Court Opinion

ID: 8207598
Source: CourtListenerOpinion
Date Created: 2022-09-20 16:02:02.776401+00
Date Added: 2024-06-11T16:41:26.983754
License: Public Domain

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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

 IGLESIA DE JESUCRISTO MINISTERIOS A LOS PIES DEL MAESTRO,
                       Plaintiff/Appellant,

                                        v.

     BROTHERHOOD MUTUAL INSURANCE COMPANY, et al.,
                  Defendants/Appellees.

                             No. 1 CA-CV 21-0358
                               FILED 9-20-2022

           Appeal from the Superior Court in Maricopa County
                          No. CV2020-009227
            The Honorable Roger E. Brodman, Judge Retired

                                  AFFIRMED

                                   COUNSEL

Poli Moon & Zane PLLC, Phoenix
By Michael N. Poli, Lawrence R. Moon
Co-Counsel for Plaintiff/Appellant

Taylor Young Appeals, PLLC, Phoenix
By Taylor C. Young
Co-Counsel for Plaintiff/Appellant
Jones Skelton & Hochuli PLC, Phoenix
By Donald L. Myles, Jr., Patrick C. Gorman
Counsel for Defendant/Appellee Brotherhood Mutual Insurance Company

Udall Law Firm LLP, Phoenix
By Elizabeth L. Fleming
Counsel for Defendant/Appellee Augspurger Komm Engineering Inc.

                     MEMORANDUM DECISION

Judge Angela K. Paton delivered the decision of the Court, in which
Presiding Judge Paul J. McMurdie joined. Vice Chief Judge David B. Gass
dissented.

P A T O N, Judge:

¶1          Iglesia de Jesucristo Ministerios A Los Pies del Maestro (“the
Church”) appeals from the superior court’s grant of a motion to dismiss its
aiding and abetting claim against Augspurger Komm Engineering, Inc.
(“AKE”). We affirm.

                FACTS AND PROCEDURAL HISTORY

¶2             We take all well-pled factual allegations as true when
reviewing the superior court’s grant of a motion to dismiss under Arizona
Rule of Civil Procedure 12(b)(6). Cullen v. Auto-Owners Ins. Co., 218 Ariz.
417, 419, ¶ 7 (2008).

¶3           In 2016, the Church held an insurance policy with
Brotherhood Mutual Insurance Company (“Brotherhood”). That year,
thirty-two out of its thirty-five air conditioning units were damaged in an
August hailstorm. Following the storm, the units malfunctioned and did
not adequately cool rooms on the Church’s property. The Church was
unaware that this loss in function was connected to the 2016 hailstorm and
did not immediately submit a claim. In 2018, another hailstorm struck the
Church’s property, and the Church submitted a claim to Brotherhood for
the damage resulting from both hailstorms.

¶4           Brotherhood acknowledged the claim and retained AKE to
inspect the units. AKE prepared a report finding that the units exhibited
fin deformations “most consistent with hailstone impacts.” But AKE found
the damage was not caused by either the 2016 or 2018 storms but by a 2010

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                    IGLESIA v. BROTHERHOOD, et al.
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hailstorm, which was prior to the Church purchasing the property and
Brotherhood covering the insured property.

¶5            Brotherhood denied the claim based on AKE’s finding. The
Church sued both Brotherhood and AKE—alleging breach of contract,
breach of implied duty of good faith and fair dealing, and bad faith denial
of an insurance claim against Brotherhood, and aiding and abetting tortious
conduct against AKE.

¶6            Brotherhood settled with the Church, and the superior court
dismissed the claims against it. AKE filed a motion to dismiss for failure to
state a claim under Arizona Rule of Civil Procedure 12(b)(6). AKE argued
the Church had not alleged, and the court could not infer, that AKE had
actual knowledge of bad faith committed by Brotherhood. AKE further
argued that no allegation or inference had been made that AKE had
substantially assisted the alleged tortious conduct of Brotherhood. The
court found the Church had not pled facts sufficient to support its action
against AKE. Specifically, the court noted that “[the Church] has no claim
against AKE unless AKE’s report was, in fact, knowingly inaccurate.” It
further explained that the Church had “not pled facts showing that AKE
knew that [Brotherhood] made [the Church] a lowball offer or that AKE’s
conduct provided substantial assistance. There is no allegation that AKE
had any role in the ultimate claim decision.” But the court granted leave
for the Church to file an amended complaint as a matter of right.

¶7            The Church filed an amended complaint asserting the same
causes of action with additional allegations, including that AKE knew
Brotherhood would rely on the report and breach its duties to the Church
by denying the claim. The Church further alleged that AKE ignored
contrary evidence that suggested the 2016 storm was responsible for the
damage to the units. AKE filed a second motion to dismiss for substantially
the same reasons as before: that the amended complaint lacked any fact
indicating AKE substantially assisted with a tort and that no allegation or
inference of actual knowledge was present. The superior court granted this
second motion to dismiss without leave to amend the complaint.

