Allen v. scf/morris ( 2015 )

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
SHAWNTELLE ALLEN, Plaintiff/Appellant,
v.
SCF NATIONAL INSURANCE COMPANY; RALPH MORRIS,
Defendanst/Appellees.
No. 1 CA-CV 14-0058
FILED 6-23-2015
Appeal from the Superior Court in Maricopa County
No. CV2013-007120
The Honorable Katherine Cooper, Judge
REVERSED AND REMANDED
COUNSEL
Mandel Young PLC, Phoenix
By Taylor C. Young, Robert A. Mandel
Counsel for Plaintiff/Appellant
Sanders & Parks, P.C., Phoenix
By Mark Worischeck, Nicholas A. Bender
Counsel for Defendants/Appellees
ALLEN v. SCF/MORRIS
Decision of the Court
MEMORANDUM DECISION
Judge Jon W. Thompson delivered the decision of the Court, in which
Presiding Judge Andrew W. Gould and Judge Maurice Portley joined.
T H O M P S O N, Judge:
¶1 Shawntelle Allen (Allen) appeals from the trial court’s
judgment dismissing her complaint against SCF National Insurance
Company (SCF National) and Ralph Morris (Morris) pursuant to Arizona
Rule of Civil Procedure 12(b)(6) (Rule 12(b)(6)). For the following reasons,
we reverse the decision of the trial court and remand for further
proceedings.
FACTUAL AND PROCEDURAL HISTORY
¶2 Allen was working at St. Vincent de Paul Society (St. Vincent)
in January 2011 when a refrigerator fell on her and injured her leg and
shoulder. She filed a workers’ compensation claim. SCF National was the
issuer of St. Vincent’s workers’ compensation insurance, and Morris was
the adjuster in charge of processing Allen’s claim. SCF National initially
accepted Allen’s claim, made payments to her for temporary compensation,
and paid for her medical treatment.
¶3 In September 2011, however, SCF National issued two notices
of claim status 1) terminating Allen’s temporary compensation and active
medical treatment, and 2) determining that her injury had resulted in a five
percent functional loss of her right lower extremity, a permanent disability
which SCF National determined to be worth $1864.13 as payment in full.
Allen protested the notices. A hearing was scheduled before the Industrial
Commission of Arizona in October 2012, but on the day of the hearing the
administrative law judge (ALJ) issued a decision declaring the protested
notices cancelled. The ALJ noted: “The defendant insurance carrier will
rescind [the] protested notices and reinstate benefits which resolves the
issues which were to be considered at the hearing.” SCF National then
reinstated Allen’s benefits retroactive to September 2011.
¶4 In 2012, the Arizona legislature privatized SCF Arizona. See
Ariz. Rev. Stat. (A.R.S.) § 41-3012.19 (2011). SCF Arizona’s assets and
liabilities, presumably including SCF National, were transferred to the
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ALLEN v. SCF/MORRIS
Decision of the Court
private successor mutual company effective January 1, 2013. 2010 Ariz.
Sess. Laws, Ch. 268, § 4(D) (2d Reg. Sess.)1
¶5 In May 2013, Allen filed a complaint in superior court against
SCF National and Morris (appellees) for breach of the duty of good faith
and fair dealing as to the handling of her workers’ compensation claim. She
did not file a notice of claim.
¶6 Appellees filed a Rule 12(b)(6) motion to dismiss the
complaint, arguing that Allen failed to file a notice of claim pursuant to
A.R.S. § 12-821.01(A) (2003), that she could not bring a separate claim
against Morris, and that they were immune from Allen’s punitive damages
claim. After oral argument, the trial court granted the motion to dismiss,
finding that Allen’s failure to file a notice of claim was dispositive. Allen
timely appealed. We have jurisdiction pursuant to A.R.S. § 12-2101 (A)(1)
(Supp. 2014).
DISCUSSION
¶7 When reviewing the trial court’s judgment granting a Rule
12(b)(6) motion to dismiss, we view the facts alleged in the complaint as
true and will uphold the dismissal “only if [the] plaintiff would not be
entitled to relief under any facts susceptible of proof under the claim
stated.” Mattison v. Johnston, 152 Ariz. 109, 114, 730 P.2d 286, 291 (App.
1986) (citation omitted). We review the legal issues under a de novo
standard of review. Mulleneaux v. State, 190 Ariz. 535, 538, 950 P.2d 1156,
1159 (App. 1997) (citation omitted).
¶8 The issue presented in this case is whether A.R.S. § 12-821.01
required Allen to file a notice of claim. Allen argues that the trial court
erred by dismissing her complaint because SCF National was not a public
entity when her notice of claim was due (April 10, 2013, the date 180 days
1 Section 4(D) provides, in part: “The successor mutual insurer corporation
is responsible for the obligations of the state compensation fund to the same
extent as though incurred originally by the mutual insurer corporation . . .
