This case concerns the importance of being earnest about arbitration.

Pinnamaneni’s corporation hired Smith’s corporation to build a home. The contract required AAA arbitration. When a dispute arose the builder demanded arbitration. The owner filed a complaint with the Registrar of Contractors and refused to arbitrate until it was resolved. The owner didn’t show up at the arbitration hearing; the builder presented evidence (these arbitration rules don’t allow default) and was given an award.

When it tried to have the award confirmed in court the owner opposed it. A week before the arbitration hearing the owner had discovered that the builder didn’t have a contractor’s license when it signed the contract. The builder argued that the owner had waived the defense by not appearing at arbitration.

The Court of Appeals agrees. “[A] contractor’s lack of licensure is an affirmative defense subject to waiver.” Its contracts are voidable, not void. Moreover, the court tells us, the only objections to confirmation of an arbitration award are those listed in 12-1512 (fraud, the arbitrators exceeded their power, etc.). So although the court uses the word, whether it’s an “affirmative” defense doesn’t seem to matter; the question is whether it’s a listed defense.

That takes sixteen pages. As usual, the court grinds on and on about the easy parts and gives the harder part – here, distinguishing California cases – a lick and a promise.

(Another issue was that the arbitrators had held Pinnamaneni personally liable even though he hadn’t signed the contract personally. That (lack of an arbitration agreement) is a listed defense. The trial court should therefore have ruled on that, it didn’t, and so on that issue the court remands. That takes seven endless pages.)

(link to opinion)

This opinion about an architect’s implied warranty tells us that it is “very likely” correct.

A property owner hired Architecture to design a custom home. He told Architecture that he wanted a view of the city but the contract did not expressly provide for that. North Peak, the contractor, started to build it but discovered that it faced the wrong way. North Peak therefore started over and sued Architecture for the resulting expenses, alleging breach of implied warranty (and negligence, which turned out to be barred by the state of limitations, an issue not involved here). Architecture moved to dismiss the warranty count; the trial court granted it; this opinion reverses.

The trial court followed the Court of Appeals opinion in Flagstaff Affordable Housing, which seemed to say that claims against architects are in tort, not contract. But the Supreme Court vacated that decision.  This opinion therefore follows Donnelly, which held that a contractor need not be in privity with an architect to sue on an implied warranty. But Architecture argued, citing Barmat, that the implied duty to a party not in privity is simply to act non-negligently. Although this opinion specifically says that it relies on Donnelly, that’s arguably what Donnelly says, too. The Court of Appeals looks to some Supreme Court cases involving parties in privity to conclude that the implied warranty “very likely” arises out of contract, not tort.

What is the warranty? It is to “exercise its skill with care and diligence and in a reasonable, non-negligent manner.” So, Architecture can be liable in contract to North Peak, without privity, and without any breach of the express terms of the contract.

If you’re a bit confused about where to draw the line between tort and contract, you ain’t seen nothin’ yet. North Peak also sued the architect personally. Architecture argued that he didn’t sign the contract in his personal capacity. The court says that doesn’t matter since North Peak’s claim isn’t based on the contract.

And so it almost makes sense when the court concludes by saying that North Peak isn’t entitled to fees because its claim “sounds” in contract but does not “arise out of” contract.

So, Architecture and its principal have a contractual duty not to be negligent that is independent of a contract. (That’s not the way the court puts it, that’s just the way we put it to make it sound even stranger.)

(link to opinion)

Something old, something new, and something silly about additur/remittitur.

Hanscome died in hospital. His wife and two-year-old son sued for elder abuse and wrongful death. The jury awarded the son $1.8 million, the estate $200,000, and the wife $0. The trial court remitted the son’s award to $500,000 and added $200,000 to the wife’s award (even though her counsel had refused to ask for an additur, presumably trying not to upset his two-million-dollar applecart). Both sides rejected the changes; the court ordered a new trial on damages; both sides appealed.

The Court of Appeals remands the remittitur for reconsideration because it can’t figure out whether the trial court used the right standard. The minute entry indicated that the jury didn’t follow the instructions but at oral argument the court had talked about how it had to use its good conscience and sense of fairness. The judge not only wrote about the right standard but voiced the wrong one, he also implied that the jury should have awarded punitive damages (the instruction had been given) and should have awarded the wife more, so he would have upheld an award totaling $2 million, even though the result of his remittitur/additur was a $900,000 judgment. This last was perhaps the straw of confusion that broke the camel’s back, since one would normally expect appellate courts to act by reading a court’s rulings rather than by interpreting the phraseology of selected comments from the bench.

But this does give us a chance to point out once again that the modern fashion among trial judges to be garrulous and verbose does no one much good. There was a time when good judges knew that they should say nothing and write little; that wisdom has been lost, replaced with the silliness of long conversations and even longer minute entries.

As to the additur, it’s not encouraging to see a court trip over a long-settled point of law that should be at the fingertips (mixing metaphors a bit) of lawyers and judges who try civil cases: you can’t add to a zero. Even the mother agreed to this; you wonder why, since her counsel didn’t want the additur anyway, he hadn’t pointed that out to the trial court.

What he did want now was a new trial but since he hadn’t asked for one below that raised a problem on appeal. He came up with the argument that the trial court could grant her one because the defendants had asked for one, since the court can grant new trial for reasons not raised in the motion. The court holds that a new trial can’t be granted to a party who didn’t timely request one.

Since each party won part of this one, the court awards no costs to either. Defendants asked for fees; the court summarily denies the request because they hadn’t stated a basis for them. This happens all the time. Folks, if you don’t know the law on appeal fees and can’t be bothered to look it up then you’re not exactly wowing the court with your intellect.

The court spends about three pages restating black-letter law on the standards for remittitur/additur, so this may be a useful recent source for citations.

(link to opinion)