NOTICE: NOT FOR OFFICIAL PUBLICATION.

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL

AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

MARIE GRADIS, 

Plaintiff/Appellant, 

v.

BANNER HEALTH; BANNER PLAN 

ADMINISTRATION, INC.; CAROL WARD, 

Defendants/Appellees.

No. 1 CA-CV 16-0056

Appeal from the Superior Court in Maricopa County

No. CV2014-006089

The Honorable Christopher T. Whitten, Judge

AFFIRMED

COUNSEL

Mandel Young, PLC, Phoenix

By Taylor C. Young, Peter A. Silverman, Erin Ford Faulhaber

Co-Counsel for Plaintiff/Appellant

Doyle, LLP, Phoenix

By Michael P. Doyle, Patrick M. Dennis

Co-Counsel for Plaintiff/Appellant

Quarles & Brady, LLP, Phoenix

By Stephanie J. Quincy, Robert G. Vaught, Brian A. Howie

Counsel for Defendants/Appellees
GRADIS v. BANNER HEALTH, et al.

Decision of the Court

2

MEMORANDUM DECISION

Presiding Judge Diane M. Johnsen delivered the decision of the Court, in 

which Judge Margaret H. Downie and Judge James P. Beene joined.

J O H N S E N, Judge:

¶1 Marie Gradis appeals the superior court's entry of summary 

judgment dismissing her complaint against her former employer, Banner 

Health; its worker's compensation administration company, Banner Plan 

Administration, Inc.; and the latter company's claims worker, Carol Ward

(collectively "Banner"). For the reasons explained below, we affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 Gradis, a certified nursing assistant, hurt her back while 

working at a Banner Health facility in April 2012. She filed a claim for 

worker's compensation; Banner, which is self-insured for purposes of 

worker's compensation coverage, denied the claim. After Gradis appealed, 

an Administrative Law Judge ("ALJ") issued a decision in May 2013 finding 

Gradis had established a compensable injury and awarded her benefits.

¶3 Several months before her on-the-job injury, Gradis had filed 

a charge of employment discrimination against Banner Health. On October 

24, 2012, while her appeal of Banner's denial of her worker's compensation 

claim was pending, Gradis and Banner Health executed a "Settlement 

Agreement and General Release" ("Agreement") that resolved the 

discrimination claim.

¶4 The Agreement's recitals addressed Gradis's claim for 

discrimination and recounted a mutual "desire to settle and finally resolve 

any and all outstanding matters and disputes between them related to any 

claims GRADIS may have in relation to [her] employment or with the 

ending of her employment with BANNER." The Agreement's "Payment" 

section stated that the designated payment by Banner to Gradis

is full compensation for any and all past, present, or future 

claims of emotional distress, anxiety, depression, trauma, any 

physical, psychiatric, or psychological manifestations thereof,

any claims of temporary or permanent disability, loss of 

consortium, bodily injury, defamation, personal injury, 

impairment of his [sic] ability to compete in the open labor
GRADIS v. BANNER HEALTH, et al.

Decision of the Court

3

market, pain and suffering, lost income, damage to reputation 

or character, attorneys fees, if any exist, or any other claims, 

ASSERTED OR UNASSERTED, KNOWN OR UNKNOWN, 

rights, damages, costs, loss of services, expenses and 

compensation of any nature whatsoever, arising from or 

associated with GRADIS' employment relationship and/or 

the termination of her employment with BANNER or arising 

out of any of the events described in the Recitals above. This 

Agreement does not impact Gradis' application for worker's 

compensation or disability benefits, either positively or negatively.

(Emphasis added.) In the Agreement's "Release of Claims" section were the 

following three paragraphs:

[2]a. . . . GRADIS . . . further agrees not to institute any claims, 

charges or lawsuits in relation to any aspect of GRADIS'

employment relationship and/or the ending of her 

employment with BANNER. GRADIS does hereby waive, 

release and forever discharge [Banner] . . . from any and all 

rights, claims, demands, causes of action . . . and liability of 

any nature whatsoever that GRADIS has had in the past or 

may hereafter have against . . . any of them, arising out of, or 

by reason of any cause, matter, or thing whatsoever existing 

as of the date of execution of this Agreement, WHETHER OR 

NOT KNOWN TO THE PARTIES AT THE TIME OF 

EXECUTION OF THIS AGREEMENT.

[2]b. This FULL WAIVER AND RELEASE OF ALL CLAIMS 

includes, without limitation, any attorney's fees, any claims, 

demands or causes of action arising out of or relating in any manner 

whatsoever, to the employment relationship of GRADIS by 

BANNER and to the events described in the Recitals Section

above. This FULL WAIVER AND RELEASE OF ALL 

CLAIMS INCLUDES, BUT IS NOT LIMITED TO, any and all 

complaints, claims, charges, claims for relief, demands, suits, 

actions and causes of action, whether in law or in equity, 

which GRADIS asserts or could assert, at common law or 

under any statute, rule, regulation, order or law, whether 

federal, state, or local, or on any ground whatsoever . . . .

