Opinion
No. 1 CA-CV 13-0025
02-04-2014
BRADLY ELLICO , Plaintiff/Appellant, v. HACKBERRY ELEMENTARY SCHOOL DISTRICT NO. 3 OF MOHAVE COUNTY GOVERNING BOARD; LAURIE LAWSON, Governing Board President; NAOMI BARGHOLZ, Governing Board Member; DANIEL KING, Governing Board Member, Defendants/Appellees.
Law Office of Gary L. Lassen, PLC, Mesa By Gary L. Lassen Counsel for Plaintiff/Appellant Gallagher & Kennedy, P.A., Phoenix By Donald Peder Johnsen, Jodi R. Bohr Counsel for Defendant/Appellee King Jones, Skelton & Hochuli, P.L.C., Phoenix By Georgia A. Staton, Jonathan P. Barnes, Jr. Counsel for Defendants/Appellees Hackberry Elementary School District No. 3, Laurie Lawson and Naomi Bargholz
NOTICE: NOT FOR PUBLICATION.
UNDER ARIZ. R. SUP. CT. 111(c), THIS DECISION DOES NOT CREATE LEGAL PRECEDENT
AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.
Appeal from the Superior Court in Mohave County
No. S8015CV201101182
The Honorable Randolph A. Bartlett, Judge
AFFIRMED
COUNSEL
Law Office of Gary L. Lassen, PLC, Mesa
By Gary L. Lassen
Counsel for Plaintiff/Appellant
Gallagher & Kennedy, P.A., Phoenix
By Donald Peder Johnsen, Jodi R. Bohr
Counsel for Defendant/Appellee King
Jones, Skelton & Hochuli, P.L.C., Phoenix
By Georgia A. Staton, Jonathan P. Barnes, Jr.
Counsel for Defendants/Appellees Hackberry Elementary School District No. 3,
Laurie Lawson and Naomi Bargholz
MEMORANDUM DECISION
Presiding Judge Peter B. Swann delivered the decision of the Court, in which Judge Patricia K. Norris and Judge Kenton D. Jones joined. SWANN, Judge:
¶1 A former employee of the Hackberry Elementary School District appeals the dismissal of claims arising from the Governing Board's decision to buy out his employment contract. We conclude that the superior court properly determined that the plaintiff failed to comply with the notice-of-claim statute governing the claims at issue, and we therefore affirm its entry of judgment on the pleadings in favor of the Board and its members. We further conclude that the court did not err by awarding attorney's fees to the defendants or by denying the plaintiff's motion to disqualify defense counsel.
FACTS AND PROCEDURAL HISTORY
¶2 At a public meeting held on September 30, 2010, the Hackberry Elementary School District's Governing Board, which included members Laurie Lawson, Naomi Bargholz, and Daniel King, approved a buyout of the employment contract of Bradly Ellico, an administrator and principal. Almost six months later, on March 9, 2011, Ellico mailed a "notice of claim" letter to Lawson, Bargholz, King, and others, claiming that the meeting had violated the state open meetings law, had violated the laws governing dismissal of certificated teachers set forth in Title 15 of the Arizona Revised Statutes, and had resulted in a buyout amount that did not include all wages due him. The next month, Ellico mailed a second "notice of claim" letter that added claims of fraud and conspiracy against Lawson based on "facts previously unknown." Three months later, Ellico commenced this action against the Board, Lawson, Bargholz, King (collectively, "the defendants") and others.
¶3 Ellico's original complaint included a claim for sanctions under the open meeting law. After the court denied Ellico's application for a temporary restraining order and order to show cause related to the open meetings law claim, Ellico filed an amended complaint in which he asserted claims for unpaid wages, negligence based on failure to comply with Title 15, breach of contract, breach of the covenant of good faith and fair dealing, interference with contractual relationship and civil conspiracy, intentional infliction of emotional distress, and third-party bad faith.
¶4 The defendants answered the amended complaint and asserted that Ellico had failed to comply with the notice-of-claim statute. They then filed motions for judgment on the pleadings. In response, Ellico filed his own motion for judgment on the pleadings, moved to disqualify defense counsel based on alleged conflicts of interest, and moved for summary judgment. The court denied Ellico's disqualification motion and extended the deadline for the defendants to respond to the summary judgment motion. The court then held oral argument on the parties' competing motions for judgment on the pleadings, and entered an order granting the defendants' motions and denying Ellico's motion. Ellico timely appeals from Ariz. R. Civ. P. 54(b) judgments dismissing his claims against the defendants with prejudice and awarding them attorney's fees.
