Samuel G. Doneson, Plaintiff/Appellant,
Farmers Insurance Exchange, a California reciprocal or interinsurance exchange; Farmers Insurance Company of Arizona, Inc., an Arizona corporation, Defendants/Appellees.
from the Superior Court in Pima County No. C20170429 The
Honorable Catherine Woods, Judge.
Jackson & Oden P.C., Tucson By Todd Jackson and Goldberg
& Osborne LLP, Tucson By David J. Diamond Counsel for
Rees Scully Mansukhani LLP, Phoenix By Andrew S. Jacob, Aaron
P. Rudin, and Calvin E. Davis Counsel for
Judge Eckerstrom authored the opinion of the Court, in which
Judge Brearcliffe and Judge Espinosa concurred.
ECKERSTROM, CHIEF JUDGE.
Samuel Doneson appeals from the trial court's order
granting a motion filed by appellees Farmers Insurance
Exchange and Farmers Insurance Company of Arizona, Inc.
(collectively "Farmers") to dismiss the complaint
against them. For the following reasons, we affirm the
judgment of the trial court.
and Procedural Background
"In reviewing a trial court's decision to grant a
motion to dismiss, we assume the truth of the facts asserted
in the complaint." Sw. Non-Profit Housing Corp. v.
Nowak, 234 Ariz. 387, ¶ 4 (App. 2014). In
February 2016, Doneson was injured in an automobile accident.
He incurred approximately $22, 000 in medical expenses, a
portion of which was paid by workers' compensation
benefits. He recovered $15, 000 from a third-party tortfeasor
and, pursuant to A.R.S. § 23-1023(D), was required to
reimburse his workers' compensation insurer in the amount
of $8, 750.
At the time of the accident, Doneson was an insured under an
automobile liability insurance policy issued by Farmers. The
policy included a "medpay" provision that provided
coverage for injuries sustained in an automobile accident.
That policy contained an exclusion for "bodily
injury" that "[o]ccurr[ed] during the course of
employment if workers' or workmen's compensation
benefits are required." Doneson submitted a claim for
$5, 000 in medical bills, which Farmers denied.
Doneson filed a complaint in the superior court alleging
claims of breach of contract, declaratory relief, insurance
bad faith, and interference with contract. Farmers filed a
motion to dismiss the complaint, asserting the medpay claim
was properly denied under the workers' compensation
exclusion. The trial court granted Farmers's motion and
dismissed the complaint with prejudice. Doneson appealed. We
have jurisdiction pursuant to A.R.S. §§
12-120.21(A)(1) and 12-2101(A)(1).
We review a trial court's grant of a motion to dismiss
for failure to state a claim under Rule 12(b)(6), Ariz. R.
Civ. P., de novo. Blankenbaker v. Marks, 231 Ariz.
575, ¶ 6 (App. 2013). Doneson claims the trial court
erred in finding the workers' compensation exclusion
barred his claim, arguing that the court should have
considered other factors including the intent of the parties,
public policy considerations, and extrinsic evidence, rather
than enforcing the exclusion on the basis that it was
unambiguous. The interpretation of a contract is a question
of law that we review de novo. Grosvenor Holdings, L.C.
v. Figueroa, 222 Ariz. 588, ¶ 9 (App. 2009).
The sole issue on appeal is whether the policy exclusion
providing for no coverage when "workmen's
compensation benefits are required" applies when, as
here, the injured worker has recovered from a third-party
tortfeasor and reimbursed the employer's insurer for
workers' compensation benefits pursuant to A.R.S. §
23-1023(D). Farmers asserts that benefits are
"required" when an injured employee is entitled to
receive workers' compensation benefits regardless of
whether the employee "sought, was ever paid, or was
later required to reimburse workers' compensation
benefits." Doneson claims that when an insured party
reimburses a workers' compensation insurer for the
benefits received, the insured has taken nothing, and
therefore benefits were essentially not "required."
Doneson asserts the trial court erred in failing to consider
parol evidence supporting his interpretation of the
In determining whether to consider parol evidence to
interpret a contract, a "judge first considers the
offered evidence and, if he or she finds that the contract
language is 'reasonably susceptible' to the
interpretation asserted by its proponent, the evidence is
admissible to determine the meaning intended by the
parties." Taylor v. State Farm Mut. Auto. Ins.
Co.,175 Ariz. 148, 154 (1993). In interpreting a
contract, we seek to effect the intent of the parties and ...