Twin City Fire Insurance Co. v. Graciela Leija

IN THE
SUPREME COURT OF THE STATE OF ARIZONA
TWIN CITY FIRE INSURANCE COMPANY,
Plaintiff/Counter-Defendant/Appellee,
v.
GRACIELA LEIJA,
Defendant/Counter-Claimant/Appellant.
No. CV-17-0280-PR
Filed August 2, 2018
Appeal from the Superior Court in Maricopa County
The Honorable Michael J. Herrod, Judge
The Honorable J. Richard Gama, Judge, (Retired)
No. CV2012-004506
AFFIRMED
Opinion of the Court of Appeals, Division One
243 Ariz. 175 (App. 2017)
AFFIRMED IN PART, VACATED IN PART
COUNSEL:
Donald L. Myles, Jr., Jefferson T. Collins, Lori L. Voepel (argued), Jones,
Skelton & Hochuli, P.L.C., Phoenix, Attorneys for Twin City Fire Insurance
Company
Joel B. Robbins (argued), Anne E. Findling, Robbins & Curtin, PLLC,
Phoenix; and David L. Abney, Ahwatukee Legal Office, P.C., Phoenix,
Attorneys for Graciela Leija
Mark A. Kendall (argued), CopperPoint Mutual Insurance Company,
Phoenix, Attorneys for Amicus Curiae CopperPoint Mutual Insurance
Company
TWIN CITY FIRE INS. CO. v. LEIJA
Opinion of the Court
Nathan B. Webb, Miller, Pitt, Feldman & McAnally, P.C., Tucson, Attorneys
for Amici Curiae Mark Ballinger and Patricia Ballinger
Taylor C. Young, Mandel Young PLC, Phoenix, Attorneys for Amicus
Curiae American Insurance Association
David W. Lippman, Lippman Recupero, Tucson, Attorneys for Amicus
Curiae National Association of Subrogation Professionals
JUSTICE PELANDER authored the opinion of the Court, in which CHIEF
JUSTICE BALES, VICE CHIEF JUSTICE BRUTINEL, and JUSTICES
TIMMER, GOULD, and LOPEZ joined. JUSTICE BOLICK concurred in the
result.
JUSTICE PELANDER, opinion of the Court:
¶1 Under the Arizona Workers’ Compensation Act (the “Act”),
an insurance carrier obtains a lien on a claimant’s (or a claimant’s
dependents’) recovery from third persons who negligently injured or killed
the claimant to the extent of workers’ compensation benefits paid (less
reasonable and necessary expenses incurred in securing the recovery).
A.R.S. § 23-1023(D). In Aitken v. Industrial Commission, this Court held that
the insurance carrier may assert the lien “only to the extent that the
compensation benefits paid exceed the [non-party] employer’s
proportionate share of the total damages fixed by verdict in the
[third-party] action.” 183 Ariz. 387, 392 (1995). We today hold that a
claimant who settles all of his or her third-party claims is not entitled to a
post-settlement trial to determine the percentage of employer fault solely to
reduce or extinguish the insurance carrier’s lien.
I.
¶2 Victor Leija died while working as a window washer when he
fell from a building after a scaffold collapsed. Victor’s widow and children
(collectively, “Leijas”) claimed workers’ compensation benefits through
Victor’s employer’s workers’ compensation carrier, Twin City Fire
Insurance Company (“Twin City”). Twin City accepted the claim and pays
monthly benefits of $1857 to the Leijas. Eventually, the payments will total
approximately $575,000.
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TWIN CITY FIRE INS. CO. v. LEIJA
Opinion of the Court
¶3 Exercising their right under the Act to bring a tort claim
against any third person who negligently caused Victor’s death, see
§ 23-1023(A), the Leijas filed a negligence action against the City of
Glendale, which owned the building from which Victor fell, the building’s
property manager and maintenance company, and the companies that
furnished and fabricated the scaffold.
¶4 During settlement negotiations between the Leijas and the
third-party defendants, Twin City asserted its right under § 23-1023(D) to
fully enforce a lien against all settlement proceeds for the amount of
workers’ compensation benefits it had paid and would pay in the future.
Nevertheless, Twin City offered to reduce its lien by five percent if the
Leijas settled all their third-party claims. The Leijas rejected the offer,
arguing that Twin City was required to reduce its lien by more than five
percent due to the alleged comparative fault of Victor’s employer in causing
the accident. Although Twin City did not object to any settlement, it never
wavered from its position that it was not required to reduce its lien. The
Leijas ultimately settled with all the third-party defendants for $1.6 million.
