Redhair v. Kinerk, 2 CA-CV 2007-0107

CourtCourt of Appeals of Arizona
Writing for the CourtECKERSTROM, Presiding.
Docket Number2 CA-CV 2007-0107
PartiesMICHAEL REDHAIR, Plaintiff/Appellant. v. KINERK, BEAL, SCHMIDT, DYER & SETHI, P.C., an Arizona professional corporation, Defendant/Appellee.
Decision Date22 April 2011

MICHAEL REDHAIR, Plaintiff/Appellant.
SETHI, P.C., an Arizona professional
corporation, Defendant/Appellee.

2 CA-CV 2007-0107


Filed: April 22, 2011



Cause No. C20064653

Honorable Michael Alfred, Judge Honorable Michael O. Miller, Judge


Mesch Clark & Rothschild, P.C.
By Patrick J. Lopez
Attorneys for Plaintiff/Appellant

Rusing & Lopez PLLC
By Michael J. S. Rusing

Steptoe & Johnson LLP
By Bennett Evan Cooper and Douglas D. Janicik
Attorneys for Defendant/Appellee

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ECKERSTROM, Presiding Judge.

¶1 Appellant Michael Redhair appeals from the trial court's dismissal of his complaint, in which he asserted claims for breach of contract, unpaid wages, and promissory estoppel against appellee Kinerk, Beal, Schmidt, Dyer & Sethi, P.C. (hereinafter "the firm"). The trial court granted the firm's motion to dismiss, finding Redhair had failed to file his claims within the one-year statute of limitations applicable to employment contracts. See A.R.S. § 12-541(3). He argues his claims involving an unpaid bonus were not subject to the one-year limitation period because the definition of "employment contract" in that statute is limited to claims falling under the Arizona Employment Protection Act. He also argues his claim for unpaid wages is based on a liability created by a penalty statute so that an alternative one-year statute of limitations for "liability created by statute, other than a penalty or forfeiture," A.R.S. § 12-541(5), is not applicable. For the following reasons, we affirm the judgment.

¶2 When reviewing a trial court's decision to grant a motion to dismiss, "we assume the truth of the allegations set forth in the complaint and uphold dismissal only if the plaintiffs would not be entitled to relief under any facts susceptible of proof in the statement of the claim." Mohave Disposal, Inc. v. City of Kingman, 186 Ariz. 343, 346, 922 P.2d 308, 311 (1996). Thus, for purposes of the issues we address here, we accept the complainant's factual allegations as follows.

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¶3 Redhair was employed as an associate attorney for the firm when his father referred a medical malpractice case to him. Redhair presented the case to the managing partner of the firm, and the firm accepted the case in December 2000. The managing partner offered to pay Redhair's father a referral fee. Redhair's father instead asked the firm to pay the referral fee to Redhair as a bonus. The firm proposed the same to Redhair and he accepted. Although much of the medical malpractice case was litigated during Redhair's tenure with the firm, the firm did not receive its $2 million fee for the case until December 2004, after Redhair had left the firm and started his own practice. The firm has never paid the bonus to Redhair.

¶4 Redhair filed a complaint in August 2006 for breach of contract, recovery of wages, and promissory estoppel.1 The firm moved to dismiss the complaint, arguing Redhair's claims were subject to the one-year limitations periods set forth in § 12-541(3) and (5). The court found all his claims precluded by § 12-541(3) as "concerning an oral contract of employment." It dismissed the complaint with prejudice, and this appeal followed.

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¶5 Redhair argues the trial court erred by interpreting the oral agreement as an employment contract under § 12-541(3).2 We review de novo a trial court's decision to grant a motion to dismiss that involves statutory interpretation. Harris v. Cochise Health Sys., 215 Ariz. 344, ¶ 24, 160 P.3d 223, 230 (App. 2007).

¶6 Section 12-541(3) creates a one-year statute of limitations in actions "[f]or breach of an oral or written employment contract including contract actions based on employee handbooks or policy manuals that do not specify a time period in which to bring an action." When interpreting a statute, if its "language is unambiguous, we give effect to the language and do not use other rules of statutory construction in its interpretation." Maycock v. Asilomar Dev., Inc., 207 Ariz. 495, ¶ 24, 88 P.3d 565, 570 (App. 2004); US West Commc'ns, Inc. v. City of Tucson, 198 Ariz. 515, ¶ 12, 11 P.3d 1054, 1059 (App. 2000). In doing so, we give effect to each "word, phrase, clause, and sentence... so that no part of the statute will be void, inert, redundant, or trivial." Walker v. City of Scottsdale,

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163 Ariz. 206, 210, 786 P.2d 1057, 1061 (App. 1989). Nor will we read into the statute "something which is not within the manifest intent of the legislature as indicated by the statute itself." City of Tempe v. Fleming, 168 Ariz. 454, 457, 815 P.2d 1, 4 (App. 1991).

