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Linder v. Brown & Herrick
943 P.2d 758
Ariz. Ct. App.
1997
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*1 of causation. We remand ruling on the issue application. has no Arono- trine of laches further 237, 570, trial court for this matter Levy, 56 N.W.2d vitch v. 238 Minn. (1953). opinion. this proceedings consistent with Eighth Circuit Because statute of limitations found that a Minnesota action, EHRLICH, JJ., underlying concur.

governed to bar the VOSS of laches became irrelevant. doctrine superseding agreement, we do

As to the agreement

not find in the record either the which the trial court evidence from agreement 943 P.2d 758 could have determined that superseded promissory notes. There- Nancy L. LINDER and Charles G. fore, in a the trial court could not been Husband, Linder, Sr., Wife law, decide, of position to as matter Plaintiffs-Appellants, any rights under agreement terminated remand, may Upon appellees the notes. question in a manner that will raise this Prаkel, Attorney-Appellant, Judith M. the issue on enable the court to determine the merits. HERRICK, Arizona Gener- an BROWN us, cau- the record before the issue of On Kaufman, Partnership; Robert B. al Because the open remains an one. sation Corpora- P.C., Arizona Professional an lack of causation as a trial court determined Nearhood, tion; Kaufman, Apker & law, dem- of and because our decision matter Corpora- P.C., Arizona Professional an ruling onstrates that the foundation for McVey, P.A., tion; Lancy, Scult & error, court on we reverse the trial Corporation; San- Professional Arizona issue. al., Schaller; dra et J. Attorneys’ fees IV. appellees fees to The trial awarded Roca, Part- an Arizona General Lewis and arising prevailing party a matter as the Rawlins, Burrus, nership; Lewkowitz Because we have affirmed out of contract. P.C., Corpora- Feinstein, an Arizona claim, of contract the dismissal of the breach Schilleman, Single tion; Wom- Sue O. prevailing party on appellees are still the Agreement an, under Trust and Trustee However, have reversed the

that claim. we 1982; al., July 21, et Defendants- Dated summary judgment negligence claim on the Appellees. issue, appears that and it and the causation No. 1 CA-CV 94-0533. portion appellees’ fees awarded some may have been incurred the trial court Arizona, Appeals Court The fee award connection with these issues. 1, E. Department Division but the trial court must therefore be vacated remand, following upon may, reconsideration 1997. Jan. appеllees’ portion of make an award for that for Review and Cross-Petition Review litigating actually expended in fees 16,1997.* Sept. Denied Environmen- of contract claim. See breach Denied Feb. Reconsideration Liners, 930 P.2d at tal CONCLUSION of the breach affirm the dismissal reverse the dismissal

contract claim. We the trial court’s negligence claim and * Jones, V.C.J., pate of this matter. partici- in the determination and did not recused himself *2 Stahl, A. Lang, P.A. Louis

Streich Phoenix, Defendant-Appellee Lewis & Roca. Micheaels,

Beale & P.C. John A. Mi- Salmon, Jennings, cheaels Strouss O’Connor, Phoenix, ‍​‌​‌‌​‌​​‌‌‌​​‌‌​‌‌​‌‌‌​‌​​‌‌​​​​‌‌‌‌‌​‌‌‌​​​​‌​‍P.L.C. Michael J. Rawlins, Burrus. Defendant-Appellee *3 Hill, Hill, by James W. Ltd. James W. Phoenix, Defendant-Appellee for Schilleman. OPINION GERBER, Judge. Presiding (Linder) Nancy L. Linder and Charles G. Linders) Linder, (jointly losing Sr. were $20,000 parties involving in prior a lawsuit in a held real estate escrow account. The grown stakes have since then. actiоn, Linders, present

In the repre- (Prakel), by attorney sented Judith Prakel (1) negligence against filed suit for the attor- neys prior who them the law- (2) prevailing suit and for fraud party, adverse Sue O. Schilleman (Schilleman), attorneys. and her The Lin- ders, appeal propria persona, now from granting the trial all court’s order defen- dants’ for failure motions to dismiss to state appeal a claim. and Prakel also The Linders imposition from the trial court’s of Rule 11 sanctions and the denial of their motion for follow, new trial. For reasons that we af- firm. BACKGROUND Linder,

