TWIN CITY FIRE INSURANCE COMPANY, Plaintiff/Counter-Defendant/Appellee,
GRACIELA LEIJA, Defendant/Counter-Claimant/Appellant.
from the Superior Court in Maricopa County No. CV2012-004506
The Honorable Michael J. Herrod, Judge The Honorable J.
Richard Gama, Judge, Retired.
Skelton & Hochuli, PLC, Phoenix By Donald L. Myles, Jr.,
Jefferson T. Collins, Lori L. Voepel Counsel for
Robbins & Curtin, PLLC, Phoenix By Joel B. Robbins, Anne
E. Findling Co-Counsel for
Ahwatukee Legal Office, PC, Phoenix By David L. Abney
Co-Counsel for Defendant/Counter-Claimant/Appellant
Presiding Judge Diane M. Johnsen delivered the opinion of the
Court, in which Judge Patricia K. Norris and Judge Jay M.
Polk joined. 
M. Johnsen, Judge
Under Arizona law, an injured worker who accepts workers'
compensation benefits cannot sue the employer. The worker may
sue others responsible for his or her injuries, but the law
grants the employer's insurance carrier a lien against
any recovery. We hold in this case that when a worker settles
a claim against a third party for less than the limits of the
third party's insurance, the worker may obtain a judicial
determination of whether the carrier's lien should be
reduced to account for the employer's comparative fault.
AND PROCEDURAL BACKGROUND
Victor Leija was a window washer. He plunged three stories to
his death when a scaffold he was trying to erect atop a
three-story building collapsed and fell to the ground. His
employer's workers' compensation carrier, Twin City
Fire Insurance Company, accepted the claim and pays monthly
benefits of $1, 857 to Leija's widow and children. Over
time, those payments will total some $575, 000.
Leija's family sued several third parties, including the
City of Glendale, which owns the building from which Leija
fell; the building's property manager and maintenance
company; the company that furnished the scaffold; and the
company that fabricated it. The Leijas alleged negligence by
each of the defendants caused the scaffold to fall; in the
case of the City, they alleged breach of a duty to provide
anchors to secure the scaffold to the roof of the building.
The City and the other defendants identified Leija's
employer as a nonparty at fault. As evidence, they pointed to
citations the state Division of Occupational Safety and
Health issued the employer for failing to repair a defect in
the scaffold, failing to properly secure the scaffold to the
building and failing to make sure Leija wore a safety
The Leijas eventually settled with all the defendants and
recovered a total of $1, 600, 000. All but one paid the
limits of their insurance coverage. The exception was the
City of Glendale, which was an additional insured on two of
the other defendants' policies. The City settled the
Leijas' claim without having to draw on its own insurance
coverage, which was ample. Twin City did not object to any of
the settlements, but asserted a right to fully enforce its
lien against the settlement proceeds. It sought reimbursement
for what it had paid the Leijas already and full credit
against future payments. The Leijas rejected Twin City's
demand, arguing the carrier's lien should be reduced due
to the employer's comparative fault in the accident.
After negotiations failed, Twin City filed a complaint for
"enforcement of lien." The Leijas counterclaimed,
alleging Twin City breached its duty of good faith and fair
dealing by refusing to reduce its lien to account for
employer fault. They also alleged Twin City breached a
promise to reevaluate the lien amount after all the
settlements were finalized. In the alternative, the Leijas
asked the superior court to set a trial to establish the
amount of the lien.
Both sides eventually moved for summary judgment. The court
rejected the Leijas' contention that a workers'
compensation carrier owes a duty of good faith to compromise
its lien to account for the employer's comparative fault,
but found there was a genuine issue of material fact about
whether Twin City breached a promise to consider compromising
its lien. The court also ruled that "a separate action
after compromise of the third-party claim is not the
appropriate vehicle to allocate fault to the workers[']
compensation carrier's insured."
After further discovery, Twin City once again moved for
summary judgment. This time, the superior court granted the
motion, finding no proof that Twin City promised to
compromise its lien. The court also denied the Leijas'
motion for leave to add claims against Twin City's parent
company, The Hartford Financial Services Group, Inc.
¶8 We have jurisdiction of the
Leijas' timely appeal pursuant to Arizona Revised
Statutes ("A.R.S.") sections 12-2101(A)(1) (2017)
and -120.21(A)(1) (2017).
Workers' Compensation Liens and ...