NOTICE: NOT FOR PUBLICATION.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.

IN THE

ARIZONA COURT OF APPEALS DIVISION ONE

KENNETH CALLIES and DORENE CALLIES, husband and wife, 

Plaintiffs/Appellants,

v.

UNITED HERITAGE PROPERTY AND CASUALTY INSURANCE 

COMPANY, a foreign corporation, Defendant/Appellee.

No. 1 CA-CV 13-0189

Appeal from the Superior Court in Maricopa County

No. CV2012-005517

The Honorable Mark H. Brain, Judge

REVERSED AND REMANDED

COUNSEL

Dawson & Rosenthal PC, Sedona

By Steven C. Dawson, Anita Rosenthal

Co-Counsel for Plaintiffs/Appellants

Adelman German PLC, Scottsdale

By Steven J. German

Co-Counsel for Plaintiffs/Appellants
2

Thomas Thomas & Markson PC, Phoenix

By Neal B. Thomas

Counsel for Defendant/Appellee

MEMORANDUM DECISION

Judge Kenton D. Jones delivered the decision of the Court, in which 

Presiding Judge Patricia A. Orozco and Judge Lawrence F. Winthrop

joined.

J O N E S, Judge:

¶1 Kenneth and Dorene Callies, husband and wife (collectively, 

Callies), appeal the trial court’s dismissal of their insurance bad faith 

cause of action against United Heritage Property and Casualty Insurance 

(United). For the reasons stated herein, we reverse and remand to the 

trial court. 

FACTS1 AND PROCEDURAL HISTORY

¶2 The Callies maintained a homeowner’s insurance policy 

with United. At the time they purchased the policy, the Callies were 

Oregon residents, while United was domiciled in Idaho and conducted 

business in multiple states, including Idaho, Oregon, Arizona, and Utah. 

The relevant policy covered the Callies’ home in Eugene, Oregon, as well 

as their personal property “while it was anywhere in the world.”

¶3 In June 2011, the Callies moved from Oregon to Arizona. To 

this end, the Callies rented a moving truck and drove to Surprise, 

Arizona. As the Callies had not yet secured permanent living 

arrangements in Arizona, they rented a room from The Lodge at Sun 

Ridge for the nights of June 10 through June 14. The Callies were allowed 

to park their moving truck in The Lodge’s parking lot during their stay. 

 

1 When reviewing the grant of a motion to dismiss, we assume the truth of 

the well-pleaded factual allegations contained within the complaint. 

Logan v. Forever Living Prods. Intern., Inc., 203 Ariz. 191, 192, ¶ 2, 52 P.3d 

760, 761 (2002). 
CALLIES v. UNITED HERITAGE

Decision of the Court

3

¶4 On the morning of June 11, the Callies discovered their 

truck, containing all of their personal property, had been stolen during the 

night. The Callies notified both the Surprise Police Department and 

United of the theft that same day. On June 28, the truck was discovered 

by the Glendale Police Department, but the Callies’ personal property had 

been removed. 

¶5 Toward the administration of the Callies’ insurance claim, 

United directed an Arizona adjustor to contact the Callies in Arizona and 

take their statements. The Callies also provided complete inventory lists 

of the property taken, per United’s request. With that, United advised the 

Callies that payment on their claim would be forthcoming, and that the 

only remaining issue was to determine the exact amount due. Acting on 

such assurance, the Callies proceeded to purchase a house in Arizona. 

¶6 However, rather than make the promised payment, United 

instead decided to initiate a fraud investigation into the Callies’ claim. 

United informed them of this decision by telephone in August. Following 

the phone call, Kenneth began displaying behavioral issues, suffering 

from emotional and mental agitation and confusion. 

¶7 Later in August, the Callies received another phone call, this 

time from an attorney representing United, in which they were told to 

have no direct contact with any person at United and were asked to agree 

to be questioned under oath. When Dorene explained she did not believe 

Kenneth would be able to handle the examination, the attorney concluded 

the phone call. The Callies heard nothing further from United for several 

months. During that intervening time period, Kenneth continued to suffer 

emotional and psychological problems, and on October 28, he was civilly 

committed to a mental health facility in Oregon. 

¶8 On April 13, 2012, the Callies initiated suit against United

and the Lodge at Sun Ridge and its owners (collectively, The Lodge).

Within their complaint, the Callies alleged two claims: 1) insurance bad 

faith against United, and 2) negligence (premises liability) against The 

Lodge.2

¶9 United responded by filing a motion to dismiss for failure to 

state a claim. See Ariz. R. Civ. P. 12(b)(6). In its motion, United argued 

 2 The Lodge did not join United’s motion to dismiss, and is not a party to 

this appeal. 
CALLIES v. UNITED HERITAGE

Decision of the Court

4

Oregon law, rather than Arizona law, should be applied, and that Oregon 

did not recognize a cause of action for first-party insurance bad faith. It 

also argued the doctrine of forum non conveniens mandated dismissal. To 

its motion, United appended a certified copy of the Callies’ insurance 

policy, as well as a partial transcript of Dorene’s examination under oath. 

¶10 Within their response, the Callies argued to the contrary, 

asserting Arizona law should be applied, and that Arizona was not an 

inconvenient forum.3 United replied, attaching, in support of its forum 

non conveniens argument, the Callies’ Rule 26.1 disclosure statement to 

illustrate that a majority of the Callies anticipated witnesses lived in 

Oregon. 

