Secura v. Sudhoff

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

SECURA SUPREME INSURANCE COMPANY, Plaintiff/Appellee,

v.

MEGAN SUDHOFF, Defendant/Appellant.

No. 1 CA-CV 19-0406
FILED 3-3-2020

Appeal from the Superior Court in Maricopa County
No. CV2018-007919
The Honorable Daniel J. Kiley, Judge

AFFIRMED

COUNSEL

Hill, Hall & DeCiancio, PLC, Phoenix
By Joel DeCiancio and Christopher Robbins (argued)
Counsel for Plaintiff/Appellee

Ahwatukee Legal Office P.C., Phoenix
By David L. Abney
Co-Counsel for Defendant/Appellant

SECURA v. SUDHOFF
Decision of the Court

MEMORANDUM DECISION

Presiding Judge Paul J. McMurdie delivered the decision of the Court, in
which Judge Jennifer B. Campbell and Vice Chief Judge Kent E. Cattani
joined.

M c M U R D I E, Judge:

¶1 Appellant Megan Sudhoff challenges the superior court’s
declaratory judgment in favor of Appellee Secura Supreme Insurance
Company (“Secura”). We affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 On June 13, 2015, Sudhoff was injured when a van owned by
Western States Home Services, L.L.C. (“Western States”) and driven by
Western States employee Joseph Gabriel struck her bicycle. Sudhoff sued
Gabriel and Western States in 2016 (the “negligence case”).

¶3 In the negligence case, Western States moved for summary
judgment, arguing that it was not vicariously liable because Gabriel was not
acting in the scope and course of his employment when the accident
occurred. The superior court denied Western States’ motion on November
22, 2017.

¶4 On June 4, 2018, Secura sued Sudhoff and Gabriel for
declaratory relief (the “coverage action”) alleging it was not obligated to
indemnify Gabriel under the insurance policy it issued to Western States
(the “policy”). The judge assigned to the negligence case stayed that case
pending the outcome of the coverage action.

¶5 Secura then moved for summary judgment in the coverage
action, arguing Gabriel did not have permission to drive the van at the time
of the accident. Sudhoff opposed the motion, arguing (1) it constituted an
improper “horizontal appeal” of the summary judgment ruling in the
negligence case; (2) genuine issues of material fact remained concerning
whether Gabriel had permission to drive; (3) Secura lacked standing to
bring a declaratory relief action because it did not intervene in the
negligence case; and (4) the applicable statute of limitations and laches
barred Secura’s declaratory relief claim.

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¶6 The superior court rejected each of Sudhoff’s arguments and
granted Secura’s motion, and Sudhoff appealed. We have jurisdiction
under Arizona Revised Statutes (“A.R.S.”) section 12-2101(A)(1).

DISCUSSION

¶7 On review of a grant of summary judgment, we determine de
novo whether any genuine issues of material fact exist and whether the court
correctly applied the law. Sign Here Petitions LLC v. Chavez, 243 Ariz. 99, 104,
¶ 13 (App. 2017). We view the facts and reasonable inferences in the light
most favorable to Sudhoff as the non-prevailing party. See Rasor v. Nw.
Hosp., LLC, 243 Ariz. 160, 163, ¶ 11 (2017). Summary judgment should be
granted only “if the facts produced in support of [a] claim . . . have so little
probative value, given the quantum of evidence required, that reasonable
people could not agree with the conclusion advanced by the proponent of
the claim.” Orme Sch. v. Reeves, 166 Ariz. 301, 309 (1990).

¶8 The policy provides that Secura

will pay all sums an “insured” legally must pay as damages
because of “bodily injury” or “property damage” to which
this insurance applies, caused by an “accident” and resulting
from the ownership, maintenance or use of a covered “auto.”

The policy defines “insured” as follows, in relevant part:

The following are “insureds”:

a. You for any covered “auto,”

b. Anyone else while using with your permission a
covered “auto” you own . . . .

