Case of the Day – Wednesday, May 8, 2019

HERE, LET ME FIX THAT

Residential developments often have deed restrictions, or just merely homeowners’ association rules, prohibiting different colors of house paint, refusing clotheslines and outbuildings, and even banning trees that block a neighbors’ view. And yet people buy houses in the developments, too excited at closing to pay a lot of attention to yet another page of legalese buried in a mountain of legalese. When – several years later – those restrictions get in the way of their whims, the unhappy parties blame everyone but themselves.

That happened to Gail Andrews, who bought a place at beautiful Sandpiper Village in Waldport, Oregon. These places aren’t cheap, but the ocean view makes them quite desirable.

Ms. Andrews lived harmoniously with her neighbors for several years, until a nearby homeowner asked her to trim her trees because they were blocking his view of the ocean. Ms. Andrews ignored his request. Not to be denied, the neighbor had the local homeowners association ask her to trim them. She didn’t ignore the homeowners association. Instead, she sued them, and her lawyer found a hook.

The restrictions on trees had been modified in 1993, a few years before she moved in. But then a year later, the association’s lawyer, trying to be helpful, decided to rewrite things a little. He added the phrase “designated ocean view lot” to the restriction, so it read “no trees, hedges, shrubbery, plantings, or fencing shall obstruct the view of the ocean from designated ocean view lots without the written approval of the board.” You know, he was just trying to be helpful, to make it a little clearer. Only problem was that there was no such thing as a “designated ocean view lot.” Ms. Andrews glommed onto the new language, claiming she didn’t have to trim her trees because her neighbor’s lot wasn’t a “designated ocean view lot.” In the alternative, she said the whole restriction was void because the homeowners had never passed on the “designated ocean view lot” language.

legaleseThe Court concluded that the evidence showed that the association’s lawyer never intended his rewrite the change the restriction that the homeowners had approved. Besides, Ms. Andrews had a chance to read all of the rules before she moved in. Her excuse was that some unnamed person who had been attached to the homeowners association had once told her that her neighbor’s place was not a “designated ocean view lot.” Kind of short on corroborative facts, Ms. Andrews, aren’t we? The Court thought so. Without revealing who and when the conversation occurred, Ms. Andrews was unconvincing.

There’s a lesson here for the helpful lawyer. If the restriction was too confusing as it was passed — and there’s no evidence it was — he should have asked the homeowners to vote on the new one. Being a lawyer, he should have foreseen that problems with the restriction wouldn’t arise from good faith confusion as much as bad-faith avoidance, and the non-trimmer would hire a mouthpiece who would try to drive a chainsaw through his “helpful” re-write. And why would anyone use gobbledygook like “designated ocean view lot” when there was no procedure for designating lots in the first place? punchThe lawyer’s helpful “fix” just created a mess and cost his client a lot of money. The unanswered question is whether his client punched him in the kisser and fired him, or just fired him without fisticuffs. It would be a close call.

Andrews v. Sandpiper Villagers, Inc., 170 P.3d 1098 (Or.App., 2007). Sandpiper Villagers, Inc., was the local association of homeowners in Sandpiper Village, a coastal subdivision. When the subdivision was built in 1968, the developer recorded a declaration of covenants and restrictions prohibiting trees, hedges, shrubbery, plantings or fencing over 6 feet tall. The restrictions were to remain in effect for 25 years, during which they could be amended by vote of the lot owners. In 1993, the association adopted an amended declaration providing that no trees, hedges, shrubbery, plantings or fencing of any kind would be allowed to obstruct the ocean view without written approval of the board. The next year, the association’s legal counsel drafted what he termed to be a “stylistic” change to the restriction, one that was not voted on by the homeowners. Following his change, the provision held that no “trees, hedges, shrubbery, plantings, or fencing shall obstruct the view of the ocean from designated ocean view lots without the written approval of the board.” Another provision stated “[i]f a provision is subject to more than one reasonable interpretation, any reasonable interpretation adopted by [the board] shall control.”

Andrews bought a lot in Sandpiper Village in 1997, after reviewing the 1994 restrictions as part of her title report. Six years later, another member of the association sent a written notice to Andrews asking her to trim trees on her property in order to preserve his view. She did not. When the ARC asked in writing that she do so, she sued, asking a ruling from the court that the association had no authority to require her to trim the trees because there was no documentation or other evidence showing that her neighbor’s property was a “designated [ocean] view lot.” She also asked that the restrictions be declared void as contrary to state statutes.

The Association moved for summary judgment, arguing that because the phrase “designated ocean view lots” was drafted as a stylistic change and never voted on by the homeowners, it should be disregarded. Without that phrase, the Association argued, the 1994 restrictions had the same effect as the 1993 restrictions. Alternatively, the Association said that, even assuming that phrase is a valid part of the 1994 restrictions, the phrase was ambiguous and the court either should defer to the ARC’s interpretation or determine – based on extrinsic evidence – that it was not intended to effect a substantive change to the 1993 restrictions under which all lots were entitled to view protection. The trial court awarded summary judgment in favor of the Association. Andrews appealed.

Held: The Court of Appeals upheld the judgment for the Association. If a text’s meaning is unambiguous, the Court said, courts decide the meaning of contractual provisions as a matter of law. If disputed contractual provisions are ambiguous, however, courts proceed to examine extrinsic evidence of the contracting parties’ intent, including, if helpful, evidence regarding the parties’ practical construction of an agreement.

