Wyatt v. Wehmueller

lessly, Nunez cannot be convicted of a less- theory crime on the he killed the same

er acting intentionally, knowing-

victim while I

ly, recklessly. dissent from the con-

trary majority. conclusion reached Wyatt, D. and Donna K.

James WYATT Wife;

Husband and Clinton E. Wolf Wolf, Wife;

and Joann P. Husband and Russell, Patty Russell and A.

John W. Wife; Joseph

Husband Soldevere Soldevere,

and Jane M. Husband and

Wife; the Glendale Industrial Air Park

Associates, an Arizona Part- General

nership; and Pacific General Invest- Ltd., Group, Corpora-

ment an Arizona

tion; Brandes, and Richard N. Plain-

tiffs-Appellants, WEHMUELLER

James Doe Jane

Wehmueller, Wife; Husband and Phil-

lip Polich, Polich and Jane Doe Hus- Wife;

band and James Overfield and Overfield, Wife;

Jane Doe Husband and Airport Partners,

Glendale Arizona USA, Inc., Partnership;

General Title Title,

Formerly Known as Life U.S.

Inc., Foreign Corporation; and Z & H

Engineering, Corporation, an Arizona

Defendants-Appellees.

No. CV-89-0421-PR. Arizona,

Supreme Court of

En Banc.

Feb. 1991.

against plaintiffs pursuant to A.R.S. attorney’s against and fees pursuant counsel to A.R.S. 12-349. We review the assessment of against plaintiffs.1 Rule Ariz.R. See Civ.App.P., jurisdic- 17B A.R.S. We have Const, 6, 5(3), pursuant tion to Ariz. art. and A.R.S. 12-120.24. AND

FACTUAL

PROCEDURAL HISTORY August Plaintiffs contracted purchase large parcel property defendants/appellees, Airport Glendale (GAP). promis- Partners took GAP back sory property note and deed of trust on the purchase price. of the 17,1987, plaintiffs On June sued Mari- copa County Superior alleging they Court purchase sixty contracted to net usable only fifty-six acres from GAP but received prayer sought acres. The for relief com- interest, pensatory damages, prejudgment costs, fees, but no form of equitable complaint relief. The stated that plaintiffs were not in default under the filing. Apparently, note at time of complaint, plaintiffs after failed payment, thereby to make an installment going into default. 28,1987,

On June caused GAP a notice of trustee’s sale to be issued and recorded pursuant to 33-808. On October 21, application filed an for a tem- order, porary restraining an order to show Brandes, Joffe, Lane & P.C. Richard cause, preliminary injunction pre- and a Brandes, Phoenix, plaintiffs-appel- N. vent the trustee’s Plaintiffs sale. asserted lants. convey sixty that GAP’s failure to usable Mariscal, Weeks, McIntyre & Friedlan- acres caused their default under note der, P.A. and Mi- James T. Braselton equity and that should restrain the trust- Rubin, Phoenix, defendants-ap- chael S. By ee’s sale under such circumstances. pellees. entry minute dated October the trial plaintiffs’ application, finding court denied OPINION irreparable injury neither nor a reasonable GORDON, likelihood of success on the merits. Chief Justice. Plaintiffs/appellants morning for re- petitioned On October the date sale, plaintiffs’ view of a court affirm- of the scheduled trustee’s appeals’ decision ing the trial court’s recorded a Notice of Lis Pendens assessment of originally granted against 1. We review on both issues. on the issue of fees counsel record, however, reviewing After portion we deter- and that order now vacated. granted improvidently mined that review was following is- in the copy trial court without issues. We review filed a The lis notifying plaintiffs. stated sue: part: against a client assessed Can of the action is that the object 2. The pursuant to when an A.R.S. § of under the theories

Plaintiffs seek the attorney pendens files a lis without contract, of negligence, breach breach of knowledge client's or consent? fraud, damages in an duty and fiduciary determined, allege and that to be amount DISCUSSION Sale, July Trustee’s filed the of Notice 28, Maricopa County Re- Plaintiffs courts in- with the contend both lower and any applied 33-420(A), is invalid that correctly corder’s Office and that sub- § occurring is also thereby sale void and their attor- apply section C should because invalid, property title to said real and will ney unilaterally pendens filed the lis with- current or his remain with titleholder out their or consent. Section nominee, pertain of which real all to the 33-420(A) provides: property described below herein. person A to claim an inter- purporting Quash in, against, GAP filed a Motion to Lis Pen- est or a lien or encumbrance 2, requested dens and an property, on November real causes a document who expedited hearing, arguing that the record- asserting claim to be recorded or such ing pendens hardship. of created the lis recorder, county filed the office of the sup- The the motion asserted that action knowing reason to know that porting pendens not the lis was one “affect- forged, groundless, the document is con- ing property” real within the mean- title to tains a misstatement or material false ing plaintiffs’ 12-1191 because § claim or is invalid is liable to A.R.S- otherwise sought only underlying complaint monetary the owner title holder the beneficial damages. not property real for the sum of less dollars, than five or for treble thousand argument by

