Kellin v. Lynch/AmericanWest (CA1 9/10/19)

It used to be that supersedeas bonds were obscure, mentioned only by a brief and vague rule, governed by common law and common sense. Few lawyers knew much about them and there weren’t many cases. Then various interests weaponized them and the legislature had to step in. Now we have a statute (12-2108), and a lengthy rule (ARCAP 7), and various changes in both from time to time. The result is that few lawyers know much about them but this is the tenth supersedeas-bond case we’ve blogged.

This special action is about supersedeas bonds on appeal of garnishment judgments.

Its a small piece of long, convoluted litigation spanning several appeals in which debtors appear to be using every conceivable legal maneuver to avoid paying an out-of-state judgment. The court recounts its history at length. This seems unnecessary — and, though not long by CA1 standards, the opinion would indeed have been better at half the length — but in the end there turns out to be a reason for it.

Creditor garnished two of Debtor’s bank accounts; one held about $70,000 and the other about $400,000. Over Debtor’s objection Creditor took garnishment judgments. Debtor appealed them. She asked the trial court to waive supersedeas bonds under Rule 7(a)(6), the funds in the accounts being their own security.  Creditor argued that bonds were required and appropriate under Rules 7(a)(4) and 7(a)(9). After argument the trial court, citing only Rule “7”, ordered a $50,000 bond for each garnishment judgment. Debtor took this special action.

The Court of Appeals accepted jurisdiction, for reasons mentioned in context below. The record doesn’t know the reasons for the trial court’s order, Debtor having not included in it a transcript of the relevant hearing. So the order will be affirmed if it could have been correct for any reason.

The court now discusses rules 7(a)(4) and 7(a)(9) at some length before revealing that the discussion is unnecessary because those rules don’t apply any more. The new rule, 7(a)(6), has applied since last January. (This rule’s novelty is the court’s reason for accepting special action. That really could have gone the other way; nothing here cries out for immediate interpretation.)

So, Debtor is right about which rule applies. It allows a court to protect the status quo and to protect the adverse party against loss potentially caused by the stay.  The court agrees with Debtor that having the funds protected in the bank accounts protects the status quo. So, since 7(a)(6) — unlike other parts of the rule — is permissive, it would have allowed the trial court to waive the bonds. But the court didn’t and the question is whether the rule allows that.

Creditor argued that bonds were appropriate to protect it from the costs and fees of the garnishment appeals. For some reason the court seems to decide that whether costs and fees can be awarded on a garnishment appeal is an issue that it must analyze. 12-1580E specifically answers the question but the court takes most of a page to get around to saying so. The statute allows costs and fees against the debtor if the court finds that the debtor objected to the writ in order to delay or harass the creditor.

The trial court’s order made no such finding. In most contexts that step isn’t skippable. But the opinion, having suggested that there was a basis for a finding — now you know why it explained the history of the litigation — seems to feel that that’s good enough in this situation. It doesn’t address the issue specifically.

So, jurisdiction accepted but relief denied.

(Opinion: Kellin v. Lynch/AmericanWest)






Valdez v. Delgado (CA1 9/10/19)

The court makes this simple case sound complicated.

Plaintiff sued for specific enforcement of an oral contract to sell a house, relying on the part-performance exception to the statute of frauds. The trial court denied Defendant’s JMOL; the jury found for Plaintiff; the trial court then denied Defendant’s renewed motion for JMOL. Defendant appealed.

Court of Appeals affirms. On appeal a jury’s findings are accepted unless clearly erroneous; the jury found by special verdict that Plaintiff had done things, which the court recites at length, because of and in reliance on the contract. Whether the facts satisfy the part-performance exception is a conclusion of law that the court makes de novo; the court has no trouble concluding that these facts do satisfy it.

