Free Objection - District Court of Arizona - Arizona

Robert M. Frisbee #018779 FRISBEE & BOSTOCK, PLC 2 1747 East Morten Avenue, Suite 108 Phoenix, Arizona 85020 3 Phone: (602) 354-3689 Fax: (602) 266-7744 4 [email protected] Attorneys for Greg and Linda Hancock
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Meritage Homes Corporation, a Maryland Corporation, formerly d/b/a Meritage Corporation; Hancock-MTH Builders, Inc., an Arizona corporation; Hancock-MTH Communities, Inc., an Arizona corporation d/b/a/ Meritage Homes Construction, Inc.; and Meritage Homes of Arizona, Inc., an Arizona Corporation, Plaintiffs, vs. ) ) ) ) ) ) ) ) ) ) ) Ricky Lee Hancock and Brenda ) Hancock, husband and wife; Gregory ) S. Hancock and Linda Hancock, ) husband and wife; Rick Hancock Homes ) LLC, an Arizona limited liability ) company; RLH Development, LLC, an ) Arizona limited liability company; and ) J2H2, LLC, an Arizona limited ) liability company, ) Defendants, ) and ) ) Greg Hancock, an individual, ) ) Defendant, Counter) Claimant and Third) Party Plaintiff, ) vs. ) ) Steven J. Hilton, an individual; John R. ) Landon, in individual; Larry W. Seay, ) an individual; and Snell & Wilmer, LLP, ) an Arizona professional ) corporation, ) Third-Party Defendants. ) )
Document 354

Case No. CV-04-0384-PHX-ROS

GREG HANCOCK'S NOTICE OF OBJECTION TO PROPOSED ORDER

Case 2:04-cv-00384-ROS

Filed 09/18/2006

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Meritage Corporation's proposed order requests the Court to impose sanctions in the amount of $19,299.00 pursuant to the Court's Order of August 22, 2006. Presumably, the request is based on the first paragraph of page 3 of that Order. As will be seen, the proposed Order is inappropriate under the circumstances. 1. It Is Unjust To Sanction Counsel For Recognizing That A Sua Sponte Order Is Invalid, But Not Recognizing the Proper Reason For Invalidity. This Court has vacated its dismissal orders regarding Greg Hancock's state court

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claims. Thus, those orders are annulled, rendered void, rescinded.1 The decision to vacate must have been based on the fact that the Orders violated the Anti-Injunction Act, 28 U.S.C.

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§ 2283. Nevertheless, this Court and Meritage seek to punish counsel because he was right,
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but for the wrong reasons.
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As has been stated frequently in prior submissions, counsel simply did not know of
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the existence of the Anti-Injunction Act until shortly before he requested the Court to
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withdraw the Orders in question. He had in the past been involved in several "parallel
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action" cases, but never had he experienced one forum attempting to interfere with the other.
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Had that happened, perhaps he would have known of the statute. And certainly had he
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known of it and of its prohibition of federal court interference in a state case, he would have
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cited it to the Court of Appeals. It is almost a certainty that the Court of Appeals' decision
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would have been different had he done so. It may also be fairly inferred that the Court of
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Appeals judges who decided the matter similarly were unfamiliar with the statute.
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More to the point, when this Court sua sponte2 ordered the state court case dismissed, neither it nor its law clerks knew of the statute. Surely had they known, the order would not

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have issued. And had Meritage's attorneys known of the statute, certainly they would not
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Black's Law Dictionary (Sixth Ed.), p. 1548.

Meritage made no motion that the state court case be dismissed, it merely complained about its existence in status conference sessions. For reasons never expressed, the Court simply ordered the dismissal.

