Archive for the ‘Practice & Procedure’ Category

After he was arrested and later released without charge, Illinois resident Bruce Williams filed suit against four officers, alleging Fourth Amendment violations. According to Williams, the officers arrested him without probable cause and proceeded to assault him, causing facial scars that made it impossible for him to follow his vocation of cosmetologist/educator. Williams was allowed to proceed in forma pauperis and later retained attorney Garry Alonzo Payton on a contingent-fee basis.

Six months after the trial court’s deadline for the filing of a final pretrial order, and after repeated attempts to elicit a response from a draft pretrial order, the officers moved for sanctions. The trial court declined to dismiss the case, but refused to schedule a pretrial conference. Instead he ordered Williams and Payton to reimburse the legal expenses incurred in order to obtain a response to the draft order, approximately $9,000, within 30 days.

Williams unsuccessfully tried to negotiate a payment plan at a rate of $25 per month, unable to afford more on his $1,050 monthly salary. The officers rejected the plan and the 30-day deadline passed without payment. Though he acknowledged Williams’ poverty, the trial court dismissed the case for failure to pay the sanction.

Williams also complained to the Illinois Attorney Registration and Disciplinary Commission, blaming Payton for the delay in responding to the pretrial order. The commission agreed and ordered Payton to pay the sanction and suspended him for 45 days.

On appeal, the Seventh Circuit Court of Appeals criticized the dismissal as a disproportionate response to the misdoing:

[Williams] was given 30 days; he sought 11,000. But the court was mistaken to term the plaintiff’s failure to pay ‘contumacious.’ No one doubts that he can’t afford to pay the monetary sanction. To ignore a party’s inability to pay a sanction could result in a disproportionate punishment–as this case illustrates.

Had the case been allowed to proceed to trial, the $10,000 settlement offered by the officers could have covered the sanction. The Seventh Circuit applauded the decision of the Illinois Attorney Registration and Disciplinary Commission, noting that "Payton got off lightly. Ignoring the need to prepare a pretrial order was inexcusable. Ignoring the order to pay sanctions was worse; it was contempt of court." The Seventh Circuit reinstated Williams’ case and remanded it back to the trial court.

For the full story, click here.


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In recent years, Warren Jeffs, incarcerated leader of the Fundamentalist Church of Jesus Christ of Latter-Day Saints, has been charged with bigamy, sexual assault, and rape in multiple states. The $110 million trust for the polygamist sect owns more than 700 houses, farms, dairies, and other businesses on land in two communities along the Arizona-Utah border. Several entities have sued the trust as an accomplice to Jeffs, and Utah intervened in the trust amid claims of mismanagement stemming from the alleged crimes of Jeffs.

A federal trial court entered an order returning control of the trust, including financial and property records and all of the trust’s assets, to the Fundamentalist Church of Jesus Christ of Latter-Day Saints. Then a state trial court filed a motion with the Tenth Circuit Court of Appeals, requesting a stay of the first order. The Tenth Circuit agreed and indefinitely stayed that order, halting the return of control of a $110 million trust to the polygamist sect.

For the full story, click here.

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Tim McCollough sued Johnson, Rodenburg & Lauinger, a debt-collection law firm, for pursuing his credit card bet after the statute of limitations had expired. McCollough claimed that he and his wife fell behind in paying their credit card bills after he suffered a brain injury while working as a school custodian and his wife underwent surgery. He stopped making payments on his account with Chase Manhattan Bank in 1999 when there was an unpaid balance of about $3,000. In 2005, another debt-collection agency sued McCollough, but the lawsuit was dismissed because the five-year statute of limitations had already expired.

