Linder v. Brown & Herrick
| Decision Date | 21 July 1982 |
| Citation | 189 Ariz. 398,943 P.2d 758 |
| Parties | , 233 Ariz. Adv. Rep. 16 Nancy L. LINDER and Charles G. Linder, Sr., Wife and Husband, Plaintiffs-Appellants, and Judith M. Prakel, Attorney-Appellant, v. BROWN & HERRICK, an Arizona General Partnership; Robert B. Kaufman, P.C., an Arizona Professional Corporation; Kaufman, Apker & Nearhood, P.C., an Arizona Professional Corporation; Lancy, Scult & McVey, P.A., an Arizona Professional Corporation; Sandra J. Schaller; et al., and Lewis and Roca, an Arizona General Partnership; Rawlins, Burrus, Lewkowitz and Feinstein, P.C., an Arizona Corporation; Sue O. Schilleman, a Single Woman, and Trustee under Trust Agreement Dated |
| Court | Arizona Court of Appeals |
Nancy L. Linder (Linder) and Charles G. Linder, Sr. (jointly the Linders) were losing parties in a prior lawsuit involving $20,000 held in a real estate escrow account. The stakes have grown since then.
In the present action, the Linders, represented by attorney Judith Prakel (Prakel), filed suit (1) for negligence against the attorneys who represented them in the prior lawsuit and (2) for fraud against the prevailing adverse party, Sue O. Schilleman
(Schilleman), and her attorneys. The Linders, now in propria persona, appeal from the trial court's order granting all defendants' motions to dismiss for failure to state a claim. The Linders and Prakel also appeal from the trial court's imposition of Rule 11 sanctions and the denial of their motion for new trial. For reasons that follow, we affirm.
The underlying litigation arose from a dispute over the attempted sale of Apacheland Movie Ranch (Apacheland) in Apache Junction. The ranch was then owned by Schilleman. In 1985, Linder, a licensed real estate agent, contacted Schilleman with a potential buyer.
Schilleman and "Stephen S. Russell and/or Nominee" executed a purchase contract with a purchase price of $1,100,000, with $20,000 in earnest money to be deposited in escrow held by Title Insurance Company of Minnesota (TICOM). Russell paid half of the earnest money and Linder put up the other half.
The escrow instructions contained the following cancellation clause:
CANCELLATION
16. If either party elects to cancel these instructions because of the failure of the other party to comply with any of the terms hereof within the time limits provided herein, said party so electing to cancel shall deliver to Escrow Agent a written notice to the other party and Escrow Agent demanding that said other party comply with the terms hereof within thirteen days from the receipt of said notice by Escrow Agent or that these instructions shall thereupon become cancelled.
Both the escrow instructions and the purchase contract contained a "time is of the essence" clause. On November 6, 1986, Schilleman invoked this clause by demanding that escrow close by November 11, 1986. When escrow failed to close on that date, she asked TICOM to issue a thirteen-day cancellation notice to Russell and to advise him that unless he paid the amount due under the purchase contract by November 25, 1986, escrow would be cancelled and he would forfeit his earnest money. When Russell did not deposit the required amount into the account, she eventually cancelled the escrow.
TICOM then filed an interpleader action against Schilleman and Russell to determine the right to the $20,000 earnest money. Schilleman filed a cross-claim against Russell in which she alleged that she was entitled to the earnest money because he had failed to perform. She also filed a cross-claim against Linder in which she alleged that Linder not only brokered the transaction but also was an undisclosed buyer in violation of Arizona Department of Real Estate regulations. She sought a declaratory judgment that the purchase contract was thereby void or cancelled. For his part, Russell filed a cross-claim against Schilleman seeking specific performance of the contract.
The trial court granted summary judgment in favor of Schilleman and against Russell and Linder. It ruled that Schilleman was entitled to cancel the contract, that the contract did not provide for the sale of personal property, and that Linder failed to disclose in writing her status as a buyer. The court awarded Schilleman the $20,000 earnest money as well as $188,197.85 in attorneys' fees and costs.
