A Miner Contracting Inc. v. Safeco Ins. Co. of Am.

• Decision Date: 30 September 2021
• Docket Number: 1 CA-CV 20-0463,1 CA-CV 20-0205
• Citation: A Miner Contracting Inc. v. Safeco Ins. Co. of Am., 1 CA-CV 20-0205, 1 CA-CV 20-0463 (Ariz. App. Sep 30, 2021)
• Parties: A MINER CONTRACTING INC., et al., Plaintiff/Appellant/Cross-Appellee, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant/Appellee/Cross-Appellant. ALAN R. MINER, et al., Plaintiffs/Appellees, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant/Appellant.
• Court: Arizona Court of Appeals

A MINER CONTRACTING INC., et al., Plaintiff/Appellant/Cross-Appellee, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant/Appellee/Cross-Appellant.

ALAN R. MINER, et al., Plaintiffs/Appellees, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant/Appellant.

Nos. 1 CA-CV 20-0205, 1 CA-CV 20-0463

Court of Appeals of Arizona, First Division

September 30, 2021

Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court

Appeal from the Superior Court in Maricopa CountyNo. CV2005-009781CV2005-019434, CV2006-007290, CV2007-000895, CV2008-001105 The Honorable James D. Smith, Judge The Honorable Lindsay P Abramson, Judge Pro Tempore

Becke & Olson PLLC., Prescott By Andrew J. Becke Co-Counsel for Plaintiff/Appellant/Cross-AppelleeA. Miner Contracting, Inc.

The Vakula Law Firm, PLC, Prescott By Alex B. Vakula Co-Counsel for Plaintiff/Appellant/Cross-AppelleeA. Miner Contracting Inc.

Jennings, Strouss & Salmon, P.L.C., Phoenix By Scott F. Frerichs, Patrick F. WelchCounsel for Defendant/Appellee/Cross-AppellantSafeco Insurance Company of America

Sacks Tierney P.A., Scottsdale By Evan F. Hiller, Wesley D. RayCounsel for Plaintiffs/AppelleesAlan Miner, et al.

Judge Samuel A. Thumma delivered the decision of the Court, in which Chief Judge Kent E. Cattani and Judge Jennifer M. Perkins joined.

MEMORANDUM DECISION

THUMMA, JUDGE

¶1 These consolidated appeals are the most recent appellate iteration of consolidated superior courtcases first filed in 2005.The original dispute related to a $4.3 million construction contract awarded by the Toho Tolani County Improvement District in 2003 to plaintiff A.Miner Contracting, Inc.(AMC) to build roadway improvements and related work in Kachina Village, Arizona.

¶2 In 2013, this court resolved the dispute between AMC and the District, affirming a grant of summary judgment that AMC had defaulted on its obligations to the District under the construction contract.A. Miner Contracting, Inc. v. Toho-Tolani Cnty. Imp. Dist.,233 Ariz. 249, 251 ¶ 1 (App. 2013)(Miner I).That decision relieved the District of its obligation to repay AMCs surety, Safeco Insurance Company of America (Safeco), for completing work AMC had abandoned.

¶3 In the lawsuit resulting in this appeal, Safeco asserted an indemnity claim against Alan R. and Elizabeth L. Miner and AMC (collectively, Miner).AMC responded by asserting contract-based counterclaims.After a March 2019 trial, the jury returned verdicts resulting in a net damage award to AMC.

¶4 Miner appeals the resulting judgment against it, while Safeco cross-appeals from the verdict finding Safeco breached the implied covenant of good faith and fair dealing.Safeco also appeals from a judgment quashing its writ of garnishment and an attorneys' fee judgment in the garnishment proceedings.Because the parties have shown no reversible error, the judgments are affirmed.

FACTS AND PROCEDURAL HISTORY

¶5 In November 2003, the District awarded AMC the construction contract.Before beginning work, AMC had to procure payment and performance bonds.See generallyA.R.S. §§ 48-925; 34-222 (2021).^[1] AMC did so through a General Agreement of Indemnity (GAI), in which Safeco agreed to assume AMCs obligations to the District if AMC failed to perform as promised.Alan Miner signed the GAI individually and on behalf of AMC.The following declaration was inserted after Mr. Miner's signatures: "The indemnity of the undersigned is limited solely to the Interest that they may have, now or in the future, in the real property located at 1071 Commerce Drive, Prescott, Arizona."Elizabeth Miner, Alan's wife, signed the GAI after that declaration.

¶6 The GAI provided that Safeco would be indemnified for "[a]ll loss, costs and expenses . . . including court costs [and] reasonable attorney fees . . . incurred by" Safeco if the District declared AMC in default.The GAI authorized Safeco to demand collateral from both AMC and the Miners in the event of AMCs default and to file UCC-1 financing statements to secure that collateral.It also expressly granted Safeco the exclusive right to "determine in good faith" whether to pay any claims against its bonds, adding such determinations "shall be final and conclusive upon" Miner.

¶7 Various disputes arose during the project.In June 2005, AMC stopped work and sued the District.The District counterclaimed, declared AMC in default and called on Safeco to complete the project in AMCs stead.

