Monthly Archives: November 2012

Flores v. Martinez (CA2 11/20/12)

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The parties so tangled this appeal that the court decided to take a Gordian Knot approach.

This is a divorce case. The parties were divorced in 2008. In 2011 the court modified the decree but in a way that nobody liked: Husband moved to amend that order and, less than an hour later, Wife appealed it. The trial court later denied Husband’s motion in an unsigned minute entry but, in a memo, the Court of Appeals dismissed because the motion had been pending when the appeal was filed.  After the memo came out Wife got the trial court to sign an identical minute entry and appealed it.

Yes, she appealed the denial of Husband’s motion rather than the modification order. She appealed the wrong order.

The court’s solution is to decide that her appeal is invalid anyway. The mandate from the first, dismissed, appeal hadn’t come down when Wife obtained the signed order and filed the second appeal. An appeal does not end until the mandate issues, no matter what the resolution of the appeal is. The trial court therefore had no jurisdiction to sign the order. The court concludes that Wife “could not appeal from it.” That elides the reasoning a bit since it suggests that a judgment entered without subject-matter jurisdiction isn’t appealable. But the alternative is to produce an appellate decision that either merely vacates the entry of the order, which accomplishes nothing and is an even bigger “gotcha” for Wife, or pretends that Wife appealed the right order, which she clearly and specifically didn’t.

Husband didn’t catch either of Wife’s mistakes; the court addresses jurisdiction sua sponte. Apparently he was vaguely aware that something was wrong with the second appeal but his response was to move to dismiss it on res judicata grounds. Generously, the court merely notes this without analyzing it.

Keep in mind, by the way, what happened here: the trial judge knew perfectly well that the case had gone up on appeal because that’s why he was being asked to sign another order. But nobody checked to see if the case had come back down yet. Nowadays you can’t rely on the court to know what its doing; the court will rely on you, instead – so you have to assume that the trial judge will sign anything that isn’t objected to.

(link to opinion)

Sun Valley Ranch v. Robson (CA1 11/20/12)

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Here’s one about an arbitration clause that all drafters of contracts will need to remember.

A limited partnership was formed to build and operate a HUD apartment project. The partnership agreement had an arbitration clause. The partnership entered into a contract with HUD to build the project, with one of the partners as the builder. When the project was later sold the partners disagreed about how to split up the money; this lawsuit resulted. Defendants argued that the arbitration clause applied. Plaintiff argued that most of its claims arose out of the construction contract and that some of them weren’t arbitrable in any event.

The Court of Appeals holds that all claims are subject to arbitration.

The first issue is whether an arbitration clause in one contract can apply to another than doesn’t have such a clause.

The court follows a federal district court case from Kansas, the "analytic framework” of which is “consistent with Arizona law.” What that means or why its true the court does not explain. The Kansas case says that when the language of an arbitration clause in one contract is broad enough to apply to claims from another then whether it actually does apply depends on our old friends, Factors.

Here, the clause covered “any” dispute “arising out of or relating to” the partnership agreement. That, says the court, is broad enough. (Have you ever seen an arbitration clause that wouldn’t be?)

So the court then turns to the factors. The first is “whether the agreements incorporate or reference each other.” The partnership agreement incorporated the construction agreement; the construction agreement did not incorporate the partnership agreement. The court concludes that “standing alone, this factor is neutral, though it demonstrates the related nature of the two agreements.” What?? That one contract doesn’t incorporate the other is “neutral?” So let’s get this straight: both incorporate each other, that’s “positive”; neither does, that’s “negative”; one does and the other doesn’t, that’s “neutral.” That sort of thinking is fine in electrical engineering but this is supposed to be law. Except that under the court’s analysis there isn’t really any “neutral” because even purported neutrality “demonstrates” support of its conclusion.

The next factor is whether the agreements are dependent on each other or relate to the same subject matter. Here the plaintiff did itself no good; the allegations of its Complaint essentially alleged that the construction contract was part and parcel of the partnership agreement.

Factor three is whether the arbitration clause specifically excludes certain claims. How is that different from the threshold breadth-of-language analysis? Apparently the court doesn’t know, either, since it doesn’t analyze this factor.

The last factor is whether the agreements were executed closely in time by the same parties. Here, they were.

So the court concludes that the arbitration agreement in the partnership contract applies to claims under the construction contract.

What does the court not analyze? What does it not use to interpret the contracts? The intent of the parties. The word “intent” does not appear in the opinion. So much for all those silly cases that tried to tell you it was important. Using Factors courts can engineer any conclusion they deem best.

The next issue was whether certain claims could be heard by an arbitrator.

The plaintiff tried to argue that its unjust-enrichment claim had nothing to do with the partnership agreement. After a dozen pages talking about how interrelated they are, though, the court wasn’t going to let that fly.

More serious was how an arbitrator could appoint a receiver and dissolve the partnership. The Revised Uniform Arbitration Act (12-3001 et seq.) allows an arbitrator to order “interim” remedies, which the court thinks a receiver is. As to dissolution, the court finds a thirty-year-old Michigan case that allowed an arbitrator to dissolve a partnership. The statute (29-345)says that the Superior Court can dissolve a partnership but that doesn’t “suggest,” you see, that the power is exclusive. (In fairness, one might argue that the non-judicial dissolution statute – 29-344 – signals that the legislature would agree; but the court doesn’t – it doesn’t mention it.)

(There was also an issue about whether parties not technically signatories to the contracts could insist on arbitration but the court’s holding on this isn’t particularly novel or surprising.)

(link to opinion)

Yanes v. Maricopa County (11/13/12)

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We blogged this one the other day but the court has now issued a “modified” opinion. Why? Well, as usual, there’s no explanation. But the new opinion omits one sentence from a footnote. Why? Presumably because the sentence misattributed a First Circuit Case to the Ninth Circuit and used that to support its conclusion about a certain point.

It would have been quicker and clearer to issue a brief order modifying the opinion to exclude the sentence (a bit like the “errata pages” inserted in old books). But courts won’t do things that way since it would emphasize mistakes rather than hide them. And since some of those orders would have to do a lot more than omit one insignificant error.

(link to opinion)