Scottsdale Personal Injury Lawyer

Driver Arrested For Manslaughter In Fatal Crash

Chrissie Cole — Tue, 17 Feb 2009 22:46:00 GMT

The driver of a vehicle involved in a fatal car accident on February, 8 in Scottsdale, has been charged with manslaughter.

The woman, 25, of Phoenix, was arrested last week after being treated and released from the hospital following the accident, according to police.

She was charged with one count of manslaughter and three counts of endangerment.

The investigation is still ongoing but police believe alcohol was likely involved in the accident which occurred at 6:00 a.m. when she rear-ended a Ford van at the intersection of Cactus and Scottsdale with her Saturn.

The backseat passenger of her vehicle, a woman, 24, was taken to John C. Lincoln North Mountain Hospital where she later died.

Another passenger also inside the Saturn, 35, of Mesa, was booked on one count of trespassing after fleeing the scene of the accident and being taken into custody in a nearby yard, police said.

Originally posted at InjuryBoard by Chrissie Cole

Mandatory Closing Provisions Strictly Enforced in Real Estate Purchase Contracts

Geoff Trachtenberg — Tue, 11 Mar 2008 12:41:19 GMT

That hissing sound you hear is not just air coming out of the real estate bubble, it's the folks at Mining Investment Group, LLC ("MIG") who today learned the importance of a mandatory closing date where a contract specifies that "time is of the essence." The case, Mining Investment Group, LLC v. Roberts, shows just how strictly the courts will interpret real estate purchase contracts - indeed, what a difference a (business) day makes - where the contract includes a specific date for closing, a term that is currently quite common in many real estate purchase contracts.

The short story: MIG contracted with Roberts to buy some land for $126,000. MIG deposited $10,000 in earnest money into escrow, promised another $30,000 at closing and a note for the rest. The closing date was ultimately set on a Friday and MIG failed to deposit the $30,000 into escrow. Roberts then faxed the escrow company a cancellation after the close of business on the date of the closing, withdrawing the property from escrow. The next business day, however, MIG wired the $30,000 to the escrow company (the escrow company was closed over the weekend). Roberts refused to close and MIG sued Roberts for specific performance. Roberts countersued MIG for filing a groundless lis pendens against the property.

The trial court granted Roberts' motion for summary judgment that, in light of the "time of the essence" clause in the contract, the failure to close on the specific date was a material breach. The trail court enforced the liquidated damages clause of the contract, awarding the $10,000 earnest money to the Roberts, awarded attorneys' fees to Roberts pursuant to the contract and ordered the lis pendens to be released (although it did not find it was groundless). Both parties appealed and the Court of Appeals affirmed the trial court on all counts.

MIG relied upon one the Supreme Court's decision in Foundation Development Corp. v. Loehmann's, Inc., 163 Ariz. 438, 788 P.2d 1189 (1990), to support its argument that, notwithstanding the "time is of the essence" term of the contract, there must be a material breach to work a forfeiture of an equitable property interest, and that the "materiality" of a breach was a question of fact. Loehmann's involved a tenant in a commercial lease who was subject to a forcible detainer action after it was three days late paying an assessment for common areas. In Loehmann's the Supreme Court held that a "time of the essence" clause was not dispositive in determining the materiality of a breach, that "[t]he mere incantation that 'time is of the essence' works no magic to transform trivial untimeliness into a material breach; rather, the same factors . . . in determining general materiality apply to evaluating the effect of a particular 'time of the essence' provision."

At first blush, Loehmann's seems to support MIG, but the Court of Appeals saw it differently. The Court distinguished an "executory contract for the purchase of real estate" from leasehold contracts. The Court found an "equitable interest" in land under a purchase contract was sui generis to a "possessory interest" in land under a leasehold, with the possessory interest apparently enjoying more protection from "inequitable forfeiture" as described in Loehmann's. The Court was also troubled by having to "ignore the express terms that the parties contracted for and essentially rewrite the contract." Not surprisingly then, the Court affirmed the trial court's award of the $10,000 earnest money and attorneys' fees, also pursuant to the express terms of the contract. The Court also agreed with the trial Court's determination that the lis pendens was not groundless.

This case is a big deal, and I have to wonder whether it will withstand further review. There are many reasons why real estate deals do not close on a specific dates, which are usually agreed to weeks or months in advance. Bank delays in wiring money, lender or broker delays of all kinds and simple press of business sometimes makes a precise closing impossible. Further, in my view, it is grossly unfair and bizarre to enforce the "time is of the essence" provision in one type of real estate contract (a lease) but not in others (a purchase) under some legal fiction that one is possessory and the other is "merely equitable."

For now, at least, if you are buying property in Arizona, you better make sure you build in sufficient room for delaying closing because the slightest delay may result in a substantial forfeiture.

Originally posted at InjuryBoard by Geoff Trachtenberg

No Personal Jurisdiction Over Across-the-Border Bar That Overserves Patron Killing Arizona Pedestrian

Geoff Trachtenberg — Fri, 29 Feb 2008 12:34:51 GMT

Interesting and disappointing personal jurisdiction memo opinion from Division One, Womack v. KC Arena. In short, KC operates a bar on the Nevada side of the Arizona-Nevada border, over served a patron who then drove across the state line and killed an Arizona pedestrian. Moreover, plaintiffs asserted that KC employees knew the patron lived in Bullhead City and that he would return there after he left the facility.

