A Startling and Amazing Note to Our Readers

It appears that our last post was premature. Due to popular demand (there actually was some of that, believe it or not), the Arizona Appellate Blog can continue. It will, however, be under new management. We’re happy to announce that an extremely knowledgeable and experienced civil practitioner has volunteered to take over. The new blogger may not be as jaded, sour, and judgmental as we have always endeavored to be. But fear not — having to explain these opinions over and over again should cure that soon enough. The next voice you hear will be that of our esteemed successor. Thanks again. 

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A Note to our Readers

As of today — November 5, 2020 — the Arizona Appellate Blog has been in operation for twelve years.

And that’s long enough.

Even if we weren’t old and decrepit there are too few truly interesting civil opinions left to blog. We’ve written barely one blog per month this year and not greatly more than that the last couple of years; early on we were annually in the 60s, later in the 40s. Nowadays even Division One is largely a machine for reviewing criminal cases. This trend, not unique to Arizona, is the new normal. It is a significant development, though one not much mentioned at a time when criminal law is assumed to be at the heart of our jurisprudence and of our profession. (That was historically neither the truth nor the assumption among lawyers in general, even relatively recently.)

We will keep the web site up; there are over 500 case blogs here that can be of continued use. But there will be no more new ones. (When you see ads appear on the site that doesn’t mean we’re making money; it means we stopped paying our web hosting service the surcharge that keeps them off.)

We’ve enjoyed doing this and we hope that we’ve helped, or at least entertained, people along the way. Although we’ve never allowed public comments (moderating flame wars would have driven us away long ago), informal feedback from lawyers and judges has been encouraging (except for a few folks who don’t understand the uses of illeism).

Thank you all.

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JTF Aviation Holdings v. CliftonLarson (9/18/20)

This opinion disapproves of holding people to contracts they weren’t parties to.

Plaintiff Freer hired Defendant, an accounting firm, to audit his company’s books. The contract was between Defendant and the company. Defendant certified that the books conformed to GAAP. Another company bought Plaintiff’s business but then found that the books did not conform to GAAP and that the inaccuracies inflated the price it paid. Plaintiff settled the resulting lawsuit and personally sued Defendant for negligence and breach of fiduciary duty. The contract said that suit had to come within 24 months of Defendant’s audit report; this one came after. The parties cross-moved for summary judgment on the issue.

Plaintiff’s argument was that he himself was not bound by the limitation because he was not a party to the contract. The trial court ruled that he was close enough to his company to be bound, using the “closely-related party” doctrine, and granted Defendant’s motion. Plaintiff appealed; the Court of Appeals affirmed.

The Supreme Court granted review and reverses. The “closely-related party” doctrine is used in some federal courts in cases involving (at least in all the federal cases cited here) forum selection clauses. The court says that where a claim may be brought is a “more limited” issue than when. Applying the doctrine in this case “places too much emphasis on [Plaintiff’s] ownership of [the company] and minimizes the importance of the corporate form recognized by Arizona law.” In Arizona, “corporate status will not be lightly disregarded.” The doctrine amounts to an alter-ego or corporate-veil theory, both of which require more than proof of ownership. 

Vacated, reversed, remanded for proceedings consistent.

The opinion’s few footnotes are mostly unnecessary but the first also raises a style problem we’ve mentioned before. It announces that the parties and the courts below were wrong to say that the contract established a “limitation” period rather than a period of “repose” but that it will condescend to say “limitation” because they did. Now, these people didn’t say “limitation” because nobody at five large law firms and two levels of our judicial system knows the difference; they said it because that’s what the contract said: “Limitation Period.” But whether the provision is about one concept or the other doesn’t matter here; the court chooses not to mention the only way in which it might have made some slight difference. So why imply — and this is indeed an implication, intended or not, that some readers will draw — that all those who worked on the case were ignorant until this court enlightened them? The answer is that the footnote is, if not a mere exercise in pedantry, an attempt to avoid having someone, somewhere, some time in the future use the opinion to confuse the two concepts or to accuse this court of doing so. (Many unfortunate excrescences on judicial opinions are, like this one, attempts to ward off imagined arguments yet-unmade.)  But if the distinction had to be drawn, it would not have been hard to do so without gratuitous insult: “The contract creates a period of repose, styled a “Limitation Period,” as follows: [quoting it].”

(Opinion: JTF Aviation v. CliftonLarsonAllen)