The court heard oral trial damages the actual caused the record- telephone granted 3 and the on November ing filing, greater, whichever is and quash. given motion Plaintiffs were to reasonable fees and costs of respond to the request two weeks to action. and fees. On Novem- pendens ber the trial court ruled lis appeals The court of affirmed trial ground- 12-1191 and violated A.R.S. was court’s assessment less, it was recorded an action 33-420(A), stating that the de- seeking only monetary and there- pendens to file a cision the lis was normal property. fore affect title to real did not concerning and routine decision tactical pendens also found that the lis court litigation. Reasoning that the statute does misrepresented object of the action. require “person purporting not that the By stating property that the title specific knowledge an claim interest” have affected, pendens was the lis contained filing, of or the court held authorize plaintiffs’ actu- misstatement” “material plaintiffs for their were liable attor- Moreover, al the court found that claims. ney’s findings actions. As a result of its plaintiffs’ filed the A, appeals under subsection the court groundless knowing document was that the Likewise, did not subsection C. we address and material misstatement. contained a do not C. address subsection granted judgment GAP then trial court dispute Plaintiffs do that counsel was not $5,000 against pursuant agent authority to act their and had judgment against 33-420 and pendens. They in filing their behalf attorney’s fees of counsel for claim, however, 33-420(A) applies $2,762 and pursuant to A.R.S. 12-349 §§ agent principal instructs appeals affirmed. 33-420. The court of pendens; to file a lis then can the peti- 163 Ariz. 581. Plaintiff 785 P.2d knowingly cause principal tioned be said to this court for review raised five recording (1985); of the lis According Flood, see Peterson v. 84 Ariz. plaintiffs, 33-420(C) applies to this case 326 P.2d To find supersedes agency by pro- because it law legislative intent, appellate may viding separate subsection for relief many consider different factors. These agent when an records an invalid document factors statute, include the context of the principal’s knowledge. without How- language used, matter, subject its ever, argue sanctions this case are background, historical its effects and con improper under subsection C because the sequences, spirit and its purpose. principal given was not notice of the Martin, Martin v. wrongful recording opportunity and an 1038, 1043(1988). A court also should release the invalid document. interpret two sections of the same statute consistently, especially they use iden GAP counters that the statute does not language. tical Oehlerking, State v. 147 change, abrogate, or even the common law 266, 268, 900, Ariz. 709 (App. P.2d 902 agency in agency of this situation. Under 1985). plaintiffs responsible principles, law are for attorney’s Although plain- their actions. requires A.R.S. 33-420 knowing vio- personally pendens, tiffs did not file the lis lation before imposed. its sanctions will be they authority vested the to do so in their person A is liable under if filing. and therefore “caused” the he causes a document to be recorded or statutory requirement party that the “knowing filed or having reason to know “knowingly” filing cause the is satisfied groundless____” that the document is ... agency imputes because law added.) (Emphasis impos- The statute thus to the client. Under liability (i.e., es on the claimant the client interpretation, alleges, GAP it is left with lawyer) causing instead of the filing statutory no remedy neither pendens only of a lis if he knows or has client attorney may nor the be held liable. reason to know the lis claim is interpretation Plaintiffs’ would allow an at- showing A invalid. of the client’s scienter torney simply by acting to insulate a client required. The statute’s text is inconsist- express without the client’s consent. that, although ent with GAP’s contention personally did not undertake the 1. Statutory construction filing pendens, agency law pen- rules caused the of the lis statutory Under rules of construc by authority they dens virtue of the vested tion, if changed, is to common law attorney by hiring their him. GAP’s statute, supplemented, abrogated by it construction would allow a violation of the necessary must be expressly done by imputed knowledge, statute which is not implication. Superior v. S.H. Kress & Co. what the statute intended it when used the Court, 67, 73, 931, 66 Ariz. 182 935 “knowing words reason to (1947). clearly If the fails to know.” plainly and intent to alter the manifest an law,

