Arizona Statute Update- Check Your License Plate Frame- New Law Imposes Fine for Illegal Plate Frames

Posted by: Ted Schmidt, Dev Sethi, Matthew Schmidt and Burt Kinerk

December 31, 2008

Effective January 1, 2009, a new Arizona law gives police the authority to stop a vehicle for the sole reason that its Arizona license plate is not completely visible.

Car Dealer's Insurance Policy Doesn't Cover "Customers"

By Ted Schmidt, Dev Sethi, Matt Schmidt, Burt Kinerk

Garage Keeper's Liability Insurance Doesn't Cover Customers
Messina v. Midway Chevrolet Co., 545 Ariz. Adv. Rptr. 12 (Ct. App. Div. I, December 18, 2008) (Justice Downie)

GARAGE POLICY EXCLUDES CUSTOMERS TO INCLUDE ONE WHO PURCHASES OR PATRONIZES.

Bookhamer purchased a new car from the defendant but his check bounced and the financing was not approved so technically he never "paid" or "bought" anything. While in possession of the vehicle he drove across the center line in the car killing himself and seriously injuring the plaintiff. Plaintiff sues claiming Bookhamer was insured under the defendant's garage liability policy.

The policy in question excludes coverage for customers of the defendant unless the customers lack the minimal financial responsibility insurance limits in coverage elsewhere. Here Bookhamer had such a policy so the only question was whether or not he was a "customer" considering he never paid or bought anything. The term was not defined in the policy.

The Arizona court of appeals therefore gave "customer" it's plain and ordinary meaning finding Webster's definition of "one who purchases a commodity or service or 'patronizes or uses the services, '" particularly persuasive.

Here there was no question that Bookhamer had "patronized" the defendant and was therefore a "customer" of Midway Chevrolet and excluded under their garage keeper's policy.

Finally, the court sustained the trial court's ruling in the face of plaintiff's expert's declaration that Bookhamer was not a customer. The court found that insurance policy terms are to be given "their ordinary meaning and effect, and we view them from the standpoint of someone untrained in law or the insurance business." The trial court didn't need an expert to tell it Bookhamer was a customer.

If you or a loved one have been seriously injured or killed in an automobile accident there could be many complicated insurance coverage questions that an attorney will need to address to maximize your recovery.  Contact us if you need help.

New Court of Appeals Decision Holds Summary Judgment is not a Discovery Sanction

By Ted Schmidt, Dev Sethi, Matt Schmidt, Burt Kinerk

Civil Procedure—Summary Judgment not a Sanction for Failing to Properly Respond

Tilley v. Delci, 548 Ariz. Adv. Rep. 15 (App. Div. I, January 29, 2009)(Justice Downie)
GRANT OF SUMMARY JUDGMENT IS NOT A SANCTION FOR FAILING TO COMPLY WITH COURT ORDER TO FILE PROPER RESPONSE

The plaintiff was involved in an automobile accident and sued the adverse driver.  For months plaintiff failed to file a Rule 26.1 disclosure statement and failed to respond to discovery requests including requests for admission.  A Rule 16 scheduling conference was held at which time the court ordered the plaintiff to respond to the discovery and requests within 30 days.  Plaintiff did not comply.

Thereafter the defendant filed a motion for summary judgment based primarily upon the plaintiff’s failure to respond to a request to admit “that he had not been injured or damaged as a result of the automobile accident.”  The plaintiff did not file a timely or proper response. Instead, on the day before the hearing on the motion the plaintiff hand-delivered a disclosure statement and discovery responses along with a “cursory” response to the motion that essentially said only that plaintiff had filed a disclosure and responded to the discovery. The disclosure and discovery was not attached to the response.

At the hearing the court ordered the plaintiff to pay attorneys’ fees to the defense for its failure to timely respond to discovery requests and ordered a “proper response” to the motion be filed within 10 days.  Thirteen days later the plaintiff filed a response supported only by an affidavit signed by plaintiff’s attorney who mostly attempted to explain the delays but failed to properly raise a question of fact.  The attorney had no personal knowledge of the liability facts. The court found this response still did not comply with Rule 56 (e).  The court again ordered plaintiff to file an appropriate response within 30 days. Plaintiff failed to comply.  Oral argument was held and the motion for summary judgment was granted.

Plaintiff then moved for reconsideration which was denied. 