¶11 Following oral argument on United’s motion to dismiss, the 

trial court, applying the principles delineated within the Restatement 

(Second) Conflict of Laws §§ 6 and 145 (1971), found Oregon law should 

apply, and granted United’s motion to dismiss for failure to state a claim. 

In so finding, the trial court noted: (1) the Callies suffered the initial injury 

in Arizona but “the effects of [United’s] conducts are continuing to be felt 

in Oregon, where [the Callies] reside;” (2) United’s bad faith actions were 

centered in Oregon; (3) the Callies “were and are Oregon residents, but 

briefly lived in Arizona;” (4) United was an Idaho corporation that 

conducted business nationwide; (5) the parties’ relationship was centered 

in Oregon; and (6) “Oregon’s interests stand out – it has an interest in 

ensuring that its citizens are treated appropriately by insurers.” While 

recognizing Arizona and Oregon differ in the treatment of insureds, the 

trial court did not find Oregon’s treatment unfair. 

¶12 The Callies sought reconsideration, which the trial court 

ultimately denied. The Callies then timely appealed. We have 

jurisdiction pursuant to Arizona Revised Statutes (A.R.S.) section 12-

2101(A)(1) (2014). 

STANDARD OF REVIEW

¶13 We review the grant of a Rule 12(b)(6) motion to dismiss de 

novo. Coleman v. City of Mesa, 230 Ariz. 352, 355, ¶ 7, 284 P.3d 863, 866 

(2012). Motions to dismiss for failure to state a claim are not favored in 

Arizona. Acker v. CSO Chevira, 188 Ariz. 252, 255, 934 P.2d 816, 819 (App. 

 3 At no time did the Callies move to amend their pleading. See Ariz. R. 

Civ. P. 15(a)(1). 
CALLIES v. UNITED HERITAGE

Decision of the Court

5

1997). Dismissal pursuant to Rule 12(b)(6) is appropriate if as a matter of 

law the plaintiff would not be entitled to relief under any interpretation of 

the facts. Belen Loan Investors, LLC v. Bradley, 231 Ariz. 448, 453, ¶ 7, 296 

P.3d 984, 989 (App. 2012) (quoting Coleman, 230 Ariz. at 352, ¶ 8, 284 P.3d 

at 867) (internal quotations omitted). 

¶14 Choice of law issues are questions of law, which we review 

de novo. Garcia v. General Motors Corp., 195 Ariz. 510, 516, ¶ 19, 990 P.2d

1069, 1075 (App. 1999). 

DISCUSSION

¶15 On appeal, the Callies argue the trial court erred by granting 

United’s motion to dismiss because it found Oregon law, rather than 

Arizona law, applied to this action. We agree. 

I. Choice of Law

¶16 The parties agree the choice of law determination is 

dispositive of this matter. Oregon courts do not recognize a separate tort 

cause of action for an insurance bad faith claim that stems from an 

insurer’s refusal to pay benefits, instead holding that such an action 

sounds in contract. See Emp’rs’ Fire Ins. Co. v. Love It Ice Cream Co., 670 

P.2d 160, 165 (Or. Ct. App. 1983). Arizona does allow such a tort action. 

See Zilisch v. State Farm Mut. Auto. Ins. Co., 196 Ariz. 234, 237, ¶ 20, 995 

P.2d 276, 279 (2000); Rawlings v. Apodaca, 151 Ariz. 149, 160, 726 P.2d 565, 

576 (1986); Noble v. Nat’l Am. Life Ins. Co., 128 Ariz. 188, 190, 624 P.2d 866, 

868 (1981).4 Therefore, if Oregon law applies to this dispute, the Callies 

will have failed to state a claim upon which relief may be granted; the 

converse being true if Arizona law applies.5 

 4 Idaho, United’s place of incorporation, similarly recognizes first party 

insurance bad faith as independently actionable in tort. See Weinstein v. 

Prudential Prop. & Cas. Ins. Co., 233 P.3d 1221, 1240 (Id. 2010); White v. 

Unigard Mut. Ins. Co., 730 P.2d 1014, 1017 (Id. 1986). 

5 Neither party argues that Idaho law should be applied to this action, but 

rather focuses their arguments entirely on Oregon and Arizona law. As 

such, we discuss the Restatement contacts in Arizona or Oregon, and 

mention Idaho’s contacts only when it would support an Arizona or 

Oregon contact. See Bryant v. Silverman, 146 Ariz. 41, 44 n.2, 703 P.2d 1190, 

1193 n.2 (1985). 
CALLIES v. UNITED HERITAGE

Decision of the Court

6

¶17 As the forum state, Arizona law will govern the choice of 

law determination. See Cardon v. Cotton Lane Holdings, Inc., 173 Ariz. 203, 

206, 841 P.2d 198, 201 (1992). Arizona courts follow the Restatement 

(Second) of Conflict of Laws (1971) (Restatement) in determining the 

controlling law for multistate torts. Pounders v. Enserch E & C, Inc., 232 

Ariz. 352, 354, ¶ 8, 306 P.3d 9, 11 (2013); Bates v. Superior Court of State of 

Ariz., 156 Ariz. 46, 48, 749 P.2d 1367, 1369 (1988).6 

A. Restatement § 146

¶18 Restatement § 146, entitled “Personal Injuries,” has been 

found applicable to insurance bad faith claims when sufficient mental 

distress or physical harm has been alleged, as in the immediate case. See 

Bates, 156 Ariz. at 49, 749 P.2d at 1370 (“We conclude that § 146 is 

pertinent because plaintiff claims that the alleged bad faith acts [of the 

defendant] caused her to suffer personal injury, mental and physical 

harm.”).7 Section 146 provides:

[T]he local law of the state where the injury occurred 

determines the rights and liabilities of the parties, unless, 

with respect to the particular issue, some other state has a 

more significant relationship under the principles stated in § 

6 to the occurrence and the parties, in which event the local 

law of the other state will be applied.