Nancy L. Linder and Charles G. Sr., Chandler, pro. per. Litigation The TICOM Prakel, by Judith M. P.C. Judith M. Prak- underlying litigation arose from a dis- el, Phoenix, Attorney-Appellant. pute Apacheland attempted over the sale of Apache (Apacheland) Movie Ranch Junc- Woods, Cass, Broening, Oberg, Wilson & by owned tion. ranch was then Schille- by Broening R. P.C. James and Kenneth C. Linder, man. a licensed real estate Miller, Phoenix, Defendants-Appellees for potential agent, with a contacted Schilleman Brown & Herrick. buyer. by P. Kauf- Robert P. Kaufman Robert “Stephen Schilleman S. Russell and/or man, Phoenix, Defendants-Appellees for purchase Nominee” a contract with executed Kaufman, Kaufman, Ap- P.C. and Robert P. $20,000 $1,100,000, purchase with price Nearhood, ker & P.C. money deposited in earnest to be escrow Swan, Turley, Company of Minne- Turley P.C. Kent E. held Title Insurance (TICOM). Phoenix, Defendants-Appellees paid sota Russell half of the ear- Schaller money up Lancy, McVey, put P.A. nest Linder the other half. Scult & $20,000 The escrow instructions contаined the fol- awarded Sehilleman the earnest lowing $188,197.85 cancellation clause: money in attorneys’ as well as fees and costs.

CANCELLATION If party either elects to cancel these Linder filed a motion reconsideration instructions because of the failure of the which the trial court denied. The court then party comply other with awarded additional Sehilleman an terms provid- hereof within time limits attorneys’ fees. herein, party electing ed so said to cancel shall Agent deliver to Escrow a written Appeal The TICOM notice party to the other and Escrow timely appeal The Linders filed Agent demanding that party said other separate appeal. TICOM case from this comply with the terms hereof within thir- (1) appeal, they argued that Linder was days teen receipt from the of said notice (2) contract; not a even if Lin- Agent Escrow these instructions *4 der party, was a trial court the erred in thereupon shall become cancelled. ruling that could Sehilleman cancel the con- Both pur- the escrow instructions and the because, view, tract in Linder’s Schilleman’s chase contract contained a “time is of the title dispute was and a unmarketable existed 6, 1986, essence” clause. On November regarding personal property whether could Sehilleman invoked this clause demanding contract; pursuant be to transferred the and that escrow close November 1986. (3) the trial in awarding court erred attor- date, When escrow close on failed to that she neys’ against fees Linder. asked a thirteen-day TICOM to issue cancel- lation notice to and Russell to advise him unpublished In an memorandum decision paid that unless he the amount due under the in appeal, that Division Two of this court pin-chase 25, 1986, contract November judgment. affirmed the trial court’s See escrow would be cancelled and he would for- 2 Leffler/Linder, Schilleman v. CA-CV 90- money. feit his earnest When Russell did (October 1990). The court ‍​‌​‌‌​‌​​‌‌‌​​‌‌​‌‌​‌‌‌​‌​​‌‌​​​​‌‌‌‌‌​‌‌‌​​​​‌​‍noted deposit not required the amount into the joint that in her for summary cross-motion account, eventually she cancelled the escrow. judgment, “specifically Linder claimed that she purchaser disclosed her dual status as interpleader TICOM then filed an action during negotiations broker with Schille against Sehilleman and Russell to determine man.” Id. at 7. The court further noted that right the to the mоney. earnest in response to Schilleman’s contention that Sehilleman against filed a cross-claim Russell Regula had violated Real Arizona Estate in alleged which she that she was entitled to tions, “argued Linder that she had made the money earnest because he had failed to disclosure____” adequate Id. The court con perform. She also filed a against cross-claim cluded that because Linder once maintained in Linder which she that Linder not contract, party that she was a “she only brokered the transaction but also was position change appeal.” [could] not her buyer in undisclosed violation of Arizona Id. at 6. Department regulations. of Real Estate She

sought declaratory judgment a pur- that the regard With Linder’s to thereby chase contrаct was void or cancelled. Sehilleman could not cancel the contract be- part, For his Russell filed a cross-claim unmarketable, cause her title was Division seeking specific perfor- Sehilleman Two of this court determined the es- mance of the contract. permitted party crow instructions either The trial granted summary judgment court if cancel the instructions the other favor of perform Sehilleman Russell failed to that the “cancellation provision and Linder. electing party It ruled Sehilleman require was did not the contract, entitled perform performance.” to cancel the that the con- or tender Id. at provide tract did not for the personal sale of 9. Thus Sehilleman had contractual property, that Linder failed tо disclose in cancel escrow when Russell and Linder did writing buyer. deposit purchase money her status as a The not court the into escrow $30,000. Following closing court the amount of by the date. The further de- trial or motion for new writings involved court’s denial of their did termined Prakel personal judgment, the satisfy to amend Linders the statute of frauds as They present timely appeal. filed personalty was not property therefore following review: Lastly, court issues for included contract. no abuse the trial found of discretion dismissing court 1. Did the trial err attorneys’ against Lin- award of fees court’s negligence claims? appellate awarded The court Schille- der. dismissing 2. trial court err in Did the attorneys’ fees and costs.

