Robertson v. Alling (CA2 8/6/14)

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The court holds that settlement agreements are worthless.

This was a prescriptive-easement case with several plaintiffs and 27 defendants. There was a settlement conference; all defendants, or their authorized proxies, attended. They made an offer that wasn’t accepted. Their lawyer then emailed them recommending that they keep the  offer open. Five defendants emailed him that they didn’t agree to that; he didn’t read the email. A number of emails between counsel then set forth and confirmed the settlement. When the plaintiffs learned that some defendants were making problems they moved to enforce the settlement agreement. The trial court granted the motion, ruling that the defendants’ lawyer had actual and apparent authority.

The Court of Appeals reverses.

The court first decides that it treats motions to enforce settlement as motions for summary judgment.

The court finds that the lawyer had no actual authority; the Robertson’s argument that he did because he didn’t read the email has “no merit.”

The court finds that a question of fact exists as to actual authority. Why? That isn’t as clear. The court cites the traditional rule that “if the client places the attorney in a position where third persons of ordinary prudence and discretion would be justified in assuming the attorney was acting within his authority, then the client is bound by the acts of the attorney within the scope of his apparent authority.” That used to mean what it says. But the court cites a 1992 case called Canyon Contracting, which apparently implied that the principal’s manifestations must include not just placing the attorney in a position but somehow sending signals directly to the other party. What signals (you’re asking) is a good question and the court does nothing to clarify it much by suggesting that the defendants’ presence at the settlement conference might mean not that they were on board with the lawyer but, on the contrary, that he didn’t have authority to settle the case if they weren’t present. It is evidently up to “persons of ordinary prudence and discretion” to assume that things either are as appearances naturally suggest or that they are the complete and counterintuitive (to anyone who has ever actually attended settlement conferences) opposite. Perhaps having 27 clients makes a difference; perhaps that ordinary person should understand that getting 27 fractious ducks in a row can be tricky and temporary. The court does mention that the plaintiffs insisted that they all be at the settlement conference. But nothing in the court’s analysis suggests that there is a difference between one client and one thousand.

So what is the resolution? The court says that under the summary-judgment standard it would normally remand for hearing or trial on the disputed issue. (And that’s certainly a possibility, though its odd to say that that’s something that “normally” happens.) But here it simply sets the settlement agreement aside. Why? Rule 80 (agreements must be in writing or made in open court). The court apparently accepts that the emails were “in writing.” What wasn’t in writing was the clients’ assent to the settlement. Since when does that have to be in writing? The court cites Canyon Contracting for the proposition.

The court isn’t entirely comfortable with this, though, since it finds the need to justify itself in a footnote. Rule 80 does not contain this requirement but Canyon Contracting, the court says, read it into the rule. The plaintiffs did not argue that the court should change Canyon Contracting (presumably because they argued an entirely different set of issues and so had no reason to). Moreover, Canyon Contracting is “long standing precedent.”  The court does not suggest that any other case has followed Canyon Contracting on this point (we haven’t Shepardized it). We used to question a former Supreme Court Justice’s practice of finding a lone case that was wrongly-decided years ago and announcing that it had “established” the law of Arizona. Apparently he has followers after all.

So remember that your settlement agreement signed by counsel is as good as gold – until the other lawyer calls to tell you that his client never really did agree and even if he did it wasn’t in writing so you can’t enforce anything.

(link to opinion)

American v. CSK (CA1 8/5/14)

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Bailiff issues – the careless, the chatty, the controlling, the prejudiced – we have always with us. Traditionally, at least, the problem bailiffs were routinely found in the courtrooms of the problem judges (though we don’t know this judge and have no idea whether  that’s true here).                  .

After a jury trial – 12 days, 24 witnesses, 168 exhibits –  produced an unsatisfactory result American hired a PI to interview jurors. He got affidavits from two. Turns out that when sent to deliberate – in the middle of Friday afternoon before a three-day weekend – the jurors, who had earlier wondered how long the trial would last, asked the bailiff how long deliberations typically take. She told them that “an hour or two should be plenty.” The affidavits also claimed that most jurors didn’t consider the evidence,  just wanted to go home, etc. American moved for new trial; the trial court denied it. The Court of Appeals reverses.

The court first rules that although the jurors’ thoughts and attitudes are inadmissible under Rule 606 the bailiff’s comment could be considered, as “extraneous information that could have prejudiced the jury.”

The court next holds, citing Perez (1997), that a bailiff communication doesn’t necessarily warrant new trial. Though bad if it was improper and prejudicial, the communication is okay if concerns an “administrative detail” or an “innocuous matter,” or if it accurately answers a question. But if it doesn’t, or if you can’t tell, or if it violated an “essential right” then a new trial can be in order.