¶19 The “place of the injury,” in the context of § 146, equates to 

the place where “the last event necessary for liability occurs.” Pounders, 

232 Ariz. at 356, ¶ 21, 306 P.3d at 13 (internal quotations omitted). Here, 

Kenneth began suffering emotional and psychological problems in 

Arizona immediately following United’s informing the Callies their claim 

was being investigated. Further, the Callies allege having experienced 

 6 We note that Oregon likewise applies the Restatement’s “most 

significant relationship” approach to tort claims. Spirit Partners, LP v. Stoel 

Rives LLP, 157 P.3d 1194, 1200 (Or. Ct. App. 2007). 

7 United invites us to resolve the choice of law issue under Restatement § 

193. We decline to do so, as Restatement § 193 applies to “[t]he validity of 

a contract of fire, surety or casualty insurance and the rights created 

thereby,” which are not at issue in this case. Further, Bates illustrates that 

choice of law cases regarding multistate insurance bad faith claims are 

analyzed under Restatement §§ 6, 145 and 146. Bates, 156 Ariz. at 48-51, 

749 P.2d at 1369-72.
CALLIES v. UNITED HERITAGE

Decision of the Court

7

extreme stress during the months they remained in Arizona due to 

United’s decision to withhold payment on the Callies’ claim during its 

investigation. 

¶20 The Callies argue the place of the injury is determined at the 

time of the commission of the tort, leading to the conclusion that Arizona 

is the place of the injury. United argues that, in this instance, “the place of 

injury is, at best, transitory,” and therefore cannot be said to be Arizona,

because bad faith is a continuing tort and the Callies have alleged they are 

continuing to suffer the effects of United’s alleged bad faith in Oregon, 

where they now reside.8 We agree with the Callies that the place of injury

is Arizona, as it was the state where they were located when they allege 

having initially suffered damage by virtue of United’s actions. See 

Pounders, 232 Ariz. at 356, ¶ 20, 306 P.3d at 13 (“Determining that the 

‘place of injury’ is the place where the last event necessary for liability 

occurred (that is, the place where the injury manifested), which can only 

occur in one location, preserves the Restatement goals of certainty, 

predictability, and uniformity of result.”). 

B. Restatement § 145

¶21 Having found that “[§] 146 initially suggests the application 

of [Arizona] law, we still must consider whether [Oregon] has a more 

significant relationship to the parties and the issue than does [Arizona].” 

Garcia v. Gen. Motors Corp., 195 Ariz. 510, 517, ¶ 20, 990 P.2d 1069, 1076

(App. 1999); see Bates, 156 Ariz. at 49, 749 P.2d at 1370. In doing so, we 

consider and analyze the factors outlined in Restatement § 145(2):

 8 United cites two cases, White v. Western Title Insurance Company, 40 

Cal.3d 870 (Cal. 1985) and Floyd v. Donahue, 186 Ariz. 409, 923 P.2d 875 

(App. 1996), as supportive of the argument that bad faith is a continuous 

tort. Both cases are easily distinguishable, and neither supports their 

contention. White stands for the proposition that an insurer’s duty of good 

faith does not terminate when a law suit is filed against it by an insured. 

White, 710 P.2d at 885-86. Floyd addresses the implications of continuous 

torts in regards to the commencement of limitations periods, and does not 

enunciate insurance bad faith is such a continuous tort. Floyd, 186 Ariz. at 

413, 923 P.2d at 879. Neither support United’s contention that the bad 

faith claim is a continuing tort, nor that the place of injury may be said to 

include a state where damages continue to accrue after they have already 

been incurred in another state. 
CALLIES v. UNITED HERITAGE

Decision of the Court

8

(a) The place where the injury occurred,

(b) The place where the conduct causing the injury occurred, 

(c) The domicil, residence, nationality, place of incorporation 

and place of business of the parties, and

(d) The place where the relationship, if any, between the 

parties is centered.

Bates, 156 Ariz. at 49, 749 P.2d at 1370; Garcia, 195 Ariz. at 517, ¶ 20, 990 

P.2d at 1076. 

¶22 The first factor, as previously established, weighs in favor of 

applying Arizona law. United consistently argues that the weight given 

this factor should be diminished because the injury occurring in Arizona 

was “merely fortuitous.” See Pounders, 232 Ariz. at 357, ¶ 28, 306 P.3d at 

14 (quoting Restatement § 145 cmt. e (“Situations do arise, however, 

where the place of injury will not play an important role in the selection of 

the state of the applicable law. . . . [W]hen the place of injury can be said 

to be fortuitous. . . .”)). In support of this assertion, United notes that the 

theft and events giving rise to the Callies’ insurance claim occurred on 

their first night in Arizona. 

