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Preston v. Kindred Hospitals West (3/24/11)

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We reported the Court of Appeals decision here. Read that blog first. The Supreme Court affirms the Court of Appeals’ opinion.

The Court first tells us that Preston was the Billy Preston – apparently a musician of some note some decades ago who backed The Beatles. We’d normally point out that this is completely irrelevant to anything but the opinion isn’t bad otherwise so we’ll chalk it up to the innocent expression of some personal enthusiasm of Justice Bales. Rock on.

Next, the Court tells us that “Whether Rule 17(a) requires a plaintiff to show that a failure to name the real party in interest resulted from an understandable mistake or difficulty in identifying the party is an issue of first impression in Arizona.” Well, yes, but then so are lots of other cases arguing that a statute or rule means something other than what it says. That surely isn’t enough to merit review. Perhaps the difference here is that Preston relies on a line of federal cases, which the Court thinks it worth taking the time to say that Arizona won’t follow.

Its substantive analysis of that is as follows: “Having considered the federal cases, we decline to engraft requirements onto Rule 17 beyond those reflected in the text of the rule.” Once again our Court hearkens back to an older school of opinion writing in which courts expressed their opinions by expressing their opinions, not by labored scholastic argument. But it also points out that not all federal courts follow this interpretation anyway and that even those that do wouldn’t necessarily impose the drastic sanction of dismissal when substitution is possible.

Regarding the State Bar Committee note to Rule 17 that supports the federal interpretation, the Court points that a comment cannot change the clear text of a rule. The value of the comments, apparently, is that they “may clarify a rule’s ambiguous language.” Maybe. But we’re talking about a committee that writes rules. Wouldn’t it be better to write unambiguous ones in the first place? Or has rule-writing become one of those things characterized by compromises that one side or the other tries to “win” in a committee report? If so, why does the Court accept such rules?

The Court next addresses an argument that for some reason didn’t show up in the appellate opinion: the relationship between changing defendants under Rule 15 and changing plaintiffs under Rule 17. The Court finds this “not particularly relevant,” though, apparently because Rules 17 and 15(c) each handle separately the issue of relation-back. This doesn’t give the issue as much attention as it may deserve but we’ve not seen the briefs to know how extensively it was developed.

Finally, Kindred raised the spectre of abuse if amendments were liberally allowed under Rule 17. The Court says that the trial court can deal with this in its discretion; it may refuse amendment in cases of “undue delay, dilatory action, or undue prejudice.” The opinion then takes this back by saying basically that substituting one representative plaintiff for another with the same claim wouldn’t ever prejudice anyone.

(link to opinion)

Blevins v. GEICO (CA1 3/24/11)

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(LATER NOTE: This is opinion was amended by another issued on July 28, 2011. The only difference appears to be the deletion of a couple of sentences (from paragraphs 22 and 25) regarding the use and effect of DOI forms, about which one of the parties presumably raised some quibble. For purposes of our analysis the changes are inconsequential.)

A.R.S. 20-259.01(B) requires a written offer of UIM coverage. The issue here is whether it also requires a written denial. The answer is “no.”

When Blevins bought his car insurance from GEICO it gave him a written offer. He refused the coverage but didn’t sign the form saying so. After being in an accident he claimed UIM; GEICO denied it; he sued. The trial court gave him summary judgment; this opinion reverses.

An earlier case (State Farm v. Ash) had decided this issue for the insurer. But since then the statute has added two sentences.

Since 1992 the statute has said “The selection of limits or rejection of coverage by a named insured or applicant on a form approved by the director shall be valid for all insureds under the policy.” The trial court apparently focused on this, interpreting it as requiring a written denial on the written form. But the Court of Appeals points out that the sentence does not explicitly require a written denial nor even that a form be used. The Legislature could have done so had it wished, as it has with other insurance statutes, e.g., 20-259.01. The legislative history and a Supreme Court case indicate that use of the written form – including a written denial – is one method of demonstrating compliance, not the only way to comply with the UIM requirement. The sentence relates to an effect of using the form, namely, that the policyholder’s UIM choice applies to all insureds.

Since 2003 the next sentence of the statute has said “The completion of such form is not required where the insured purchases such coverage in an amount equal to the limits for bodily injury or death contained in the policy.”  This, Blevins argued, means that the form is required otherwise. But the court says that the 2003 sentence relates only to the 1992 sentence, under the last antecedent rule (“a qualifying phrase [is] applied to the word or phrase immediately preceding as long as there is no contrary intent indicated”). In other words, the sentence means that the purchase of maximum UIM coverage is valid for all insureds whether or nor a state-approved form is used.

The Department of Insurance has taken the position that it must approve the forms used to offer UM/UIM coverage. But an agency’s interpretations are advisory only; “to the extent it conflicts with our interpretation, we do not find [the Department’s] interpretation controlling.

(This will cause some consternation since there are efforts already underway to attack some companies’ UM/UIM selection forms based on the Department’s interpretation.)

The rule in Ash therefore still applies. The denial of UIM need not be in writing.

The Court remands with instructions to enter judgment for GEICO.

(link to opinion)

Neeme Systems v. Spectrum Aeronautical (CA1 3/24/11)

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Rule 55 requires that notice of default be given to the attorney of a represented party. This plaintiff tried to base a $750,000 default judgment on not doing that, with predictable results.

Spectrum (in Utah) and Neeme (in Arizona) had a falling-out over a contract. Spectrum sued Neeme in Utah; Neeme sued Spectrum in Arizona. Spectrum didn’t appear in Arizona and Neeme took default judgment. Neeme sent copies of the application for default to Spectrum itself but not to Spectrum’s lawyer in Utah. On Spectrum’s motion, the trial court set the default aside. Neeme appealed. The Court of Appeals affirms.

Neeme argued that the Utah attorney wasn’t going to appear in the Arizona case. But the rule says “attorney,” not “attorney who is going to appear in the case.” The court emphasizes the facts that Neeme knew of the the Utah lawyer and that he represented Spectrum in the same dispute out of which Neeme’s case arose. And it limits its holding to that set of facts, declining to rule on various scenarios that Neeme apparently proposed – whether, for example, the rule means all of multiple lawyers, or in-house counsel, or lawyers working on matters unrelated to the subject of the dispute.

Neeme also argued that Spectrum had unclean hands because Neeme had announced that it would sue Spectrum on a particular day and Spectrum filed its suit the day before. Spectrum thereby, you see, “force[d] Neeme to litigate in a foreign forum.”  We don’t know whether the increasing ability of lawyers to make outrageous and even simple-minded arguments with a straight face arises out of an increase in attitude or an increase in ignorance, or both. In any event, the court treats the argument with at least as much respect as it deserves, making some comments about the meaning and effect of equitable defenses and also that the unclean hands have to arise out of the same transaction.

(link to opinion)