¶5 After that settlement, Twin City filed this action against the
Leijas to enforce its lien. Consistent with its pre-settlement position, Twin
City sought to fully enforce its lien under § 23-1023(D) against all the
settlement proceeds to the extent of past and future workers’ compensation
benefits. The Leijas counterclaimed, arguing, as relevant here, that Twin
City breached its duty of good faith and fair dealing by refusing to reduce
its lien to account for Victor’s employer’s alleged comparative
fault. Alternatively, the Leijas requested that the superior court set a trial
to establish the employer’s proportionate fault and the resulting amount of
Twin City’s lien.
¶6 On the parties’ cross-motions for summary judgment, the
superior court ruled in Twin City’s favor, reasoning that “a separate action
after compromise of the third-party claim is not the appropriate vehicle to
allocate fault” to a non-party employer. The court further reasoned that,
contrary to the Leijas’ assertions, a workers’ compensation insurance carrier
does not owe a duty of good faith and fair dealing to reduce its lien against
a claimant’s settlement proceeds to account for a non-party employer’s
alleged comparative fault.
¶7 The court of appeals reversed, holding 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
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TWIN CITY FIRE INS. CO. v. LEIJA
Opinion of the Court
comparative fault.” Twin City Fire Ins. Co. v. Leija, 243 Ariz. 175, 177 ¶ 1
(App. 2017). The court reasoned that “the fact that the Leijas settled their
[third-party] claims rather than try them to a verdict does not preclude
equitable apportionment under Aitken.” Id. at 181 ¶ 20. The court observed
that “the settlement with [the City of] Glendale did not touch multiple
layers of coverage and the record contains significant evidence of employer
fault.” Id. ¶ 21. Therefore, the court stated, Twin City’s lien should be
equitably apportioned because “estimations of [Victor’s] employer’s
comparative fault undoubtedly affected the amount the Leijas were able to
recover in settlement.” Id. ¶ 19. The court of appeals remanded the case to
the superior court to set “a trial to equitably apportion Twin City’s lien”
and directed that court to “address the specifics of such a proceeding,”
including “whether damages and the employer’s comparative fault should
be determined by the court or by a jury.” Id. ¶ 23.
¶8 Finally, because the court of appeals “ruled that the Leijas
have a right to a trial by which Twin City’s lien may be apportioned,” it
found “no need” to reconsider the principle that a workers’ compensation
carrier does not breach its duty of good faith and fair dealing when, “absent
a fair adjudication of damages and employer comparative fault,” it refuses
to compromise or reduce its lien under § 23-1023(D). Id. at 182 ¶ 28.
¶9 We granted review because this case presents recurring issues
of statewide importance. We have jurisdiction under article 6, section 5(3)
of the Arizona Constitution and A.R.S. § 12-120.24.
II.
¶10 We review legal questions, including statutory issues, de
novo. In re Marriage of Friedman & Roels, 244 Ariz. 111, 114 ¶ 11 (2018).
¶11 The Arizona Constitution requires the legislature to “enact a
workmen’s compensation law” that generally permits a worker to collect
compensation when he or she is injured in the course of employment. Ariz.
Const. art. 18, § 8. The legislature implemented this constitutional mandate
shortly after statehood. Grammatico v. Indus. Comm’n, 211 Ariz. 67, 70 ¶ 13
(2005). The Act, now codified in A.R.S. §§ 23-901 to -1091, generally
provides that every employee is “entitled to receive and shall be paid . . .
compensation” for the loss sustained due to the employee’s injury when the
employee’s accidental injury or death occurred in the course of the
employee’s employment. § 23-1021.
¶12 An employer who complies with the Act is generally immune
from tort liability for an employee’s accidental injury or death that occurred
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TWIN CITY FIRE INS. CO. v. LEIJA
Opinion of the Court
in the course of the employee’s employment. § 23-906(A); see also
§ 23-1022(A) (stating that an employee’s “right to recover compensation”
under the Act is generally “the exclusive remedy against the employer or
any co-employee acting in the scope of his employment”); § 23-1024(A)
(stating that “[a]n employee . . . who accepts compensation waives the right
to exercise any option to institute proceedings in court against his employer
or any co-employee acting within the scope of his employment”).
¶13 Although an employer is generally immune from tort liability
when an employee accepts compensation under the Act, the employee may
bring a tort claim against a third person when the employee was “injured
or killed . . . by the negligence or wrong” of the third person. § 23-1023(A).
When an employee brings such a third-party claim, the Act vests the
employer’s insurance carrier with a lien on any recovery (less reasonable
and necessary expenses) that the employee collects from the third-party to
the extent of the compensation benefits paid by the insurance carrier.
§ 23-1023(D); see also Dietz v. Gen. Elec. Co., 169 Ariz. 505, 511 (1991) (noting
that “the lien provisions in favor of immune employers have been part of
the workers’ compensation system since 1925”). This case concerns the
application of this lien on an employee/claimant’s settlement proceeds
recovered from third-party defendants.
