Cal X-Tra v. W.V.S.V. Holdings (CA1 4/24/12)

If you’ve ever thought our criticisms of long opinions and extended statements of fact overdone, try meandering through this. When the facts and procedural background alone take 34 pages it’s a good bet that eyes will glaze over long before the good part – if there is one. But if you make it to page 55 you find, buried in about fifteen pages in the middle of a 91-page opinion, a statutory-construction issue of first impression, presumably the reason this was published.

The question is whether 29-833 (fees/costs in a derivative action) allows the court to award fees against the defendant or simply allows the derivative plaintiff to take expenses from the damages awarded to the successful entity.

The court first looks to decisions from other states, which take expenses from the award. Only then does it point out that another Arizona statute has “nearly identical” language which has been construed to mean that the derivative plaintiff’s expenses come from the entity’s award. This court seems to like that opinion because it is consistent with what other states say rather than the other way around. The trial court had awarded fees against the defendants, so this opinion reverses that.

We can’t find what’s publishable in the rest of this. It relies on established law and discretionary rulings. Basically, investors in a real estate deal found out – after fighting for the deal through several contract amendments and a couple of lawsuits – that the people managing it for them were trying to steal the property using entities the managers secretly controlled (this is the case you may, for various reasons, have heard about where the estranged wife of one of the defendants gave a plaintiff a disc filled with the incriminating documents). So the plaintiffs sued to undo some things, including some prior judgments. On grounds of extrinsic fraud the trial court let them do so and the Court of Appeals affirms.

There were no doubt a lot of facts to the case. It would have been nice, though, to see someone try to do something more than to lay them all out seriatim, as if this opinion were a trial court’s findings of fact. Otherwise, publishing only the 29-883 stuff would have avoided the needle-in-a-haystack phenomenon. Our readers will recall that we don’t like that practice but its surely the lesser of the evils here.

(link to opinion)