WAGNER v. ARIZONA MUNICIPAL

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

ZAKI WAGNER, Plaintiff/Appellant/Cross-Appellee,

v.

ARIZONA MUNICIPAL RISK RETENTION POOL, et al.,
Defendants/Appellees/Cross-Appellants.

No. 1 CA-CV 24-0562
FILED 01-07-2026

Appeal from the Superior Court in Maricopa County
No. CV2022-013732
The Honorable John L. Blanchard, Judge

REVERSED IN PART; VACATED AND REMANDED IN PART;
AFFIRMED IN PART

COUNSEL

Robert J. Hommel, P.C., Phoenix
By Robert J. Hommel
Co-Counsel for Plaintiff/Appellant/Cross-Appellee

Robbins Curtin Millea & Showalter, LLC, Phoenix
By Matthew P. Millea
Co-Counsel for Plaintiff/Appellant/Cross-Appellee

DePasquale Law Firm, P.C., Phoenix
By Mark J. DePasquale
Co-Counsel for Plaintiff/Appellant/Cross-Appellee

Broening Oberg Woods & Wilson P.C., Phoenix
By Robert T. Sullivan, Kelley M. Jancaitis, Jessica J. Kokal
Counsel for Defendants/Appellees/Cross-Appellants
 WAGNER v. ARIZONA MUNICIPAL, et al.
Opinion of the Court

OPINION

Judge Brian Y. Furuya delivered the opinion of the Court, in which
Presiding Judge Angela K. Paton and Judge Daniel J. Kiley joined. Judge
Furuya also delivered a separate special concurrence.

F U R U Y A, Judge:

¶1 Appellant Zaki Wagner challenges the superior court’s
summary judgment and fee award in favor of appellees Arizona Municipal
Risk Retention Pool (the “Risk Pool”) and Berkley Risk Administrators
Company LLC (“Berkley”). Appellees cross-appeal the superior court’s
decision that the Risk Pool is not a public entity for the purposes of the
notice of claim statute. For the following reasons, we reverse in part and
affirm in part.

FACTS AND PROCEDURAL HISTORY

¶2 The Risk Pool is an Arizona insurer comprised of cities and
towns joining to provide liability coverage, including workers’
compensation insurance, for its members, including the city of Maricopa.
After being injured in the course and scope of his employment as a City of
Maricopa police officer in July 2018, Wagner filed a workers’ compensation
claim with the Risk Pool. Berkley acted as the third-party administrator for
Wagner’s claim. Berkley initially accepted the claim and provided benefits.
However, across the ensuing three years of treatment, Berkley repeatedly
denied and then allowed, closed and then reinstated, Wagner’s coverage
and benefits.

¶3 Wagner filed a lawsuit in the superior court alleging bad faith
in October 2022. The parties filed cross-motions for summary judgment.
The court granted Berkley’s motion for summary judgment on the basis that
Wagner’s claim was time-barred by the statute of limitations. Wagner
timely appealed and the Risk Pool timely cross-appealed. We have
jurisdiction pursuant to Arizona Revised Statutes (“A.R.S.”) Section 12-
2101(A)(1).

DISCUSSION

¶4 The Risk Pool challenges the court’s finding that it is not a
public entity. Wagner challenges the court’s dismissal of Berkley from the
case and its award of attorneys’ fees. We review each argument in turn.

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 WAGNER v. ARIZONA MUNICIPAL, et al.
Opinion of the Court

I. The Risk Pool is a Public Entity for Purposes of A.R.S. Section 12-
821.01.

¶5 Any person asserting a cause of action against a public entity
is required to file a notice of claim within 180 days after the claim accrues.
A.R.S. § 12-821.01(A). “Any claim that is not filed within one hundred
eighty days after the cause of action accrues is barred . . . .” Id. The notice of
claim statute’s purpose is to prevent the government from incurring “excess
or unwarranted liability and [to] facilitate[] settlement of claims by allowing
the government to investigate the claim . . . and budget for settlement or
payment of large claims.” Yollin v. City of Glendale, 219 Ariz. 24, 29 ¶ 11
(App. 2008). Also, “[a]ll actions against any public entity . . . shall be
brought within one year after the cause of action accrues and not
afterward.” A.R.S. § 12-821. Thus, the notice of claim statute and its
associated statute of limitations period apply to the Risk Pool if it is a public
entity.