man additional fraud claims? petition Linders filed a for re- The then court discretion 3. the trial abuse its Did Supreme view in the Arizona Court. jointly awarding Rule 11 sanctions petition denied the and awarded severally against Linders and The Linders sub- additional fees. Schilleman Prakel? Chapter voluntary bank- sequently filed properly imposed If trial court ruptcy petition States Bank- the United sanctions, ex- the amount Court, Chapter later to a ruptcy converted cessive? liquidation. court abuse its discretion Did the trial mo- denying appellants’ new trial Present Case jurisdiction pursuant tion? We Linders, July On Annotated Revised Statutes Arizona *5 Prakel, attorney com- by filed amended (F)(1). 12-2101(B) (A.R.S.) section superior alleging negligent plaint in by lawyers former representation their —the DISCUSSION Herrick, through firm of Brown & its law I. Dismiss Herrick, Motions to Greg attorneys and John Brown Kaufman, P. and the law firms of Robert of a motion to dismiss On review Nearhood, P.C., Kaufman, P.C., Apker & claim, state a we take for failure to P.A., through Lancy, McVey, & Scult their allegations complaint true. We will as (Sehaller), attorney Sandra J. Schaller only plaintiff is uphold if the the dismissal suscep “under facts not entitled to relief alleged that The Linders further Sehille- proof Don man, tible of under the claims stated.” together attorneys— with her former Roca, nelly Oberg/Hunt/Gilleland, through firm its Constr. Co. of Lewis and the law (1984). 1292,1294 184,186, Ariz. attorneys and Sheila Foster Robberson Car- those may for reasons other than affirm of Rawlins Burrus mody, and the law firm (Rawlins upon by Earthworks Feinstein, relied court. Bur- P.C. Lewkowitz Contracting Ltd. v. Mendel-Allison Constr. rus), Jeffrey attorney and its Leonard —com- Cal., Inc., 102,109, representations making fraud false mitted (App.1990). withholding court and material to the litigatiоn. information Negligence A. Claims motions to

