Arizona Appellate Blog

This case’s only apparent contribution to the law is to confuse it.

BYS sued Smoudi for breach of contract and took default. There followed some email correspondence between him and BYS’s counsel about his either answering the suit or settling it. He did neither but eventually filed (apparently pro se) a pleading called “Application for Default Entry of Default, Request for Time Extension,” explaining why he hadn’t answered (basically, the dog ate his homework) and asking for more time. With it he paid the Answer fee. BYS filed a response.

BYS then moved for judgment. The trial court granted it without hearing, based on counsel’s sum-certain affidavit, and later denied Smoudi’s motion to set it aside. Smoudi appealed.

The Court of Appeals holds that the entry of default was effective because Smoudi hadn’t filed anything within ten days of the default notice as required by Rule 55(a).

(But Smoudi raised on appeal a new argument – that default should be set aside under Rule 55(c) because the service was invalid. “[B]ecause the trial court did not rule on this issue” the Court of Appeals does not, either, and says that Smoudi may raise it on remand. These things are dealt with mostly in a series of footnotes, which were apparently given as much thought as most footnotes are. The court forgets to explain why, the default being valid, not filing an explicit Rule 55(c) motion, and not filing a Rule 12 motion, and not raising the argument in the motions he did file that gave him ample opportunity to do so, and not giving the trial court the chance to “rule on the issue” didn’t waive anything.)

Smoudi also argued, though, that his “Application for Default Entry of Default, Request for Time Extension” was an appearance that entitled him to notice of the default-judgment hearing under Rule 55(b)(2); BYS didn’t disagree, contending instead that no hearing was necessary under 55(b)(1) because the amount was a sum certain. But 55(b)(2) requires notice and hearing whenever an appearance has been made. Failure to give notice renders the judgment void.  The court therefore sets it aside and remands.

(Having earlier said explicitly that setting aside a default judgment requires showing a meritorious defense, another thing the court forgets to explain is that that isn’t true when the judgment is void. That’s the key here, since Smoudi didn’t come close to showing a defense.)

In part (a small part, but a part), the blame for this case lies with Rule 55(b). Its division into two subsections was not artfully done and a poorly-worded amendment in 1984 made things worse. An incautious reader could miss, or misunderstand, the fact that subsection 1 deals with a specialized subset of cases conditioned by subsection 2. But don’t wait for improvement; the Supreme Court doesn’t encourage the amendment of rules merely because they’re badly worded, perhaps because someone might ask why it approved them in the first place. Instead, be cautious, read carefully, and – the real moral here – opt for a hearing if there’s any doubt. Many lawyers try to avoid them because they’re a hassle compared to filing an affidavit. But that’s penny-wise, as BYS discovered by losing its judgment and 2 1/2 years of interest.

Having complained about other footnotes we should mention that footnote 5 is an interesting one, if only because of its extraneousness. In it the court mentions, apparently sua sponte, the Maricopa County procedure that the clerk does nothing to enter default (other than to file the plaintiff’s application for it). “The Smoudis raise no challenge to this Administrative Order or the procedure it implements,” so the court raises the issue merely for the sake of raising it. Given such cases as American Asphalt this is perhaps an invitation, though one could argue that the County’s procedure is more an insult to the intent of the rule than to its strict wording.

This opinion adds nothing substantive to the law, so presumably the excuse for publishing is to call attention to an issue (Rule 111)(b)(2). What it mostly calls attention to is its sloppiness.

(link to opinion)

This case about proof of medical causation should get some attention.

Plaintiff’s wife died while under Advanced Cardiac’s care. Its expert testified (the court having denied a motion in limine to exclude it) that Advanced didn’t cause the brain hemorrhage that killed her and that any number of other factors could have caused it. After a defense verdict, Plaintiff appealed.

Her argument was that the expert shouldn’t have been allowed to say what else “could” have caused the hemorrhage because doctors are allowed to testify only to what is medically probable.

The Court of Appeals holds that this applies to plaintiffs because they have the burden of proof. Defendants can elect merely to attack the plaintiff’s evidence, which can be done with possibilities. To require probabilities of defendants would shift the burden. The court concludes, citing and discussing cases from other jurisdictions, that this is the majority rule. Allowing the evidence was therefore not an abuse of discretion.

This is a pretty nice opinion. Its discussion of the facts is, by CA1 standards, commendably short. It dispenses with a standard-of-review paragraph, instead neatly mentioning the standard when stating its conclusion. And it manages to discuss a large number of cases in a brief and efficient way (which several of our judges seeming can’t). It would be ungrateful of us to point out that it has too many footnotes.

(link to opinion)

This dispute between insurers shows that you need to be careful drafting your Damron paperwork – unless you can convince the Court of Appeals to give you a do-over.

Roman was injured in an accident at a road-construction site on the Loop 101. He sued the general contractor (DBA Contracting) and the Arizona DOT. The situation was routine: subs were required to add the general to their insurance policies while DBA had excess coverage. DBA tendered the defense to subcontractors. They refused it. DBA and the ADOT did a Damron that involved stipulating to a judgment, paying some of it, and assigning their rights (and that of Colorado Casualty, DBA’s insurer, which paid its part of the settlement) to Roman.