¶9 We construe insurance policy provisions according to their
plain and ordinary meaning. Cal. Cas. Ins. Co. v. Am. Family Mut. Ins. Co.,
208 Ariz. 416, 418, ¶ 5 (App. 2004). If a provision is susceptible to different
constructions, we discern its meaning by examining its purpose, the public
policy considerations involved, and the transaction as a whole. Id.

¶10 The terms quoted above are consistent with A.R.S.
§ 28-4009(A)(2), commonly known as the “omnibus statute,” which
requires that all motor vehicle liability policies issued in Arizona “insure
the person named in the policy as the insured and any other person, as
insured, using the motor vehicle or motor vehicles with the express or

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implied permission of the named insured.” We construe the omnibus
statute broadly in favor of providing coverage for permissive drivers. Hille
v. Safeco Ins. Co. of Am., 25 Ariz. App. 353, 354 (1975). But it was Sudhoff’s
burden to present facts showing Gabriel had the permission necessary to
trigger coverage. Home Ins. Co. v. Keeley, 20 Ariz. App. 200, 202 (1973).

A. Secura Established That Gabriel Did Not Have Permission to
Drive the Van at the Time of the Accident.

¶11 Secura presented an affidavit from Western States’ owner
stating (1) Gabriel was not scheduled to work or on-call on the day of the
accident; (2) Western States had never assigned Gabriel any jobs in Tucson,
where the accident occurred; (3) Western States did not receive any service
calls in Tucson on the day of the accident; (4) Gabriel did not ask for and
was not given permission to use the van on the day of the accident, and
(5) Gabriel had never requested permission to use a Western States van for
personal reasons. Despite the affidavit, Sudhoff contends she established
genuine issues of material fact about whether Gabriel had permission to
drive the van at the time of the accident and, therefore, whether he was an
“insured” under the policy.

1. Gabriel’s Statement in the Police Report Is Not Admissible
Evidence.

¶12 Sudhoff first cites Gabriel’s statement to the police that he
“was going to a job” when the accident occurred. The superior court
excluded this statement as inadmissible hearsay. See In re 1996 Nissan
Sentra, 201 Ariz. 114, 117, ¶ 6 (App. 2001) (“In ruling on a party’s motion for
summary judgment, the trial court should consider those facts that would
be admissible in evidence.”). We will not disturb its evidentiary ruling
absent an abuse of discretion. Ogden v. J.M. Steel Erecting, Inc., 201 Ariz. 32,
40, ¶ 34 (App. 2001).

¶13 The statement is hearsay, as Sudhoff offered it to prove its
truth. Ariz. R. Evid. (“Rule”) 801(c). Sudhoff contends Secura waived all
hearsay objections by citing the police report in its statement of facts. But
Secura did not attempt to offer Gabriel’s statements; it only cited the report
to contend Western States did not see the statement until after litigation had
commenced.

¶14 Sudhoff also argues the statement is admissible as a statement
of a party-opponent under Rule 801(d)(2). See State v. Griffith, 247 Ariz. 361,
363, ¶ 7 (App. 2019) (“If the record includes statements made by an
opposing party and is offered against that opposing party, those statements

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are not hearsay.”). But she did not offer the statement against Gabriel, the
party who made it; she instead offered it against Secura. 1

2. Evidence of Other Permissive Uses of Western States Vans
Does Not Create an Issue of Material Fact.

¶15 Sudhoff also cites record evidence that (1) Western States
allowed its employees to take company vans home to drive to service calls;
(2) Western States sometimes permitted employees to drive company vans
for personal reasons; and (3) the company handbook “envisions permissive
use of vehicles.” Taking this evidence as accurate, as we must in reviewing
a grant of summary judgment, it does not suggest Gabriel had either
express or implied permission to drive the van at the time of the accident.

¶16 Indeed, Sudhoff presented no evidence to refute Secura’s
evidence that Western States did not assign Gabriel a job in Tucson—or
anywhere else—on the day of the incident; nor did she present evidence
that Gabriel had express permission to use the van on the day of the
incident. See Ariz. R. Civ. P. 56(c)(3)(B)(ii) (party opposing summary
judgment must file a statement “specifying . . . those facts that establish a
genuine dispute or otherwise preclude summary judgment”).