¶6 The parties dispute whether the Risk Pool is a “public entity”
under A.R.S. Section 12-821.01(A). The Risk Pool contends that it is a public
entity; Wagner argues that it is not. Because this issue is dispositive as to
Wagner’s claims against the Risk Pool, we address it first.

¶7 We review the question of whether the Risk Pool is a public
entity for the purposes of A.R.S. Section 12-821.01(A) de novo. State v.
Serrato, ___ Ariz. ___, ___, 568 P.3d 756, 759 ¶ 9 (2025) (reviewing an issue
requiring statutory interpretation de novo) (citing Planned Parenthood Ariz.,
Inc. v. Mayes, 257 Ariz. 137, 142 ¶ 13 (2024)). When interpreting statutes, we
begin with the text. Id. (citing Franklin v. CSAA Gen. Ins. Co., 255 Ariz. 409,
411 ¶ 8 (2023)). “We interpret statutory language in view of the entire text,
considering the context and related statutes on the same subject.” Id.
(quoting Nicaise v. Sundaram, 245 Ariz. 566, 568 ¶ 11 (2019)). If the statute’s
text is unambiguous, “it controls unless it results in an absurdity or a
constitutional violation.” Id. (citing 4QTKIDZ, LLC v. HNT Holdings, LLC,
253 Ariz. 382, 385 ¶ 5 (2022)).

¶8 The applicable statutory definition provides that “‘[p]ublic
entity’ includes this state and any political subdivision of this state.” A.R.S.
§ 12-820(7). Though we agree with Wagner that the Risk Pool does not
qualify as either the “state” or as a “political subdivision of this state,” that
is not determinative of the Risk Pool’s status. The statutory definition of
“public entity” for purposes of compliance with A.R.S. Section 12-821.01
states that this term “includes this state and any political subdivision of this
state.” Id. (emphasis added). As our supreme court recently reiterated, “the

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Opinion of the Court

term ‘includes’ is a ‘term of enlargement, . . . encompass[ing] items that
were not specifically enumerated.’” Sanchez v. Maricopa Cnty., ___ Ariz. ___,
___, 572 P.3d 101, 110 ¶ 29 (2025) (quoting Tracy v. Superior Court of Maricopa
Cnty., 168 Ariz. 23, 35 (1991)). In Sanchez, our supreme court held that a
county sheriff falls within the definition of a “public entity” under A.R.S.
Section 12-820 despite being neither the “state” nor a “political
subdivision.” Id. at 111 ¶ 32. In accepting that “§ 12-820(7) does not
necessarily preclude a county sheriff from constituting a public entity[,]” id.
at 110 ¶ 29, the Sanchez court rejected more restrictive readings of that
definition, such as that advanced by Wagner in response to the Risk Pool’s
motion. We similarly reject that narrow reading of the definition. Instead,
“when the legislature does not define a term, but states that the term
‘includes’ specified items, we construe the term to also include other items
that fall within the term’s ordinary meaning.” State ex rel. Dep’t of Econ. Sec.
v. Torres, 245 Ariz. 554, 558 ¶ 14 (App. 2018). Thus, we must assess whether
the Risk Pool otherwise qualifies for inclusion within the ordinary meaning
of “public entity.” Our decision in Pivotal Colorado II, L.L.C. v. Arizona Public
Safety Personnel Retirement System, 234 Ariz. 369 (App. 2014), is instructive
to that end.

¶9 In Pivotal Colorado II, we addressed whether the Arizona
Public Safety Personnel Retirement System (“PSPRS”) was a “public entity”
subject to the notice of claim and limitations statutes. To determine whether
PSPRS qualified as a “public entity,” we considered the following factors:
(1) whether the entity is a creature of statute; (2) whether its governing
board is appointed by a political subdivision; and (3) whether the entity “is
subject to various levels of state control while being expressly exempted
from other controls, yet not exempted from the immunity provisions of
[A.R.S. Section 12-821.01(A)].” See id. at 373 ¶ 17. We determined that those
factors, along with PSPRS’s creation by statute and regulation by state laws,
supported the conclusion that PSPRS is a public entity, and is therefore
subject to the notice of claim and limitations statutes. Id.