[2]c. In addition, in exchange for the promises contained in 

this Agreement and as a condition to receiving the above 

consideration in Paragraph 1, GRADIS agrees not to institute, 
GRADIS v. BANNER HEALTH, et al.

Decision of the Court

4

nor cause to be instituted, any further legal proceeding, including 

filing any charge, claim or complaint with any state or federal 

governmental agency alleging any violation of law or public 

policy, against BANNER and/or any other RELEASEE or any 

of their current, former or future affiliates, subsidiaries, 

divisions, corporate parents, partners, joint venturers, 

associates, agents (actual, apparent, ostensible or otherwise), 

board members, officers, directors, employees, medical staff 

members, physicians, (employed or unemployed), attorneys, 

employee benefit plans, predecessors and successors in 

interest and assigns, premised upon any legal theory or claim 

whatsoever arising out of events occurring prior to the date of this 

Agreement.

(Emphases added.)

¶5 In April 2014, Gradis sued Banner, alleging Banner breached 

its duty of good faith and fair dealing in handling her worker's 

compensation claim. Banner moved for summary judgment, arguing the 

releases Gradis gave in the Agreement applied to her bad-faith claim. The 

superior court granted the motion and dismissed the complaint.

¶6 We have jurisdiction of Gradis's timely appeal pursuant to 

Arizona Revised Statutes ("A.R.S.") sections 12-120.21(A)(1) (2017) and 

-2101(A)(1) (2017).1

DISCUSSION

¶7 We review de novo the grant of a motion for summary 

judgment. Espinoza v. Schulenburg, 212 Ariz. 215, 216, ¶ 6 (2006). "The court 

shall grant summary judgment if the moving party shows that there is no 

genuine dispute as to any material fact and the moving party is entitled to 

judgment as a matter of law." Ariz. R. Civ. P. 56(a). We view the evidence 

and reasonable inferences in the light most favorable to the party opposing 

the motion. Wells Fargo Bank v. Arizona Laborers, Teamsters & Cement Masons 

Local No. 395 Pension Trust Fund, 201 Ariz. 474, 482, ¶ 13 (2002).

¶8 Settlement agreements are governed by general contract-law

principles. Emmons v. Superior Court, 192 Ariz. 509, 512, ¶ 14 (App. 1998). 

Courts attempt to enforce a contract according to the parties' intent. Taylor 

v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 152 (1993). To determine the 

 

1 Absent material revision after the relevant date, we cite a statute's 

current version.
GRADIS v. BANNER HEALTH, et al.

Decision of the Court

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parties' intent, we consider the meaning of the words and the "context of 

the contract as a whole." Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588, 

593, ¶ 9 (App. 2009).

¶9 The Agreement contains two broad releases, one described in 

paragraph 2(b) and the other described in 2(c). In paragraph 2(c), Gradis 

waived claims "premised upon any legal theory or claim whatsoever 

arising out of events occurring prior" to October 24, 2012, the date of the 

Agreement. The superior court reasoned the complaint was barred by this 

provision, but, as Gradis argues, some of the events that underlie her badfaith claim against Banner (e.g., its allegedly bad-faith choice of a physician 

to perform an independent medical examination) occurred after execution 

of the Agreement.

¶10 In paragraph 2(b), the Agreement described a "FULL 

WAIVER AND RELEASE OF ALL CLAIMS" that encompassed any claim 

"arising out of or relating in any manner whatsoever, to the employment 

relationship of GRADIS" with Banner.

2 Banner argues that its handling of 

Gradis's worker's compensation claim arose out of or related "in any 

manner whatsoever" to the employment relationship, and therefore is 

encompassed by the waiver. Gradis contends that, to the contrary, an 

employer's handling of a worker's compensation claim is distinct from the 

employment relationship.

¶11 Arizona law requires all employers to secure worker's 

compensation insurance for their employees, but allows employers to selfinsure if they can show "satisfactory proof of financial ability to pay." A.R.S.

§ 23-961(A)(1), (2) (2017). A self-insured employer may be liable for breach 

of the duty of good faith and fair dealing in its handling of an employee's 

worker's compensation claim. Mendoza v. McDonald's Corp., 222 Ariz. 139 

(App. 2009).

¶12 Gradis argues that Franks v. United States Fidelity & Guaranty 

Co., 149 Ariz. 291 (App. 1985), supports her contention that acts by a selfinsured employer in handling a worker's compensation claim do not arise 

out of the employment relationship. In Franks, we held for the first time 

that an employee's bad-faith claim against a worker's compensation insurer 

is not subject to the exclusivity provision of the Worker's Compensation 

Act. 149 Ariz. at 296; see A.R.S. § 23-1022(A) (2017). We contrasted the 

 

2 Banner does not argue that the language of the first sentence in 

paragraph 2(b) was meant as a waiver of any claims, whether or not related 

in some way to Gradis's employment relationship.
GRADIS v. BANNER HEALTH, et al.