¶8           The Church filed a motion to alter or amend the judgment
under Arizona Rule of Civil Procedure 59, which the superior court denied.
The court awarded costs to AKE as the prevailing party under Arizona
Revised Statutes (“A.R.S.”) § 12-341. The Church timely appealed.

¶9          We have jurisdiction pursuant to Article 6, Section 9, of the
Arizona Constitution, and A.R.S. §§ 12-120.21(A)(1) and -2101(A)(1).

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                     IGLESIA v. BROTHERHOOD, et al.
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                                DISCUSSION

¶10            We review the superior court’s dismissal of a complaint under
Arizona Rule of Civil Procedure 12(b)(6) de novo. Conklin v. Medtronic, Inc.,
245 Ariz. 501, 504, ¶ 7 (2018). In so doing, we may consider exhibits to the
complaint. Coleman v. City of Mesa, 230 Ariz. 352, 356, ¶ 9 (2012). Dismissal
under Rule 12(b)(6) is proper if, “as a matter of law [Plaintiff] would not be
entitled to relief under any interpretation of the facts susceptible of proof.”
CVS Pharmacy, Inc. v. Bostwick, 251 Ariz. 511, 576-77, ¶ 10 (2021) (internal
quotation omitted). While Arizona follows a notice pleading standard,
“mere conclusory statements are insufficient to state a claim upon which
relief can be granted.” Cullen, 218 Ariz. at 419, ¶ 7.

   I.      The superior court correctly dismissed the aiding and abetting
           claim against AKE.

¶11           The tort of aiding and abetting requires proof of three
elements: (1) the primary tortfeasor committed a tort causing injury to the
plaintiff, (2) the defendant knew the primary tortfeasor’s conduct
constituted a breach of its duties to the plaintiff, and (3) the defendant
substantially assisted or encouraged the primary tortfeasor in achieving the
breach. Wells Fargo Bank v. Ariz. Laborers, Teamsters and Cement Masons Loc.
No. 395 Pension Tr. Fund, 201 Ariz. 474, 485, ¶ 34 (2002); Restatement
(Second) of Torts § 876(b).

¶12            The underlying tort in this case, bad faith denial of a claim by
an insurer, occurs when (1) the insurer acts unreasonably towards its
insured and (2) the insurer did so either knowingly or with reckless
disregard to whether it was acting unreasonably. Acosta v. Phoenix Indem.
Ins. Co., 214 Ariz. 380, 383, ¶ 13 (App. 2007). Bad faith is an intentional tort.
See Noble v. Nat’l Am. Life Ins. Co., 128 Ariz. 188, 190 (1981).

¶13             While a plaintiff need not allege that an aiding and abetting
defendant had “[a]ctual and complete knowledge of the details of a primary
tort,” he must allege that “the defendants knew the conduct they allegedly
aided and abetted was a tort.” Dawson v. Withycombe, 216 Ariz. 84, 102,
¶ 50 (App. 2007) (citing Wells Fargo, 201 Ariz. at 485, ¶¶ 33, 35 (2002)).
Courts typically require that a defendant have “actual knowledge of the
specific primary wrong that he is substantially assisting” to be liable under
the Second Restatement formulation. See In re Hydroxycut Mktg. and Sales
Pracs. Litig., 299 F.R.D. 648, 657 (S.D. Cal. 2014) (dismissing claim for aiding
and abetting deceptive advertising scheme where plaintiffs did not allege
that defendants had knowledge of the falsity or deceptiveness of primary

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                     IGLESIA v. BROTHERHOOD, et al.
                           Decision of the Court

tortfeasor’s marketing) (citing In re First Alliance Mortgage Co., 471 F.3d 977,
993 (9th Cir. 2006); Restatement (Second) of Torts § 876(b)). A conclusory
allegation that an alleged aider-and-abettor knew that a report prepared for
an insurer would be used for an improper purpose is insufficient to plead
the knowledge element of an action for aiding and abetting the tortious bad
faith denial of an insurance claim. See Federico v. Maric, 224 Ariz. 34, 37, ¶¶
11-12 (App. 2010).

¶14          Here, the Church advances the following relevant allegations
in its amended complaint: (1) AKE prepared a report for Brotherhood
analyzing the claim of hailstone damage, (2) this report was “biased and
outcome-oriented,”(3) AKE knew Brotherhood would rely on the report in
declining the claim, (4) AKE had at least “a general understanding” of
Brotherhood’s duties given its experience in the insurance industry, and (5)
the report was incorrect and failed to engage with contrary evidence.