Here, the phrase “designated ocean view lots” in the restrictions was unambiguous, referring to those lots that, as a matter of observable fact, had a view of the ocean. Plus, extrinsic evidence supported the Association’s claim that the regulations were unchanged from those approved by the homeowners. The Association’s lawyer’s contemporaneous communications indicated that his revised section of the regulations was intended to have the same substantive effect as section of regulations which, by its terms, did not restrict the protection of ocean views to any particular ocean view lots, such as those that someone had previously “designated” as having an ocean view.

Andrews argued that a prior chairman of the ARC assured her that her neighbor’s lot was not a “designated ocean view lot,” but the Court said that wasn’t a sufficient claim to create a factual dispute about the meaning of the restrictions. Andrews’ affidavit did not state whether the prior chairman was the chairman of the committee at the time she made the statement or, alternatively, at the time that the regulations were adopted.

– Tom Root

TNLBGray

Case of the Day – Tuesday, May 7, 2019

YOU SHOULDA WORN A HAT

Everyone has probably experienced it. Something goes terribly wrong, and the numbskull responsible for the mishap refuses to step up. Instead, he or she points at you, and finds a reason it’s all your fault.

It’s a Lucy Van Pelt moment. In one memorable Peanuts strip, When she was reprimanded for fighting with her little brother, the blanket-toting philosopher-kindergartner Linus, she pointed at him and argued, “It’s his fault. He hit me back first.”

Juries can be swayed by convincing variations of this theme, where the plaintiff is denigrated as somehow as liable or more liable for the accident than is the defendant. Sometimes it is true. But often it is not. It falls to the trial judge to regulate the flow of evidence to let the relevant stuff in while prohibiting material that might “inflame the passions” of the jury into reaching a verdict that is stupid.

Indiana’s approach is common. There, for example, the law prohibits a defendant from introducing evidence that an injured plaintiff was not using safety equipment, unless the failure to use the equipment somehow contributed to causing the injury.

Today’s case is from the U.S. Court of Appeals for the 7th Circuit, because the negligence action was brought in federal district court. It was what is called a diversity case, allowed in federal court because the plaintiff was a resident of one state while the defendant was a Hoosier. In diversity cases, the federal courts are bound to apply state law, which is how three judges in Chicago can be so focused on Indiana law.

Webber v. Butner, 2019 U.S. App. LEXIS 13409 (7th Cir., May 3, 2019): Johnny Webber was helping his friend Roger Butner cut down trees on Butner’s property. Johnny was not a professional logger, and he was not wearing a hardhat while cutting down the trees. The duo agreed that Johnny would operate the chainsaw while Roger would assist by watching out for hazards. While Johnny was cutting into one of the trees, a dead branch fell on his head, causing severe injuries.

Johnny sued Roger, arguing that he had a duty to take reasonable steps to protect Johnny’s noggin, both because he was the landowner and because he had agreed to look out for hazards, but failed to warn Johnny of the falling branch. Johnny said his injuries were a proximate result of Roger’s breaches of duties.

Roger removed the case to federal court, and the case was tried to a jury. Before opening arguments, Johnny moved to exclude evidence that he had not been wearing a hardhat while he was cutting down the trees. The district court turned him down, ruling that the evidence could be introduced “to show assumption of risk, comparative fault, and whether Johnny Webber acted as a reasonably careful person.” In his closing argument, Roger’s counsel employed the Lucy defense, reminding the jury that Johnny was to blame because he cut the trees “without wearing any safety helmets, any safety equipment,” and that “you can consider that testimony that he didn’t wear a hardhat, so he basically—he assumed the risk of that danger.”

The court instructed the jury: “Evidence relating to the use of a hardhat is offered to show assumption of risk, comparative fault, and whether Johnny Webber acted as a reasonably careful person. You may not consider it to show whether it would have prevented or altered the extent of Johnny Webber’s injuries.”

The jury did not bother to parse things that finely, apportioning 51% of fault to Johnny and 49% of fault to Roger. Under Indiana law, this meant Johnny got nothing.

Johnny appealed, challenging the trial court’s admission of evidence that he was not wearing a hardhat, and the jury instruction on what it could use that evidence for.

Held: Johnny was entitled to a new trial, because the evidence he was not wearing a hardhat should never have come in, and the results were so close that the erroneous admission of the hardhat evidence probably affected the outcome.

The Indiana comparative fault statute, Ind. Code §§ 34-51-2-7(b)(2) and 34-51-2-6, is a type of modified 50% comparative fault law. The Act replaced the common law rule of contributory negligence, under which a plaintiff who was even slightly negligent was barred from any recovery. Instead, the Act allocates fault proportionally, ensuring that each person whose fault contributed to cause injury bears his or her proportionate share of the total fault contributing to the injury.

However, the “modified” part of the Comparative Fault Act is this: If a claimant is deemed to be more than 50% at fault, he or she is barred from recovery. In determining fault, Indiana law also prohibits admission of evidence that an injured plaintiff was not using safety equipment, unless the failure to use the equipment contributed to causing the injury. Ind. Code §§ 34-51-2-7(b)(1) and 34-51-2-3.

To prove that Roger was at fault for his injury, Johnny would have to show (1) Roger owed him a duty; (2) Roger breached his duty by allowing his conduct to fall below the applicable standard of care; and (3) Johnny was injured by Roger’s breach of duty.

In the Act, “fault” is defined to include any act or omission that is negligent, willful, wanton, reckless, or intentional toward the person or property of others. The term also includes unreasonable assumption of risk not constituting an enforceable express consent, incurred risk, and unreasonable failure to avoid an injury or to mitigate damages. The phrase “unreasonable failure to avoid an injury or to mitigate damages” applies only to a plaintiff’s conduct before an accident or initial injury. A plaintiff’s post-accident conduct, even if it constitutes an unreasonable failure to mitigate damages, is not to be considered in the assessment of fault.

