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City of Phoenix v. Glenayre Electronics, Inc.

Court of Appeals of Arizona, First Division

May 19, 2016

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.

         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

          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.

          Judge Kenton D. Jones delivered the opinion of the Court, in which Presiding Judge Diane M. Johnsen and Judge Patricia A. Orozco joined.

          OPINION

          JONES, Judge:

         ¶1 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), [1] 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

         ¶2 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]

         ¶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 ...

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