¶15            Taken as true, these allegations fall short of pleading the
knowledge element of an aiding and abetting claim. In Federico, this court
upheld a grant of summary judgment concerning an aiding and abetting
claim against a physician who performed an independent medical
examination (“IME”). 224 Ariz. at 35, ¶¶ 3-4. As here, the non-moving
party asked the superior court to infer the knowledge element from the fact
that the physician possessed knowledge of the insurance industry and
knew his IME would likely result in the denial of the claim. Id. at 37, ¶ 11.
This was coupled with evidence that the physician was prejudiced against
his patients and viewed those who appeared for an IME with suspicion. Id.
But even these facts “pertain[ed] only to [the physician’s] own actions” and
did not suggest the defendant knowingly aided another tortfeasor. Id. We
noted that even accepting each proposed statement of fact as true, “none of
them suggest in any way that [the defendant] had any knowledge of [the
insurer’s] intent or even propensity to act in bad faith toward [the] claim.”
Id.

¶16            A motion to dismiss requires the movant to meet a higher
standard than a motion for summary judgment. Compare Ariz. R. Civ. P.
12(b)(6), Fid. Sec. Life Ins. Co. v. Ariz. Dep’t of Ins., 191 Ariz. 222, 224, ¶ 4
(1998) (requiring the defendant to demonstrate that plaintiff “would not be
entitled to relief under any interpretation of the facts susceptible of proof”)
with Ariz. R. Civ. P. 56(a) (requiring the movant to demonstrate that there
are no genuine issues of material fact and the movant is entitled to
judgment as a matter of law). Our dissenting colleague emphasizes this
point. This distinction, however, is immaterial here: Federico stands for the
proposition that even assuming facts that might suggest bias by the reporter

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                    IGLESIA v. BROTHERHOOD, et al.
                          Decision of the Court

does not suffice to prove knowledge of a scheme conducted by the insurer.
If these facts would be inadequate to demonstrate knowledge on a motion
for summary judgment, they are inadequate as allegations to withstand a
motion to dismiss.

¶17            Here, as in Federico, none of the allegations suggest AKE knew
its report would facilitate a breach of Brotherhood’s duty to the Church.
Falling short of even the plaintiff’s allegation in Federico, the Church’s
allegation of bias is conclusory: no supporting allegations are made to show
AKE had any biased or outcome-oriented intent in preparing its report.
Indeed, no well-pled allegation suggests that AKE knew Brotherhood
would rely on the report to a tortious end, instead of the ordinary reliance
an insurer places on such a report. Assuming arguendo the report was
wrong, no further allegations permit us to infer knowledge of
Brotherhood’s tortious conduct by AKE. Indeed, as in Federico, none of the
allegations suggest AKE knew Brotherhood’s intended conduct after the
report was provided. Nor is there anything other than a conclusory
allegation of “general awareness” of a purported fraudulent scheme by
Brotherhood. See Dawson, 216 Ariz. at 102, ¶ 50. While general awareness
is the standard, the bare pleading of the standard is not sufficient, even in
Arizona. Cullen, 218 Ariz. at 419, ¶ 7. The dissent’s elaboration of the
pleadings at infra ¶ 35, in our view, does not get the Church any closer.

¶18            While we will not go point by point through the dissent’s
review of the complaint, we note that the final allegation—that of
spoliation—is at least in part contradicted by the emails offered as an
attachment to the Church’s Rule 59 motion. AKE admitted it does not
electronically preserve emails but represented that it prints emails
containing information that “need[s] to [be] retain[ed]” and keeps them in
a case file.

¶19          Further, as the superior court noted, AKE considered the
Church’s evidence—specifically, the Church’s attached report and letter to
its amended complaint indicating AKE disagreed with its interpretation of
the data. This evidence does not support the Church’s otherwise
conclusory allegations of bias or outcome-oriented reporting nor an
inference that AKE knew Brotherhood’s conduct constituted a breach of
duty.

¶20          As the superior court aptly summarized:

      The fact that AKE generally works with insurance carriers is
      not a factual contention supporting the claim that AKE was

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                     IGLESIA v. BROTHERHOOD, et al.
                           Decision of the Court

       aware of a strategy by Brotherhood Mutual to act in bad faith
       on this claim . . . . There are no facts supporting a suggestion
       that AKE had some form of “extraordinary motivation.”

With no allegations from which the court could infer knowledge, the second
element of aiding and abetting was not properly pled, and the court
properly granted AKE’s motion to dismiss.

¶21           The dissent suggests we are applying a pleading standard at
odds with our decision in Verduzco v. American Valet, and generally a
standard higher than what Arizona requires. 240 Ariz. 221 (App. 2016). In
Verduzco, we noted that “knowledge, and other condition of mind of a
person may be averred generally.” Id. at 225, ¶ 9 (quoting Ariz. R. Civ. P.
9(b)). But we did not, in Verduzco or anywhere else, announce a rule
contrary to that expounded by our supreme court, namely that “[b]ecause
Arizona courts evaluate a complaint’s well-pled facts, mere conclusory
statements are insufficient to state a claim upon which relief can be
granted.” Cullen, 218 Ariz. at 419, ¶ 7. We take the view that the complaint
here—including the statements highlighted by the dissent—are “mere
conclusory statements” that do not provide a sufficient factual basis to infer
AKE had a general awareness of Brotherhood’s scheme.