A broad range of conduct initially may be considered by the jury, but it may allocate comparative fault only to those people whose fault was a proximate cause of the claimed injury.

Johnny probably should have worn a hardhat, although it is unlikely that the hardhat would  have lessened his injuries much, if at all. But it is clear that Johnny’s failure to wear his hat did not cause the branch to fall, or cause Roger not to be vigilant in seeing the danger. That being the case, the court should not have let in the evidence that Johnny was bare-headed.

Roger’s margin of victory was razor-thin. Two percent the other way, and Roger would have been liable for 51¢ of every dollar of damage to Johnny. As the Court of Appeals put it, “Admitting this evidence and submitting an instruction to the jury that allowed them to consider it in apportioning fault were legal errors. The jury’s apportionment of fault between the parties was so close that we cannot treat the errors as harmless.”

– Tom Root

TNLBGray

Case of the Day – Monday, May 6, 2019

DEDICATED TO THE ONE I LOVE

Facts150501Courts of appeal sit mostly to determine how the law should apply to facts. Usually, when a trial court decides a legal question, a court of appeal will give a fresh look to the issue, called “de novo” review. You Latin scholars will recall that this literally means “of new.” Think “fresh look.”

Not so with facts. Whether the trial court got the facts right is something that seldom worries an appellate court. Usually, the appellate court won’t alter a grail court’s factual finding unless it’s clearly wrong. This is known generally as the “clearly erroneous” standard.

The different states and Federal government apply slightly different standards of review to different types of cases, and generalizing may be useful for our purposes, but not for real life. Still, as a rule, appellate courts treat trial courts’ findings of fact with great deference. Today’s case is one of those decisions that make you wonder why they should.

The Tinnes had owned a lakefront resort for years and used a private road, Corewood Lane, for their guests to have access to the beachfront property. When they retired, the couple sold all of the place except for a small piece on the north side, where they built a retirement home.

The Brands tore up the asphalt a bit…

Their golden-age digs had a driveway that attached to Corewood Lane. The new resort owners, the Brands, promptly began obstructing Corewood Lane, even tearing out big chunks of the asphalt. Finally being roused from their retired reverie by the Brands’ unfriendly conduct — which even included the Brands trimming trees on the Tinnes’ property — the retired couple sued for a judgment that Corewood Lane had become a public road by implied dedication. They asked for an injunction against future obstruction, and treble damages for the cut tree limbs.

The trial court obliged on a record that was pretty thin. It ordered that Corewood was public, told the Branches to repave it, pay $10,000 to the Tinnes for having obstructed it, and $250 (which it trebled to $750) for having trimming the Tinnes’ trees without permission.

The Court of Appeals reversed it all.

It turned out that Mrs. Tinnes had herself testified that she and her husband had never intended Corewood to be a public street.  The landowner’s intent is the most crucial element in an implied dedication of a private road as a public one. What’s more, no one bothered to introduce any evidence of the amount of damage that had been caused by the trespass and pruning of the Tinnes’ trees, and at any rate, Missouri’s treble damage statute related to cutting down trees, not just pruning them. To be sure, damages are presumed when a trespass is proven, but the damages that are awarded are nominal – think “symbolic and puny” – unless actual harm is shown.

And how much was nominal in this case? The Court of Appeals cut the damage award to one dollar.  About enough for one-fifth of a Starbucks Double Chocolaty Chip Crème Frappuccino® Blended Crème.

One is left to wonder what evidence the trial court was weighing when it throttled the Brands to begin with. It would appear that the trial judge decided the case with his heart, not his head.

Tinnes v. Brand, 248 S.W.3d 113 (Mo.App. S.D. 2008). Corewood Lane runs through property once owned by the Tinnes but now owned by the Brands. When they owned the land, Mr. and Mrs. Tinnes ran a lakefront resort on the property. Corewood Lane was the access road through their property to the resort site and lakefront. When the Tinneses sold the resort in 1996, they retained four acres on the property’s north side, where they built a home and a driveway leading to Corewood Lane.

As soon as they bought the resort, the Brands started obstructing Corewood Lane with tree limbs, boats, and open ditches. They also removed asphalt pieces (which they claimed were broken) from the paved road, after which parts of the road eroded and washed away. They even trimmed some tree limbs on the Tinnes property.

The Tinneses sued for a declaratory judgment that Corewood Lane was “a road easement for Plaintiffs, and the public,” or alternatively that plaintiffs had the right to use it as an easement appurtenant to their residential property. They also sought an injunction requiring the Brands to repair the road, and not damage or obstruct it in the future, plus actual and punitive damages. The trial court found that the entire length of Corewood Lane was dedicated to the public for use as a roadway; ordered the Brands to repair and repave the road at their own expense; enjoined them from interfering with use of the road by plaintiffs or the public; awarded $100 actual damages against the Brands for obstructing and damaging the road; and awarded trespass damages of $250, “trebled according to law” to $750, for the Brands’ cutting of trees and limbs on the Tinnes’ property.

The Brands appealed.

The Tinnes didn't need a formal street dedication ... but if they had actually intended to dedicate the street, it would have helped ...

The Tinnes didn’t need a formal street dedication … but if they had actually intended to dedicate the street, it would have helped …

Held: The decision was reversed, because the evidence didn’t support a finding that Corewood Lane had been dedicated to public use.

