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Marquez v. Ortega (CA1 2/28/13)

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 We love to blog these cases about why you, too, could need malpractice insurance.

Plaintiff sued for her husband’s wrongful death, represented by counsel in Arizona and California. The parties established and continued discovery/disclosure deadlines several times. Plaintiff blew the last deadline for disclosure of witnesses and experts and then tried to move to extend it; the trial court denied that. Plaintiff moved for rehearing; the court denied it and denied a “culprit hearing” (to establish whether the fault was the lawyers’ or the client’s). California counsel blamed Arizona counsel and got a new one, who filed a disclosure of witnesses and experts anyway; the trial court struck that. The case went to trial; Plaintiff lost; she appealed the discovery rulings.

She made two arguments: the delay was harmless since no trial date had been set and the court should have held a culprit hearing. The Court of Appeals affirms.

The first argument was based on Allstate v. O’Toole (1995). Those who’ve been around long enough may remember that one. It was the case in which Tom Zlaket told us that the Zlaket Rules would not, after all, radically transform Arizona practice, contrary to the prognostications of “expert” lawyers and judges and article writers and CLE speakers for many months before the rules were adopted. Under Allstate “good cause” in Rule 26 incorporated the no-harm-no-foul approach applied to the discovery rules (and which was promptly plugged expressly into Rule 37). So the civil law continues to coddle the lazy, the sloppy, and the stupid; little wonder that their ranks swell. We do this, you see, to “protect” the clients – protect them, that is, from good lawyering.

But we digress. In Allstate a failure to make timely disclosure was harmless because there were some extenuating circumstances and no trial date had been set. Here there was really no excuse and the vogue in Maricopa County is now to set a trial date only after discovery is finished so that point is less relevant.

Whether a culprit hearing is necessary depends on “the circumstances in general” (that’s a wonderfully clear and coherent factor, don’t you think?), the type and severity of the sanctions, and the trial court’s knowledge of the facts. This trial court knew that the lawyers were the culprits but didn’t order a “dispositive sanction,” i.e., dismissal, so he didn’t need a hearing. Why ordering a trial without witnesses and experts wasn’t in this case dismissal by another name isn’t clear.

(link to opinion)

Champlin, et al. v. Bank of America (CA2 1/31/13)

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This opinion clarifies something about how to take default and then decides to throw a lawyer under the bus.

When a house burned Allstate interpleaded the claim payment because various parties disputed who should get it.  The other parties answered but the bank didn’t; Allstate took default. The bank eventually appeared and moved to set it aside, presenting evidence that its copy of the application for default wasn’t sent to it until weeks after Allstate’s default application said it was and after default had been entered. Allstate didn’t object. The other parties did; though they didn’t successfully dispute the bank’s claim of delayed notice they argued that the bank had ten days after receiving that delayed notice to answer and hadn’t done so. The trial court denied the motion; the bank appealed.

The Court of Appeals reverses. The trial court “erred as a matter of law by concluding that a delay in mailing the notice would not necessarily invalidate the entry of default and preclude a default judgment.” In other words, delayed notice invalidates the default. Rule 55 says that default will be effective ten days from the filing of the application. And at one point it characterizes its provisions as requiring “notice prior to the entry of default.” Therefore, “the notice must be provided either before, or simultaneously with” the filing of the application. “A delayed notice . . . does not comply with the terms of Rule 55(a).” The argument that delayed notice simply delays the ten-day grace period is “logical” but not consistent with the rule. If the notice is delayed then the application must be re-filed.

(We say that Rule 55 “at one point characterizes’” itself as requiring notice before entry because that part – 55(a)(5) of the present version – is a summary reference to other provisions that don’t specifically say that, though they may certainly mean it. That kink in the rule was, as usual, not caught in its recent revision. But that revision was for bureaucratic convenience – adopting the Maricopa County practice of not requiring the clerk to do anything on default – so it is of course entirely understandable that no thought whatever was given to mere legal issues.)

The court says that when the bank brought up the discrepancy about the notice date Allstate’s counsel, as part of her duty of candor, should have told the court what she knew about that rather than “simply” not object to the motion. The court – deliberately, it seems – suggests that not objecting was an admission that something was wrong with the default application when a moment’s thought would show that Allstate wouldn’t, for reasons both practical and legal, contest the motion in any event. As for counsel’s duty, we wonder whether a party argued that or whether it was just the court’s churlish idea. What is a lawyer supposed to know about when some piece of paper actually went out of the office? Was she supposed to make an investigation to support one side or the other on a motion her client clearly didn’t care about and wasn’t involved in?  The court admits that the parties didn’t start arguing about the date on her default affidavit until appeal – so how did she have a duty to give testimony on a non-issue that wasn’t before the court?  And if the parties framing the issues wanted more information from Allstate, what stopped them from getting it?

(link to opinion)

Tumacacori Mission Land Devt. v. Union Pacific Railroad (CA2 1/30/13)

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This res judicata case could have been short, clear, and helpful.

Tumacacori sued to establish a prescriptive easement over a Union Pacific line. UP moved for summary judgment. The trial court granted it and the Court of Appeals affirmed. After that Tumacacori moved to amend its Complaint to assert other easement theories. The trial court denied the motion; Tumacacori appealed.

The Court of Appeals affirms. It is black-letter law that a final judgment makes all claims that were or could have been brought res judicata. Tumacacori tried to argue that res judicata doesn’t apply in equity, which the court dismisses easily.

But the court doesn’t seem to feel that that’s quite enough so it adds other things, none of which are useful.

For example, the court points out that Tumacacori did not file a Rule 60(c) motion. But what difference would that have made? On what basis could the trial judge possibly have granted that motion? Its true that setting aside the judgment can be a way around res judicata but that isn’t the court’s point – it mentions 60(c) “preliminarily,” before even starting its res judicata analysis. So what is the court’s point? Goodness knows.

Tumacacori argued that the judgment was on the issue of prescriptive easement. The court points out that UP’s summary-judgment motion also dealt with easements by implied necessity. But so what? The court admits that its opinion in the first appeal talked about prescriptive easements. The point of res judicata – i.e., the point of this case – is that it doesn’t matter what was actually argued since everything that could have been argued is also concluded.

UP used the term “res judicata.” The court includes a footnote to say “We use the more modern term ‘claim preclusion’ instead of res judicata.” The court is apparently proud of that, which is depressing. The movement by law professors to replace the established terms “res judicata” and “collateral estoppel” with the the bland and confusing “claim preclusion” and “issue preclusion” – which are less, not more, descriptive of the concepts – has been followed in the practice largely by those whose grasp of what any of them means is sometimes less than clear. We wish the courts could be prouder of knowledge than of modernity.

(link to opinion)