Powell-Cerkoney v. TCR-Montana Ranch Joint Venture, II

Decision Date31 August 1993
Citation860 P.2d 1328,176 Ariz. 275
PartiesConstance J., a married woman dealing with her sole and separate property; Rita Eggleston, a married woman dealing with her sole and separate property, Plaintiffs-Appellees, v.RANCH JOINT VENTURE, II and Trammell Crow Homes, Arizona Inc., Defendants-Appellants. 91-0214.
CourtArizona Court of Appeals

RUTH V. McGREGOR, Presiding Judge.

In this appeal, we hold that a trial judge's legal conclusions underlying an order denying an application for a preliminary injunction do not operate as law of the case to prevent another trial court judge who later considers a motion for summary judgment from conducting an independent legal analysis of the issues.


Several owners (the owners) of homes or lots in Montana Ranch, a Scottsdale, Arizona subdivision, filed a declaratory judgment action to enjoin TCR-Montana Ranch Joint Venture, II and Trammell Crow Homes Arizona, Inc. (TCR) from amending the Declaration of Covenants, Conditions and Restrictions (CC & Rs) for the subdivision. The owners asserted that they had purchased their property in reliance on the CC & Rs in addition to written and oral representations that the subdivision would consist solely of custom-built homes. They alleged that TCR, the successor to the rights of the original developer, had amended the CC & Rs to permit construction of non-custom homes. The owners sought to enjoin TCR from building homes that did not conform to the original CC & Rs and asked the court to declare void TCR's amendments to the CC & Rs.

TCR moved to dismiss or, in the alternative, for summary judgment and also asked the court to deny the owners' application for preliminary injunction against further construction. TCR argued that the owners failed to join indispensable parties, that the original and amended CC & Rs permitted TCR's construction activities, that the balancing of hardships favored TCR and that the doctrine of laches barred the owners' request for preliminary injunction. The Honorable Paul A. Katz conducted an evidentiary hearing considering only the owners' preliminary injunction request. Judge Katz denied the request and set forth extensive findings in support of his ruling, including his conclusions that the relevant CC & Rs were unambiguous and could not be modified by parol evidence and that TCR had authority to amend the CC & Rs. The owners did not appeal from that order. Judge Katz did not rule on TCR's motion for summary judgment.

The case was later transferred to the Honorable Colin F. Campbell, who considered TCR's motion for summary judgment. Judge Campbell initially granted the motion, stating:

Judge Katz did not grant summary judgment because it was only before him on the application for preliminary injunction. But he did everything but. I mean, he's interpreted the CC & Rs as a matter of law. He's ruled against the plaintiffs on all of their claims on legal grounds. I can't revisit those. My hands are tied. I don't sit as a horizontal court of appeals.

The owners then moved for a new trial, arguing that Judge Katz's rulings did not bind Judge Campbell and that Judge Campbell should independently review the record in considering TCR's motion. Judge Campbell granted the motion for new trial, stating his reasons as follows:

The Court granted the Summary Judgment Motion on the grounds that the Court was bound by certain legal rulings made by Judge Katz regarding the parol evidence rule and the legal interpretation of the contractual documents....

If Judge Katz has made a legal determination about the applicability of the parol evidence rule in this case, then the Court believes that it is bound by Judge Katz's decision, whether the Court agrees with the decision or not. On the other hand, if Judge Katz's prior Order is explaining his thought processes in denying the request for a preliminary injunction, then this Court is not bound by Judge Katz's thought processes regarding parol evidence in the context of a preliminary injunction hearing.

Upon reconsidering this matter in the light of the new cases brought forth by Plaintiffs, the Court believes it committed error in ruling that it was bound by Judge Katz's prior decision. Upon reconsideration, the Court concludes the prior Order reflects simply the reasoning of the Court in denying an injunction rather than case dispositive rulings. Plaintiffs are entitled to this Court's de novo review of the record on the Summary Judgment Motions. If questions of fact for a jury are present, the Court understands that Plaintiffs wish to amend their complaint to seek damages....

TCR filed this appeal from the order granting a new trial. This court has jurisdiction pursuant to Ariz.Rev.Stat.Ann. §§ 12-120.21 and -2101.


This court will uphold an order granting a new trial unless the trial court clearly abused its discretion. Tempe Corporate Office Bldg. v. Arizona Funding Services, Inc., 167 Ariz. 394, 398, 807 P.2d 1130, 1134 (App.1991). TCR argues that Judge Campbell abused his discretion by granting a new trial because his decision, made without benefit of any new evidence or new legal arguments, failed to treat Judge Katz's legal conclusions as law of the case and effectively permitted a horizontal appeal.


