A useful case about the responsibility and liability of receivers.

Builder built a low-income apartment complex but then defaulted on its loan, resulting in litigation. The court appointed a receiver, Mashni, to run the complex. Although recorded covenants required it to be rented to low-income tenants, Mashni rented to regular tenants at market rates. This allegedly threatened Builder’s expected tax benefits but Builder did nothing about it until Mashni moved to wind up the receivership, which happened when Builder eventually filed bankruptcy and the Bankruptcy Court took over. The trial court denied his motion to exonerate his bond on the grounds that he “did not faithfully discharge his duties” and “had a responsibility to protect the rights of all parties to the transaction.”

Mashni took special action, arguing that he was immune. The Court of Appeals accepts jurisdiction and grants relief.

A receiver is a ministerial officer, appointed pursuant to statute and rule, not an agent of any party. The receiver’s duty is to the court and its orders. As to the parties he is neutral – especially since, as here, the party’s interests are ususally adverse (i.e., Builder wanted its tax credits while the other party, the lender’s successor-in-interest, wanted the complex to bring in some money).  As long as the receiver’s actions are within the scope of the order appointing him he shares the judge’s immunity.

The trial court did not find that Mashni acted outside the scope of the order, which said nothing about operating the complex as low-incoming housing. He had the authority to reject contracts, which is what the court says the low-income covenants amounted to.

The court also says that Builder could have moved to amend the appointment order to add the low-income requirement. What does that have to do with immunity? “When a party is aware of a perceived defect in a receiver’s performance of his duties, equity demands that the court be informed and given an opportunity to right the wrong through its supervisory powers. If a party does not afford the court such an opportunity, it is difficult to conceive of a case in which it can later seek damages for the harm that it failed to take measures to prevent.” We’re not sure why judges would suggest that equitable considerations can affect immunity, 

(link to opinion)

There probably aren’t many probate opinions that depend on the Restatement (Third) of Unfair Competition.

Daughter made comments on the web whining about having to care for her dying mother. Mother then died. Sister, purporting to find out about the comments only after Mother’s dearth, told the complaining daughter to stop making public comments about Mother. Daughter then put a tribute to Mother on her blog. Sister, as Mother’s P.R., then filed an estate claim against Daughter for violation of the “right of publicity.” The point of this opinion is to establish a right of publicity, though it doesn’t apply to what Daughter did.

The court starts its analysis thus: “Violation of the right of publicity, also termed “appropriation,” originally was one of the four varieties of invasion of privacy. See Restatement (Second) of Torts §§ 652A, 652C (1977); William L. Prosser, Privacy, 48 Cal. L. Rev. 383, 389 (1960).” Now, these are two cites for essentially the same thing and so we wonder whether the court didn’t know that or knew it and cited both anyway to make its opinion look stronger. Prosser was the Senior Reporter for the Restatement (Second) and incorporated in it his theories of privacy law (though several volumes of his Restatement were not published until years after his death, such is the glacially slow pace at which the ALI operates). He had earlier stated those theories in the Privacy article. (That article invented the “four varieties,” by the way. Did the court know that, either, or did it think it was plumbing the depths of common-law history?)

In any event, the court then jumps to the Restatement (Third) of Unfair Competition, which speaks of a “right of publicity” creating a claim against “[o]ne who appropriates the commercial value of a person’s identity by using without consent the person’s name, likeness, or other indicia of identity for purposes of trade.” (In other words, the “right of publicity” is the right of no publicity, an absurdity for which we cannot  blame CA1. The point of Prosser’s Privacy article was in fact to try to bring order to the field, which is in part why it is now seen as dated and restrictive by enlightened minds.)

The court explains how the right of publicity protects performers and celebrities from having their identity ripped off. So how does that apply to Mother? Well, “even the identity of an unknown person can have commercial value,” according to the Restatement. So, how does that apply to Mother? Because “we see no need to depart from the Restatement.” In other words, if the Restatement says it then there’s no point in reading too closely or trying to figure out what it means. Instead of explaining that the key is not notoriety but trade value and how the two can differ the court simply applies the tort to everyone.

Daughter then argued that Mother’s “right of publicity” hadn’t survived her because the survival statute (14-3110) excludes “invasion of the right of privacy.” But it doesn’t specifically say “right of publicity” and that is “logical,” the court tells us, because the claims that do not survive are “deeply personal” ones; the right of publicity, on the other hand, despite what the court told us earlier about privacy, “is more akin to a property right, the breach of which is measured by resulting pecuniary loss, than a personal right whose violation results in emotional injury.” In other words, the statute omits right of publicity not because it never existed until now but because the legislature made a logical analysis of it and logically decided that it should not survive. (In fairness, and we do try to be fair once in a while even though its normally far less interesting, the court is presumably trying to say – or at least should be trying to say, though on balance we’re not sure that the court is sure what it should be trying to say – that this is what the legislature would have done had it had the opportunity to consider the tort.) One wonders, though, what will come of today’s pronouncement that libel and slander, for example – also non-surviving claims in the statute – do not result in pecuniary loss.

But the court can’t stop and continues on this issue by saying “But even when appropriation, or violation of the right of publicity, was treated as a variety of invasion of privacy, the Restatement (Second) of Torts expressly allowed such a claim to survive the death of the holder.” Is the opinion saying that right of publicity would survive even were it a right of privacy even though our statute says right of privacy doesn’t survive? That’s the implication; we almost said “the obvious implication” but perhaps it wasn’t so to somebody. We thought these folks swore their oaths to the laws and Constitution of Arizona, not to the Restatement.

In the next paragraphs, though, right of publicity becomes a property right again so as to hold that it can be asserted by the estate.

Finally, however, the court rules against Sister because Daughter’s articles, though arguably done for a commercial purpose, were not “for purposes of trade.” That’s what right of publicity applies to according to the Restatement of Unfair Competition. The court apparently intends that you read the Restatement to find out what that means since it doesn’t much comment on it itself. Daughter’s comments were “on the order of an unauthorized biography,” which is “plainly” not right-of-publicity stuff.  (We used to complain about opinions’ unreasonably long statements of fact. We haven’t had to make that complaint lately – and yes, we’re willing to take credit for the change, thank you. But in this case the facts deserved a bit more explanation; why any of this was even arguably commercial activity is especially vague and had to be supplemented by a footnote late in the opinion.)

(link to opinion)

We blogged Sage v. Blagg Appraisal so we’ll blog this, which Sage probably inspired in part (though the opinion indicates that the plaintiff also relied on dicta from a Washington case).

There were two cases below but the Court of Appeals consolidates them because they involve three instances of the same fact pattern:: Southwest contracted to sell a house to a buyer for a specific amount; the buyer’s lender then got an appraisal that came in below that amount; so the lender balked and the deal fell through. Southwest’s solution was, among other things, to sue the appraiser for negligence. The appraisers argued in varying ways that they had no duty to Southwest. The trial court agreed, as does the Court of Appeals.

Under the Restatement an appraiser has a duty, basically, to his client and people he should know will get the appraisal and be influenced by it. Since Southwest had already agreed to a price there was no basis to find that the appraiser influenced it or intended to do so.

Two of the appraisers also argued successfully that under the language of their contract with the lenders Southwest was not a party who was intended to get their appraisal anyway, so they could not have intended to influence it.

The Restatement section, by the way, is 552 of Torts (Second). One wonders what the outcome would have been if these judges had been willing to read it as expansively as their brethren read the same section in Sage.

Sage was five years ago. Its frankly a shock to see that we’ve been doing this blog that long; we had expected to turn it into a reality TV series long before this.

(link to opinion)