¶22            Verduzco is also distinguishable. In that case, we examined
what was necessary to adequately plead that a defendant knew a driver
was not safe to drive. The plaintiffs appropriately pled that the driver was
“high on drugs and behaving erratically” and that under those
circumstances the defendant “should have known” he was unable to safely
drive. Verduzco, 240 Ariz. at 225, ¶ 10. Plaintiffs alleged a factual predicate
to the defendant’s knowledge: the driver was visibly behaving “erratically.”
Id. Further, the plaintiffs only had to prove the defendant’s knowledge of
the driver’s condition—one level of knowledge. By contrast, the Church
has not adequately pled any factual predicate to AKE’s purported
knowledge of a scheme, not making it “susceptible of proof.” CVS
Pharmacy, Inc., 251 Ariz. at 576–77, ¶ 10. Further, in the instant case, it is not
merely AKE’s knowledge of the conditions of the roofs or other physical
facts that are necessary for the aiding and abetting claim. AKE must have
had knowledge of Brotherhood’s breach of duty. Restatement (Second) of
Torts § 876(b). For the purposes of aiding and abetting a tort of bad faith,
this requires that AKE knew Brotherhood’s denial was made with reckless
or knowing wrongfulness. See Federico, 224 Ariz. at 36, ¶¶ 8-9.

¶23          The dissent also takes issue with our discussion of In re
Hydroxycut. 299 F.R.D. 648. But In re Hydroxycut merely applies the same

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                    IGLESIA v. BROTHERHOOD, et al.
                          Decision of the Court

elements of aiding and abetting—including the knowledge element —that
Arizona has already adopted, including in Wells Fargo. Compare In re
Hydroxycut, 299 F.R.D. at 657-58 (applying Restatement (Second) of Torts
§ 876(b)) with Wells Fargo, 201 Ariz. at 485, ¶¶ 33-36 (same). While this
knowledge can be inferred, it cannot be based upon “inference [piled] upon
inference.” Dawson, 216 Ariz. at 103, ¶ 52. General awareness still
presupposes some actual awareness. Id. at 102-103, ¶ 51 (citing Wells Fargo,
201 Ariz. at 487, ¶¶ 37-41). With respect to our dissenting colleague:
knowledge need not be pled with specificity, but actual knowledge must be
pled. Id. We do not find that the Church alleged facts susceptible to proof
of AKE’s scienter sufficient for an aiding and abetting claim.

¶24           Finally, we respectfully disagree with the dissent’s statement
that requiring adequate pleading for aiding and abetting shuts the
courthouse door to litigants. While the superior court noted that generally
“[t]he process is first to obtain some facts that support a claim, and then file
litigation and conduct discovery,” Arizona is not quite so harsh. Our state
has procedural rules for pre-litigation discovery to allow development of
those facts. See generally Ariz. R. Civ. P. 27. By no means is a party required
to plead with the benefits of full discovery, but litigants who fear a motion
to dismiss have options to guard against that result if they have already
been warned that their pleading is inadequate, as was the case here. The
Church could have exercised these rights before bringing the action—as
well as when it was given an opportunity to file an amended complaint
specifically addressing the court’s concerns—as can any litigant seeking to
bring an aiding and abetting claim. It is simply the case that different causes
of action will require different levels of investigative effort on the part of
attorneys before a case is filed. It is unexceptional that aiding and abetting
in this context would be more difficult to investigate and plead than
negligence.

   II.    The superior court properly awarded costs to AKE.

¶25          A court is required to award taxable costs to a prevailing
party under Section 12-341. We affirm the judgment and the superior
court’s award of taxable costs.

   III.   Attorneys’ Fees and Costs on Appeal

¶26           AKE requests attorneys’ fees and costs on appeal. As the
prevailing party, AKE is entitled to taxable costs upon compliance with
Arizona Rule of Civil Appellate Procedure 21. We decline to award
attorneys’ fees.

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           IGLESIA v. BROTHERHOOD, et al.
                 Decision of the Court

                   CONCLUSION

¶27   We affirm.

                         9
                    IGLESIA v. BROTHERHOOD, et al.
                         Gass, V.C.J., dissenting

G A S S, V.C.J., dissenting.

¶28           In granting Augsperger Komm Engineering, Inc.’s (AKE’s)
motion to dismiss, the superior court said, Iglesia de Jesucristo Ministerios
A Los Pies del Maestro’s (the Church’s) “aiding and abetting claim against
AKE is entirely conclusory.” To that end, the superior court said, “[f]or the
purposes of this motion, the key finding of [Federico v. Maric, 224 Ariz. 34
(App. 2010)] is that a court cannot infer knowledge of bad faith based on an
allegation that a third-party’s report to an insurance company was biased
and submitted with the knowledge that it would negatively affect the
claimant’s claim.” Federico, however, was before this court at the summary
judgment stage. 224 Ariz. at 35, ¶ 1. If this case was at the summary
judgment stage, I would join the majority. But this case is at the motion to
dismiss stage, so the standard of review and the inferences the superior
court (and we) must apply are fundamentally different. Further, the
allegations in the Church’s first amended complaint go further than the
final evidence produced in Federico. I would reverse and remand for further
proceedings.