¶14 After the legislature abolished joint and several liability by
amending the Uniform Contribution Among Tortfeasors Act in 1987, we
ruled in Dietz that a third-party defendant may name a
plaintiff/employee’s employer as a non-party at fault under A.R.S.
§ 12-2506. 169 Ariz. at 510–11; see also § 12-2506(B) (stating that “[i]n
assessing percentages of fault the trier of fact shall consider the fault of all
persons who contributed to the alleged injury . . . regardless of whether the
person was, or could have been, named as a party to the suit”); Ariz. R. Civ.
P. 26(b)(5) (requiring notice for claims of non-party fault).
¶15 Following Dietz, this Court recognized in Aitken that
permitting a third-party defendant to name a plaintiff/employee’s
employer as a non-party at fault creates an inequity when a trier of fact
allocates some percentage of fault to the non-party employer. 183 Ariz. at
390–91. That is so, we reasoned, because such an allocation forces the
plaintiff “to endure the combined effect of first having his or her award
reduced by reason of the employer’s fault, and thereafter having to satisfy
a lien against this diminished recovery in favor of the employer and its
carrier to the full extent of compensation benefits provided.” Id. at 392.
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TWIN CITY FIRE INS. CO. v. LEIJA
Opinion of the Court
¶16 To cure this inequity, Aitken held that “a carrier may assert a
lien on a third party recovery only to the extent that the compensation
benefits paid exceed the employer’s proportionate share of the total
damages fixed by verdict in the [underlying] action.” Id.; see also Grijalva v.
Ariz. State Comp. Fund, 185 Ariz. 74, 76 (1996) (stating that Aitken’s equitable
apportionment rule applied “following a contested third party trial that
necessitated a determination of liability and damages, including the
apportionment of fault among parties and nonparties as required by law”);
Weber v. Tucson Elec. Power Co., 202 Ariz. 504, 504–05 ¶ 1, 506–07 ¶ 10
(App. 2002) (concluding that equitable apportionment applied when a
plaintiff/employee brought a tort claim against two third-party
defendants, settled with one of them, and prevailed against the other
defendant at trial, in which the jury assigned fault to the non-party
employer, because the claimant’s damages were in fact reduced due to the
non-party employer’s fault and because the trial was not “a sham or
collusive proceeding that resulted in extraneous and irrelevant findings on
damages or the apportionment of fault”).
¶17 Neither party nor any amicus has urged us to overrule Aitken
or otherwise revisit its equitable apportionment rule as applied to contested
cases that are tried to a verdict. Notably, in Aitken we explicitly invited the
legislature to amend § 23-1023(D) if it disagreed with our interpretation of
it. 183 Ariz. at 393. Despite that invitation, the legislature has not
statutorily abolished or modified the equitable apportionment rule that
Aitken embraced, even though the legislature amended an unrelated part of
§ 23-1023(D) in 2012. 2012 Ariz. Sess. Laws, ch. 240, § 1 (2d Reg. Sess.).
Therefore, we assume, without deciding, Aitken’s continued validity and
adherence to legislative intent in applying the lien provision. 1
1 In his concurring opinion, Justice Bolick faults the Court in Aitken for
unconstitutionally usurping legislative powers it does not have and
improperly rewriting the law. Infra ¶¶ 31, 38 (Bolick, J., concurring in the
result). Professing to “police our constitutional boundaries,” he therefore
urges us to “overturn Aitken and return this issue to the legislature, where
it belongs.” Infra ¶ 46. Its nautical humor aside, infra ¶¶ 32–35, the
concurrence disregards that courts generally refrain from addressing
questions the parties did not raise — especially when doing so would,
assuming the concurrence is correct, require us to sua sponte overrule our
prior case law. See Dolan v. United States, 560 U.S. 605, 619 (2010) (refusing
to depart from the Court’s precedents “when this case does not require us
to do so” and when “the issue has not been adequately briefed” and lower
courts “had no opportunity to consider the argument”); State ex rel. Brnovich
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TWIN CITY FIRE INS. CO. v. LEIJA
Opinion of the Court
¶18 In contrast to the contested third-party action that was tried
to verdict in Aitken, Grijalva involved a plaintiff/employee’s “pretrial
attempt to settle a third party claim without approval of the compensation
carrier,” followed by an “apportionment of fault apparently carried out for
the sole purpose of impacting the carrier’s lien rights.” 185 Ariz. at 76. This
Court viewed that as an “artful contrivance[]” that “Aitken neither requires
nor authorizes.” Id. at 76–77. Indeed, we stated that if a plaintiff/employee
“is entitled to receive or has received settlement proceeds” from a
third-party defendant, then the insurance carrier “has a lien and/or a future
credit against those proceeds.” Id. at 77; see also Stout v. State Comp. Fund
(Stout I), 197 Ariz. 238, 240 ¶ 7, 242 ¶ 15 (App. 2000) (rejecting
plaintiff/employee’s argument that “the rule of equitable apportionment
from Aitken should apply to cases that are resolved by settlement” and
concluding that “equitable apportionment does not apply when a
third-party action is settled at policy limits and there is no evidence that
employer fault affected the offer to settle at policy limits”).
