APPELLATEOPINIONS 015 CASES OF NOTE APPELLATE OPINIONS Yanni v. Tucker Plumbing November 20, 2013 AZ Court of Appeals, Review denied April 22, 2014 www.appeals2.az.gov/Decisions/CV20130024%20Opinion.pdf Mike Ludwig, Chris Pierce and Jon Barnes obtained a win at the Arizona Court of Appeals. Plaintiffs, who were Arizona homeowners, sought statewide class certification and sued under an implied warranty theory for damages sustained to their homes due to the installation of allegedly defective brass plumbing fittings by the defendant plumbing subcontractors. In lieu of suing the homebuilders directly, Plaintiffs chose to sue the Defendant subcontractors, Tucker Plumbing. Defendants moved for summary judgment arguing that because Plaintiff lacked privity of contract with Defendants, such a claim could not stand. The trial court agreed and granted the motion. The Arizona Court of Appeals affirmed. In a published decision, the court concluded that Plaintiffs could sue the developer, general contractor, or vendor, but refused to expand the privity exception to include suits against subcontractors. This decision finally settles the long-running dispute whether homeowners can sue subcontractors directly for breach of an implied warranty, absent a contract. The answer is no. Read the complete article on pages 10-11. Munoz v. Indus. Commission of AZ February 10, 2014 AZ Court of Appeals www.apltwo.ct.state.az.us/Decisions/IC20130001%20 Opinion.pdf JSH lawyers Greg Folger, Lori Voepel, and Jennifer Anderson recently scored an important workers’ compensation law victory for employers and insurance carriers. In Munoz v. Industrial Commission of Arizona, Division Two of the Arizona Court of Appeals reaffirmed the rule that earnings for services performed as an independent contractor are not included in the average monthly wage (AMW) calculation. Munoz injured her shoulder while working part time for Sonic Restaurants. Her AMW was set at $1,570.68, which included wages from Sonic and concurrent earnings from a home improvement store. Munoz challenged the AMW calculation, claiming that prospective earnings from her horse training business should have been included. At the time of her injury, Munoz had signed contracts with horse owners to train and rehabilitate their horses, but she had not yet performed or been paid under the contracts. The Administrative Law Judge (ALJ) concluded that (1) the horse training contracts represented prospective income that could not properly be calculated as AMW; and (2) because the horse training contracts described an independent contractor relationship, any earnings under the contracts were not subject to the Workers’ Compensation Act and thus not properly calculated as AMW. On these grounds, the ALJ excluded the prospective horse training earnings form Munoz’s AMW calculation. On Munoz’s petition for administrative review, the court of appeals first reaffirmed the rule that because independent contractors are not subject to the Act, it would be improper to include a claimant’s concurrent self-employment earnings in the AMW calculation. See Wheeler v. Industrial Commission, 22 Ariz. App. 488, 490, 528 P.2d 874, 876 (1974). The court next analyzed the relationship between Munoz and the horse owners. It concluded that Munoz was an independent contractor rather than an employee based on the various indicia of control outlined in Home Ins. Co. v. Industrial Comm’n, 123 Ariz. 348, 350, 599 P.2d 801, 803 (1979). Therefore, the court concluded Munoz’s horse training earnings could not be included in the AMW. Munoz argued for the first time on appeal that she was a “sole proprietor” and sole proprietors potentially are eligible for benefits under the Act. The court noted that a sole proprietor may be entitled to benefits at the discretion of an insurance carrier with whom the sole proprietor applies for workers’ compensation coverage. Munoz, however, produced no evidence that she applied for or obtained coverage for her horse training business. Because the court concluded that Munoz was an independent contractor, it never reached the issue of whether her prospective earnings were properly excluded from the AMW calculation. Munoz filed a Petition for Review with the Arizona Supreme Court, which the Court denied on May 28, 2014.