KC filed a motion to dismiss based upon a lack of personal jurisdiction. The plaintiffs opposed the motion, asserted general and specific personal jurisdiction, and (smartly) requested the opportunity to conduct discovery on the issue of personal jurisdiction. The trial court, however, granted KC's motion and Division One affirmed!

General personal jurisdiction over any claim against a defendant arises when the defendant has "substantial" or "continuous and systematic" contacts with the state. Though the record contained evidence that KC (1) advertises on television broadcasts in Arizona; (2) lists its establishment in various Arizona telephone directories; (3) employs Arizona residents; and (4) maintained an interactive website that has a "chat room" and solicits email, the Court of Appeals determined that these contacts were insufficient for general personal jurisdiction (they claimed to ignore the website since it was not, apparently, raised in the trial court).

Specific personal jurisdiction over a related claim against a defendant arises when (1) the defendant performed some act or consummated some transaction with the state by which it "purposefully availed" itself of the privilege of conducting activities in the forum state; (2) the claim "arises out of or relates to" the defendant's forum-related activities; and (3) the exercise of jurisdiction would be reasonable. KC argued that there was not a sufficient nexus between the plaintiffs' claim and KC's contacts with Arizona - namely, its local television advertising and telephone directory listings - to support the exercise of specific jurisdiction because those contacts are unrelated to the events giving rise to the plaintiffs' claims. The Court essentially agreed, focusing particularly on the fact that the events giving rise to the liability occurred in Nevada and that the location of the "injury causing event" in Arizona was irrelevant.

The Court also affirmed the trial court's exercise of discretion in denying the plaintiffs an opportunity to conduct discovery because, in essence, the Court concluded that the additional discovery would not have made a difference in the analysis. Don't you love that kind of logic - speculating on the outcome of the appeal based upon discovery that was not allowed?

Personally, Judge Barker's concurrence makes the most sense to me:

KC runs a bar that is immediately across the river from Arizona. Certainly, the business of the bar, and plaintiffs' claim, "relate[] to" the steady stream of patrons that come to the bar from Arizona and re-enter Arizona after frequenting the bar's premises. KC chose to locate its bar in that location. It initiated those contacts. It should not be jurisdictionally immune from the impact that it is having on Arizona residents when it sends intoxicated drivers onto Arizona highways.

But, alas, it is so immune.

Originally posted at InjuryBoard by Geoff Trachtenberg

Arizona Supreme Court Holds Professional Negligence Against Insurance Agent is Assignable

Geoff Trachtenberg — Wed, 06 Feb 2008 09:16:33 GMT

Surprising result in Webb v. Gittlen, a new opinion from the Arizona Supreme Court which holds that a professional negligence claim against an insurance agent is assignable. Although a long overdue holding, it highlights the badly misunderstood law concerning assignments, including the scope and justification of anti-assignment law (see my earlier article on Assignments vs. Liens in the Personal Injury Context).

To be sure, how many modern opinions rely upon 400-year old case law from "Lord Coke"? This one does.

The opinion is a actually a good read in that the Supreme Court takes us through centuries of anti-assignment history and jurisprudence, neatly summarizing Arizona law on this issue as follows:

The current principles under Arizona law for determining if an unliquidated claim may be assigned can be summarized as follows: (1) claims generally are assignable except those involving personal injury; (2) the legislature may specify whether particular claims are assignable; and (3) absent legislative direction, public policy considerations should guide courts in determining whether to depart from the general rule.

The Court then turned to the case at issue and, without specifically saying so, seemed to accept that a claim against an insurance agent -- relating to a wrongful death claim -- does not "involve a personal injury." While I think this is clearly correct, it is surprising how often the issue gets ignored or taken for granted -- namely, what constitutes an unlawful assignment of a personal injury claim?

For example, is a medical lien an unlawful assignment of a personal injury claims? Why not? Since most personal injury attorneys encounter these every day, wouldn't it make sense to know whether they are valid and why? Well, this opinion may shed some light on the issue where Court stated as follows:

Arizona case law generally allows the assignment of unliquidated legal claims except those involving personal injury. This distinction reflects the evolution of the common law, which once held that "choses in action" could not be assigned, except to the crown. Welch v. Mandeville, 14 U.S. (1 Wheat.) 233, 237 n.a (1816). A legal claim is one type of "chose in action," but the concept also encompasses "debts of all kinds" and "rights to recover ownership or possession of real or personal property."

While not the focus of the opinion, the Court's discussion of the affirmative assignably of "legal claims" and "debts of all kinds" is important. For instance, even though a medical lien creates an interest in a person's bodily injury recovery, maybe it is a valid "legal claim" since it covers a "debt." But if you think this is a slam-dunk, consider what the same Court said in Allstate Ins. Co. v. Druke, 118 Ariz. 301, 576 P.2d 489 (1978):

Whatever the form, whatever the label, whatever the theory, the result is the same. The [documents] create an interest in any recovery against a third party for bodily injury. Such an arrangement, if made or contracted for prior to settlement or judgment, is the legal equivalent of an assignment and therefore unenforceable.