The trial court can hold an evidentiary hearing to determine these things. That’s what the majority ends up deciding that this trial judge should have done. The dissent points out that CSK didn’t dispute what the bailiff said and therefore feels that no hearing was necessary (and that finding what happened innocuous was within the trial court’s discretion; the majority goes out of its way to mention facts to the contrary and of course that may be the point of its opinion – finding that you should have held a hearing is a way to reverse a discretionary ruling the appellate judges don’t agree with).

So why did the majority feel that a hearing was necessary? It doesn’t hesitate to conclude that length of deliberations is not a permitted communication and is of procedural importance. But the majority’s question is whether this improper communication was prejudicial. In other words, did the jury think the bailiff’s remark a general comment or did they think it applied specifically to their case? The affidavits didn’t, in the majority’s view, provide enough information to answer that.

What about the problem that the trial took place three years ago? Its for the trial court to determine whether an evidentiary hearing at this point is feasible. If not, says the majority, the court must order a new trial (apparently on the law cited above that if you can’t tell then its prejudicial).

Finally, the court discusses the scope of the hearing. The thrust appears to be that although under Rule 606 you can’t ask jurors how something actually affected their thinking you can find out things around the edges – when it happened, where it happened, how it happened, who heard it, etc.

So, one of two things will happen. Either the trial court will take the majority’s broad hints, reverse himself, and grant a new trial, using the excuse that a hearing is no longer feasible. Or he will call the jurors back to court to give testimony, the two who gave affidavits will have their recollections refreshed by them and emphasize the egregiousness of the circumstances, the rest won’t remember or won’t care or won’t show, and the judge will grant a new trial.  What we wonder is whether the bailiff will face any consequence for scuttling an expensive trial with a careless – or worse – remark. Well, no, we don’t wonder, bureaucracies being the way they are.

(link to opinion)

Wilks v. Manobianco (CA1 7/22/14)

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The latest battle in the UM/UIM coverage wars.

For those who’ve not been following the action closely, uninsured and underinsured coverage must by statute (20-259.01B) be offered and refused in writing. People who refuse it and later, after an accident, find themselves in need of it must therefore get creative. Some argue that they did have the coverage because the offer or refusal wasn’t valid (e.g., here and here). The Wilks took a different tack, admitting that they didn’t have the coverage and suing the insurance agent for not selling it to them. The agent moved for summary judgment, arguing that under 20-259.01B it fulfilled its obligations by offering the coverage and obtaining the Wilks’ written refusal. The trial court granted the motion.

The Court of Appeals reverses. The Wilks said they wanted the same coverage that they had in a prior policy, which included UIM. They had an “expert” who opined that when clients want the same coverage they had before the agent should sell them the same coverage they had before (an odd item, we would have thought, for an expert opinion; maybe you had to be there). And the agent allegedly told the Wilks that he had indeed provided them the same coverage they had before. The court says that this is a valid negligence claim.

It then analyses, separately, whether following the statute protects the agent from liability. Why the court does this, having already found that the agent isn’t protected from liability, isn’t clear. Our guess is that perhaps this is the way the case was briefed and the court just followed along. (As we have said before, we think that’s good practice and what courts should normally do – with the proviso that if the briefs are poor the opinion has to improve on them.) The court holds, based on statutory language and history, that complying with its procedures protects the insurer but not the agent.

The “special concurrence” agrees with the first part of the majority opinion but doesn’t think the separate statutory analysis necessary (and indicates that it would disagree with it if it were). (Once upon a time the judge would have been described as “concurring in part,” or even “dissenting in part.” Apparently the  court’s present software has only a “specially concurring” button. This is doubly a shame because it hides, rather than signals, the judge’s position and because it lumps perfectly serviceable separate opinions like this one with unfortunate exercises like this one.)

The court remands and will let a jury deal with a factual position that doesn’t actually make a huge amount of sense. The Wilks don’t deny that the agent explained UM/UIM coverage and that they signed the denial form – although they weren’t paying attention/don’t remember/etc. – nor that, based on the agent’s advice, they also omitted other coverages contained in the prior policy. Apparently the argument is that the alleged subjective motivation that sent them to the agent – to get the same thing they had before – overrides the actions they took while there.

(The Wilks also said they wanted “full coverage” but this isn’t really a full-coverage case; what they wanted, allegedly, was what they had before to the extent it included UIM coverage. The notion that they wanted “full coverage” probably hurts their case more than helps it since they knowingly and admittedly didn’t buy full coverage. Its funny how the phrase “full coverage,” which has become a mantra among lawyers, independently and spontaneously turns out to be the same phrase their clients – all of them – had in mind all along.)

(link to opinion)