¶29            The majority correctly describes the elements of the torts at
issue in this case: (1) aiding and abetting and (2) insurer’s bad faith denial
of a claim. See supra ¶¶ 11–12.

¶30           For this dissent, I focus on the aiding and abetting claim. For
its aiding and abetting claim against AKE, the Church must allege (1)
Brotherhood breached its duty of good faith and fair dealing and caused
injury to the Church; (2) AKE knew Brotherhood’s conduct constituted a
breach of its duties to the Church; and (3) AKE substantially assisted or
encouraged Brotherhood in achieving the breach. See Dawson v. Withycombe,
216 Ariz. 84, 102, ¶ 50 (App. 2007) (citing Wells Fargo Bank v. Ariz. Laborers,
Teamsters & Cement Masons Loc. No. 395 Pension Tr. Fund, 201 Ariz. 474, 485,
¶¶ 33–34, 36 (2002), as corrected (Apr. 9, 2002)). This appeal focuses on the
second and third elements.

¶31            The majority correctly states aiding and abetting does not
require the Church to allege AKE had “[a]ctual and complete knowledge of
the details of a primary tort.” See Dawson, 216 Ariz. at 102, ¶ 50 (citing Wells
Fargo, 201 Ariz. at 488, ¶ 45). Indeed, the Church need not allege AKE
actually knew the conduct it allegedly aided and abetted was a tort and
instead may establish a “general awareness” of the tort. See id.; see also Wells
Fargo, 201 Ariz. at 488, ¶ 45 (“The knowledge requirement can be met, even
though the bank may not have known of all the details of the primary
fraud—the misrepresentations, omissions, and other fraudulent practices.”

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                     IGLESIA v. BROTHERHOOD, et al.
                          Gass, V.C.J., dissenting

(quoting Aetna Cas. and Sur. Co. v. Leahey Const. Co., 219 F.3d 519, 536 (6th
Cir. 2000) (internal quotation marks omitted))). In short, Arizona requires
the plaintiff allege the aiding and abetting defendant either have actual
knowledge or a general awareness of the underlying tort. Sec. Title Agency,
Inc. v. Pope, 219 Ariz. 480, 490, ¶ 42 (App. 2008); see also Wells Fargo, 201 Ariz.
at 488, ¶ 45 (citing with approval FDIC v. First Interstate Bank of Des Moines,
N.A., 885 F.2d 423 (8th Cir. 1989) for the proposition a “bank can be held
liable for aiding and abetting a customer who defrauded another bank if
[the] bank has a ‘general awareness’ of the customer’s fraudulent scheme,
notwithstanding the fact that the bank may not have had actual knowledge
of the scheme or an intent to participate in the fraud”).

¶32            I take no issue with the majority’s basic statement of the law
as it applies to this case. This court reviews the superior court’s dismissal
of a complaint under Arizona Rule of Civil Procedure (Rule) 12(b)(6) de
novo. Conklin v. Medtronic, Inc., 245 Ariz. 501, 504, ¶ 7 (2018) (citation
omitted). In so doing, we may consider exhibits to the complaint. Coleman
v. City of Mesa, 230 Ariz. 352, 356, ¶ 9 (2012) (citation omitted). Dismissal
under Rule 12(b)(6) is proper if, “as a matter of law, [Plaintiff] would not be
entitled to relief under any interpretation of the facts susceptible of proof.”
CVS Pharmacy, Inc. v. Bostwick, 251 Ariz. 511, 576–77, ¶ 10 (2021) (citation
omitted). Though Arizona follows a notice pleading standard, “mere
conclusory statements are insufficient to state a claim upon which relief can
be granted.” Cullen v. Auto-Owners Ins. Co., 218 Ariz. 417, 418, 419, ¶¶ 1, 7
(2008) (rejecting heightened federal pleading standard from Bell Atlantic
Corp. v. Twombly, 550 U.S. 544 (2007), which requires the pleading establish
a “plausible” claim for relief).

¶33            Instead, I take issue with the majority’s reliance on Federico,
which analyzed the knowledge requirement in an aiding and abetting tort
at the summary judgment stage. Federico, 244 Ariz. at 35, ¶ 1. I would look
to this court’s more recent discussion of pleading knowledge at the motion
to dismiss stage. See Verduzco v. Am. Valet, 240 Ariz. 221 (App. 2016). In
Verduzco, this court made several key points about pleading knowledge
under the Arizona Rules of Civil Procedure—points I conclude control the
outcome of this appeal. See id. at 225, ¶¶ 9–12. In Arizona, a plaintiff need
only make “[a] short and plain statement of the claim showing that the
pleader is entitled to relief.” Id. at 225, ¶ 9 (quoting Ariz. R. Civ. P. 8(a)(2)).
Further, “knowledge, and other conditions of a person’s mind may be
alleged generally.” Ariz. R. Civ. P. Rule 9(b). A plaintiff need not “allege the
evidentiary details of plaintiff’s claim for relief.” Verduzco, 240 Ariz. at 225,
¶ 9 (citing Daniel J. McAuliffe & Shirley J. McAuliffe, Arizona Civil Rules
Handbook at 21 (2015 ed.)). As Verduzo recognized, “[t]he test is whether

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                    IGLESIA v. BROTHERHOOD, et al.
                         Gass, V.C.J., dissenting

enough is stated to entitle the pleader to relief on some theory of law
susceptible of proof under the allegations made.” Id. (quoting McAuliffe &
McAuliffe at 144) (emphasis added).