The defendants filed dismiss complaint alleged that their The Linders’ complaint pursuant to Rule the amended Procedure, negligently represented 12(b)(6), attorneys former Arizona Rules of Civil litigation. negli- in them the TICOM for failure to state a claim also for both as follows: granted gence claims can be summarized standing. trial court lack of (1) Lin- misrepresented that attorneys failure to their motions for state defendants’ Apacheland transac- partner granted der was a The court also Lewis claim. (2) rele- investigate Roca’s, Burrus’, tion and failed and Schilleman’s Rawlins litigation 11, vance of the Schilleman-Stewart1 pursuant to Rule for sanctions motions Procedure, litigation. Specifically, to the TICOM Arizona Rules Civil complaint, the amendеd Prakel, severally, in Count One of their jointly and Linders Apacheland. former father and the owner Spencer Stewart is Schilleman’s alleged attorney legal Greg Linders that Brown and that Sehilleman had the (Brown) and the Brown & Herrick firm to demand close of escrow on Novem- himself, clients, apprise 25,1986. “fail[ed] to and his of ber the fact that Sehilleman and the Stewarts respect allegation that With were involved in the Schilleman-Stewart Lit- attorneys misrepresented Linder’s her status igation.” significant, This was ac- buyer, preventing prevail as a thus her from Linders, cording to the because Sehilleman ing subsequent in the TICOM lawsuit and alleging pro- that the Stewarts had not appeal, the trial court noted: acceptable assumption vided her with an if Plaintiffs contend that Ms. Schaller and, concerning Apacheland statement addi- deposition testimony ignored the extensive tionally, problems had not resolved with its Linder Mr. and instead of Ms. Russell personal property, lease and all of which was a told the Court that Ms. Linder “preventfed] closing her from escrow with “potential buyer,” this could have affected Russell.” Brown thus to establish “fail[ed] Judge the outcome of the case. Gottsfield with TICOM that Sehilleman did not have ruled on the entire record based before legal right to demand that TICOM issue him, including depositions, that Ms. ... thirteen-day to Russell the cancellation “party” Linder was a to the transac- notices when Sehilleman herself could not tion____ attorney obligation An has an perform.” fairly deal with a tribunal. Arizona Rules The Linders attorney further 3.3(a): Conduct, of Professional John Hеrrick and the Brown & Herrick firm lawyer A knowingly: shall not negligent “failing recognize were 1. Make a false statement of fact of law an actual conflict of interest existed in the tribunal; to a position” Russells’ and the Linders’ required law, Except by applicable as litigation; ‍​‌​‌‌​‌​​‌‌‌​​‌‌​‌‌​‌‌‌​‌​​‌‌​​​​‌‌‌‌‌​‌‌‌​​​​‌​‍failing TICOM to inform them fail to disclose a material fact to a tribunal positions could not be necessary exposing when disclosure is jointly; failing Nancy “to assert ... client____ criminal or fraudulent act actually Linder never became a nominee *6 Apacheland part- “unspeak” Purchase Contract or a Ms. Schaller could not buyer”; ner of failing testimony Russell as a and in to sworn of her client and her copy “Agency obtain a Option partner. of the client’s Agreement ... with exhibits A and B at- agree reаsoning. with the trial court’s tached.” position Linder’s initial was that she had Four complaint, appropriate Count of their amended made disclosure of her dual sta- alleged attorney the Linders buyer Schaller as a broker and a tus and thus satis- negligently recognize failed to regulations. the different fied real estate Such disclosure legal positions of unnecessary the Linders and the Rus- would have been if she was not sells; However, failed to inform buyer, the court that Schille- a as now Lin- claims. performance man could not demand deposition from der’s affidavit as well as her own Russell perform by testimony when she could not clos- and that of Russell establish her contract; ing Apacheland on buyer Apacheland erred in true status as a stating Judge during argu- to Gottsfield oral complain transaction. She cannot now to us 12, 1988, February ment on that Linder and about what she said in her own words. Giv- statements, partners, thereby Russell preventing attorneys were en her own her in the lawsuit; prevailing litigation hardly “misrep- Linder from in the and TICOM could have fact, attorney failed to correct state- Robberson’s resented” her status to the court. April attorneys ethically ments oral on her were foreclosed from “potential maintaining only that escrow officer Gail could have Johnson that she was a prepared closing buyer,” they statement on November as Linder now contends should Agency Option Agreement allegation pp. 2. The is "Fraud Claims." See 764-765. infra heading discussed further under titled added.) negligence against their attor- alleged. (Emphasis If there is for а claim investigate the any misrepresentation, discrep- neys for failure to Schille- it lies Further, litigation. ancy and man-Stewart between Linder’s sworn statements testimony, the Linders Linder’s own sworn differing position appeal. her negligence have no basis for their claim of respect allegations in the With attorneys Apacheland complaint regarding amended the Schille Accordingly, the trial transaction. we affirm litigation, agree we with the man-Stewart and the grant court’s of Brown & Herrick’s trial court that Division Two’s memorandum to dismiss for defendants’ motions Schaller issue, namely, decision resolved the central a claim. failure to state ability perform the effect of Schilleman’s right on her under the escrow instructions B. Fraud Claims cancel escrow: fraud claims Schille- The Lindеrs’ instructions, the escrow either Under attorneys, Lewis and Roca and man and her party permitted to cancel the instruc- Burris, also relate to the Schille- Rawlins perform. tions if the other failed to litigation. Five of man-Stewart Count provision require This cancellation did not alleged complaint, the Linders their amended electing party perform or tender “knowingly false that these defendants made performance. the re- Schilleman issued Superior Arizona representations buy- quired 13-day notice and the demand litigation “fail- Court” the TICOM perform. cancellation of ers did not Her Agency ing produce the correct disclose instructions was valid. the escrow Agreement exhibits to Option with its Schilleman, 2 90-0099 at 9-10. CA-CV response counsel in to Linders’ Re- Linders’ The Schilleman сourt ruled as matter of Documents on or quest for Production law that the Schilleman-Stewart 30, 1987”; by “misrepresenting about June to cancel did not affect Schilleman’s Liti- the relevance Schilleman-Stewart Linder and Russell failed to escrow when Lawsuit”; by “misrepre- gation to this money required date. deposit their on the senting ability to close the es- Schilleman’s Further, that because the court determined Apacheland transaction.” The crow on the agreement the Wilderness/Schilleman defendants Linders also these assignabili- on sale3 contained no restrictions representations made false to the court ty, possibility of a successful there was “no court, supreme bankruptcy and the appeals, assumability, accordingly, attack on its regarding Liti- the SchillemanStewart to tender a marketable Schilleman was able alleges resulting inten- gation. Six Count Regarding title.” Id. at 11. the leases infliction of emotional dis- tional or reckless *7 that because property, the the court found tress. default, they had the were Schilleman these claims can be The essence of all possession right to cancel them and retake as follows: had these defendants summarized necessary and that such cancellation was not counsel and the court not misled the Linders’ ... ability perform to “until to Schilleman’s of the Schilleman-Stewart about the nature purchase price.” Id. buyers the tendered the (and Linders’ own attor- litigation had the personal that at 12. The court also found them), the neys negligently not in the transaction property was nоt included able to make Linders would have been writing identify- signed was no because there un- winning argument that Schilleman was satisfying the statute of ing specific property unable to can- perform to and therefore able Thus, factual issue Id. at 14. no frauds. cel escrow. prevent respect personalty to to existed with Linders had con- summary judgment, as the claims are defective The Linders’ tended. Id. at 15. First, Linders fail the for several reasons. elemente of a fraud plead all the essential prior decision de- to of this court’s “magic no lan- Although there is above, have no basis claim. the Linders now scribed (Wil- demess) Schilleman. agreement Stewart and of sale between 3. The fraud, guage” required specious. state a The Lin- to claim These contentions are complaint merely the as whole must speculate be construed ders about the contents of Romero, A; plead to all nine v. elements. Hall the nor Prakel Exhibit neither Linders 120, 124, Further, (App. 685 P.2d this even if have seen document.5 1984). Justifiable reliance is one of those A we assume that Exhibit described with Here, essential elements. the Linders failed particularity personal property conveyed the allege they justifiably to that on Stewart, relied by present to Schilleman the trans- by opposing statements made counsel. In- by writing signed action lacked a Schille- still deed, sense, aas matter of law and common confirming agreed man sell and to they right rely no had to on statements made buy buyers agreed specifically the identi- to attorneys opposing See Thus, the them. Lewis if personal property. fied even this Swenson, produced the TI- document been duty 74 (App.1980) (any adverse owed litigation, COM it would not have affected respect litiga- with to the counsel conduct ruling personal prop- the trial court’s on the court, tion not is “owed to the and to the erty issue. party.”) Thus, they adverse because had no Two of Division also determined rely,