Id. at 304, 576 P.2d at 492; Lo Piano v. Hunter, 173 Ariz. 172, 175-76, 840 P.2d 1037, 1040-43 (App. 1992) (holding that reimbursement provision was an unenforceable assignment of a personal injury claim). So it is still up in the air whether such assignments are valid.

Anyway, the substantive thrust of the Court's holding was to explain the difference between assignments of legal malpractice claims and professional negligence claims against insurance agents. Without holding whether legal malpractice claims were assignable, the Court went on to "assume they are not" and distinguished the attorney-client relationship with the insurance agent-client relationship, essentially saying that the later was of a lesser duty (i.e., generally not a fiduciary, which was a bit of a surprise to me) and drawing on other differences (without saying why the differences made a difference by the way). The Court just concluded that the relationship with an insurance agent was not "uniquely personal" to justify making claims against an insurance agent non-assignable.

Next, the Court addressed public policy arguments. Surely, the best line in this section is the following refreshing dose of common sense to the argument that allowing such assignments would "commercialize" the insurer-client relationship: "Although the agent-client relationship has personal dimensions, it arises from a commercial transaction - the purchase of insurance. It is therefore odd to suggest that it should not be commercialized." This, of course, begs the question -- isn't the relationship between an attorney and client commercial? That is, it involves the commercial exchange of money for services, so why should it get any different treatment?

It is probably too much to hope for, namely -- the complete abolition of anti-assignment law -- and even though it sometimes helps our clients in the lien context, it has always seemed unnecessarily paternalistic and outdated to me, especially the nonsense about "trafficking in personal injury claims." Still, it was nice to see the Court tip its hat, in footnote 3, to commentators "who advocate allowing assignment of all tort claims."

In fact, the Court alluded to the inconsistent and strange genesis of the non-assignablity issue, noting that "[a]s courts became more accessible and litigation a more accepted means for resolving disputes, the prohibition on assignment gradually became the exception rather than the rule." The Court explained that the rationale behind the "exception" of prohibiting assignment of personal injury claims was basically tied to the idea that the claims were "personal" and did not survive death, therefore, they could not be assigned during the person's lifetime. But the Court observed:

This "survivability" test did not itself survive in Arizona after 1955, when the legislature enacted a [now amended] statute providing for the survival of most causes of action, including personal injury claims. Although this statute undermined one rationale for refusing to allow the assignment of personal injury claims, courts did not abolish the rule. Instead, they resurrected the common law public policy rationale - fear of vexatious litigation.

In other words, the reason we still have non-assignment law today is simply a function of judicial activism from 50 years ago. So it's possible that, one day, courts will see it differently -- afterall, who would have thought the Court would permit assignment of a claim against an insurance agent, but not a lawyer?

Originally posted at InjuryBoard by Geoff Trachtenberg

Arizona Supreme Court Finds No Workers' Compensation Offset for Underinsured Motorist Coverage

Geoff Trachtenberg — Thu, 10 Jan 2008 16:04:22 GMT

Today the Arizona Supreme Court issued an opinion in Cundiff v. State Farm Mutual Automobile Ins. Co. which dealt with workers' compensation offsets in underinsured motorist (UIM) claims.

Pima County Deputy Sheriff Jean Cundiff was injured by a third-party while on the job, in her patrol car. Although she was paid certain workers' compensation benefits, the third-party only carried $15,000 in liability coverage. So, after accepting these minimal limits, Ms. Cundiff made a UIM claim with her insurer, State Farm.

State Farm, however, had a term in its policy that provided for an offset against any UIM coverage based upon benefits received from a workers' compensation carrier. The provision stated that: "Any amount payable under [UIM] coverage shall be reduced by any amount paid or payable to or for the insured under any worker[s'] compensation, disability benefits, or similar law. This does not reduce the limits of liability required by law for this coverage."

The claim went to arbitration and Ms. Cundiff prevailed. Nevertheless, relying upon the foregoing provision, State Farm was only willing to pay a reduced amount of the arbitration award, i.e., an amount offset based upon the benefits Ms. Cundiff received from her workers' compensation carrier. So Ms. Cundiff sued State Farm for the full amount she was due pursuant to the arbitration award, without application of any offset.

The trial court and Court of Appeals (in a published decision) sided with State Farm, but the Arizona Supreme Court reversed these decisions. Based on the terms of the UIM statute, which override the terms of the State Farm policy, the Supreme Court explained that only "liability insurance" can be deducted from the full value of an insured's loss to reduce the amount of the claim -- that is, only proceeds received from a liability policy will be offset against the full value of an insured's claim. The Court explained that, since workers' compensation does not constitute "liability insurance," workers' compensation benefits cannot be offset against an insured's claim.

For more information on this subject, please refer to the section on Car and Motorcycle Accidents.