The Court of Appeals first acknowledged that the trial court was correct in finding the plaintiffs’ responses to the motion for summary judgment were not in compliance with Rule 56 (e).  The responses failed to raise any questions of fact, did not incorporate any discovery responses and attached only one affidavit which contrary to the rule was not signed by anyone with personal knowledge of the facts of the case.  “In deciding a motion for summary judgment, the trial court considers ‘those portions of the verified pleadings, deposition, answers to interrogatories and admissions on file which are brought to the court’s attention by the parties.’”

The court rejected plaintiff’s argument that the granting of the summary judgment was an inappropriate discovery sanction. The court pointed out that the award of attorneys’ fees was a sanction but the granting of the summary judgment motion was based solely upon the deficiencies in plaintiff’s response to the motion.  “Summary judgment is not a sanction. It is a ‘final judgment on the merits.’”

Lastly, the court held that the trial court is not required to consider evidence first brought to its attention in a motion for reconsideration.

New Court of Appeals Case on NonParty at Fault Designations, Liquidated Damages and Rule 68 Sanctions

By Ted Schmidt, Dev Sethi, Matt Schmidt, Burt Kinerk

Civil Procedure—Nonparty at Fault Requires Facts to Support

Scottsdale Ins. Co. v. Cendejas, ___Az. Adv. Rep. ___1 CA-CV 08-0001 (App. March 3, 2009) (Justice Weisberg)

DEFENDANT’S NONPARTY AT FAULT PROPERLY STRICKEN WHERE INSUFFICIENT FACTS SET FORTH IN NOTICE TO ESTABLISH VIABLE CLAIM OF LIABILITY/PREJUDGMENT INTEREST  RUNS ON LIQUIDATED DAMAGES FROM THE DATE PLAINTIFF SPECIFIES HOW THEY CAN BE CALCULATED/EXPERT WITNESS FEES AWARDED FOR FAILING TO ACCEPT OFFER OF JUDGMENT INCLUDE FEES FOR NONTESTIFYING EXPERTS

Anthony Cendejas [Cendejas] caused a fire at an insured’s home and Scottsdale Insurance [SIC] paid $256,500 in a property damage claim to the insured as a result then made a claim against Cendejas in subrogation to recoup this payment. Cendejas’ insurer disputed the amount of the claim and this suit followed for the $259,000 payment plus prejudgment interest.

Cendejas filed nonparty at fault designations that named some specific nonparties but no specific facts as to what they did wrong. In fact, the designation was that “if” they had contributed to the fire they were nonparties. Others designations were generic such as “any subcontractor.”  After the nonparty designation deadline, Cendejas’ expert was deposed and during examination by Cendejas’ attorney revealed a defense never before disclosed that the insulation in the house was improperly installed and caused the fire to accelerate unnecessarily. The identity of this alleged negligent installer was not revealed by Cendejas.

As a result of these deficiencies, SIC moved to strike the nonparty designations. After this motion was granted and Cendejas’ motion for reconsideration was denied, SIC moved for summary judgment arguing there was no question of fact that Cendejas started the fire and caused the damage. Cendejas did not dispute that he started the fire but claimed the insulation installation was a superceding intervening cause. The trial court granted summary judgment finding the insulation could not be a superceding intervening cause because at best this would be a contributing cause and further since the nonparty designation was not proper or timely the jury couldn’t apportion fault against the insulation installer and therefore evidence of this alleged improper insulation was inadmissible in any event.  Prejudgment interest was also awarded along with sanctions.

In affirming the summary judgment the Court of Appeals pointed out that Rule 26(b)(5) requires a party “provide the identity, location, and the facts supporting the claimed liability” of the nonparty being designated.  Cendejas’ notice failed to meet this standard. Even to the extent a specific entity was identified there were no facts set forth “that would explain why [the nonparty] was liable for the fire and the resulting damage.”  The court recognized that the purpose of the nonparty designation requirement is to give the plaintiff proper notice to where it can bring a nonparty into the suit before the statute of limitations runs.  Here in some instances there were no facts to support bringing these nonparties in and in other cases the specific identity (“any subcontractor”) did not identify who to bring in.  “From this SIC could not have deduced that Appellants intended to name an insulation installer as opposed to any other type of subcontractor.”

