Case Information
*1 In the
A RIZONA C OURT OF A PPEALS D IVISION O NE
CITY OF PHOENIX, Third-Party Plaintiff/Appellant , v.
GLENAYRE ELECTRONICS, INC.; WILLIAM LYON HOMES, INC.; KB
HOME HOLDINGS, INC.; RICHMOND AMERICAN HOMES, INC.; MDC/WOOD, INC.; UDC HOMES, INC. nka SHEA HOMES OF PHOENIX, INC. (FN) and ELLIOTT HOMES, INC.; SWENGEL-ROBBINS CONTRACTING CO., INC.; AZTEC CONSTRUCTION, INC.; JNC, INC.;
UH HOLDINGS, INC.; LOS PAISANOS DEVELOPMENT, INC.; MICHAEL NEWSOME; CHI CONSTRUCTION CO.; CONTINENTAL HOMES, INC.; PULTE HOME CORP.; DEL WEBB CORP.; WITTMAN
CONTRACTING CO.; JEFF BLANDFORD INVESTMENTS, INC.; Third-Party Defendants/Appellees .
No. 1 CA-CV 14-0739 Appeal from the Superior Court in Maricopa County No. CV2013-001762 The Honorable Randall H. Warner, Judge The Honorable Douglas L. Rayes, Retired Judge The Honorable Lori Horn Bustamante, Judge AFFIRMED
*2 COUNSEL
Phoenix City Attorney’s Office, Phoenix
By Brad Holm
Counsel for Third-Party Plaintiff/Appellant
Osborn Maledon PA, Phoenix
Mary R. O’Grady
Counsel for Third-Party Plaintiff/Appellant
Gallagher & Kennedy PA, Phoenix
By Kevin E. O’Malley, Mark A. Fuller, Thomas A. Maraz
Counsel for Third-Party Defendants/Appellees CHI Construction Co., Continental Homes, Inc.
Green & Baker Ltd, Scottsdale
By Katherine E. Baker, Diane L. Bornscheuer
Counsel for Third-Party Defendant/Appellee Glenayre Electronics, Inc.
Berkes Crane Robinson & Seal LLP, Los Angeles, CA
By Brad D. Bleichner
Counsel for Third-Party Defendant/Appellee William Lyon Homes, Inc.
Lorber Greenfield & Polito LLP, Phoenix
By Holly P. Davies, Alexix G. Terriquez
Counsel for Third-Party Defendants/Appellees KB Home Holdings Inc., Richmond American Homes Inc., MDC/Wood, Inc.
Wood Smith Henning & Berman LLP, Phoenix
By Jill Ann Herman
Counsel for Third-Party Defendants/Appellees UDC Homes, Inc. nka Shea Homes of Phoenix, Inc. (FN), Elliot Homes, Inc.
Gammage & Burnham, PLC, Phoenix
By Richard K. Mahrle, Jason L. Cassidy
Counsel for Third-Party Defendant/Appellee Swengel-Robbins Contracting Co., Inc.
Law Offices of Joseph A. Kula, Scottsdale
By Joseph A. Kula, Benjamin R. Eid
Counsel for Third-Party Defendant/Appellee Aztec Construction, Inc.
Maynard Cronin Erickson Curran & Reiter PLC, Phoenix
By Daniel D. Maynard
Counsel for Third-Party Defendants/Appellees JNC, Inc., UH Holdings, Inc.
Quintairos Prieto Wood & Boyer, PA, Phoenix
By Vincent J. Montell, Michael J. Ponzo, Rita J. Bustos
Counsel for Third-Party Defendant/Appellee Los Paisanos Development, Inc.
Michael Newsome, Cave Creek
Third-Party Defendant/Appellee
Dickinson Wright PLLC, Phoenix
By Michael S. Rubin, Stephen E. Richman, J. Gregory Cahill Counsel for Third-Party Defendants/Appellees Pulte Home Corp., Del Webb Corp.
Shorall McGoldrick Brinkmann PC, Phoenix
By Thomas J. Shorall, Jr., Jason J. Boblick
Counsel for Third-Party Defendant/Appellee Wittman Contracting Co.
