This is a commercial landlord/tenant case that probably reaches the right result but in the wrong way, with possible consequences for the law.

Malecki leased an office from Desert Palms, with a right to renew “so long as [he] is in compliance with the terms” of the lease. Desert Palms asked him to move out so that it could take over his space. He declined and announced that he intended to renew the lease. The next month he got a letter from Desert Palms saying that it had mistakenly calculated the square footage of the office, that the office was larger than he was paying for,  and that he owed some $8000 in back rent. Squabbling followed, during which Malecki gave notice of renewing his lease. Desert Palms replied that he could pay all the disputed amount to avoid being evicted immediately but that his lease would not be renewed in any event.

Was this one of those half-clever landlords who think themselves legally cunning? Who knows. The opinions’ recitation of the facts is loaded in favor of Malecki, going out of its way to explain and justify his actions. Those with commercial landlord/tenant experience will read between the lines and guess that there was more going on than meets our eye but by the end of the fifth paragraph its pretty clear who the hero and villain of the opinion are.

Malecki sued for a DJ and a TRO (which the court granted), and for breach of contract and of the duty of good faith and fair dealing. Desert Palms counterclaimed for the alleged back rent. At trial (a bench trial, apparently), the court found that although the space actually was larger than he had been paying for, Malecki was in compliance with the lease when he renewed it and that Desert Palms’ claim was a bad-faith contrivance to get him out of the space. The court awarded Malecki his attorney’s fees, reduced by the amount of back rent it found he owed.

Desert Palms appealed. The issue was whether Malecki was sufficiently in compliance with the lease to exercise the renewal option.

Desert Palms argued that Malecki could not renew unless he was in strict compliance with the lease, citing law to the effect that there must be strict compliance with the terms of an option agreement. The Court of Appeals swallowed the bait, proceeding as if the question were how “strict” “strict compliance” must be. It first discussed a 1947 federal case holding – although this doesn’t seem to be quite the way the court understood it – that “faithful compliance “ (the wording of the contract in that case) doesn’t require strict compliance. It then cited an Arizona case called Loehmann’s holding that the statute on a landlord’s right of re-entry, though it says you can do it for “any violation” of the lease, doesn’t mean a trivial violation. Under Loehmann’s , the court says, “a tenant’s right to possession may not be conditioned on perfect performance of a commercial lease.”

Okay, before we get any farther off the beam let’s review the right analytical track. This is a contract case. The basic question is the intent of the parties. To find that you look at the contract language. The contract says “in compliance.” Did the parties mean “strict compliance?” Did they mean “reasonable compliance?” Presumably they never thought about it and the language was boilerplate they paid no attention to.  That means, for reasons that it should not take a court long to explain,  that the contract will be held to have meant “reasonable compliance.” No matter how strictly the law wants to apply the terms of an option provision, “strictly reasonable” is still “reasonable.” A contract that says “faithful compliance” is of marginal interest. The meaning of a statute depends on what the legislature intended and has nothing to do with what the parties to a contract intended.

The court does eventually get back to mentioning, almost in passing, the “in compliance” contract language. But then it says “we view Malecki’s contingent right to renew as analytically similar to the right of possession at issue in Loehmann’s” (par. 24). “Analytically similar?” No, it might be factually similar but the involvement of a statute on Loehmann’s makes it analytically different.

The court also, in a footnote quoting Loehmann’s, lists the Restatement factors for judging the materiality of a breach. This does, arguably, have something to do with the reasonableness of compliance and should have been a better part of the analysis than a parenthetical reference to a problematic case.

The court concluded that substantial evidence supported the conclusion that Malecki did not materially breach the lease and that Desert Palms acted in bad faith.

Desert Palms also disputed the award of attorney’s fees, either for incomprehensible reasons or for reasons that merely sound so in the opinion.

Is it now the law that “a tenant’s right to possession may not be conditioned on perfect performance of a commercial lease?” Before now we would have said that the parties to such a contract, though they probably wouldn’t do so, had a perfect right to agree to such a thing.

