Court Opinion

ID: 6331790
Source: CourtListenerOpinion
Date Created: 2022-04-14 18:01:32.904029+00
Date Added: 2024-06-11T09:23:14.664562
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

       SAFEWAY INSURANCE COMPANY INC, Plaintiff/Appellant,

                                         v.

             JONATHAN GARCIA, et al., Defendants/Appellees.

                              No. 1 CA-CV 21-0342
                                FILED 4-14-2022

            Appeal from the Superior Court in Maricopa County
                           No. CV2019-096463
                  The Honorable David J. Palmer, Judge

         VACATED AND REMANDED WITH INSTRUCTION

                                    COUNSEL

Huser Law Firm, Chandler
By Ronald E. Huser
Counsel for Plaintiff/Appellant

Moshier Law Firm PC, Phoenix
By Trail T. Potter, Jennifer Kristen Moshier
Counsel for Defendant/Appellee
                       SAFEWAY v. GARCIA, et al.
                          Decision of the Court

                      MEMORANDUM DECISION

Chief Judge Kent E. Cattani delivered the decision of the Court, in which
Presiding Judge Cynthia J. Bailey and Judge D. Steven Williams joined.

C A T T A N I, Chief Judge:

¶1           Safeway Insurance Company Inc. challenges the superior
court’s summary judgment ruling construing an “other vehicle” exclusion
in an automobile liability insurance policy. Because the case was rendered
moot before the court’s ruling, we vacate the judgment and associated
award of attorney’s fees and remand with instruction to dismiss the case.

             FACTS AND PROCEDURAL BACKGROUND

¶2         Jonathan Garcia was injured when he was struck by a vehicle
owned and driven by Bryan Vargas.

¶3             Garcia sued Bryan and his parents, Rafael and Elizabeth
Vargas, in March 2019. Garcia claimed Bryan’s negligence had caused the
accident, making him liable for Garcia’s injuries; Rafael and Elizabeth were
joined on the theory that Rafael’s Safeway-issued automobile liability
insurance policy (for a different vehicle) provided additional coverage for
Bryan’s liability for the accident beyond that provided by Bryan’s separate
automobile liability policy. Garcia settled his claim against Bryan for policy
limits (under Bryan’s own policy), and Garcia’s claim against Bryan was
dismissed with prejudice. The superior court then granted summary
judgment in favor of Rafael and Elizabeth, noting that Garcia had not
asserted that they were independently liable for the accident.

¶4            While the tort case remained pending, Safeway filed the
current lawsuit (naming Garcia and the three Vargas family members as
defendants) seeking a declaratory judgment that the “other vehicle”
exclusion in Rafael’s policy precluded coverage for Bryan’s liability to
Garcia in the underlying tort case. None of the Vargases appeared or
answered the complaint, but Garcia answered and moved for summary
judgment. Safeway opposed and filed a cross-motion for summary
judgment. The superior court ruled in Garcia’s favor, concluding that there
was a conflict between the Safeway policy’s coverage language and its
exclusion of coverage for other vehicles (those not expressly insured under

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                         SAFEWAY v. GARCIA, et al.
                            Decision of the Court

the policy) owned by family members that rendered the exclusion
unenforceable.

¶5           Safeway moved for reconsideration, arguing in part that the
court’s ruling was moot because Garcia’s claim against Bryan in the
underlying tort case had been dismissed. The superior court ordered and
considered a response from Garcia and later denied reconsideration. The
court entered a final judgment stating that Safeway was obligated to
provide additional coverage for Garcia’s unreimbursed damages caused by
Bryan, and awarding Garcia several thousand dollars in attorney’s fees and
costs. Safeway timely appealed, and we have jurisdiction under A.R.S.
§ 12-2101(A)(1).

                                 DISCUSSION

¶6            Safeway argues not only that the superior court erred on the
merits, but also that the court erred by entering judgment at all after the
resolution of the underlying tort suit left no remaining justiciable
controversy. The latter issue is dispositive.

¶7            Preliminarily, we note that Safeway did not raise the issue of
mootness until its motion for reconsideration. While we often decline to
consider issues first raised in a request for reconsideration, Powers v. Guar.
RV, Inc., 229 Ariz. 555, 561–62, ¶ 24 (App. 2012), our reluctance to reach
such issues is based largely on the unfairness of considering arguments to
which the opposing party had no opportunity to fairly respond. See Evans
Withycombe, Inc. v. W. Innovations, Inc., 215 Ariz. 237, 240–41, ¶¶ 15–16 (App.
2016). Here, because Garcia received a fair opportunity to respond to
Safeway’s allegation of mootness (and present any additional facts he
deemed relevant) in superior court, as well as an opportunity to further
develop his argument on appeal, we may fairly consider the issue.

