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Diaz v. Phoenix Lubrication Service (CA1 5/4/10)

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This case discusses the issue of duty.

Plaintiff had his oil changed at Defendant’s Jiffy Lube store. A few weeks later he crashed, allegedly because of worn tires. He sued the car people and the tire people, one of whom noticed Jiffy-Lube as a non-party at fault. Plaintiff moved to strike the notice, contending that Jiffy Lube had no duty, but lost and added it as a defendant. He argued that when it serviced his car Jiffy Lube should have noticed, and warned him of, the worn tires .

The trial court granted summary judgment. The Court of Appeals affirmed.

Duty, the court says citing the Supreme Court’s 2007 Gipson decision, depends on the relationship between the parties and on public policy.

The only relationship between these parties was contractual. The court cites a couple recent economic-loss-doctrine cases for the idea that the contract determines the boundaries of liability.  The contract said nothing about looking for tire wear. The fact that the technician could see the tires didn’t imply a obligation to inspect them, even though this court had said something mostly to the contrary in an older case named Reader. The Court of Appeals points out that that opinion had been vacated and doesn’t point out that that had been on other grounds; the real problem is that the Court of Appeals had pretty much pulled that part of Reader out of its hat. But the court adds that Reader isn’t on point anyway since it had to do with a dealer’s work under a manufacturer’s warranty.

As to public policy, the policy is that everyone has a duty to avoid creating an unreasonable risk of harm and those who do create a risk of harm have a duty to use due care. But Jiffy Lube didn’t create the risk of harm. Duty should be limited by the scope of the actual undertaking.

Finally, Plaintiff argued that there was an industry standard to check the tires. But duty is defined by law, not by expert testimony; industry standards relate to when duty is breached but cannot create it.

Comerica v. Mahmoodi (CA1 5/4/10)

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This plaintiff apparently figured that it had its case in a bag when the defendant claimed not to remember anything.

Comerica gave Mahmoodi’s business a line of credit. He essentially maxed it out and then moved the business without telling Comerica. Comerica asked about its status, wasn’t satisfied with the answers, and sued for repayment. The business declared bankruptcy, in the process providing accountings of its receivables that were about 350% less than those it had, pursuant to the contract, provided Comerica in the prior few months. Comerica therefore added fraud to its contract claim.

As the result of a car accident, Mahmoodi lost his memory of his dealings with Comerica.

Comerica moved for summary judgment. Defendants did not oppose it on the contract claim but argued issues of fact on the fraud claim. Comerica apparently contended that it should have summary judgment because it could present a prima facie case to which Mahmoodi, due to lack of memory, couldn’t respond. The trial court agreed.

The Court of Appeals didn’t. A jury could find that there was an innocent explanation for the difference in receivables – namely, that receivables really had fallen hugely in one month. Factually unlikely, perhaps, but this is fraud – the standard is clear and convincing. A jury could also find that the accountings to Comerica were phony but that Mahmoodi didn’t know it (thought the basis for that conclusion isn’t clear from the opinion; Comerica had evidence that he did know). Finally, since Mahmoodi had already gotten the money before the receivable reports in controversy were made, Comerica hadn’t met its “burden of production” (whatever that is) to show that they had damaged it.

Nothing novel here. Why publish it? To remind us that a prima facie case is not the same as a summary judgment case. The opinion might have been useful had the court found a clear way to say that rather than to attempt erudite pedagogy.

Lips v. Scottsdale Healthcare Corporation (5/3/10)

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This case was brought to try to create a new tort: third-party spoliation (i.e. “spoliation” by someone who’s not a party to a lawsuit). As with many cases brought to make legal points, the lawyers win while their client loses.

We blogged the opinion of the Court of Appeals (which, as we suggested then, was written to slide the case to the Supreme Court while not changing the law but also not sticking anybody’s neck out – the bureaucratic mind at work). The facts haven’t changed: Lips got a hip replacement at Scottsdale/Osborn. Part of it broke, requiring its replacement. She wanted to sue its manufacturer but the hospital had thrown the old hardware away, so she sued the hospital for spoliation.

The Supreme Court looked separately at the issues of negligent and intentional third-party spoliation.

The alleged damage to Plaintiff’s cause of action was an economic injury. There is no general duty of due care for the economic – as opposed to physical – safety of others. Plaintiff argued that there should be a “limited” duty because her surgeon told SHC that it had to keep the hardware. But the requests or demands of others do not create duties. (Another way of saying this is that they don’t create rights, which we wish people would remember when “reserving the right” to do something they have no right to do.) In a footnote, though, the court obliquely points out that the hospital could be liable if it had undertaken to keep the hardware and then damaged it.

A tort of intentional third-party spoliation, however, would in the court’s view be perfectly consistent with the law so long as it required a specific intent to damage the plaintiff’s claim. But this plaintiff didn’t allege that and the surgeon’s message wasn’t enough to create an inference of one. “Therefore, even assuming that we would recognize the tort of third-party intentional spoliation,” Plaintiff loses. The opinion upholds the trial court’s dismissal of the claim while vacating what the Court of Appeals had to say about intentional spoliation.

We won’t claim entirely to understand why the court is playing games here. The effect of the ruling is to create a tort of intentional third-party spoliation. If it didn’t want to change the law, the thing to do was to decline review. If it hadn’t realized when it accepted review that this plaintiff couldn’t quite qualify for a new tort then it could – as it has done before in analogous situations – announce that the petition had been improvidently granted. Instead, it approves the tort, defines it, vacates the lower court’s explanation that there is no such tort, but plays coy about whether its going to “recognize” it. The fact is that this is a major change in the law, and it is done by dictum, and if the court is embarrassed by that then – rather than do the deed and try to preserve its modesty with a fig leaf – it shouldn’t have. No matter who signed the briefs.

Stylistically the opinion is clear and relatively short, though its longest paragraph (12) is mostly unneeded. Citations to Doubtful Danny Dobbs or to the cheerful but bibulous Bill Prosser are always red flags but are handled reasonably here.