¶10 Here, as in Pivotal Colorado II, the Risk Pool finds its genesis
within statutory authority because it was formed by its member-
municipalities pursuant to A.R.S. Section 11-952.01. The legislature
expressly granted authority to municipalities to form entities like the Risk
Pool to aid in their compliance with the state’s liability and workers’
compensation insurance requirements. A.R.S. § 11-952.01(B). Because it
exists under the auspices of that authority expressly granted to
municipalities, the Risk Pool is a creature of statute.

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 WAGNER v. ARIZONA MUNICIPAL, et al.
Opinion of the Court

¶11 Further, like the governor’s appointment of PSPRS’s Board of
Trustees, Pivotal Colo. II, 234 Ariz. at 371 ¶ 8, the Risk Pool is managed by a
board of trustees, who are elected by the Risk Pool’s members—which are
themselves political subdivisions, A.R.S. § 11-952.01(H). The statute further
requires that its board of trustees must be comprised “of at least three
persons who are elected officials or employees of public entities within this
state.” Id. Moreover, the Risk Pool’s board of trustees invests and manages
its assets, which are derived exclusively from the member-municipalities’
contributions of public monies, similar to functions of PSPRS’s board.
Pivotal Colo. II, 234 Ariz. at 371 ¶ 12.

¶12 Also, the Risk Pool is subject to regulation by the state
through a “bundle of statutes,” like the state’s regulation of PSPRS in Pivotal
Colorado II. Id. at 373 ¶ 17. The Industrial Commission of Arizona (“ICA”)
is statutorily required to approve of the Risk Pool serving as a self-insurer
and is authorized to regulate the Risk Pool’s activities, adopt administration
requirements, and perform audits and reviews of the Risk Pool. A.R.S. § 11-
952.01(B).

¶13 Wagner argues that the Risk Pool’s regulation by the ICA is
not indicative of its status as a public entity because private insurers are
also subject to such regulation as well. Though true, the Risk Pool is subject
to other state oversight that private insurers are not. For example, the Risk
Pool is authorized to invest its members’ funds in a manner only available
to political subdivisions and other public entities, but subject to the
authority and limitations set forth in A.R.S. Sections 11-952.01(Q) (limited
by the constraints of A.R.S. Section 35-323) and -952.01(R) (limited by the
constraints of A.R.S. Section 35-326).

¶14 Further, like PSPRS, the Risk Pool uses public funds for a
public purpose. Pivotal Colo. II, 234 Ariz. at 371 ¶ 8. As noted, the Risk Pool’s
assets are solely comprised of public funds, and excess funds are
redistributed to the member-municipalities rather than kept as profit. It is
also exempt from state and federal taxation. Referencing Section 501(c) of
the Internal Revenue Code, Wagner argues that this too is not an indicator
of public entity status, since private corporations—including other
insurance providers—may also have tax exempt status under federal law.
See 26 U.S.C. § 501(c). But Wagner’s position is flawed. First, federal law
also provides an exemption from tax liabilities exclusive to public entities.
See, e.g., 26 U.S.C. § 115(1). Therefore, Wagner is mistaken in his supposition
that just because private entities may qualify for tax exemptions under one
section of federal statutes, this means tax exemption can never be evidence
of public entity status. Second, the Risk Pool’s tax-exempt status is provided

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Opinion of the Court

for expressly by a statutory grant specific to it. A.R.S. § 11-952.01(G). Thus,
Wagner’s argument does not contradict the Risk Pool’s status as a public
entity.

¶15 In view of the above, and under the totality of the
circumstances, we hold that the Risk Pool is a public entity for purposes of
A.R.S. Section 12-821.01. Therefore, we reverse the court’s entry of
summary judgment to the contrary.

¶16 Because it is a public entity, Wagner was required to serve the
Risk Pool with a compliant notice of claim no later than 180 days after
accrual of his cause of action. A.R.S. § 12-821.01(A). Wagner concedes he
did not do so. Therefore, Wagner’s claims against the Risk Pool are barred
because of this deficiency. We affirm the court’s entry of judgment against
Wagner on his claims against the Risk Pool and need not address his
challenges to the court’s grant of summary judgment in favor of the Risk
Pool on other grounds. See Vohland v. Maricopa Cnty., ___ Ariz. ___, ___, 571
P.3d 364, 366 ¶ 10 (App. 2025) (“We will affirm summary judgment if it is
correct for any reason supported by the record.”) (quoting KB Home Tucson,
Inc. v. Charter Oak Fire Ins. Co., 236 Ariz. 326, 329 ¶ 14 (App. 2014)).