The court, though, apparently doesn’t think this a no-trouble case. “This case requires us to assess the interplay between two standards of review where a legal question is raised on appeal, and reviewed de novo, but the answer to the legal question hinges on the factual findings of a jury, which are reviewed for clear error.” But that’s just a convoluted way of expressing the ABCs of appellate review: findings you accept unless clearly erroneous, legal conclusions you make yourself. Always, not just in this case. The idea that JMOL rulings are reviewed de novo — which is what seems to throw the court off onto this tangent — doesn’t change that. The court’s attempt to “assess the interplay” lasts only a couple of paragraphs (13 and 14) and adds nothing to the law.

Defendant also argued that specific performance was not a proper remedy. While there can be a conceptual argument against specific performance in some statute-of-frauds cases the evidence here was pretty clear. The court agrees that the remedy was appropriate.

(Opinion: Valdez v. Delgado)


Reyes v. Gilbert (CA1 7/25/19)

There is a nuggest here which makes some sense, which is that a new trial for failure to make disclosure or discovery has to be based on disclosure or discovery. Otherwise we’re not sure that the court’s analysis is particularly artful.

Plaintiff was hurt when a car in which he was a passenger ran off the road into a canal. He sued the Town of Gilbert alleging inadequate signs and barricades. He lost at trial but won his motion for new trial based on the Town’s failure to disclose an engineering report concerning the road. The Town appealed.

The Court of Appeals reverses and remands with instructions to reinstate the verdict.

The opinion recounts at length the facts of the accident (the driver was drunk and reckless), the facts of the entire evening of the accident, and, in one of the eleven footnotes, the facts of the driver’s criminal punishment. None has anything to do with the issue or the holding. Perhaps someone found them interesting, though they are standard teenage-one-car-accident stuff. Or perhaps this is another example of a phenomenon we remarked on recently — trying to make the holding emotionally satisfying — since the driver could perhaps have crashed regardless of how the Town signed the road. (Of course a causation defense, especially if there were a general verdict, could have raised issues in this appeal but this blog entry is going to be long enough as it is so we won’t worry about why they’re not here.)

The court gives us a lengthy section on “Applicable Law and Standard of Review.” The “applicable law” cited is that roads needn’t be perfectly safe and that their design can assume that drivers will follow the rules of the road. How that law is “applicable” to an appeal about new trial under Rule 26.1 is not explained. As for the standard-of-review section, we have said too much about those to repeat that rant here. This particular one is clearly intended to justify the result rather than to explain, however unnecessarily, the parameters of analysis.

There was a traffic study of the area from 2003, made in connection with a then-proposed subdivision. Plaintiff had filed a public-records request for studies of the road. The Town didn’t provide the 2003 study in response to the request nor under Rule 26.1. It apparently wasn’t clear whether the trial court granted new trial based on the request, on Rule 26.1, or on both. So the court addresses both.

A request for public documents is not a discovery request under the Rules of Civil Procedure. It is made under a statute that includes its own sanctions (39-121.02). It is thus not a basis for new trial even if the statue were violated.

Regarding Rule 26.1 the court examines the facts and the allegations and decides that the 2003 report had nothing to do with the case or “at best . . . contained marginally useful information” and so the Town “had no reason” to disclose it. The trial court therefore erred. What kind of error, you ask? Was it an error of law? Was there no substantial evidence to support it? Was it arbitrary and unreasonable? The opinion’s standard-of-review section had raised all as possibilities. One would normally expect the court to identify which one it had picked, especially since its disagreement with the trial court sounds so much like one of fact. But it doesn’t.

The court then says that even if the Town violated Rule 26.1 there was no prejudice. The 2003 study didn’t “materially” contradict the town’s expert witness. As for “speculation” that the report supported an additional theory of negligence, that’s not prejudicial because Plaintiff and his expert could have come up with it on their own. (The court cites no authority for this; we assume that it didn’t look for any since the cases don’t necessarily say that.) Plaintiff can’t, therefore, have a new trial because letting him use a report that raises a new issue that the Town kept secret until after the trial would mean that his disclosure of the issue would be untimely. (Don’t believe us? Read the last part of ¶38.) So the trial court abused its discretion (at least here the court identifies a legal basis of error).

(Opinion: Reyes v. Gilbert)