We learn here that the validity of a plaintiff’s contract with a defendant can depend on the nature of the fee agreement she later signs with her lawyer.

Plaintiff’s daughter put her in Defendant’s nursing home. Plaintiff was injured at the home and sued it. Defendant moved to compel arbitration, there being an arbitration agreement in the contracts Daughter (who had mom’s power of attorney) had signed. Plaintiff objected, arguing that the agreement was unconscionable. The facts were:

1. The agreement required Plaintiff to pay Defendant’s costs and attorney’s fees regardless of the outcome of a dispute;
2. The contract advised the patient to obtain counsel before signing it;
3. Signing it was not a requirement for admission to the nursing home;
4. Daughter testified that she met with Defendant’s representative for 10-15 minutes before signing and the arbitration provision was not pointed out to her; the representative testified that her standard practice was to send out the documents beforehand, point out the arbitration agreement, and meet with people for over one hour;
5. the provision regarding costs and fees was expressly severable from the remainder of the contract;
6. Plaintiff’s fee agreement with her lawyer was of the no-recovery-no-fee (or cost) variety.

After an evidentiary hearing the trial court denied the motion, deciding that the agreement was procedurally and substantively unconscionable and that it violated Plaintiff’s reasonable expectations. Defendant appealed.

The Court of Appeals reverses.

First, it says that the “superior court’s findings here do not establish procedural unconscionability.” This was merely a “standardized adhesion contract.” Such contracts do not have to be explained, and it was Daughter’s fault for not reading it, and anyway the part she didn’t read told her to get a lawyer. “This record does not support a finding of procedural unconscionability and we therefore reverse that finding.” (It is not clear here whether the court means “finding” or “conclusion” or whether it knows the difference.  In any event, is the court saying that the conclusion does not follow from the findings or that the findings are unsupported by the evidence? The former is an odd call, the latter a risky one.)

The court then agrees that the provision regarding costs and fees is unconscionable, “oppressive and may not be enforced.” Then it rules that the provision should be severed. (Actually, it doesn’t; it simply says that Plaintiff’s arguments on severability are wrong. But later it suggests that this part of the opinion had indeed “stricken” or “severed” the provision.)

Is the agreement unconscionable without the fee provision? It can be if the costs of pursuing arbitration are prohibitive. But Plaintiff didn’t have to pay anything unless she won. So the court decides that costs are not prohibitive. For it this is the crux of the opinion; its opinion’s first sentence tells us that the case concerns “an agreement to arbitrate . . . when counsel for the party seeking to avoid arbitration has agreed to advance all costs.” And so the validity of the contract Plaintiff signed in April 2017 depends on the nature of her agreement with her lawyer a year or so later. (And so her lawyer’s act in having her enter into it caused or contributed to her failure to overturn the arbitration agreement. Will he report that to his carrier?)

Finally, the court decides that the trial court erred in finding a violation of reasonable expectations. Defendant, the court tells us, “had [no] reason to believe” that Plaintiff wouldn’t have signed the contract had she known about the arbitration cost provision and, anyway, the court severed it. (A provision that makes her pay whether she wins or loses in a contract she doesn’t have to sign in order to get her mom admitted — and there’s no reason to believe that she wouldn’t have signed it had she known? The court has already told us that the provision is “oppressive”; has that no bearing on what a defendant has reason to believe?)

Costs on appeal to Defendant; remanded for proceedings consistent.

Your homework: calculate the chances that Defendant will change even one comma of that oppressive, unconscionable, and unenforceable — but delightfully in terrorem and conveniently severable if the rubes catch on — provision.

(Opinion: Rizzio v. Surpass Senior Living)

We’re not here to criticize lawyers and judges. Really, no. But these might have saved themselves a remand had any of them read the Arizona Rules of Civil Procedure.

Omitting the tiresome details, which are most of them, the parties settled this personal-injury case involving a tire (see what we did there?). CAS then intervened in order to open sealed records. The trial court had ordered them sealed after finding that they contained Goodyear trade secrets. The intervenor argued the public interest, that the tire was dangerous, that Goodyear and its lawyers were bad guys, etc. (The Court of Appeals does suggest that the lawyers’ actions were less than optimal. There has apparently been a fair amount of controversy involving these tires and, reading between the lines, there was some serious maneuvering going on here. Things happened that should raise eyebrows but the defense lawyers were not the only ones involved.) The trial court, relying on federal law cited by both parties, agreed. It found that “Goodyear’s interests did not outweigh the public’s need for access,” especially because Goodyear did not “particularize” how it would be harmed and because the information was “old.” The court authorized release of the records. Goodyear appealed.

It seems that of the six law firms involved at the trial-court level none managed to point the court to the applicable Arizona rule. (In fairness to the Arizona firms involved, its a fair bet that none of the lawyers doing the heavy lifting practice here. That’s an old problem with cases that involve national counsel; always double-check your out-of-state colleagues’ homework.)

The Court of Appeals reverses. By this time someone had mentioned Rule 5.4(c)(2). Documents can be sealed only if the court finds, in effect, that a need for a seal “overcomes the right of public access.” Under Rule 5.4(h), unsealing is governed by the same standards. But the trial court did not make a 5.4 analysis in ordering the unsealing. Instead, it used some sort of balancing test. It did, however, find that there were trade secrets involved — which the uniform act, adopted in Arizona, requires be kept secret. Age doesn’t vitiate them (which is a main reason why manufacturers keep stuff secret rather than patent everything). Their disclosure “necessarily implies that particularized harm exists because trade secrets derive their value from their secrecy.” “[A] court may expose trade secrets only in extraordinary circumstances, such as when the information has lost the independent economic value created by its secrecy, or when secrecy represents a significant threat to the public welfare.” An intervenor has a “heavy burden to show why the public needs access to confidential trade secrets.”

The court remands for a 5.4 analysis. But it puts its thumb on the scale by saying that since a summary of the secrets was already leaked “it is difficult to see what marginal benefit to the public would be achieved by unsealing the remaining trade secrets.”

Yes, it should probably have occurred to the trial court that you can’t just “balance” away a right to property, intellectual or otherwise. But in a strange land you depend on your guides — and the reality is that nowadays almost all civil law, not just its specialized branches, is off the edge of most trial judges’ maps. The rules, though, shouldn’t be.

(Opinion: CAS v. Goodyear)

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)