¶19 Twin City argues that claimants who settle all their
third-party claims “should not be granted post-settlement trials to
determine the percentage of employer fault,” and insurance carriers should
not be forced “to reduce their liens accordingly.” It reasons that Aitken and
Grijalva impose an equitable apportionment rule only when “two
conditions are met: (1) the employer’s share of fault was determined by
verdict and applied to reduce the claimant’s damages; and (2) the verdict
was obtained in the third-party action.” According to Twin City, “[w]ithout
the statutorily required reduction of a claimant’s recovery based on the
percentage of employer fault apportioned by a jury in the third-party
action, there is simply no Aitken-type of inequity to ameliorate.”
¶20 The Leijas, on the other hand, argue that “[t]here is no
justification for failing to offset the lien amount for an employer’s fault
simply because the parties have, with the [insurance] carrier’s consent,
settled before trial.” Under the Leijas’ view, a claimant should not “be
v. City of Tucson, 242 Ariz. 588, 599 ¶ 45 (2017) (stating that “[w]e generally
do not reach out . . . to upset established precedent when no party has raised
or argued such issues”); State v. Valenzuela, 239 Ariz. 299, 306 ¶ 21 (2016)
(declining to address issues “[t]he parties did not brief”); cf. Kimble v. Marvel
Entm’t, LLC, 135 S. Ct. 2401, 2409 (2015) (stating that “stare decisis carries
enhanced force when a decision . . . interprets a statute,” even when the
decision relied not on statutory text alone but on “the policies and purposes
animating the law,” because the legislature may alter what the Court does).
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TWIN CITY FIRE INS. CO. v. LEIJA
Opinion of the Court
penalized twice for the employer’s fault, first by having to compromise
during settlement negotiations, and second, by having a lien placed on an
already reduced settlement for the full amount of compensation benefits,
without any consideration of employer fault.”
¶21 We agree with Twin City. Neither Aitken nor Grijalva
authorizes the post-settlement trial process proposed by the court of
appeals. Aitken expressly limits application of the equitable apportionment
rule to situations where a claimant’s total damages are “fixed by verdict” in
the third-party action. 183 Ariz. at 392. Grijalva likewise expressly
recognized and applied that limitation. 185 Ariz. at 76–77. In the settlement
context, a claimant’s proceeds are not “fixed by verdict,” Aitken, 183 Ariz.
at 392, and a settlement between a claimant and a third-party defendant
does not “necessitate[] a determination of liability and damages, including
the apportionment of fault among parties and nonparties,” Grijalva, 185
Ariz. at 76. Simply stated, neither the applicable statutes nor our prior
decisions authorize a post-settlement trial process.
¶22 In addition, there are good reasons to limit application of the
equitable apportionment rule to only those cases that are tried to verdict.
The inequity we recognized in Aitken will exist in every such case when the
jury allocates some percentage of fault to a non-party employer. But that
inequity will not exist in every case where a claimant settles with a
third-party defendant. It is purely speculative to assume that, based solely
on a claimant and a third-party defendant settling at some amount below
the defendant’s insurance policy limits, the claimant’s recovery was
reduced by the non-party employer’s alleged fault. In short, a third-party
defendant’s insurance policy limits are not a proxy for employer fault.
¶23 Many factors may influence a plaintiff/employee’s decision
to settle with a third-party defendant and the settlement amount. Indeed,
a claimant may settle below a third-party defendant’s insurance policy
limits for many reasons that have nothing to do with employer fault. For
example, the claimant may not have suffered a severe injury, might have
difficulty proving fault or causation on the part of the third-party
defendant, or might be risk-averse and would prefer a potentially smaller
recovery to avoid the risk of trial, including the risk that the jury will
apportion a substantial amount of fault to the claimant or the claimant’s
employer. Cf. id. at 77 (observing that “it is uncertainty about the result that
most often leads to settlement”). There is no basis to assume that in every
settlement between a claimant and a third-party defendant, the claimant
suffered the inequity that Aitken sought to cure.