3. There is not a Presumption of Permission in this Case.

¶17 Sudhoff also contends in her reply brief that “[u]nless there is
contradicting evidence, the driver of an automobile causing damage or
injury by its negligent operation is presumed to be using the automobile in
the business of the owner and therefore with his permission.” Hille, 25 Ariz.
App. at 355. In Hille, the owner testified that he had given the driver
“permission to use the car as her own without qualification and trusted her
judgment in permitting other persons to drive the car.” Id. On that basis, we
affirmed summary judgment to the plaintiff on the issue of permission.

¶18 Sudhoff concedes that the owner’s affidavit rebutted the
presumption stated in Hille, but argues her evidence created a factual
dispute. As noted above, Secura presented undisputed evidence that

1 Sudhoff also contends the residual exception of Rule 807 applies, but
she did not raise this argument below. She has waived it for purposes of
this appeal. See K.B. v. State Farm Fire & Cas. Co., 189 Ariz. 263, 268 (App.
1997).

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Gabriel did not ask for and was not permitted to use the van on the day of
the accident.

B. Secura Did Not Pursue an Improper Horizontal Appeal.

¶19 Sudhoff next contends Secura’s summary judgment motion
was an improper horizontal appeal of the ruling denying summary
judgment to Western States in the negligence case. “The policy against
horizontal appeals . . . forms part of the general concept of law of the case
as applied to decisions of the same court.” Powell-Cerkoney v. TCR-Montana
Ranch Joint Venture, II, 176 Ariz. 275, 278 (App. 1993). A party seeks a
horizontal appeal by asking a second trial judge to reconsider the decision
of the first trial judge in the same matter when no new circumstances have
arisen in the interim, and there is no other reason to reconsider the decision.
Id. at 278–79. The goal is to “eliminate . . . the practice of bringing
substantially the same motion before different superior court judges in the
hope of eventually finding one who will make a favorable ruling.” Mozes v.
Daru, 4 Ariz. App. 385, 389 (1966).

¶20 Assuming without deciding that this case and the negligence
case constitute the same matter, the denial of Western States’ motion in the
negligence case did not preclude Secura from seeking summary judgment
in this case. See Mozes, 4 Ariz. App. at 389 (stating that the horizontal appeal
prohibition “did not preclude the other two defendants from making a
similar motion and having it heard before any judge to whom the matter
was regularly assigned”). Sudhoff contends we should consider them to be
the same party because Secura is defending Western States in the
negligence case. She cites no authority, however, suggesting a liability
insurer and its insured should be treated as one party when a tort action
and a coverage action are pending.

¶21 Moreover, while the two motions cited many of the same
facts, they did not present the same issues. See Powell-Cerkoney, 176 Ariz. at
279 (“We criticize horizontal appeals because they waste judicial resources
by asking two judges to consider identical motions . . . .” (emphasis added)).
Western States’ motion focused on vicarious liability and whether Gabriel
was acting within the scope and course of his employment. Secura’s
motion, in contrast, sought a determination whether Gabriel was an insured
under the terms of the policy. Accordingly, Secura’s motion was not an
improper horizontal appeal.

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C. Secura Had Standing to File This Declaratory Relief Action.

¶22 Sudhoff also contends Secura lacked standing to file the
coverage action because it did not intervene in the negligence case. She cites
no authority for this position. The declaratory judgment statute authorizes
“[a]ny person interested under a . . . written contract” to “have determined
any question of construction or validity arising under the . . . contract . . .
and obtain a declaration of rights, status or other legal relations
thereunder.” A.R.S. § 12-1832. A justiciable controversy exists if there is “an
assertion of a right, status, or legal relation in which the plaintiff has a
definite interest and a denial of it by the opposing party.” Keggi v.
Northbrook Prop. & Cas. Ins. Co., 199 Ariz. 43, 45, ¶ 10 (App. 2000) (quoting
Samaritan Health Servs. v. City of Glendale, 148 Ariz. 394, 395 (App. 1986)).

¶23 Secura contends it is not obligated to cover Gabriel as an
insured under the policy; Sudhoff alleges that it is. Secura thus had standing
to pursue this declaratory relief action.