To show implied or common-law dedication of a roadway, a plaintiff must prove (1) the landowner’s unequivocal intent to dedicate the land to public use; (2) public acceptance; and (3) public use. Intent must be unequivocally manifested, expressly or by plain implication. Here, plaintiff Deanna Tinnes herself denied on the stand that they had ever intended to dedicate the lane to public use. The Court held that the record did not “convincingly demonstrate” that any landowner meant to create public rights in Corewood Lane adverse to the owner’s own rights.

As for the $250.00 trespass award, “trebled according to law” to $750.00, the Court of Appeals held that that the Brands had only cut tree limbs, not any whole trees, and neither party presented evidence as to damages. However, the Brands admitted the trespass, and the Tinnes were entitled to nominal damages, even if they proved no actual damage. Because the trial court awarded $100.00 for the Corewood Lane access damages, the Court of Appeals said that the $250.00 damages for the trespass could hardly be called nominal.

The Court ordered damages for the tree trimming to be reduced to $1.00.

– Tom Root

TNLBGray

Case of the Day – Friday, May 3, 2019

¡CINCO DE MAYO!

Either the aftermath of battle ... or the morning after a U.S. celebration of Cinco de Mayo.

     Either the aftermath of battle … or the morning after a U.S. celebration of Cinco de Mayo. The Mexicans, having more sense than we do, make little fuss over May 5th.

Yeah, we recognize that Sunday is Cinco de Mayo, not today, but we don’t publish on Sundays… and it’s much more fun to party on a Friday, when there’s no work to awaken to the next day. Cinco de Mayo is the most cherished of Mexican patriotic holidays, a day when all true patriots of the Escudo Nacional de México honor the great–

PendejadasAll right, Cinco de Mayo is essentially unobserved in Mexico, but is commemorated in all but two bars in the U.S. to celebrate a surprising but utterly insignificant victory of Mexican forces over the French Army – we hoist a cerveza to Kelly Rush. Mr. Rush, like the Mexican military, won an meaningless trial court victory on the way to getting routed.

The French invaded Mexico because our neighbor to the south owed reparations to the Second Empire, but decided that a siesta was more salubrious than settling up.  By contrast, Mr. Rush was looking to be paid for the work he had done for JoAnn Goodwin. Kelly is undoubtedly an arborist and landscaping specialist of the first water, but as a businessman … well, that’s another story.

Mr. Rush bid a job for JoAnn Goodwin. And like Gaul, it was divided into three parts. One part was tree removal, one was landscaping, and one was installation of a drain system. Of course, as soon as the job began, there was mission creep. More trees were to be cut down, and then more, and extra branches were to be hauled away. Rush diligently completed the extra work, but he wasn’t nearly so diligent in getting change orders signed by his customer, leading to inevitable confusion.

Alas, hilarity did not ensue. Instead, JoAnn denied asking for any more trees to be cut down, and alleged Rush was overcharging her. Rush said more money was owed. At that point, Kelly “Who Needs a Lawyer?” Rush sued Ms. Goodwin in Justice of the Peace Court, a very informal court in Texas for small issues. He won $4,500. It was his moment, his own victory at Puebla. But recall that after getting his Gallic butt kicked on May 5, 1862, French General Charles de Lorencez responded a year later with a second Battle of Puebla. No one talks much about that one, because the cheese eaters routed the Mexican forces and headed for Mexico City. Like Monsieur General, Ms. Goodwin regrouped, reprovisioned, and came after Mr. Rush again.

In her own second battle, Goodwin appealed to the regular trial court, which was obliged under Texas law to hold a whole new trial. At that trial, Rush’s damages fell from $4,500 to $200, despite the fact he showed the court the contract, two change orders Ms. Goodwin had initialed but not signed and one which he had prepared but she hadn’t even initialed.

The stubborn Mr. Rush appealed the $200 verdict. At the Court of Appeals, Kelly Rush found himself really swimming upstream. His only argument was that the trial court’s decision was contrary to the weight of the evidence, and those cases are hard to win on appeal. To make matters worse, in his zeal to save money, Mr. Rush forgot that sometimes lawyers are good for something. That “something” here would have been to get the documents he was relying actually admitted into the trial record so the court of appeals had something to look at. Without the missing documents – which Kelly Rush hadn’t introduced into the record – the Court of Appeals said it really had nothing to look at, and the $200 award stood.

Pozole - the national dish of Mexico.

Pozole – the national dish of Mexico.

Parenthetically, one would think that the trial court would have helped out layman Kelly Rush on coaching him to introduce the documents into evidence. But it wasn’t required to. We bet Kelly Rush was glad he saved so much money by not hiring one of those worthless lawyers to help him out! Lesson: Document your work. Get signatures from the customer. Hire a lawyer when you need one. After all, lawyers hire arborists when they need them. OK, end of lesson … and the pozole’s on!

Rush v. Goodwin, Not Reported in S.W.3d, 2007 WL 3380025 (Tex.App.-Waco 2007). JoAnn Goodwin requested a landscaping bid from Kelly Rush involving three parts: tree removal, landscaping, and construction of a French drain system. After completing the work, Rush complained that he was not paid in full.

Rush complained that he ended up cutting down many more trees than originally agreed to. Both Rush and Goodwin walked the property, and they agreed to have 26 trees cut down. But Rush said that after the initial agreement, the number of trees to be cut down kept changing. He claimed that the final agreement called for removal of 36 large trees, 14 small trees, and 1 large limb from Goodwin’s property, at an agreed-upon price of $200 for each large tree, $100 for each small tree, and $100 for removal of the large limb. The total was $8,700.

