Another in our why-was-this-published series.

Defendants put up a swing set in their backyard without asking the Homeowners Association’s approval. When it sued them they moved to enforce the arbitration agreement in the CC&Rs. The trial court denied it, finding that the provision was intended to apply to claims with the builder, not to this sort of dispute with the HOA.

After reviewing the language of the CC&Rs, the Court of Appeals agrees. No cases are cited except a few at the beginning, for basic, black-letter propositions about arbitration.

(The only interesting question here might have been whether the arbitration provision gave the arbitrator enough power that Defendants should have proceeded with arbitration themselves, and moved for a stay, rather than to move to compel it, which the arbitration types think can be a shoot-yourself-in-the-foot maneuver. The opinion doesn’t tell us enough to answer it.)

Those of you with swing-set cases in Saguaro Highlands should pay close attention.

This case discusses the issue of duty.

Plaintiff had his oil changed at Defendant’s Jiffy Lube store. A few weeks later he crashed, allegedly because of worn tires. He sued the car people and the tire people, one of whom noticed Jiffy-Lube as a non-party at fault. Plaintiff moved to strike the notice, contending that Jiffy Lube had no duty, but lost and added it as a defendant. He argued that when it serviced his car Jiffy Lube should have noticed, and warned him of, the worn tires .

The trial court granted summary judgment. The Court of Appeals affirmed.

Duty, the court says citing the Supreme Court’s 2007 Gipson decision, depends on the relationship between the parties and on public policy.

The only relationship between these parties was contractual. The court cites a couple recent economic-loss-doctrine cases for the idea that the contract determines the boundaries of liability.  The contract said nothing about looking for tire wear. The fact that the technician could see the tires didn’t imply a obligation to inspect them, even though this court had said something mostly to the contrary in an older case named Reader. The Court of Appeals points out that that opinion had been vacated and doesn’t point out that that had been on other grounds; the real problem is that the Court of Appeals had pretty much pulled that part of Reader out of its hat. But the court adds that Reader isn’t on point anyway since it had to do with a dealer’s work under a manufacturer’s warranty.

As to public policy, the policy is that everyone has a duty to avoid creating an unreasonable risk of harm and those who do create a risk of harm have a duty to use due care. But Jiffy Lube didn’t create the risk of harm. Duty should be limited by the scope of the actual undertaking.

Finally, Plaintiff argued that there was an industry standard to check the tires. But duty is defined by law, not by expert testimony; industry standards relate to when duty is breached but cannot create it.

This plaintiff apparently figured that it had its case in a bag when the defendant claimed not to remember anything.

Comerica gave Mahmoodi’s business a line of credit. He essentially maxed it out and then moved the business without telling Comerica. Comerica asked about its status, wasn’t satisfied with the answers, and sued for repayment. The business declared bankruptcy, in the process providing accountings of its receivables that were about 350% less than those it had, pursuant to the contract, provided Comerica in the prior few months. Comerica therefore added fraud to its contract claim.

As the result of a car accident, Mahmoodi lost his memory of his dealings with Comerica.

Comerica moved for summary judgment. Defendants did not oppose it on the contract claim but argued issues of fact on the fraud claim. Comerica apparently contended that it should have summary judgment because it could present a prima facie case to which Mahmoodi, due to lack of memory, couldn’t respond. The trial court agreed.

The Court of Appeals didn’t. A jury could find that there was an innocent explanation for the difference in receivables – namely, that receivables really had fallen hugely in one month. Factually unlikely, perhaps, but this is fraud – the standard is clear and convincing. A jury could also find that the accountings to Comerica were phony but that Mahmoodi didn’t know it (thought the basis for that conclusion isn’t clear from the opinion; Comerica had evidence that he did know). Finally, since Mahmoodi had already gotten the money before the receivable reports in controversy were made, Comerica hadn’t met its “burden of production” (whatever that is) to show that they had damaged it.

Nothing novel here. Why publish it? To remind us that a prima facie case is not the same as a summary judgment case. The opinion might have been useful had the court found a clear way to say that rather than to attempt erudite pedagogy.