Appellate Court Process

January 18, 2016

The Arizona state court system has two primary appellate court levels: the Arizona Supreme Court and the Court of Appeals. The Supreme Court is paramount. It hears appeals from Court of Appeals decisions and in rare cases, directly from the trial courts. The Court of Appeals—there are divisions sitting in Phoenix for the north / central part of the state, and in Tucson for the rest–handles appeals from the Superior Courts, and from the Industrial Commission in workers compensation cases. I offer the foregoing introduction to highlight recent cases and provide some insights into the appellate process.

On November 24, 2015 the Arizona Supreme Court issued its unanimous opinion in DBT Yuma, L.L.C. v. Yuma County Airport Authority. The airport authority aka YCCA is a nonprofit corporation, which leases the Yuma airport property from Yuma County. YCCA sublet a part of the airport property to a fixed base operator—these are the outfits which sell gas and storage facilities to private plane owners—and later terminated that lease. The FBO sued YCCA claiming it breached the lease agreement, and wanted to add Yuma County as a part, claiming YCCA was the County’s agent.

The decision turns on an interpretation of A.R.S. § 28-8424, a statute which specifically addresses the leasing of airport property by nonprofit corporations. The Court held that the statute does not, alone, make a county liable on account of the actions of an airport authority despite language in the statute which refers to the authority as an “agency or instrumentality” of the governmental body. The opinion provides an excellent example of a “meat and potatoes” part of appellate judging: statutory interpretation. There is nothing intuitive about the decision, but it focuses very closely on the meaning of words within the context of statutes. Boring stuff, but part of what appellate judges do.

In Great Western Bank v. LJC Development, LLC, an opinion issued by Division 1 of the Court of Appeals on November 10, 2015, the court upheld a trial court judgment against a bank and in favor of loan guarantors, where the guarantors were sued on a defaulted loan and alleged that lender wrongdoing caused the problem. The bank and its borrowers entered into a loan agreement. The bank pulled out of Arizona lending in mid-2008—imagine that—and left the borrower without further funding. Then it sued the guarantors, who were able to establish a breach and lost profits.

The case was tried to a Superior Court judge, with no jury. (This is not uncommon in business disputes.) The judge decided the case in favor of the guarantors, leaving the appellate court with the duty to: (a) make sure the trial judge followed procedural rules; and (b) interpret the contract de novo, or with a fresh set of eyes. The appellate court had no trouble doing so, and ruling consistent with the trial judge’s ruling.

From Division 2, here’s a memorandum decision in Fectay v. Tahiri, dated November 30, 2015. (Memorandum opinions have limited precedential authority, and are not published in the traditional sense.) The parties entered into a partnership to sell meteorites. One of the partners intervened in a dispute between the other partner and a third party, and alleged fraud, breach of contract and conversion (which is theft without the criminal element.) The suing party lost on summary judgment, which means the trial court decided the suing party could not win, even if he was given the benefit of the doubt on all disputed facts.

The appellate court reviewed the summary judgment decision. It reached the conclusion that the trial judge improperly applied the law regarding fraud to the facts before the court. Thus, it reversed the trial court decision on the fraud claim. BY doing so, it also decided a settlement agreement was no longer, necessarily, enforceable, which gave the intervenor-claimant the right to pursue all of his claims.

Appeals provide an opportunity to make sure the trial court followed the rules, and properly applied the law. That’s about all they do, despite the fervent wishes of many a losing party for someone to “see it their way.”

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