II. The Superior Court Properly Dismissed Berkley from the Lawsuit.

¶17 Wagner further argues the superior court erred in dismissing
Berkley from the lawsuit and asks that we hold Berkley has direct liability
to him as a third-party administrator for bad faith claims arising out of its
insurance claims handling, or, alternatively, that Berkley has vicarious
liability on a joint-venture theory.

¶18 We review de novo the grant of summary judgment, viewing
the “evidence and reasonable inferences in the light most favorable” to
Wagner, against whom summary judgment was entered. Andrews v. Blake, 205 Ariz. 236, 240 ¶ 12 (2003). When there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law, we will
affirm a grant of summary judgment. Ariz. R. Civ. P. 56(a); Thompson v. Pima
Cnty., 226 Ariz. 42, 44 ¶ 5 (App. 2010). And we will affirm summary
judgment if it is correct for any reason supported by the record. Vohland,
571 P.3d at 366 ¶ 10.

A. Direct Liability

¶19 “Insurance bad faith denial-of-coverage claims arise when an
insurer intentionally denies, fails to process, or fails to pay a claim without
a reasonable basis for such action.” Satamian v. Great Divide Ins. Co., 257

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Opinion of the Court

Ariz. 163, 173 ¶ 28 (2024) (citing Ness v. W. Sec. Life Ins., 174 Ariz. 497, 500
(App. 1992)). Such claims are derived from the covenant of good faith and
fair dealing. See Manterola v. Farmers Ins. Exch., 200 Ariz. 572, 576 ¶ 9 (App.
2001) (“[B]ad faith tort actions are based in the underlying contract.”)
(quoting Lloyd v. State Farm Mut. Auto. Ins. Co., 189 Ariz. 369, 377 n.4 (App.
1996)). The covenant of good faith and fair dealing is implied by law in
every contract in Arizona, including insurance contracts generally, Rowland
v. Great States Ins. Co., 199 Ariz. 577, 582 ¶ 8 (App. 2001), as corrected (May
24, 2001), and in the context of workers’ compensation coverage more
specifically, id. at 583 ¶ 11. The implied covenant imposes a duty on
contracting not to impair the other’s right to the benefits that flow from the
agreement. Id. at 582 ¶ 8. And while occurrence of a breach of that
contractual relationship is not required to sustain a bad faith claim, a
contractual nexus is a necessary element to any bad faith claim. Id. at 582–
83 ¶ 10.

¶20 Wagner argues that he can assert a bad faith claim against
Berkley arising out of the duty it owed him based on a “special
relationship” between them. Duties may arise from a special relationship
between parties, including relationships based in contract. Stanley v.
McCarver, 208 Ariz. 219, 221 ¶ 7 (2004). The determination of whether a
special relationship is present depends on “whether a sufficient
relationship exists between the parties to make it reasonable, as a matter of
public policy, to impose a duty.” Id. at 222 ¶ 10 (citation modified).

¶21 However, examination of special relationships normally
arises in the context of assessing the existence of a duty for purposes of a
negligence claim. See id.; Gipson v. Kasey, 214 Ariz. 141 (2007); Diggs v.
Arizona Cardiologists, Ltd., 198 Ariz. 198 (App. 2000). A bad faith claim is not
a negligence claim. Rather, a bad faith claim is an intentional tort which
arises out of contractual relationships. Manterola, 200 Ariz. at 576 ¶ 9
(quoting Rawlings v. Apodaca, 151 Ariz. 149, 160 (1986)). Wagner cites no
authority recognizing the existence of any non-contractual special
relationship in the bad faith context. On the contrary, all the cases cited by
Wagner address special relationships that have been long-recognized in
common law—doctor-patient, employee-employer, landlord-invitee, etc.
The “third-party administrator-insured” relationship is not one that is
historically acknowledged in the common law as giving rise to any non-
contractual duties.