Originally posted at InjuryBoard by Geoff Trachtenberg

Peak Oil: A Crude Awakening

Geoff Trachtenberg — Sun, 30 Dec 2007 15:39:46 GMT

Ask most people, and they'll probably tell you global warming is our greatest global obstacle. Some will even say something like terrorism or illegal immigration. Frankly, I thought I was pretty damn clever spotting the global credit bubble, and believed it to be the greatest global crisis we'd face in our lifetimes (i.e., something on order of five times larger than the S&L crisis). Even if I'm right about that number, I'm far from being right about the significance of the event.

I rented a movie this weekend, A Crude Awakening (2006), from Netflix. You have to see it; it changed my thinking in 90 minutes.

I had previously read about "Peak Oil," but nothing put it together as persuasively as this movie. The magnitude and consequences of a global oil crisis are staggering, imminent and unavoidable.

For anyone who does watch it or who has seen it, I'd really like to know your thoughts on the following: When the world can no longer fulfill our global oil demand (sometime between now and 10 years from now), do we get massive price inflation or deflation of assets and commodities (or will it be different for one versus the other)?

Don't be too quick to answer; it's trickier than you might think. While the law of supply and demand dictates dramatically higher prices (for commodities anyway), global asset and commodity prices during the Great Depression sank almost 50%, and there's reason to believe that long-term effects of a real global oil crisis (unlike the temporary and politically-induced "oil shock" of the 70s) would not necessarily lead to higher prices if it disrupted economic activity for any appreciable amount of time. Simply put, if economic activity slowed or stopped, there'd be massive unemployment, less money and, consequently, less demand for everything (with the exception of things like guns, ammo, food and water, in my opinion).

So, think $100 per barrel is expensive? What if oil cost $1,000 per barrel or $50/gal of gasoline? How much does bread, clothing or heating cost then? Will people be able to afford it? Will they have a job under such conditions? What about American cities, like ours, that are spread out and utterly dependent upon personal transportation? What will happen to economic activity in a place like Phoenix or, more broadly, the "American way of life"?

Originally posted at InjuryBoard by Geoff Trachtenberg

Business Owners Now Owe Nondelegable Duties to Keep Premises Reasonably Safe

Geoff Trachtenberg — Wed, 26 Dec 2007 13:18:10 GMT

"Attention Safeway shoppers, business owners now owe nondelegable duties to their invitees to keep their premises reasonably safe."

Steven H. Simon sued Safeway after he was injured during a store altercation with a security guard who "physically and sexually" assaulted him. The guard was employed by a third-party company who had contracted with Safeway. He mistakenly concluded that Mr. Simon had stolen some items, Mr. Simon then asked to speak to the manager and the altercation began.

Mr. Simon sued Safeway in Simon v. Safeway, Inc. on the grounds that Safeway was vicariously liable under theories of respondeat superior and because it had a nondelegable duty to train, supervise and "employ properly licensed and trained security guards." Safeway filed a motion for summary judgment on the issue of whether they were vicariously liable for the intentional torts of the third-party security guard. Mr. Simon opposed the motion and requested the trial court continue the matter to allow for additional discovery under Rule 56(f). After initially denying Safeway's motion, the trial court granted Safeway's subsequent motion for reconsideration, denied Mr. Simon's request for Rule 56(f) relief and the Court of Appeals reversed.

Before getting into the opinion, as an important footnote, the Court's opinion assumes no independent negligence on the part of Safeway. The Court stated that, although Mr. Simon "clearly raised an independent negligence claim in his original complaint, and the parties discussed it in their initial summary judgment filings . . . we can find no record that the trial court considered or ruled on this claim when it reconsidered and ruled on Safeway's motion for summary judgment. Therefore, we decline to consider any argument about Safeway's independent negligence on appeal." This will be important later.

The Court first addressed the trial court's denial of Mr. Simon's Rule 56(f) motion to continue. Mr. Simon argued that he needed discovery to determine the precise nature of the relationship between Safeway and the security guard and requested time to depose three witnesses--the guard, the Safeway store manager and a Safeway employee who allegedly told the guard that Mr. Simon might be shoplifting.

I won't spend a lot of time talking about Rule 56(f) because it is so fact-specific, but it bears mentioning that Mr. Simon clearly did not adhere to the requirements of Rule 56(f), which requires an affidavit containing very specific information about "who, what, where and when" additional discovery would be completed. Typically, defects in Rule 56(f) affidavits are fatal, but not this time. Not only did fail to raise the issue of a missing affidavit in the trial court, but significantly the Court of Appeals concluded that failure to raise such a defect caused a waiver of the issue because "any technical deficiency in the form of the motion would have been easily remedied had Safeway done so."

So on that note, "good to know," I thought - "failure to file an affidavit in compliance with Rule 56(f) is a mere defect in 'form.'" Hallelujah, right? Wrong. In a footnote, buried at the end of the section, the Court deftly back-peddles, stating "[w]e do not suggest that courts should overlook a party's failure to follow the technical requirements of Rule 56(f). Our conclusion is limited to the specific facts of this case, where the motion substantially complied with the rule's requirements, the opposing party did not object on technical grounds, and the trial court addressed the motion on the merits despite the technical deficiency." So beware, Rul 56(f) requirements remain critical.

