This discusses a slightly interesting point about a lawyer’s legal obligations in corporate derivative claims

Ron Simms and his brother own, through a collection of trusts and corporations, TP Racing, a partnership (actually an l.l.l.p; these folks were apparently sold every imaginable bell and whistle) that owns the Turf Paradise race track. TP sued Ron. He counterclaimed; the court dismissed his claims for lack of standing. Before re-filing them as derivative claims he asked the court to declare that his lawyers, Greenberg Traurig, did not have a conflict (because this had been the subject of earlier motions, each side having tried unsuccessfully to disqualify the other’s lawyer). TP objected, arguing that since derivative claims are brought on behalf of the business Greenberg owed TP a fiduciary duty, so it couldn’t also represent someone adverse to TP. Greenberg never actually represented TP nor did anyone think it did; the argument was entirely technical. The trial court bought it and disqualified Greenberg. Ron took a special action.

The Court of Appeals reverses. Cases from other jurisdictions allow such representation, considering the corporation to be only a nominal party in a fight between shareholders and managers. The court adopts this reasoning for partnerships. The corporation – or partnership – is not a client of the firm bringing the derivative claim and that firm, as opposed to its client, has no fiduciary duty to the corporation. TP’s position apparently rested mostly on an Arizona probate case that the opinion distinguishes fairly easily.

(link to opinion)

We haven’t seen a notice-of-claim case in awhile but this one shows that they’re still being fouled up.

Drew sued the school district because it didn’t renew his contract to provide special education services. His notice of claim set a two-week deadline for acceptance. The statute (12-821E) says  that a “claim . . . filed pursuant to this section is deemed denied sixty days after the filing of the claim unless the claimant is advised of the denial in writing before the expiration of sixty days.” So when he filed suit the district moved to dismiss, arguing that the statute requires that it have sixty days. The trial court granted the motion; the Court of Appeals affirms (treating this as an appeal from summary judgment since the trial court, having considered documents outside the pleadings, should have converted the motion).

Drew argued that he just had to wait sixty days before filing suit. But the precedent is pretty clear that the statute intends to give the government time to investigate and evaluate. A footnote says that the two weeks in question fell over the Christmas holiday so the district in fact had only a few days. But that confuses the issue: the holding is that the government has sixty days because the statute says so, not because of particular circumstances in a particular case.

Drew also argued that the district “set a trap” for him by not asking for more time before his offer expired. But “the notice of claim statute clearly places the burden on the claimant to make a statutorily compliant settlement offer.”

These are not close questions. The court addresses the most interesting argument in a footnote, so its not clear that Drew even made it. Why not ignore or sever the deadline and consider it void as in violation of the statute? Because courts can’t write parties’ letters for them. “[W]here a party’s intent ‘is expressed in clear and unambiguous language, there is no need or room for construction or interpretation and a court may not resort thereto.’”  (Presumably also because, though the court doesn’t say this, the claimant has the burden and the point is to clarify the issues and promote resolution, not make the parties argue for a year or two about what a letter meant at law that it didn’t say in fact).

The opinion mentions in passing that the district didn’t waive the statute, which suggests that government can. But with so many notice-of-claim cases on the books now, if you have to argue waiver then you made a mistake. Trying to cut corners on this statute is the sort of thing you could end up telling your carrier about some day.

(link to opinion)

“We hold that  . . .  when a principal is jointly and severally liable for the fault of its agent, a stipulated dismissal with prejudice of the principal does not as a matter of law bar a claim against the agent.”

This is a slip-and-fall in a drug store. Plaintiff sued Walgreen’s and its janitorial service. She settled with Walgreen’s. The janitorial service then moved for dismissal, on the principle that the release of the principal releases the agent.

This principle may not be familiar to those with more than a foggy grasp of the law of agency since theory, and the practice of the common law, are to the contrary. But dictum in a 1945 case citing Am. Jur. supported it as did, the court points out, a 1963 passage in A.L.R. We think and hope that the court is suggesting – and we think and hope that most lawyers understand – the foolishness of relying on such as Am. Jur. and A.L.R. They are (or were, in the days before the internet) ways of finding cases; to rely on their legal conclusions is lazy and amateurish (except, of course, when you can’t find cases that actually say some favorable thing that Am.Jur., etc. say they do).

But the court avoids common-law problems by relying instead on UCATA. Principal and agent are still jointly and severally liable (12-2506); release of one joint tortfeasor doesn’t release the other (12-2504). The janitorial service argued that 2504 doesn’t apply, citing a case (Law 2007) involving the release of the agent. The court explains – using some good common-law theory without quite acknowledging it as such – that Law can’t apply to the converse situation.

This opinion uses the U.S. Supreme Court page format recently adopted by our Supreme Court. We don’t recall seeing this in a CA2 opinion yet but presumably its only a matter of time until everyone is sophisticated, or modern, or whatever somebody thinks this is. (Do they really think it modern? Should we tell them that its older than their “old” format?)

(link to opinion)