In so ruling the court reaffirmed its holding in Rosner v. Denim & Diamonds, Inc., 188 Ariz. 431, 937 P.2d 353 (App. 1996) which allowed a defendant to designate an unknown assailant as a nonparty where no one could reasonably ascertain the assailant’s identity based upon the substantive right under ARS sec. 12-2506 to only be held liable for the amount of damages apportioned to a defendant by the jury. Here Cendejas knew or reasonably could have ascertained the identity of the insulation installer and the facts to support his liability. 

Next the court ruled that even where striking the nonparty designation is in effect a striking of the defendant’s answer because it eliminates his only defense, the rules do not allow the court discretion to consider any lesser sanction.

As to the question of prejudgment interest, the court recognized that “a party is entitled to prejudgment interest on a liquidated claim as a matter of right. . . .a claim is liquidated if the plaintiff provides a basis for precisely calculating the amounts owed. . . . the lack of an agreement as to a specific amount does not render a claim unliquidated if the amount is capable of calculation.”  Here because the plaintiff only set forth a lump sum amount in its and did not itemize its damages until filing its complaint the date for prejudgment interest should have been calculated from the date of the filing of the suit and not the date of the demand letter.

Finally, the court held that expert witness fees sanctions for failure to accept a rule 68 offer of judgment would apply to a witness who was disclosed to have performed expert functions but who was not disclosed or intended to be called as an expert witness.

Private Arbitration Rules Strictly Enforced

By Ted Schmidt, Dev Sethi, Matt Schmidt, Burt Kinerk

Civil Procedure: Arbitration Awards

FIA Card Services, v. Levy, 545 Ariz. Adv. Rptr. 15 (Ct. App. Div. II, December 12, 2008) (Justice Vasquez)  ARBITRATION  CLAUSE  ALLOWING  ARBITRATOR  TO RULE  WITHOUT  HEARING  WHERE   PARTY  DOES  NOT  MEET  DEADLINE FOR  FILING  OPPOSITION  UPHELD

Doug Levy and his credit card company got into a dispute over the amount owed on his bill.  He only paid what he thought he owed and the credit card company demanded arbitration pursuant to its arbitration clause.  Levy received notice of the demand for arbitration, that National Arbitration Forum was the contractually mandated arbitrator and of his deadline to respond to the demand.  Levy did not respond. A second notice giving Levy an additional 14 days to respond was received by Levy. He responded 3 days late and the arbitrator issued an award against him for the full amount sought by the credit card company and without a hearing.

Levy sued claiming under Ariz. Rev. Stat. 12-1512 (A) the arbitrator was biased and in failing to consider his response and give Levy a right to be heard, “undue means” had been used by the arbitrator to support an unfair judgment. 

The court of appeals first noted that no Arizona court had defined “undue means” under this or any statute. The court found persuasive the line of federal cases interpreting these terms to require “intentional misconduct . . . immoral if not illegal [conduct] corruption or fraud . . . sloppy or overzealous lawyering” do not rise to the level of “undue means.” 

Here there was no proof of even impartiality let alone intentional, wrongful, bad faith conduct.  “Levy had ample notice that a claim had been filed against him, and he was informed of the potential consequences of failing to respond in a timely manner.  He nonetheless failed to file a timely response.  Therefore, having failed to timely appear in the action, he was not entitled to a participatory hearing, notice of the selected arbitrator, or to conduct discovery.  The arbitrator acted well within his discretion by proceeding summarily . . .”

If you have a contract with a company be it your credit card company, hospital, car dealer or employer, and a dispute arises you may find the company has an arbitration clause in the contract requiring you to follow strict rules and often short deadlines in pursuing your rights. Do not delay in getting advice from a lawyer on such matters before you lose your rights.

New Arizona Supreme Court Case Explains How Class Representatives Comply with Notice of Claim Statute

By Ted Schmidt, Dev Sethi, Matt Schmidt, Burt Kinerk

Civil Procedure—Notice of Claim—Class Action

City of Phoenix v. Fields, 548 Ariz. Adv. Rep. 33 (January 22, 2009) (Justice Hurwitz)
CLASS ACTION PLAINTIFF MUST FILE NOTICE OF CLAIM AGAINST GOVERNMENT SPECIFIYING AMOUNT FOR WHICH CLASS REPRESENTATIVE WOULD SETTLE HIS INDIVIDUAL CLAIM/DEFENDANT MAY WAIVE RIGHT TO COMPLIANCE WITH NOTICE OF CLAIM STATUTE BY SUBSTANTIAL PARTICIPATION IN LITIGATION BEFORE PURSUING DEFENSE.