Anyway, before turning to the substance, the Court went on to make some important points about independent contractor law in Arizona - namely, whether someone is an independent contractor versus an employee. Although anyone reading our case law should come to the same conclusion as the Court, nothing I know of says it in as plain terms as the following:

We recognize many of the factors that suggest an independent contractor rather than master-servant relationship between Safeway and [the guard] are also present in this case. Safeway compensated [the guard's third-party employer] for its services every four weeks, and [that company] was responsible for hiring, training, and certifying its own employees, including [the guard], and for providing employee compensation and benefits. However, our case law distinguishes a servant from an independent contractor primarily based on the employer's right to control how the work is performed.
The right-to-control test requires an examination of whether the employer reserves the right to supervise or control the method of performing the contracted service or whether the employer's control is limited to the result, leaving the method to the other party.

So the Court concluded, that "even if the evidence in the record is not sufficient, standing alone, to raise a material question of fact, it provides a reasonable basis for Simon's request to conduct additional discovery on the existence of a master-servant relationship." "We therefore cannot say that granting Simon's timely request for additional disclosure could not have led to admissible evidence on this issue, and the trial court thus abused its discretion in denying Simon's motion for time to conduct additional discovery."

Remember, all this has to do with whether Mr. Simon could prove that the guard was, in fact, an employee. However, the balance of the opinion renders this issue moot, because the Court finds that, even if the guard was an employee, Safeway owed nondelegable duties to protect Mr. Simon from the guard and that "Safeway will be vicariously liable for [the guard's] actions if [the guard] is found liable in the first instance."

So next, turning to the meat and potatoes of the case, the Court addressed Mr. Simon's argument that "Safeway had a non-delegable duty to provide safe premises for its business invitees and is liable for the torts of independent contractors it retains to work on its premises." Although the trial court found Safeway could not be vicariously liable because "there was no evidence it had attempted to delegate a nondelegable duty," Division Two disagreed.

In my favorite part of the opinion, the Court of Appeals explained that the analysis of the case was not limited to the traditional independent contractor rule and exceptions in the Restatement (Second) Torts Â§Â§ 409-429. The Court explained that, under those sections, the independent contractor was hired to perform "physical construction or maintenance on land or premises or the work to be performed is peculiarly or inherently dangerous." Those sections "do not directly address, much less resolve, the issue presented in this case, where [a third-party contractor] was hired to provide ongoing services for Safeway on Safeway's premises and where, in the performance of those services, [the third-party contractor's] employees are required to interact personally with business invitees of Safeway."

The Court concluded that "the facts of this case are more akin to premises liability under Restatement (Second) of Torts Â§ 344 (1965) than independent contractor liability under Â§Â§ 409-429." In relevant part, Restatement Â§ 344 provides that "[a] possessor of land who holds it open to the public for entry for his business purposes is subject to liability to members of the public while they are upon the land for such a purpose, for physical harm caused by the accidental, negligent, or intentionally harmful acts of third persons . . . and by the failure of the possessor to exercise reasonable care to (a) discover that such acts are being done or are likely to be done."

The Court then went on to address several opinions on this issue, concluding that while they were "distinguishable from the present case because they deal with a landowner's direct liability for its own tortious acts and not a landowner's vicarious liability for an independent contractor's torts . . . . they do stand for the limited proposition that a landowner's duty of care to business invitees encompasses activities on the land and is not limited to dangerous conditions, as Safeway suggests."

Most significantly, the Court noted that comment c to Â§ 344 expressly provides: "The rule stated applies to the acts of independent contractors . . . who are employed or permitted to carry on activities upon the land. The possessor is required to exercise reasonable care, for the protection of the public who enter, to supervise the activities of the contractor . . . ." "Therefore, a business owner may not escape liability for his failure to exercise reasonable care merely because the aggrieved party was injured by an independent contractor who was employed to provide services for the business owner on the business premises."

So the Court then "turn[ed] . . . to the question of vicarious liability and whether Safeway may be held liable in the absence of its own negligence."

Are you confused? I am, and I think they goofed a little.

Comment c to Â§ 344 does not say that a possessor is liable for independent contractors per se. It says the possessor is "required to exercise reasonable care . . . to supervise the activities of the contractor." That necessarily means that, for Safeway to be liable, Safeway must have been independently negligent in supervising the activities of its contractors. So it's not accurate to say that Safeway was being held liable "in the absence of its own negligence," and by addressing this issue, the Court is necessarily reviewing "argument about Safeway's independent negligence on appeal."

Anyway, it's about to get even more confusing because, instead of focusing on whether Safeway negligently supervised the activities of the security guards, the Court and parties went down the rabbit hole of nondelegable duty. As you'll see, this is good for plaintiffs, but may prove to be reversible error if the Supreme Court ever sees the case (Quarles & Brady handled the appeal, so watch for a petition for review).

Safeway relied primarily on Myers v. City of Tempe, 212 Ariz. 128, 128 P.3d 751 (2006), to support its argument that it cannot possess a nondelegable duty where no duty existed in the first place. Safeway argued that, "because it had no obligation to provide security services in the first instance, the fact it undertook to do so does not create a 'nondelegable duty.'" Specifically, Safeway argued that, since there was no inherent duty to provide security, "it could delegate any duty it assumed to an independent contractor without incurring vicarious liability."

