Hatch Development, LLC v. Solomon
240 Ariz. 171
Ariz. Ct. App.2016Background
- Hatch sues Solomon for indemnity arising from Hunts’ water damage claims tied to Solomon’s sewer work on Hatch’s property.
- Hunts sued Hatch, Solomon, and the Town of Taylor in 2007 for property damage caused by sewer and water line work.
- Hatch and Town of Taylor settled with the Hunts; Solomon was not a party to the settlement documents (SAC and FFR).
- Hatch sought indemnity from Solomon, arguing Solomon’s fault and Hatch’s reliance on settlement representations.
- The trial court granted Hatch partial summary judgment on indemnity liability; later damages and fees were awarded to Hatch.
- Solomon appeals, challenging indemnity liability and the theory under Restatement § 78(b)(ii) in light of the statute of limitations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hatch may recover indemnity under Restatement § 78(b)(ii). | Hatch contends Solomon’s fault and Hatch’s justifiable belief justify indemnity. | Solomon argues the statute of limitations barred Hunts’ claim and MT Builders’ test governs indemnity. | Yes; indemnity awarded under Restatement § 78(b)(ii). |
| Whether Hatch discharged a current obligation to the Hunts, supporting indemnity. | Hatch believed Hunts had a claim, and negotiations continued with settlement. | Settlements discharged any obligation Hatch owed to Hunts, precluding indemnity. | Not required; Restatement § 78(b)(ii) supports indemnity despite limitations. |
| Whether Hatch’s failure to obtain ADEQ approval proximately caused Hunts’ damages. | ADEQ non-approval contributed to liability and Hatch’s negligence per se. | ADEQ approval is not proximate cause; Solomon’s negligence in trenches caused the damage. | Summary judgment on proximate cause for Hatch’s indemnity stands; damage primarily due to Solomon’s trench/manhole negligence. |
| Whether Hatch is precluded from indemnity due to Hatch’s active fault. | Hatch, as owner, had no active fault; Hatch’s actions were supervisory. | Hatch was actively negligent by not acting promptly after notice. | Hatch not actively negligent; indemnity allowed under Restatement and owner-status liability framework. |
Key Cases Cited
- MT Builders, L.L.C. v. Fisher Roofing, Inc., 219 Ariz. 297 (App. 2008) (three-pronged MT Builders test for indemnity (discharged obligation, other liable, discharge between them))
- KnightBrook Ins. Co. v. Payless Car Rental Sys., Inc., 100 F. Supp. 3d 817 (D. Ariz. 2015) (restatement-based indemnity; other party at fault or extinguished obligation)
- KnightBrook Ins. Co. v. Payless Car Rental Sys., Inc., 43 F. Supp. 3d 965 (D. Ariz. 2014) (discusses Restatement § 76 and indemnity framework)
- Am. & Foreign Ins. Co. v. Allstate Ins. Co., 139 Ariz. 223 (App. 1983) (Restatement § 76 applicability; consent/fault basis for indemnity)
- Shea v. Superior Court of Maricopa County, 150 Ariz. 271 (1986) (indemnity limitations when actor is actively negligent)
- Busy Bee Buffet v. Ferrell, 82 Ariz. 192 (1957) (indemnity concerns and wrongful conduct limitations)
- Hall v. Mertz, 14 Ariz. App. 26 (1971) (statutory compliance and duty to protect statutory beneficiaries)