Author Archives: unknown

Assyia v. State Farm (CA1 3/22/12)

Posted on by

This case holds that a claim for breach of an insurance contract sounds in contract for purposes of a fee award.

Assyia, hurt in a car accident, made an underinsured-motorist claim against her carrier, State Farm. She wanted her limits, $50,000. State Farm thought the claim worth only $2,000 and paid that, whereupon Assyia sued. During discovery it turned out that some big, contested charges were related to the accident after all. So State Farm paid the remaining $48,000. The court then found Assyia the prevailing party in a contested action arising out of contract and awarded $19,000 in costs ($400 an hour, in case you’re curious) under 12-341.01. State Farm appealed the award.

It argued primarily that the claim sounded in tort, not contract. The purpose of UIM coverage is to put the insurer in the tortfeasor’s place, so claiming the coverage is functionally the same as suing the tortfeasor, right? But the contract, not the accident, was the cause of State Farm’s liability; it otherwise had no duty to Assyia.

State Farm argued that the action wasn’t “contested” after the facts about the contested charges came out. But its Answer had denied liability and it also contested the fee award.

The company pointed out that the policy states that “Regardless of the amount of any award  . . . we are not obligated to pay any amount in excess of the available limits under this coverage . . .” But 12-341.01 is also part of the contract as a matter of law.

State Farm also disagreed with some details about the size of the fees and made one or two other, minor arguments that aren’t really worth your time.

Its not as if State Farm doesn’t have an argument here. But as carriers have abandoned the requirement to arbitrate UIM claims (they originally thought that arbitration would save them money; at the moment they mostly don’t; eventually they’ll change their minds and policies back again; that’s the way these things work) careful defense counsel have for some time been pointing out to them their probable exposure under 12-341.01. In any event, State Farm has never been shy about litigating questionable causes; its various counsel over the years may have lost more appeals than any other single set of civil lawyers in Arizona.

(link to opinion)

Best v. Miranda (CA1 3/15/12)

Posted on by

A standard commercial case with, nevertheless, a couple of lessons in it.

Best had an option to buy Miranda’s property, which he could exercise by paying the full purchase price. He gave Miranda two written notices of his intent to exercise the option but didn’t pay the money. The option then expired. Best sued Miranda for not conveying the property to him.

Commercial-litigation folks will recognize a classic: the guy who wants to exercise an option now and pay for it later. That’s why contracts, like this one, tend to make it clear that you can’t do that. The trial court granted Miranda summary judgment.

On appeal Best, who represented himself, argued that there was an oral understanding that he could exercise the option merely by giving notice. The Court of Appeals points out that that’s barred by the Statute of Frauds. Best next argued the duty of good faith but that doesn’t require the exercise of an option contrary to its terms.

Finally, Best argued that summary judgment was improper because reasonable people could reach different conclusions, as shown by the fact that the trial court had granted summary judgment both ways. What happened was that Best had originally moved for summary judgment and Miranda then had the matter stayed pending resolution of litigation by the State AG’s office against Best arising out of several similar transactions. Miranda therefore hadn’t responded to Best’s motion. So the Superior Court, true it its traditions of efficiency and excellence, granted it. Miranda had to get that set aside; then, after the stay was lifted, he filed his own motion, which the court also granted. The opinion says that the first doesn’t count since it was a mistake and in any event the appellate court determines de novo (not italicized in the opinion; we’ve given up on figuring out what rules or style book they use for that sort of thing) whether there’s an issue of fact.

The first lesson here is that while Miranda was theoretically correct not to file a response over a stay, leaving that loose end caused problems. If there’s a reason not to respond, its safer to file a one-sentence explanation  of why not; nobody’s going to object if this technically violates a stay. Remember those twin rules: never count on your opponent to make a mistake and never count on the bureaucracy not to. It will be just your luck to get some eager young clerical type who worked at Subway last month but is now in charge of your case because her uncle in Parks and Recreation got her a County job.

Miranda requested attorneys fees. The opinion refuses them because he cited no authority to support the award. Then other lesson, then, is to cite authority for your fee request no matter how obvious the reason is. We’ve mentioned this before since it’s a common problem but apparently somebody wasn’t reading us that day.

The back story, by the way, is that Best got options from a number of Phoenix homeowners in aid of some proposed development and then, when that went south, sued everyone in sight and got sued himself, which cases are at various stages of appeal. The court released this as a memo last month but has now made it an opinion, for reasons we don’t know.

(link to opinion)

The Salvation Army v. Bennett (CA1 3/2/12)

Posted on by

A minor piece about corporate attorney-client privilege.

Bennett was injured at a Salvation Army day camp. The SA’s lawyers hired a private investigator to take statements from the witnesses – including SA employees and volunteers – a couple of weeks after the accident. Bennett sued. HIs lawyers took everybody’s deposition but also requested production of the statements; SA objected that the statements were privileged and work product. The trial court ordered the SA to “redact the work product” and produce them. (The Court of Appeals assumes, perhaps charitably, that he meant redact the mental impressions, etc. of counsel.) The SA took this special action. (You wouldn’t at first know that it was a special action since court names it using only the name of the real-party-in-interest. That’s an improvement over naming the judge, which we’ve complained about several times before, but why not just say “Superior Court,” as we used to before the rule was changed to require that the judge be identified in the caption on the pleadings, so that people can spot the posture of the case right away?)

The Court of Appeals starts by noting that work product and privilege are separate issues that apparently weren’t analyzed separately below. It discusses work product first.

Work product does not apply to privileged items. Work product is prepared in anticipation of litigation and is discoverable only on a showing of substantial need and an inability to obtain the information otherwise. Having told us that, the court tells us that its irrelevant, at least to the employee’s statements, because they’re privileged, an issue it only then proceeds to analyze. (In fairness to the court, the odd structure of the opinion might be its way to avoid having to say that the trial court didn’t understand the issue and used the wrong law. The court implies that the parties confused things but there was a day when trial judges knew the law of evidence; we mean no special blame to this particular guy, by the way, that’s just a sign of the times.)

The attorney-client privilege statute, 12-2234, includes a lawyer’s “paralegal, assistant, secretary, stenographer, or clerk” and protects communications with employees in order to provide legal advice to the corporate client. That covers the employee statements. (Bennett didn’t argue that a PI is not an “assistant.” That argument has apparently been generally given up, though the statute says “stenographer” because law offices used to be cautious enough to take statements themselves, going to the client’s office with court reporter in tow. As with many other things, that wise bit of lawyering was insufficiently “cost-effective” for the non-lawyers who nowadays control, on both sides, how cases are handled.)

As to the interviews of the SA volunteers, the statute applies to employees and “agents.” The court says that the record doesn’t show  whether the volunteers were agents so it remands.

(link to opinion)