Wyatt v. Wehmueller

• Decision Date: 28 February 1991
• Docket Number: No. CV-89-0421-PR,CV-89-0421-PR
• Citation: 806 P.2d 870,167 Ariz. 281
• Parties: James D. WYATT and Donna K. Wyatt, Husband and Wife; Clinton E. Wolf and Joann P. Wolf, Husband and Wife; John W. Russell and Patty A. Russell, Husband and Wife; Joseph Soldevere and Jane M. Soldevere, Husband and Wife; the Glendale Industrial Air Park Associates, an Arizona General Partnership; and Pacific General Investment Group, Ltd., an Arizona Corporation; and Richard N. Brandes, Plaintiffs-Appellants, v. James WEHMUELLER and Jane Doe Wehmueller, Husband and Wife; Phillip Polich and Jane Doe Polich, Husband and Wife; James Overfield and Jane Doe Overfield, Husband and Wife; Glendale Airport Partners, an Arizona General Partnership; Title USA, Inc., Formerly Known as U.S. Life Title, Inc., a Foreign Corporation; and Z & H Engineering, an Arizona Corporation, Defendants-Appellees.
• Court: Arizona Supreme Court

Page 870

806 P.2d 870

167 Ariz. 281

James D. WYATT and Donna K. Wyatt, Husband and Wife; Clinton E. Wolf and Joann P. Wolf, Husband and Wife; John W. Russell and Patty A. Russell, Husband and Wife; Joseph Soldevere and Jane M. Soldevere, Husband and Wife; the Glendale Industrial Air Park Associates, an Arizona General Partnership; and Pacific General Investment Group, Ltd., an Arizona Corporation; and Richard N. Brandes, Plaintiffs-Appellants, v. James WEHMUELLER and Jane Doe Wehmueller, Husband and Wife; Phillip Polich and Jane Doe Polich, Husband and Wife; James Overfield and Jane Doe Overfield, Husband and Wife; Glendale Airport Partners, an Arizona General Partnership; Title USA, Inc., Formerly Known as U.S. Life Title, Inc., a Foreign Corporation; and Z & H Engineering, an Arizona Corporation, Defendants-Appellees.

No. CV-89-0421-PR.

Supreme Court of Arizona, In Banc.

Feb. 28, 1991.

[167 Ariz. 282] Brandes, Lane & Joffe, P.C. by Richard N. Brandes, Phoenix, for plaintiffs-appellants.

Mariscal, Weeks, McIntyre & Friedlander, P.A. by James T. Braselton and Michael S. Rubin, Phoenix, for defendants-appellees.

OPINION

GORDON, Chief Justice.

Plaintiffs/appellants petitioned for review of a court of appeals' decision affirming the trial court's assessment of damages against plaintiffs pursuant to A.R.S. § 33-420(A) and attorney's fees against counsel pursuant to A.R.S. § 12-349. We review only the assessment of damages against plaintiffs. ¹ See Rule 23, Ariz.R.Civ.App.P., 17B A.R.S. We have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3), and A.R.S. § 12-120.24.

FACTUAL AND PROCEDURAL HISTORY

Plaintiffs contracted on August 20, 1985 to purchase a large parcel of property from defendants/appellees, Glendale Airport Partners (GAP). GAP took back a promissory note and deed of trust on the property as part of the purchase price.

On June 17, 1987, plaintiffs sued in Maricopa County Superior Court alleging they contracted to purchase sixty net usable acres from GAP but received only fifty-six acres. The prayer for relief sought compensatory damages, prejudgment interest, costs, and attorney's fees, but no form of equitable relief. The complaint stated that plaintiffs were not in default under the note at the time of filing. Apparently, after filing the complaint, plaintiffs failed to make an installment payment, thereby going into default.

On June 28, 1987, GAP caused a notice of trustee's sale to be issued and recorded pursuant to A.R.S. § 33-808. On October 21, plaintiffs filed an application for a temporary restraining order, an order to show cause, and a preliminary injunction to prevent the trustee's sale. Plaintiffs asserted that GAP's failure to convey sixty usable acres caused their default under the note and that equity should restrain the trustee's sale under such circumstances. By minute entry dated October 26, the trial court denied plaintiffs' application, finding neither irreparable injury nor a reasonable likelihood of success on the merits.

On the morning of October 29, the date of the scheduled trustee's sale, plaintiffs' attorney recorded a Notice of Lis Pendens and filed a copy in the trial court without notifying plaintiffs. The lis pendens stated in part:

2. The object of the action is that the Plaintiffs seek under the theories of breach of contract, negligence, breach of fiduciary duty and fraud, damages in an amount to be determined, and allege that the Notice of Trustee's Sale, filed July 28, 1987 with the Maricopa County Recorder's Office is invalid and that any sale thereby occurring is also void and invalid, and title to said real property will remain with current titleholder or his nominee, all of which pertain to the real property described below herein.

GAP filed a Motion to Quash Lis Pendens on November 2, and requested an expedited hearing, arguing that the recording of the lis pendens created hardship. The motion asserted that the action supporting the lis pendens was not one "affecting title to real property" within the meaning of A.R.S. § 12-1191 because plaintiffs' underlying complaint sought only monetary damages.

