Arizona Attorney - December 2013

The Judicial Nomination Statute Is Unconstitutional. Arizona’s Constitution requires the Commission on Appellate Court Appointments to submit “not less than three” nominees for a judicial vacancy to the governor. Ariz. Const. art. 6, §§ 36-37. The legislature recently enacted H.B. 2600, which requires the Commission to submit “at least five” nominees to the governor, unless an applicant is rejected by a two-thirds vote. H.B. 2600 directly conflicts with Arizona’s Constitution. The requirement to submit at least five nominees fundamentally changes the selection process set forth in the Constitution, which requires nomination of no fewer than three. Dobson v. Arizona, CV-13-0225- SA, 9/13/13.

COURT OF APPEALS CIVIL MATTERS

Negligence Claims Are
Barred When Title
Commitment Fails to Disclose
Encumbrances, but a
Continuation of Insurance
Provision in a Title Policy Does
Not Preclude a Claim for
Damages Made After the
Property Is Sold. A.R.S. § 20-
1562 makes a clear distinction
between “abstract of title,” which
is intended to be relied upon, and
a “title commitment,” which is
merely a description of the condi-
tions under which the title compa-
ny will issue a title insurance policy.
By statute, the title commitment is
not a representation that the title is
unencumbered, but rather a prom-
ise to issue a policy indemnifying
the buyer for any encumbrances
the title company failed to discov-
er. Consequently, a party may not
assert a negligence claim against a
title company for failure to include
an encumbrance in the title com-
mitment. A “continuation of cov-
erage” clause in a title policy does
not put a restriction on when
a party may assert a claim under
the title policy, but rather only on
the date when the policy would
indemnify for a claimed injury.
Consequently, a title claim may be
made after the insured property is
sold. Centennial Dev. Group, LLC
v. Lawyer’s Title Ins. Corp., 1 CA-
CV 12-0080, 9/19/13.

Determinations of a Board of Directors of a County Improvement District Made at a Hearing Held Pursuant to A.R.S. § 48-924(D) Are Quasi-Judicial and Have Preclusive Effect. The statute governing county improvement districts authorizes a district’s board of directors to conduct a hearing if a contractor’s work “is not prosecuted with diligence.” A.R.S. § 48- 924(D). At the hearing, a board “may prescribe such terms and conditions as it deems proper before permitting the contractor to continue with the work” or may “hold the contractor in default and make demand on the surety.” A board’s determinations are “final and conclusive” and “may be reviewed only by a special action.” An adjudicative determination by an administrative tribunal is entitled to the same res judicata effect as a judgment of a court if it entails the essential elements of adjudication. A. Miner Contracting, Inc. v. Toho-Tolani County Improvement Dist., 1 CA-CV 10-0665, 9/19/13.

Parties Cannot Contractually Waive Their Statutory Rights to a Judicial Determination of a Property’s Fair Market Value Under A.R.S. § 33-814(A). Arizona’s Enabling Act requires that any sale or lease of trust lands be made to the highest and best bidder at a public auction. This requirement is incorporated into the Arizona Constitution. A disposition that is not made in substantial conformity with this requirement is null and void. Arizona’s statutory process for awarding state

SUPREME COURT CIVIL MATTERS Legislature’s Budget Measure

Violated Voter Protection Act by Repealing or Amending Voter-Approved Statute Requiring Certain Increases to School Funding. Article 4, Part 1, Section 1( 1) of the Arizona Constitution reserves for the people the “power to propose laws and amendments to the constitution and to enact or reject such laws and amendments at the polls, independently of the legislature.” The people exercise this power through the initiative and referendum process. Under the Voter Protection Act (“VPA”), the legislature may not repeal a voter-approved law and may only amend the law if it “furthers the purposes” of the law and receives a three-fourths super-majority vote in the legislature. ARIZ. CONST. art. 4, pt. 1, § 1( 6), ( 14). Public schools receive funding based on a statutory formula which includes calculation of a “revenue control limit.” The “revenue control limit” consists of the “base level” support for each school and the “ transportation support level.” In 2000, voters approved Proposition 301. Among other things, Prop 301 required the legislature to make annual inflation adjustments to “increase the base level or other components of the revenue control limit” by certain amounts. Proposition 301/ § 15-901.01 is constitutional as there is nothing in the constitution that would preclude the voters from enacting such a provision. H.B. 2008 also implicitly repealed or amended § 15-901.01 because the two provisions could not “be harmonized.” H.B. 2008 violates the VPA. Cave Creek Unified Sch. Dist. v. Ducey, CV-13-0039- PR, 9/26/13.

APPELLATE HIGHLIGHTS

by Thomas L. Hudson (civil), Patrick C. Coppen (criminal), and James M. Susa (tax). Family Law summaries are prepared by the Case Law Update Committee of the Family Law Section of the State Bar of Arizona.

trust lands in Arizona complies with the Enabling Act. Those procedures satisfy the Act’s highest and best bidder requirement under the Enabling Act because they include an assessment of who is willing to pay the highest rent. WildEarth Guardians, Inc. v. Knight, 1 CA-CV 12-0338, 9/12/13.

A Creditor May Sue a Guarantor Without a Prior Trustee’s Sale, and Arizona’s Anti-Deficiency Statute Only Applies After a Trustee’s Sale of a Qualifying Property Under A.R.S. § 33-814(G). A.R.S. § 33- 814(B) provides that any action must be brought within 90 days of a trustee’s sale. However, because § 33-814(C) provides that the balance due on a contract may be enforced “in an action regardless of whether a trustee’s sale is held,” it is not necessary for a creditor to first hold a trustee’s sale. Under Arizona’s anti-deficiency statute, A.R.S. § 33-814(G), a creditor can elect to forgo foreclosure and sue directly on the note, except in certain cases involving mortgages and deeds of trust. The statute does not apply to a lender who has not foreclosed on qualifying collateral. First Credit Union v. Courtney, 2 CA-CV 2013-0005, 9/12/13.

When a Patient Gives Informed Consent to a Medical Procedure, the Patient May Not Assert a Claim for Medical Battery Based on the Doctor’s Failure to Disclose Information Unrelated to the Procedure. Although claims involving lack of consent, i.e., the doctor’s failure to operate within the limits of the patient’s consent, may be brought as battery actions, true “informed consent” claims, i.e., those involving the doctor’s obligation to provide information, must be brought as negligence actions. Consequently, if a patient consents to a medical procedure that is fully explained, a claim that the doctor should have disclosed his drug dependency may only be pursued under a negligence theory. Rice v. Brakel, 2 CA-CV 2012-0118,

9/12/13.

Thomas L. Hudson is a member at Osborn Maledon PA, where his practice focuses on civil appeals and appellate consulting with trial lawyers. He can be reached at thudson@omlaw.com, and is ably assisted with this column by Osborn Maledon PA’s appellate group, which maintains azapp.com. AzAPP contributors include Sharad H.