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DBT Yuma, L.L.C. v. Yuma Cnty. Airport Auth.

Supreme Court of Arizona

November 24, 2015

DBT YUMA, L.L.C., AN ARIZONA LIMITED LIABILITY COMPANY; DBRT YUMA FBO, LLC, AN ARIZONA LIMITED LIABILITY COMPANY; DBRT YUMA HANGARS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY; DBRT YUMA MAINTENANCE, LLC, AN ARIZONA LIMITED LIABILITY COMPANY, Plaintiffs/Appellants,
v.
YUMA COUNTY AIRPORT AUTHORITY, A BODY POLITIC AND CORPORATE PURSUANT TO A.R.S. § 28-8424; YUMA COUNTY, A POLITICAL SUBDIVISION OF THE STATE OF ARIZONA, Defendants/Appellees

Appeal from the Superior Court in Yuma County. The Honorable John N. Nelson, Judge. No. CV201001309. Opinion of the Court of Appeals, Division One 236 Ariz. 372, 340 P.3d 1080 (App. 2014) .

Appeal from the Superior Court in Yuma County. The Honorable John N. Nelson, Judge. AFFIRMED. Opinion of the Court of Appeals, Division One 236 Ariz. 372, 340 P.3d 1080 (App. 2014). VACATED IN PART.

Daryl M. Williams (argued), Michael C. Blair, Baird, Williams & Greer, LLP, Phoenix, Attorneys for DBT Yuma, L.L.C., DBRT Yuma FBO, LLC, DBRT Yuma Hangars, LLC, and DBRT Yuma Maintenance, LLC Paul S. Gerding, Jr., Marc R. Lieberman, Kelley E. Sucher, Kutak Rock, LLP, Scottsdale, Attorneys for Yuma County Airport Authority.

Jon R. Smith, Yuma County Attorney, William J. Kerekes (argued), Chief Civil Deputy County Attorney, Office of the Yuma County Attorney, Yuma, Attorneys for Yuma County.

Jeana R. Morrissey, Jeana R. Morrissey, PLLC, Gilbert, Attorney for Amici Curiae M-14P Inc., et al.

VICE CHIEF JUSTICE PELANDER authored the opinion of the Court, in which CHIEF JUSTICE BALES and JUSTICES BRUTINEL, TIMMER, and BERCH (RETIRED) joined.

OPINION

Page 380

PELANDER, VICE CHIEF JUSTICE.

[¶1] Under A.R.S. § 28-8424(A)(3), a nonprofit corporation that leases airport property from a county " [p]erforms an essential governmental function as an agency or instrumentality" of the county. We here address whether, based solely on that statutory language, the Yuma County Airport Authority (" YCAA" ) is an agent of Yuma County, making the County liable as principal for YCAA's alleged breach of its sublease with Plaintiffs (collectively " DBT Yuma" ). We hold that § 28-8424(A)(3) by itself does not make YCAA the County's agent for purposes of imputed liability.

I.

[¶2] In 1965, five persons formed YCAA as a nonprofit corporation to operate the Yuma International Airport under a lease from the County. That arrangement has continued for about fifty years. In 2008 and 2009, DBT Yuma subleased property at the airport from YCAA and operated a fixed base operation there as Lux Air. After YCAA evicted DBT Yuma and entered into a new sublease with another tenant, DBT Yuma sued YCAA for breaching its sublease and the implied covenant of good faith and fair dealing.

[¶3] DBT Yuma later added Yuma County as a defendant, alleging that YCAA was the County's " political subdivision" and " instrumentality and alter ego," making the County liable for YCAA's breach. The County and DBT Yuma each moved for summary judgment, and the trial court granted the County's motion under Arizona Rules of Civil Procedure 54(b) and 56.

[¶4] The court of appeals affirmed, holding that YCAA was not the County's alter ego and that " A.R.S. § 28-8424 does not impose vicarious liability on counties for the activities of airport operators that are nonprofit corporate lessees of county airport land." DBT Yuma, L.L.C. v. Yuma Cty. Airport Auth., 236 Ariz. 372, 377 ¶ 20, 2340 P.3d 1080, 1085 (App. 2014).

[¶5] We granted review because the interpretation of § 28-8424 is a legal issue of first impression and statewide importance. We have jurisdiction under article 6, section 5(3) of the Arizona ...


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