Butler Law Firm, PLC v. Higgins

• Decision Date: 22 February 2018
• Docket Number: No. CV-17-0119-PR,CV-17-0119-PR
• Citation: 410 P.3d 1223
• Parties: The BUTLER LAW FIRM, PLC; Everett S. Butler; Matthew D. Williams, Petitioners, v. The Honorable Robert J. HIGGINS, Judge of the Superior Court of the State of Arizona, in and for the County of Navajo, Respondent Judge, Winslow Memorial Hospital, Inc., d/b/a Little Colorado Medical Center, Real Party in Interest.
• Court: Arizona Supreme Court

410 P.3d 1223

The BUTLER LAW FIRM, PLC; Everett S. Butler; Matthew D. Williams, Petitioners,

v. The Honorable Robert J. HIGGINS, Judge of the Superior Court of the State of Arizona, in and for the County of Navajo, Respondent Judge,Winslow Memorial Hospital, Inc., d/b/a Little Colorado Medical Center, Real Party in Interest.

No. CV-17-0119-PR

Supreme Court of Arizona.

Filed February 22, 2018

Anthony S. Vitagliano (argued), Robert B. Zelms, Manning & Kass, Ellrod, Ramirez, Trester LLP, Phoenix, Attorneys for The Butler Law Firm, PLC, Everett S. Butler, Matthew D. Williams

Randall Yavitz, Isabel M. Humphrey, Hunter, Humphrey & Yavitz, PLC, Phoenix; and James E. Ledbetter (argued), Jared R. Owens, The Ledbetter Law Firm, P.L.C., Cottonwood, Attorneys for Winslow Memorial Hospital, Inc. d/b/a Little Colorado Medical Center

JUSTICE BRUTINEL authored the opinion of the Court, in which CHIEF JUSTICE BALES, VICE CHIEF JUSTICE PELANDER, and JUSTICES TIMMER, BOLICK, GOULD, and LOPEZ joined.

JUSTICE BRUTINEL, opinion of the Court:

¶ 1 Winslow Memorial Hospital ("Hospital") filed this legal-malpractice action in the Superior Court of Navajo County against Butler Law Firm, PLC ("BLF"), a professional limited liability company ("PLLC") organized in Maricopa County, and against attorneys Everett S. Butler and Matthew D. Williams, both Maricopa County residents (collectively, "Defendants"). The trial court denied Defendants' motion for change of venue. We reverse and hold that venue does not properly lie in Navajo County as to any of the Defendants.

I. BACKGROUND

¶ 2 In March 2013, BLF entered into a legal-services agreement (the "Representation Agreement" or "Agreement") with the Hospital to draft an employment contract for the Hospital's CEO. The Hospital is in Navajo County. The Representation Agreement stated that BLF would provide "legal services" to the Hospital and that Everett S. Butler, BLF's sole member, would have "primary responsibility" for representing the Hospital. In addition to an hourly fee, the Hospital agreed to reimburse BLF for costs incurred on its behalf, including "travel, parking, computerized legal research, long distance calls, photocopying, court costs and filing fees, court transcripts, messenger services, etc." The Representation Agreement was written on BLF's letterhead and displayed BLF's Phoenix address, but it was silent as to where BLF was to perform its services under the Agreement.

¶ 3 The relationship between the parties soured. In January 2016, the Hospital sued BLF, Butler, and Williams, a non-member attorney employed by BLF. The complaint alleged legal malpractice, breach of fiduciary duty, and breach of the covenant of good faith and fair dealing.

¶ 4 Defendants moved to transfer venue to Maricopa County pursuant to A.R.S. § 12–404(A). They argued that because all Defendants resided in Maricopa County, venue in Navajo County was improper unless a statutory exception applied under A.R.S. § 12–401.

¶ 5 The trial court denied the motion. Relying on Morgensen v. Superior Court , 127 Ariz. 55, 56, 617 P.2d 1171, 1172 (App. 1980), it found that venue in Navajo County was proper under § 12–401(5) because "the plaintiff exclusively contracted business in Navajo County." The court also found venue proper under § 12–401(18), reasoning that because the liability limitations of both limited liability companies ("LLCs") and corporations are susceptible to "veil-piercing," LLCs should be considered corporations for venue purposes. The court did not address any other exception. The court of appeals declined special-action review.

¶ 6 We granted review to consider (1) whether BLF "contracted in writing to perform an obligation" in Navajo County, and (2) whether an LLC is an "other corporation" contemplated by the venue statute. We have jurisdiction pursuant to article 6, section 5(3), of the Arizona Constitution and A.R.S. § 12–120.24.

