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BMO Bank v. Bluff (CA1 5/3/12)

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Can you be held it contempt for saying that you’re going to violate a court order?

A homeowner got a TRO stopping  a trustee’s sale because of defects in the notice. BMO re-noticed the sale. The homeowner argued this violated the TRO; the trial court agreed and awarded him attorney’s fees. BMO took this special action.

The Court of Appeals grants relief. The terms of the TRO blocked the sale of the home. Re-doing the notice wasn’t a sale.

BMO’s attorney had taken the position, until the trial court made clear that he was wrong, that under the new notice he would go ahead with a sale despite the TRO. The Court of Appeals agrees that he was wrong. But Arizona does not recognize “anticipatory contempt.” Intent can change and holding someone in contempt before he’s actually committed it violates the equitable principle of using the least necessary power.

The opinion is only eight pages long, which for this judge is little more than a tweet, but she does get in six footnotes [edited; the original said eight footnotes, sorry about that).

(link to opinion)

Nardelli v. Metropolitan (CA1 5/1/12)

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A case about the allowable extent of punitive damages.

Metropolitan, Nardelli’s auto insurer, refused to total his damaged car, instead paying him for repairs. He sued for bad faith; the jury awarded $155,000 compensatory damage and $55 million in punitives. The trial court reduced the punitive award to 4:1, viz., $620,000. Metropolitan appealed liability and damages.

About two-thirds of this 61-page opinion rehashes the facts to conclude that there was enough evidence to send bad-faith and punitive damages to the jury. Punitives were apparently based on a company policy of being hard on claims to boost profits and adjuster’s incomes.

But the Court of Appeals reduces the punitive award to 1:1 – $155,000.  It analyzes the factors (“guideposts” is the current euphemism; even the courts are beginning to feel guilty about factors) from the U.S. Supreme Court case of State Farm v. Campbell.

“Reprehensibility” is the first one; the court feels that Metropolitans’ conduct on that score was “low to . . . middle range.” 

The ratio is the second factor (oops, sorry; “guidepost”). This court had said in Pope (2008) that 4:1 was close to the constitutional line. But this opinion says that this evidence doesn’t support even that, for reasons the court does not really explain. The fact that compensatory damages were “substantial” ($155,000 for the repair/replacement of a $35,000 Ford Explorer) had something to do with it. 

The third guidepost is the difference between the punitive award and analogous civil penalties. Unfair claims settlement practice penalties are capped at $50,000 every six months. The court then says that other cases that awarded big punitives aren’t like this one. What that has to do with this factor guidepost isn’t clear.

The dissent argues that punitives shouldn’t have gone to the jury since Metropolitan’s actions, though not good, were not malicious or outrageous. Judge Swann basically makes the points that profit motive is not evil and that you shouldn’t turn every repair-or-replace argument into a punitive case.

The majority sheds some crocodile tears over the stress of being a “gatekeeper.” But why don’t we tell the truth? On punitives an appellate court is not just the gatekeeper but the judge, jury, and executioner. Normal judges, juries, and even executioners can live with themselves because they act under the dictates and constraints of a system of law. The stress, if these folks really feel any, comes from knowing that you’re doing these things based on nothing but “factors” some court has pulled out of thin air and that you’re using to justify your emotions about the case.

(link to opinion)

Arpaio v. Figueroa (CA2 4/30/12)

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A significant case about discovery of a defendant’s wealth when punitive damages are alleged.

Plaintiff’s mother died, allegedly as a result of inadequate medical care while in Maricopa County jail. And so, in an action that surely has everything to do with gaining compensation for a grieving daughter and nothing at all to do with politics or publicity, she sued Joe Arpaio and others personally. And, having pleaded punitive damages, she wanted details of all his assets. She admitted that she wasn’t entitled to them before making a prima facie showing but wanted the information sealed and filed with the court so that it would be available as soon as she did so at trial. The trial judge agreed and ordered the defendants to do that. They took this special action.

The Court of Appeals accepted it and grants relief. The opinion is mostly a review of the Larriva case requiring a prima facie showing. Although the information wouldn’t be revealed until after the showing, its compilation, preparation, and filing are themselves burdens that can’t be based on mere allegation. The opinion rejects Plaintiff’s attempt to analogize this to a situation in which information is collected for inspection in camera since in that case it is needed for the court to make a ruling.

The point of the opinion, though, is to say that the court need not wait until trial to rule on whether a showing can be made but should instead do so during discovery or a pretrial conference, “as soon as is reasonably possible,” “through discovery, by evidentiary means or through an offer of proof.”

The court also expressly holds – because this trial judge apparently didn’t think he could do it – that the financial information can be the subject of a protective order. (Apparently the defendants wanted the information sealed and returned after the trial, even if the court allowed the evidence in. The court declines to rule, since the trial judge hadn’t actually done so yet, on whether spectators can be cleared from the courtroom when the financial stuff is presented.)

We don’t know what the court has in mind by including “offer of proof” as a way to judge a prima facie showing. An offer (Rule 103) makes a record, after a ruling, of what a litigant wants to try to prove. An offer made as the evidentiary basis for a trial court ruling is, with all due respect to counsel, little better than an allegation, especially since a punitive allegation is often used to pressure a settlement which, once made, relieves counsel of having to prove what he’s offered.

(link to opinion)