Colorado Casualty then sued the subs and their carriers to recover what it had paid. Roman  intervened, arguing that Colorado Casualty had assigned its rights to him, and filed cross- and counterclaims against it and the subs/insurers (which did not include a bad-faith claim). Roman and Colorado Casualty then settled with everyone except subcontractor Safety Control and its insurer, Employers’ Mutual, against which they moved for summary judgment. They hadn’t worked out their own differences yet but agreed to do so after judgment on the merits. The court granted summary judgment, awarding money and saying “Roman and Colorado Casualty shall resolve their dispute concerning this award amongst themselves.”  Safety Control and Employers appealed.

They argued, firstly, that the judgment wasn’t valid because the real party in interest wasn’t identified. The court said that the purpose of the rule (17) requiring a real party in interest is to let the defendant know what defenses it has, and that since the appellants hadn’t been prevented from raising anything the judgment was valid. An issue that would have interested us – how a defendant can be bound by a judgment that can’t be satisfied – apparently wasn’t raised (perhaps the claimants had offered some sort of escrow arrangement).

Employers also argued that the Damron was collusive because Colorado Casualty agreed to defend DBA when Employers refused to and that the agreement was therefore intended not to protect DBA from liability but merely to shift liability for the settlement from Colorado Casualty to Employers. The court ruled that an insurer can’t escape the consequences of denying its contractual obligation simply because another steps in, and that the agreement shifted the liability for settlement to where it should have been in the first place.

The court next holds, however, that there is an issue of fact about whether the judgment “arose out of” Safety Control’s operations, a coverage requirement. Nothing in the judgment, the agreement, or the record established in any detail how the accident occurred or why Safety Control was negligent. But for some reason the court remands with directions that the trial court “shall conduct whatever proceedings it deems appropriate to resolve that issue.” The opinion does not explain why this particular summary-judgment appeal merits special remand instructions (nor why the Damron parties can’t end-run them with some redrafting).

The opinion also addresses a few issues relevant on remand but unimportant for purposes of precedent.

The court finishes by denying everybody’s request for fees “without prejudice to a request for fees incurred in this appeal to be filed by the prevailing party on remand before the superior court.” In other words, Colorado Casualty could get fees for losing an appeal caused by its own failure to make a proper record.

Is this the new standard? When the Court of Appeals finds that an issue of fact prevents summary judgment does it now remand for a specific finding and make a fee award that can charge an appellant money for successfully pointing out that its opponent wasn’t entitled to judgment the first time? The theory, apparently, is that winners below are entitled to a Mulligan but that winners above can be penalized for making them take it.

(link to opinion)

This discovery dispute involves the extent of a trial court’s jurisdiction over a related administrative proceeding.

The plaintiff, Crain (Buttrick is John Buttrick, the Maricopa County judge; this is a special action), was a railroad employee injured on the job. He sued the railroad under the FELA. His union’s collective bargaining agreement with BNSF requires injured employees to submit certain medical notices regularly. After he filed suit Crain stopped doing so. BNSF scheduled an administrative hearing into this “misconduct” by its employee, under procedures authorized by federal railway-labor law and the contract. Crain countered with a motion for protective order asking the court to rule that BNSF couldn’t require the notices or discipline him for not submitting them. The trial court ruled that he didn’t have to submit them but could be disciplined if he didn’t participate in the hearing. He didn’t; BNSF fired him and filed this special action.

The Court of Appeals holds that the administrative proceedings, “which are conducted under the auspices of the Railway Labor Act, 45 U.S.C. §§ 151-164, fall outside the scope of actions that the superior court is granted jurisdiction to entertain.”

The parties apparently argued the case on the basis that the Act either did or didn’t preempt State authority. The Court of Appeals says that preemption is not the issue because all that’s in the state court is a personal-injury case, not the regulated employment matters. “The pertinent question, therefore, is not what the court can and cannot do under the Railway Labor Act, but whether the trial court’s jurisdiction extends to the conduct of an independent proceeding with a dignity of its own.” The answer is no, the court can’t interfere with the administrative proceedings any more than the administrative hearing officer could interfere with the court case. “Although Arizona courts have broad powers, both express and inherent, to control the course of their own proceedings, those powers do not create jurisdiction to control independent proceedings conducted under the authority of a separate sovereign.”

Along the way the court says that Crain had produced all “necessary documents” required by the Rules of Civil Procedure but that BNSF’s insistence on contractual notices was not a “mere pretext” for getting more because it needed information regarding possible accommodations for Crain’s alleged disabilities. The court did this as a further, and unnecessary, way to distinguish one of Crain’s cases. The impulse is one we see from time to time: to insist that justice, not merely law, is on your side. (That the two must be the same – and that if they are not then we might as well retire all the judges and go back to being ruled by tribal elders – is a point sometimes elusive.) But the court makes clear that its holding is based on law, not facts. If a court doesn’t have jurisdiction then logically it would seem to be for the administrative proceeding to decide whether a contractual request is proper.

(link to opinion)