¶22 Here, Berkley serves as a third-party administrator for the
Risk Pool and was tasked with administering Wagner’s claim. The
undisputed evidence shows that Berkley’s contract to provide such services

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Opinion of the Court

is with the Risk Pool alone; Wagner does not argue that he is a party to it.
Instead, Wagner argues that direct liability attaches to Berkley because it
served as the Risk Pool’s agent when it denied Wagner’s claims, and, as the
Risk Pool’s agent, it was directly liable for its bad-faith torts. This argument
posits that because the Risk Pool owed a duty of good faith and fair dealing
towards Wagner, and because the Risk Pool would be liable for its agent’s
bad faith, so too must its agent necessarily have the same duty and liability
directly to him. Not so.

¶23 The Risk Pool concedes that it owes a duty of good faith to
Wagner as its insured, notwithstanding that it has tasked Berkley with
performing its claims administration obligations to Wagner on its behalf.
But such liability is clear because it flows from the contractual relationship
between the Risk Pool as insurer and Wagner as insured. See Walter v. F.J.
Simmons, 169 Ariz. 229, 238 (App. 1991) (“[A]n insurer who owes the legally
imposed duty of good faith to its insureds cannot escape liability for a
breach of that duty by delegating it to another, regardless of how the
relationship of that third party is characterized.”); Meineke v. GAB Bus.
Servs., Inc., 195 Ariz. 564, 568 ¶ 18 (App. 1999) (“If the [third party] adjuster
mishandles the claim, the insurer has the same liability to the insured as if
an employee of the insurer had mishandled the claim.”). This record reveals
no contractual nexus between Wagner and Berkley to support Wagner’s
bad faith claim directly against Berkley. Rowland, 199 Ariz. at 582–83 ¶ 10.

¶24 Wagner argues that our supreme court’s decision in Gatecliff
v. Great Republic Life Insurance Co., 170 Ariz. 34 (1991), establishes direct
liability for bad faith claims against “a person who intentionally and
unreasonably causes an insured the denial of policy benefits . . . even if that
person is not a party to the insurance contract.” But Gatecliff is
distinguishable from the facts of this case.

¶25 In Gatecliff, our supreme court held that a parent company
could be directly liable for insurance bad faith for performing claims
management functions for its subsidiary company that issued the insurance
contract to the insureds, even though the parent company was not a party
to that contract. Id. at 39–40. But this holding was premised on evidence that
the parent company had near total control of its subsidiary that issued the
contract. Id. at 40. By contrast, no evidence in this record indicates that the
Risk Pool and Berkley have a parent-subsidiary relationship or that Berkley
had any direct control over the Risk Pool. Though Gatecliff’s direct liability
analysis stands independent of those findings, we find the difference
meaningful because the facts of this case do not similarly implicate the
Gatecliff court’s concerns about fraud or injustice. See id. at 38 (“Upon review

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Opinion of the Court

of the record, we also find that the interrelationship between the two
corporations may promote fraud or injustice[.]”). The Gatecliff analysis was
grounded in addressing the facts of that case, in which a parent company
acted through an agent to insulate itself from bad faith liability. Id. at 39–40.
But as already noted, the Risk Pool admits that it is liable for any bad faith
conduct undertaken by its agent Berkley. Thus, unlike in Gatecliff, the
principal here is not attempting to improperly shield itself behind an agent.
Liability for Wagner’s claims of bad faith would properly lie against the
Risk Pool, and that difference makes the analysis in Gatecliff inapposite to
this case.

B. Joint Venture

¶26 Wagner alternatively argues that Berkley is liable to him as a
participant in a joint venture with the Risk Pool.

¶27 “Vicarious liability for concerted action may be found to exist
when the tort-feasors have entered into a . . . joint venture.” Sparks v.
Republic Nat’l Life Ins. Co., 132 Ariz. 529, 540 (1982). To determine whether
parties are engaged in a joint venture, Tanner Cos. v. Superior Court, 144 Ariz.
141, 143 (1985) (citing Ellingson v. Sloan, 22 Ariz. App. 383 (1975)), sets forth
the following elements: “(1) a contract; (2) a common purpose; (3) a
community of interest; (4) an equal right to control; and (5) participation in
the profits and losses.” However, the fifth element requiring participation
in profits and losses need not be shown in the context of so-called “social
circumstances.” Est. of Hernandez v. Flavio, 187 Ariz. 506, 509–10 (1997)
(applying joint venture liability in the context of school fraternity activities).