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have violated Arizona Rule of Professional Conduct ER 3.3., Candor Toward the Tribunal: "(a) A lawyer shall not knowingly: * * * (2) fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel; . . ." Accordingly, Hancock's counsel knew as much (or as little) as every other judge, law clerk or lawyer involved in the matter about the Anti-Injunction Statute. What he knewi nstinctively, however, was that the dismissal order was improper. Yet it is now proposed that he be punished for not knowing more than everybody else involved in the issue, even though he was right in believing that the order was wrong. It is true that counsel does not have a right to independently review each order from a court and selectively obey only those orders he believes to be valid. Usually, the recourse is appeal. However, case law has established that a party or counsel are permitted to disregard a "transparently invalid" court order without threat of sanctions. An order is "transparently invalid" if it lacks "any pretense to validity" at the time it is issued. In re Providence Journal Co., 820 F.2d 1342, 1346-48 (1st Cir. 1986). Disobedience is permissible when "the court is acting so far in excess of its authority that it has no right to expect compliance and no interest is protected by requiring compliance." 820 F.2d at 1347. Further, Hancock has contended and moved that this Court has no subject matter jurisdiction over this case. If he is proved correct on appeal, then counsel cannot be afoul of any order for any reason. In such a case, the original order is deemed a nullity, and the accused violator cannot be fairly punished for violating nothing at all. See, Maness v. Meyers, 419 U.S. 449,591, 95 S,Ct, 584,626, 42 L.Ed.2d 574,616 (1975). It can be said fairly that the Court's vacating of the orders is tantamount to a successful appeal in that the Anti-Injunction Statute deprived it of jurisdiction to issue the orders initially. 2. A Party Is Not Entitled To The Reward Of Sanctions Based Upon An Order Later Determined To Be Invalid.

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The Court observed in its Order that Meritage spent thousands of dollars3 pursuing its motions for an order to show cause. Meritage was under no compulsion to do so. Indeed, likely because it knew it could not do so, Meritage made no motion to the Court regarding the existence of the state court case until after the Court issued its sua sponte order, and then it was for sanctions rather than substance. In point of fact, just before the Court issued its order, Hancock's counsel requested a stipulation for Meritage's counsel placing the state court case on inactive status. They never responded, for obvious reasons. There is also no mention of similar thousands spent by Hancock seeking reversal of the improper order, a quest in which he was ultimately successful. It seems only fair that all counsel involved in a case be held to the same standard of knowledge as to applicable law. It can be concluded that Snell & Wilmer did not know about the Anti-Injunction Statute, because they would not knowingly have violated E.R. 3.3, supra. They behaved no differently than did counsel for Hancock, i.e. they neither knew of the statute nor mentioned it to the Court. Equally so, if one counsel should have known of the Anti-Injunction Statute, the all counsel should have known of it. And if Snell & Wilmer should have known of it, then they had no right to spend thousands of dollars seeking sanctions for disobedience to an Order which they should have known was illegal. Moreover, Hancock did not disobey the Order. He sought to get it overturned in the Ninth Circuit. In addition, the dismissal Orders placed him in an impossible position vis a vis the state court case, partially described at fn. 3 of this Court's Order of August 22, 2006. In short, he did everything he could do under the circumstances. Meritage should not profit by the fact that it forced him to take those steps. 3. Conclusion.

The vacated Order mandated that Hancock pay Meritage's state court dismissal costs. Meritage sought $25,682.00. Saying that Meritage had failed to prove any of the prerequisites, Judge Houser awarded costs of $151.00 on May 5, 2006, and no fees whatever.

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Meritage makes no mention of how it arrived at the figure in its suggested order, $19,299.00. Indeed, this fee request appears to be so excessive as to be intolerable, and the Court may deny the requested fees entirely as a prophylactic measure. Brown v. Stecker, 612 F.2d 1057 (7th Cir. 1980) and Lewis v. Kendrick, 944 F.2d 949, 958 (1st Cir 1991). The proposed order, albeit implicitly invited by the Court, would result in the punishment of a lawyer simply for not knowing of a seldom applicable statute, which nobody else in the case knew about, and for being right about the impropriety of an order, but for the wrong reason. That result is not just. Furthermore, if Hancock is successful on appeal on the jurisdictional issue, all prior orders are a nullity, and the Court would have to undo all it will have done. Hancock's counsel believes the prudent course to be to refuse to enter the order as premature, as it did with Meritage's prior request for fees. RESPECTFULLY SUBMITTED this 18th day of September, 2006.

\s\ Robert M. Frisbee Robert M. Frisbee Attorneys for Greg Hancock

The foregoing Notice of Objection to Proposed Order was electronically filed this 18th day of September, 2006, and copy thereof mailed to 19 the Honorable Judge Silver
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\s\ Robert M. Frisbee
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