Wilenchik & Bartness PC, Phoenix
By Dennis I. Wilenchik, Mia Nguyen
Counsel for Third-Party Defendant/Appellee Jeff Blandford Investments, Inc.
OPINION
Judge Kenton D. Jones delivered the opinion of the Court, in which Presiding Judge Diane M. Johnsen and Judge Patricia A. Orozco joined.
J O N E S
, Judge: The City appeals the trial court’s orders: (1) dismissing its
third-party complaint against Appellees because it was not brought within the eight-year period of repose set forth in Arizona Revised Statutes (A.R.S.) section 12-552(A), and (2) awarding certain Appellees their attorneys’ fees as the successful parties in a contract action pursuant to A.R.S. § 12- 341.01(A). We conclude A.R.S. § 12-552 applies to governmental entities and that the City’s claims are based in contract within the meaning of A.R.S.
§ 12-552(F); therefore, the City’s claims against Appellees are time-barred.
We also find no error in the court’s grant of attorneys’ fees to those Appellees who properly asserted a right to fees and conclude that the amounts awarded were within the court’s discretion. For these reasons, we affirm.
FACTS [2] AND PROCEDURAL HISTORY In 2013, Carlos Tarazon filed a lawsuit alleging he had developed mesothelioma as a result of long-term exposure to asbestos while performing pipe installation and repair for the City and numerous other defendants not parties to this appeal. Tarazon further alleged the City knew of the inherent dangers of asbestos exposure and was negligent in failing to adequately warn and protect him from those risks. [3] The City immediately filed a third-party complaint seeking defense and indemnification from eighty-two developers (the Developers) [4] and eight contractors (the Contractors) [5] allegedly responsible for planning, designing, and constructing the projects on which Tarazon was exposed to asbestos between 1968 and 1993. Within its complaint, the City alleged the third-party defendants were solely responsible for the selection, installation, and disposal of any asbestos-laden products used in their respective projects, and therefore, the Contractors and Developers were required to indemnify the City against Tarazon’s claims — the Contractors by virtue of their construction contracts and right-of-way permits, and the Developers by virtue of City ordinances incorporated within development permits.
¶4 Each of the City’s contracts with the Contractors provided that “[t]he Contractor agrees to indemnify and save harmless the City of Phoenix . . . from all suits, including attorneys’ fees and cost of litigation . .
. of any character or any nature arising out of the work done in fulfillment of the terms of th[e] contract.” The permits issued to the Developers do not contain any specific covenant to indemnify, but rather state the permittee “agrees to perform all work in accordance with” certain agreed-upon plans and specifications, and that the permit is issued “on the express conditions that every agreement and covenant contained in th[e] permit is faithfully performed.” As the City alleges, the agreed-upon plans incorporate specifications required by the Maricopa Association of Governments, which in turn require the permittees to “observe and comply with all such laws, ordinances, regulations, codes, orders and decrees.” Among those ordinances is the following indemnification provision:
The permittee agrees to indemnify and save harmless the City of Phoenix . . . from all suits, including attorneys’ fees and costs of litigation . . . of any character or any nature arising out of or in connection with any act or omission of the permittee, his agents and employees, and of any subcontractor.
Phx. City Code § 31-40. The Appellees asserted through various motions and joinders
that the City’s claims for indemnification were barred by the statute of repose contained in A.R.S. § 12-552(A), which provides:
Notwithstanding any other statute, no action or arbitration based in contract may be instituted or maintained against a person who develops or develops and sells real property, or performs or furnishes the design, specifications, surveying, planning, supervision, testing, construction or observation of construction of an improvement to real property more than eight years after substantial completion of the improvement to real property.
In response, the City argued that, as a governmental entity, it is exempt from the statute of repose. After briefing and oral argument, the trial court dismissed the
City’s third-party complaint in its entirety. The City filed a motion for reconsideration, which was denied. The court later deemed Appellees the successful parties in a contract action and, after considering the relevant factors identified in Associated Indem. Corp. v. Warner , 143 Ariz. 567, 570 (1985), awarded attorneys’ fees pursuant to A.R.S. § 12-341.01(A) to those parties who had properly requested them. The City timely appealed, and we have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1) and -2101(A)(1).