¶28 Here, there is no evidence to establish profit and loss sharing
by Berkely and the Risk Pool, and Wagner does not contend otherwise.
Wagner argues, however, that this element is not required under Sparks and
Farr v. Transamerica Occidental Life Insurance Co. of California, 145 Ariz. 1
(App. 1984). In Sparks, our supreme court concluded that the agent was
engaged in a joint venture with the insurer, noting that the agent issued
certificates of coverage, billed and collected premiums, investigated and
paid claims, and distributed brochures to market the policies. 132 Ariz. at
539–40. But our supreme court did not expressly address the profit-and-loss
sharing element. By contrast, this court in Farr recognized a joint venture
where the agent not only marketed the insurer’s policy, but also “received
a commission on premiums collected as well as a percentage of renewal
commissions[,]” a form of profit sharing. 145 Ariz. at 11. We find it
significant that the court emphasized the necessity of the profit-and-loss
element in both Farr and in Estate of Hernandez, with the latter clarifying that

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Opinion of the Court

the element does not apply in the context of social ventures. Id.; Est. of
Hernandez, 187 Ariz. at 509. Because this case does not involve a social
venture, the element applies.

¶29 Further, the facts of this case differ from those in Farr and
Sparks. The agent’s commission on premiums collected and renewals in Farr
is at least evidence of sharing of profit and losses. See 145 Ariz. at 11. There
is no such evidence in this record. Also, the “marketing” assigned to
Berkley appears vastly different in character from the kind referenced in
Sparks and Farr, as both advertised commercial insurance to the general
public. See Sparks, 132 Ariz. at 539–40; see also id. at 3. But here, Berkley’s
“marketing” is limited to activities listed in the Administrative Services
Agreement (“ASA”), such as “develop[ing] an annual marketing plan and
budget . . . attend[ing] meetings of city/town councils or meetings of other
public agency governing boards . . . [and] maintain[ing] and publish[ing]
the [Risk] Pool’s website.” The activities undertaken on behalf of the Risk
Pool are confined to municipalities and their constituent groups. Thus, the
Risk Pool’s “marketing” is not targeted to the public at large, a fact we find
distinguishing.

¶30 Further, a joint venture requires an equal right of control,
meaning that “each joint venturer must share, to some extent, in the control
of the venture.” Est. of Hernandez, 187 Ariz. at 510. To establish a joint
venture in this case, Wagner must show that Berkley had some “right to be
heard in the control and management of the venture.” Id. (emphasis added).
While Berkley has been delegated broad power to administer claims by the
Risk Pool, the record does not indicate it had any right to control the
venture between them. Moreover, “[w]here a joint venture exists, each of
the parties is the agent of the others and each is likewise a principal so that
the act of one is the act of all.” Sparks, 132 Ariz. at 540. But in this case, the
record establishes only that Berkley is an agent for the Risk Pool as
principal, with no joint agency between the two.

¶31 Thus, the superior court correctly concluded that Berkley was
neither directly liable to Wagner nor engaged in a joint venture giving rise
to vicarious liability for bad faith, and therefore it does not owe its own
separate and distinct duty of good faith and fair dealing to Wagner. We
affirm the court’s dismissal of Berkley from the lawsuit.

III. The Superior Court Erred in Awarding Berkley Attorneys’ Fees.

¶32 The superior court denied the Risk Pool’s fee application in
full, and awarded Berkley $93,000 of the $118,637.50 fee award that it

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sought. Wagner challenges1 the superior court’s award of fees to Berkley.
We review an award of attorneys’ fees and costs for abuse of discretion and
will affirm the award if reasonable. Peterson v. City of Surprise, 244 Ariz. 247,
253 ¶ 25 (App. 2018). “In any contested action arising out of a contract,
express or implied, the court may award the successful party reasonable
attorney fees.” A.R.S. § 12-341.01(A).

