Tucson Estates v. Estate of Jenkins (CA2 11/12/19)

The defendant didn’t care about this case; it made no appearance at any stage of it. The plaintiff cared mostly about attorney’s fees — but not those in this case, as only a couple of thousand dollars were at issue. The point, as the court suggests between the lines, was to set an easy-fee precedent for its future cases.

Plaintiff, a homeowners’ association, sued Defendant alleging violations of the CC&Rs. Plaintiff took default judgment and submitted a China Doll affidavit for its fees. The trial court awarded fees but reduced them, finding some of the requested fees excessive. Plaintiff appealed. A non-appearance on appeal is normally a confession of error but Plaintiff wanted a precedent set instead, so that’s what the court did: it reviewed the issue and published but set a precedent opposite to what Plaintiff wanted.

Plaintiff argued that the trial court’s ability to reduce the amount evidenced by a China Doll affidavit is limited when there is no opposition to it. Although that sounds dangerous considering the routine effronteries of China Doll affidavits there is decent support for it in some of the language of the precedent, including China Doll itself. The court has to step around that; not all of its steps are equally deft.

China Doll “authorizes a trial court to adjust a fee award ‘upon the presentation of an opposing affidavit.'” But it didn’t involve a situation where no one was available to file one.

McDowell (App. 2007) said that a China Doll affidavit establishes a “prima facie entitlement to fees in the amount requested.” McDowell was an HOA case involving contractual fees. This opinion distinguishes McDowell on the grounds that the CC&Rs in that case gave the HOA a claim to “all” fees whereas Tucson Estates’ give it a claim to “reasonable” fees.

Which leads the court to a conclusion: in order to ensure that the fee awarded is reasonable the trial court has broad discretion to review the fee request despite lack of an opposition. Otherwise, the intent of the parties to the contract could be frustrated.

This is good policy, the court tells us, because limiting the trial court “would incentivize some prevailing parties to overreach in their fee applications.” No, really?

(The irony is that this plaintiff didn’t, at least not much. Some of the items criticized by the trial court seem a bit overstated but others certainly don’t.)

But wait a minute. Is the court really suggesting that its rule doesn’t apply if the fee agreement says “all”? Can a default judgment include an unreasonable fee if the contract is worded correctly? What about the rule that that’s unethical? Isn’t it also against public policy? And if it is indeed against public policy, what is the legal difference between a contract that says “all” and a contract that says “reasonable”?

(Opinion: Tucson Estates Property Owners Association vs. Estate of Jenkins)

Kellin v. Lynch/AmericanWest (CA1 9/10/19)

It used to be that supersedeas bonds were obscure, mentioned only by a brief and vague rule, governed by common law and common sense. Few lawyers knew much about them and there weren’t many cases. Then various interests weaponized them and the legislature had to step in. Now we have a statute (12-2108), and a lengthy rule (ARCAP 7), and various changes in both from time to time. The result is that few lawyers know much about them but this is the tenth supersedeas-bond case we’ve blogged.

This special action is about supersedeas bonds on appeal of garnishment judgments.

Its a small piece of long, convoluted litigation spanning several appeals in which debtors appear to be using every conceivable legal maneuver to avoid paying an out-of-state judgment. The court recounts its history at length. This seems unnecessary — and, though not long by CA1 standards, the opinion would indeed have been better at half the length — but in the end there turns out to be a reason for it.

Creditor garnished two of Debtor’s bank accounts; one held about $70,000 and the other about $400,000. Over Debtor’s objection Creditor took garnishment judgments. Debtor appealed them. She asked the trial court to waive supersedeas bonds under Rule 7(a)(6), the funds in the accounts being their own security.  Creditor argued that bonds were required and appropriate under Rules 7(a)(4) and 7(a)(9). After argument the trial court, citing only Rule “7”, ordered a $50,000 bond for each garnishment judgment. Debtor took this special action.

The Court of Appeals accepted jurisdiction, for reasons mentioned in context below. The record doesn’t know the reasons for the trial court’s order, Debtor having not included in it a transcript of the relevant hearing. So the order will be affirmed if it could have been correct for any reason.

The court now discusses rules 7(a)(4) and 7(a)(9) at some length before revealing that the discussion is unnecessary because those rules don’t apply any more. The new rule, 7(a)(6), has applied since last January. (This rule’s novelty is the court’s reason for accepting special action. That really could have gone the other way; nothing here cries out for immediate interpretation.)

So, Debtor is right about which rule applies. It allows a court to protect the status quo and to protect the adverse party against loss potentially caused by the stay.  The court agrees with Debtor that having the funds protected in the bank accounts protects the status quo. So, since 7(a)(6) — unlike other parts of the rule — is permissive, it would have allowed the trial court to waive the bonds. But the court didn’t and the question is whether the rule allows that.

Creditor argued that bonds were appropriate to protect it from the costs and fees of the garnishment appeals. For some reason the court seems to decide that whether costs and fees can be awarded on a garnishment appeal is an issue that it must analyze. 12-1580E specifically answers the question but the court takes most of a page to get around to saying so. The statute allows costs and fees against the debtor if the court finds that the debtor objected to the writ in order to delay or harass the creditor.

The trial court’s order made no such finding. In most contexts that step isn’t skippable. But the opinion, having suggested that there was a basis for a finding — now you know why it explained the history of the litigation — seems to feel that that’s good enough in this situation. It doesn’t address the issue specifically.

So, jurisdiction accepted but relief denied.

(Opinion: Kellin v. Lynch/AmericanWest)

 

 

 

 

 

Valdez v. Delgado (CA1 9/10/19)

The court makes this simple case sound complicated.

Plaintiff sued for specific enforcement of an oral contract to sell a house, relying on the part-performance exception to the statute of frauds. The trial court denied Defendant’s JMOL; the jury found for Plaintiff; the trial court then denied Defendant’s renewed motion for JMOL. Defendant appealed.

Court of Appeals affirms. On appeal a jury’s findings are accepted unless clearly erroneous; the jury found by special verdict that Plaintiff had done things, which the court recites at length, because of and in reliance on the contract. Whether the facts satisfy the part-performance exception is a conclusion of law that the court makes de novo; the court has no trouble concluding that these facts do satisfy it.

The court, though, apparently doesn’t think this a no-trouble case. “This case requires us to assess the interplay between two standards of review where a legal question is raised on appeal, and reviewed de novo, but the answer to the legal question hinges on the factual findings of a jury, which are reviewed for clear error.” But that’s just a convoluted way of expressing the ABCs of appellate review: findings you accept unless clearly erroneous, legal conclusions you make yourself. Always, not just in this case. The idea that JMOL rulings are reviewed de novo — which is what seems to throw the court off onto this tangent — doesn’t change that. The court’s attempt to “assess the interplay” lasts only a couple of paragraphs (13 and 14) and adds nothing to the law.

Defendant also argued that specific performance was not a proper remedy. While there can be a conceptual argument against specific performance in some statute-of-frauds cases the evidence here was pretty clear. The court agrees that the remedy was appropriate.

(Opinion: Valdez v. Delgado)