DISCUSSION I. The City Is Not Exempt from the Statute of Repose Contained in
A.R.S. § 12-552. ¶7 It is undisputed that the City filed its third-party complaint more than eight years after completion of the construction projects on which Tarazon worked. The City argues, however, the trial court erred in dismissing the third-party complaint because, as a political subdivision of the State of Arizona, it is exempt from all limitations periods and the period of repose contained in A.R.S. § 12-552(A). Whether A.R.S. § 12-552(A) applies to a claim brought by a governmental entity is an issue of first impression. The interpretation and application of a statute presents a
question of law which we review
de novo
.
First Fin. Bank, N.A. v. Claassen
,
2000) (motion to dismiss). Initially, the City argues “it is old and familiar law” that
limitations of actions do not apply to the State or its political subdivisions.
See State ex rel. Dep’t of Health Servs. v. Cochise Cnty.
,
When interpreting a statute, “we look first to the plain
language of the statute as the most reliable indicator of its meaning.”
Harris
Corp. v. Ariz. Dep’t of Revenue
,
“[n]otwithstanding any other statute,” no action may be filed more than eight years after substantial completion of the improvement to real property. Appellees argue the “notwithstanding” phrase means the exemption from limitations granted to governmental entities in A.R.S. § 12- 510 does not apply to the eight-year statute of repose in A.R.S. § 12-552. Consistent with the commonly understood meaning of the phrase, “[t]he legislature has often used language such as ‘notwithstanding any other statute’ or ‘notwithstanding any other provision to the contrary’ to indicate that a particular provision will trump any conflicting statutes.” State v.
Jones
,
§ 12-510 “limits its provisions to statutes of limitation in ‘this chapter,’ referring to chapter 5, title 12” and holding that the statute would not necessarily preclude application of the common law doctrine of nullum tempus because A.R.S. § 12-510 is “a partial codification”). But, the distinction has no relevance in the immediate case because the repose period at issue is found within the relevant chapter. For purposes of this Opinion, we assume without deciding that the
statute of repose is a limitations period within the meaning of A.R.S. § 12-
510.
But see Albano v. Shea Homes Ltd. P’ship
,
supersede[]” laws providing otherwise). [8] Thus, A.R.S. § 12-552(A) explicitly renders inapplicable the nullum tempus doctrine reflected in A.R.S. § 12-510. The City argues A.R.S. § 12-510 contains only one explicit
exception for those claims described within A.R.S. § 12-529,
[9]
and therefore,
A.R.S. § 12-552(A) does not expressly subject the City to the statute of
repose. The City relies upon a line of cases suggesting a governmental
entity is subject to limitations periods only upon an “express[] and definite[]
declar[ation]” by the legislature.
City of Bisbee
,
including A.R.S. § 12-510, when it enacted A.R.S. § 12-552 almost ninety
years later.
See Daou v. Harris
,
of Dirs. for Junior Colls. v. Phx. Union High Sch.
,
§ 12-552(A) to a governmental entity leads to an absurd result because it
may prevent the City from acting “on the public’s behalf and for the
public’s benefit.”
See Tucson Unified Sch. Dist. v. Owens-Corning Fiberglass
Corp.
, 174 Ariz. 336, 337 (1993) (holding A.R.S. § 12-510 is intended “to
protect the public from the negligence of public officers that might deprive
the public of its rights to redress against wrongdoers”). This argument is
unpersuasive, however, given the distinct purpose of the statute of repose
embodied in A.R.S. § 12-552: “‘to establish a limit beyond which no suit may
be pursued.’”
Albano
,
v. W. Innovations, Inc.