Johnson, Rodenburg & Lauinger then became involved and were incorrectly informed that McCollough had paid $75 on his account in 2004, effectively resetting the clock to run through 2009. The 2004 activity was not a payment; however, it was the return of court costs to the other debt-collection agency for an earlier attempt to pursue McCullough’s debt. No one at Johnson, Rodenburg & Lauinger requested documentation of the activity. Instead, the firm simply sued McCullough in 2007 for about $10,000. In his pro se answer to the complaint, McCullough again wrote that the statute of limitations had expired:


McCullough eventually retained a lawyer, and Johnson, Rodenburg & Lauinger dismissed the suit with prejudice. He then filed suit against the firm, claiming it had violated the federal and state fair debt laws, as well as state torts of malicious prosecution and abuse of process. A Montana jury ordered Johnson, Rodenburg & Lauinger to pay Tim McCollough $250,000 in damages for emotional distress. The trial court refused to reduce the award or give Johnson, Rodenburg & Lauinger a new trial.

On appeal, the Ninth Circuit Court of Appeals found that Johnson, Rodenburg & Lauinger filed an average of five collection lawsuits a day in Montana between January 2007 and July 2008, which amounted to about 2,700 total. On one day, the North Dakota firm filed 40 lawsuits. About 90% of the firm’s suits end in a default judgment. The court affirmed the trial court’s ruling, noting that the
firm’s error was its own to prevent.

For the full story, click here.

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Northpoint Health Services of Arkansas, LLC v. Wayne Rutherford & Tresa Robinson, Nos. 09-2433 & 09-2435.

Wayne Rutherford and Tresa Robinson, as representatives of Isaac Rutherford and Donna Faye Snow, respectively, brought separate state actions against nursing home facilities in Fayetteville and Springdale, Arkansas, that were operated by Northpoint Health Services of Arkansas, LLC (“Northpoint”) and the nursing home administrators. Prior to being admitted to the Northpoint nursing homes, Rutherford and Snow signed Admission Agreements that provided that (1) all disputes must be resolved by binding arbitration and (2) the agreement to arbitrate was governed by the Federal Arbitration Act (“FAA”).

Northpoint then filed federal actions to compel arbitration under §4 of the FAA and alleged that the parties had diversity jurisdiction. Northpoint did not include the nursing home administrators in their petitions. Rutherford and Robinson did not contest the allegations regarding diversity jurisdiction, and the trial court granted Northpoint’s petitions to compel arbitration. Later, the Supreme Court of the United States held in Vaden v. Discover Bank that, in determining federal question jurisdiction, courts must look at the “underlying substantive controversy.” Relying on Vaden, Rutherford and Robinson moved for the trial court to vacate the orders compelling arbitration because inclusion of the administrators destroyed complete diversity of citizenship of the parties. The trial court granted the motions, concluding that Vaden implicitly overruled prior cases compelling arbitration based on diversity jurisdiction. Northpoint appealed the rulings, and the cases were consolidated on appeal.

The Eighth Circuit Court of Appeals explained that, except to compel arbitration, the FAA grants no court federal jurisdiction. Because of this, most parties seeking to compel arbitration to through a §4 petition, allege an independent basis for federal court jurisdiction—diversity jurisdiction or federal question jurisdiction. Prior to Vaden, all courts adopted the same approach in resolving whether diversity jurisdiction applied. The courts reviewed only the §4 petition to determine if there was complete diversity of citizenship between the parties.

As to federal question jurisdiction, a split in the circuits had developed over whether to “look through” the §4 petition to the underlying case to determine jurisdiction. Vaden adopted the “look through” approach, but limited its holding to federal question jurisdiction cases only.

Because the Vaden court carefully limited its holding to federal question jurisdiction cases, the Northpoint court refused to extend the “look through” approach to diversity jurisdiction cases. Accordingly, the court reversed the orders to vacate the orders compelling arbitration.

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Carlson v. Kelso Drafting & Design, Inc., No. CA08-1327.

