Green v. Lisa Frank, Inc. (CA2 1/20/09)

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Appellate judges love to do this once in a while: write, a la Stanley Feldman,  a long opinion explaining why black is really white even though the statutes and the cases and the common law all thought it was black.

The case was a messy corporate/family dispute. In the course of it Green, a corporate officer, violated a court order prohibiting him from making off with corporate assets. Finding him in contempt, the trial court struck his pleadings and awarded the other side some injunctive relief. A judgment was entered, with Rule 54(b) language; damages were to be determined later.

The law has always been that civil contempt orders are not appeable; the remedy is by special action. The civil contempt statute has no provision for appeal, the common law does not allow appeal, and our Supreme Court has said that there is no appeal. It takes Joe Howard’s dissent only a couple of pages to point out law that the Court of Appeals has no power to change. The moral should be that you can’t make an order appealable just by dressing it up like a judgment.

But the majority decides that the order was an “interlocutory judgment” that could be appealed under 12-2101(G). What about the statute, cases, etc.? The long and short of the fifteen pages (in fairness to Judge Pelander, the rest of his 37-page opinion discusses the merits; in more fairness to him, he doesn’t try to hide the fact that the law is against him) is that they don’t really apply to this situation because this was, you see, a “judgment.” Why was it a judgment? It did award part of the relief sought in the action but this is hardly the first time contempt ever did that. In reading the majority opinion one can’t escape the feeling that the good judge  thought it was a judgment mostly because it says “Judgment.”

Reasonable people could argue that an order of this sort is enough like a judgment that it ought to be appealable. But the law is — or was — that it can’t be until the Legislature lets it be. That’s a step that shouldn’t be skippable.

What about the merits? Corporate-law types will want to read the case but the substance is pretty mushy: the trial court was right on some things, wrong on others, based on the sort of equitable “factors” that this court makes up and  the next will follow or ignore as it pleases.

Mayer Unified School District v. Winkleman (2/13/09)

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This one won’t be of much interest to most; a tip of the hat to the court, though, for a well-written opinion. It helps that the legal analysis consists of one sentence.

Winkleman is the State Land Commissioner, in charge of school trust lands. From 1909 to 1967, the state granted easements over trust land without compensation. In 1967 the United States Supreme Court held, in Lassen v. Arizona, 385 U.S. 458, that the state had to charge for such easements; since then it has. In this case a couple of school districts sued Winkleman as Land Commissioner, the State Land Department, the state, and pre-1967 easement holders for the money the state should have charged between 1909 and 1967.

The filed the case in 2004. The issue was, therefore, the statute of limitations.

The court recited the historical facts and pointed out that the cause of act could not have accrued until at least 1967, when Lassen made people aware that the state’s action was improper.  Plaintiffs argued that  not collecting past money was a “continuing violation” by the state, which would mean that their 2004 filing was still timely even though the applicable statute of limitations was one year.

The court analyzed the Plaintiffs’ argument by citing an Indian land case from the Court of Claims that disagreed with a similar argument and adding this:

We agree that the violation here also occurred once, when the  . . . easements were granted, even though the cause of action did not accrue until 1967.

The cause of action thus accrued in 1967; the plaintiffs Complaint was about 36 years late.

This sort of clear, if somewhat conclusory, approach is old-fashioned; it was common in Arizona Supreme Court cases sixty and more years ago. We hope its coming back into vogue — it is really not necessary to turn every opinion into a legal treatise or a demonstration of  how much the judge knows. But we’re not holding our breaths.

Monterey Homes Arizona, Inc. v. Federated Mutual Insurance Co. (CA1 2/10/09)

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Insurance companies complain that our courts are too hard on them. Once in a while, though, something like this comes along.

Monterey, a home-builder, sued one of its subs, BBP Concrete. Federated insured BBP. Federated denied coverage but defended BBP under a reservation of rights. Eventually, Monterey and BBP decided to resolve disputes they had against each other by agreeing that nobody would pay anything to anybody.

Federated then moved to intervene to pursue a subrogation claim against Monterey, arguing that it should recover the costs and fees it had spent defending BBP because Monterey’s claim was, according to Federated, groundless. The trial court denied intervention, figuring that Federated could bring the subro claim as a separate action; the Court of Appeals reversed and remanded with instructions that require the trial court to allow the intervention.

The court held, first, that the settlement between BBP and Monterey did not bind Federated, even though a subrogee stands in the shoes of the subrogor and even though the Monterey-BBP settlement specifically released the defense costs. The court cited cases from other jurisdictions for the proposition that once the tortfeasor is informed of the subrogation rights, they cannot be released by the insured. This is a novelty to Arizona law; whether the cases cited actually stand for that proposition on these facts is an exercise we leave for the reader.

Next, the court decided what Federated really wanted — even though it had never thought to ask for it — was a reasonableness hearing under USAA v. Morris, 154 Ariz. 113, and that Morris required that it get one.  (Morris allows the insured to settle a claim without the insurer’s approval when the insurer reserves its rights.) This is true even though the settlement did not result in any additional liability to Federated. At the hearing the burden will be on Monterey to prove, under the court’s new subrogation law, that it did not have notice of the subro claim (which it clearly did according to the facts recited by the court) and/or that, under Morris, the settlement was reasonable. If it fails to prove these things, Federated can proceed with its claim (which will presumably requre proving that Monterey’s claim was meritless).

This of course gives the insurer the best of both worlds. It can deny coverage yet still prevent or manipulate settlement by using the threat of subrogation for defense costs. And this is done under the cover of a case — Morris — that was supposed to prevent it from doing just this sort of thing.