¶8 Safeco assumed Miner's construction obligations in a takeover agreement with the District.The District then paid Safeco about $720, 000 of the remaining contract balance, withholding $1.1 million as an estimate of its damages caused by AMCs default.Safeco retained Combs Construction Company to complete AMCs work, at an additional cost to Safeco of about $3 million.Combs completed the work, satisfying Safeco's obligations under the takeover agreement.

¶9 After Miner I, Safeco invoked the GAI and pressed an indemnity claim against Miner for the money it had paid Combs.In response, Miner asserted two counterclaims: breach of the express terms of the GAI and breach of the implied covenant of good faith and fair dealing, seeking as damages lost bonding capacity and payment owed for work performed.

¶10 At a March 2019 trial, the jury returned verdicts for Safeco on its indemnity claim, awarding Safeco $2, 087, 907, and for Miner on its implied covenant claim, awarding Miner $1, 062, 030.The jury found for Safeco on Miner's counterclaim for breach of the express terms of the GAI.After offsetting the awards, awarding Safeco its attorneys' fees and costs and awarding prejudgment interest, the final judgment for Safeco totaled more than $5.3 million.Safeco's attempts to collect on the judgment led to later judgments quashing its writ of garnishment and awarding the Miners attorneys' fees.

¶11 In this consolidated appeal, this court has jurisdiction over Miner's timely appeal and Safeco's timely cross-appeal from the underlying judgment, and Safeco's timely appeal from the garnishment judgments, pursuant to Article 6, Section 9, of the Arizona ConstitutionandA.R.S. §§ 12-120.21(A)(1) and -2101(A)(1).

DISCUSSION

I.Miner's Appeal.

¶12 Miner argues the superior court erred by denying its motion for entry of judgment on alleged damages from Safeco's UCC-1 filings and denying its motion for remittitur or new trial.This court reviews both issues for an abuse of discretion.GM Dev. Corp. v. Cmty. Am. Mortg. Corp.,165 Ariz. 1, 9(App.1990)(motion for entry of judgment);Monaco v. HealthPartners of S. Ariz.,196 Ariz. 299, 304 ¶ 13 (App. 1999)(motion for remittitur or new trial).

A.The Court Properly Denied Miner's Motion for Entry of Judgment.

¶13 After the District declared AMC in default, Safeco filed two UCC-1 financing statements with the Arizona Secretary of State, encumbering Miner's assets.In 2006, Miner moved to quash the UCC-1s, claiming they exceeded the scope of the GAI and seeking at least $1.4 million in damages under A.R.S. § 47-9625(B) and a penalty under A.R.S. § 47-9509(A).After considering briefing by the parties, in August 2006, the court issued a minute entry stating that "[f]or reasons set forth in [Miner's] Motion and Reply, IT IS ORDERED granting [Miner's] . . . motion."

¶14 Nearly two years later, in July 2008, Miner requested an evidentiary hearing "to determine [the] damages awarded to it" in the 2006 minute entry.No such hearing was ever set or held.The issue was raised again after the March 2019 trial, when Miner moved for entry of judgment on the 2006 minute entry.In denying Miner's motion, the court concluded the 2006 minute entry awarded no damages.The court also stated that any such award made without an evidentiary hearing would "test fundamental notions of due process" and noted the jury had rejected Miner's request for the damages that it claimed were owed under the 2006 minute entry.On appeal, Miner argues (1) the 2006 minute entry was "res judicata;"(2) denial of the post-trial motion for entry of judgment was an impermissible "horizontal appeal" and (3) Miner's damage claims should not have been submitted to the jury.

¶15 Miner's first two arguments misconstrue the relevant law.Because the 2006 minute entry was never reduced to a final judgment, it was interlocutory and could be "revised at any time."Ariz. R. Civ. P. 54(b).Thus, the 2006 minute entry was not a judgment, meaning res judicata does not apply.SeeHall v. Lalli,194 Ariz. 54, 57 ¶ 7 (1999)("res judicata will preclude a claim when a former judgment on the merits was rendered")(emphasis added).Nor was the denial of Miner's motion for entry of judgment an impermissible "horizontal appeal."Among other things, the 2006 minute entry "did not actually decide the issue" of Miner's damages, a prerequisite to applying any horizontal appeal limitation.SeePowell-Cerkoney v. TCR-Mont. Ranch Joint Venture, II,176 Ariz. 275, 279(App.1993).

¶16 Miner has also shown no error in the court's submission of its claims for damages to the jury.Miner's primary argument appears to be that there was no jury trial right on its claim because it arose out of statute.Miner relies on the proposition that the Arizona Constitution's "jury trial provision merely preserves a right to jury trial if such a right existed at common law; it does not create a right where none existed before."Smith v Ariz. Clean Elections Comm'n,212 Ariz. 407, 416 ¶ 43 (2006).That principle, however, does not mean that there is no right to a jury trial on claims that arise out of statute.Rather, Smith reaffirmed the proposition that the right to a jury trial under Arizona's Constitution"has never extended to civil cases that turn on...