common law remains in the common agency principles Common law hold effect. Nelson United Bank v. Mesa N.O. attorney, by attorney- that an virtue of the Co., 1384, 438, 442, 121 1388 Ariz. 590 P.2d relationship, client implied authority has (1979); Hoover, In re 140 Ariz. Estate of perform necessary acts incident or 464, 467, 469, (App.1984). 682 P.2d 472 purpose retained, for which he was includ statutory ing primary principle day-to-day tactical in decisions interpretation give litigation ef process. is to and volved determine United legislative Groen, fect to statute’s intent. When a Farm Bureau Mut. Ins. Co. v. 486 intent, 571, words do not legislative (Ind.App.1985); disclose N.E.2d 573 see also whole, Garn, 156, 160, court must read v. 155 Ariz. the statute as Garn 745 P.2d give meaningful pro (App.1987); operation Attorney to all of its 608 7A C.J.S. & Co., visions. Kriz v. 191 Buckeye Petroleum Client Section ab 374, rogates principle, this common 701 P.2d law nec- requires higher that the implication, requires scienter on The statute then essary awarded, plus attorney’s fees client if he is to be held of the two be doctrine holds that responsible for his acts. and costs. Well-settled punitive damages non-compensatory interpretation argues that this will GAP designed therefore are not nature and to insulate his client allow injury. City compensate any actual liability by failing to inform the client from Concerts, Inc., 453 U.S. Newport v. Fact fact, In a client in of his intended actions. 2748, 2759, 247, 266-67, 101 S.Ct. insulated this situation will be (1981) (“Punitive damages by L.Ed.2d 616 is, deserve; does not sanctions he compensate intended to definition are not requisite he lacks the scienter to where injured party, punish rather to but Here, attorney’s actions. cause the wrongful in- action was tortfeasor whose undeserved because the client sanctions are malicious, and to deter him and tentional or requisite did not have the scienter to cause conduct.”); In- others from similar extreme wrongful filing of a Elec. v. ternational Bhd. Workers A is read in con When subsection Foust, 99 S.Ct. U.S. provisions other junction with (1979) (quoting 60 L.Ed.2d 698 Gertz 33-420, again appears that the statute it § Welch, Inc., 323, 350, 94 Robert 418 U.S. liability imposed requires be for (1974)) 2997, 3012, 41 L.Ed.2d 789 S.Ct. E knowing violations. Subsection uses the (“Punitive damages compensation ‘are not language2 A exact scienter as subsection Instead, injury. they private fines groundless and makes the of a by juries punish reprehen- levied civil misdemeanor, 1 a class a criminal sible conduct and to deter its future occur- offense. Because the scienter element of a ”). rence.’ charge by criminal cannot im be satisfied Scott, puted knowledge, 1 W. LaFave & A. damages compared may Treble be 3.9, 354 Substantive Criminal Law general punitive damages they (1986), requirement in the scienter subsec purpose punishing the ly serve the of by tion E of the statute cannot satisfied be wrongdoer. requires Arizona common law Thus, imputed knowledge. because the showing of malice to obtain an award interpreted two subsections must be con damages. damages punitive Punitive serve sistently, must we construe the statute penalty for conduct that is as a evil-minded such that neither subsection can be violated gross negligence. something more than “guilt” one whose is based 149, 161- Rawlings Apodaca, 151 Ariz. imputed knowledge.3 565, 62, (1986). plaintiff 577-78 A 726 mind may prove the element of evil damages 2. Nature actions; showing either evil malicious mo damages tives; outrageous, oppres The nature of the also indi or intolerable or high in a risk of imputed knowledge cates is not conduct that results sive enough damages imposed others. v. Illinois great to be harm to Gurule Co., 600, 33-420(A). Ariz. imposes Casualty The statute a mini 152 Mut. & Life (1987). $5,000 damages plaintiff if 87 A mum of even no actual 734 P.2d occurred; damages damages actual dam to actual before have where must be entitled occurred, punitive damages. ages being must be trebled. entitled to Hub- have provides: Additionally, note that the statute does not 2. Subsection E 3. we in, expressly liability imputed provide for based on person purporting A to claim an interest against, property, knowledge. Had the wished to im- a lien or encumbrance real asserting liability easily such claim pose imputed who causes a document it could have done in the office of the See, to be recorded or filed e.g., ("Any expressly. so recorder, county knowing reason mi- act of malicious or wilful misconduct of a forged, groundless, know that the document parents legal imputed nor shall be ... or false contains a material misstatement guardian____”). guilty of a claim or is otherwise invalid is added.) (Emphasis class misdemeanor. Superior Court, bard v. 1988); 111 Ariz. Corp. Birds Int’l v. Arizona Main- 535 P.2d Co., tenance (App.1983). cases, judg- In these default damages available under imposed upon ments were the clients under punitive 33-420 are in nature. GAP ar 37(b)(2), Ariz.R.Civ.P., A.R.S., Rule gues agency principles that common law discovery distinguished rule. The court de- applied recovery should be in order to allow judgments fault 60(c), under Rule Ariz.R. However, damages. improper of these it is Civ.P., 37(b)(2). 16 A.R.S. and Rule It stat- agency principles to use common law ed: punitive damages recover when the com 60(c)], Under neglect of an mon law would not allow such recovery [Rule attorney is attributed to the client and without actual and the statute only when the attorney’s omission or clearly requires scienter on the fail- legally ure to act is wrongdoer. may Common excusable relief agency princi law obtained, ples regarding granting punitive [citation omitted.] apply not spe do when a statute think, however, We do not that Rule cifically trebling allows for the of actual 37(b)2(iii),supra, where it is used as a fact, damages. In comment c to the Re interroga- sanction for failure to answer (Second) statement Agency 217 C tories, should, justice, the interest of (1958) specifically enforced____ says: rule stated “[t]he rigidly be so apply this Section does not to the inter Treadaway, 103 Ariz. at 436 P.2d at 903 pretation special statutes such as those (emphasis added). Thus, because the de- giving triple damages, as to which no state judgments fault involved in these cases ment is Agency principles made.” restrict operated sanctions, the courts refused to recovery to actual unless some hold the vicariously clients accountable for participation, acquiescence, or at least is attorneys’ the misconduct. Because the part principal.4 shown on the of the penalties imposed op- 33-420 also § Therefore, language the of a statute that sanctions, imputed erate as liability should monetary allows for a award over and recognized compelled by not be unless the incurred, damages above specifically actual words of the statute. damages, treble removes it from the realm Finally, punishing wrong- besides the analysis of common law and necessitates doer, punitive damages also are awarded to interpreting “knowing the words or wrongdoers deter and others from similar reason requiring to know” as scienter generally misconduct. 1 See L. Schlueter Thus, the wrongdoer. of the the stat- Redden, (2d Damages & K. Punitive 24-28 ute does not authorize GAP’s claim for 1989). purpose ed. The 33-420 is to § damages against plaintiffs because the protect property owners from actions plaintiffs did not know and had no reason clouding property. title to their The stat- to know attorney that their filed an invalid purpose ute seeks to achieve this deter- pendens. lis ring individuals from knowingly filing Additionally, groundless re- pendens line of Arizona cases lis claims. If the un- impose fuses to punitive derlying sanctions on a rationale is deterrence rather than procedural client for loss, of his compensation punitive misconduct of actual attorney. Meador, See 103 nature of Treadaway against per- 33-420 militates § (1968); Ariz. mitting P.2d 902 requirement Robinson v. the scienter to be sat- Higuera, (App. by imputed knowledge. isfied If the law- (b) punitive agent 4. The damages principal Restatement allows un- was unfit and the was narrow, specific him, der certain employing situations: reckless in or (c) agent employed managerial was in a 217 C. Punitive § capacity acting scope and was properly Punitive in the of em- can be awarded against ployment, principal or a master or other because if, (d) agent managerial principal agent an act (a) an but if: or a of the principal doing principal approved authorized the ratified and the or the act. act, (Second) Agency manner of the Restatement C innocent, filing tiffs’ it. See yer guilty is and the client behalf deterred, by unchallenged lawyer may punished, and These facts are P.2d at 872. paid by unchallengable. fees to be The lis an award case, personally. him In this the trial court solely ben- pendens was filed $2,762 pursuant attorney’s fees of awarded filing its exact intended efit and its had 12-349 and 33-420. See also to A.R.S. §§ effect. Ariz.R.Civ.P., (court 16 A.R.S. Rule plain- Still, majority that concludes plead- if may impose appropriate sanction subject damages under are not to tiffs motion, signed is in violation ing, paper 33-420(A) an lawyer filed because their is, however, rule). no deterrent There he did not tell his stating affidavit punishes an unknow- value in a rule pendens. filed the lis clients when he ing, innocent client. wholly silent as to whether affidavit keep his clients continued