¶7 Here, the trial court understood the term "employment contract" as used in § 12-541(3) to encompass the circumstances at issue, categorizing the dispute as one concerning a term of an oral contract of employment. This comports with the ordinary meaning of the term: a "contract between an employer and employee in which the terms and conditions of employment are stated." Black's Law Dictionary321 (7th ed. 1999); see also State v. Wise, 137 Ariz. 468, 470 n.3, 671 P.2d 909, 911 n.3 (1983) (approving use of dictionary to determine ordinary meaning).

¶8 By suing the firm for breach of contract based on the firm's alleged refusal to ?honor the agreement to pay the bonus, Redhair essentially concedes the agreement was a contract. However, he contends it is not an "employment contract" pursuant to § 12-541(3) because subsection (3) was added to § 12-541 by Senate Bill 1386, which also enacted the Arizona Employment Protection Act (AEPA), A.R.S. §§ 23-1501 through 23-1502. See 1996 Ariz. Sess. Laws, ch. 140, §§ 2, 3.3 Accordingly, he argues, § 12-541(3) only applies to "agreements affecting a term of employment or altering or limiting the at-will presumption from which an employee could state a claim for termination of employment pursuant to

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A.R.S. § 23-1501(3)(a)." Applying that interpretation of § 12-541(3), Redhair contends the type of agreement at issue here, an "agreement[] arising in the employment context concerning... bonus compensation," is "outside the scope of the AEPA and A.R.S. § 12541 since [it is] not [an] 'employment contract[]' for a specific term of employment or that otherwise alter[s] or limit[s] the at-will presumption."

¶9 We do not read § 12-541(3) so narrowly for several reasons. First, that subsection expressly applies to both oral and written employment contracts, while § 23-1501(2) describes only contracts in writing. See § 23-1501(2) (repeatedly discussing requirement of "written contract"). Thus, interpreting the term "employment contract" in § 12-541(3) to encompass only those contracts described by § 23-1501(2) would render the portion of § 12-541(3) referring to "oral" contracts a nullity. See Walker, 163 Ariz. at 210, 786 P.2d at 1061 (in construing statute, effect must be given to every word). And, had our legislature intended to limit the meaning of the term "employment contract" as Redhair suggests, we presume it would have done so expressly, either by cross-referencing § 23-1501(2) or by adding limiting language to the statute. See Yarbrough v. Montoya-Paez, 214 Ariz. 1, ¶ 14, 147 P.3d 755, 759 (App. 2006) (collecting cases emphasizing presumption that if legislature intends to limit a statute, it does so clearly and expressly).

¶10 We also find guidance in the statute's location. Rather than including the limitation period for an "employment contract" in Title 23 with the remainder of the AEPA, the legislature chose to add that provision to an existing statute that provides a one-year

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limitation period for other types of actions.4 See Manic v. Dawes, 213 Ariz. 252, ¶ 16, 141 P.3d 732, 735 (App. 2006) (legislature's insertion of notice-of-right-to-jury-trial language into substantive driving-under-the-influence-of-intoxicant statute demonstrated legislative intent); cf. Hughes v. Jorgenson, 203 Ariz. 71, ¶11, 50 P.3d 821, 823 (2002) (acknowledging principle of statutory construction that statutory scheme is considered as a whole to determine legislative intent).

¶11 As Redhair correctly emphasizes, the legislature set forth the one-year limitation period for breach of an "employment contract," § 12-541(3), in a bill containing other provisions that focus on the "severability of employment relationships," as set forth in § 23-1501. See 1996 Ariz. Sess. Laws, ch. 140, §§ 2, 3. From that, we can reasonably infer that the legislature amended § 12-541 in part to provide a time limitation for filing a claim arising under § 23-1501. But Redhair can direct us to no language in § 12-541(3) demonstrating that this was the exclusive purpose of § 12-541(3), and the legislature is entitled to address more than one public policy concern in a bill. As discussed, the express language of § 12-541(3) applying its terms to oral employment contracts, a species of

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employment contract not addressed in § 23-1501, demonstrates that the legislature intended the scope of the former statute to extend beyond the concerns addressed in the latter.

¶12 We agree with the broader contention urged by Redhair—that the bill within which § 12-541(3) was promulgated primarily addressed the...

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