¶23 First, United’s focus upon the theft occurring on the Callies’

first night in Arizona as the basis for its assertion the injury is fortuitous is 

misplaced, as it is not the theft that gives rise to the allegation of tortious 

conduct, but rather United’s actions, thereafter. The Callies’ bad faith 

allegation is that they suffered injury as a result of United’s unreasonable

decision to launch an insurance fraud investigation. The theft of the rental 

truck, itself, was no more than the triggering event that lead to the Callies’ 

insurance claim. It was United’s handling of the claim in August, two 

months after the theft, which resulted in the Callies’ complaint of injury.

¶24 Second, we determine that Arizona was not a fortuitous 

place of injury. An injury is only fortuitous when it “just happens to 

occur” in a particular state. See id. (finding manifestation of mesothelioma 

in Arizona was fortuitous as the injured could have moved anywhere 

following his exposure to asbestos in New Mexico); Garcia, 195 Ariz. at 

517, ¶¶ 21-22, 990 P.2d at 1076 (finding Idaho was a fortuitous place of 

injury because the injured passengers of an automobile accident that 

occurred in Idaho were Arizona residents that were taking a trip to 

Washington with the intent to return to Arizona); Baroldy v. Ortho Pharm.

Corp., 157 Ariz. 574, 578-79, 760 P.2d 574, 578-79 (App. 1988). 
CALLIES v. UNITED HERITAGE

Decision of the Court

9

¶25 The Callies had not only moved to Arizona, but proceeded 

with the purchase of a home by the time United determined to further 

investigate their claim. Further, the Callies had filed their insurance claim 

with United from Arizona. Unlike the cited cases where the injury was 

deemed fortuitous because the mere happening of the event in the state 

was considered random (such as a car accident or the manifestation of an 

injury stemming from prior toxic exposure), in this case the Callies’

location at the time of their injury was not a random event as they had not 

only decided to reside in Arizona but had relocated to this State, with

United subsequently directing its actions toward the Callies with full 

knowledge they, by then, resided in Arizona. See Restatement § 146 cmt. e 

(“The local law of the state where the personal injury occurred is most 

likely to be applied when the injured person has a settled relationship to 

that state, either because he is domiciled or resides there or because he 

does business there.”). 

¶26 The second factor, given this case’s procedural posture, is 

unclear. The complaint merely alleges that United informed the Callies

their claim was to be investigated by an United adjustor, without 

specifying which office they would be in contact with or where the 

adjustor was located. Naturally, both parties argue the conduct occurred 

in the locale that supports their position, with the Callies arguing the 

decision was made in Idaho and United arguing the conduct occurred in 

Oregon.9 However, it is unlikely, based upon the facts alleged in the 

complaint and contained within the associated papers, the complained of 

conduct — United’s decision to undertake an investigation of the Callies’ 

claim — occurred in either Oregon or Arizona. See Bates, 156 Ariz. at 50, 

749 P.2d at 1371 (noting the place where the injury-causing conduct 

occurred was found where the decision to terminate plaintiff’s medical 

benefits was made, at Nationwide’s headquarters); see, e.g., Baroldy, 157 

Ariz. at 579, 760 P.2d at 579 (finding that in failure to warn cases “the 

‘place of conduct’ is where the tortuous decision is made”). As the trial 

 9 This is common when conducting choice of law determinations at the 

motion to dismiss stage, as the choice of law inquiry is necessarily fact 

intensive, and at this stage discovery has yet to take place and the factual 

record has not been developed. See Sioux Biochemical, Inc. v. Cargill, Inc., 

410 F.Supp.2d 785, 799-800 (N.D. Iowa 2005); Amiot v. Ames, 693 A.2d 675, 

678-79 (Vt. 1997); see generally Coleman v. City of Mesa, 230 Ariz. 352, 363, ¶ 

46, 284 P.3d 863, 874 (2012) (“In adjudicating a Rule 12(b)(6) motion to 

dismiss . . . a court does not resolve factual disputes between the parties 

on an undeveloped record.”). 
CALLIES v. UNITED HERITAGE

Decision of the Court

10

court found, United’s place of incorporation is Idaho. Further, Idaho 

appears to also be United’s principal place of business, as the address 

given for United in the Callies’ policy is in Meridian, Idaho. 10 

¶27 When reviewing a dismissal pursuant to Rule 12(b)(6), we 

assume the truth of the well-plead allegations contained within the 

complaint, as well as all reasonable inferences arising from those facts. 

Cullen v. Auto-Owners Ins. Co., 218 Ariz. 417, 419, ¶ 7, 189 P.3d 344, 346 

(2008). In this instance, where the facts alleged the Callies were told by a 

United adjustor, rather than the insurance agent (Gambill Insurance 

Agency) from whom the Callies purchased their policy in Oregon, that an 

investigation of their claim was going to commence, it is reasonable to 

infer that the decision to investigate their claim was made at United’s 

principal place of business – Idaho – rather than in another State where it

simply conducts business. Therefore, this factor does not particularly 

weigh in favor of either state’s law being applied. However, as Idaho 

recognizes a tort action for insurance bad faith, we may consider this 

factor as weighing in favor of the application of Arizona law. See Baroldy, 

157 Ariz. at 579, 760 P.2d at 579 (noting that “when the law of two states 

does not conflict, the contacts from those two states should be considered 

as if they were from the state involved in the choice of law question”)

(citing Restatement § 145 cmt. i). 

¶28 The third factor favors the application of Arizona law. The 

Callies were domiciled in Arizona at the time of the alleged bad faith. 

They had moved themselves and their belongings to Arizona and

purchased a home with the intent to remain. Arizona Bd. Of Regents v. 