CONCLUSION litigation ignorance during the to remove damages may not be as- We hold that the lis against pursuant to sessed a client files a lis although majority’s holding, Under the pendens without client’s plaintiffs filing from the of the lis benefit portion consent. We vacate that any pendens, they are immune from liabili- appeals’ opinion granting pendens. Al- ty filing wrongful re- pursuant to GAP filing though lawyer’s act in damages. verse the trial court’s award of plaintiffs, does not bind that same lawyer’s act in an affidavit is deemed FELDMAN, V.C.J., J., and CAMERON adequate wholly exonerate TRUMAN, Judge, concur. holding ef- liability. majority’s him- Justice J. Corcoran recused Robert 33-420(A). The fectively repeals A.R.S. § decision; participate self and did not in this he claims no lawyer is not liable because Const, pursuant Judge Ariz. art. property. interest in the The client is not County Superior Alice Truman of the Pima ignorance he claims of his liable because designated Court was to sit his stead. claims of client actions. Such ignorance usually will be uncontrovertible MOELLER, Justice, dissenting. attorney-client privilege pre- the respectfully I in- dissent. The obvious discovery of the facts. cludes provide tent of A.R.S. is to statute, pendens A.R.S. The lis property some relief to are owners who 12-1191(A),5 a grants plaintiff to a or to wrongful filing victimized the of doc- right lawyers, not to their the defendant, uments that cloud their title. The trial pendens pending litigation to file a lis when court, appeals, the court and this court property. to their real Be affects title agree pendens all that the lis filed in this always ancillary to pendens a lis is cause groundless and asserted a false case was client, lawyer, usually not the litigation, the Indeed, unsupportable claim. the trial future, only In the files the lis finding pendens that was court’s majority lawyers have not read the who is filed in bad faith to harass defendants opinion tell their clients in this case will unchallenged unchallenged Also is here. pendens, for to do so file a lis attorney filed the plaintiffs’ the fact that immunity this court will break the shield of benefit and that authority plain- to act on has now created for uninformed clients. had affecting property pendency proper- is a notice of the title to real situated 5. A. In action ty, filing complaint, The notice shall contain plaintiff time of the action defense. at the thereafter, parties, object of the action at the time of the names of and defendant defense, the relief demanded and pleading relief is claimed or affirmative his when affirmative thereafter, property may description A.R.S. pleading, file in the affected. in such added). (emphasis county in which the office of the recorder of the chooses, majority acknowledges legislature, may that “Com- if it correct so “problem” majority. agency found principles mon law hold that an attorney-client attorney, by virtue of the