At trial, Rush presented an original contract which he had signed and Goodwin had initialed stating that 26 trees were to be cut down at $200 each and a large limb removed for $100, for a total of $5,300. As well, he presented a document only he had signed – a request for removal of 36 large trees at $200 each, 14 small trees at $100 each, and removal of a large oak branch at $100 – and another he had signed and Goodwin had initialed in part by Goodwin, reflecting an agreement to cut and remove 33 trees at $6,600.

No, this is not Mr. Rush on his way to hack down those extra trees. Rather, it is a Conco de Mayo celebrant in a period costume. Think of him as a Mexican version of a Civil War re-enactor.

     No, this is not Mr. Rush on his way to hack down those extra trees. Rather, it is a Cinco de Mayo celebrant in a period costume, a Mexican version of a U.S. Civil War re-enactor.

Goodwin contended she only agreed to have 26 large trees removed from her property at $200 per tree. She said that after counting the stumps, only 26 trees had been removed, and that even if more than 26 trees had been removed, she never agreed to their removal. She maintained that Rush overcharged her $1,400 to remove trees that were not cut down. In addition to tree removal, the agreement called for removal of vegetation and growth, spreading of dirt, and removal of fences. Rush and Goodwin agreed that the cost of that project would be $3,600. Goodwin paid Rush $1,000 on the landscape agreement and still owed $1,600. She argued that because she overpaid $1,400 on the tree removal and other projects, she did not owe the $1,600 balance.

Rush also argued that after starting the project, Ms. Goodwin asked that extra side projects be performed, and the cost of these projects came to total of $749.94, none of which Goodwin paid. He filed suit without an attorney against Goodwin, seeking relief of only $1,600 but being awarded $4,500 plus court costs. A glorious and unexpected windfall! But Ms. Goodwin appealed to county court, where in a bench trial the court returned Rush to reality, awarding Rush a symbolic $200 with interest.

Far be it from us to plug our book, but if Kelly had "Rushed" out to buy a copy, he would have spared himself some grief.

      Far be it from us to plug our book, but if Kelly had “Rushed” out to buy a copy, he would have spared himself some grief.

Rush appealed.

Held: Rush got only his $200 award.

In his appeal, Rush claimed he was underpaid for his work and essentially argued that the $200 damage award was against the great weight and preponderance of the evidence. When seeking review of the factual sufficiency of the evidence supporting an adverse finding on which the appealing party had the burden of proof, the appellant must show that the adverse finding is against the great weight of the evidence. The appellate court must weigh all the evidence, and may set aside the finding only if the evidence is so weak or the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and unjust. The appellate court isn’t permitted to pass on the credibility of witnesses or substitute its judgment for that of the trial court.

The Court found that Rush had completely bollixed up the trial. During that proceeding, Rush referred to the various documents he said established the terms of the tree removal and landscape agreement, but he failed to ask the court admit any of them into evidence. The Court of Appeals said that in order for it to consider the documents, those papers had to have been introduced and admitted at trial. Without them, the Court could only examine the parties’ testimony. That testimony was largely in conflict, and it was the role of the trial court, not the Court of Appeals, to determine which party’s testimony was more believable.

The trial court’s award of only $200 in damages, the Court of Appeal said, was not overwhelmingly against the great weight of the evidence, especially when the alleged contracts were not in evidence.

Oops. Or as the Mexicans say, “¡Ay!”

– Tom Root

TNLBGray

Case of the Day – Thursday, May 2, 2019

NEITHER FISH NOR FOWL

Normally, one would think that when an electric utility was busy building new transmission lines, it was just as subject to liability for empty-headed negligence as the next guy. That would be true for your garden-variety profiteering, money-grubbing commercial enterprise. But not necessarily when your Uncle has his fingers in the pie… at least until this past Monday.

Back in the dusty days of the Great Depression, some Americans began to think it was a good idea for the “public” – that is to say, the government – to own electric utilities. A lot of people thought private electric companies charged too much for power, did not employ fair operating practices, and were subject to abuse by the utility holding companies that owned them. What crazy ideas!

After all, the government is benevolent. And efficient. And responsive to citizens. Look no further than your local DMV. Isn’t it sad everything can’t be so well run? During his presidential campaign, Franklin Roosevelt claimed the federal government would never part with control of its power resources. At least where the Tennessee Valley Authority is concerned, he has been as good as his word.

The TVA is a utility that is neither fish nor fowl, acting in all respects like a privately-held company engaged in electricity generation and distribution. At the same time, it acts like a government agency, wielding powers reserved to the government.

Is that a good thing? Don’t ask Gary Thacker. He and fishing buddy Tony “Ski Daddy” Szozda were trollin’ and a’rollin’ in an Alabama fishing tournament on the Tennessee River one weekend, just while TVA crews were raising a submerged power line that they had accidently let drop into the river. If you ever saw the scene in “The Great Escape” where Steve McQueen commandeers a motorcycle with a rope across the road, you know where things were headed for Gary and Tony. At the they passed through the unmarked work area at full throttle, the TVA crews lifted the conductor out of the water. The boat hit the cable. Tony died.

Logically, Gary sued the TVA for negligence. After all, its crews had dropped the cable, and they had no boats patrolling the channel to warn boaters of their recovery activities, despite knowing that boats traversed the area at high speed, and that the usual Tuesday fishing tourney – with a lot of fast-moving boats – was underway.

