Beaver v. American Family Insurance (CA1 5/20/14)

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Allowing a new exclusion to UIM coverage.

Sally lived with her father. After getting hit while riding her motorcycle she sought UIM benefits under his auto policy. Although she was a relative living in his household, and would therefore normally be covered, the policy excluded relatives who owned a motor vehicle. So AmFam denied her claim; she sued; the trial court ruled for her; AmFam appealed. This opinion reverses, holds the exclusion valid, but remands on reasonable expectations.

Sally argued that the AmFam exclusion was really a disguised “other vehicle’ exclusion. That exclusion (excluding UIM coverage if the policy does not cover the vehicle for liability) is invalid because the statute (20-259.01) allows the policyholder to buy UIM coverage for all insureds. But the statute and public policy do “not restrict the parties’ right to agree on who is an insured.” Sally, because she owned a motorcycle, was by AmFam’s exclusion not an insured at all. That isn’t and end-run around the prohibition of “other vehicle” UIM exclusions because, you see, under the policy she did not merely have no UIM coverage, she had none at all.

Sally also argued reasonable expectations – i.e., her father’s reasonable expectations –  because the exclusion was allegedly buried inconspicuously. The trial court hadn’t had to reach that argument; this court does, says she’s entitled to try to prove it, and therefore remands.

(link to opinion)

Woodbridge et al. v. Genex (5/13/14)

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A case about intervention and a small story illustrating the decline of modern times.

Thomas won one million dollars in the lottery. He elected to take the money as an annuity. That is not in theory the optimal solution but, like structured settlements,  protects people against themselves. But it can’t protect them from the sharks who nowadays swim up to recipients of annuities and structured settlements and tempt them with a cash sale (the opinion says that Thomas was approached by several of them; it calls them “structured settlement companies,” which is what we used to call the outfits that sold them rather than the vultures that buy them).  (Lawyers used to spend considerable time, thought, and effort creating structures to protect the financially unsophisticated, the naïve, and the juvenile; we used to be able to protect the weak. Today there is, for every lawyer’s tv commercial, a commercial enticing the foolish to undo the lawyer’s work.) Thomas sold his million dollars to Genex for $428,128. But then he changed his mind, tried to cancel the deal, and sold instead to Woodbridge for $430,000. (Yes, Thomas arguably breached a contract and undeniably bought himself trouble for 1872 bucks, about .4% of the principal involved; so, you see, there really is a reason why some people should use annuities and structured settlements and why the law shouldn’t let them be taken advantage of on the basis of some pro-forma paperwork.)

But when Thomas and Woodbridge filed their paperwork Genex moved to intervene arguing that it had an interest in the money and that approving the sale would impair its right to recover it. The argument comes from Rule 24, which requires for intervention an intervenor’s interest in the property and threatened impairment of its ability to protect its interest (in addition to a timely motion and the lack of a party who will protect that interest). The trial court denied the motion and entered judgment approving the transfer. Genex then filed a Rule 60(c) motion, which the court denied. The Court of Appeals affirms.

A mere contingent interest in the property is not enough. The requirement (however notional) of court approval for the transfer of the annuity makes Genex’s interest contingent upon that approval. And failing to intervene would not prevent Genex from suing the parties involved.

Genex argued that it had filed a UCC-1 but the court says that it did not in fact have a security interest, again because its interest was contingent.

Because Genex had no right to intervene it also was not entitled to Rule 60 relief even “assuming for purposes of argument that a nonparty may move for relief from judgment under Rule 60.”

(link to opinion)

Munger Chadwick P.L.C. v. Farwest Development (CA2 5/7/14)

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The rule has long been that if you represent yourself you can’t get a fee award. This case holds that the rule applies to law firms.

Munger Chadwick, a Tucson firm represented by its own members, sued Farwest and won; it then moved for and was granted fees. This opinion reverses the award.

The court first addresses a jurisdictional argument. It had no choice but we do; the argument was too useless and silly to bother with.

Substantively, Munger argued that a PLC can’t represent itself, relying on Hunt (1987), which suggested that only a natural person could represent himself and therefore, by Munger’s logic, that an entity can’t, isn’t, and should thus get fees. This court explains that the lesson of Hunt (which let a lawyer-partner get fees for representing the partnership) is that  “a partnership, or a corporation, may not be represented by someone who is not.authorized to practice law.“ The court says that if the Munger firm couldn’t represent itself then it couldn’t represent anyone else, either. “But that conclusion would be contrary to the common practice of clients hiring law firms for legal representation.” A Supreme Court rule implies that an “entity” can be engaged in the practice of law. And the Restatement of the Law Governing Lawyers says that it’s the law firm that represents the client. (Well, maybe, though the concept that the firm rather than the lawyer is doing the representing, and the wording of the signature lines of pleadings, etc., to reflect this, is more the result of law-firm marketing and P.R. than of of inherent legal theory. Restatement drafters are the last people who would know such things.). “We . . . find no logical reason to draw any distinction between a law firm that represents itself and a sole practitioner that [sic] does so.” And it would be unfair to allow a firm to get fees in a situation where an individual lawyer or a pro se couldn’t.

Early in the opinion, however, the court, in a long footnote, does us the honor of suggesting its own theory. It tells us that Munger did not make this argument; Farwest surely didn’t, either, which means that no party did and that it is included as a lagniappe for we dimwits who still practice law. We’re grateful when courts do this;  the deep wisdom and long professional experience of the people who write these things surely puts them in a position to expound their views on issues unbriefed, and which they may have barely heard of before, but on which they’ve recently spent a bit of time reading a few cases. In any event, the court points out that some jurisdictions don’t apply the no-fee-if-you-represent-yourself rule to lawyers. But our Supreme Court has said that “one who acts only for himself in legal matters . . . is not practicing law.” Though that “doesn’t’ squarely address” the issue, “to the extent” that it does indeed do so CA1 is bound to accept it. The opinion doesn’t mention that the principle has been cited in cases other than the Supreme Court case it cites from 1942 (which the author of the opinion may consider the dark days before the invention of the wheel) though in fact it has been, including the Hunt case (where the court presumably found it). Hunt, rather than go out of its way to question the idea, called it “undisputed in Arizona.” The evident purpose of the footnote is that it not remain so despite the failure of these lawyers to dispute it.

(link to opinion)