The Court noted that a nondelegable duty is one "for which the employer must retain responsibility, despite proper delegation to another." The Court held that, "[s]uch duty arises in those 'special situations in which the law prescribes a duty requiring a higher degree of care,' such as the affirmative duty of a landowner'to protect those described as his invitees by making and keeping the premises safe.'" The Court went on to explain the well-known rule that, "[t]his exception to the general rule of nonliability for employers of independent contractors is 'premised on the principle that certain duties of an employer are of such importance that he may not escape liability merely by delegating performance to another.'"

Is this correct? Is the affirmative duty of a landowner to protect invitees a higher degree of care? It may have been so at one time, but as Judge Lankford notes in his negligence treatise, Arizona has really abandoned the old "status distinctions" in premises cases. Anyway, even if that is true, what does that have to do with whether Safeway properly supervised its contractors? Is the duty to supervise contractors providing security or the common law duty keep the premises safe to invitees of such importance that it cannot be delegated to another? The wheels feel like they're coming off this opinion.

Anyway, the Court stated that, while "[w]e agree that . . . Safeway had no inherent duty to provide some of the security services performed by [the third-party contractor], . . . . [Safeway did have] a common law duty . . . '. . . to keep [its] premises reasonably safe for invitees." The Court thereby concluded that, "[w]hereas, in Myers, the city owed no special duty to provide emergency medical services, the nondelegable common law duties of business owners to their invitees are undoubtedly implicated in this case."

The Court explained itself as follows:

Here Safeway did not initially have a specific, nondelegable duty to provide security services. Instead, it voluntarily assumed that duty within the context of the heightened duty it already owed to its business invitees. Having [voluntarily] assumed the task of providing security services on its premises, Safeway thus created for itself a personal, nondelegable duty to protect its invitees from the intentionally tortious conduct of those with whom it had contracted to maintain a presence and provide security on its premises. Safeway cannot now disclaim liability merely because the individuals it permitted to interact so closely with its customers had been hired by an independent contractor. Were we to hold otherwise, the potential for abuse would be great. Therefore, we hold that when, as here, a business owner assumes a duty to provide security services, that duty is nondelegable, and the owner will not be insulated from liability for the tortious acts of security personnel hired as independent contractors.

So, according to Division Two, business owners now owe nondelegable duties to their invitees to keep the premises reasonably safe, which includes the conduct of third-party security. Significantly, and despite my snarky comments about the Court's reasoning, in a footnote the Court noted that this is the law in the majority of other jurisdictions considering the issue, so maybe our Supreme Court will agree.

[Ed: At least on appeal, anyway, Steven H. Simon represented himself. It's not often that a pro se litigant is successful on these types of issues, but it appears that Mr. Simon is not an attorney.]

Originally posted at InjuryBoard by Geoff Trachtenberg

Mortgage Rate Freeze: A Flim-Flam Scheme to Recharacterize Billions of Fraudulent Mortgages and Trick Investors

Geoff Trachtenberg — Sun, 09 Dec 2007 11:56:20 GMT

Imagine a loan of $100,000 based upon (1) a borrower's true income / ability to repay and (2) the true value of the real estate collateral. Now imagine a loan of $100,000 based upon (1) fictional income figures and (2) fictional valuation of real estate collateral. Which type of loan do you think predominated in the United States for the last five to ten years?

Now imagine these "liar loans" were bundled into securities with a few good loans thrown on top to make them smell nice. A little like giving someone a stack of bills with $100 bills at the top and monopoly money underneath. Then imagine those bundled securities are sold to various pension funds and foreign investors. Sound familiar?

Add in the fact that you are now the treasury secretary of the United States, formerly with Goldman Sachs, one of the major players in this bundled securitization scheme and you are facing record foreclosures and home price devaluation. What do you do?

Do you worry that those pension funds or foreign investors might sue your banking buddies for selling them a bill of goods? You bet you do. So how to fix the problem?

The answer: freeze mortgage interest rates for five years in a massive national refinancing scheme.

It's a brilliant plan. You appear to be the benevolent bureaucrat, concerned for the "working man" who is going to "lose their home." You even get to claim that you are doing a service to all those investors in mortgage-backed securities because, after all, they are better off taking a little less interest than dealing with the expense of foreclosure, right?

But not so fast. Did you catch the flim-flam? Did you spot it?

You see, in five years, those same people will own real estate that, let's face it, is going to be worth the same or, most likely, less money at that time than it is today. And please spare me the National Association of Realtor's rosy projections on home valuations. Those cheerleading saps have never been right about predicting home values and live in a perpetual state of euphoric denial. Moreover, even if unemployment stays as low as it is and wage growth continues in a Goldilocks economy, once the rates unfreeze, those people will be facing the very same issues. And what if we get that recession that everyone's talking about?

Do you see it now? Well here it is: after the five year rate freeze, those bankers who sold the fraudulent junk debt will have a great defense to any claim that the junk was fraud. Namely, they'll be past most statutes of limitation and be able to turn back to the suckers - I mean investors - who bought those securities and say the investors "knew all along," and certainly knew as of the rate freeze, about the true income and valuation status underlying the various mortgages in the packaged securities.