Plaintiffs, eight former Head Start workers brought a class action against the City of Phoenix claiming they had been denied certain benefits afforded other city employees. The class representative served a timely notice of claim but did not specify an amount for which the case could be settled. The city did not respond to the notice. Suit was filed, the city answered, four years of litigation followed and then Deer Valley v. Houser was decided holding a notice of claim must set forth a specific amount for which the claim could be settled.  The city then moved for summary judgment based on the class representative’s failure to specify an amount for which the case could be settled.

The Supreme Court first noted that class actions were unique and unaddressed by the notice of claim statute (ARS 12-831.01).  The court observed that “it is simply not possible for those filing a purported class action under the notice of claim statute to set forth a ‘specific amount’ for which the entire class ‘can be settled.’”  The purported class representative has no legal authority to settle the case for the class until the class is certified and potential class members given an opportunity to opt in or out of the class.

On the other hand, the court noted it was for the legislature and not the court to exempt class actions from the notice of claim statute and this had not been done to date. Accordingly the court held that the notice of claim statute “requires a putative class representative to include in his notice of claim a ‘specific amount’ for which his individual claim can be settled.  The notice should also include a statement that, if litigation ensues, the representative intends to seek certification of a plaintiff class.  If a class is later certified, the notice of claim will sere as a representative notice for other class members.”

Finally, the court ruled that noncompliance with the notice of claim statute is an affirmative defense which must be pled in the Answer or a Rule 12 (b) (6) motion to dismiss.  Further, even when properly pled a defendant can be found to have waived the defense by substantially participating in litigation without pursuing the defense. This is particularly true regarding a claimed deficiency in a notice of claim because such a deficiency will always be apparent on the face of the notice and a matter courts can quickly and easily adjudicate.

Here where the city answerered the complaint, engaged in extensive briefing on the propriety of class certification, filed various motions and Rule 26.1 disclosures including a number of unrelated motions for partial summary judgment and otherwise litigated the case for four years before raising the notice of claim defense in a motion for summary judgment, the defense was waived as a matter of law.

If you have a potential claim against a governmental entity a notice of claim must be filed within 180 days and very specific requirements must be met in the notice. Contact us if you believe you have such a claim as we may be able to help you.

Consumer Safety -- Toys

By Ted Schmidt, Dev Sethi, Burt Kinerk, Matt Schmidt

Safety First for Holiday Toys

Consumer advocates have come out with their annual holiday shopping tips designed to help Santas everywhere avoid dangerous toys.  There is good reason for parents to be careful while picking out presents this holiday season.  Even with new lead standards in place as part of a landmark consumer safety bill passed in August, dangerous toys are still on the shelves.  In fact, because new safety standards won't take effect until early 2009, retailers may discount dangerous toys to get them off of their shelves before the deadline.
How can you best protect your familiy while shopping for toys?  Arm yourself with the best information.  Visit http://www.recalls.gov/ to make sure none of the toys on your list have been recalled.  Or check out the latest from the Public Interest Research Group, who lists ways to protect kids from toy hazards.  Parents are also learning that the internet provides a great forum for sharing information and helping others out with lessons from their own experience.  Mom-written blogs like http://www.safemama.com/ and http://www.safbaby.com/ are indespensible. 

As for shopping tips, keep these in mind:
Dont by toys with magnets or costume jewelry for toddlers.  Keep the "Toilet Paper Rule" in mind...if a small piece of the toy can fit through the the cardboard toilet paper tube, it's a choking hazard.

Dont' buy used toy, which may be chipped or cracked.

Avoid toys made with PVC, which often contain hormone-like chemicals called phthalates.  They are often marked with a Number 3 recycling code.

Buy only brand name toys.  Big companies are not failsafe, but they have a huge stake in keeping toys safe and protecting their name and goodwill.

If you or any of your loved ones have been harmed by any products and are seeking assistance, feel free to contact us by phone or email.  We focus on all serious injury and death cases especially medical negligence, products liability and serious auto accidents including trucking accidents.  Please understand that every case is unique and descriptions of past cases are no representation of future success.