After filing the lawsuit, Gary got smacked again. It turns out that sometimes the TVA is a private utility company. Sometimes it’s the government. Being the government has a substantial impact on liability, because no one may sue the federal government for tortious conduct (like negligence) unless the plaintiff has permission.

Permission is granted by the Federal Tort Claims Act, which grants permission to sue for many types of negligence. The FTCA, however, does not permit suit where the negligent act complained of is a “discretionary function” of government. The trial court concluded that “clotheslining” fishermen with an understaffed and poorly-thought-out power line recovery operation was a government function, and the court thus lacked jurisdiction to hear the lawsuit. The 11th Circuit Court of Appeals agreed.

But this week, the Supreme Court of the United States reversed. TVA could be a fish. Or a fowl. But it could not change according to what was convenient. If it was out in the marketplace acting like a private entity, it will be treated like one.

The Court of Appeals had applied an unusually attenuated syllogism here: the TVA has the power of eminent domain to condemn real estate for the installation of power lines. Because that is a government function, if when and where and how to build power lines is a discretionary function, any institutional stupidity that attends the building of power lines is likewise a discretionary function.

The Supreme Court would have nothing to do it. When TVA (or other government actors that compete in the marketplace with private companies)  it is subject to suit when its employees do something bone-headed, and victims are hurt or killed.

There is little question that SCOTUS (the acronym for The Supreme Court Of The United States used by people in the know) brought some sanity to the FTCA. When we reported on the Court of Appeals decision, we complained, “Where does this string finally snap? Would driving a truck to be used in the building of a power line a discretionary function, so that a drunken TVA employee running down a busload of Brownies be shielded from liability? After all, relieving the tipsy trucker would require using another employee, an allocation-of-resources decision? More to our topic, would the clearing of trees well beyond a right-of-way – because maintaining power lines that TVA built on land it had condemned be part of the “discretionary function” chain – likewise block a suit when the tree fell on the same busload of Brownies? There seems to be no logical way to cabin the 11th Circuit’s reasoning in this decision.”

Maybe the Justices read this blog. It’s doubtful, but the wisdom of the Court’s decision on Monday is not.

Thacker v. Tennessee Valley Authority, Case No. 17-1201, 2019 U.S. Lexis 3149 (April 29, 2019). Gary Thacker sued TVA for negligence involving a tragic 2013 accident on the Tennessee River. While Gary and his friend Anthony Szozda were participating in a local fishing tournament, TVA was raising a downed power line that was partially submerged when a pulling cable had failed earlier that day. At the moment that TVA employees began lifting the conductor out of the water, the fishing partners’ boat passed through. The conductor struck Szozda, killing him, and Thacker. Injuring him seriously.

The district court concluded that TVA’s activities raising the cable were part of its discretionary function as a government agency, and dismissed the complaint for lack of subject-matter jurisdiction. Gary appealed, and the 11th Circuit agreed. Last week, the Supreme Court reversed the two lower courts.

Held: TVA is not immune from suit for negligence arising from the accident.

Under the doctrine of sovereign immunity, no one can sue the United States without the government’s permission. In the Federal Tort Claims Act, the government granted a limited waiver of its immunity, allowing people to sue the government for torts committed by its employees and agents. The FTCA contains an exception from liability when a government employee performs “a discretionary function or duty.”

By contrast, the TVA is governed by its own statutory waiver of sovereign immunity, 16 U.S.C. § 831c, which grants the TVA is power to “sue and be sued in its own corporate name,” with any judgment paid from TVA assets rather than the federal treasury.  The Supreme Court has previously held that when Congress “launched a governmental agency into the commercial world and endowed it with authority to “sue or be sued,’” the clause should be “liberally construed.”

The government successfully convinced the 11thCircuit Court of Appeals that something like the FTCA’s discretionary-function exception should be judicially inferred to prevent “judicial second-guessing” of TVA policy decisions. Citing a prior Supreme Court decision, Federal Housing Administration v. Burr, the government contended that courts should recognize implied limits on “sue-and-be-sued” clause authority when “necessary to avoid grave interference” with governmental functions. Thus, the government argued to the Supreme Court, that the TVA’s discretionary decisions should be protected from court review.

But the Supreme Court “balk[ed] at using Burr to provide a gov­ernmental entity excluded from the FTCA with a replica of that statute’s discretionary function exception.” The Court explained that because “[t]he law … places the TVA in the same position as a private corporation supplying electricity,” “a suit challenging a commercial act will not ‘grave[ly]’—or, indeed, at all—interfere with the ‘governmental functions Burr cared about protecting.’”

However, as the court noted, “the TVA is something of a hybrid, combining traditionally govern­mental functions with typically commercial ones.” The TVA engages in governmental activities such as exercising eminent domain to take private property for TVA use and running its own band of law enforcement agents. The Court said that if TVA’s activities are “commercial—the kind of thing any power company might do – the TVA cannot invoke sovereign immunity.” But even if the conduct is governmental, it must be clearly show” that granting TVA immunity from private lawsuit is needed to prevent a “grave interference” with a governmental function.

Because the district court bypassed the “grave interference test,” the court sent the case back for reconsideration in light of this analytical framework.

The Court rejected the government’s claim that constitutional separation-of-powers principles prevents courts from reviewing a government entity’s discretionary choices. The Justices rejected the separation-of-powers argument as applied to the commercial activity engaged like the construction undertaken by the TVA in this case. Beyond that, the Court ruled that Congress by statute waiver may strip a government entity of immunity. “The right gov­ernmental actor (Congress) is making a decision within its bailiwick (to waive immunity) that authorizes an appro­priate body (a court) to render a legal judgment.”