¶33 Berkley argued that Wagner’s direct liability claim was not
tenable and that Wagner’s attorney should have known it was not tenable
because counsel raised the same issue, and lost, in separate litigation filed
on behalf of a different client in federal district court. See McCalla v. ACE
Am. Ins. Co., CV-20-01561-PHX-JAT, 2022 WL 2290552, at *12 (D. Ariz. June
24, 2022). According to Berkley, an award of fees against Wagner was
warranted because his counsel “lost” on “this exact same issue” in
unrelated litigation, and Berkley “should not have to bear the burden of
legal fees so that plaintiffs can continuing [sic.] simply running this claim
up the flagpole over and over again to see if they can luck out with a
different result.” Berkley raises the same argument on appeal, asserting in
its answering brief that “Wagner’s counsel had recently litigated the
viability of a direct claim of insurance bad faith against the [third party
administrator], and lost.” Berkley maintains that the fee award should be
affirmed because “[t]he unfavorable ruling” in the unrelated case “did not
deter counsel from raising it again.”

¶34 Berkley takes the position, in effect, that the fee award should
be affirmed because Wagner not only asserted an unsuccessful claim in this
case, but because his lawyer raised the same issue, unsuccessfully, on behalf
of a different client in a different case in a different jurisdiction.

¶35 A ruling by a federal district court on an issue of Arizona law,
though persuasive, is not binding on Arizona courts. Arpaio v. Figueroa, 229

1 Wagner argued to the superior court that Berkley’s fees were
unreasonable as requested. The billing records that Berkley submitted in
support of its fee application are so heavily redacted that we cannot conduct
an intelligent review for the purpose of assessing the reasonableness of the
fees. See Schweiger v. China Doll Rest., Inc., 138 Ariz. 183, 188 (App. 1983) (“In
order for the court to make a determination that the hours claimed are
justified, the fee application must be in sufficient detail to enable the court
to assess the reasonableness of the time incurred.”) However, Wagner did
not raise this argument on appeal, so he has waived it, and we do not
address it further.

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Ariz. 444, 447 ¶ 11 (App. 2012). Wagner’s counsel was not, therefore,
precluded from asserting the claims here simply because a federal district
court rejected them when he asserted them on behalf of a different client. In
other words, an argument is not frivolous merely because it was previously
rejected by a court in another jurisdiction. Cf. Ariz. Republican Party v. Richer, 257 Ariz. 237, 243 ¶ 15 (2024) (recognizing that “a claim may lack winning
merit without being sufficiently devoid of rational support to render it
groundless”). Any other rule would chill creative advocacy and impede the
development of the law. Id. at 251 ¶ 49 (vacating fee award and warning
that “courts risk chilling legal advocacy” by “sanctioning parties and their
lawyers for bringing debatable, long-shot complaints”).

¶36 Berkley’s argument that fees should be assessed against
Wagner because his lawyer raised an argument previously rejected in
another jurisdiction is improper and cannot form the basis of, or influence
the amount of, a fee award. Yet the court’s fee award cites only
“unreasonableness” as grounds for the award and does not identify
Wagner’s purportedly unreasonable litigation conduct. Because the court
did not clearly indicate whether its decision to award fees was, at least in
part, based on Berkley’s allegedly improper argument, the award of fees is
vacated and remanded so the court can reconsider without any weight
given to counsel’s making an unsuccessful argument in a different
jurisdiction in an entirely separate and distinct case.

¶37 Appellees also request attorneys’ fees incurred on appeal
pursuant to A.R.S. Section 12-341.01(A). In exercise of our discretion, we
deny the request for attorneys’ fees but award Appellees their costs on
appeal, contingent on their compliance with Arizona Rule of Civil
Appellate Procedure 21.

CONCLUSION

¶38 For the foregoing reasons, we reverse in part, vacate and
remand in part, and affirm in part.

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 WAGNER v. ARIZONA MUNICIPAL, et al.
Furuya, J., Specially Concurring:

F U R U Y A, Judge, specially concurring:

¶39 Though the parties did not reference it, I further believe that
the Risk Pool is a public entity because it is subject to regulation under
Arizona’s Open Meeting and Public Records laws. These form important
and distinctive additions to the “bundle of statutes that . . . regulate an
entity that make[] it a public entity for purposes of the notice of claim and
corresponding limitations statutes.” Pivotal Colo. II, 234 Ariz. at 373 ¶ 17.