State Tort Claims Not Preempted by Manufacturer's Voluntary Product Replacement

By Ted Schmidt, Dev Sethi, Matt Schmidt, Burt Kinerk

Federal Preemption not Available to Manufacturer Who Complies with CPSC Volutary Replacement Plan

In re Mattel, Inc., __F. Supp. 2d __, 2008 WL 5147996 (C.D. Cal., December 8, 2008)

CONSUMER PRODUCT SAFETY COMMISSION REGULATIONS DO NOT PREEMPT SATE LAW CLASS ACTIONS BY CONSUMERS

Mattel toys were found to have excessively high levels of lead paint and Mattel magnets were found to be small enough to swallow.  Mattel voluntarily replaced the problem products as part of a CPSC voluntary corrective action plan.

Subsequently, a class action was filed by consumers over the allegedly defective toys and Mattel moved to dismiss on the grounds the state tort claims were preempted by the CPSC regulation.

The California District court disagreed, noting that the regulation in question on its face provided that participation in a voluntary corrective action plan was not “legally binding” nor conclusive regarding the scope of corrective action even the CPSC might seek.   The court felt that taking the defense argument to its logical conclusion would essentially allow manufacturers to choose the remedy least burdensome for placing potentially dangerous products into the stream of commerce.  Preemption would deny harmed parties input while giving the agency little incentive to ensure an adequate solution was obtained.

Accordingly the court denied the manufacturer’s motion to dismiss and allowed the class action to go forward under state tort theories.

New Arizona Case: Punitive Damages Survive Death/ Loss Enjoyment of Life Damages Do Not Survive Death

By Ted Schmidt, Dev Sethi, Matt Schmidt, Burt Kinerk

Torts  – Damages – Loss  Enjoyment of Life & Punitives

Quintero v. Rogers., 543 Ariz. Adv. Rep. 29 (Az Ct. App. Div. 1, November 18, 2008) (Judge Irvine).    LOSS OF ENJOYMENT OF LIFE DAMAGES EXPIRE WITH THE DECEDENT BUT PUNITIVE DAMAGES DO NOT.

Soto was injured in an automobile accident and sued adverse driver Rodgers.  During the pendency of the injury claim arising out of this automobile accident Soto died in an unrelated work place accident.  The plaintiff Elizabeth Quintero was substituted into the action as plaintiff upon Luis Soto’s death.

Thereafter the defendant brought a Motion for Summary Judgment claiming that   Soto’s claims for “loss of enjoyment of life” and punitive damages were extinguished with the plaintiff's death.

The court examined Arizona’s survival statute, Arizona Revised Statute §14-3110 and found “pain and suffering” damages do not survive death and “lost enjoyment of life” damages are but a species of pain and suffering.

In contrast, the court held that the survival statute does not preclude an award of punitive damages.  Punitive damage are “not aimed at compensation but principally at retribution and deterring harmful conduct.”  Because they do not compensate for the victim’s injuries, they survive the victim’s death unless the survival statute says otherwise and the court finds it does not.

Finally the court overturned the trial court’s granting of summary judgment on the question of punitive damages.  The court found that although generally exceeding the speed limit is insufficient by itself to support punitive damages here the records indicated Rodgers had been weaving in and out of traffic and that he plead guilty to reckless driving and endangerment.  Rodgers admission guilt for recklessness based and resulting misdemeanor convictions are binding admissions upon him in Quintero’s suit.  His reckless behavior is the precise conduct Rawlings cited  as an example of when a jury may find punitive damages appropriate. 

If you or a loved one have been seriously injured or killed by the carelessness of another contact us, we may be able to help.

New Arizona Case: Liability Limitation in Contract Upheld

By Ted Schmidt, Dev Sethi, Matt Schmidt, Burt Kinerk
Torts  – Defenses Limitation of Liability Clauses & Assumption of the Risk

1800 Ocotillo, LLC v. The WLB Group, Inc., 542 Ariz. Adv. Rep. 11 (Az Sup. Ct. November 3, 2008) (Justice Bales).  LIMITATION OF LIABILITY CLAUSE IN CONTRACT LIMITING DAMAGES FOR NEGLIGENCE OF SURVEYOR TO THE SURVEYOR’S FEES DID NOT VIOLATE PUBLIC POLICY AND DID NOT CONSTITUTE AN "ASSUMPTION OF THE RISK" CONSTITUTIONALLY REQUIRING A JURY TRIAL.  

The WLB Group entered into a contract with the 1800 Ocotillo Development Company to provide surveying and engineering services related to the construction of townhouses near a canal.  

Due to alleged negligence in the survey work the City of Phoenix denied Ocotillo’s building permits. 

