Author Archives: unknown

BMO Harris Bank v. Wildwood Creek (1/22/15)

Posted on by

We blogged the Court of Appeals decision here.

The Supreme Court comes to the same result – reversing and remanding the trial court – but vacates the Court of Appeals’ opinion. It does this mostly, it seems, to remove from the law that opinion’s “special concurrence” (or, more generously and possibly more accurately, to remove from the law the confusion that led to the grey area addressed by the concurrence). “For § 33-814(G) to apply, a dwelling must have been completed.” Not just intended, not just started, but completed, overruling Marshall & Ilsley “insofar as it conflicts with our reasoning in this case.”

That sort of open-ended overruling can cause issues down the line but this is such a nicely drafted opinion that we’re not going to pick nits. Justice Bales’ style is often reminiscent of that of Justice, as he then was, Hurwitz – clear, concise, and brief.

(link to opinion)

In Re The Shaheen Trust (CA2 1/16/15)

Posted on by

This case holds that the probable-cause  exception applies to in terrorem clauses in trusts. The result itself is reasonable but the way the court gets there gives us an opportunity to complain.

The Shaheen Trust contained a clause invalidating the interests of those who challenged it. Certain beneficiaries did challenge it. They lost but the trial court refused to enforce the clause. The trustee appealed, arguing that it should have.

The trial court essentially concluded that 14-2517 (you can challenge a will if you have probable cause despite a will provision to the contrary) applied to trusts as well (by applying a case – Stewart (2012) – that was based on the statute). So there were three possible issues: does the statute apply, what’s the law if it doesn’t, and, if necessary, was there probable cause?

The court first says that Stewart held that the statute applies only to wills. Actually, though, Stewart dealt with a “Will and Trust,” which is presumably why the trial court thought the case could apply, and it isn’t entirely easy to tell in Stewart where or whether that court meant to limit the statute.

But the court then says that, although the statute doesn’t apply, the Restatement of Property – which “suggests treating no-contest provisions in wills and trusts the same” – does, and therefore no-contest provisions in wills and trusts will be treated the same. This is abrupt and conclusory. The court relies on a comment in the Restatement, not even the black letter; since when have the comments  — this one written by a law professor thirty years ago – become the presumptive law of Arizona? Does the comment reflect the common law or the majority of jurisdictions, or was it just the Reporter’s opinion? Does the court know? Does it care? And the comment (which the court doesn’t quote, though if you look carefully at the cite you can at least spot that its a comment) says simply that there’s no reason to treat wills and trusts differently. What about expressio unius est exclusio alterius? The statute doesn’t say “trusts”; had the legislature thought of a reason to treat them differently? We doubt it, and it doesn’t look like the parties raised the issue. But doesn’t a proper respect for statutory law demand that the issue at least be acknowledged?

Regarding probable cause, the court first concludes that “when a single petition alleges multiple challenges to a will or trust . . . probable cause must exist as to each challenge.” On this point the court then reverses, since the trial court found one of the several challenges here to be without merit. That court found that the challenging beneficiaries had thought it subjectively reasonable but the test is objective reasonableness, for which there was no evidence in the record.

So the court remands for an order invalidating these beneficiaries’ interests.

But wait, there’s more. On another issue entirely, there’s a footnote. The beneficiaries argued that the appeal should be dismissed because the trustee failed to follow ARCAP 13(a)(3) (the brief must indicate the basis of the appellate court’s jurisdiction.) The trustee didn’t cite any statute, she simply said, according to the court, that she was “appealing from a judgment of the superior court [sic].” Then the court says “we believe [that] is sufficient.” The court suggests the beneficiaries’ argument is “hyper-technical” and that it has an independent duty to examine its jurisdiction.

So remember that, at least in Tucson, you don’t have to follow the rule any more unless you happen to have an appeal from something other than a complete and final judgment. The court won’t do anything except to chastise your opponent for raising the issue. Some rules, its seems, are binding and others are hyper-technicalities that can be ignored.

(No, the court shouldn’t dismiss an appeal where jurisdiction exists just because the appellant failed to point out specifically why it exists. And we do question the usefulness of the rule for most appeals. But annulling it by footnote isn’t the answer. We’ve seen briefs kicked back for failing to follow it – for failing to do exactly what this brief didn’t: cite a statute. That’s what the court should have done here. When the beneficiaries faced it with its mistake this court made another – writing something that makes a joke either of its footnote or of the rule.)

(link to opinion)

Everest Indemnity v. Rea (CA1 1/15/15)

Posted on by

The question is whether an insurance company, by defending a bad-faith claim on the grounds of subjective good faith, waives the attorney-client privilege.

The opinion says almost nothing about the facts but it appears that Everest issued a liability policy and then used up its limits settling some but not all of multiple claims, whereupon the disappointed claimants arranged a bad-faith action. Everest, which had consulted with counsel during the settlement process, defended on the grounds of both objective and subjective good faith. The plaintiffs sought production of the lawyers’ communications, arguing that they were relevant to subjective bad faith (apparently acknowledging that Lee (2000) foreclosed waiver claims on the objective side). The trial court ordered production; Everest took special action; the Court of Appeals accepts it and reverses, though there is a dissent.

The court starts by citing Lee for the proposition that merely consulting with a lawyer doesn’t waive the privilege. But “waiver is implied when . . . a party makes an affirmative assertion that it was acting in good faith because it relied on counsel’s advice to inform its own interpretation and evaluation of the law.” The plaintiffs countered with Mendoza (2009), in which the insurer had substantially relied on lawyers to make decisions about how to handle a workers comp claim; that court, mostly in the context of subjective bad faith, allowed discovery of the lawyers’ advice. The court says that the argument “overreads” Mendoza. “To waive the attorney client privilege, a party must make an affirmative claim that its conduct was based on its understanding of the advice of counsel”; merely getting the advice isn’t enough.

“Everest has not asserted as a defense, at least not yet, that it depended on advice of counsel in forming its subjective beliefs regarding the appropriate course of conduct. Similarly, Everest has not yet seen the need to share the advice of its counsel with its own expert — the expert simply cites the fact of consultation as a procedural indication of good faith. As such, Everest has not yet placed the advice it received from counsel at issue in this litigation.” So the court reverses and remands.

The dissent essentially agrees with the majority’s reading of Mendoza. But it points out that Everest’s lawyers also participated in the negotiations to settle the claims that it resolved. “Counsel’s participation, along with Everest’s assertion of subjective good faith, is an affirmative interjection of counsel’s role in formulating and acting upon Everest’s subjective good faith in this litigation.”

We think we can figure out the intended meaning of that sentence, though as written it doesn’t have any. The dissent argues against a “mechanical” application of Lee by which the privilege isn’t waived until the insurer formally takes a particular position; the judge says it “depends on the facts” and feels that counsel’s participation in settlement raises enough of a question to warrant discovery.

Despite the dissent’s acceptance of the majority’s legal analysis, its hard to reconcile some of the language this case with that in Mendoza. One of them “overreads” Lee.

Otherwise this is not a bad little opinion (though the majority opinion is a bit oddly organized). Which is to say that we’re not complaining when we wonder why the majority, while mentioning almost no relevant facts, chose to point out an obscure and irrelevant one: that the policy was an OCIP.

(link to opinion)