,
at 239, ¶ 9); accord Shasta View Irrigation Dist. v. Amoco Chemistry Corp. , 986 P.2d 536, 543 (Or. 1999) (holding the policy behind nullum tempus inapplicable to a statute of repose). Although the City’s interest in acting for the public benefit is valid, we assume the legislature considered that interest when it declined to exempt the City and other governmental entities from the statute of repose. Application of the statute’s plain language serves its purpose to limit liability exposure and, by definition, does not create an absurdity. Finally, while we need not consider the legislative history or
purpose of a statute to effectuate its plain language, the history of A.R.S. § 12-552 is particularly compelling. Section 12-552(A), adopting the eight- year limitations period, was enacted in 1989. One year later, the Central Arizona Water Conservation District (CAWCD), a municipal corporation, discovered defects in the 336-mile long Central Arizona Project (CAP) system, [10] completed more than twelve years before, which would cost $150 million to repair. See S. Fact Sheet (May 27, 1992), S.B. 1478, 40th Leg., 2d Reg. Sess. (Ariz. 1992). Acknowledging that any claim by CAWCD against the contractors was barred by A.R.S. § 12-552(A) and that, without further action, the burden of the repairs would fall to the taxpayers, see Minutes of S. Comm. on Judiciary at 30-33 (April 7, 1992), 40th Leg., 2d Reg. Sess. (Ariz.
1992), the legislature amended the statute to add subsection (G), stating that the eight-year period would not begin to run until September 15, 1989 “[w]ith respect to an improvement to real property that was substantially complete on or before September 15, 1989,” A.R.S. § 12-552(G). This amendment, which provided CAWCD an additional five years in which to sue for the CAP defects, reflected the legislature’s understanding that A.R.S. § 12-552 would have otherwise barred CAWCD’s claims. Simply put, there would have been no need for the legislature to amend A.R.S. § 12-552 to extend the repose period to allow CAWCD to bring suit over the CAP defects if the statute did not apply to government entities. [11] II. The Indemnity Obligation Contained Within Permits Issued to the
Developers is Based in Contract for Purposes of A.R.S. § 12-552. The City also argues that because A.R.S. § 12-552(A) applies only to claims “based in contract,” it does not apply to its claims against the Developers for defense and indemnification because those claims arise from permits issued by the City, rather than contracts. An “action based in contract” is defined within A.R.S. § 12-552(F) as “an action based on a written real estate contract, sales agreement, construction agreement, conveyance or written agreement for construction or for the services set forth in subsection A of this section,” which includes all services related to the development, sale, design, or construction of an improvement to real property, down to the supervision and observation of the project. See A.R.S.
§ 12-552(A). Whether a cause of action is “based in contract” within the
meaning of the statute is a question of law, which we review
de novo.
Caruthers v. Underhill
, 230 Ariz. 513, 526, ¶ 58 (App. 2012) (citing
Schwab
Sales, Inc. v. GN Constr. Co.
,
specific contracts to which it applies” and “noticeably absent from the exclusive list” are permits or documents “related to” those specified. However, contrary to the City’s position, the legislature did not mention any particular document by name within A.R.S. § 12-552(F). See supra ¶ 16.
And, the omission of a specific type of agreement is not dispositive given
the legislature’s broad language and obvious intent to encompass any
“written agreement . . . for the services set forth in subsection A.” A.R.S.
§ 12-552(F);
cf. Hohokam Irrigation & Drainage Dist. v. Ariz. Pub. Serv. Co.
, 204
Ariz. 394, 399, ¶ 20 (2003) (considering “the purposes of the [applicable
law], the broad statutory language, [and] the absence of specific language
of prohibition” in rejecting an argument that the defendant’s actions were
prohibited by statute);
Braden Trust v. Cnty. of Yuma
,
hallmark elements of a contract — i.e., the permits were not “dickered deals” reflecting offer, acceptance, consideration, mutual assent, and a sufficiently detailed statement of its terms. See Muchesko v. Muchesko, 191 Ariz. 265, 268 (App. 1997) (citing Savoca Masonry Co. v. Homes & Son Constr.
Co.