¶34            In Verduzco, this court reversed a grant of dismissal of a
negligent entrustment claim based on “[t]he factually intensive nature of a
‘reason to know’ inquiry.” Id. at ¶ 12. General awareness, like a “reason to
know,” is a factually intensive question. See id. Under Arizona’s liberal
pleading standard, the Church need not “speculate” about what AKE knew
to survive a motion to dismiss. Cf. id. (finding allegations sufficient based
on the nature of the Arizona common law claim and Arizona’s liberal
pleading standard such that plaintiff need not speculate about actual
knowledge especially “given the limited record on a motion to dismiss for
failure to state a claim, which does not include disclosures, discovery or
other external evidence”). Instead, the Church may demonstrate general
awareness with circumstantial evidence, and this court must “indulge all
reasonable inferences” from the factual allegations presented. See Coleman,
230 Ariz. at 356, ¶ 9; Dawson, 216 Ariz. at 102, ¶ 50 (holding “knowledge
may be inferred from the circumstances presented”). “This is particularly
true given the limited record on a motion to dismiss for failure to state a
claim, which does not include disclosures, discovery or other external
evidence.” Verduzco, 240 Ariz. at 225, ¶ 12.

¶35           With the above in mind, this court’s review must consider all
well-pled factual allegations in the first amended complaint. I believe the
majority omits some material factual allegations, and I would suggest the
following italicized and underlined additions to paragraph 14 of the
majority opinion, quoting directly from the first amended complaint:

      Here, the Church advances the following relevant allegations
      in its amended complaint:

      (1) AKE prepared a report for Brotherhood analyzing the
      claim of hailstone damage,

      (2) this report was “biased and outcome-oriented,” and
      “intended by AKE to lead to the denial of [the Church]’s claim or
      the under-estimation of the true amount owed to [the Church] by
      Brotherhood Mutual,”

      (3) AKE knew Brotherhood would rely on the report in
      declining the claim, “and from its experience working with
      insurance companies, AKE knew that in doing so, Brotherhood
      Mutual breached its duties owed to [the Church],”

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                    IGLESIA v. BROTHERHOOD, et al.
                         Gass, V.C.J., dissenting

      (4) AKE had at least “a general understanding” of
      Brotherhood’s duties given its experience in the insurance
      industry, and “AKE substantially assisted Brotherhood Mutual in
      a tortious breach of the duties owed by Brotherhood Mutual to [the
      Church] under the applicable contract of insurance, and under
      general legal principles,”

      (5) the report was incorrect and failed to engage with contrary
      evidence,

      (6) “AKE, through its agents and/or employees, aided and abetted
      Brotherhood Mutual by failing to reasonably inspect the Property,“

      (7) “AKE and its agents knew that the conduct of Brotherhood
      Mutual, including the lowball estimates of Brotherhood Mutual,
      and the repeated refusal to include all damages in the Loss,
      constituted a breach of the duties owed by Brotherhood Mutual to
      [the Church]; in part, this is based on the understanding that AKE
      routinely assists and works with insurance carriers like Brotherhood
      Mutual on insurance claims like the one at issue here,” and

      (8) “In an effort to destroy evidence of its knowledge of its clients’
      use of its reports to improperly deny and/or ‘low-ball’ insurance
      claims, such as [the Church]’s, AKE does not retain
      communications with its clients, such as Brotherhood Mutual. In
      comparison, independent insurance adjusters are required to retain
      all claim file records, including communications, for three years.”

¶36          The above allegations, viewed in concert, should survive a
motion to dismiss. I focus on one additional allegation regarding AKE’s
knowledge not addressed in the majority’s analysis. The Church makes this
statement regarding its allegation AKE acted with the intent to lead
Brotherhood to deny the Church’s claim or underestimate the claim’s true
value. To support that proposition, the first amended complaint goes on,
saying,

      Some of the AC units were known to have had their
      condenser fins combed after the Prior Event and prior to the
      2016 hailstorm [and] reflect[ed] damage that is consistent
      with the size of the hail stones that AKE has acknowledged
      were contained in the 2016 hailstorm but AKE did not address
      the damages to those units or report[] that the damage to those units
      was from the Prior Event.

