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Agency Between County and Nonprofit Performing Essential Govt’l Function

Posted by Ted A. Schmidt | Dec 08, 2015 | 0 Comments

DBT Yuma, LLC v. Yuma County Airport Auth., 726 Ariz. Adv. Rep. 38 (November 24, 2015) (J. Pelander)

COUNTY NOT LIABLE FOR ALLEGED BREACH OF SUBLEASE BY AIRPORT AUTHORITY—ARS §28-8424

The Yuma County Airport Authority [YCAA] leased property owned by Yuma County and operated the Yuma International Airport there for some 50 years.  DBT Yuma subleased property at the airport where it operated Lux Air.  YCAA evicted DBT Yuma [DBT] and gave the sublease to a new tenant.  DBT then sued YCAA and Yuma County for alleged breach of the sublease arguing that ARS §28-8424 rendered YCAA the County's agent and making the County liable for the alleged breach. The trial court granted Yuma County summary judgement and the Arizona Court of Appeals affirmed. The Arizona Supreme Court accepted review and affirmed the trial court and reversed in part the opinion of the court of appeals.

The supreme court noted that under A.R.S. §28-8424(A)(3), a nonprofit corporation that leases airport property from a county "[p]erforms an essential governmental function as an agency or instrumentality" of the county. That said, the court found that the terms “agency” and “instrumentality” are terms of art when applied to corporations such as YCAAA organized under a governmental scheme. In this case the YCAAA is a  "body politic and corporate" entity serving a public function and thus a public corporation. As such a public corporation is a separate entity from a county, city, or town, and is not a subdivision, alter ego or agent of the county in which it is organized.

About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".

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