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Duncan v. Progressive (CA1 6/9/11)

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This one of those occasional cases in which the Court of Appeals uses its discretion to consider a matter not raised below.

Duncan sued Progressive’s insured for a car accident but he died before she could serve him. She got the probate registrar to appoint a special administrator solely to accept service, telling the court that defendant had no heirs. She served him but the defendant’s estate did not appear so she took default. Progressive intervened to contest the sufficiency of service. It moved to dismiss the negligence case, arguing that service was no good because the insured did have heirs (whom Duncan had never contacted) and that the appointment was improper for other reasons. The accident-case judge granted the motion.

The Court of Appeals holds that the motion to dismiss was an improper collateral attack on the probate order appointing the special administrator. Duncan hadn’t raised the issue in the trial court. The appellate court decided to review it anyway because an “issue involving orderly judicial administration is a matter of statewide public importance” and this was a pure issue of law on undisputed facts.

The court quotes a case to the effect that “a decree in the probate court has . . . the conclusiveness inherent in a judgment of a common law court and, therefore, may not be collaterally attacked.” This is interesting since the Marvin Johnson case later said essentially that the probate court is a common-law court (we’ve expressed our feelings about Johnson before.) In any event, even if there were some defect in the appointment the place to attack it was the probate court (as Progressive had started to do and then, for reasons not explained, switched tactics).

LATER EDIT: The court issued an amended version of this opinion on September 27, 2011. The amendment adds a new paragraph — now no. 18 — in which it concludes, addressing another Progressive argument, that the rule against collateral attack also applies to “orders that are not final judgments in the traditional sense,” citing some out-of-state probate cases. The court also took the opportunity to edit the opinion a bit, omitting a few words here and adding a citation there.

(link to opinion)

Continental Lighting v. Premier Grading (CA2 5/31/11)

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This isn’t a fascinating opinion but it introduces law new to Arizona and also illustrates that it’s better late than never even if there’s really no excuse for late.

Lender financed the purchase of property and took a first deed of trust. Contractors then developed the property, noticing their mechanics’ liens appropriately. Lender then refinanced the loan twice (for the borrower’s LLC, to which he had by then transferred the property), taking new deeds of trust each time. Naturally, the L.L.C. then ran out of money to pay anybody. The question in this action to foreclose the mechanics’ liens is whether they have priority over the later deeds of trust.

Lender argued that they didn’t, under the doctrine of equitable subrogation. A perfectly good doctrine – except that it doesn’t apply here. You can’t be subrogated to yourself (the doctrine works when the refinancing comes from a new lender). Contractors presumably pointed that out in their responses to Lender’s motion for summary judgment, for its reply came up with a new argument: the doctrine of replacement. This is apparently not one Arizona appellate courts had dealt with yet. According to the Restatement, if lender and borrower modify or replace their agreement then the new mortgage/deed of trust can retain the priority of the old to the extent not materially prejudicial to junior lienholders. Why Lender hadn’t figured out what its case was before moving for summary judgment isn’t clear but the Court of Appeals accepted the reply as having raised the argument below. (It helped that Lender then moved for reconsideration, asking the trial court whether it had considered the replacement argument, and the court replied that it had considered everything.)

The opinion adopts the replacement doctrine. It holds that Lender has priority to the extent of the principal amount of the first loan (the refinancings were a little larger). Contractor’s argued that it couldn’t because the borrowers were technically different (borrower’s L.L.C. versus borrower himself); the court says that doesn’t make any difference, at least in this case.

(link to opinion)

Winterbottom v. Ronan (CA1 5/26/11)

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An attempt to use the Victims’ Bill of Rights to prevent depositions in a civil case.

Defendant was sued for molesting girls named in the caption and in the opening of the opinion but thereafter referred to as Crime Victims. (Reminds me of when people refer to the guy who “allegedly” shot Judge Roll; for many the use of labels is a process that need never involve the brain.) Defendant’s Lawyer withdrew because his bills didn’t get paid. Defendant then found money somewhere and settled the case for a judgment that said $2.2 million but was really for $111,000 plus a third of the recovery in Defendant’s malpractice case against Lawyer. Defendant then sued Lawyer (for reasons unclear, apparently something to do with discovery). Lawyer’s counsel subpoenaed Victims for deposition; they moved for protective order on the basis of being victims. The trial judge prohibited questions about the molestation but otherwise allowed their depos.  They took special action.

The Victims Bill of Rights prohibits depositions and discovery by or for the defendant. “We start (and end) our analysis with the language” the court says  (but of course doesn’t really mean – it starts by explaining at length that statutes and the constitution mean what they say). Lawyer wasn’t acting by or for Defendant. (Daughters apparently tried to argue that he really was, that their dispute was phony, maybe just a ruse to take a prohibited deposition; the court disagrees in a factual finding disguised as a footnote. Daughters presumably failed to explain why they contracted to buy a third of a phony dispute. The various ethical issues in this case are interesting but unremarked.)

Victims also objected, under Rule 26(C), that the depositions would be embarrassing and oppressive. The trial court’s limitations in response to that were within his discretion.

The court declines to rule on whether the Victim’s Bill of Rights applies “beyond the end of a criminal case.”

(link to opinion)