employee of Glasser’s business, Mahoney instructed Great American to delete the property coverage for the McDowell Property. On July 6, 2010, Glasser discovered a theft and vandalism at the McDowell Property and submitted a claim for the loss to Great American. Great American denied the claim because the policy did not cover property damage at the McDowell Property and the property had been vacant for more than 60 days before the loss, a vacancy exclusion term under the policy.

Glasser field the suit against Mahoney alleging it breached the agreement with Glasser by: 1) failing to obtain appropriate insurance coverage for the McDowell Property; 2) failing to exercise reasonable care, skill, and diligence to secure and maintain appropriate insurance coverage for Glasser’s real properties; and 3) negligently misrepresenting that it had secured appropriate insurance coverage for Glasser’s real properties, including the McDowell Property.

Mahoney moved for summary judgment on grounds Glasser produced no evidence that the policy would have covered the loss even if it had been in effect and thus he could not prove that Mahoney’s allegedly negligent conduct caused him any damage, relying specifically on the vacancy exclusion. Glasser argued there was an exception to the vacancy exclusion for buildings under renovation and this applied because his employees had been readying the building to serve as his business headquarters by re-keying locks, installing fencing and landscaping, removing shelving, signs, logos, trash, and other debris, testing light fixtures and changing light bulbs, cleaning the carpet, touching up the paint, patching holes in the walls, repairing minor plumbing leaks, and repairing broken doors and windows. Mahoney disagreed that these activities constituted renovation as opposed to routine maintenance and repair. The superior court found the evidence only supported an inference that the McDowell Property was being cleaned, repaired, and maintained and such acts, as a matter of law, did not constitute renovation.

Holding

The interpretation of a policy is a matter of law. Ambiguity is construed against the insurer. The absence of a definition does not render a term ambiguous. Undefined terms are given their usual and ordinary meaning.

Webster’s defines the term “renovate” as 1) to make new or like new; to clean up, replace worn and broken parts in repair, etc; to restore to good condition; 2) to refresh; to revive. Similarly, the American Heritage dictionary defines this word as 1) to restore to an earlier condition, as by repairing or remodeling; to impart new vigor to; revive. Based on these definitions, a question of fact exists regarding whether the activities of Glasser’s employees at the McDowell Property during the relevant time qualified as renovation. The evidence showed two of his employees were at the McDowell Property every day after the purchase making changes and repairs to render the property acceptable business headquarters. A reasonable jury could find that the activities satisfy the usual and ordinary definition of renovation. If Great American and Glasser intended that the policy’s renovation exception would apply only to substantial reconstruction activities, rather than minor repairs or cleaning, they were free to specify the meaning in the policy.

The interpretation of similar policy language by courts in other jurisdictions and their refusal to find an exception to a vacancy exclusion when the insured’s activity at the property was not substantial and continuing are inapposite because none of the policies in those cases dealt with a renovation exception. Even if the court did find the reasoning persuasive, under the circumstances in this case, they would still determine that a fact question existed regarding whether Glasser’s activities at the property were substantial and continuing.

Summary judgment was not proper and the matter was reversed as to this issue and remanded for further proceedings. 

ABOUT THE AUTHOR

J.P. Harrington Bisceglia is senior counsel at Tyson & Mendes, LLP.  She specializes in general liability defense, insurance coverage and bad faith litigation.  Contact J.P. at 602.386.5644 or jpharrington@tysonmendes.com.

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