The trial court heard oral argument by telephone on November 3 and granted the motion to quash. Plaintiffs were given two weeks to respond to the request for damages and attorney's fees. On November 23, the trial court ruled the lis pendens violated A.R.S. § 12-1191 and was groundless, because it was recorded in an action seeking only monetary damages and therefore did not affect title to real property. The court also found that the lis pendens misrepresented the object of the action. By stating that the title to the property was affected, the lis pendens contained a "material misstatement" of plaintiffs' actual claims. Moreover, the court found that plaintiffs' attorney filed the lis pendens knowing that the document was groundless and contained a material misstatement. The trial court then granted GAP judgment against plaintiffs for $5,000 pursuant to A.R.S. § 33-420 and judgment against plaintiffs' counsel for attorney's fees of $2,762 pursuant to A.R.S. §§ 12-349 and 33-420. The court of appeals affirmed. 163 Ariz. 12, 785 P.2d 581. Plaintiff petitioned this court for review and raised five issues. We review only the following issue:

Can damages be assessed against a client pursuant to A.R.S. § 33-420(A) when an attorney files a lis pendens without the client's knowledge or consent?

DISCUSSION

Plaintiffs contend both lower courts incorrectly applied § 33-420(A), and that subsection C should apply because their attorney unilaterally filed the lis pendens without their knowledge or consent. Section 33-420(A) provides:

A person purporting to claim an interest in, or a lien or encumbrance against, real property, who causes a document asserting such claim to be recorded or filed in the office of the county recorder, knowing or having reason to know that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid is liable to the owner or beneficial title holder of the real property for the sum of not less than five thousand dollars, or for treble the actual damages caused by the recording or filing, whichever is greater, and reasonable attorney fees and costs of the action.

The court of appeals affirmed the trial court's assessment of damages under § 33-420(A), stating that the attorney's decision to file the lis pendens was a normal and routine tactical decision concerning the litigation. Reasoning that the statute does not require that the "person purporting to claim an interest" have specific knowledge of or authorize the filing, the court held that plaintiffs were liable for their attorney's actions. As a result of its findings under subsection A, the court of appeals did not address subsection C. Likewise, we do not address subsection C.

Plaintiffs do not dispute that counsel was their agent and had authority to act on their behalf in filing the lis pendens. They claim, however, that § 33-420(A) applies only when the principal instructs the agent to file a lis pendens; only then can the principal be said to knowingly cause the recording of the lis pendens. According to plaintiffs, § 33-420(C) applies to this case because it supersedes agency law by providing a separate subsection for relief when an agent records an invalid document without the principal's knowledge. However, they argue sanctions in this case are improper under subsection C because the principal was not given notice of the wrongful recording and an opportunity to release the invalid document.

GAP counters that the statute does not abrogate, or even change, the common law of agency in this situation. Under agency law principles, plaintiffs are responsible for their attorney's actions. Although plaintiffs did not personally file the lis pendens, they vested the authority to do so in their attorney and therefore "caused" the filing. The statutory requirement that the party "knowingly" cause the filing is satisfied because agency law imputes the attorney's knowledge to the client. Under plaintiffs' interpretation, GAP alleges, it is left with no statutory remedy because neither the client nor the attorney may be held liable. Plaintiffs' interpretation would allow an attorney to insulate a client simply by acting without the client's express consent.

1. Statutory construction

Under rules of statutory construction, if the common law is to be changed, supplemented, or abrogated by statute, it must be done expressly or by necessary implication. S.H. Kress & Co. v. Superior Court, 66 Ariz. 67, 73, 182 P.2d 931, 935 (1947). If the legislature fails to clearly and plainly manifest an intent to alter the common law, the common law remains in effect. United Bank v. Mesa N.O. Nelson Co., 121 Ariz. 438, 442, 590 P.2d 1384, 1388 (1979); In re Estate of Hoover, 140 Ariz. 464, 467, 682 P.2d 469, 472 (App.1984).

The primary principle of statutory interpretation is to determine and give effect to legislative intent. When a statute's words do not disclose legislative intent, the court must read the statute as a whole, and give meaningful operation to all of its provisions. Kriz v. Buckeye Petroleum Co., 145 Ariz. 374, 377, 701 P.2d 1182, 1185 (1985); see Peterson v. Flood, 84 Ariz. 256, 259, 326 P.2d 845, 847 (1958). To find legislative intent, an appellate court may consider many different factors. These factors include the context of the statute, the language used, the subject matter, its historical background, its effects and consequences, and its spirit and purpose. Martin v. Martin, 156 Ariz. 452, 457, 752 P.2d 1038, 1043 (1988). A court also should interpret two sections of the same statute consistently, especially when they use identical language. State v. Oehlerking, 147 Ariz. 266, 268, 709 P.2d 900, 902 (App.1985).

A.R.S. § 33-420 requires a knowing violation before its sanctions will be imposed. A person is liable under §...