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Howell v. Hodap (CA1 5/12/09)

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This is a res judicata case that discusses the effect a federal action has on a state action.

Hodap was a member of the Flagstaff version of those paramilitary anti-drug police units. He and other officers broke into the Howells’ home but apparently didn’t find enough to support a drug charge. (Mr. Howell shot at the officers, which earned him charges for attempted murder and aggravated assault, which were eventually dismissed.) (The opinion lingers lovingly on the details of the break-in; it tells us, for example, about the “halogen tool on the lip of the security door.” We’re afraid to ask why anybody at the court thought that an important fact.)

The Howells filed suit in Yavapai County for violation of their state constitutional rights, state statutory rights, and various torts. They then filed suit in federal court for violation of federal constitutional rights and statues. The factual allegations in both cases were essentially identical.

In the District Court, the Howells lost summary judgment on some of their counts and lost a jury trial on the others.

The defendants then moved for summary judgment in the state court action based on res judicata and collateral estoppel, which motion the court denied. Some of the plaintiffs’ causes of action were thrown out by other motions; others went to trial. The jury found for defendants on all, except that they awarded Mrs. Howell $10,000 for false arrest.

On appeal , the defendants argued that the trial court should have granted their res judicata motion. The Court of Appeals agreed.

The parties agreed that the two cases involved the same parties and that the federal case had gone to judgment on the merits. That left only one element of res judicata to be decided: whether the suits had involved the same claims and causes of action.

The conclusive effect of a federal case is, the court said, controlled by federal law. In the Ninth Circuit, claims are the same if they “arise out of the same transactional nucleus of facts.” For some reason, the court cites a Ninth Circuit case that sets out other elements as well, then cites still more Ninth Circuit cases to establish that the “transactional nucleus” test is the one that really counts. (How, you ask, does a “transactional nucleus” differ from a “nucleus?” We wish courts would ask – and answer – that sort of question.)

The plaintiffs argued that their state constitutional rights were broader than their federal rights. But res judicata depends not merely on what claims were brought but on what claims could have been brought. The state causes of action could have  been brought as pendant claims in the federal case, so the resolution of that case precluded the state claims as well.

This was an example of those two-headed cases – one opinion that’s published and one that isn’t. The unpublished opinion discusses interesting issues, some tied fairly closely to res judicata; it would be interesting to know why the court split one part of the analysis out as a separate opinion. The memorandum opinion also addresses to some extent the other issues raised by filing two lawsuits, which some lawyers appear to think clever.

Quintero v. Rogers (CA1 5/12/09)

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When courts do something like this, shouldn’t they mention it? Life is confusing enough.

The court issued an opinion on this one in November; we discussed it here. A motion for rehearing resulted in this new opinion, which differs from the old in ways you may spot if you use a magnifying glass (the holdings and dispositions are the same in both.) Nowhere does the court mention that this is its second try. It removed the first opinion from its online Opinion Index instantly (though its control over Lexis, etc., is slower). Maybe the court thinks that nobody except the parties will remember having read it before.  Our problem was that we kinda did, and had to go hunting through the databases to make sure that what our partners say about our mental state wasn’t true after all.

How about a footnote, gang, to let us older folks know that we’re not losing our minds?

Hughes Custom Building, L.L.C. v. James Davey and Associates (CA2 5/7/09)

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Having very recently addressed the economic loss rule, Division Two does so again here and manages to muddy the waters pretty completely.

Davey (“JDS”) did soil engineering for a subdivision in Globe. Hughes built some houses there. The houses had serious problems due, allegedly, to bad soil. As a result, Hughes dealt with lawsuits from homeowners, problems with the Registrar of Contractors, its own (unsuccessful) suit against the City of Globe, and substantial legal fees. It then sued JDS for negligence. JDS moved for summary judgment, which the trial court – a Graham County judge visiting Gila – granted. (For some reason, the trial judge then instructed JDS to prepare findings and conclusions; in a footnote, this opinion gently points out that they’re not appropriate on summary judgment and that the Court of Appeals would ignore them.) Hughes appealed.

JDS’s argument was that under the economic loss rule Hughes couldn’t sue for negligence. The economic loss rule, traditionally stated, is that a claim for economic loss that does not involve personal injury or damage to property other than that which was the subject of a contract lies only in tort, not in contract. For example, if you buy a widget that turns out to be broken then your claim is in contract unless the broken widget hurts you or causes damage to some other, “secondary” property.

What property is “secondary” can involve the sort of how-many-angels-fit-on-the-head-of-a-pin metaphysics that has not – as this opinion demonstrates – entirely passed out of the law. When Hughes built houses on the land JDS worked on, did they become part of the land – and therefore subject to the economic-loss doctrine – or were they still separate, and therefore “secondary,” property?

In March Division Two seemed to have simplified the problem in  Valley Forge Insurance v. Sam’s Plumbing, L.L.C. (CA2 3/19/09) (which we referred to briefly here). Under that case, the question turns not on whether the property is “other property” but instead on analysis of three factors: “the nature of the defect, how the loss occurred, and the type of loss for which the plaintiff seeks redress.” Under that analysis, there needn’t even be any “other property” to support a tort claim.

Hughes started with the last factor – the type of loss.  If the loss is economic, the remedy is in contract. But if personal injury or damage to other property is involved, tort liability is appropriate. Therefore, the court said, the question is whether the houses became part of the land or were “other property.”

Wait a minute. Haven’t we just circled back to the traditional economic loss rule? And how does that square with the indication in Valley Forge that the question is not whether there is other property?

In any event, after a page or two of studying metaphysics from other jurisdictions, the court concluded that the houses were separate from the lots. (At this point the opinion mentions that JDS had conceded that at oral argument; one wonders whether the court wanted to bolster its argument with the litigant’s admission or to justify the admission with its argument.) So, factor three justifies a tort claim.

The first factor – the nature of the defect – concerns whether there is an unreasonable danger to person or property or merely a construction defect. The court concluded that bad soil is a danger both to the houses and to their occupants. Factor two justifies a tort claim.

The second factor – how the loss occurred – has to do with whether it occurred suddenly or gradually. This factor, the court explained, might favor a contract claim but was outvoted here by the first two factors.

Therefore, Hughes was entitled to sue JDS for negligence. The court reversed and remanded on that issue. (It upheld the trial court on a couple of issues JDS argued below but didn’t discuss in its brief.)

Where this leaves the economic loss rule is anybody’s guess. The old rule has, apparently, been folded into one of the three Valley Forge factors, which are themselves so clearly and artfully drawn that they have to be addressed backwards, or at least sideways.

(Hughes also argued a “standing” issue but the argument was factually silly and so we won’t waste time on it.)