The ruling should blunt government defenses of policy immunity for entities that “operate[] in the marketplace as private companies do” and thus should be “as liable as they are for choices and judgments.”

– Tom Root

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Case of the Day – Wednesday, May 1, 2019

“NIXON” AND “BREAK-IN” SORT OF GO TOGETHER

watergat160524Today’s case is all about someone named Nixon, government break-ins, abuses of power and that sort of thing. You’re thinking Watergate, 1972?  That’s so 20th Century. There weren’t even any Russians involved…

The Nixon we’re talking about is Diane Nixon, and the government is that of Montgomery County, Maryland. It seems that Nixon — who was the victim here, not the NCA — had a rather unkempt lawn. The Housing Code people inspected and sent her a certified letter telling her to clean it up or the County government would (at her expense). Ms. Nixon received the letter and made some half-hearted attempt to straighten the place up. But after the ten days provided for in the County’s letter elapsed, the housing inspector and a gang of worker broke through a gate, cut the grass, removed the trees and hauled off the junk.

Ms. Nixon, apparently more adept at scape-goating than landscaping, sued the County, claiming that it and its employees had committed grievous violations of her due process rights by giving inadequate notice of what it intended to do, by trespassing and destroying perfectly good trees, and — while they were at it — hauling off a picnic table.

The federal district court dismissed the case, finding that the County had complied with due process by giving adequate notice of what it intended to do and when, and the Court of Appeals agreed. At its heart, due process requires notice and an opportunity to be heard. Ms. Nixon got adequate notice and she was afforded a right to a hearing, which she didn’t ever exercise. As for the picnic table, the trees and a wheelbarrow that the workers allegedly spirited off, the State had a procedure for Ms. Nixon to employ in making claims for such damages. After all, due process is nothing more that “the process that is due.”

President Nixon reminds us with his gesture that due process has two (count 'em, two) components - notice and an opportunity to be heard.

President Nixon reminds us with his gesture that due process has two (count ’em, two) components – notice and an opportunity to be heard.

Nixon v. Montgomery County, 251 Fed.Appx. 141 (4th Cir., 2007).   The Montgomery County Department of Housing and Community Affairs received a complaint about Diane Nixon’s place in Silver Spring, a housing code inspector determined that it was in violation of the County Code. He sent Nixon a notice by certified mail, return receipt requested, stating that her property was in violation of the Housing Code, which prohibits “weeds and generalized growth to exceed 12 inches in height limit in a subdivision.”

The notice complied with the Code: it offered Nixon a 10-day waiting period, the opportunity to appeal the notice, and the telephone numbers for the Board of Appeals and for the inspector. But the notice warned that after the waiting period, the County would enter the property for the purpose of bringing it into compliance with the Housing Code. After receiving the letter, Nixon failed to appeal, but she said he hired some youths to help clean up the place. Nonetheless, after the 10-day period expired, the inspector and a work crew arrived at Nixon’s property, entered it through a chain link gate that they removed from its hinges, and proceeded to clean up the place. The inspector said the property was still in violation of the Code when he arrived on November 7, and that, in cleaning the property, he cut back and removed dead vegetation, vines, overgrown bamboo, logs of wood, and dead, dying, or leaning trees. He also removed a picnic table and wheelbarrow, maintaining that these items were unusable and constituted trash.

Nixon claimed that she had sufficiently cleared the yard of overgrowth to be within the Housing Code, and that the inspector actually destroyed healthy trees, ornamental shrubs, and plants with an estimated value of $17,362. She sued the inspector and the County alleging violations of her constitutional rights to due process and freedom from unreasonable search and seizures under both the federal and state constitutions, as well as state tort claims for trespass and conversion. The federal district court granted summary judgment to all defendants on all claims.

mower160524Held:  The Court of Appeals upheld the dismissal of her claim. The Due Process Clause guarantees that “[n]o person shall … be deprived of life, liberty, or property, without due process of the law.” The general rule developed under the Due Process Clause is that individuals must receive notice and an opportunity to be heard before the Government deprives them of property.

Nixon claimed the County’s notice was deficient. But the Court said the notice had to be judged according to three standards: (1) the private interest that will be affected by the official action; (2) the risk of an erroneous deprivation of such interest through the procedures used; and (3) the probable value, if any, of additional or substitute procedural safeguards. Finally, the County had to weigh Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. Applying these factors, the Court concluded that the County provided constitutionally adequate process to Nixon concerning the removal of the items covered by the Code.

The removal of the solid waste items, covered by Chapter 48 of the Code, appeared closely related to the cleanup of the Chapter 58 items. Although the notice lacked specificity, the Court said, it clearly presented the County’s general concerns, indicated the County’s proposed solution, and provided Nixon with a means to appeal if she so chose.

Nixon also claimed the County exceeded its legitimate authority under any section of the Housing Code by destroying healthy trees and a functional picnic table and wheelbarrow. But the Court said that Nixon didn’t have a viable due process claim because Maryland provided a post-deprivation process that offered Nixon sufficient redress for her alleged property loss.

– Tom Root

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Case of the Day – Tuesday, April 30, 2019

WHO ARE YOU GOING TO BELIEVE?