DISCUSSION
¶5 Ellico's arguments on appeal are limited to the denial of his motion for judgment on the pleadings, the grant of the defendants' motions for judgment on the pleadings with respect to his wage and Title 15 claims, the denial of his motion to disqualify defense counsel, and the award of attorney's fees to the defendants. We address these arguments in turn. I. THE SUPERIOR COURT DID NOT ERR BY DENYING ELLICO'S MOTION FOR JUDGMENT ON THE PLEADINGS.
¶6 Ellico purported to move for judgment on the pleadings based on the defendants' alleged violations of the open meetings law, arguing that open meetings law issues "predominate in this case, [and] are dispositive of most claims and all defenses advanced." Ellico also argued that the defendants committed "other statutory violations" with respect to unpaid wages and compliance with Title 15.
¶7 As an initial matter, we conclude that Ellico's motion, though styled a motion for judgment on the pleadings, was actually a motion for summary judgment. A plaintiff's motion for judgment on the pleadings tests whether the defendant's answer states a defense. Walker v. Estavillo, 73 Ariz. 211, 215, 240 P.2d 173, 176 (1952); Colboch v. Aviation Credit Corp., 64 Ariz. 88, 92, 166 P.2d 584, 587 (1946). Ellico's motion did not rest on such an argument. Instead, he sought judgment on the merits of his claims by relying, in part, on documents outside of his amended complaint that were neither part of the public record nor central to his pleading. His motion was therefore one for summary judgment, see Ariz. R. Civ. P. 12(c), for which he was required to submit "undisputed admissible evidence that would compel any reasonable juror to find in [his] favor on every element of [his] claim[s]," Wells Fargo, N.A. v. Allen, 231 Ariz. 209, 213, ¶ 18, 292 P.3d 195, 199 (App. 2012) (citation omitted). But the evidence that he presented was limited to his counsel's correspondence regarding his claims, an attorney general opinion about the open meetings law, and an application to an administrative hearing officer for compensation for accumulated leave, lost salary, and overtime. This evidence was insufficient to compel judgment in his favor on his claims.
¶8 More fundamentally, Ellico was not entitled to summary judgment on the central theory of his motion -- open meetings law violations -- because the amended complaint does not state a claim under the open meetings law. The amended complaint superseded the original complaint (which had asserted an open meetings law claim) and became the sole pleading upon which Ellico could obtain relief. Francini v. Phx. Newspapers, Inc., 188 Ariz. 576, 586, 937 P.2d 1382, 1392 (App. 1996) ("Once an amended complaint is filed . . . it supersedes the original complaint, which becomes functus officio, that is, of no further effect or authority."). To be sure, a claim actually raised should not be precluded merely because it is not set forth as a specifically demarcated count. And here, it is true that the amended complaint is not wholly without reference to the open meetings law: the pleading cites that law in the title to the negligence claim, and in its introductory factual allegations describes an "illegal[] . . . executive session" commenced "without notice" in "gross, intentional and wanton violation of the open meeting law" and asserts that defendants "expose[d] the Board to personal liability including liability under [the open meetings law]." But even read liberally, see Ariz. R. Civ. P. 8(f), we cannot say that these allegations fairly raise a claim for relief under the open meetings law. The pleading contains only conclusory references to the open meetings law, does not specify relief requested under the open meetings law, and does not allege facts from which a reader could conclude that a violation of the open meetings law actually occurred. Although we assume the truth of well-pled factual allegations, "mere conclusory statements are insufficient." Cullen v. Auto-Owners Ins. Co., 218 Ariz. 417, 419, ¶ 7, 189 P.3d 344, 346 (2008). Ellico could not obtain judgment based on claims not asserted in the amended complaint.
At oral argument on appeal, Ellico's counsel asserted that the superior court led him to redact the originally pled open meetings law count, because the court found that an open meetings law violation had not been shown for purposes of his application for a temporary restraining order and order to show cause. But in denying accelerated relief, the court did not dismiss the open meetings law claim. Ellico voluntarily relinquished that claim by filing the amended complaint, which superseded the original complaint.