The doctrine referred to as "law of the case" describes the judicial policy of refusing to reopen questions previously decided in the same case by the same court or a higher appellate court. A & A Concrete, Inc. v. White Mountain Apache Tribe, 781 F.2d 1411, 1418 (9th Cir.), cert. denied, 476 U.S. 1117, 106 S.Ct. 2008, 90 L.Ed.2d 659 (1986); Dancing Sunshines Lounge v. Indus. Comm'n, 149 Ariz. 480, 482, 720 P.2d 81, 83 (1986). As one commentator has noted, however, courts commonly use the single label "law of the case" to describe a doctrine applied to distinct sets of problems. In some instances, courts use the label to refer to the fundamental obligation of every court to follow the rulings of a higher court. In others, courts use the label in connection with the desire of a single court to adhere to its own prior rulings. 18 CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 4478 (1981) [hereinafter FEDERAL PRACTICE AND PROCEDURE]; see also 1B JAMES W. MOORE ET AL., MOORE'S FEDERAL PRACTICE p 0.404 (2d ed. 1993) [hereinafter MOORE'S]. Unfortunately, our decisions do not always adequately distinguish between the two situations or take into account the differing considerations raised by these distinctive applications of the doctrine.

When, as in this case, we apply the doctrine to decisions of the same court, we treat law of the case as a procedural doctrine rather than as a substantive limitation on the court's power. See North Star Dev. Corp. v. Wolfswinkel, 146 Ariz. 406, 410, 706 P.2d 732, 736 (App.1985); Love v. Farmers Ins. Group, 121 Ariz. 71, 73, 588 P.2d 364, 366 (App.1978). In this setting, the doctrine promotes an orderly process leading to an end to litigation. State v. Maxwell, 19 Ariz.App. 431, 435, 508 P.2d 96, 100 (1973).

The policy against horizontal appeals, which TCR asserts Judge Campbell violated, forms part of the general concept of law of the case as applied to decisions of the same court. See MOORE'S, supra, at p 0.4.4[4.-2]. A party seeks a "horizontal appeal" when it requests a second trial judge to reconsider the decision of the first trial judge in the same matter, even though no new circumstances have arisen in the interim and no other reason justifies reconsideration. Hibbs v. Calcot, Ltd., 166 Ariz. 210, 214, 801 P.2d 445, 449 (App.1990). We criticize horizontal appeals because they waste judicial resources by asking two judges to consider identical motions and because they encourage "judge shopping." Id.; see Chanay v. Chittenden, 115 Ariz. 32, 34, 563 P.2d 287, 289 (1977); Mozes v. Daru, 4 Ariz.App. 385, 389, 420 P.2d 957, 961 (1967).

Prior decisions have established, however, that courts must not afford this procedural doctrine undue emphasis. Because of the potentially harsh nature of the doctrine, we will not apply it if doing so would result in a "manifestly unjust decision." Sibley v. Jeffreys, 81 Ariz. 272, 276, 305 P.2d 427, 429 (1956) (citation omitted). Similarly, reliance upon law of the case does not justify a court's refusal to reconsider a ruling when an error in the first decision renders it manifestly erroneous or unjust or when a substantial change occurs in essential facts or issues, in evidence, or in the applicable law. Dancing Sunshines Lounge, 149 Ariz. at 483, 720 P.2d at 84. Additionally, we will not apply law of the case if the prior decision did not actually decide the issue in question, if the prior decision is ambiguous, or if the prior decision does not address the merits. Id. If these or comparable circumstances appear, sufficient reason exists for reconsideration, and a second judge does not abuse his discretion by agreeing to reconsider an earlier decision. Union Rock & Materials Corp. v. Scottsdale Conference Ctr., 139 Ariz. 268, 273, 678 P.2d 453, 458 (App.1983); Union Constr. Co. v. Beneficial Standard Mortgage Investors, 125 Ariz. 433, 434, 610 P.2d 67, 68 (App.1980).


The issue before us is whether Judge Campbell's decision to conduct a de novo review of the questions of law resolved by Judge Katz during the preliminary injunction proceedings so clearly violated the policy against horizontal appeals as to constitute an abuse of discretion. We conclude it did not.


Decisions from other jurisdictions consistently hold that findings of fact and conclusions of law made in granting or denying a request for preliminary injunction do not...

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