right the claim to Linders’ fraud is the Schilleman had contractual legally deficient. agreement under the escrow to cancel the Second, holdings this court’s buyer’s upon nonperformance escrow the in appeal TICOM resolve the issues raised in ability dependently perform. of her to That complaint. rulings the Linders’ These can language decision rests on broad collaterally not nоw be attacked. Division provision of the instruc cancellation escrow this court Two of determined that Schilleman tions. That court found that cancella “[t]his obligated convey personal proper was not to provision require electing tion did ty signed writing because no identified the perform performance.” to or tender specific property Schilleman, be transferred. In the (empha 90-0099 at 9 CA-CV case, present added). the Linders in their sis Lewis Roca’s statements complaint that Schilleman Lewis the Schilleman-Stewart was by failing produce Roca committed fraud ability to Schilleman’s to cancel irrelevant Agency Agreement Option and its language escrow rested of this clause during discovery.4 exhibits Linders ar “misrepre therefore could not bеen gue if pro these been documents had sentations” intended deceive the court. duced, they might have shown that Stewart fully litigated performance The Linders conveyed personal property Apache- personalty issue and the issue in the TICOM land writing to Schilleman and that appeal such subsequent trial court and in the might satisfy the statute frauds with re judgment is this court. Schilleman final spect Apacheland transaction. collaterally be cannot attacked. view, Apacheland being because Third, basic, and most the Linders’ partially by sold to Russell Schilleman against opposing fraud claims counsel are not assignment of her “Agreement father’s recognized by granting Arizona law. incorporated Agency Sale” which dismiss, Lewis and Roca’s motion Option Agreement pre A of which —Exhibit *8 as follows: ruled sumably personal property described —these might “convey documents have shown that The critical issue is whether this Court supposed recognize ance to Russell was to include the should a cause of action personal property.” party opposing the against counsel at con- hearing, testimony Agency Op- 4. that she the and At the 11 the showed admitted had seen 1978, produced Agency expired that Schilleman had the and Agreement, for the tion which in Agreement Option response to the Linders’ in only days hearing. first time several before this 30, request production June 1987 for but had A, responded produce Exhibit she could hearing at the Prakel also admitted Rule 11 person- presumably Apacheland which described never seen Exhibit A. she has property, did it. al because she not have Prakel 406 published during a