Such as plan is equally ingenious and corrupt, but don't be fooled by the flim-flam man. Although this plan is going to save Wall Street, get ready for one hell of a ride on Main Street, because it is you, me and our children that are ultimately going to pay the heavy, heavy price in the years to come.

Originally posted at InjuryBoard by Geoff Trachtenberg

Assignments vs. Liens In the Personal Injury Context

Geoff Trachtenberg — Sun, 09 Dec 2007 08:41:24 GMT

A large number of people, attorneys included, don't know the difference between "assignments" and "liens."

Why does it matter, you ask? For a number of reasons that will be more obvious when the difference is understood.

An assignment is the easier of the two to understand since, as the name implies, it is an transfer of all or some rights or property to a third-party. Although an assignor cannot ever assign more rights or property than it holds, it can assign less than all of the rights or property subject to the assignment.

An assignment is bears the hallmarks of ownership. That is, an assignee steps into the assignor's shoes and has the ability to control the rights or property subject to the assignment. This means that the assignee can further assign the rights or property, can sell them, donate them, pledge them as collateral or simply enjoy the rights or property as though they were his or her own; subject, of course, to restrictions in the assignment agreement.

Here is where it will get tricky: an assignment can, in effect, extinguish an obligation to one party by transferring the obligation to another party.

Take, for example, a debt. Assume you owe a friend $10,000 for a car that you bought from him, and you agree to pay it of at a rate of $1,000 a year for 10 years. After two years, however, your friend decides that he really needs money and so he assigns the remaining $8,000 debt to me for $5,000 immediate cash. The debt to your friend is now, in effect, extinguished and transferred to me - that is, you owe me the $8,000.

You may not realize it, but a personal injury claim is a bundle of property rights, and to make matters a little more confusing, some states prohibit assignment of personal injury claims. Now, understand, this is a seemingly narrow restriction and assignment of other rights (such as debts) and property (such as cars) are fully assignable in every state.

What this anti-assignment law in the personal injury context means is that you cannot assign to someone a claim for bodily injury to a third-party. Remember, you can still assign the part of the case that corresponds to property damage, such as damage to your vehicle or personal belongings, and you can still assign any non-bodily injury claims, such as breach of contract or bad-faith.

Now keep that all in mind. What is a lien?

A lien is "[a] charge or encumbrance upon property to secure the payment or performance of a debt, duty or other obligation," and it "is distinct from the obligation which it secures." Matlow v. Matlow, 89 Ariz. 293, 297-98, 361 P.2d 648, 651 (1961) (citing 53 C.J.S. Liens Â§ 1, at 826). In Arizona, a lien can be created by statute, but an equitable lien may also arise from an express contract if the parties indicate an attempt to charge particular property as security for an obligation. Kalmanoff v. Weitz, 8 Ariz.App. 171, 172, 444 P.2d 728 (1968).

Unlike assignments, there is no prohibition on liens against personal injury cases, but this subject matter creates a great deal of confusion. Admittedly, what has contributed to the confusion is that the law has undergone centuries of perversion and that it is sometimes hard to tell the difference between an assignment versus a lien on a personal injury claim.

The courts examining this issue have often overlooked the distinction and, typically, have incorrectly deemed simple liens to be prohibited assignments without examining the real character of the transaction. To be sure, there are decisions that uphold standard (non-statutory) medical liens between a doctor and patient for services, and opinions which preclude insurance companies from recouping payment made to those same doctors as being impermissible assignments. These decisions are irreconcilable and fail to appreciate the difference between an assignment versus a lien on a personal injury claim.

Simply put, such arrangements - e.g., where someone is due money for services rendered - are permissible liens on a personal injury claims. That is, where an injured person owes money to a third-party and agrees to secure the debt with an encumbrance upon proceeds in a personal injury claim, the third-party does not own or control the personal injury claim (as they would had there been an assignment) and the personal injury claim remains "distinct from the obligation which it secures." The third-party has no say in how the claim is handled, does not need to assent to the settlement of the claim and will not be a party to signing a release of such a claim, which would be hallmarks of an assignment. To the contrary, if the injured party loses the personal injury suit, the "distinct . . . obligation" remains and must still be satisfied (absent an agreement making the debt or obligation contingent upon an event, such as prevailing in a personal injury action). In contrast, assignment of a losing claim would always result in an assignee receiving nothing (with the obligation having been extinguished upon the assignment).

Due to the anti-assignment case law, which is inconsistently applied, this causes confusion in personal injury cases. Although we are not going to ever resolve the issue here, it helps to remember the reason for anti-assignment law in the personal injury context is to prevent "trafficking in personal injury claims." That is, the courts long ago decided that it was not acceptable for people to market in buying and selling personal injury actions, ostensibly because of the unsavory possibilities of having injured people victimized by those wishing to purchase such rights. In reality, it has more to do with the image of justice and the likelihood that it would encourage fraudulent personal injury claims.

Ironically, the quiet exception to the rule prohibiting assignment of personal injury claims is that attorneys are permitted to take contingency fees on personal injury claims, which (if you believe what you read about other so-called impermissible assignment arrangements) is nothing more than an assignment of a personal injury claim. It used to be that such arrangements were considered impermissible, but after many years the courts relented an allowed contingency fee arrangements in all but criminal and divorce proceedings. In those cases, courts still felt that there was too must risk to allowing contingency fees -- that contingency fees would encourage unethical or unsavory conduct in criminal and divorce cases.

