Chula Vista HOA v. Irwin (CA2 7/27/18)

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The question presented is whether a supersedeas bond should include the amount of a fee award. City Center (2015) settled that; this case follows it, adding a bit of additional discussion of exceptions that don’t apply here.

Plaintiffs sued their homeowners association. They won, receiving some declaratory relief, $5000 damages, costs, and $35,000 attorney’s fees on a contract claim. The HOA file a notice of appeal. It argued that the amount of its supersedeas bond should not include the fee award; the trial court ruled that it should. So the HOA filed this special action.

The Court of Appeals accepts review and grants relief. The part of Rule 7 at issue here bases the bond on the “total amount of damages.” It is hornbook law that attorney’s fees are not “damages.”

But there are exceptions. The trial court apparently followed Desert Mountain (2010): “when one party’s breach of contract places the other in a situation that ‘makes it necessary to incur expense to protect his interest, such costs and expenses, including attorneys’ fees, should be treated as the legal consequences of the original wrongful act and may be recovered as damages.'” But Desert Mountain was a claim against an insurer to recover amounts — including fees — paid by an insured for claims the insurer refused to cover. The holding was that in that context the fees fell under the policy language of things the insured was “legally obligated to pay as damages.” The fees in this case didn’t arise from litigation with a third party. (It might be worth noting, though the court does not utilize the distinction, that Desert Mountain also did not use the standard legal definition of “damages”; instead it used the “plain and ordinary meaning” standard applied to insurance policies.)

Some provisional remedies are also exceptions, so Plaintiffs argued that their slander-of-title claim was “akin” to a provisional remedy. The court points out that the claim is statutory and that the statute (33-420), although allowing fees, does not define them as part of the “damages.”

(Opinion: Chula Vista Homeowners v. Irwin)

Ruffino v. Lokosky (CA1 7/12/18)

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The court discusses service of process in the context of the internet.

Plaintiff sued because of some allegedly defamatory posts by Defendant on Defendant’s web site. When his process server failed to make service he moved for alternative service by mail. The trial court denied the motion, spotting the fact that the process server — despite a return that seemed to show a lot of effort — hadn’t really tried very hard. Plaintiff made one more desultory try then served by publication and took default judgment. He knew defendant’s email address and phone number and knew she was active on social media. And he had been in internet contact with her before the suit. But he didn’t try to notify her in any of those ways nor ask to serve electronically.

Defendant moved to set aside the judgment. After an evidentiary hearing the trial court granted the motion, finding that Defendant was not evading service and that service attempts were insufficient. Defendant appealed.

The Court of Appeals affirms. Plaintiff argued that the court should review de novo, presumably to avoid the lower court’s findings. The court points out that it reviews Rule 60 motions for abuse of discretion and clearly-erroneous findings.

The rule on service by publication (4.1(l)) requires that the plaintiff be unable to find the address after diligent effort or that the defendant is evading service, and also that service by publication is “the best means practicable in the circumstances for providing the person with notice.” (Some of us remember when our rules were written in English rather than in semi-grammatical jargon.) For some reason the trial court made a finding on only one of those things — that Defendant wasn’t evading. But there were only three possible addresses, the process server admitted that she thought one of them was the right address, and Plaintiff had the means of contacting Defendant to confirm it but didn’t. “A reasonably diligent effort . . . would have included reaching out to [Plaintiff] via telephone, email, or even social media to verify her correct address.” You can find telephone cases that are years old but the email/social media aspects of this are somewhat novel.

The court uses them with the “best means practicable” requirement as well. It says that even if there had been diligent effort and/or evasion of service, “given our present society . . . modern methods of communication, especially email, were more likely to give . . . notice of a suit than publication.” (The telephone is an even better way but that’s not the point of the opinion.)

The court adds archly, in an unnecessary and ill-considered comment, that the newspaper used for publication was distributed in a rural area 70 miles from Defendant’s Scottsdale address. But what of the very next section of Rule 4.1(l), which specifically allows service “in a newspaper published in the county where the action is pending,” as it and its predecessors have for many years? Would using a “closer” paper have overcome the failure to make a phone call or send an email? Is “a newspaper published in the county” no longer good enough? If so, why does the rule still say that? If not, on what basis should defendent select a newspaper — by trying to read the plaintiff’s mind about which one (if any, nowadays) she’s most likely to read? (And if that’s the standard, why don’t we require publication to be done on the paper’s front page rather than rather than in parts that nobody reads anyway?) Granted, the Republic needs the income; but the niche papers that make a living printing legal notices will be sorely disappointed.

There’s not actually much new here except the reminder to pursue internet contacts. And the moral is the old one: you need to direct and assist your process servers actively, not just let them go through their comfortable motions. The dogged, clever, self-starting process servers you read stories about presumably exist but you will never find one.

(Opinion: Ruffino v. Lokosky)

 

Kopp v. Physician Group of Arizona (7/9/18)

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The Supreme Court changes the law on the effect of dismissal.

Plaintiffs sued a doctor and a hospital for malpractice; against the hospital they alleged both respondeat superior and independent negligence in hiring and supervision. They settled with the doctor and dismissed him with prejudice. The hospital then moved for summary judgment, arguing that the claims against it were derivative. The trial court granted the motion; the Court of Appeals affirmed.

The Supreme Court reverses.

“Derivative liability is no broader than vicarious liability.” Even though the claims of independent negligence against the hospital depend on proving the doctor negligent they are not vicarious.

But, the hospital also argued, dismissal of the doctor was an adjudication on the merits against him so he can’t be proved negligent. The lower courts had followed Torres (App. 1971), holding that allegations against the hospital don’t survive dismissal of the doctor if proving the doctor’s negligence is an element of those allegations. The Supreme Court cites Chaney Building (1986) to the effect that collateral estoppel applies only to facts or issues actually litigated. Stipulated judgments aren’t litigated and bind others only if the settlement agreement said so. The court recognizes that the law since DeGraff (1945) has been otherwise; “we disavow our holding in DeGraff insofar as that case and its progeny conclude that a stipulated dismissal with prejudice ‘operate[s] as an adjudication that [the dismissed party] was not negligent.'”

At least the court acknowledges DeGraff. In all other respects it follows the script written years ago by one of the people involved in this case: this opinion isn’t radically changing existing law, you understand, that was really done years ago by another case (Chaney Building in this performance of the play) so this one is simply following the precedent, never mind that the supposed precedent had never before been read that way.

(Opinion: Kopp v. Physician Group)