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TWIN CITY FIRE INS. CO. v. LEIJA
Opinion of the Court
¶24 Notably, an insurance carrier could also be concerned with
the risk that a jury will apportion a substantial amount of fault to the
claimant or the claimant’s employer because that could adversely affect the
carrier by reducing the claimant’s recovery and, consequently, the value of
the carrier’s lien. Therefore, a carrier may understandably wish to
incentivize the claimant to settle by voluntarily reducing its lien in
exchange for a settlement. Cf. Boy v. Fremont Indem. Co., 154 Ariz. 334, 337
(App. 1987) (“By compromising its lien to help achieve settlement, the
insurer may guarantee at least some recovery for itself.”).
¶25 Moreover, the post-settlement trial process proposed by the
court of appeals would itself create perverse incentives and inequities.
Generally, a claimant in a third-party action “has every incentive to
maximize the percentage of fault allocated to the third-party defendant”
because the claimant wants to receive the highest amount of damages he or
she can obtain. Stout v. State Comp. Fund (Stout II), 202 Ariz. 300, 303 ¶ 11
(App. 2002). Consequently, the claimant “necessarily has every incentive
to minimize the percentage of fault allocated to the employer” because “any
fault assigned to the employer will typically reduce that assigned to the
third-party defendant.” Id.
¶26 But a post-settlement trial process would transform this
incentive structure. Under the court of appeals’ construct, a claimant would
try to maximize a third-party defendant’s fault (and therefore to minimize
the fault attributable to the claimant’s employer) so as to maximize the
amount of the claimant’s settlement. Then, in the post-settlement trial with
the insurance carrier, the claimant would be incentivized to take the
diametrically opposite position by maximizing the fault attributable to the
employer (and therefore minimizing the fault accruing to the settling
third-party defendant) solely to reduce or extinguish the insurance carrier’s
lien on the settlement proceeds.
¶27 Even assuming that an insurance carrier’s refusal to waive or
reduce its lien might be inequitable in some circumstances, it is difficult to
understand how the possible gamesmanship created by a post-settlement
trial process is more equitable than permitting an insurance carrier to
exercise its statutorily authorized lien on a claimant’s settlement proceeds
to the extent of compensation benefits paid when, for the reasons
previously discussed, there may be no inequity at all. Accordingly, we hold
that a claimant who settles all his or her third-party claims may not obtain
a post-settlement trial to determine the percentage of employer fault solely
to reduce or extinguish the insurance carrier’s lien.
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TWIN CITY FIRE INS. CO. v. LEIJA
Opinion of the Court
¶28 In so holding, we recognize that even in a settlement context,
an insurance carrier has an obligation to act in good faith toward a claimant
by giving equal consideration to the claimant’s interests. See Stout I, 197
Ariz. at 242 ¶¶ 19–22; cf. Boy, 154 Ariz. at 335, 337 (concluding pre-Aitken,
that workers’ compensation insurer “did not breach its duty to act in good
faith when it refused to compromise its lien against any [third-party]
recovery,” and noting that “[t]he duty of good faith . . . merely requires the
insurer to give equal consideration to the interests of both parties”). Under
these circumstances, as amicus CopperPoint Insurance Company
acknowledged at oral argument, good faith might entail a workers’
compensation insurer considering and reasonably acting on a claimant’s
request to reduce the lien on third-party settlement proceeds, particularly
when evidence of employer fault is clear, undisputed, and substantial.
¶29 The record in this case includes some evidence of employer
fault. Perhaps for that reason, Twin City offered to reduce its lien by five
percent if the Leijas settled with the third-party defendants. In view of that
offer and the Leijas’ failure to preserve or argue in this Court any issue
relating to their bad faith claim, we have no basis for overturning the
superior court’s grant of summary judgment in favor of Twin City on that
claim. See Stout I, 197 Ariz. at 243 ¶ 22 (stating that because “a carrier’s
statutory lien has strong protection under the law,” “the carrier may
reasonably protect its right to recover the lien amount” and is “not required
to completely disregard its own interests”).
III.
¶30 For the reasons stated above, we affirm the superior court’s
judgment in favor of Twin City as it relates to the enforcement of Twin
City’s lien and the Leijas’ bad faith claim. We vacate paragraphs 9 through
28 of the court of appeals’ opinion as well as paragraphs 1 and 33 to the
extent they are inconsistent with this opinion. We affirm the balance of the
court of appeals’ opinion.
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TWIN CITY FIRE INS. CO. v. LEIJA
JUSTICE BOLICK, Concurring in the Result
JUSTICE BOLICK, concurring in the result.
¶31 I join my colleagues’ resolution of this difficult case.
However, its difficulty is in large part the byproduct of the decision
twenty-three years ago in Aitken that the Court should rewrite rather than
apply the statutes governing the issues before us. The Court today chooses
not to address whether we exceeded our constitutional powers in doing so,
because the parties have not asked us to overrule Aitken. With respect, I
disagree.