                                       13
                    IGLESIA v. BROTHERHOOD, et al.
                         Gass, V.C.J., dissenting

(Emphasis added.) Admittedly, the statement would be clearer if it was in
the active voice, rather than the passive voice. But for motions to dismiss,
Arizona courts parse words by indulging “all reasonable inferences” from
the factual allegations presented. See Coleman, 230 Ariz. at 356, ¶ 9; Dawson,
216 Ariz. at 102, ¶ 50 (holding “knowledge may be inferred from the
circumstances presented”). The statement was not made in a vacuum, but
in the context of AKE’s alleged knowing misconduct. The reasonable
inference here is the condition was known to AKE. See id.

¶37           With the above, the Church’s first amended complaint
contained well-pled factual allegations of AKE’s knowledge about
Brotherhood’s alleged breach of its duty of good faith and fair dealing. The
Church alleged AKE did not reasonably inspect the property, omitted and
misattributed damages to certain units, created a biased and outcome-
oriented report, intended the report to lead to an under-estimation by
Brotherhood, routinely works with insurance carries and understands their
duties, and failed to retain its communications with Brotherhood. At the
very least, these allegations give rise to a reasonable inference AKE was
generally aware Brotherhood’s conduct would constitute a breach of duty.
See Coleman, 230 Ariz. at 356, ¶ 9; Dawson, 216 Ariz. at 102, ¶ 50 (“knowledge
may be inferred from the circumstances presented”).

¶38           By comparison, this court summarized the facts in Federico as
follows:

       1. Maric knew he was working for Liberty Mutual.

       2. Maric had done work for Liberty Mutual before.

       3. Maric knew that calling somebody a malingerer can have
          a negative connotation.

       4. Maric knew that opining that a claimant is motivated by
          secondary gains can have a negative [e]ffect on their claim.

       5. Maric knew that his IME report would adversely affect the
          outcome of Federico’s workmans’ compensation claim.

       6. Maric prejudges the patients he sees because he believes
          that the honest claims by legitimately injured people are
          settled and he never sees those people.

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                     IGLESIA v. BROTHERHOOD, et al.
                          Gass, V.C.J., dissenting

       7. Maric believes the people he sees are seeking monetary
          damages far beyond what is appropriate.

       8. Maric finds almost 60% of the people he sees are
          imagining their pain or exaggerating their pain to make
          money from lawsuits.

       9. Maric believes that he sees a skewed population of
          patients.

       10. Maric finds only about 3.7% of the people on whom he
           performs IMEs are truly injured, and that injury was
           caused by the incident complained of.

       11. Maric believes that lawsuits drive the amount of care
           because that is how claimants’ attorneys make more
           money.

       12. Maric performed an inadequate medical examination of
           Federico.

Federico, 244 Ariz. at 37, ¶ 11.

¶39           The allegations here go further than those in Federico in
several key regards. First, the Church alleged AKE’s report was outcome
oriented. No such allegation appears in the list in Federico. See id. At best,
Federico suggests the alleged aider and abettor was biased, but did not say
the report was outcome oriented. See id. And nothing in the list says the
alleged aider and abettor “intended” the insurer’s denial or under-
estimation of the claim. See id. The first amended complaint also alleges
AKE knew Brotherhood engaged in “lowball estimates” and excluded
damages in violation of its duty to the Church. Nothing in Federico suggests
a similar allegation. See id. And nothing in Federico suggests the alleged
aider and abettor knowingly omitted information comparable to allegations
AKE knowingly omitted damage to some units even though AKE knew the
units were repaired after the event to which AKE attributed the damages.
See id. Though those omissions may at some point constitute mere
disagreement, at the pleading stage this court is not able to make that
determination.

¶40          Moreover, the first amended complaint alleged AKE did not
retain communications with Brotherhood to conceal its efforts to aid and
abet Brotherhood. Federico contains no such allegation. See id. Nothing in

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                     IGLESIA v. BROTHERHOOD, et al.
                          Gass, V.C.J., dissenting

Federico addresses a spoliation of evidence allegation. See id. The majority
relies on emails attached to the Church’s motion to dismiss. In those emails,
AKE acknowledges it did not preserve the emails, but says it prints the
emails that it needs to retain for the claim file.

¶41            I disagree with the majority because in its analysis, it relies on
those emails to draw inferences to favor AKE. But our cases direct us to
draw inferences to favor the Church. And one such inference is AKE did
not keep emails that would have supported the Church’s position—an
equally plausible inference in my opinion. In the end, it becomes a fact issue
for the jury, not the superior court or this court. And to prevail on a motion
to dismiss, AKE must demonstrate the Church “would not be entitled to
relief under any interpretation of the facts susceptible of proof,” not just one
of several inference to be drawn from the alleged facts. See Fid. Sec. Life Ins.
Co. v. Ariz. Dep’t of Ins., 191 Ariz. 222, 224, ¶ 4 (1998).

