375 P.3d 1189
Ariz. Ct. App.2016Background
- Plaintiff Tarazon sued the City of Phoenix for asbestos-related injuries allegedly sustained while working on public projects completed between 1968 and 1993; the City filed a third-party complaint seeking defense and indemnity from numerous developers and contractors.
- City contracts with contractors expressly contained indemnity clauses; City-issued development/right-of-way permits required permittees to comply with plans, specs, and a City ordinance that included an indemnity provision.
- The City filed its third-party indemnity claims more than eight years after the projects’ substantial completion.
- Defendants moved to dismiss under Arizona’s statute of repose, A.R.S. § 12-552(A), arguing claims “based in contract” are barred after eight years; the City argued governmental entities are exempt from limitations (nullum tempus / A.R.S. § 12-510) and that the permit-based indemnity claims were not contract-based.
- The trial court dismissed the City’s third-party complaint as time-barred and awarded attorneys’ fees to successful defendants under A.R.S. § 12-341.01(A); the City appealed.
- The Court of Appeals affirmed: (1) § 12-552(A) applies notwithstanding the nullum tempus codification; (2) the indemnity obligations in permits are contractual and thus “based in contract”; and (3) awards of attorneys’ fees were proper and not an abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether A.R.S. § 12-552(A)’s eight-year statute of repose applies to governmental entities | The City: nullum tempus / A.R.S. § 12-510 exempts the State and its political subdivisions from limitations, so § 12-552(A) shouldn’t bar its claims | Defendants: § 12-552(A) says “notwithstanding any other statute,” so it supersedes § 12-510 and applies to government entities | Held: § 12-552(A) applies to governmental entities; its “notwithstanding” language removes the § 12-510 exemption |
| Whether the City’s indemnity claims based on permits are “actions based in contract” under § 12-552(F) | The City: permits are regulatory/police-power exercises, not contracts, so § 12-552 doesn’t apply | Defendants: permits containing indemnity terms are written agreements allocating risk for development/construction services and thus fall within § 12-552(F) | Held: Permits with indemnity obligations are written agreements for qualifying services and claims are “based in contract” |
| Whether A.R.S. § 12-341.01(A) permits awarding attorneys’ fees to defendants who successfully defended the City’s third-party contract-based claims | The City: because claims were not contract-based (per its position), fee statute shouldn’t apply | Defendants: claims arose from indemnity agreements in permits, so § 12-341.01(A) authorizes fees to the successful parties | Held: § 12-341.01(A) applies; trial court did not err in awarding fees to defendants |
| Whether the fee amounts awarded (e.g., $110,000 to Continental) were reasonable | The City: rates and claimed hours were excessive, duplicative, and included unnecessary partner time | Defendants: time and rates were reasonably incurred defending a complex, multi-defendant action; court limited award below requested amount | Held: Trial court’s findings support the fee award; amount was within judicial discretion |
Key Cases Cited
- Department of Health Services v. Cochise County, 166 Ariz. 75 (Ariz. 1990) (discussing governmental immunity from statutes of limitation and nullum tempus)
- Albano v. Shea Homes Ltd. Partnership, 227 Ariz. 121 (Ariz. 2011) (distinguishing statutes of repose from statutes of limitations and explaining repose purpose)
- Associated Indemnity Corp. v. Warner, 143 Ariz. 567 (Ariz. 1985) (factors for awarding attorney fees under A.R.S. § 12-341.01)
- Broemmer v. Abortion Services of Phoenix, Ltd., 173 Ariz. 148 (Ariz. 1992) (adhesion contracts enforceable absent unconscionability or unexpected terms)
- Chaurasia v. General Motors Corp., 212 Ariz. 18 (Ariz. Ct. App. 2006) (statutory interpretation review de novo for fee statutes)