Harper, 108 Ariz. 223, 228, 495 P.2d 453, 458 (1972) (“Domicile is primarily 

a state of mind combined with actual physical presence in the state.”). 

Although they have now returned to Oregon, such bears little significance 

to this factor. See Summers v. Interstate Tractor & Equip. Co., 466 F.2d 42, 48 

n.3 (9th Cir. 1972) (noting that the change of domicile to another state 

should carry no weight in deciding which law applies, as granting weight 

to it would encourage forum shopping) (citing Reich v. Purcell, 67 Cal.2d 

 10 The insurance policy was introduced by United in its motion to dismiss. 

Although it is not a matter contained within the pleadings, see Rule 12(b), 

the complaint itself referenced this specific policy and the policy is central 

to the Callies’ claim against United. Strategic Dev. & Constr., Inc. v. 

Roosevelt Partners, L.L.C., 224 Ariz. 60, 64, ¶ 14, 226 P.3d 1046, 1050 (App. 

2010). Therefore, in reviewing the motion to dismiss, we may consider the 

information contained within the certified policy. 
CALLIES v. UNITED HERITAGE

Decision of the Court

11

551, 555 (Cal. 1967)); see also Pounders, 232 Ariz. at 358, ¶ 32, 306 P.3d at 

15 (stating the place of the plaintiff’s current domicile was entitled to little 

weight as he could have relocated to anywhere following his asbestos 

exposure); see, e.g., Restatement Intro. Note, ch. 7 (although not taking a 

specific stance, noting that a party’s change in domicile following the 

commission of the tort but prior to the commencement of litigation should 

“[p]resumably[] . . . have no effect upon the law governing most of the 

issues involving the [tort]”). United, on the other hand, is incorporated 

and maintains its principal place of business in Idaho, while licensed to 

conduct business in several states, including both Arizona and Oregon. In 

a personal injury case, “we give greater weight to the residence of the 

alleged tort victim.” Bates, 156 Ariz. at 50, 749 P.2d at 1371 (citing 

Restatement § 145 cmt. e). 

¶29 The fourth factor, similar to the second, is unclear based 

upon the record. The Callies were Oregon residents when they purchased 

their United insurance policy from an Oregon insurance agent toward

insuring their Oregon home and personal possessions. Nevertheless, at 

the time of the alleged bad faith, the Callies had relocated to Arizona, 

wherefrom their insurance claim to United was submitted and adjusted. 

Because insureds possess greater mobility than insurers we generally 

assume the relationship is centered at the insurer’s headquarters. Id. In 

the immediate case, that is Idaho. Again, as Idaho and Arizona law is 

harmonious, we may consider this factor to weigh in favor of applying 

Arizona law. See Baroldy, 157 Ariz. at 579, 760 P.2d at 579 (citing 

Restatement § 145 cmt. i). 

¶30 In total, the first and third factors weigh in favor of Arizona 

law, while factors two and four arguably weigh toward either Idaho or 

Arizona law. However, this is a qualitative, rather than quantitative 

analysis. Bates, 156 Ariz. at 51, 749 P.2d at 1372; see Restatement § 145. 

Under § 146, “the law of the state ‘where the injury occurred’ is 

determinative unless some other state has a more significant relationship.” 

Bates, 156 Ariz. at 51, 749 P.2d at 1372 (citing Restatement § 146). 

C. Restatement § 6

¶31 Having determined the factors from § 145 illustrate Arizona 

has greater contacts relevant to this dispute, we still may only apply 

Arizona law if doing so would be consistent with the principles stated in 

Restatement § 6. Pounders, 232 Ariz. at 358, ¶ 35, 306 P.3d at 15; Bates, 156 

Ariz. at 50, 749 P.2d at 1371; Restatement § 145(1)-(2). Section 6(2) sets 
CALLIES v. UNITED HERITAGE

Decision of the Court

12

forth general principles to be applied in every choice of law 

determination:

(a) the needs of the interstate and international systems,

(b) the relevant policies of the forum,

(c) the relevant policies of other interested states and the relative 

interests of those states in the determination of the particular 

issue,

(d) the protection of justified expectations, 

(e) the basic policies underlying the particular field of law,

(f) certainty, predictability and uniformity of result, and 

(g) ease in the determination and application of the law to be 

applied. 

¶32 In this case, the first, fifth, and seventh factors are 

insignificant. The needs of the interstate and international systems are not 

implicated or affected by the application of either Oregon or Arizona law. 

See Bates, 156 Ariz. at 50, 749 P.2d at 1371. Likewise, both states would be 

easily able to determine and apply either state’s law. See Garcia, 195 Ariz. 

at 519, ¶ 27, 990 P.2d at 1078. 

¶33 United argues that the fourth factor, the protection of 

justified expectations, weighs in favor of Oregon having a more significant 

relationship to this dispute because the contract originated in Oregon and 

none of the parties could have expected the Callies to gain greater 

contractual rights by moving to Arizona. United’s assertion creates a 

misnomer, as the claim alleged sounds in tort, and in no way expands the 

Callies’ “contractual benefits.” Further, however, we simply disagree 

with the argument as the very language of United’s insurance contract 

specifically asserted the contracted-for coverage for personal property 

applied anywhere in the world. United could not have believed that no 

matter where the Callies moved and regardless of the circumstances 

giving rise to a claim or subsequent actions following a claim being filed, 

throughout the world, Oregon law would apply. 