¶32 The notion that we can ignore the constitutional contours of
our authority if the parties do not question it brings to mind a story told by
the famed journalist Ambrose Bierce more than a century ago. The story
essentially goes that a Supreme Court justice was sitting by a river when a
traveler approached and asked, “I wish to cross. Will it be lawful to use this
boat?”
¶33 “It will,” the justice replied; “it is my boat.”
¶34 The traveler thanked him and rowed away. But quickly the
boat took on water, forcing the traveler to abandon the journey. An
indignant spectator asked the justice, “Why did you not tell him that your
boat had a hole in it?”
¶35 “The matter of the boat’s condition,” the jurist replied, “was
not brought before me.” 2 See Ambrose Bierce, A Defective Petition, in 6 The
Collected Works of Ambrose Bierce 294 (1911).
¶36 The question that supposedly is not before us is the implied
premise that this Court’s decision in Aitken, which we persist in applying
today, was a proper exercise of our constitutionally limited powers. Supra
¶ 17. In my view, that question, regardless of whether the parties raise it,
is always properly before us.
¶37 In our constitutional system, which distributes separate and
defined powers among the branches of government, no more fundamental
tenet exists than that the judiciary must never exercise legislative powers.
In The Federalist, Alexander Hamilton remarked that “liberty can have
nothing to fear from the judiciary alone,” but warned that we “have every
thing to fear” from a union of judicial and legislative powers. The Federalist
No. 78, at 298 (The Legal Classics Library ed., 1983). Following nearly a
2I am indebted to Chief Justice Stephen Markman of the Michigan Supreme
Court for a version of this story.
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TWIN CITY FIRE INS. CO. v. LEIJA
JUSTICE BOLICK, Concurring in the Result
century and a quarter of experience with the national constitution, the
Arizona Constitution’s framers considered separation of powers so
important that they enshrined it in its own article, decreeing that the three
branches “shall be separate and distinct, and no one . . . shall exercise the
powers properly belonging to either of the others.” Ariz. Const. art. 3.
Specifically, the judicial power “does not license judges to craft new laws
to govern future conduct, but only to ‘discer[n] the course prescribed by
law’ as it currently exists and to ‘follow it’ in resolving disputes between
people over past events.” Sessions v. Dimaya, 138 S. Ct. 1204, 1227 (2018)
(Gorsuch, J., concurring) (quoting Osborne v. Bank of U.S., 22 U.S. 738, 866
(1824)).
¶38 The Court transgressed that constitutional boundary, for
beneficent purposes yet blatantly and overtly, in Aitken. 183 Ariz. 387. The
case involved the interplay between the lien statute, § 23-1023(D), and the
recent legislative abolition of joint and several liability, § 12-2506. The
plaintiff argued that the combined effect of the two statutes violated the
constitutional guarantee of a just and humane worker’s compensation law,
Ariz. Const. art. 18, § 8, and the prohibition against laws limiting the
amount of damages for death or injury, id. art. 2, § 31. Aitken, 183 Ariz.
at 389. As the Court explained, “a reasonable balance between the rights of
employer and employee, consistent with the underlying goals of the
compensation scheme, has existed for more than twenty years. That
balance appears to have been skewed by the almost complete abolition of
joint and several liability.” Id. at 392.
¶39 When a statute is reasonably susceptible of two
interpretations, a court may and should construe it in a plausible manner
that avoids holding it unconstitutional. State v. Burbey, 243 Ariz. 145, 149
¶ 17 (2017) (“When we can reasonably interpret a statute in a way that
preserves its constitutionality, we pursue that course.”); see also Antonin
Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 66–68
(2012). But Aitken made no pretense that the statute was ambiguous,
instead objecting to the statute as written. 183 Ariz. at 390. Indeed, it
examined cases from other states applying similar statutory language
literally, characterizing the results in those cases as inequitable. Id.
at 390–91.
¶40 Instead of construing and applying the statutory language,
the Court wrote into the law “a rule of equitable apportionment,” thus
“making it function as closely as possible to the way in which it has always
operated and in accord with what appears to have been the intent of the
legislature at the time of its passage.” Id. at 393. This it did because “[w]e
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TWIN CITY FIRE INS. CO. v. LEIJA
JUSTICE BOLICK, Concurring in the Result
know exactly how [the lien statute] is supposed to operate and what it was
designed to accomplish because we have been working with and applying
it since its enactment in the mid-1960s.” Id. at 391. The Court reasoned that
when the legislature enacted § 12-2506, “it did not anticipate the manner in
which compensation liens would operate outside the universe of joint and
several liability.” Id. Given that oversight, “we cannot agree with the
suggestion that our courts are powerless to compensate for the clearly
unintended consequences of these recent developments in the law . . . .
