Kobold v. Aetna (CA1 3/31/16)

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The subject is narrow but the procedure reminds us that, for better or worse, there is more than one way to skin a cat.

Kobold, a federal employee, was injured in a motorcycle accident. Aetna, his employer’s insurer, paid his medical bills. When he obtained judgment against the other driver Aetna tried to assert a lien against his recovery. Although prohibited by Arizona law this is allowed by Aetna’s policy; under federal law – the Federal Employee Health Benefits Act (5 USC 8902(m)(1)) – the insurance policy supersedes state law (we hope you are startled by that; even the U.S. Supreme Court considers it “unusual”). The trial court denied Aetna’s claim; the Court of Appeals affirmed, reasoning that the language of the federal statute didn’t quite cover reimbursement claims.

Aetna reacted to that in a traditional, if slightly unusual in this context, way – it filed a petition for writ of certiorari with the U.S. Supreme Court. But it also reacted in the modern way – by sending in the lobbyists. So by the time the Supreme Court got around to considering the case the federal Office of Personnel Management had already written new regulations saying that the statute does too allow Aetna’s claim. The Supreme Court accepted cert but remanded for reconsideration in light of the new regulations.

The Court of Appeals now reverses its earlier ruling. The OPM is an agency entitled to deference in the matter. Its new regulation is a reasonable interpretation of what everybody agrees is an ambiguous statute. “The fact that the regulations postdate our [earlier] decision  . . . does not deprive them of authority” because the court hadn’t concluded that the statute unambiguously leaves no room for the OPM’s construction. The court remands with instructions to enter judgment for Aetna.

Substantively the Court of Appeals’ first opinion was probably wrong anyway; the court was stretching things a bit to uphold Arizona law and policy. But the important lesson is to keep your case alive long enough to let it be decided not by mere judges but by the people who have real power in our society, the bureaucrats.

(Opinion: Kobold v. Aetna)

Sotomayor v. Sotomayor-Munoz (CA1 3/28/16)

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This is what can happen when the Supreme Court decides that every cause of action or niche practice deserves its own set of rules.

Mother filed an FED action against Daughter. The trial court entered judgment for Mother. Daughter moved to set it aside under Rule 15 of the eviction rules. The court denied it. Daughter appealed one day later but that was almost 90 days after the judgment.

ARCAP 9 lists the time-extending motions but doesn’t mention any eviction rules. So the court goes on to consider whether the order on a Rule 15 motion is itself appealable as  a “special order . . . after final judgment.” Rules 59 (new trial) and 60(c) are;  the grounds for a Rule 15 motion “overlap” those rules “but are not directly analogous.” An order after judgment is “special” – i.e., appealable – if it raises different issues than an appeal from the judgment would and if it relates to the judgment, its enforcement, or its execution. Daughter argued that her motion was akin to a new trial; the court decides, based on the details of her particular arguments, that it was more of a challenge to the merits of the judgment. It therefore fails the “different issue” test. Appeal dismissed.

So the law is that an Eviction Rule 15 motion might be appealable when it is but isn’t when it isn’t.

That’s not the Court of Appeals’ fault. Our guess is that the eviction people would have wanted Rule 15 to be time-extending but that they forgot, unlike the family law people, to hook their rules into ARCAP 9. We blame it on the Supreme Court for allowing, and at times encouraging, the balkanization of the rules. With vanishingly few exceptions these separate rules are necessary only to the ease and self-esteem of those who use them.

(Opinion: Sotomayor v. Sotomayor-Munoz)

Kresock v. Gordon (CA1 3/17/16)

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This is another case (like Hoag) interpreting the supersedeas-bond statute. The court holds that “attorneys’ fees imposed as sanctions . . . are not ‘damages awarded’ for purposes of calculating “ the bond.

The trial court dismissed the plaintiffs’ case and as sanctions awarded against them the defendants’ attorneys’ fees. The plaintiffs appealed. Under the statute the amount of the supersedeas bond is normally the ‘total amount of damages awarded excluding punitive damages.” Since there were no damages the plaintiffs took the position that there need be no bond. The trial court disagreed and refused to stay the judgment; the plaintiffs took special action (after filing a motion to stay directly with the Court of Appeals, which denied it and basically told them to take special action instead).

The Court of Appeals accepts jurisdiction and, in a way,  grants relief. Various cases have held that attorneys fees are not “damages.” Jantzen did so in the context of a supersedeas bond. The plaintiffs tried to distinguish it because in that case fees were awarded under 341.01 (contract case) rather than as a sanction. But as in Jantzen the fees were not part of the substantive claim; they were not “a legal consequence of an original wrongful act.” And the court says that the statute’s exclusion of punitive damages includes amounts awarded as punishment. Finally, 12-349, under which these sanctions were awarded, distinguishes between fees and the doubled fees that it allows to be awarded and calls “double damages.” But here the court has over-analyzed things; if the trial court had doubled the fees would that have made them “damages” for fixing the bond?

The court does not stay the judgment nor instruct the trial court to do so. The court “grants relief by ordering that the award of attorneys’ fees as sanctions” are not “damages” for purposes of a supersedas bond. But that’s a conclusion of law, not an order. Our appellate courts like to take a hands-off attitude toward supersedeas bonds nowadays; the failure to remand with instructions, though, turns this into a sort of advisory opinion that they aren’t really supposed to be in the business of.

We have to suggest again that the legislature take another look at the statute. (For some reason we’re not sure that our last suggestion sent them all running to the books with their red pencils.) Having been written to address a particular problem (that of capping bonds when verdicts are huge) it seems to have in mind only very traditional, damages-only judgments. But those are not the only type that exist and they are, as we have also suggested before (with equal impact on public consciousness), a vanishing species.

(Opinion: Kresock v. Gordon)