¶8             A declaratory judgment action requires an actual controversy
between interested parties. Bd. of Supervisors of Maricopa Cnty. v. Woodall,
120 Ariz. 379, 380 (1978); Thomas v. City of Phoenix, 171 Ariz. 69, 74 (App.
1991); see also A.R.S. § 12-1832 (authorizing a declaratory judgment action
to declare the rights of a person “interested under” or “affected by” a
contract). Arizona courts thus generally decline to hear declaratory
judgment cases that raise only moot questions or seek advisory opinions.
Ariz. State Bd. of Dirs. for Junior Colls. v. Phx. Union High Sch. Dist., 102 Ariz.
69, 73 (1967). A case becomes moot when an event occurs such that the
outcome of the case will “have no practical effect on the parties.” Sedona
Priv. Prop. Owners Ass’n v. City of Sedona, 192 Ariz. 126, 127, ¶ 5 (App. 1998).

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                        SAFEWAY v. GARCIA, et al.
                           Decision of the Court

Although our reluctance to consider moot questions is a discretionary
(rather than constitutional) restraint under Arizona law, Cardoso v. Soldo,
230 Ariz. 614, 617, ¶ 5 (App. 2012), such restraint ensures, at a minimum,
“that the issues will be fully developed by true adversaries” with an interest
in the outcome. Armory Park Neighborhood Ass’n v. Episcopal Cmty. Servs. in
Ariz., 148 Ariz. 1, 6 (1985).

¶9           Here, an active controversy between interested parties existed
when Safeway initially filed the declaratory judgment action: The
complaint sought a declaration as to coverage under the Safeway policy and
named as defendants Rafael (the named insured) as well as Bryan (who, as
a family member living in Rafael’s household, could under some
circumstances claim liability coverage under Rafael’s Safeway policy). But
none of the Vargases appeared or answered the complaint.

¶10            The only defendant who opposed Safeway was Garcia, who
himself had no independent interest in the coverage question. Instead,
Garcia’s interest was indirect, dependent on Bryan’s potential claim for
liability coverage to pay Garcia excess damages based on Bryan’s liability
for the accident.1 But Garcia settled his tort claim against Bryan for policy
limits under Bryan’s own insurance—and stipulated to dismissal of that
claim with prejudice. There is no indication in the record—or even
allegation by Garcia—that the settlement contemplated excess liability or
included an assignment of Bryan’s coverage claim (if any) to Garcia.
Without that, the question of Bryan’s liability to Garcia was fully resolved
by the dismissal in the underlying tort case, meaning that as between
Safeway and Garcia (the only parties appearing in this case), resolution of
the declaratory judgment case would “have no practical effect on the
parties” and was thus moot. See Sedona Priv. Prop. Owners Ass’n, 192 Ariz.
at 127, ¶ 5.

¶11            Garcia argues that the case is not moot because the
interpretation of Safeway’s policy language could apply to other Safeway
insureds whose policies contain the same language. Cf. Cardoso, 230 Ariz.
at 617, ¶ 5 (permitting consideration of a moot issue if it is “of great public
importance” or “capable of repetition yet evading review”) (citations
omitted). But without “true adversaries” with an interest in the outcome of

1       Garcia also named Rafael and Elizabeth as defendants in the
underlying tort claim, but he never asserted that they were independently
liable for the accident, and the court entered summary judgment in their
favor on that basis. Garcia’s interest in the coverage question was thus tied
solely to Bryan’s liability.

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                       SAFEWAY v. GARCIA, et al.
                          Decision of the Court

this case, see Armory Park Neighborhood Ass’n, 148 Ariz. at 6, the coverage
question became simply a request for an advisory opinion with no concrete
effect on the participating parties. See Cardoso, 230 Ariz. at 617, ¶ 5.
Moreover, assuming other Safeway insurance contracts include
comparable policy language, the coverage/exclusion issue presented here
will not evade review if a policy holder (or other covered person) remains
a party to an underlying tort case or the injured person receives an
assignment of rights in conjunction with a settlement. See Contempo-Tempe
Mobile Home Owners Ass’n v. Steinert, 144 Ariz. 227, 230 (App. 1985).

¶12           Accordingly, because the declaratory judgment case was
moot with no viable exception, we vacate the superior court’s judgment.
This resolution means Garcia no longer prevailed in superior court, so we
likewise vacate the superior court’s award of attorney’s fees in his favor.
See A.R.S. § 12-341.01(A).

                              CONCLUSION

¶13            We vacate the judgment (including the award of attorney’s
fees) in favor of Garcia and remand with instruction to dismiss the case as
moot.

¶14           Safeway requests an award of attorney’s fees on appeal under
A.R.S. § 12-341.01, and Garcia requests an award of fees and costs as a
sanction under ARCAP 25. In light of our conclusion that the case is moot,
and in an exercise of our discretion, we deny both requests. Each side shall
bear its own costs on appeal.

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

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