¶9 For all of these reasons, the denial of Ellico's motion was appropriate. Though not essential to our decision, we note our disagreement with the contention of several of the defendants that collateral estoppel provides an additional ground for affirmance. The previous litigation on which these defendants rely, Ellico v. Hackberry Elementary Sch. Dist., 1 CA-CV 10-0769, 2012 WL 3193519 (Ariz. App. Aug. 7, 2012) (mem. decision), decided an open meetings law claim arising from a March 2009 Board meeting. Id. at *1-2, ¶¶ 2, 5. Even if the amended complaint could have been read to raise open meetings law claims, it is clear that the amended complaint relates only to the events of September 2010. Those events were not litigated in the earlier case. Collateral estoppel therefore does not apply. See Robert Schalkenbach Found. v. Lincoln Found., Inc., 208 Ariz. 176, 181, ¶ 18, 91 P.3d 1019, 1024 (App. 2004) (holding that collateral estoppel requires, among other things, actual litigation of the issue in a previous proceeding). II. THE SUPERIOR COURT DID NOT ERR BY GRANTING THE DEFENDANTS' MOTIONS FOR JUDGMENT ON THE PLEADINGS ON ELLICO'S CLAIMS FOR WAGES UNDER A.R.S. § 23-355 AND ATTORNEY'S FEES UNDER A.R.S. § 15-542.
¶10 In their motions for judgment on the pleadings, the defendants argued, inter alia, that Ellico's notices of claim failed to satisfy the notice-of-claim statute, A.R.S. § 12-821.01. As an initial matter, we note that because the notices were central to the amended complaint, and also because the notices were public records, defendants' reliance on the notices did not convert their motions to ones for summary judgment. See Strategic Dev. & Constr., Inc. v. 7th & Roosevelt Partners, LLC, 224 Ariz. 60, 64, ¶¶ 13-14, 226 P.3d 1046, 1050 (App. 2010) (describing centrality and public records exceptions to conversion rule for motions to dismiss); Phx. Newspapers, Inc. v. Ellis, 215 Ariz. 268, 272, ¶ 17, 159 P.3d 578, 582 (App. 2007) (holding that notice of claim was public record). The motions were properly considered as motions for judgment on the pleadings. A defendant's motion for judgment on the pleadings tests whether the complaint states a claim for relief, assuming the truth of its factual allegations. Giles v. Hill Lewis Marce, 195 Ariz. 358, 359, ¶ 2, 988 P.2d 143, 144 (App. 1999). In cases where the notice-of-claim statute applies, compliance with the statute is a prerequisite to a valid claim. See A.R.S. § 12-821.01(A).
¶11 The notice-of-claim statute requires a plaintiff with "claims against a public entity or public employee" to timely file a notice stating sufficient facts to describe the claimed liability, a specific amount for which the claims can be settled, and facts supporting that amount, so that the defendant may investigate and assess liability, potentially settle, and make accurate financial planning and budgeting decisions. A.R.S. § 12-821.01(A); Deer Valley Unified Sch. Dist. v. Houser, 214 Ariz. 293, 295, ¶ 6, 152 P.3d 490, 492 (2007). By its terms, the notice-of-claim statute applies to all "claims" except for claims for just compensation in eminent domain cases, A.R.S. § 12-821.01(A), (H), and our current case law excludes from the statute's reach actions for declaratory or injunctive relief only, on the grounds that such actions are not "claims" because they do not seek money damages, State v. Mabery Ranch, Co., 216 Ariz. 233, 244-45, ¶¶ 47-53, 165 P.3d 211, 222-23 (App. 2007); Martineau v. Maricopa County, 207 Ariz. 332, 337, ¶ 25, 86 P.3d 912, 917 (App. 2004).
¶12 Ellico expressly excluded his claim for wages under A.R.S. § 23-355 and his claim for attorney's fees under A.R.S. § 15-542 from his notices of claim. In both the March 2011 notice and the April 2011 notice, Ellico stated that he would settle for $385,000, but repeatedly emphasized that this settlement offer did not include his Title 23 or Title 15 claims. In the March 2011 notice, Ellico stated:
This current notice of claim is for a sum certain in addition and separate from the statutory based liquidated sums and attorneys fees in the wage and attorney's feesSimilarly, in the April 2011 notice, Ellico stated:
action. Those monies are payable immediately per statute [and] do not require a notice of claim.
. . . .
The sums for fees due and owing upon the District's failure to comply with its statutory obligations under A.R.S. §15-542 and A.R.S. §23-355, et seq. are not included in this claim. The sum certain set forth above for all claims does not include unpaid wages trebled as provided under A.R.S. §23-355 et seq. plus attorneys fees under A.R.S. §15-542.