¶42          As Justice Rehnquist recognized, factually intensive state-of-
mind inquiries are best left to factfinders, not courts acting as gatekeepers:

       The state of a [person]’s mind is as much a fact as the state of
       [their] digestion. It is true that it is very difficult to prove what
       the state of a [person]’s mind at a particular time is, but if it
       can be ascertained it is as much a[] fact as anything else.

U.S. Postal Serv. Bd. of Governors v. Aikens, 460 U.S. 711, 716–17 (1983)
(quoting Eddington v. Fitzmaurice, 29 Ch. Div. 459, 483 (1885)).

¶43             Not to put too fine a point on it, but even in the context of
fraud, which must be pled with specificity and which is not the claim at
issue here, a plaintiff need only plead knowledge “generally.” See Ariz. R.
Civ. P. Rule 9(b). This lessened requirement exists to allow plaintiffs the
opportunity to investigate, exchange disclosures, and find support (or not)
for an allegation of knowledge—rather than making them speculate about
what went through another’s mind. See Verduzco, 240 Ariz. at 225, ¶ 12. To
hold otherwise and require knowledge be pled with specificity, as the
majority does here, would foreclose almost any aiding and abetting claim
at the outset. In Arizona, we do not shut the courthouse doors so hastily.
Cf. id. at 225, ¶¶ 9–12 (“The test is whether enough is stated to entitle the
pleader to relief on some theory of law susceptible of proof under the
allegations made.” (Quoting Daniel J. McAuliffe & Shirley J.
McAuliffe, Arizona Civil Rules Handbook at 144 (2015 ed.))).

¶44         Finally, I do not find persuasive the majority’s citation to In re
Hydroxycut Mktg. and Sales Pracs. Litig., 299 F.R.D. 648, 657 (S.D. Cal. 2014).

                                        16
                    IGLESIA v. BROTHERHOOD, et al.
                         Gass, V.C.J., dissenting

See supra ¶ 13. To begin, Hydroxycut applied the heightened federal
pleading standard, which is inimical to Arizona’s relaxed pleading
standard. See id. at 659. And though Arizona permits “general awareness”
for an aiding and abetting claim, Hydroxycut confined its analysis to “actual
knowledge.” Compare Wells Fargo, 201 Ariz. at 488, ¶ 45 with Hydroxycut, 299
F.R.D. at 657. But even assuming Hydroxycut was relevant, it does not stand
for the proposition a defendant must have “actual knowledge of the specific
primary wrong he is substantially assisting” to be liable under the Second
Restatement formulation. 299 F.R.D. at 657 (emphasis in original). Though
Hydroxycut includes that statement, upon closer examination, the
Hydroxycut holding does not go that far. See id. The Hydroxycut plaintiffs
argued “the Retailer Defendants need not have known about the tortious
nature of Iovate’s representations to be held liable as aider and abettors.”
See id. (emphasis added). Put differently, Hydroxycut did not focus on the
specificity of the pleadings, but rather whether the knowledge allegation
needed to be pled in the first place. See id. Here, the Church makes no such
argument. Instead, it argues the first amended complaint provides
sufficient factual allegations to pass muster.

¶45            Because I believe the Church sufficiently pled the knowledge
element, I also address the third element: whether the Church adequately
pled AKE substantially assisted Brotherhood in achieving the breach. See
Dawson, 216 Ariz. at 102, ¶ 50 (citing Wells Fargo, 201 Ariz. at 485, ¶ 34).
“The third requirement, substantial assistance by an aider and abettor, can
take many forms, but means more than ‘a little aid.’” Wells Fargo, 201 Ariz.
at 488, ¶ 46 (citations omitted). Here, the first amended complaint alleged
AKE substantially assisted Brotherhood. That bare allegation, standing
alone, would not survive a motion to dismiss, but the first amended
complaint went further. As part of that substantial assistance, the Church
alleged AKE intended its actions to “lead to the denial . . . or the under-
estimation” of the Church’s claim. As part of AKE’s substantial assistance,
the first amended complaint alleges AKE failed “to reasonably inspect the
Property.” And it says AKE did not address or misreported damages to
some of the units knowing they had been repaired (as in having had their
condenser fins combed) after the 2010 hailstorm. Taken together, the
Church satisfied its pleading burden on the third element.

¶46           I would hold the Church adequately pled (1) Brotherhood
committed a tort (breach of its duty of good faith and fair dealing); (2) AKE
knew Brotherhood’s conduct constituted a breach of its duties to the
Church; and (3) AKE substantially assisted or encouraged Brotherhood in
breaching its duty to the Church. See Dawson, 216 Ariz. at 102, ¶ 50 (citing
Wells Fargo, 201 Ariz. at 485, ¶¶ 33–34, 36). Putting other weaknesses in the

                                     17
                   IGLESIA v. BROTHERHOOD, et al.
                        Gass, V.C.J., dissenting

first amended complaint aside, its factual allegations are sufficient to
survive a motion to dismiss.

¶47          I respectfully dissent.

                          AMY M. WOOD • Clerk of the Court
                          FILED:    JT

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