THIS OPINION HAS BEEN VACATED IN PART

An interesting aspect of the law of anticipatory repudiation.

The Thomases contracted to buy a house Montelucia would build at its luxury resort in Scottsdale. The contract provided, as usual, that if the seller had not complied with a term then the buyer could give it a certain amount of time to remedy the problem and then cancel the contract. Just before closing the Thomases refused to go through with the sale, and demanded the return of their earnest money, because some of the resort’s amenities weren’t done and because a certificate of occupancy for the house hadn’t been issued. Montelucia refused to return the earnest money; the Thomases sued; Montelucia countersued, for specific performance. They both moved for summary judgment on the Thomases’ claim; the trial court granted the Thomases’ motion. Montelucia appealed.

The Court of Appeals reverses. It concludes that what the Thomases did was an anticipatory repudiation. They didn’t have a contractual right to cancel without giving Montelucia notice and time to remedy.

That raises the next question: whether Montelucia was ready and able to perform. There was a dispute about this. But “the law does not require the non-breaching party to prove it was able to perform . . .  unless it is seeking damages” or equitable relief. “This appeal concerns only Montelucia’s defense to the Thomases’ claim for damages, not a claim by Montelucia for any affirmative relief.” “Once the Thomases repudiated  . . .  Montelucia was no longer obligated to do anything more  . . . ” In other words, proof of ability to perform was an element of Montelucia’s claim against the Thomases, not of its defense to their claim.

The court remands for the entry of judgment against the Thomases on their claim. It sets aside the trial court’s award of fees and costs to them and allows the trial court to determine where fees/costs should lie after final judgment. The immediate result is that Montelucia keeps the Thomases’ $659,000 in earnest money.

We know nothing else of this case. You can perhaps read between the lines and judge for yourself whether the Thomases made a bad legal mistake, were desperately trying to avoid closing on a home they could no longer pay for, or both.

(link to opinion)

This case holds that a claim for breach of an insurance contract sounds in contract for purposes of a fee award.

Assyia, hurt in a car accident, made an underinsured-motorist claim against her carrier, State Farm. She wanted her limits, $50,000. State Farm thought the claim worth only $2,000 and paid that, whereupon Assyia sued. During discovery it turned out that some big, contested charges were related to the accident after all. So State Farm paid the remaining $48,000. The court then found Assyia the prevailing party in a contested action arising out of contract and awarded $19,000 in costs ($400 an hour, in case you’re curious) under 12-341.01. State Farm appealed the award.

It argued primarily that the claim sounded in tort, not contract. The purpose of UIM coverage is to put the insurer in the tortfeasor’s place, so claiming the coverage is functionally the same as suing the tortfeasor, right? But the contract, not the accident, was the cause of State Farm’s liability; it otherwise had no duty to Assyia.

State Farm argued that the action wasn’t “contested” after the facts about the contested charges came out. But its Answer had denied liability and it also contested the fee award.

The company pointed out that the policy states that “Regardless of the amount of any award  . . . we are not obligated to pay any amount in excess of the available limits under this coverage . . .” But 12-341.01 is also part of the contract as a matter of law.

State Farm also disagreed with some details about the size of the fees and made one or two other, minor arguments that aren’t really worth your time.

Its not as if State Farm doesn’t have an argument here. But as carriers have abandoned the requirement to arbitrate UIM claims (they originally thought that arbitration would save them money; at the moment they mostly don’t; eventually they’ll change their minds and policies back again; that’s the way these things work) careful defense counsel have for some time been pointing out to them their probable exposure under 12-341.01. In any event, State Farm has never been shy about litigating questionable causes; its various counsel over the years may have lost more appeals than any other single set of civil lawyers in Arizona.

(link to opinion)

A standard commercial case with, nevertheless, a couple of lessons in it.

Best had an option to buy Miranda’s property, which he could exercise by paying the full purchase price. He gave Miranda two written notices of his intent to exercise the option but didn’t pay the money. The option then expired. Best sued Miranda for not conveying the property to him.

Commercial-litigation folks will recognize a classic: the guy who wants to exercise an option now and pay for it later. That’s why contracts, like this one, tend to make it clear that you can’t do that. The trial court granted Miranda summary judgment.

On appeal Best, who represented himself, argued that there was an oral understanding that he could exercise the option merely by giving notice. The Court of Appeals points out that that’s barred by the Statute of Frauds. Best next argued the duty of good faith but that doesn’t require the exercise of an option contrary to its terms.

Finally, Best argued that summary judgment was improper because reasonable people could reach different conclusions, as shown by the fact that the trial court had granted summary judgment both ways. What happened was that Best had originally moved for summary judgment and Miranda then had the matter stayed pending resolution of litigation by the State AG’s office against Best arising out of several similar transactions. Miranda therefore hadn’t responded to Best’s motion. So the Superior Court, true it its traditions of efficiency and excellence, granted it. Miranda had to get that set aside; then, after the stay was lifted, he filed his own motion, which the court also granted. The opinion says that the first doesn’t count since it was a mistake and in any event the appellate court determines de novo (not italicized in the opinion; we’ve given up on figuring out what rules or style book they use for that sort of thing) whether there’s an issue of fact.

The first lesson here is that while Miranda was theoretically correct not to file a response over a stay, leaving that loose end caused problems. If there’s a reason not to respond, its safer to file a one-sentence explanation  of why not; nobody’s going to object if this technically violates a stay. Remember those twin rules: never count on your opponent to make a mistake and never count on the bureaucracy not to. It will be just your luck to get some eager young clerical type who worked at Subway last month but is now in charge of your case because her uncle in Parks and Recreation got her a County job.

Miranda requested attorneys fees. The opinion refuses them because he cited no authority to support the award. Then other lesson, then, is to cite authority for your fee request no matter how obvious the reason is. We’ve mentioned this before since it’s a common problem but apparently somebody wasn’t reading us that day.

The back story, by the way, is that Best got options from a number of Phoenix homeowners in aid of some proposed development and then, when that went south, sued everyone in sight and got sued himself, which cases are at various stages of appeal. The court released this as a memo last month but has now made it an opinion, for reasons we don’t know.

(link to opinion)