Otherwise undistinguished, this opinion is notable for its decision not to create a new duty.

Ramsey’s wife reported that he had sexually assaulted their child. After an investigation, a grand jury indicted him but the State dismissed the charges when its own expert’s report was iffy. Ramsey then sued everyone in sight for most of the torts you’ve ever heard of. The trial court granted the defendants summary judgment, mostly based on §13-3620J, which gives immunity to people who report child abuse. The Court of Appeals affirms.

Ramsey argued that the statute violates equal-protection and abrogates his right to sue. But he hadn’t raised the equal-protection argument until he moved for reconsideration of the summary judgment. He hadn’t mentioned the abrogation argument except perhaps at oral argument and he didn’t put a transcript of that in the record. So the Court of Appeals did not consider the constitutional arguments.

Under the statute, a person who reports it must “reasonably believe” that abuse occurred. The court said that that requirement does not apply to those who participate in the investigation, e.g., experts who examine the child and express their opinions.

The counselor who did report had reasonable belief because the mother told her and because the child said her father touched her “inappropriately.” The court also held – and this seems to be the principal legal aspect of the case – that a counselor or therapist owes no duty to an alleged sex offender.

Ramsey argued that people acted with malice, which would destroy the qualified privilege. The court interpreted acting with “malice” to mean doing something that the actor knows to be wrong. There was no evidence of that.

As for defendant YFAC itself, it was only the place where part of the investigation had taken place; none of its employees participated. There was no evidence that it breached a duty to Ramsey.

(link to opinion)

Insurance lawyers will be writing to their companies about this one. It concerns the handling of multiple claims in excess of the policy limits.

ACIC’s insured caused an accident that injured McReynolds. The policy limit was $25,000. His claim was big; even his hospital lien was over $40,000. ACIC tendered the limit but he rejected it because ACIC put the hospital’s name on the check.  He sued the insured and made an OJ for the policy limit; ACIC provided a defense and responded to the OJ with an interpleader naming McReynolds, the hospital, and AHCCCS. When the hospital released its lien and AHCCCS defaulted, the interpleader was dismissed. McReynolds obtained an excess verdict at trial (over $400,000), took an assignment of the insured’s rights, and sued ACIC for bad faith based on its failure to accept the OJ.

The trial court granted summary judgment for ACIC; the Court of Appeals affirms.

McReynolds argued that ACIC should have “managed” its policy limit by settling his claim, leaving its insured exposed only to the much-smaller hospital lien. The court disagrees, holding that when an insurer is faced with multiple claims in excess of the policy limit its obligation is satisfied by promptly and in good faith interpleading its limits, so long as it also provides its insured a defense. The court specifically recognizes the victim’s claim and the medical liens as separate claims.

The court rejects other theories for paying multiple claims. The “first-in-time” rule doesn’t apply here because McReynolds’ injury and medical bills were at the same time. Courts that had said its a jury question for a bad-faith action didn’t address the interpleader angle.

“Promptly” means, when there is an OJ,  within the time for responding to it. In so holding the court clarifies that Rules 6(a) (last day on a Sunday/holiday) and 6(e) (extra days for mail) apply to responses to OJs.

And “good faith?” What a bad-faith interpleader would be is not explained. The court proudly says that its holding creates a “safe harbor”; our courts have once again produced a “safe harbor” with uncharted rocks and shoals.

The opinion also requires that the carrier actually pay the money into court. Rule 22 doesn’t require doing so until the time of discharge (and it is easier for all concerned that money never actually pass through the court’s hands); why the rule is different for insurance carriers is also unexplained.

The court regards this as an issue of first impression but the impression for years has been that interpleader is the safe thing for a carrier to do in this situation. The case will in any event be cited for the interpleader as “safe harbor”idea and its rules for getting there.

That’s unfortunate because the court comments, albeit very much in passing, on the other side of the coin. It quotes and agrees with a Kansas case that interpleader is but one of at least three ways of dealing with the situation: alert all claimants and get mutual agreement; pay the claims as they come (though this opinion has already thrown doubt on that); or interplead the policy limit.

A climate in which carriers probably must file interpleaders and claimants must file lawsuits to trigger them – which this opinion could further – is not necessarily good for either. McReynolds’ argument was legally wrong but hardly unreasonable; ACIC would have greatly reduced its insured’s exposure by paying him. What if it had? How is it bad faith to settle a $400,000 claim and expose the insured to only $40,000? What if one claim were 20 or 30 or 50 times larger than the other rather than merely 10? Interpleader should be for the tough calls. Carriers are already afraid that if they can’t settle with everyone – including every passenger and passerby and person who hasn’t made a claim yet but might someday –  then they can’t settle with anyone. That causes delayed compensation and higher claims costs even when the company knows perfectly well that one claim is huge and the others are peanuts. The attitude that making no decision is safest hardly needs to be reinforced; instead, carriers should be assured that they may settle multiple claims in objectively reasonable ways even if that exhausts the policy. That not paying claims need be a safe-harbor is a sign that not all is well in bad-faith land.

(link to opinion)

This opinion concerns the preclusive effect of a small-claims judgment.

Clusiau’s uncle arranged to have his company, Clusiau Enterprises (CEI), make monthly payments of $350 to her for life. When CEI stopped paying she sued it for breach of contract in the small claims division of the Justice Court. Neither party had counsel. Clusiau won. Apparently, she collected that judgment but then CEI stopped paying again. She sued again (and the case moved to Superior Court because of a counterclaim not at issue on appeal). Clusiau argued that CEI was collaterally estopped by the first judgment. The trial court agreed and gave her summary judgment on liability.

The question on appeal was whether in the first case CEI had a “full and fair opportunity and motive to litigate the issue.” If it did, collateral estoppel would apply. Restatement (Second) of Judgments §28 says that the lack of a right to appeal, “differences in the quality or extensiveness of the procedures followed in the two courts,” and jurisdictional issues can be factors in this.

The opinion holds that the first judgment did not collaterally estop CEI. It reviews the reasons why small-claims courts are not like others: there is no appeal; there is no jury; hearing officers need have only minimal qualifications; there are no attorneys or motions, nor any discovery; the rules of procedure and evidence don’t apply.

In addition, the small claims division had jurisdiction over only seven month’s worth of Clusiau’s payments; to give its judgment preclusive effect would effectively expand its jurisdiction.

Clusiau argued that CEI could have hired a lawyer in the first case and moved out of small claims. But the court says that a litigant should not have to do that simply because more or bigger claims might be filed later.

A footnote mentions that this opinion applies only to small-claims cases won by the plaintiff; the issues may be different if the plaintiff loses.

This may sound like a no-brainer but the issue was the subject of some major bickering when the ALI was considering the present Restatement of Judgments. The Reporter originally didn’t think – nor did many of the law professors who make up the ALI – that, other than the lack of a right to appeal, the circumstances of the first case should make much difference. They gave some ground on that but the illustrations, cited in this opinion, mostly reflect their views: a court with a $500 jurisdictional limit and no rules shouldn’t have preclusive effect but a property-damage judgment in a $2000 court with “substantially” standard rules can – even on an unrelated, multimillion-dollar, personal-injury case. The real-world decisions that real-world clients have to make in real-world cases are generally not things that the folks in the ivory towers care to spend much time knowing or thinking about.

(link to opinion)