¶34 Additionally, the claim is not one arising “from breach of 

some express covenant inserted by [United] as a matter unique to its 

[Oregon] business. [It instead] arises, rather, from breach of a good faith 
CALLIES v. UNITED HERITAGE

Decision of the Court

13

covenant implied in law.” Bates, 156 Ariz. at 50, 749 P.2d at 1371. Bates

rejected the argument that the law of the state where the contract was 

entered into (here, Oregon) necessarily is applied to a bad faith claim 

arising from conduct and resulting injury occurring in another state (here, 

Idaho and Arizona respectively). Id. at 51, 749 P.2d at 1372. Any 

expectations that would be the case are unjustified. Id. at 50, 749 P.2d at 

1371. Further, “the protection of the justified expectations of the parties . . 

. is of lesser importance in the field of torts.” Restatement § 145 cmt. b. 

The underlying purpose of this policy is to avoid penalizing a person for 

conforming to the law of one state “when he had justifiably molded his 

conduct to conform to the requirements of another state,” which is less of 

a concern in the area of torts. Restatement § 6 cmt. g. Even assuming this 

policy carried great relevance to the tort of bad faith, this factor does not 

weigh in favor of Oregon law, as United did not justifiably mold its 

conduct to conform to the law of Oregon. Oregon does not excuse liability 

for insurer’s bad faith actions, but rather limits any cause of action to 

contract claims. Emp’rs’ Fire Ins. Co., 670 P.2d at 165. 

¶35 United also argues the application of Oregon law would best 

serve the policies, provided in factors six and seven, of “certainty, 

predictability, and ease of determination.” Specifically, it argues Oregon 

law would provide greater ease because the tort is not recognized, 

therefore the trial court would not have to go through the task of 

“consider[ing] a vast array and detailed analysis of the handling of a claim 

under the bad faith tort.” Succinctly stated, if this Court, on appeal, were 

to decide in favor of United, any bad faith claim would be eliminated. 

However, this policy bears no weight in our analysis as this principle is 

concerned with “choice-of-law rules [being] simple and easy to apply,” 

and both Oregon and Arizona follow the Restatement’s choice of law 

approach. Moreover, the principle of certainty and predictability of result 

is more significant in areas where “the parties are likely to give advance 

thought to the legal consequences of their transactions,” such as the effect 

and validity of a contract or will. Bryant, 146 Ariz. at 46, 703 P.2d at 1195; 

Restatement §§ 6 cmt. j, 145 cmt. b. In the immediate matter, the parties

gave no such advance thought to the legal consequences of the alleged 

bad faith actions. 

¶36 The remaining principles require consideration of the 

policies and interests of the forum state and other interested states. 

Restatement § 6(2)(b)-(c). These two principles gain greater significance 

due to the limited importance of the other § 6 principles in tort cases. 

Pounders, 232 Ariz. at 359, ¶ 39, 306 P.3d at 16; see Restatement § 145 cmt. b 

(noting that the relevant polices in tort cases usually are the policies of the 
CALLIES v. UNITED HERITAGE

Decision of the Court

14

forum and other interested states). These policies are compared with 

particular weight being given to the Arizona’s policy, as it is the dominant 

state. See Pounders, 232 Ariz. at 359, ¶ 40, 306 P.3d at 16 (citing 

Restatement § 145 cmt. b). 

¶37 Oregon and Arizona’s policies regarding insurance bad faith 

are drastically different. Arizona recognizes that conduct constituting 

insurance bad faith may cause a person to suffer more than mere 

economic injuries, and thus recognizes it as a tort. Noble v. Nat’l Am. Life 

Ins. Co., 128 Ariz. 188, 189-90, 624 P.2d 866, 867-68 (1981); Bates, 156 Ariz. 

at 49, 749 P.2d at 1370. Oregon, however, limits bad faith causes of actions 

to contract, thus making emotional or physical damages unrecoverable. 

Emp’rs’ Fire Ins. Co., 670 P.2d at 790. 

¶38 As the policies of the states are substantially different, we 

turn to the interests of the respective states. Arizona has a strong interest 

in ensuring its residents are made whole for injuries sustained while in 

Arizona. Bryan, 146 Ariz. at 47, 703 P.2d at 1196. Toward that end, it 

allows recovery for plaintiffs injured by insurance bad faith practices to 

recover all damages caused by an insurer’s conduct, including economic 

and emotional damages.11 Rawlings, 151 Ariz. at 161, 726 P.2d at 577. It 

also has a strong interest in deterring wrongful conduct directed against 

its citizens. Pounders, 232 Ariz. at 359, ¶ 41, 306 P.3d at 16. Oregon’s

interests, on the other hand, are limited here, where the insureds were

Arizona residents at the time of the complained of conduct, the conduct 

occurred outside of Oregon, and the tortfeasor is incorporated in Idaho. 

Although United conducts business in Oregon, this creates no greater 

interest in Oregon as United equally conducts business in Arizona. 

¶39 After weighing the relevant principles of §§ 6, 145 and 146, 

we find Arizona has the more substantial interest to this occurrence, and,

therefore, Arizona law is appropriately applied, even though neither party 

is currently a domiciliary of the State. See, e.g., Jackson v. Chandler, 204 

Ariz. 135, 139, ¶ 18, 61 P.3d 17, 21 (2003) (“[W]e believe Arizona has a 

substantial interest in permitting the present action in this forum even 

though no party is a domiciliary of Arizona.”). 