elusion of the lawsuit. Plaintiffs and written statements sought encourage adopt to preliminary this to to the initiation press Court conference ap- plaintiffs. such lawsuits as the “more reasoned In hold- against a class action of proach” analyzing liability to to counsel’s the ing attorney’s that an conduct Arizona, parties. third But case in judicial absolutely law proceedings of is course Swenson, specifically, v. 126 Ariz. Lewis explained: privileged, Supreme our Court 561, (App.1980), 617 four- P.2d 69 stands privileges In the area one of absolute square against proposition Plain- the which involving the most common is that tiffs advocate. judicial proceedings. in The participant authority bringing No exists Arizona for promoted by socially important interests attorney opposing a claim of an fraud privilege absolute in this area include during litigation. To for statements made and prosecution the fearless defense contrary, narrowly limits claims case law complete exposure of claims which leads to clear. against opposing counsel. Our law is pertinent information for a tribunal’s dis- Swenson, 562, In Lewis v. 126 Ariz. at 617 protects judges, position. privilege 70, plaintiff malprac- P.2d at in a medical lawyers, jurors. parties, witnesses opposing tice action sued counsel for speak- is in that absolute defense failing prevent expert to misconduct an motive, purpose er’s or reasonableness commenting malprac- on high witness from uttering a do not statement false affect jury’s premiums presence. tice privilege Whether the exists is defense. affirming the trial court’s dismissal court, may be question of for the law court, plaintiff’s complaint, dismiss____ in an the Lems properly in a motion to raised O’Connor, opinion authored now Justice Trust, 613, 141 Ariz. at P.2d Acres 688 Green Hines, Cal.App.3d from quoted Norton v. 49 (citations omitted) added); (emphasis 621 at (1975): 917,123 237,240 Cal.Rptr. accord, Technologies, Inc. v. Western Sverdr Clearly, an is not an intend- adverse Parcel, 1, Inc., 4, P.2d up 739 beneficiary ed of the adverse counsel’s (“An 1318, 1321 (App.1986) privilege absolute If client. a cause of action exists judicial participants proceed for exists ..., attorneys be pleaded it must as Couri, Darragh Ariz. ings.”); Superior v. 183 prosecution. see action malicious (“One 1215, (App.1995) P.2d 1217 applicаble no reason extend law now recognized privi widely of the most absolute involving attorneys found cases participants judicial leges is that afforded parties there third when is sound proceedings.”)6 recognized policy limiting the public cases, these well-established prosecution. cause action to malicious in- claims of fraud intentional Linders’ (em- Lewis, 564, at 72 Ariz. at against opposing fliction of emotional distress added). phasis The court noted that “rea- recognized comprise causes of counsel fail public policy sons of have caused courts above, stated For all the reasons we action. privilege is an declare there absolute grant of the trial court’s Lewis affirm attorneys anything and witnesses state Burrus’, Roca’s, and Schillеman’s Rawlins trial which relates to the matter at issue.” to state a claim. motions to dismiss for failure Id. Although the foreclosed from Linders were are policy supporting There reasons London, against opposing bringing a fraud claim Acres Trust view. Green counsel, (1984), they had other remedies available plain- Litigants they not utilize. brought against de- them which did tiffs a defamation action or their attorneys on oral believe that their adversaries fendants based who plaintiffs cause of Contrary reply brief could maintain a action under assertion in her to Prakel’s they present Darragh holdings [could] RICO "if in Western statute "limited federal *9 Acres," evidence, independent Technologies held the Green this court sufficient immunized and of partici- testimony appraisals, privilege prоtected that Petitioner both the the absolute (Emphasis alleged conspiracy." testimony appraisals judicial pated and written of added.) court held that the witness from suit. The also

407 Parcel, Inc.; attorneys guilty Technologies ‍​‌​‌‌​‌​​‌‌‌​​‌‌​‌‌​‌‌‌​‌​​‌‌​​​​‌‌‌‌‌​‌‌‌​​​​‌​‍Sverdrup adversaries’ have been of v. & during litigation may misconduct file a mo- v. Green Acres Trust London. 60(c),