Courts should not limit themselves to the rigid construction or application
of a statute when significant changes in circumstance since its enactment
produce results plainly contrary to legislative intent.” Id. Thus, “[w]e now
hold that a carrier may assert a lien on a third party recovery only to the
extent that the compensation benefits paid exceed the employer’s
proportionate share of the total damages fixed by verdict in this action.” Id.
at 392.
¶41 The Court may well have been correct that the legislature
overlooked the impact the abolition of joint and several liability might have
on the lien provisions. And unquestionably, the result was harsh. Neither
of those facts, however, licenses courts to rewrite the law.
¶42 Aitken proceeded from the fundamentally flawed premise
that “[w]e interpret and apply laws so as to further ‘the general legislative
goals that can be adduced from the body of legislation in question.’” Id.
(quoting Dietz, 169 Ariz. at 510). What a wide-ranging commission that
would be, “adducing” not a statute’s text, not even the particular statute’s
intent, but the “general legislative goals” of an entire “body of legislation.”
Regardless of a court’s beneficent motivation, such a self-anointed mandate
bestows vast legislative powers upon a branch of government intended to
have none.
¶43 We should repudiate the premise and the precedent, both of
which are antithetical to our constitutional separation of powers. I certainly
cannot say it better than our own abundant opinions and other authorities.
“Our task in statutory construction is to effectuate the text if it is clear and
unambiguous.” BSI Holdings, LLC v. Ariz. Dep’t of Transp., 244 Ariz. 17, 19
¶ 9 (2018). “It is a universal rule that courts will not enlarge, stretch,
expand, or extend a statute to matters not falling within its express
provisions.” State ex rel. Morrison v. Anway, 87 Ariz. 206, 209 (1960). “To
depart from the meaning expressed by the words is to alter the statute, to
legislate and not to interpret. If the true construction will be followed by
harsh consequences, it cannot influence the courts in administering the law.
The responsibility for the justice or wisdom of legislation rests with the
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TWIN CITY FIRE INS. CO. v. LEIJA
JUSTICE BOLICK, Concurring in the Result
legislature, and it is the province of the courts to construe, not to make, the
laws.” Barlow v. Jones, 37 Ariz. 396, 399–400 (1930) (quoting 25 Ruling Case
Law 963, § 218); accord State ex rel. Polk v. Campbell, 239 Ariz. 405, 408 ¶ 12
(2016) (“We decline to effectively, if not actually, rewrite [the statute], as
that is the legislature’s prerogative, not ours.”). “The question . . . is not
what Congress ‘would have wanted,’ but what Congress enacted . . . .”
Argentina v. Weltover, Inc., 504 U.S. 607, 618 (1992). Thus, “[t]he absent
provision cannot be supplied by the courts. What the legislature ‘would
have wanted,’ it did not provide, and that is the end of the matter.” Scalia
& Gardner, supra ¶ 39, at 94. 3
¶44 In forbidding us legislative powers, the framers were
prescient. The precept that courts can divine and effectuate law from
intentions unmanifested in statute “is anomalous and philosophically
indefensible as violating the separation of powers, and it produces
considerable judicial mischief.” Id. at 349–50. Not only are judges neither
empowered nor equipped to perform legislative functions, but courtrooms
are ill-suited to a legislative forum. Apart from sweeping legislative
pronouncements in cases like Aitken, courts render decisions based not on
broad social considerations but on the specific facts of the cases and parties
before them. See Sessions, 138 S. Ct. at 1228 (Gorsuch, J., concurring) (“Nor
do judges . . . act in the open and accountable forum of a legislature, but in
the comparatively obscure confines of cases and controversies.”). To
determine how the judicial rule applies to different situations requires
parties to either speculate or file more cases — and we have had quite a
number, including Grijalva, 185 Ariz. 74, Stout I, 197 Ariz. 238, and Stout II,
202 Ariz. 300. Because of the ad hoc nature of litigation, once we enter the
lawmaking arena, we must necessarily construct the law as we go along.
Tellingly, the portions of the Court’s opinion that apply the law to the facts,
supra ¶¶ 19–29, reference only court decisions and not statutes, for perfectly
good reason: there is no statute to apply. So that those who consult the
statutes in this area will be misinformed, because the applicable rule exists
only in an evolving series of court decisions.
¶45 I join the result today because my able colleagues have
conscientiously navigated our prior decisions in a way that does not further
extend the gulf between the statutes and our jurisprudence. However, the
fact that our able colleagues on the court of appeals conscientiously reached
3 In this instance, had the Court struck down the statutory scheme as
unconstitutional in Aitken, it would have comported with separation of
powers by preserving the legislature’s role in determining whether and
how to replace it.