A. Open Meeting Law

¶40 Under Arizona’s Open Meeting Law, “[a]ll meetings of any
public body shall be public meetings” and are subject to the open meeting
law. A.R.S. § 38-431.01(A) (emphasis added). A “public body” is defined as
including “all multimember governing bodies of departments, agencies,
institutions and instrumentalities of this state or political subdivisions,
including without limitation all corporations and other instrumentalities
whose boards of directors are appointed or elected by this state or a political
subdivision.” A.R.S. § 38-431(6) (emphasis added).

¶41 I find persuasive Attorney General Opinion I07-001, which
analyzed this statute in its determination that the Open Meeting Law
applies to the Board of Trustees of the Northern Arizona Public Employees
Benefit Trust (“NAPEBT”). The opinion relied on Prescott Newspapers, Inc.
v. Yavapai Community Hospital Association, 163 Ariz. 33 (App. 1989), in which
we stated that to determine whether an entity constitutes an
instrumentality of a political subdivision, we look to “whether the function
performed by the entity is committed to the political subdivision, i.e., is it
something the political subdivision could do itself.” Op. Ariz. Att’y Gen.
I07-001, 2007 WL 419654, at *2. The opinion concluded that the Board of
Trustees was a “public body” because it is an “instrumentality of the
participating political subdivisions and each trustee of the Board is
appointed by the political subdivisions.” Id. at *3. Also, the NAPEBT and
its Board “were created by the various political subdivisions to carry out
the duties and powers of the government entities . . . .” Id.

¶42 Here, the Risk Pool is similar to NAPEBT and its Board
because it is created by various political subdivisions—its member-
municipalities—and it was created pursuant to state statute by an
intergovernmental agreement between these various political subdivisions.
A.R.S. § 23-961.01(A).

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 WAGNER v. ARIZONA MUNICIPAL, et al.
Furuya, J., Specially Concurring:

The Risk Pool is also tasked with carrying out a duty of the municipalities,
which is to provide workers’ compensation insurance, as required by the
state. Further, it operates under the control of the municipalities to carry
out this function, like NAPEBT carries out the function of providing health
and welfare benefits to the government entities’ employees.

¶43 Also, like NAPEBT and its Board, the Risk Pool’s member-
municipalities retain control over the Board and appoint and remove Board
members in accordance with A.R.S. Section 11-952.01(H). Thus, the Risk
Pool is an instrumentality of the state as a corporation formed by a political
subdivision. Therefore, in my view, the Risk Pool is subject to the Open
Meeting Law, a circumstance that I believe further evidences its character
as a “public entity” for purposes of applying A.R.S. Section 12-821.01.

B. Public Records Law

¶44 Similarly, I would hold that Arizona’s Public Records Law
apply to the Risk Pool. Our supreme court has said that “access and
disclosure is the strong policy of the law[.]” Carlson v. Pima Cnty., 141 Ariz.
487, 491 (1984). As such, in the absence of a specific legislative exemption,
the Public Records Law applies to every “public body.” A.R.S. § 39-
121.01(B). The Public Records Law define a “public body” as including “any
public organization or agency, supported in whole or in part by monies
from this state[.]” A.R.S. § 39-121.01(A)(2). Here, the Risk Pool is funded
solely by public monies provided by its member-municipalities. Therefore,
I believe it is subject to Arizona’s Public Records Law.

¶45 Where Wagner argues that private corporations and the Risk
Pool are subject to the same statutes requiring ICA and Department of
Insurance regulation—concluding that such regulation is not evidence that
the Risk Pool is a public entity—the Risk Pool’s subjection to the Open
Meeting and Public Records laws provides a compelling counterpoint. The
Open Meeting and Public Records laws are statutes solely applicable to
public bodies, and in my view, the Risk Pool is subject to these laws.
Though the definition of “public entity” under A.R.S. Section 12-820(7) may
differ from that of “public body” in A.R.S. Section 38-431(6)—Open
Meeting Law—and A.R.S. Section 39-121.01(A)(2)—Public Records Law—I
nevertheless view their subjects as inherently related and relevant.

15
 WAGNER v. ARIZONA MUNICIPAL, et al.
Furuya, J., Specially Concurring:

These statutes represent additional regulations by the state, to which
private insurers are clearly not subject. Thus, I find them additional
compelling indicators that convince me that the Risk Pool is a “public
entity” for purposes of the notice of claim statute.

MATTHEW J. MARTIN • Clerk of the Court
FILED: JR

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