The sum certain is separate from the statutory based liquidated sums and attorneys fees in the wage and attorney's fees action and is not changed from the March 9,
2011 notice.
. . . .
The sums for fees due and owing upon failure to comply with statutory obligations under A.R.S. §15-542 and A.R.S. §23-355, et seq. are not included in this claim. The sum certain set forth above for all claims does not include unpaid wages trebled as provided under A.R.S. §23-355 et seq. plus attorneys fees under A.R.S. §15-542. The sum certain also does not include claims against Mohave County or its official[s] and employees. It also does not include claims against Laurie Lawson acting individually. It does not include any claim for first or third party bad faith based upon actions perpetrated by the District's insurer through its employees and agents.
¶13 We cannot agree with Ellico's contention that claims brought under A.R.S. §§ 23-355 and 15-542 were exempt from the notice-of-claim statute. Ellico has failed to provide any authority in support of this contention, and we are aware of none. The plain language of the statute supports its application to Ellico's wage claims, and the superior court did not err by granting judgment in the defendants' favor.
¶14 Nor did the court err by dismissing the claims with prejudice. A notice of claim generally must be filed within 180 days of the claim's accrual. A.R.S. § 12-821.01(A). Otherwise, the claim is barred. See Haab v. County of Maricopa, 219 Ariz. 9, 14, ¶ 24, 191 P.3d 1025, 1030 (App. 2008). Here, Ellico's opportunity to file a compliant notice of claim had long expired by the time of the dismissal order. III. THE SUPERIOR COURT DID NOT ERR BY DENYING ELLICO'S MOTION TO DISQUALIFY DEFENSE COUNSEL.
¶15 Ellico moved to disqualify defense counsel based on an alleged conflict of interest between the Board and Board members Lawson and Bargholz, and an alleged conflict arising from counsel's representation of a different Board member, Rick Maudlin, whom Ellico wished to call as a witness at trial. The superior court ruled that Ellico failed to demonstrate that counsel had an ethical conflict of interest. We agree. Ellico made no showing that the Board, Lawson, and Bargholz had adverse interests in the representation, see Ariz. R. Sup. Ct. 42, E.R. 1.7, or that these defendants' interests were materially adverse to Maudlin's interests, see Ariz. R. Sup. Ct. 42, E.R. 1.9. Moreover, as we held regarding Ellico's similar motion to disqualify defense counsel in previous litigation, Ellico did not have standing to seek disqualification because he did not allege that he was counsel's past or current client, or that extreme circumstances otherwise entitled him to challenge defense counsel's representation. Ellico, 1 CA-CV 10-0769, 2012 WL 3193519, at *4, ¶ 15 (citing State ex rel. Romley v. Superior Court, 181 Ariz. 378, 380, 891 P.2d 246, 248 (App. 1995)). IV. THE SUPERIOR COURT DID NOT ERR BY AWARDING ATTORNEY'S FEES TO THE DEFENDANTS.
¶16 After the court granted the defendants' motions for judgment on the pleadings, the defendants moved for attorney's fees under A.R.S. §§ 12-341.01 and -349. The court awarded attorney's fees to all of the defendants in the final judgments.
¶17 Ellico contends that this was error because the defense was funded by the school district's insurer. We reject this contention. It is well-established that defense by a third-party insurer does not prevent a successful party from obtaining an award of attorney's fees under § 12-341.01. Wilcox v. Waldman, 154 Ariz. 532, 538, 744 P.2d 444, 450 (App. 1987). Because Ellico's claims arose out of an employment contract and the defendants prevailed, the superior court reasonably awarded attorney's fees to the defendants under § 12-341.01(A). And in view of Ellico's pursuit of claims that he had abandoned or willfully refused to include in his notices of claim, the awards were also reasonable under § 12-349(A).
CONCLUSION
¶18 We affirm for the reasons set forth above. The Board, Lawson, and Bargholz request attorney's fees on appeal under A.R.S. § 12-349 and ARCAP 25, and King requests attorney's fees on appeal under A.R.S. §§ 12-341.01 and -349. We grant the defendants' requests under A.R.S. § 12-349 because we find that Ellico's continued pursuit of waived claims lacks substantial justification and has unreasonably expanded this litigation. The defendants are entitled to recover their reasonable attorney's fees under A.R.S. § 12-349(A), and their costs under A.R.S. § 12-341, upon their compliance with ARCAP 21. In exercise of our discretion under A.R.S. § 12-349(B), we allocate the awards of fees and costs equally between Ellico and his counsel.