D. This Action Is Not Time-Barred.

¶24 Sudhoff next contends this action is barred by the two-year
limitation period for tort claims. A.R.S. § 12-542. Arizona does not have a
specific limitation period for declaratory relief actions; we, therefore,
“examine the substance of the action to identify the relationship out of
which the claim arises and the relief sought” to determine the appropriate
limitation period. Deutsche Bank Nat’l Tr. Co. v. Pheasant Grove LLC, 245 Ariz.
325, 330, ¶ 17 (App. 2018) (quoting Canyon del Rio Inv’rs, L.L.C. v. City of
Flagstaff, 227 Ariz. 336, 341, ¶ 21 (App. 2011)). 2

¶25 Secura seeks a declaration that Gabriel was not an “insured”
under the policy—a question of contract interpretation. The most
comparable limitation period thus is the six years for claims based on a
written contract. A.R.S. § 12-548. Sudhoff contends Secura could have

2 Secura cites Kepner v. Western Fire Insurance Co., 109 Ariz. 329
(1973) for the proposition that an insurance coverage declaratory relief
action “can be filed at virtually any time.” We disagree. Kepner stated in
dicta that “a testing of the insurer’s liability may take the form of a
declaratory judgment brought in advance of the third party’s action or
proceedings on garnishment following the trial of the third party’s action
as in the instant case.” Id. at 331. It did not authorize insurers to file
declaratory relief actions on coverage questions at any time.

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pursued declaratory relief as early as May 2016 because “it was clear there
was a dispute over Gabriel’s permission to drive” the Western States van.
Assuming this is true, Secura’s suit, filed in June 2018, was timely.

¶26 Sudhoff also contends laches bars this action. “Laches will
generally bar a claim when the delay [in filing suit] is unreasonable and
results in prejudice to the opposing party.” League of Ariz. Cities & Towns v.
Martin, 219 Ariz. 556, 558, ¶ 6 (2009) (quoting Sotomayor v. Burns, 199 Ariz.
81, 83, ¶ 6 (2000)). Delay alone is not enough; we also must “examine the
justification for delay, including the extent of plaintiff’s advance knowledge
of the basis for challenge.” Id. (quoting Harris v. Purcell, 193 Ariz. 409, 412,
¶ 16 (1998)). The party arguing laches also must show prejudice either to
itself or to the administration of justice. Id. We review a court’s laches
decision for an abuse of discretion. McLaughlin v. Bennett, 225 Ariz. 351, 353,
¶ 5 (2010).

¶27 Sudhoff contends Secura’s delay caused her to have to
“defend again against the same permission-to-drive summary-judgment
motion she defeated in the [negligence case].” But Secura contends—and
Sudhoff does not dispute—it had no reason to seek declaratory relief until
she tried to default Gabriel in the negligence case. It appears from the record
that Secura filed its complaint five days after Sudhoff moved for the entry
of default against Gabriel. We cannot say Secura unreasonably delayed in
seeking declaratory relief.

Attorney’s Fees and Costs on Appeal

¶28 Secura requests its attorney’s fees incurred in this appeal
under A.R.S. § 12-341.01(A), which permits a discretionary award to the
successful party in an action arising out of a contract. Sudhoff opposes the
request contending she did not contract with Secura and she defended
against Secura’s summary judgment motion in good faith. See Scottsdale
Mem’l Health Sys., Inc. v. Clark, 164 Ariz. 211, 217 (App. 1990) (“One of the
factors a trial judge can consider is whether assessing attorney’s fees against
the unsuccessful party would cause an extreme hardship.”).

¶29 In our discretion, we decline to award attorney’s fees. See
Grand Real Estate, Inc. v. Sirignano, 139 Ariz. 8, 14 (App. 1983) (“The
[statutory] language is permissive, leaving the awarding of attorney’s fees
to the court’s discretion.”). Secura may recover its taxable costs incurred in
this appeal upon compliance with Arizona Rule of Civil Appellate
Procedure 21.

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CONCLUSION

¶30 We affirm the judgment.

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

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