The reason contingency fees are allowed to attorneys, however, is to open the door to parties who would not otherwise be able to afford paying for attorneys on an hourly basis. And, most often, the same reason underlies lien arrangements for injured persons, whether it be health insurance liens, contractual doctors liens, liens for pharmaceutical expenses, liens for rental cars or liens for cash advanced to pay bills. Accordingly, although courts have long misunderstood and confused the difference between impermissible assignments and permissible liens, the simple fact is that such liens are a necessary element in modern personal injury practice to provide immediate care and compensation to impecunious injured parties who cannot afford to battle for years with an insurer for a tortfeasor. Such arrangements to not give rise to the concerns underlying the old anti-assignment laws and, in fact, do not reveal ownership characteristics of assignments.

Originally posted at InjuryBoard by Geoff Trachtenberg

Supreme Scrooge: Arizona's Supreme Court Delivers a Serious Blow to Products Liability

Geoff Trachtenberg — Sun, 09 Dec 2007 06:32:12 GMT

Worried about lead in your toys this Christmas? You now have something else to worry about - if those toys harm or kill your children, your rights and remedies in the state of Arizona are under serious attack.

This week, in State Farm Ins. Co. v. Premier Mfg. Sys. Inc., the Arizona Supreme Court held that, despite centuries-old common law "strict liability" in product liability cases, Arizona's Legislature eliminated such protections (in 1984) when they enacted the Arizona Uniform Contribution Among Tortfeasors Act, commonly referred to as UCATA.

Historically, courts have afforded protection to the public in extraordinary situations by imposing "strict liability" on parties engaged in certain activities. Although strict liability has always been the exception in civil cases rather than the rule, it has long been the rule in certain types of cases, such as products liability or "ultra-hazardous" activities. This is due to the balance of harms to the public and the fact that, in the products liability context, manufacturers and distributors were typically in much better positions to take steps to prevent harm if they were all held strictly liable.

In Premier, the Supreme Court concluded that UCATA's adoption, more than 20 years ago, changed this landscape. The Court held that, under UCATA, manufacturers, distributors and all others involved in putting dangerous and defective products into the stream of commerce, are to be held responsible under traditional comparative fault laws.

What does this mean to you? Assume Hasbro imports a toy from China with lead paint, and better yet, assume Hasbro absolutely knows that the toys have lead paint. Assume there is a memorandum to the Board of Directors saying, "Dear Board, we have found that we can make an additional profit of .10 per toy if we use Lead Masters Production Company in Hong Kong because Lead Masters coats all their toys in lead that will probably cause permanent brain damage to the children that play with the toys."

What used to happen before Premier? Hasbro and Lead Masters Production Company were strictly liable for damages caused by the product, so a Board of Directors receiving such a memo would have an incentive to avoid such situations (and fire the morons who came up with such a scheme) because they would be just as liable as the Chinese company for any harm that resulted from their product.

What happens now, after Premier? Hasbro has little or no exposure. In a lawsuit over who is responsible for little Jimmy's permanent brain damage due to the hypothetical Hasbro toy above, the jury will be asked to apportion fault to the various parties bringing the toy to market. That means everyone from Lead Masters Production Company in Hong Kong, to the importing company, the shipping company, any middle-man merchants, Hasbro and the store, such as Wal-Mart, who sold the product that injured little Jimmy.

What will happen? Most of the time there will not be a memo, such as the one described above, but even if there was one, the party that actually produced the harmful product will be the one with all or most of the fault. And in those situations where the toy companies, such as Hasbro above, claim ignorance of the fact that lead was used and claim that they had no reason to know lead would be used in the product, what then? If the jury believes them, they will get away free of any responsibility.

Maybe you think, "well, that's not the end of the world." But imagine that Lead Masters Production Company in Hong Kong is no longer in business, has no insurance, is bankrupt or is nothing more than a couple of part-time rickshaw drivers who make toys on the weekend. Yes, it will be found responsible, but that won't matter to little Jimmy or his parents because they will have nothing more than a worthless pyrrhic victory and no way to pay for the special care that little Jimmy will need for the rest of his life.

This decision is devastating to those people harmed by products and must be addressed by the Legislature. And frankly, one cannot fault the courts for reaching the conclusion. The simple fact is that the courts must interpret the law and, due to the poor drafting of UCATA in 1984, the result handed down by the Supreme Court was, while dramatic and disappointing, probably inevitable.

One last point bears mentioning, UCATA needs to be amended to avoid the result in Premier in the products liability arena, but it also needs to be amended to apply only to negligence matters. UCATA is as inapplicable to intentional torts as it is to products liability, yet it is applied to intentional torts all the time. UCATA is a fine idea, but it should be limited to negligence cases so that, in those case, only parties who are at fault have to pay for the damages they cause in proportion to their fault.

For more information on this subject, please refer to the section on Defective and Dangerous Products.

Originally posted at InjuryBoard by Geoff Trachtenberg