We spoke too soon. On March 25, we discussed vested rights and retroactive statutes, and the next day this case comes out. The Arizona Supreme Court holds that a more recent statutory amendment to the workers’ compensation act, which makes it easier for firefighters to have cancer covered, does not apply because the defense had a vested right under the earlier statute. The defense vested when the plaintiff filed the lawsuit. Yet another reason to re-read Hall.  Justice Montgomery authored a vigorous dissent. He has a different view on when and what rights vests. The “manifest intent” must consider that the statutory amendment was born from Arizona’s constitution and “necessarily operates with the intent and purpose to compensate as many employees as are qualified under the WCA” and “advances the remedial purpose of the WCA.” We got Grammatico goosebumps just reading this.

link to opinion

We have had too much sun today and are getting cranky. This case from Navajo County makes us even more cranky. Feuding neighbors, the Crowes and the Giersts, settled their differences in 2016. Years later they are back at each other. This time the dispute went to a nine-day jury trial. The jury found in favor of the Crowes for the Giersts breach of the earlier settlement agreement but awarded them no damages. The jury found for the Giersts on their counterclaim for breach of good faith and fair dealing and awarded 25k, part of which was for punitive damages. Both sides claimed victory. On appeal, the Giersts contended they were entitled to attorney’s fees in addition to the jury award. The Giersts, however, had presented their attorney fee claim during trial as part of their damage claims, a whopping $162,750. There are only a few rare instances when attorney’s fees constitute damages, and this isn’t one of them. It was error to present this to the jury. The Giersts invited the error and cannot complain. Unlike the fees, however, the Giersts did not request these from the jury. They could be entitled to their costs, but the trial court never explained its reasons for denying them. The case is remanded so the trial court can explain. As for claims by both sides for fees on this appeal, the court of appeals awarded the Crowes their fees and costs (our guess is the fees will be 25k and no one gets anything. Two weeks in trial and thousands and thousands in wasted fees by both sides.  We question why this is a published opinion. We are tired of reading about feuding neighbors. When neighbors settle a dispute, we demand a fence or, at a minimum, an ADR clause in the settlement agreement.

We rarely discuss criminal cases. We make an exception here because the court of appeals focused on an Arizona Supreme Court civil case when considering the retroactive application of an amendment extending the statute of limitations. We also consider a homestead exemption appellate opinion from a few weeks ago that relied upon the same Arizona Supreme Court decision: Hall v. A.N.R. Freight System, Inc., 149 Ariz. 130 (1986). Vergara committed sexual assault and kidnapping in 1991. But he was not identified as a suspect. At that time, the criminal statute for these offenses was seven years. A.R.S. § 13-107. In 1997, however, the legislature amended the criminal statute of limitations stating, “The period of limitation does not run for a serious offense. . . during any time when the identity of the person who commits the offense or offenses is unknown.” Vergara’s identity was unknown until 2018, when a cold case DNA analysis from the victim identified his DNA in a database. In 2021, he was indicted and was later convicted. Vergara contended the amendment extending the statute of limitations should not be applied retroactively and quoted the Arizona Supreme Court’s decision in Hall that there may be a fully vested right in a statute when a defendant “so substantially relied upon that retroactive divestiture that retroactive divestiture would be manifestly unjust.” The court of appeals rejected this:

Assuming Hall, a civil tort case, applies, our supreme court there stated that “[a]ny substantial reliance argument raised by a defendant must focus on actual reliance at the time of the litigated occurrence, not upon any subsequent hope or expectation that the law will remain static” until the right vests. The court determined the defendant had not “substantially relied on the contributory negligence defense, in part, because, “the existence or lack of such an affirmative defense has no effect on the everyday conduct of individuals.”

A criminal would be hard-pressed to demonstrate actual reliance when committing a crime. We are aware of other civil cases discussing whether there is a substantive vested right in a statute of limitations under fair notice and due process. E.g., Chenault v. U.S. Postal Service, 37 F.3d 535, 537 (9^th Cir. 1994). This is “because to do so would alter the substantive rights of a party and increase a party’s liability.” Id. “Extending a statute of limitations after the pre-existing period of limitations has expired impermissibly revives a moribund cause of action.” Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S. 939, 950 (1997). Simply because a new statute of limitations is created does not necessarily mean that a claim “can never be revived by a subsequent legislative extension of that period of limitations.” Chevron Chemical Co. v. Superior Court, 131 Ariz. 431, 434-40 (1982). For example, a change in a statute of limitation would not violate a person’s due process rights if the statute lengthens a statute of limitations before the time has run, as in this case. A statute violates a person’s due process rights when it “attach[es] new legal consequences to events completed before its enactment.” San Carlos Apache Tribe v. Superior Court ex rel. Cty. of Maricopa, 193 Ariz. 195, 205-06 ¶¶15-16 (1999) (citing Landgraf v. USI Film Prods., 511 U.S. 244 (1994)) (Landraff is cited in ¶ 32 of this opinion). “In other words, legislation may not disturb vested substantive rights by retroactively changing the law that applies to completed events.” Id. (citing Hall v. A.N.R. Freight System, Inc., 149 Ariz. 130, 139 (Ariz. 1986)). A “vested right ‘is actually assertable as a legal cause of action or defense or is so substantially relied upon that retroactive divestiture would be manifestly unjust.’” Id. As the court of appeals held here, Vergara never asserted and did not have any colorable argument of substantial reliance or that the statute’s application was manifestly unjust.

The reference to Hall brings up another Division 2 case from a few weeks ago. Reilly v. Canale, (D1 3.3.25), the court of appeals considered when substantive rights vest. The rights in the judgment vested before the statute was amended increasing the homestead exemption from $250,000 to $400,000. The plaintiff had obtained a judgment before the statute was enacted, and the court held the judgment was a vested or matured right. But, the inquiry did not end there. The right to satisfy the judgment through a forced sale and writ of execution had not matured. This right is procedural and was not preserved under the statute’s savings clause that states the amendment “does not affect rights and duties that matured” before its effective date.  That seems awkward. Bottom line: the debtor gets the $400,000 exemption. In looking again at Hall, we note it has been cited 115 times. We did not know it was so popular so we will re-read it.