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TWIN CITY FIRE INS. CO. v. LEIJA
JUSTICE BOLICK, Concurring in the Result
a different decision highlights how difficult it is to predict from our prior
opinions what we will decide next.
¶46 I join only the result, however, because we would do better to
overturn Aitken and return this issue to the legislature, where it belongs. I
recognize that the parties have not asked us to overrule Aitken, nor would I
expect them to do so given that such a request is usually unnecessary to the
outcome and might imply that existing law is not on that party’s side.
However, it is up to us to police our constitutional boundaries, and, by
failing to overrule Aitken, we continue to exercise legislative powers we do
not possess.
¶47 I also recognize that doing so could force us to confront two
pillars of the stare decisis doctrine: legislative acquiescence and the reliance
interest in our existing caselaw. In most cases, either basis would militate
strongly in favor of maintaining precedent interpreting statutes, but for the
following reasons they should not prevail here.
¶48 The Court observes that Aitken “explicitly invited” the
legislature to change the statutes if it disagreed with the decision but it has
not done so. Supra ¶ 17. The legislature’s failure to RSVP to a judicial
invitation cannot insulate a decision from reconsideration. As the United
States Supreme Court has admonished, “the doctrine of legislative
acquiescence is as best only an auxiliary tool for use in interpreting
ambiguous statutory provisions.” Jones v. Liberty Glass Co., 332 U.S. 524,
533–34 (1947). That limited use makes sense: if the court is choosing
between two equally plausible statutory interpretations and the legislature
does not disturb its holding, we generally should not disturb it either.
¶49 In Aitken, of course, there was nothing ambiguous in the
statute, thus we should not impute to the legislature an intent to embrace
the de facto statute the Court created. As we recognized recently, “The
doctrine of legislative acquiescence is limited to instances in which the
legislature has considered and declined to reject the relevant judicial
interpretation.” Delgado v. Manor Care of Tucson, 242 Ariz. 309, 314 ¶ 24
(2017) (internal quotation marks omitted) (quoting Sw. Paint & Varnish Co.
v. Ariz. Dep’t of Envtl. Quality, 194 Ariz 22, 25–26 ¶ 21 (1999)). Here, the
Court notes that the legislature subsequently changed an unrelated part of
the statute. Supra ¶ 17. However, “we do not presume legislative intent
when a statute is amended in ways unrelated to the judicial construction at
issue absent some affirmative indication the legislature considered and
approved our construction.” Id. (internal quotation marks omitted)
(quoting Lowing v. Allstate Ins. Co., 176 Ariz. 101, 106 (1993)); accord Sw. Paint
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TWIN CITY FIRE INS. CO. v. LEIJA
JUSTICE BOLICK, Concurring in the Result
& Varnish Co., 194 Ariz. at 26 ¶ 21 (“We have squarely rejected the idea that
silence is an expression of legislative intent.”). The Supreme Court applies
the doctrine only when there is “overwhelming evidence,” Solid Waste
Agency of N. Cook Cty. v. U.S. Army Corps of Eng’rs, 531 U.S. 159, 169 n.5
(2001), that Congress explicitly considered the “precise issue” presented to
the court, Bob Jones Univ. v. United States, 461 U.S. 574, 600 (1983); see also
Morales-Izquierdo v. Gonzales, 486 F.3d 484, 493 (9th Cir. 2007). Mere inaction
and passage of time are insufficient to invoke the doctrine.
¶50 However, even if the legislature had explicitly considered the
Court’s handiwork and voted unanimously to present us with an award for
work well done, that would still be insufficient to sustain the precedent in
this case. The legislature cannot, by either acquiescence or abdication,
confer upon us legislative powers. That matter was already decided by our
constitution. Ariz. Const. art. 3; see also Sessions, 128 S. Ct. at 1227 (Gorsuch,
J., concurring).
¶51 Finally, it is usually inappropriate to upset precedent on
which parties have come to rely. Here, I would deal with that issue by
making our ruling prospective only, so that parties in litigation before the
date of our opinion could still rely on the Aitken framework, amorphous as
it is. Cf. Turken v. Gordon, 223 Ariz. 342, 351–52 ¶¶ 44–49 (2010) (prospective
application is appropriate when a ruling overturns settled precedent,
establishes a new legal principle, or would produce inequitable results if
retroactively applied).
¶52 The legislature, not the courts, should resolve the policy
conundrum that was before us in Aitken and has reappeared repeatedly in
different permutations since then. But until we correct the error, parties
aggrieved by uncertainty in the law will continue to bring those issues to
us, rather than to the branch of government that is constitutionally
empowered to resolve them.
16