340 P.3d 1080
Ariz. Ct. App.2014Background
- Yuma County leased airport land to the Yuma County Airport Authority (YCAA), a nonprofit corporation, under a long-term lease; YCAA operated Yuma International Airport.
- Plaintiffs (Lux Air companies) subleased facilities from YCAA and were later evicted; they sued YCAA and amended to add Yuma County, alleging vicarious liability.
- Plaintiffs claimed YCAA was an "instrumentality/alter ego" of Yuma County and relied on A.R.S. § 28-8424, which describes nonprofit airport lessees as "agency or instrumentality" of the county.
- Parties filed cross-motions for summary judgment on county liability; plaintiffs pointed to lease terms and statutory language, county argued no control or creation and that the statute imposes no vicarious liability.
- The trial court granted summary judgment for Yuma County; the Court of Appeals reviewed de novo and affirmed, concluding plaintiffs offered no evidence of alter-ego control and § 28-8424 does not impose vicarious liability on the county.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Yuma County can be held vicariously liable for YCAA’s acts under an alter-ego/instrumentality theory | § 28-8424 and the Lease show YCAA lacked autonomy and was effectively controlled by County, so County is vicariously liable | No evidence County created, controlled, financed, or otherwise dominated YCAA; plaintiffs cannot meet alter-ego elements | Plaintiffs failed to show unity of control or injustice; no alter-ego liability |
| Whether A.R.S. § 28-8424’s characterization of lessees as an "agency or instrumentality" imposes county vicarious liability | The statutory label demonstrates legislative intent to treat lessee as county instrumentality, imposing liability on County | The statute does not expressly impose vicarious liability; characterization protects corporate insulation and permits independent operation | § 28-8424 does not impose vicarious liability on counties that lease airport land to nonprofit operators |
| Whether lease terms create County liability despite statutory framework | Lease restrictions and title provisions allegedly leave County with ultimate control, making it liable | Lease includes indemnity for County and the corporate structure and parties’ stipulations show YCAA independence | Lease language and stipulation facts do not establish control sufficient for liability; indemnity and corporate separation upheld |
| Whether precedent/statutory construction supports imputing liability to lessor counties | Reliance on cases treating airport authorities as agents supports imputing liability | Precedent does not address county liability here; comparable out-of-state case (Lock) supports independence of authority | Court follows statutory text and Lock as persuasive authority — lessors not vicariously liable |
Key Cases Cited
- Gatecliff v. Great Republic Life Ins. Co., 170 Ariz. 34 (1991) (sets out alter-ego/instrumentality factors and unity-of-control test)
- Ferrarell v. Robinson, 11 Ariz. App. 473 (1970) (discusses when corporate separateness is disregarded for liability)
- Orme Sch. v. Reeves, 166 Ariz. 301 (1990) (summary judgment burden-shifting standard explained)
- Lock v. City of Imperial, 155 N.W.2d 924 (Neb. 1968) (persuasive out-of-state precedent holding municipal creator not vicariously liable for airport authority’s torts)