Explaining a procedural requirement for a bad-faith claim in workers’ compensation.

Merkens received workers compensation benefits after inhaling a toxic substance at work. An IME eventually said she wasn’t harmed so Federal terminated the benefits. She sued it for breach of contract and bad faith. Federal moved for summary judgment, arguing that she first had to challenge its decision before the Industrial Commission. The Superior Court granted the motion; she appealed. The Court of Appeals affirms.

The court first reviews the history of workers’-compensation bad faith. “To date, the Arizona cases addressing a bad faith claim in the workers’ compensation context have involved injured workers who had or were pursuing a compensability determination before the Industrial Commission.” “Here, however, Merkens did not seek a determination from the Industrial Commission that she was entitled to continuing benefits. Instead, she claims she is entitled, in her superior court action, to recover the unpaid compensation and medical benefits related to her injury caused by Federal’s termination of her benefits, as well as related tort damages.”

And that’s why her claim fails. “Even if we assume [bad faith], the finder of fact would have to make a compensability determination to find that Federal unreasonably terminated Merken’s benefits.” But “the Industrial Commission has the exclusive jurisdiction to determine whether the injured worker is entitled to benefits and the amount of those benefits.” Franks (1985), allowing workers’-compensation bad faith, did not – and could not because its constitutional law – change that.

The court also affirms the trial court’s denial of fees, and itself denies costs, on hardship grounds. That would be unremarkable except that the court sees fit to throw in that “the hardship [was] caused by Federal’s decision.” So Federal “caused” Merken to be poor by not paying her money she has shown no right to? And if she did have workers’-comp benefits, that would be enough to defeat a claim of hardship? We wonder what the court thinks the quoted phrase adds to the opinion.

(link to opinion)

Its nice to know that the court will, at least eventually, put its foot down.

The Gradys borrowed money from Tri-City’s predecessor-in-interest, giving a Deed of Trust on their house. They defaulted. Following the normal modern debtor’s playbook, they sued Tri-City. They lost. But they didn’t move out, so Tri-City filed an FED action; the Gradys lost; they appealed. The trial court at first denied a stay of execution of the FED judgment pending appeal so they took a special action; the Court of Appeals ruled that a stay is not discretionary if an appropriate bond is filed. But the Court of Appeals eventually ruled against them on the merits and the Supreme Court denied review. So Tri-City moved to lift the stay, for a Writ of Restitution, and to take the bond. The Gradys responded with a nebulous motion asking the trial court to set aside the judgment, among other things. The trial court denied that motion and granted Tri-City’s. The Gradys appealed, as a special order after judgment, the denial of their motion. And they filed a motion to stay execution of the FED judgment until the completion of that appeal. The trial court granted that, feeling that it had to do so given the previous special-action ruling. Tri-City took this special action from that order.

The Court of Appeals accepts it and grants relief.

Both sides argued, again, whether a stay was discretionary. But the Court of Appeals decides the case on a different issue: “In our view, the real issue is whether the trial court had the authority to stay execution of a judgment not currently pending appeal. We hold that it did not.” “A stay can only be granted of the judgment that is being appealed,” based on the language of ARCAP 7(b) and 12-1182.

The court may be right but the analysis is more complicated than that. Although the opinion rules on an issue not briefed or argued, neither the opinion nor the record indicates that the court requested supplemental briefing. Why not? Its hard to think of a good reason but perhaps the court was reluctant to drag this out further. Tri-City has been trying for six years to get the Gradys out of the house and the court goes out of its way to suggest that their bond was inadequate. “Put simply, the Gradys are receiving a continuing unjust benefit through procedural gamesmanship.”

(link to opinion)

Over the years our courts have “clarified” the concept of duty to the point where its now fairly mysterious, even to them.

Several U. of A. students were on a “study-abroad” program in China at Nanjing American University. While there they decided to visit Mt. Everest, where one died of altitude sickness. His mother sued both “universities.” (How, you ask, can an Arizona court have jurisdiction over a Chinese college? Turns out that “Nanjing American University” isn’t “Nanjing University” except, perhaps, for marketing purposes; its instead an Arizona corporation.) The defendants moved for summary judgment on the theory that they had no duty; the court granted it. Mom appealed; the Court of Appeals affirms.

The analysis starts by explaining that there is this thing called “duty” which, along with things called “causation” and “damages” gets you a negligence case. One wonders what group of elementary-school infants they write these things for.

(As to “duty,” the court tells us that the law before 2007 (citing Gipson 2007) “created some confusion and lack of clarity . . . as to what extent, if any, foreseeability issues bear on the initial legal determination of duty.” Courts write their own versions of history and so that is presumably what history will now say: there was confusion before Gipson brought us light. So much for those of us who lived through our courts’ long, slow, and quite deliberate process of creating a justification for the rejection of the Palsgraf standard (“the risk to be foreseen defines the duty to be obeyed”), which we had followed for decades, in favor of a “standard” by which judges make up duty as they go along.)

Arizona cases had held that schools have a duty to students for on-campus events. A Restatement section says that duty extends to a student “at school or otherwise engaged in school activities.” Does that include off-campus events? Well, here the court clearly feels that it is running into a problem. Under Gipson duty is strictly legal, not factual. “Accordingly, this court does not look at ‘the parties’ actions’ alleged to determine ‘if a duty exists.’”  “Instead, this court looks to the legal factors identified elsewhere to determine whether the Tibet trip was an off-campus school activity for which Defendants owed  . . .  a duty of reasonable care.” How does it do that? By plunging back into factual analysis, so at this point you can abandon all hope of a clear idea of what the court thinks its doing.

Citing the Restatement again, “the [school’s] duty is tied to expected activities within the relationship. Therefore, in the student-school relationship, the duty of care is bounded by geography and time, encompassing risks such as those that occur while the student is at school or otherwise under the school’s control.” (Are you following this? Duty can depend on what’s “expected” but not on what’s “foreseeable.”) “In what are at best analogous contexts, Arizona cases have identified the following factors in determining whether an off-campus activity is deemed a school activity”: its purpose, whether it was part of of the curriculum, whether the school supervised it, and “whether the risk was independent of school involvement.” Though the cases are “at best analogous” and the factors strictly factual the court applies them and, after lengthy discussion of the facts of the trip to Mt. Everest, decides that the schools had no duty.

The court then switches back to legal analysis, deciding briefly that no public policy requires off-campus liability and that there’s no duty simply because the plaintiff’s expert opined that there should be.

(link to opinion)