Linder filed a motion for reconsideration which the trial court denied. The court then awarded Schilleman an additional $11,647 in attorneys' fees.
The Linders filed a timely appeal in the TICOM case separate from this appeal. In that appeal, they argued that (1) Linder was not a party to the contract; (2) even if Linder was a party, the trial court erred in ruling that Schilleman could cancel the contract because, in Linder's view, Schilleman's title was unmarketable and a dispute existed regarding whether personal property could be transferred pursuant to the contract; and (3) the trial court erred in awarding attorneys' fees against Linder.
In an unpublished memorandum decision in that appeal, Division Two of this court affirmed the trial court's judgment. See Schilleman v. Leffler/Linder, 2 CA-CV 90-0099 (October 30, 1990). The court noted that in her joint cross-motion for summary judgment, Linder "specifically claimed that she disclosed her dual status as purchaser and broker during negotiations with Schilleman." Id. at 7. The court further noted that in response to Schilleman's contention that she had violated Arizona Real Estate Regulations, Linder "argued that she had made adequate disclosure...." Id. The court concluded that because Linder once maintained that she was a party to the contract, "she [could] not change her position on appeal." Id. at 6.
With regard to Linder's argument that Schilleman could not cancel the contract because her title was unmarketable, Division Two of this court determined that the escrow instructions permitted either party to cancel the instructions if the other party failed to perform and that the "cancellation provision did not require the electing party to perform or tender performance." Id. at 9. Thus Schilleman had a contractual right to cancel escrow when Russell and Linder did not deposit the purchase money into escrow by the closing date. The court further determined that the writings involved did not satisfy the statute of frauds as to personal property and therefore personalty was not included in the contract. Lastly, the court found no abuse of discretion in the trial court's award of attorneys' fees against Linder. The appellate court awarded Schilleman additional attorneys' fees and costs.
The Linders then filed a petition for review in the Arizona Supreme Court. The court denied the petition and awarded Schilleman additional fees. The Linders subsequently filed a Chapter 11 voluntary bankruptcy petition in the United States Bankruptcy Court, later converted to a Chapter 7 liquidation.
On July 8, 1993, the Linders, represented by attorney Prakel, filed an amended complaint in superior court alleging negligent representation by their former lawyers--the law firm of Brown & Herrick, through its attorneys Greg Brown and John Herrick, and the law firms of Robert P. Kaufman, P.C., Kaufman, Apker & Nearhood, P.C., and Lancy, Scult & McVey, P.A., through their attorney Sandra J. Schaller (Schaller).
The Linders further alleged that Schilleman, together with her former attorneys--the law firm of Lewis and Roca, through its attorneys Foster Robberson and Sheila Carmody, and the law firm of Rawlins Burrus Lewkowitz & Feinstein, P.C. (Rawlins Burrus), and its attorney Jeffrey Leonard--committed fraud by making false representations to the court and by withholding material information during this litigation.
The defendants filed motions to dismiss the amended complaint pursuant to Rule 12(b)(6), Arizona Rules of Civil Procedure, both for failure to state a claim and also for lack of standing. The trial court granted the defendants' motions for failure to state a claim. The court also granted Lewis and Roca's, Rawlins Burrus', and Schilleman's motions for sanctions pursuant to Rule 11, Arizona Rules of Civil Procedure, against the Linders and Prakel, jointly and severally, in the amount of $30,000. Following the trial court's denial of their motion for new trial or to amend judgment, the Linders and Prakel filed this timely appeal. They present the following issues for review:
1. Did the trial court err in dismissing the negligence claims?
2. Did the trial court err in dismissing the fraud claims?
3. Did the trial court abuse its discretion in awarding Rule 11 sanctions jointly and severally against the Linders and Prakel?
4. If the trial court properly imposed Rule 11 sanctions, was the amount excessive?
5. Did the trial court abuse its discretion in denying appellant...
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