tion under Rule Arizona Rules of Civil (Citations omitted.) Procedure, judgment for relief from final We review the trial court’s order the basis of: imposing sanctions for an abuse of (1) mistake, inadvertence, surprise or ex- James, Hobson, discretion. Cooke & Inc. v. (2) neglect; newly cusable discovered evi- Protection, Plumbing Lake Havasu & Fire dence diligence which due could not 316, 317, (App. 177 Ariz. have been discovered time to move for a 1993). allegations Undеr Rule ;(3) ..., new trial ... misrepresenta- fraud grounded fraud must have been “well in fact” tion or other misconduct an adverse by existing good and “warranted or a law party____ The motion shall be filed with- extension, faith for the modifica time, (1), in a reasonable and for reasons tion, existing good or reversal of law.” The (2) (3) not more than six months after component faith of Rule does not turn on judgment or order was entered or attorney subjectively pursues whether an proceeding was taken. Instead, good claims faith. em rule objective bodies an standard about what a added.) (Emphasis professional, competent attorney would do in Furthermore, attorneys subject are similar satisfy circumstances to the rule’s disciplinary power of the courts and the Wilk, requirements. Standage Jаburg 11; State Bar. See R. Civ. P. Rules P.C., Court, Supreme Rule 42. (App.1993). Here the fraud claims are not well II. Rule 11 Sanctions grounded in fact. One of the Linders’ and Both the Schaller defendants and the Lew- allegations Prakel’s chief is that these defen is and Roca defendants filed motions for dants “failing committed fraud to disclose attorneys’ Following fees and sanctions. an produce Agency Option the correct evidentiary hearing, the trial court denied Agreement response with its exhibits” in granted Schaller motions but the Lewis request production of documents in and Roca motions. The court assessed a However, testimony at the sanctions $30,000 attorneys’ total of fees— hearing revealed that Lewis and Roca had Roca, Burras, each to Lewis and Rawlins produced agreement indeed at that time. against Prakel, the Linders and Schilleman — Further, allegations Prakel based certain ruling that these defendants should have complaint on the contents of a docu judgment “jointly severally ... as a ment —Exhibit A—-which she admitted sanction for the violation of Rule 11.” yet pro not seen and which has to be apparently duced and has not even been sanctions, assessing these found. explained: Additionally, Prakel has [Tjhere basis, good was not a faith after by misrep- defendants have committed fraud investigation, filing reasonable for the resenting the relevance of the Schilleman- this action Plaintiffs the fraud Stewart and its effect on Schille- Defendants, Roca, Lewis and Rawlins and ability contract, despite man’s to cancel the Schilleman____ Burras, and Sue There is рrior holding this court’s that Schilleman had authority action, no in Arizona for such an regardless to cancel escrow of her and it is not and was not a reasonable ability perform performance” “to or tender extension of Arizona law believe that express under the terms the cancellation supported. such an action could be provision. sj« sj; % # sH factually legally These claims are both above, ignore existing authority Plaintiffs chose to deficient. As discussed no Swenson; authority of Lewis v. Western exists in Arizona for a fraud claim *10 408

