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Arizona Case Law Update

PREEMPTION

BNSF Railway Company v. Seats Inc., Arizona Court of Appeals, Division One, decided May 5, 2015

Facts:
Jeffery McKinney, a train conductor employed by BNSF Railway Company filed a claim under the Federal Employees Liability Act (“FELA”) alleging he sustained serious injuries due to an unsafe seat on a BNSF locomotive. McKinney’s claims are based on a violation of the Locomotive Inspection Act (“LIA”) which establishes uniform federal safety regulations for locomotives. McKinney subsequently amended the complaint to join Seats, Inc., the manufacturer of the seat, and BNSF filed a cross-claim against Seats. BNSF sought indemnification and contribution from Seats in the event McKinney recovered from BNSF. Seats moved to dismiss both McKinney’s and BNSF’s claims against it, arguing they were preempted by federal law. The superior court granted Seats’ motion to dismiss and BNSF appealed.

Holding:
Whether BNSF may assert claims for indemnification and contribution against Seats turns on whether the LIA preempts all state-law claims or only claims based on state-specific standard of care. Under the LIA, the Federal Railroad Administration promulgated regulations governing the standard of care. Relevant to this case, one of the requirements is that locomotive seats are securely mounted and braced. Proof of a LIA violation establishes the railroad’s negligence as a matter of law and gives rise to a claim under the FELA. Although the federal statute creates the legal right to sue, the remedy for the injured party is within the state’s discretion.

Here, BNSF sought indemnification and contribution from Seats based on Seats’ failure, as the seat manufacturer, to meet the LIA safety standards. Because BNSF sought to apply the Federal standard of care promulgated by the Federal Railroad Administration, its claims for indemnification and contribution were not preempted by federal law. In other words, if an employer is found liable under the Federal Employees Liable Act, that employer should be permitted to spread the costs of the injury to other responsible parties pursuant to state law.

CONSTRUCTION – “LITTLE MILLER ACT”

Cemex Construction Materials South, LLC v. Falcone Brothers & Associates, Inc., Arizona Court of Appeals, Division Two, decided April 30, 2015

Facts:
Falcone was the general contractor for a City of Tucson public works improvement project. Falcone subcontracted with J&S Commercial Concrete Contractor, and J&S subcontracted with Cemex to provide construction materials. In 2011, Cemex filed a complaint against J&S and Falcone alleging it had not been paid for the material it had supplied to the project. J&S did not answer the complaint and Cemex obtained a default judgment against it. Cemex moved for summary judgment against Falcone. In its motion it asserted it had filed four preliminary twenty-day notices to Falcone pursuant to A.R.S. § 34-223(A) and that each notice had been mailed separately via first class mail, postage prepaid, with a certificate of mailing. In response, Falcone asserted that it never received a twenty-day notice. The trial court granted Cemex’s motion and entered judgment for Cemex. Falcone appealed.

Holding:
Arizona’s “Little Miller Act” (LMA),4 A.R.S. §§ 34-221-227, requires a general contractor on a public project to post a bond to ensure that all who supply labor or materials to the project are paid. § 34-222. Both a payment bond and a performance bond, executed by a surety company, must be posted before public work begins. The LMA provides a materialman with a right to recover from the payment bond when it has not been paid for material or labor it has provided. To maintain an action on the bond, a claimant must comply with the notice requirements of § 34-223(A). The statute requires a materialman claimant to send both a preliminary twenty day notice and a final ninety day notice. LMA notices must be sent via registered or certified mail. LMA notices mailed by first class mail do not satisfy the notice requirement. However, if a notice sent pursuant to the LMA is actually received by a contractor, the fact it was sent by a method other than registered or certified mail will not preclude a materialman’s action on the bond.

In this case, a declaration from the owner of Falcone stating that Falcone never received the notices was insufficient to establish that the notices were not actually received by Falcone. There was no evidence that the owner of Falcone was the person designated to receive such notices or that he took any steps to very if in fact the notices had been received. Thus the Court of Appeals remanded the case to the trial court for a new trial.

ABOUT THE AUTHOR: Lena Pond is a graduate of the Sandra Day O’Connor College of Law at Arizona State University. She specializes in insurance defense, insurance coverage disputes, insurance bad faith, professional liability, and general civil litigation. Contact her at 602-386-5654 or lpond@tysonmendes.com.

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