. The successor mutual insurer corporation is not an agency of this state or
a public entity of this state. The successor mutual insurer corporation shall
not use the term ‘state compensation fund’ or ‘SCF’ in its new name or logo
from and after June 30, 2014.”
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ALLEN v. SCF/MORRIS
Decision of the Court
after her claims accrued on October 12, 2012).2 Allen asserts “[a]ny public
entity status that SCF National formerly possessed was extinguished before
Allen’s notice of claim would have otherwise been due.” Appellees
contend that Allen’s obligation to file a notice of claim arose on October 12,
2012, when SCF National was still a public entity.
¶9 Arizona’s notice of claim statute, A.R.S. § 12-821.01, provides,
in relevant part:
A. Persons who have claims against a public entity or a
public employee shall file claims with the person or
persons authorized to accept service for the public entity
or public employee as set forth in the Arizona rules of civil
procedure within one hundred eighty days after the cause
of action accrues. The claim shall contain facts sufficient
to permit the public entity or public employee to
understand the basis upon which liability is claimed. The
claim shall also contain a specific amount for which the
claim can be settled and the facts supporting that amount.
Any claim which is not filed within one hundred eighty
days after the cause of action accrues is barred and no
action may be maintained thereon.
The notice of claim statute “allow[s] the public entity to investigate and
assess liability, . . . permit[s] the possibility of settlement prior to litigation,
and . . . assist[s] the public entity in financial planning and budgeting.”
Falcon ex rel. Sandoval v. Maricopa County, 213 Ariz. 525, 527, ¶ 9, 144 P.3d
1254, 1256 (2006). Thus, the notice of claim statute is designed to protect
public entities and the public treasury. See Martineau v. Maricopa County,
207 Ariz. 332, 335-36, ¶ 19, 86 P.3d 912, 915-16 (App. 2004) (citation
omitted).
¶10 As the trial court acknowledged, this case is unusual. At the
time Allen’s claim accrued, SCF National was a public entity. During the
180 day period for filing a notice of claim, SCF National and its parent
company, SCF Arizona, ceased to be public entities, and their obligations
passed to “successor” corporations. And, at the time Allen’s notice of claim
was due, SCF National had ceased to exist.
2 Appellees “accept[ ] for purposes of this appeal the October 12, 2012
accrual date that Allen . . . puts forward . . . .”
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ALLEN v. SCF/MORRIS
Decision of the Court
¶11 The trial court based its decision on Nored v. City of Tempe, 614
F. Supp.2d 991 (D. Ariz. 2008). Nored sued the City of Tempe and a city
police officer after the officer allegedly physically assaulted her in the scope
and course of his employment. Id. at 992. Nored served the city with a
notice of claim, but did not individually serve the officer, who was no
longer a city employee, with a notice of claim. Id. The officer moved to
dismiss the state law claims against him because Nored failed to comply
with A.R.S. § 12-821.01. Concluding that the officer was a public employee
at the time of the events giving rise to the complaint, the magistrate judge
dismissed Nored’s state law claims. Id. at 998. The magistrate judge
rejected Nored’s argument that she need not have served the officer with a
notice of claim because he was not a public employee at the time she served
her notice of claim on the city. Id. The court reasoned that a “public
employee” is an individual who was an employee at the time of the events
giving rise to the complaint, because otherwise “the individual’s actions
would not implicate the public entity’s liability.” Id. at 997-98. This case
presents a different situation. Here, a public entity, SCF National, ceased
to exist.3 In Nored, the officer left city employment during the relevant time
period, but he did not cease to exist as a person who could be served with
a notice of claim.
¶12 Both sides argue that the plain language of the notice of claim
statute supports their position. The statute applies to “[p]ersons who have
claims against a public entity . . . .” It does not follow that the statute would
bar Allen’s claims when SCF National was dissolved well in advance of
expiration of the notice of claim period. Even if Allen’s claims were once
claims against a public entity, they became claims against a private entity
not subject to the strictures of the notice of claim statute.
¶13 Because we decide that Allen was not required to file a notice
of claim, we need not consider her argument that the trial court should have
applied the doctrine of equitable tolling to permit her to file a delayed notice
of claim.
3In State Compensation Fund v. Superior Court, 190 Ariz. 371, 376, 948 P.2d
499, 504 (App. 1997), we held that the state compensation fund was a public
entity subject to the claims statute, but we noted, “[t]he creation of the
compensation law and the compensation fund therein was legislative. That
department could destroy its creature if it so chose . . . .” (quoting Sims v.
Moeur, 41 Ariz. 486, 493, 19 P.2d 679, 681 (1933)).
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ALLEN v. SCF/MORRIS
Decision of the Court
¶14 Both sides request costs and attorneys’ fees on appeal
pursuant to A.R.S. §§ 12-341, 12-341.01 (2003). We decline to award fees.
There is at this time no successful party.
CONCLUSION
¶15 For the foregoing reasons, we find that Allen was not required
to file a notice of claim. We reverse the decision of the trial court and
remand for further proceedings consistent with this decision.
:ama
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