relationship, authority per- has implied necessary pur- to the

form acts incident or retained, including he

pose for which was day-to-day decisions involved in tactical litigation process.” At agree 873. I this statement and with cannot, legion it. I supporting of cases FARISH, Employee, James Petitioner however, agree majority’s conclu- with the legislature, enacting that the sion 33-420(A), abrogate intended these The INDUSTRIAL OF COMMISSION recognized princi- common law

universally ARIZONA, Respondent, indication, any contrary ples. Absent Hospital, Pinal General presumed must to intend Respondent Employer, imputa- the usual common law rules of agent principal tion of from Group, Respondent Carrier. Orion language apply. simply I fail to see in the 2No. CA-IC 89-0063. any suggestion the statute of intent law, exempt abrogate the common or to Arizona, Appeals Court of entities, the statute such those Department Division B. through corporations, which can act June 1990. agents. July 1990. Reconsideration Denied unpersuasive majority’s I also find Review Denied March 1991. arising judgment reliance on default cases procedural majori- rules. The correctly notes this ty some cases held

court has that the sins of an upon not in the

should be visited a client cases, judgment. of a default Those

form

however, inapposite present case.

First, truly penal judgment a default legislative far

nature and is harsher than

remedy of treble with a modest Second, liquidated damages.

alternative apply this court sanctions

how chooses to lawyers’

to clients for their violations rules

court-created and court-enforced procedure materiality is of little or no has considered the

here. wrongful filing

problem of prescribed appro- has measured and

priate remedy. This court should follow

that statute. opinion I

Finally, majority’s note solely interpretation founded upon its constitutional

the statute invokes no Accordingly, majority

overtones. (footnote 874), notes 806 P.2d at

Case Details

Case Name: Wyatt v. Wehmueller

Court Name: Arizona Supreme Court

Date Published: Feb 28, 1991

Citation: 806 P.2d 870

Docket Number: CV-89-0421-PR

Court Abbreviation: Ariz.