 11 Punitive damages, however, are not automatically recoverable, but may 

only be recovered if the plaintiff can demonstrate the insurer’s wrongful 

conduct was done with an intent to injure the plaintiff or done with 

knowledge that the conduct created a substantial risk of harm. Rawlings, 

151 Ariz. at 162, 726 P.2d at 578. 
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II. Rule 12(b)(6)

¶40 Finding that Arizona law should be applied, we turn to the 

Callies’ complaint to determine whether a claim upon which relief can be 

granted has been asserted. In regard to United, the complaint alleges one 

cause of action for insurance bad faith. That cause of action consists of 

two elements: “(1) that the insurer acted unreasonably toward its insured, 

and (2) that the insurer acted knowing that it was acting unreasonably or 

acted with such reckless disregard that such knowledge may be imputed 

to it.” Miel v. State Farm Mut. Auto. Ins. Co., 185 Ariz. 104, 110, 912 P.2d 

1333, 1339 (App. 1995). The insurer’s actions must be intentional; mere 

mistake and inadvertence are insufficient to establish a bad faith claim. Id. 

(citing Rawlings v. Apodaca, 151 Ariz. 149, 157, 726 P.2d 565, 573 (1986)). 

¶41 Within their complaint, the Callies allege they notified police 

and United of the theft the day it occurred. The stolen truck was found 

completely empty and abandoned on the side of the road almost three 

weeks later. A month or so following the theft, a suspect was arrested and 

had in his possession a gun which had been packed in the moving truck at 

the time the truck was stolen. Further, a motorcycle taken from the truck 

was found abandoned and damaged on the side of the road. 

¶42 The Callies met with an adjustor and provided detailed lists 

of the property taken, as per United’s request. Thereafter, the Callies were 

informed their payment would be forthcoming, only later to be told 

payment was not being processed as their claim was being investigated 

without being provided an explanation for the investigation. They 

received a phone call in August 2011 from a lawyer representing United

who advised the Callies they were to no longer attempt to contact their 

own insurer and requested they submit to examinations under oath.

Dorene expressed doubt during the call that Kenneth was capable of 

undergoing such an examination. Thereafter, several months passed 

before the Callies had any further contact from United or its 

representatives. 

¶43 Taking these allegations as true and drawing all reasonable 

inferences there from in favor of the Callies, the Callies have alleged 

sufficient facts to support a tort bad faith claim and withstand United’s 

Rule 12(b)(6) motion. See Coleman, 230 Ariz. at 356, ¶ 8, 284 P.3d at 867 

(dismissal pursuant to Rule 12(b)(6) is appropriate only if “as a matter of 
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Decision of the Court

16

law plaintiffs would not be entitled to relief under any interpretation of 

the facts susceptible of proof”).12 

III. Forum Non Conveniens

¶44 Within its motion to dismiss, United also argued the claim 

against it should be dismissed because Arizona was an inconvenient 

forum. The trial court did not rule on United’s forum non conveniens

argument when it dismissed the case against it, although both parties 

addressed the argument in the course of their motion practice. 

Nonetheless, United urges us to uphold the trial court’s dismissal order on

forum non conveniens grounds. See Glaze v. Marcus, 151 Ariz. 538, 540, 729 

P.2d 342, 344 (App. 1986) (“We will affirm the trial court’s decision if it is 

correct for any reason, even if that reason was not considered by the trial 

court.”). As this issue will likely arise on remand, we address United’s 

argument and find that forum non conveniens is inappropriate in this case. 

¶45 “Forum non conveniens is ‘an exceptional tool to be employed 

sparingly’ rather than a ‘doctrine that compels plaintiffs to choose the 

optimal forum for their claim.” Parra v. Continental Tire North Am., Inc., 

222 Ariz. 212, 214, ¶8, 213 P.3d 361, 363 (App. 2009) (citing Ravelo Monegro 

v. Rosa, 211 F.3d 509, 514 (9th Cir. 2000)). A plaintiff is afforded the ability 

to choose a forum, and this choice should only be disturbed for weighty 

reasons. Cal Fed Partners v. Heers, 156 Ariz. 245, 246, 751 P.2d 561, 562 

(App. 1987)). However, a plaintiff’s forum choice is afforded less credence 

if he is not a resident of the chosen forum. Id. 

¶46 To prevail on a forum non conveniens argument, the 

defendant must demonstrate two things: (1) that there is an available and 

adequate alternative forum to hear the case, and (2) that the alternative 

forum, on balance, is a more convenient place to litigate the particular 

case. Parra, 222 Ariz. at 215, ¶¶ 9-10, 213 P.3d at 364. As to the first prong, 

United stipulated it would agree to service and jurisdiction in Oregon, 

making it an adequate alternative forum. See Restatement § 84 cmt. e 

(“[A] court which finds itself to be an inappropriate forum under the rule 

of this Section must dismiss the action outright, or do so conditionally (as 

 12 As we find Arizona law should apply and the complaint states a proper 

claim, we do not address the Callies’ argument on appeal that the trial 

court considered matters outside the pleading in reaching its decision and 

therefore should have converted the motion to dismiss into one for 

summary judgment. 
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Decision of the Court

17

by requiring that the defendant stipulate to accept service of process . . . in 

some second state that is deemed a more convenient forum).”). 

¶47 The second prong requires the balancing of private and 

public reasons of convenience. Parra, 222 Ariz. at 215, ¶10, 213 P.3d at 364. 

