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)

 

Apache Produce v. Malena Produce (CA1 8/12/19)

This nice opinion, a case of first impression that has the taste not to boast of it, concerns an interesting issue regarding injunctive relief.

Plaintiff and Defendant are rival Nogales produce importers. Plaintiff was in litigation in Mexico with a certain Mexican grower about whether it had a contract to distribute the grower’s produce; Plaintiff said it did, the grower said it didn’t. When the grower hired Defendant Plaintiff brought this case for intereference with contract and unjust enrichment, seeking damages and injunctive relief. It applied for a TRO and a hearing on a preliminary injunction. Defendant then moved to stay the case, apparently until the Mexican litigation was resolved. The trial court granted the stay without ruling on the injunctive issues. Plaintiff filed a special action, which the Court of Appeals declined. So Plaintiff filed an appeal.

12-2101(A)(5)(b) permits appeal from an order “refusing to grant . . . an injunction.” Plaintiff argued that by not ruling on the injunction the trial court refused it. Defendant argued that the court didn’t refuse it but instead merely deferred it until after the stay. There is no Arizona authority on point. Because preliminary injunctions are to provide speedy relief from irreparable injury, the court concludes that by indefinitely postponing it the trial court had effectively denied it. Cases from other jurisdictions are to the same effect.

On the merits the court holds that granting a stay to avoid ruling on a preliminary injunction is an abuse of discretion. The factors considered in ruling on the two are different. Using one to dispose of the other employs the wrong legal standard.

A good opinion but one that should never have existed. We have no idea whether Plaintiff deserves a preliminary injunction. But how can a trial court believe that a party’s request for relief could be dealt with by not ruling on it? There is a reason why there was no Arizona authority, and why these cases are few and far between elsewhere. And it isn’t because defendants don’t ever try to stay a case to avoid an injunction.

(Opinion: Apache Importers v. Malena Produce)