A small wrinkle concerning fees in contract cases.

The Tucson Estates homeowners’ association sued the McGoverns for a CC&R violation and lost. The trial court decided that each party should bear its own fees and costs. The McGoverns appealed, arguing for fees under 12-341.01. The Court of Appeals affirms as to fees, though it awards costs.

The statute says that the court “may” award fees but cannot change the contract terms. The Tucson Estates  property owners’ agreement says that the HOA “shall” be entitled to fees but says nothing about the homeowners. Existing precedent holds that in this situation the court may award fees; the McGoverns’ position was that it must award them because its only fair that if they’re mandatory as to one party they should be mandatory as to both. But the court points out that the statute’s purpose is to mitigate the burden of litigation, not to create contractual equity.

(The McGoverns also argued that the trial court should have found in its discretion that they were entitled to fees; the court rather summarily denies these fact-specific arguments.)

Because fees are mandatory for the prevailing party  the trial court apparently concluded that neither prevailed. The HOA sued for declaratory relief and for breach-of-contract damages; it lost both. Though the equitable part doesn’t have to be counted for purposes of determining a prevailing party the breach of contract does. The McGoverns therefore prevailed and were entitled to costs.

(link to opinion)

Not a terribly exciting case but insurance practitioners will want to be aware of this nicely-done civil opinion from Division Two.

Gambrell, while driving his employer’s milk truck, was injured in an accident. He got paid by the other driver’s insurer and by his employer’s UIM policy. He then demanded UIM under his personal auto policy from  IDS. It denied him; he sued; the trial court gave IDS summary judgment; the Court of Appeals affirms.

The policy’s UIM coverage was worded so as not to cover most commercial vehicles. Gambrell argued that since UIM coverage is nowadays “portable” it must cover him wherever, citing Calvert — UIM applies in the car, walking, sitting on the porch, etc. IDS cited 20-259.01(C), which makes UIM coverage of transport vehicles permissive rather than mandatory. Gambrell threw a number of arguments at that, though most seem to have amounted to “the statute can’t mean that because portability.” The essential problem with that is that Calvert expressly recognized the statute’s predecessor as an exception to the portability requirement.

The interesting part of the case is the court’s comment on portability: “Although the statute does not explicitly state that UIM coverage is personal and portable, the legislature has never explicitly addressed this interpretation  . . .  and courts continue to rely on it.” Not exactly a ringing endorsement. This is a useful, appropriate, and somewhat unexpected reminder that, despite frequent invocation of Calvert’s porch, portability is a judicial invention that exists because the legislature hasn’t bothered to change it.  

(link to opinion)

Holding that although a statute requires school districts to do background checks, if they don’t then another statute protects them from the results of hiring known sexual predators to work with your children.

A teaching assistant was convicted of creating child pornography using one of his profoundly-disabled young students. It turned out that the assistant’s last employer had fired him for making inappropriate advances. The student’s parents sued TUSD for negligent hiring and supervision. TUSD won summary judgment based on 12-820.05(B). The parents appealed; the Court of Appeals affirms.

The statute: “A public entity is not liable for losses that arise out of and are directly attributable to an act or omission determined by a court to be a criminal felony by a public employee unless the public entity knew of the public employee’s propensity for that action.” A special action taken earlier in this case established that the public entity’s knowledge must be actual, not constructive. The trial court dismissed the parents’ claim that TUSD was vicariously liable for the assistant’s acts. But they argued that the statute does not apply to their action against TUSD for its own negligence.

The court rules that it does. There was no evidence of actual knowledge. Evidence suggested, the parents contended, that TUSD hadn’t (in violation of a statute) contacted the previous employer; if so, the court indicates, that would simply confirm its lack of actual knowledge. The statute “does not include any language that would limit the public entity’s immunity based on the type of action or inaction by the entity that contributed to the injury.” Because it considers the statute clear the court declines to consider the parents’ arguments based on legislative history, policy, and comparison with other statutes.

The court omits any language along the lines of “this results in asinine policy but it’s the legislature’s fault, not ours.” Although we don’t approve of gratuitous shots at legislators and do approve of respect for statutes, some acknowledgment that the result is problematic would give us greater assurance that the court sees the problem. The suspicion is of course that to bureaucrats their immunity for violations is a feature, not a bug.

(link to opinion)