Quiroz v. Alcoa (5/11/18)

We blogged the Court of Appeals’ opinion here. The majority comes to the same result for mostly the same reasons, which it sums up as follows:

“First, duty is not presumed; in every negligence case, the plaintiff bears the burden of proving the existence of a duty. Second, . . . foreseeability is not a factor in determining duty. Third, duty is based on either special relationships recognized by the common law or relationships created by public policy. Fourth, in the context of duty, the primary sources for identifying public policy are state and federal statutes. In the absence of such legislative guidance, duty may be based on the common law — specifically, case law or Restatement sections consistent with Arizona law.”

“Duty is not presumed” means — and this seems to be the main point of the opinon — that the court specifically rejects the attempt of the Third Restatement of Torts to write duty out of the law by presuming it. The court (citing Palsgraf, which had been infra dig for a while) says that “before negligence can be predicated [on] a given act, [in] back of the act must be sought and found a duty to the individual complaining.”

On the issue of public policy the court emphasizes that “in the absence of a statute . . . we exercise great restraint in declaring public policy.” Policy is “primarily a legislative function” and even the court does not establish duties “based on our own notions of appropriate public policy.”

Bales and Pelander dissent, though Pelander apparently does not go so far as to think that Arizona should adopt the Third Restatement.


Gonzalez v. Nguyen (4/12/08)

An important decision on Rule 60(c)(6) (now 60(b)(6)).

Plaintiff took default judgment in a personal-injury case. Defendant then appeared and moved to set it aside under Rule 60(c)(6) (“any other reason justifying relief”), arguing that he wouldn’t contest liability but that the judgment was excessive. The trial court granted the motion. So far, so ordinary; this has for years been a standard insurance-defense argument, one of the few reliable uses of 60(c)(6). But then the Court of Appeals issued a memorandum reversing for lack of meritorious defense or excusable neglect. This wasn’t entirely the Court of Appeals’ fault; the Supreme Court admits that “Rule 60(c)(6) jurisprudence is not a model of clarity or consistency.” So it issues this opinion to straighten things out.

When “the record suggests that the judgment amount is excesssive, a trial court appropriately may provide Rule 60(c)(6) relief.” That the judgment is excessive is a meritorious defense. The showing of it “need not be strong” though it must be “greater than mere speculation.”

Some cases suggest that evidence of the meritorious defense must be extraneous to the judgment record. “We do not find any such requirement in the language or purpose of the rule.” “Rather, if the motion relies on evidence of a meritorious defense that appears in the record, the rule plainly vests authority in the trial court to grant relief, and we disavow language in prior decisions that suggests evidence outside the extant record is necessary.”

Excusable neglect, which is 60(c)(1), isn’t an issue since it and 60(c)(6) are “mutually exclusive.” The latter rule “contemplates circumstances that do not fit into the other . . . subsections.”

The court vacates the lower court’s opinion and affirms the trial court’s order.

(Opinion: Gonzalez v. Nguyen)


Butler Law v. Winslow Memorial

A theme of this opinion is “don’t conflate venue and liability,” which is apparently what the trial court did. But it also talks about what a limited-liability corporation is or isn’t.

A hospital in Navajo County hired a Maricopa County lawyer regarding employment matters. It later sued him, his P.L.L.C., and an outside associated lawyer for malpractice in Navajo County. Defendants moved for change of venue since they reside in Maricopa County. The trial court denied Defendants’ motion; the Court of Appeals denied special action.

The Supreme Court reverses. Plaintiff argued that the representation/fee agreement was a contract to perform services in Navajo County. But although a written contract to perform in a county permits venue there (12-401(5)), the contract must require that performance either expressly or by necessary implication. The fee agreement said nothing about the place of performance. The fact that the hospital was in Navajo didn’t matter; “place of performance” does not include “a place where performance merely causes an effect.” (The court has no occasion to address the question you litigators are asking: what if the agreement were for representation in a Navajo County lawsuit? And would that question be harder or easier if the agreement were for the defense of future lawsuits with no reference to where they might be filed?)

So far the opinion amounts to “the statute means what it says.” But then comes the L.L.C. part.

12-401(18) allows certain types of companies and also “other corporations” to be sued where the cause of action arose. Plaintiff argued that an L.L.C. is an “other corporation.” The court disagrees.

The Arizona Constitution defines “corporation” as “all associations and joint-stock companies . . . having any powers or privileges of corporations not possessed by individuals or co-partnerships.” The court says, in one conclusory sentence, that that doesn’t include an L.L.C.

Having completed its constitutional analysis the court turns, “more importantly,” to statutory analysis. Why it considers the statutes more important that the Constitution isn’t clear. In any event, the legislature put the L.L.C. laws in Title 29 (partnerships) rather than in Title 10. So they’re not corporations. In Arizona (the court points out, evidently believing that this bolsters the argument) they’re not partnerships, either but, rather, a “distinct business entity.” Although the powers of corporations and L.L.C.s are “overlapping,” an L.L.C. can waive corporate powers and has features that corporations don’t.

Yeah, maybe so. But doesn’t that leave you still wondering about associations and companies having powers or privileges of corporations not possessed by individuals or partnerships?

At the end of the opinion the court says that seeing L.L.C.s as corporations would “substantially increase the reach of” 12-401(18), which it won’t do “absent legislative action.” The court does not always display such exquisite restraint.

Plaintiff also made some arguments about the lawyers’ personal liability and piercing corporate veils. The court basically says that venue depends on the statute, not that stuff.

Reversed and remanded.

(Opinion: Butler Law et al. v. Hon. Higgins/Winslow Memorial)