We make countless assumptions every day, based on our experience and education and sometimes prior hard luck. Where we live, whenever you see a cross the road in front of you, you slow way down, because experience has taught you that there’s probably a second, and even a third, tailing along. When we grab some fast food, we assume that the acne-challenged teens cooking it in the back are practicing good hygiene, because we know that the County Health Inspector is on the case, and we know that the restaurant knows that, too. When vicious killers are sent to Death Row, we know that the manifold guarantees and procedures in our criminal justice system assure that the mutts are guilty beyond any reasonable doubt. And we fly with confidence that our government inspectors have worked tirelessly to ensure that the complex systems that carry us six miles above the earth at eight-tenths the speed of sound are free of flaws.

The law indulges us our reasonable assumptions, because those assumptions are the grease that make society work. If we see a person collapsed by the side of the road and call an ambulance, the law will protect us from a claim by the injured party that we should pay for the emergency squad because they never asked us to call. If we see a toddler wandering in the Walmart parking lot, our reasonable assumption that the child is lost protects us from liability for taking her hand and leading her to the store manager.

Even in this era of unusual domestic arrangements, the law permits us our reasonable assumptions. When Phil and Marlee Snowdon decided they wanted to clear some trees and brush along their property line adjoining the neighbors, Hal and Carol Dickinson, they did what good neighbors do: they asked for the Dickinsons’ consent. Phil and Hal walked the boundary line, Phil described what he and Marlee wanted to do, and Hal consented.

What Phil and Marlee did not know was that Carol had owned the property since before she married Hal, which was about 15 years before. She paid all the bills on the place and made all the decisions. Hal was just a kept husband.

Believing they had permission, Phil and Marlee hired Charter Oaks Tree & Landscaping Co., Inc., to perform the work. Charter Oaks was a few days into the tree and shrub removal when Carol returned from an out-of-town trip and blew a gasket. It did not matter that Hal had given permission, Carol fumed, because she had not.

Carol sued the Snowdons and Charter Oaks for trespass and wrongful cutting of trees. The Snowdons admitted she had not given them permission, but argued that her husband, acting as her agent, had done so. Carol said that didn’t matter, because he lacked the authority to do so, and no sense that he was acting as her duly-authorized agent could be inferred from her conduct, because she had never said a thing that would make Phil and Marlee think he could speak for her.

Poor Hal, the kept man. He could not have felt very good about how his wife legally emasculated him. And neither, apparently, did the court. Not because he’s a guy, but rather because you ought to be able to rely on the promises of one marriage partner to bind both.

Sure, marriage alone isn’t enough to presume an agency relationship exists, but assuming that hubby and wifey speak for each other is some of that societal grease we mentioned. Clearly, the court – while mouthing the legal platitude about no presumption of agency arising from the marriage – was going to find a way to make Hal his wife’s agent. The alternative would be to throw sand in the neighborhood gears, requiring the folks next door, the banker, the grocer and auto mechanic all to question one marital partner expressing the demands and desires of the couple. How could anything ever get done?

This court wasn’t going to be a party to that. Hal was found to have apparent authority to let Phil and Marlee cut the boundary trees.

Dickinson v. Charter Oaks Tree & Landscaping Co., Inc., Case No. 02AP-981 (Court of Appeals, Franklin County, Ohio, April 24, 2003) 2003-Ohio-2055, 2003 Ohio App. LEXIS 1940In October 1997, Marlee Snowdon and her husband Richard moved next door to Carol Dickinson and her husband, Hal. Carol Dickinson had lived in her house for 30 years. After Hal and Carol married some 15 years before, he began living there, too. Notwithstanding that, Carol owned and managed the property. Significantly, she admitted the Snowdons had no idea who owned the property.

One spring, the Snowdons decided to clean out substantial vegetation overgrowth along the side of their property abutting the Dickinson property. After Marlee and Richard decided to do the work, Richard told her he had received permission from Hal Dickinson after the two men walked the joint property line together and Richard Snowdon pointed out to Hal Dickinson what the Snowdons wanted to do. Marlee Snowdon hired Charter Oaks to do the work.

Marlee Snowdon told Charter Oaks that the Dickinsons had given their consent to removing vegetation along the border between the properties. Charter Oaks’ normal practice was to rely on the representations of the contracting party about the consent of adjoining landowners. Charter Oaks began removing the vegetation between the Dickinson and Snowdon property.

Hal watched Charter Oaks run chippers and perform its work the first day. But on the second day, Carol returned from an out-of-town trip, and became upset about the work.

Carol sued the Snowdons and Charter Oaks for trespass and wrongful cutting.

Held: Hal acted with apparent authority, and the Snowdons and Charter Oak were within their rights to rely on his consent. The evidence showed that not only did Hal work frequently in the Dickinson yard, both alone and with Carol, but he trimmed and removed vegetation from the Dickinson property, including the area along the joint property line with the Snowdons. Hal dealt with contractors, including a tree service Carol hired that performed work on the Dickinson property. No evidence suggested the Snowdons were told Hal had limited or no authority to make decisions regarding landscaping matters on the Dickinson property. That evidence let a reasonable person infer that Carol knowingly permitted Hal to act as though he had authority over landscaping matters on the Dickinson property.

What’s more, the evidence showed that Richard Snowdon believed in good faith that Hal had apparent authority to give permission to the Snowdons and Charter Oaks to enter onto the Dickinson property to remove vegetation in the area of the joint property line.

A defendant is not liable for trespass or destruction of vegetation if he is privileged, by receiving the consent of the owner or her agent, to enter onto the property of another to remove vegetation. “Because competent evidence was presented at trial to support a reasonable conclusion that Hal Dickinson was Carol Dickinson’s agent and had apparent authority to give consent to defendants to enter onto the Dickinson property and to remove vegetation,” the Court said, Carol’s claims against the Snowdons and Charter Oak failed.

– Tom Root

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