The private factors to be considered include: the relative ease of accessing 

sources of proof, availability of a compulsory process to have unwilling 

witnesses attend, the cost of obtaining the attendance of willing witnesses, 

and all other practical problems that contribute to an expeditious and 

inexpensive trial. Id. at ¶ 12 (citing Cal Fed Partners, 156 Ariz. at 246, 751 

P.2d at 562). 

¶48 With regard to sources of proof, United argues a majority of 

the witnesses the Callies disclosed in their Rule 26.1 statement reside in 

Oregon and are therefore unable to be summoned to Arizona for trial. 

These witnesses fall into three categories: (1) the Callies’ relatives, who 

would presumably avail themselves to be summoned to testify in Arizona, 

(2) medical personnel that will testify as to Kenneth’s need for medical 

treatment and his prognosis, and (3) people associated with United or the 

Callies’ insurance policy and claim. There are also identified witnesses 

who reside in Arizona, a majority being law enforcement officers, as well 

as the adjustor United dispatched to the Callies’ Arizona residence. 

¶49 Although there are more witnesses identified from Oregon 

than Arizona, evaluation of this factor does not simply look at the 

comparison of the number of witnesses from the locations, but at the 

“materiality and importance of the anticipated witnesses’ testimony and 

then . . . their accessibility and convenience to the forum.” Id. at 216, ¶13, 

213 P.3d at 365 (citing Great Learjet Corp. v. Jensen, 743 F.2d 1325, 1335-36 

(9th Cir. 1984). United has not offered any explanation as to why regular 

discovery methods would be insufficient to gain information from the 

identified Oregon witnesses, or why those witnesses’ testimony is so 

significant it would require dismissal if they were not willing to travel to 

Arizona to testify. The majority of the witnesses relate to the medical 

treatment Kenneth received, and as it is the Callies’ burden to prove their 

damages, it ultimately is them that would be harmed if they are unable to 

procure those witnesses’ testimony. Further, with respect to the Oregon 

witnesses associated directly with United, United clearly has the ability to 

interview them. 

¶50 Weighing in favor of Arizona being an inconvenient forum 

are the undeniable increased costs, to both parties, of procuring out of 

state witnesses’ testimony at trial, with these costs being unrecoverable 
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from the superior court. See A.R.S. § 12-332 (2014); Ponderosa Plaza v. 

Siplast, 181 Ariz. 128, 134, 888 P.2d 1315, 1321 (App. 1993). However, this 

concern is countered by the added expense the Callies would have to 

incur to separately litigate their two, to a certain extent, factually 

overlapping claims — one against United and the other against The Lodge

— in two separate states with separate local counsel, as The Lodge is not 

subject to personal jurisdiction in Oregon. See, e.g., Coonley & Coonley v. 

Turck, 173 Ariz. 527, 533, 844 P.2d 1177, 1183 (App. 1993)

¶51 Also to be considered are several public factors, including:

the administrative burden the lawsuit may place on the court’s docket, 

having citizens from a disinterested community to serve on a jury, and the 

law that will govern the case. Parra, 222 Ariz. at 217, ¶ 20, 213 P.3d at 366. 

¶52 These factors weigh heavily against Oregon being the more 

appropriate forum. United argues the first factor, limiting the burden of 

litigation in congestion centers, clearly favors Eugene, Oregon, over 

Phoenix, Arizona. This factor is concerned “not [with] whether a 

dismissal will reduce a court’s congestion but whether a trial may be 

speedier in another court because of its less crowded docket.” Id. at 218, 

¶24, 213 P.3d at 367. United did not support its motion with any evidence 

that this litigation would be resolved any quicker in an Oregon court. 

¶53 United also argues there are not enough contacts to Arizona 

to justify an Arizona jury having to sit for this dispute. As we noted, 

Arizona indeed does have a number of contacts to this dispute. Although 

the policy was originally purchased in Oregon and the Callies are now 

residing in Oregon, the bad faith conduct caused an injury to the Callies 

while they were Arizona residents. Also, United is licensed and conducts 

business in Arizona, selling nearly identical policies to Arizona residents. 

Arizona’s significant interests in this case make it appropriate for Arizona 

jurors to hear it. Furthermore, the third factor clearly weighs against 

dismissal as we have found that Arizona law will govern the parties’ 

dispute. 

¶54 Considering the private and public factors together, we 

cannot say they weigh so strongly in favor of Oregon that dismissal is 

appropriate. Indeed, the public factors actually weigh strongly against 

dismissal in this case. We therefore conclude United has not met its 

burden to dismiss the case upon grounds of forum non conveniens. See 

Parra, 222 Ariz. at 215, ¶ 10, 213 P.3d at 364 (“Where factors of 

convenience are closely balanced, the plaintiff is entitled to its choice of 

forum.”) (citing Cal Fed Partners, 156 Ariz. at 248, 751 P.2d at 563). 
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Decision of the Court

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CONCLUSION

¶55 For the foregoing reasons, we find Arizona law applies. 

Accordingly, we reverse the trial court’s dismissal of the Callies’ claim 

against United, vacate the trial court’s minute entry dismissing the Callies’ 

claim against United, and remand to the trial court with instructions to 

deny United’s motion to dismiss and for such further proceedings as are

consistent with this decision.13

 13 Both sides request attorneys’ fees on appeal pursuant to A.R.S. § 12-

341.01 (2014). As neither party has yet to prevail on the merits of the case, 

we deny both parties’ requests for fees. On remand, the trial court may 

consider a request from the prevailing or successful party for fees incurred 

in this appeal.