(link to opinion)

This is the latest in a line of cases demonstrating that a lis pendens is a dangerous thing you shouldn’t file unless you know what you’re doing. But it ends less than disastrously for the lawyer involved.

Lebaron sued five defendants for breach of contract to purchase real property. Kaufman, the defendants’ lawyer, filed a notice of lis pendens before filing his Answer and Counterclaim. (If you don’t understand why that could be wrong then stop, do not pass Go, and read the statute – 12-1191 – and cases carefully before venturing into lis pendens land.) Lebaron moved to quash and asked for damages of $25,000 plus fees and costs. Kaufman’s response acknowledged his mistake. The court granted the motion and ordered Kaufman (not his clients) to pay $25,000. Kaufman released the lis pendens but didn’t pay the money. The trial court entered judgment against him for $25,000 plus $750 in attorneys fees. Kaufman appealed.

Under A.R.S. 33-420(A) one who files an invalid lis pendens must pay not less than $5,000 or triple the actual damage, whichever is greater, plus fees and costs. Kaufman argued that this means $5,000; Lebaron argued that since there were five defendants it means $5,000 times five. Kaufman won the argument. The Court of Appeals decided that the legislature’s intent was that actual damages be tripled and then the greater of that or $5000 awarded. The person who causes the filing is liable so where, as here, only one person caused it the maximum award is $5000 (plus fees and costs).

The opinion also examines the question of whether the trial court was right in finding that only Kaufman, not his clients, were responsible for causing the filing. The statute has been held to have a scienter requirement. Here it wasn’t met since there was no evidence that Kaufman’s clients either told him to file the lis pendens or knew that filing it when he did was wrong.

The affirmed the judgment as modified — $5000 plus the $750.

(link to opinion)

This pleasantly brief opinion about a consumer debt should have perhaps have been a bit longer.

The Fossetts obtained an auto loan from Amtrust; they defaulted and Amtrust repo’d the car. Amtrust later sent them a 1099-C, which they duly reported in their next return, indicating that the debt had been cancelled. Amtrust then sued them on the debt; they moved for summary judgment based on the 1099-C. Amtrust’s response was captioned “Response to Defendants’ Motion for Summary Judgment and Cross-Motion for Summary Judgment” even though its position was simply that questions of fact prevented summary judgment. The opinion mentions this to explain – or to try to explain, since it is otherwise hard to figure out – why the trial court granted summary judgment for Amtrust.

The question on appeal was whether the 1099-C discharged the debt under Arizona law.

The statute, 47-3604(A), says that a party can discharge an instrument “by an intentional voluntary act” or “by agreeing not to sue or otherwise renouncing rights . . . by a signed writing.” Federal regulations require the issuance of a 1099-C under certain circumstances. Even though the form is called “Cancellation of Debt,” though, not all of those circumstances involve cancellation of the debt.  The court explains in a footnote that this is confusing. Amtrust’s collection manager testified by affidavit that this was one of those non-cancellation cancellations.

The court held that the 1099-C was prima facie evidence of cancellation. (Prima facie is officially English now, since the opinion does not italicize it; we’re apparently just old-fashioned.) But Amtrust’s affidavit was, the court said, sufficient to raise a question of fact as to whether it had intended to discharge the debt.

The problem is that the Fossetts had argued the other part of the statute, “agreeing not to sue or otherwise renouncing . . . by a signed writing.”  Why is sending a form called “Cancellation of Debt,” which by the way requires the [former] debtor to pay income tax on the amount forgiven, not “otherwise renouncing . . . by a signed writing? Well, maybe the form wasn’t “signed” for these purposes, though the opinion doesn’t get into that.

The court reversed the summary judgment for Amtrust, though, finding a question of fact as to whether the 1099-C was required by federal regulation in this case. If not, “then that is a factor bearing on whether the Fossetts remain liable for the debt.” What the court presumably means is that in deciding whether Amtrust intended to discharge the debt evidence as to whether it was required to issue the 1099-C is admissible. 

The question in this personal-injury case was whether OSHA regulations can be used as evidence of the standard of care.

Wendland was visiting a building owned by AdobeAir’s landlord; to do so he had to cross industrial space leased by AdobeAir, where he fell into a large pit.

His expert proposed to testify, based on OSHA standards, that AdobeAir had not properly cordoned off the pit. AdobeAir objected, arguing that under a prior Arizona case OSHA standards are irrelevant and that OSHA did not apply since Wendland  was not an AdobeAir employee. The trial court allowed the testimony, with an instruction telling the jury that the OSHA evidence was “for the limited purpose of suggesting standards to protect others from floor openings.”

It was undisputed that OSHA did not technically apply here and the court pointed out that OSHA does not by its terms create a private right of action, requiring instead that personal-injury actions be based on a separate duty. Wendland’s claim was based on AdobeAir’s common-law duty as the possessor of the premises; the parties agreed that he was a licensee. The court decided that “the question is whether [OSHA] regulations were appropriately referred to . . . as some evidence of the standard of care . . .”

The court held that the prior case, named Pruett, was a case about the issue of duty and does not make OSHA irrelevant on the issue of standard of care.

The court then held that “an OSHA standard may be considered as some evidence of the standard of care even when OSHA requirements are not binding on the defendant, so long as there is sufficient foundation (1) establishing that the standard at issue is directly related to the exercise of reasonable care and (2) a reasonable nexus exists between the proffered standard and the circumstances of the injury.” The jury can be instructed appropriately so that it understands that OSHA is not binding but is only one of the factors it can use to to determine whether the defendant was negligent. The court approved the trial court’s instruction but said that “it would have been better if the trial court had explicitly stated that the OSHA standards could only be considered as some evidence of the standard of care.”