Decision of the Court

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injury an employee suffers from an insurer's breach of the duty of good 

faith with the original injury suffered from a workplace injury, and, using 

the words of the compensation statute, concluded that the former injury 

"does not arise out of and in the course of employment." 149 Ariz. at 296; 

see A.R.S. § 23-1021 (2017).

¶13 Franks does not dictate the meaning of the language the 

parties here chose to use in the Agreement. The statutory language we 

recited and applied in Franks was "arising out of and in the course of 

employment," which is the language by which Arizona law distinguishes

injuries that are compensable under Title 23 from those that are not. Each 

element of that phrase has a separate meaning and serves a separate 

purpose. See Keovorabouth v. Indus. Comm'n, 222 Ariz. 378, 381, ¶ 8 (App. 

2009) ("'Arising out of' refers to origin or cause of the injury, while 'in the 

course of' refers to time, place, and circumstances of the injury in relation 

to the employment."); Lane v. Indus. Comm'n, 218 Ariz. 44, 47, ¶ 9 (App. 

2008) ("Although we must analyze the elements separately, 'in determining 

whether the necessary degree or quantum of "work-connection" is 

established to bring the claimant under the coverage of the Act, it is also 

necessary to consider them together.'"). To be compensable under Title 23, 

an injury must both "arise out of" and "in the course of" employment. Noble 

v. Indus. Comm'n, 188 Ariz. 48, 50 (App. 1996). See, e.g., Circle K Store No. 

1131 v. Indus. Comm'n, 165 Ariz. 91, 93-94 (1990) (separate analysis for

"arising out of" and "in the course of" elements); Nowlin v. Indus. Comm'n, 

167 Ariz. 291, 293 (App. 1990).

¶14 By contrast, paragraph 2(b) of the Agreement provided that 

Gradis waived any claim "arising out of or relating in any manner whatsoever" 

to her employment with Banner. That language is far broader than the 

words of § 23-1022 that we applied in Franks ("arising out of and in the 

course of employment"). Injury caused by a self-insured employer's bad 

faith does not occur in the course of employment; it arises in the course of the 

employer's handling of the claim. But the employer's claims-handling 

certainly "aris[es] out of" and/or "relat[es] in any manner whatsoever" to 

the employment relationship. To be sure, an employer owes different 

duties to an employee when it acts as an employer and when it acts as its 

own worker's compensation carrier. But such an employer's claimshandling duties exist only because of the employment relationship. To state

the obvious, in this context, Banner administered Gradis's worker's 

compensation claim only because that claim was for an injury Gradis 

alleged she suffered while working for Banner. But for the employment 

relationship, the bad-faith claim would not arise.
GRADIS v. BANNER HEALTH, et al.

Decision of the Court

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¶15 Gradis points out that the Agreement specifically excludes 

her worker's compensation claim. Contrary to her contention, however, the 

Agreement did not carve out from the otherwise broad waiver and release 

any claim that might relate to worker's compensation. The language the 

parties chose to describe the exception to the waiver is very precise: "This 

Agreement does not impact Gradis' application for worker's compensation 

or disability benefits, either positively or negatively." Consistent with that 

language, Gradis's worker's compensation claim proceeded through 

regular Industrial Commission channels to its ultimate resolution by the 

ALJ after a hearing, and there is no indication Banner used or attempted to 

use the Agreement as a defense in that proceeding.

¶16 As stated, a claim for worker's compensation benefits is 

distinct from a claim for breach of a worker's compensation insurer's duty 

of good faith and fair dealing. Mendoza, 222 Ariz. at 149, ¶ 31 ("bad faith is 

a separate tort, and not a direct or natural consequence of a compensable 

workers' compensation injury"). The narrow exception to the waiver in the 

Agreement was for Gradis's "application for worker's compensation" 

benefits, not for damages caused by Banner's alleged bad-faith handling of 

her worker's compensation claim. Although Gradis argues that the carveout for her worker's compensation claim means the parties must have 

intended also to carve out any bad-faith claim arising from worker's 

compensation, the narrow language the parties used weighs against that 

construction. This is particularly so, given that they signed the Agreement 

five months after Banner denied Gradis's worker's compensation claim and 

three months after Gradis commenced her appeal of that denial.

¶17 Considering the Agreement's language and context, we 

construe its release and waiver provisions to include any claim for breach 

of the duty of good faith and fair dealing that might arise from Banner's 

handling of Gradis's worker's compensation claim.3

 

3 Because Gradis has no surviving substantive claim against Banner, 

we need not address her claim for punitive damages. Quiroga v. Allstate Ins. 

Co., 151 Ariz. 127, 129 (App. 1986) ("The right to an award of punitive 

damages must be grounded upon a cause of action for actual damages.").
GRADIS v. BANNER HEALTH, et al.

Decision of the Court

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CONCLUSION

¶18 We affirm the superior court's entry of summary judgment 

against Gradis and in favor of Banner. We award Banner its costs and an 

amount of reasonable attorney's fees on appeal pursuant to A.R.S. § 12-

341.01 (2017), contingent on compliance with Arizona Rule of Civil 

Appellate Procedure 21.