(link to opinion)

This pleasantly brief opinion about a consumer debt should have perhaps have been a bit longer.

The Fossetts obtained an auto loan from Amtrust; they defaulted and Amtrust repo’d the car. Amtrust later sent them a 1099-C, which they duly reported in their next return, indicating that the debt had been cancelled. Amtrust then sued them on the debt; they moved for summary judgment based on the 1099-C. Amtrust’s response was captioned “Response to Defendants’ Motion for Summary Judgment and Cross-Motion for Summary Judgment” even though its position was simply that questions of fact prevented summary judgment. The opinion mentions this to explain – or to try to explain, since it is otherwise hard to figure out – why the trial court granted summary judgment for Amtrust.

The question on appeal was whether the 1099-C discharged the debt under Arizona law.

The statute, 47-3604(A), says that a party can discharge an instrument “by an intentional voluntary act” or “by agreeing not to sue or otherwise renouncing rights . . . by a signed writing.” Federal regulations require the issuance of a 1099-C under certain circumstances. Even though the form is called “Cancellation of Debt,” though, not all of those circumstances involve cancellation of the debt.  The court explains in a footnote that this is confusing. Amtrust’s collection manager testified by affidavit that this was one of those non-cancellation cancellations.

The court held that the 1099-C was prima facie evidence of cancellation. (Prima facie is officially English now, since the opinion does not italicize it; we’re apparently just old-fashioned.) But Amtrust’s affidavit was, the court said, sufficient to raise a question of fact as to whether it had intended to discharge the debt.

The problem is that the Fossetts had argued the other part of the statute, “agreeing not to sue or otherwise renouncing . . . by a signed writing.”  Why is sending a form called “Cancellation of Debt,” which by the way requires the [former] debtor to pay income tax on the amount forgiven, not “otherwise renouncing . . . by a signed writing? Well, maybe the form wasn’t “signed” for these purposes, though the opinion doesn’t get into that.

The court reversed the summary judgment for Amtrust, though, finding a question of fact as to whether the 1099-C was required by federal regulation in this case. If not, “then that is a factor bearing on whether the Fossetts remain liable for the debt.” What the court presumably means is that in deciding whether Amtrust intended to discharge the debt evidence as to whether it was required to issue the 1099-C is admissible. 

The question in this personal-injury case was whether OSHA regulations can be used as evidence of the standard of care.

Wendland was visiting a building owned by AdobeAir’s landlord; to do so he had to cross industrial space leased by AdobeAir, where he fell into a large pit.

His expert proposed to testify, based on OSHA standards, that AdobeAir had not properly cordoned off the pit. AdobeAir objected, arguing that under a prior Arizona case OSHA standards are irrelevant and that OSHA did not apply since Wendland  was not an AdobeAir employee. The trial court allowed the testimony, with an instruction telling the jury that the OSHA evidence was “for the limited purpose of suggesting standards to protect others from floor openings.”

It was undisputed that OSHA did not technically apply here and the court pointed out that OSHA does not by its terms create a private right of action, requiring instead that personal-injury actions be based on a separate duty. Wendland’s claim was based on AdobeAir’s common-law duty as the possessor of the premises; the parties agreed that he was a licensee. The court decided that “the question is whether [OSHA] regulations were appropriately referred to . . . as some evidence of the standard of care . . .”

The court held that the prior case, named Pruett, was a case about the issue of duty and does not make OSHA irrelevant on the issue of standard of care.

The court then held that “an OSHA standard may be considered as some evidence of the standard of care even when OSHA requirements are not binding on the defendant, so long as there is sufficient foundation (1) establishing that the standard at issue is directly related to the exercise of reasonable care and (2) a reasonable nexus exists between the proffered standard and the circumstances of the injury.” The jury can be instructed appropriately so that it understands that OSHA is not binding but is only one of the factors it can use to to determine whether the defendant was negligent. The court approved the trial court’s instruction but said that “it would have been better if the trial court had explicitly stated that the OSHA standards could only be considered as some evidence of the standard of care.”

The Court of Appeals publishes a very small percentage of its opinions in domestic cases. This one addresses community-property and child-support issues that are apparently thought important but its interest to the rest of us is as an example of the successor-judge problem and, more importantly, as a lesson in what the record is worth nowadays.

Judge A heard some discovery disputes in this dissolution action, tried the case for five days, received and considered written closing arguments, and took the matter under advisement. He then advised himself to resign, which he did without ruling on the case. Judge B watched the movie (the trial had been videotaped) and ruled on the case in a way that inspired both parties to appeal.

There is a rule for this situation. Rule 88 of the Family Law rules is taken from ARCP Rule 63; it allows the successor judge to proceed after “certifying familiarity with the record and determining that the proceedings in the case may be completed without prejudice to the parties.” It also allows the parties to recall witnesses, though the newer Rule 88 conditions this on the unavailability of an “adequate electronic record.”

Husband argued that Judge B didn’t follow the rule.

He claimed that  Judge B didn’t review – and therefore couldn’t certify familiarity with – the entire record. The court held that she had to review only what was relevant to her ruling. And how can a judge who hasn’t reviewed the whole record know what’s relevant to review? Well, that turned out to be a problem in this very case – but not enough of one, apparently, to cause the court any disquiet about its holding. Judge B awarded wife some fees, which required consideration of “the reasonableness of the positions each party has taken throughout the proceedings,” A.R.S. § 25-324(A). But Judge B didn’t review anything about the discovery disputes, including a videotaped discovery-motion hearing. The court reversed the fee award and remanded with instructions to review “that portion of the record necessary” to determine the parties’ reasonableness throughout the case.

So, the law is that the successor judge need not review the whole record. Instead, the parties review the whole record and decide what parts are relevant, they argue that to the judge, the judge makes a decision about what to review, reviews it, then after judgment the parties appeal because the judge allegedly didn’t review the right parts. This contentious, time-consuming, and expensive procedure is consistent with the principle of judicial economy, which is that all law shall be construed so as to lessen judicial workload.

Husband next argued that Judge B erred in failing to recall witnesses. The problem was that he hadn’t asked her to. The court didn’t accept his excuse, which is that Judge B hung up the phone (telephonic status conference) before he could ask. Now you now why judges ask at the end “Is there anything else?”

Finally, Husband argued that the video wasn’t good enough to let the judge make credibility determinations. He said it was jumpy, had gaps, and that there were problems with the audio. He pointed to several places where the written transcript said “indiscernible.” Husband, a pro se, clearly wasn’t aware that indiscernibles and gaps are now a fact of legal life and that to get a court reporter who can actually record what the witnesses really say you need either the knowledge of how to jump through hoops designed to prevent you from getting one or else  the good sense to commit a serious crime. In any event, Judge B said that she could follow the recording just fine, thank you, and that was good enough for the Court of Appeals. The video is not the record, of course, as the opinion admits in a footnote; under ARCAP 11, the record is the transcript. What happened, then, is that the record was full of indiscernibles but the successor judge decided what the the record said by reviewing matters not in the record. In other words, the record of a videotaped trial says whatever the trial judge – including one who wasn’t even there when it was made – says it says. Those of you who think this a giant step backward will rest assured, no doubt, to know that the Court of Appeals watched the movie, too — “only to assess the accuracy” of Judge B’s description of it. What the court thinks that means as a legal and evidentiary matter is beyond us.