Bill and Jane Carlson hired Kelso Drafting & Design, Inc. (“Kelso”) to design and construct a custom-built home, including a concrete-tile roof. Kelso hired a roofing company to install the roof. Construction was completed in 2002. After the Carlsons moved into the home, they noticed leaking after the first rain. Kelso informed them that the defect could be repaired. From the time of occupancy in 2002 until March 2006, Kelso and the roofing company made repeated attempts to repair the roof. At that time, the Carlsons believed the roof had been repaired, but in November 2006, they discovered additional leakage and demanded the roof be repaired. Kelso notified them in January 2007 that the leaks were caused by product defect instead of faulty design or installation. In August 2007, the Carlsons hired another roofing company to replace the roof. At that time, they learned of various construction and installation defects.

The Carlsons brought suit on February 29, 2008, and Kelso moved to dismiss their complaint based on the statute of limitations contained in Ark. Code Ann. § 16-56-112(a). The trial court agreed and dismissed the lawsuit.

On appeal, the Arkansas Court of Appeals noted that Ark. Code Ann. § 16-56-112 contained one exception to the five-year statute of limitations for construction defects, fraudulent concealment, which requires proof of the following:

some positive act of fraud, something so furtively planned and secretly executed as to keep the plaintiff’s cause of action concealed, or perpetrated in a way that it conceals itself.

The Carlsons alleged that because Kelso maintained that the roof could be repaired—and continued to make repairs—the statute of limitations should be tolled during that time period. Although the repair doctrine is recognized in several other jurisdictions, the court refused to ignore the General Assembly’s intent to provide those in the construction industry with protection from lawsuits based on work performed many years prior to the filing of the complaint.

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In re: the Estate of Mary Elizabeth Reimer, incompetent, No. CA09-770.

In 2004, George Reimer petitioned for guardianship over his wife, Mary Elizabeth Reimer. The trial court found Mrs. Reimer incompetent and appointed Mr. Reimer as guardian over her person. Two years later, Mr. Reimer moved to change guardians, and Karen Hunter, Mrs. Reimer’s daughter, was appointed as guardian over Mrs. Reimer’s person and estate. In 2008, Mrs. Reimer moved to terminate the guardianship, arguing that she was not notified about the expansion of the guardianship to include her estate and that she no longer needed a guardian. Hunter filed an amended petition for appointment of herself as guardian of Mrs. Reimer’s person and estate. At a joint hearing, the trial court held that the amended petition cured any notice defects and that a guardianship of the person and estate was still needed. Hunter remained as guardian. After the hearing, Mrs. Reimer’s attorney, Frances Morris Finley, moved for attorney’s fees incurred on her behalf, and the trial court denied that motion.

Finley appealed the denial. The Arkansas Court of Appeals held that Finley had standing to appeal the order because she “has a pecuniary interest affected by the court’s disposition of the matter below.” The court then upheld the trial court’s ruling, noting that no Arkansas statute authorized an award of attorney’s fees under these circumstances.

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Rettig v. Ballard, No. 09-361.

According to his complaint, Jimmy Rettig’s vehicle was rear-ended by a truck owned by Mississippi Coast Carrier and driven by Alton Ballard. Rettig filed his complaint on January 23, 2008, and had two summonses issued to the defendants on February 22, 2008, and February 29, 2008, respectively. Although defendants were located in Tennessee and entitled to thirty days in which to respond to Rettig’s complaint, both summonses stated that defendants had twenty days in which to respond. Both defendants were timely served with a summons and complaint.

Defendants filed a motion to dismiss, arguing that (1) the summonses were defective and the case against them had to be dismissed and (2) the statute of limitations had run and the dismissal should be with prejudice. The trial court agreed and dismissed the lawsuit with prejudice because it had never been properly commenced.

On appeal, the Arkansas Supreme Court explained that the savings statute, Ark. Code Ann. § 16-56-126, protected a plaintiff from suffering a complete loss of relief because of a procedural defect. The court further explained that, for purposes of the savings statute, a lawsuit was commenced when (1) a complaint is timely filed and (2) service of the complaint and summons (effective or defective) is completed within the 120 days allowed. If a trial court later finds that the summons was defective, the plaintiff is still entitled to the benefit of the one-year savings statute. Accordingly, the court reversed the judgment of the trial court and remanded the case.

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