adversary adversary’s attorney Similarly, reliance on Tucson Air- or an based law. her Authority during litigation. port v. Certain Underwriters on statements made See London, Lewis, 45, 561, 69; Lloyd’s, 186 Ariz. 918 P.2d 1063 126 Ariz. 617 P.2d Green Trust, 609, 617; (App.1996), wholly misplaced is also because 141 Ariz. Acres faith 1, thаt suit concerned an insured’s bad Technologies, Western 739 P.2d Moreover, against claim its own insurer for breach of good Prakel has not made a dealing during coverage. good faith and fair argument existing faith that law should be fiduciary loyalties exist between No such encompass extended to such fraud claims. parties opposing counsel. these cites numerous cases evidence of a She as legal recognize trend to such actions. How judicial sampling recent and ethical a ever, exception with the of one case discussed views, 1996 issue of the ABA the December below, distinguishable. all the cited cases are for the support Journal finds no whatsoever attorney conduct Most the cases involve suing opposing attorney. Mark nоtion of cases, judicial proceedings. In other outside Hansen, Taco Run the Court- Bell’s attorney governed by conduct state or is Company’s wrongful litigation suit house— federal statutes or the cause of action is not dismissed, against plaintiffs lawyer a is on statements made based fraudulent Journal, ABA Dec. at 20. To maintain litigation. claim, such a a court would have to find that lawyer duty opposing to an a owed some primarily Prakel relies on Robinson duty. a and then breached Such AG, (10th Volkswagenwerk 940 F.2d 1369 necessarily finding would create an automatic cert, Cir.1991), denied, 1091, 112 502 U.S. lawyer interest between a conflict of (1992), 117 L.Ed.2d 408 a federal S.Ct. destroy if client which would dilute not holding § cases in case cited duty lawyer’s aggressive and exclusive immunity, generally while available absolute representation. proverbial Like the biblical government lawyers, private is available servant, lawyer opposing a cannot serve two lawyers only in defamation claims. She masters. reply in her brief that if Rob “[e]ven states precedent, Given this entrenched Arizona Volkswagenwerk only ... were the inson v. objectively Prakel no reasonable basis jurisdiction another American di case from believing Atizona immu- that established rectly Linders’ point supported on which nity change response to a law would Defendants, against claims the Fraud sweeping argument supported by one dissim- accepted holding, existence of that based on jurisdiction. ilar case from another She principles, Appellees common even if the law good ll’s faith therefore fails to meet Rule decided, argue wrongly want to that it was requirement. to make award would be alone sufficient improper.” of Rule 11 sanctions discussion, foregoing of the it was for Prakel to sue more than 190 untenable agree citing do not one dissimilar factually groundless on al- individuals based jurisdiction federal case from another dem- by existing legations unwarranted law good faith under Rule onstrates a good argument for a unsupported faith existing Arizona 11 for the modification of change in Arizona law. These baseless Lucia, Admittedly, in Smith v. law. needlessly extended claims (App. expense in substantial caused the defendants 1992), attorney’s that an this court found defending therefore find that the them. We case, minority theory case based properly trial court exercised its discretion law, objectively unreasonable for pursuant awarding in sanctions case, however, 11. In that purposes of Rule Rule 11. in Arizona applicable law was unsettled that the trial court lacking. The Linders contend controlling precedent was contrast, bring assessing Rule 11 sanctions attempt here to erred Prakel’s upon attorneys relying “non opposing runs them as claim counsel fraud However, legal opinion.” counsel’s directly contrary long-standing, unwaver- chosen expressly allows the trial court repeatedly Arizona Rule ing, affirmed recent *11 VOSS, concurring part attorney, Judge, impose par- “a upon an dissenting in both, part. ty, appropriate an sanction.” majority respects in all agree I with argues that of Prakel amount affirming In the trial exception. with one is excessive. She states in her sanctions $30,000 sanctions, court’s assessment inquiry opening that “no was made as brief majority that: correctly concludes ability pay the award.” To [her] sue more for Prakel to it was untenable duty contrary, Prakel herself factually on than 190 individuals based present financial pertinent evidence to the by ex- groundless allegations unwarranted trial its Rule 11 court for consideration. good unsupported by a faith isting law and fact, presented none.7 This cannot court change in Arizona law. for appeal evidence ‍​‌​‌‌​‌​​‌‌‌​​‌‌​‌‌​‌‌‌​‌​​‌‌​​​​‌‌‌‌‌​‌‌‌​​​​‌​‍consider on that was needlessly These claims extended baseless before the trial court. Dorman v. the defendants sub- and caused Swift Co., 704, defending them---- expense stantial (1989). failed Because Prakel to mеet her However, majority declines defendants’ evidentiary showing burden of that the trial attorneys’ appeal. for on Be- request fees $30,- awarding court its discretion abused allegations are equally cause Prakel’s sanctions, way no 000 in we have on this costly appeal, I groundless would silent to find the excessive. record sanctions attorneys’ pur- defendants fees awarded A.R.S. section 12- suant to Rule 25 and Moreover, reviewing after motion Prakel’s 341.01. exhibits, its numerous new trial with we find of discretion court’s no abuse trial

denial of this motion.

III. Request Attorneys’ Sanctions and Appeal Fees on 943 P.2d 769 request this court to award Defendants L.C., an Arizona limited li- RENALWEST attorneys’ appeal them fees sanctions on ability company and successor inter- 11, pursuant to Rule Arizona Rules of Civil Community Dialysis est to Chandler Procedure, Arizona Rules Civil Center, Ltd., corporation, an Arizona Procedure, Appellate 12- and A.R.S. sections Cross-Appellant, Plaintiff-Appellee, 341.01(A) (C) 12-349(A)(1). hemorrhages of the financial that have al- occurred,

ready in the exercise of discre- our DEPARTMENT OF ARIZONA REVE- tion to award monies to we decline more NUE, Arizona, agency the State of anyone. Cross-Appellee. Defendant-Appellant, 96-0003.

No. CA-TX CONCLUSION Arizona, Appeals Court of 1, Department T. Division reasons, foregoing For the we affirm the judgment dismissing the Lin- court’s Jan. 1997. complaint ders’ for failure state a claim Sept. Review Denied assessing in Rule 11 sanctions against the Linders and Prakel.

THOMPSON, J., concurs. sanctions, leaving her new trial alter or relieved the Rule 11 her motion for or to liable, merely sanctions be judgment, Prakel that if alone “the amount of should amend the stated granted request reduced to that decision.” her to have the Linders reflect

Case Details

Case Name: Linder v. Brown & Herrick
Court Name: Court of Appeals of Arizona
Date Published: Jan 7, 1997
Citation: 943 P.2d 758
Docket Number: 1 CA-CV 94-0533
Court Abbreviation: Ariz. Ct. App.
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