,
1978) (noting indemnity clauses are agreements between the parties). This analysis does not change merely because the agreement
was, as the City contends, “dictated by ordinance, not dickered as a deal” between the parties. Nor does the fact that the entirety of the parties’ agreement with respect to indemnification comprises a single sentence persuade us it was not based in contract within the meaning of A.R.S. § 12- 552. The City believed this same single sentence was a sufficient basis for its third-party complaint against Appellees. The City also argues its third-party claim is an exercise of its
police power to enforce a permit, not a suit premised upon a contract.
However, as Appellees correctly note, the ordinance that gives rise to the
City’s indemnification claim is not a statute that applies to the general
public.
See, e.g.,
A.R.S. § 40-360.44 (providing a person who violates the
High Voltage Power Lines and Safety Restrictions Act “is liable to the public
entity operating the high voltage overhead line for all damages to the
facilities and all costs and expenses”). Nor is the City seeking to revoke a
permit or impose a fine based upon a perceived violation of a City
ordinance.
See
9A Eugene McQuillin,
The Law of Municipal Corporations
§
26:215 (3d ed. 2005) (acknowledging the issuance of development and
construction permits is an “exercise of municipal police power”). The City’s
claim for indemnification is therefore not, as it suggests, an exercise of
police power intended to provide “for the promotion of public safety,
health, morals, and for the public welfare,”
Dano v. Collins
,
See Washington Elementary Sch. Dist. No. 6 v. Baglino Corp.
,
developers to construct or complete any development,” and “never mention[] the words ‘develop,’ ‘development,’ ‘sell,’ ‘real property,’ or ‘services’” and therefore “can never be a written agreement for real[ ]estate development and sales services.” But, A.R.S. § 12-552(A) is much broader than the City recognizes. By its terms, the statute of repose applies to claims against anyone who: “develops or develops and sells real property, or performs or furnishes the design, specifications, surveying, planning, supervision, testing, construction or observation of construction of an improvement to real property.” A.R.S. § 12-552(A). Moreover, to the extent the Developers chose to exercise their rights under the permits to design and build improvements, the permits required them to provide those services in accordance with the City’s specifications and standards. Accordingly, we conclude the permits forming the basis of the
City’s claims against the Developers are written agreements for qualifying services and those claims therefore are “based in contract” for purposes of A.R.S. § 12-552(A).
III. The Developers Qualify for an Award of Attorneys’ Fees Under
A.R.S. § 12-341.01(A).
¶23
The City argues the trial court erred in awarding attorneys’
fees to the Developers pursuant to A.R.S. § 12-341.01(A), reasserting its
position that the third-party action did not arise out of contract. Whether
A.R.S. § 12-341.01(A) applies to the City’s claims is a question of statutory
interpretation which we review
de novo
.
Chaurasia v. General Motors Corp.
,
Dist.
,
discretion, award attorneys’ fees to the successful party “[i]n any contested action arising out of contract, express or implied.” An award under A.R.S.
§ 12-341.01(A) is justified where the contract has “some causal connection
with the claim.”
Chaurasia
,
248, 256 (App. 1986).
Cf. Forty-Four Hundred East Broadway Co. v. 4400 East
Broadway
,
IV. The Trial Court Acted Within its Discretion in Setting the Amount
of Fees Awarded to Continental.
A successful party in a contract action is entitled to recover
fees for “‘every item of service which, at the time rendered, would have
been undertaken by a reasonable and prudent lawyer to advance or protect
his client’s interest.’”
Schweiger v. China Doll Rest., Inc.
,
See Charles I. Friedman, P.C. v. Microsoft Corp.
,
2006) (citing
Orfaly v. Tucson Symphony Soc’y
,
2004)). “To find an abuse of discretion, there must either be no evidence to support the court’s conclusion or the reasons given by the court must be ‘clearly untenable, legally incorrect, or amount to a denial of justice.’” Id.