This is a forum non conveniens case but it doesn’t add anything to the law and depends on its specific facts. Had it affirmed rather than reversed, surely the opinion would not have been published.

The failure of a Continental tire allegedly caused a rollover that killed two people and injured four others. The people involved were from San Luis, Arizona (some citizens, some resident aliens), the tire had been sold and mounted in Arizona, but the accident happened in Sonora, Mexico. Plaintiffs sued Continental and its dealer in Maricopa county; Defendants moved to dismiss on grounds of forum non conveniens, arguing that the case should be heard in Mexico. Incredibly, the trial court dismissed.

The Court of Appeals reversed.

Under forum non conveniens, the defendant must show that the case can be brought elsewhere. The parties argued about whether the Mexican statute of limitations would permit suit there but the court assumed that it would, basing its decision on the conveniens part rather than the forum part.

Defendant must show that the foreign forum is the more convenient place to litigate. This includes the convenience both of the parties and of the court (or, as the court put it, “private interest factors” and “public interest factors,” using the pretentiousness typical of courts doing what they please to call deep legal thinking). These Defendants argued that some witnesses were in Mexico and couldn’t be brought here to testify. The Plaintiffs argued, and the court agreed, that the Mexican witnesses were relatively unimportant compared to the many American witnesses who would be called and that testimony could be taken from Mexican witnesses under the Hague convention. (While that may theoretically be true, it can take a long time; more likely, folks will arrange some depositions in San Luis.)

As for “public interest factors,” Arizona obviously has an interest in a case concerning damages to residents caused by a product sold here. The court treated Mexico’s interest as minor; if the opinion is to be believed, Defendants apparently argued for Mexico’s interest by presenting articles about the crash from Sonoran newspapers. (Actually, to our understanding Mexican courts would insist that they had a great interest in an accident on Mexican roads but Defendants don’t seem to have done much to explore or argue that.) Defendants also argued that the docket is crowded in Maricopa County; the question, said the court, is whether the docket is less crowded in Mexico, i.e., whether Plaintiffs could get a speedier trial there, and Defendants had presented no evidence on that.

The court awarded Plaintiffs their costs on appeal, and properly so. There was no slightest possibility that on these facts Arizona would send the case to Mexico; Defendants did well to sell the idea to one level of the judiciary.

Forum non conveniens can work but you need pretty strong facts. When the facts are weak and the smell factor strong – obviously, nobody here was really concerned about anybody’s convenience or anything other than whether Mexican or American law would apply to the claim – the court is not going to have much sympathy. Defense counsel made a lot of money doing this but this is a house-counsel sort of idea so we’ll assume that’s where it came from.

Can a motion for New Trial make an otherwise unappealable judgment appealable? We would have thought the answer intuitive.

Plaintiff’s filed a five-count Complaint; Defendants counterclaimed. Defendants obtained summary judgment on three of Plaintiffs’ five counts. Plaintiffs then attacked that ruling with a motion for New Trial. The court denied that and Plaintiffs appealed.

The judgment in the court below was a partial judgment without Rule 54(b) language. The opinion takes a surprising amount of time pointing out that you can’t appeal one of those. (This tendency to explain basic principles at length is common in opinions, almost as if – not that we’re suggesting anything, you understand – they were drafted by people who hadn’t practiced law much.)

But the appeal wasn’t from the summary judgment, it was from an order denying a new trial. Aha, a loophole!

No. The ruling on a New Trial can be appealed under A.R.S. 12-2101(C) — “from any special order made after final judgment.” You need a final judgment. Plaintiffs here didn’t have a final judgment, so they couldn’t appeal the New Trial order. The opinion takes three pages to say that, but that’s all it adds up to.

The opinion points out that a case called Mezey said all this just six years ago. But the court was spooked by the fact that a later Supreme Court opinion in another case disapproved of some things Mezey said about a different part of the appeal statute. So Santa Maria treats Mezey as if it were slightly radioactive, saying that the result here “is compelled” not by Mezey’s precedent but by its “reasoning.” 

Perhaps that was the reason for publishing this opinion. Unless the court thinks there’s something wrong with Mezey, Santa Maria adds nothing to the law.