Ocotillo sued WLB claiming a right to recover its increased costs from construction delays and the necessity of obtaining additional engineering services and designs due to WLB’s negligent survey.  WLB responded claiming its damages were limited by contract to the amount of its surveying fees.  The contract stated that “the liability of WLB’s . . . from any negligent acts, errors and/or omissions of WLB . . . is limited to the total fees actually paid by the client . . ."

Ocotillo argued that this provision was unenforceable as contrary to public policy and that additionally the limitation of liability constituted an “assumption of the risk” and as such by virtue of Article 18, Section 5 of the Arizona Constitution was required to be submitted to a jury.

Ocotillo cited an anti-indemnity statute (Arizona Revised Statute §32-1159) in support of its argument that public policy should prohibit the application of the liability limitation clause at issue.   The court rejected this argument stating that courts are always hesitant to declare any contractual provision invalid on public policy grounds.  Looking to the specific anti-indemnity statute, the court found this statute really dealt with “hold harmless” clauses and promises to defend, essentially apples and oranges to the case at bar.  More importantly, the court found that the rationale behind the statute was to avoid a situation where a tortfeasor could put an unreasonable cap on its potential liability for negligent acts.  Here the surveying fees were not insubstantial and created a “substantial interest” in  WLB  to exercise due care in its work.

Finally, in addressing the public policy argument the court held there was no identifiable public policy that clearly outweighed the interest in enforcing the contact provision.

With respect to the assumption of the risk argument, the court analyzed the “legislative history” of the constitutional provision by looking to the constitutional convention where it was enacted.  At the time of its drafting the common law posed assumption of the risk as an absolute bar to a plaintiff’s recovery for injury.   Delegates to the constitutional convention were particularly concerned that courts had used assumption of the risk, contributory negligence and the fellow-servant rule to bar recovery by injured employees against their employers.  After first considering it, a proposal that the defense of assumption of risk be abolished the delegates ultimately compromised and agreed to mitigate its harsh affects by providing this defense would “be reserved to the jury in all cases whatsoever.”  Similarly the delegates reserved to the jury the determination of the defense of contributory negligence and abolished the fellow-servant rule while prohibiting agreements that released or discharged employers from liability for injury to their employees.  As such, the “assumption of the risk” principle applies as a defense that effectively relieves a defendant from any duty of care by completely barring recovery by the injured party.

Accordingly, the Arizona Supreme Court interprets “assumption of the risk” as used in Article 18, Section 5, “to refer only to defenses that effectively relieve the defendant of any duty.  It was the harsh consequence of such a defense that caused the framers to reserve its determination to the jury”.  This concern is not implicated by agreements that reasonably limit rather than eliminate liability.”   Further, the court found that there were actually benefits to allowing parties to enter into written agreements that define the damages in such a way as to make them more predictable in the commercial world.  The limitation of liability provision at issue here did not purport to relieve WLB of all liability nor did it have that effect.   It did not abrogate WLB’s duty toward Ocotillo but instead limited to recoverable damages if the duty was breached.  As such this clause did not constitute “assumption of the risk” under the Arizona Constitution.

New Arizona Case: Liability Limitation in Contract Upheld
Posted by: Ted Schmidt
December 04, 2008


Torts  – Defenses Limitation of Liability Clauses & Assumption of the Risk

1800 Ocotillo, LLC v. The WLB Group, Inc., 542 Ariz. Adv. Rep. 11 (Az Sup. Ct. November 3, 2008) (Justice Bales).  LIMITATION OF LIABILITY CLAUSE IN CONTRACT LIMITING DAMAGES FOR NEGLIGENCE OF SURVEYOR TO THE SURVEYOR’S FEES DID NOT VIOLATE PUBLIC POLICY AND DID NOT CONSTITUTE AN "ASSUMPTION OF THE RISK" CONSTITUTIONALLY REQUIRING A JURY TRIAL.  

The WLB Group entered into a contract with the 1800 Ocotillo Development Company to provide surveying and engineering services related to the construction of townhouses near a canal.  

Due to alleged negligence in the survey work the City of Phoenix denied Ocotillo’s building permits. 

Ocotillo sued WLB claiming a right to recover its increased costs from construction delays and the necessity of obtaining additional engineering services and designs due to WLB’s negligent survey.  WLB responded claiming its damages were limited by contract to the amount of its surveying fees.  The contract stated that “the liability of WLB’s . . . from any negligent acts, errors and/or omissions of WLB . . . is limited to the total fees actually paid by the client . . ."