II. DISCUSSION

A. Standard of Review

¶ 7 The interpretation of Arizona's venue statutes is a matter of law that we review de novo. Yarbrough v. Montoya–Paez , 214 Ariz. 1, 4 ¶ 11, 147 P.3d 755, 758 (App. 2006) ; see Samiuddin v. Nothwehr , 243 Ariz. 204, 207 ¶ 7, 404 P.3d 232, 235 (2017). "Our primary goal in interpreting statutes is to effectuate the legislature's intent." Rasor v. Nw. Hosp., LLC , 243 Ariz. 160, 164 ¶ 20, 403 P.3d 572, 576 (2017). To determine that intent, we look first to the statute's language. See State v. Burbey , 243 Ariz. 145, 147 ¶ 7, 403 P.3d 145, 147 (2017) ; Wilks v. Manobianco , 237 Ariz. 443, 446 ¶ 8, 352 P.3d 912, 915 (2015). "When the text is clear and unambiguous, we apply the plain meaning and our inquiry ends." Burbey , 243 Ariz. at 147 ¶ 7, 403 P.3d at 147. Statutes relating to the same subject or general purpose should be considered to guide construction and to give effect to all the provisions involved. Stambaugh v. Killian , 242 Ariz. 508, 509 ¶ 7, 398 P.3d 574, 574 (2017). But when a statute's language is ambiguous, we look to its "legislative history, effects and consequences, and spirit and purpose." Rasor , 243 Ariz. at 164 ¶ 20, 403 P.3d at 576.

¶ 8 Section 12–401 provides generally that "[n]o person shall be sued out of the county in which such person resides" unless a statutory exception applies. The statutory exceptions to the general venue rule are narrowly construed, and "courts will not enlarge or add to an express exception." Wray v. Superior Court , 82 Ariz. 79, 84, 308 P.2d 701 (1957). To determine venue, courts consider the complaint and construe the pleadings liberally in favor of the plaintiff. Pride v. Superior Court , 87 Ariz. 157, 160, 348 P.2d 924 (1960). The general venue rule is sufficiently important, however, that "an equal doubt between the exception and the rule is to be resolved in favor of the rule." Goodrich v. Superior Oil Co. , 150 Tex. 159,237 S.W.2d 969, 972 (1951).¹ Our court of appeals has noted that "convenience to the defendant is ... the first consideration in establishing venue." Yarbrough , 214 Ariz. at 3 ¶ 4, 147 P.3d at 757.

¶ 9 The Hospital argues that three exceptions allow Defendants to be sued in Navajo County: A.R.S. § 12–401, subsections (5), (10), and (18). Because it is not clear that the trial court considered the applicability of subsection (10), although the Hospital urged it as a ground for suing Defendants in Navajo County, we confine our review to subsections (5) and (18).²

B. Written Contract to Perform an Obligation in One County

¶ 10 Section 12–401(5) states: "Persons who have contracted in writing to perform an obligation in one county may be sued in such county or where they reside." We interpreted this provision in Miller Cattle Co. v. Mattice : "[I]f the contract be in writing, and must necessarily be executed in a county different from that of the domicile of the party contracting, then, for breach of the contract, he may be sued in either of these counties." 38 Ariz. 180, 185, 298 P. 640 (1931) (quoting Seley v. Williams , 20 Tex.Civ.App. 405, 50 S.W. 399, 400 (Tex. Civ. App. 1899) ). The contract itself must "plainly specify" or necessarily imply the place of performance. Id. at 184–5, 298 P. 640 (citing Cecil v. Fox , 208 S.W. 954, 955–56 (Tex. Civ. App. 1919) ); accord Blakely v. Superior Court , 6 Ariz. App. 1, 2, 429 P.2d 493 (1967).

¶ 11 The Hospital argues that the Representation Agreement was a written contract to perform legal services in Navajo County because the Agreement expressly referred to representation of the Hospital (located in Navajo County) with respect to the Hospital's Navajo County business affairs. Therefore, according to the Hospital, BLF's obligations under the Representation Agreement could not be performed without "acting within" Navajo County, "whether by traveling there physically or by causing effects within that county by use of the Internet and other communication methods."

¶ 12 But for venue to lie in Navajo County, the Representation Agreement must have required performance there, "either expressly or by necessary implication." Blakely , 6 Ariz. App. at 2, 429 P.2d 493. To determine whether the Representation Agreement so required, we consider not only its text but also the allegations in the complaint, construing them in the Hospital's favor. See Tribolet v. Fowler , 77 Ariz. 59, 61, 266 P.2d 1088 (1954). Here, the Representation Agreement did not specify any place of performance. Moreover, nowhere in its complaint does the Hospital allege that the Representation Agreement required BLF to perform legal services in Navajo County. Indeed, the complaint is silent as to where BLF was to perform its obligations. Likewise, nothing in the Representation Agreement implied that BLF must do any work in Navajo County. Thus, neither the Representation Agreement nor the complaint provides any support for finding that BLF was required, expressly or by necessary implication, to perform in Navajo County.

¶ 13 The trial court misconstrued Morgensen by finding that the Agreement implicitly required performance in Navajo County because the Hospital "exclusively contracted business" there. Although the Hospital is in Navajo County, "[t]he determining factor is not whether the contract requires the plaintiff to perform in the county of suit, but whether it requires the defendant to so perform." Morgensen , 127 Ariz. at 57, 617 P.2d at 1173 (emphasis added). And we will not expand the meaning of "place of performance" to include a place where performance merely causes an effect. See Wray , 82 Ariz. at 84, 308 P.2d 701. BLF's performance under the contract may have had an effect in Navajo County, but BLF was not explicitly or implicitly required to perform any services in Navajo County.

C. Venue as to the Attorney Defendants

¶ 14 The Hospital also claims venue is proper as to Butler and Williams individually under subsection (5) because, under the PLLC statute, each member or employee of a PLLC remains "personally liable for any results of the negligent or...