(quoting
State v. Chapple
,
issued a detailed order containing specific findings regarding the relevant factors set forth in Associated Indemnity , including that: (1) the merits of the City’s claim were disputed; (2) the City did not make any offers to settle the case; (3) Continental’s efforts in investigating the issues, preparing pleadings, presenting a motion for judgment on the pleadings, and arguing before the court were necessary; (4) the City did not argue an award of fees would be an extreme hardship; (5) the City undertook a risk in bringing novel claims approximately twenty years after the completion of the projects at issue; and (6) an award of fees would mitigate the burden to Continental of litigating a meritorious defense. See Assoc. Indem. , 143 Ariz.
at 570 (listing factors “useful to assist the trial judge in determining whether
attorney’s fees should be granted” under A.R.S. § 12-341.01(A)) (citing
Wistuber v. Paradise Valley Unified Sch. Dist.
,
began as a complex personal injury claim against multiple defendants
based upon events spanning decades and culminating in the death of the
plaintiff. The case was further complicated by the City’s addition of almost
ninety additional third-party defendants, who were forced to participate in
the litigation until the City’s claims for indemnification were finally
resolved six months prior to trial. Additionally, the trial court’s award of
less than what Continental requested reflects it considered the City’s
arguments that the fees Continental sought were not entirely reasonable
and necessary. The trial court is in a superior position to evaluate what are
essentially factual matters involving the nature of the litigation and the
reasonableness of the parties’ corresponding efforts to defend and/or
resolve the dispute,
see Chase Bank of Ariz. v. Acosta
,
1994) (quoting
Assoc. Indem.
,
CONCLUSION The orders of the trial court are affirmed. Appellees request an award of attorneys’ fees and costs pursuant to A.R.S. §§ 12-341, -341.01(A), and -348. As the prevailing parties, Appellees are awarded their costs and reasonable attorneys’ fees incurred on appeal upon compliance with ARCAP 21(b).
Notes
[1] Absent material revisions from the relevant date, we cite a statute’s current version.
[2] We assume the truth of the well-pled facts of the third-party
complaint and construe them in the light most favorable to the City as the
non-moving party.
See Napier v. Bertram
, 191 Ariz. 238, 239, ¶ 1 (1998)
(motion for judgment on the pleadings) (citing
Thompson v. Better-Bilt
Aluminum Prod. Co.
,
[3] When Tarazon died in 2014, the complaint was amended to include a wrongful death claim against the City and other defendants.
[4] Of the named developers, fifteen appeared and defended against the City’s third-party complaint.
[5] Of the named contractors, four appeared and defended against the City’s third-party complaint.
[6] The City argues the nullum tempus doctrine is only partially codified within A.R.S. § 12-510, suggesting that some vestige of the common law
[8] The City argues the trial court erred in applying Pereyra , which interpreted the phrase “notwithstanding any law to the contrary,” rather than the phrase presented here, “notwithstanding any other statute.” Because we reject the City’s argument that A.R.S. § 12-510 only partially codified the common law nullum tempus doctrine for purposes of Title 12, Chapter 5 of the Arizona Revised Statutes, see supra n.6, we find no meaningful distinction between the two phrases that would render Pereyra inapplicable or unpersuasive.
[9] No party to the appeal has argued the exception found within A.R.S. § 12-529, relating to suits involving public trust land and navigable watercourses, applies here.
[10] CAP is a system of aqueducts, tunnels, pumping plants, and pipelines designed to bring water from the Colorado River to more than five million people living in Central and Southern Arizona. Central Arizona Project, http://www.cap-az.com (last visited March 28, 2016).
[11] Appellees also argue generally that a statute of repose creates a substantive right for which there are no exceptions. Because we conclude the language of A.R.S. § 12-552(A) is unambiguous and supported by the statute’s history and purpose, we need not address this broad proposition.
[12] The City argues for the first time in its reply brief that the permit is
actually a license, which it asserts, by definition, is not a contract. This
argument was not properly presented on appeal, and we do not address it.
Preston v. Amadei
,
[13] The City also argues a permit cannot be a valid contract because the
Phoenix City Charter requires all contracts with the City be “executed in
the name of the City of Phoenix by the Manager.”
See
Phx. City Charter
ch. XIX, § 1. However, the right-of-way permits at issue necessarily were
issued with the consent of the City Manager.
See
Phx. City Code § 31-80(A)
(authorizing the City Manager to issue permits);
see also Humphrey v. City of
Phx.
,