10th Circuit: If you think someone’s stealing your beer, take your claim to the bar before it’s barred

Eric Alden knew something funny was going on at the Wyoming liquor store that he managed and operated. In 2005, the store’s accountant notified him that beer purchases had exceeded beer sales for some time. Mr. Alden also learned about significant discrepancies between the invoices of one of the store’s suppliers, Orrison Distributing, and the store’s beer sales. He “wondered about it” but did not look into the matter further.

The store’s mysterious losses on beer continued through August 2007, when Mr. Alden finally decided to investigate. He conducted inventories over an 11-day period which him to believe that an Orrison employee was stealing beer. He then installed video cameras, and caught the employee red-handed.

It turns out that the Orrison salesman, Gary Kirchhefer, had been ordering extra cases of beer on the store’s account. When he delivered the beer to the store, he would take the extra cases and sell them to two bars at a discount, pocketing the money for himself.

The store filed a RICO lawsuit in August 2011 against Kirchhefer and the bars who had benefited from buying the stolen beer, but the trial court dismissed the case because RICO’s four-year statute of limitations had expired. Continue reading

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Non-parties who seek to enforce contract are bound by arbitration agreement, says NM Court of Appeals

Normally, arbitration is a matter of contract. If you didn’t sign an arbitration agreement, you’re not bound by it.

But there are exceptions, and the New Mexico Court of Appeals recognized one of them in Damon v. StrucSure Home Warranty, LLC. In sum, if you seek to enforce a contract that you didn’t sign, you will also be bound by an arbitration provision in that contract.

Defendant StrucSure provides warranties for homes, one of which was part of a contract between the builder and the original buyers. Plaintiffs were subsequent purchasers, and while they didn’t sign the contract, they bought the home at least in part because it was covered by the warranty.

Plaintiffs later discovered structural defects in the home, and sued StrucSure and other defendants. StrucSure moved to compel arbitration, but Plaintiffs argued that they were unaware of the arbitration provision in the warranty contract, and therefore could not be bound by it. The trial court agreed, relying on cases which state the general proposition that arbitration is a matter of contract. Continue reading

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Tenth Circuit proposes changes to its local rules; comment period open through October 20

The Tenth Circuit is inviting comment on the latest proposed changes to its local rules. The Clerk’s Office has released this memo summarizing the changes, and you can review the actual changes in redline in this lengthy document.

The most notable change is the proposed amendment to Local Rule 30, which will require retained counsel in civil and criminal cases to file the appendix electronically.

If you would like to comment on any of these proposed changes, you may email your comments to 10th_Circuit_Clerk@ca10.uscourts.gov by October 20, 2014.

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Jury can decide whether DOT had constructive notice of tire debris on highway, although no one knows how long it was there

Interstate 25 approaching Santa Fe
Interstate 25 approaching Santa Fe. Photo by John Phelan. Used by permission under Creative Commons Attribution 3.0 Unported License.

Peggy Lujan-Silva was driving on Interstate 25 near Santa Fe, when her car struck tire debris on the highway. Her car rolled over several times, and she was killed. No one knows how long the debris was on the highway.

Ms. Lujan-Silva’s estate sued the New Mexico Department of Transportation for negligently failing to clear the debris from the highway. The Department argued that the estate could not show it had constructive notice, because no one knew how long the debris had been there. The trial court agreed and granted summary judgment.

The Court of Appeals reversed. See Lujan v. N.M. Department of Transportation (Aug. 4, 2014). Judge Vigil‘s opinion explains that although it is unknown when the debris was left on the highway, the Department has a duty to inspect the roads and keep them safe for the public, and “[w]hen there is a duty to inspect, evidence showing that there was a failure to inspect within a reasonable period of time under the circumstances is evidence that the dangerous condition could or should have been discovered but for the untimely inspection.”

The opinion describes testimony from Department employees that they had not received training on removal of litter or debris from the roads, and while Department employees were instructed to remove debris whenever they saw it, there were apparently no regular patrols to look for it. The Court of Appeals determined that this evidence was sufficient to create an issue of fact about whether the Department had failed to inspect I-25 within a reasonable period of time before the accident, and therefore about whether the Department had constructive notice.

The lesson here, for all businesses and organizations that may be targets of lawsuits for injuries caused by dangerous conditions on property (e.g. merchants whose customers may slip and fall; construction site owners who fence out properties to keep out curious kids, etc.), is that it’s important to conduct, and document, regular inspections for dangerous conditions. Doing so will probably not protect you against all lawsuits, but you’ll be better off than if you hadn’t.

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A trip to Justice Serna’s home town

The famous log cabin in Reserve, New Mexico, where Justice Serna was raised
The famous log cabin in Reserve, New Mexico, where Justice Pat Serna was raised

Those who know former New Mexico Supreme Court Justice Patricio “Pat” Serna may, on rare occasions, hear him mention that he hails from the small, western New Mexico town of Reserve, which has a population of between 300 and 400.

Reserve is the seat of Catron County, which is New Mexico’s largest county in land area.

Although larger than Connecticut, Catron County has a population of only 3,725.

I traveled to Reserve this weekend for a sad occasion (the funeral of my great-uncle), but I did make an appellate pilgrimage to the log cabin where Justice Serna was raised along with his seven siblings.

Justice Serna and me at the Catron County Fairgrounds in Reserve, New Mexico
Justice Serna and me at the Catron County Fairgrounds in Reserve, New Mexico

From this humble dwelling, and through his own hard work, Justice Serna rose to the top of the legal profession in our state.

If you are ever in Reserve, do stop by to take a look. The cabin is just south of Reserve’s “downtown” area, on the west side of the road.

At the funeral, I ran into the good justice himself, in his best western attire. He seems to be thoroughly enjoying his well-deserved retirement.


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Timothy Sandefur to speak in Albuquerque on July 31

Timothy Sandefur, a Principal Attorney at the libertarian Pacific Legal Foundation (which sometimes files amicus curiae briefs in New Mexico’s appellate courts), and frequent commentator on legal issues, will speak on July 31 about his new book, The Conscience of the Constitution: The Declaration of Independence and the Right to Liberty. The book discusses whether the Constitution’s highest value is liberty or democracy.

The event is sponsored by the Rio Grande Foundation to celebrate Milton Friedman’s 102nd birthday, and is scheduled to begin at 6:00 p.m., and conclude at 7:30 p.m., in Room 2401 at UNM Law School, 1117 Stanford Drive NE, Albuquerque.

You can register here. There is a fee of $10 for light appetizers, non-alcoholic drinks, and a birthday cake.

You should also check out Mr. Sandefur’s blog, Freespace.

As always, if you know of any events that may be of interest to the New Mexico legal community, please drop me a line!

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Tenth Circuit denies en banc review in Guarantee Clause case

Yesterday the Tenth Circuit voted to deny en banc review in Kerr v. Hickenlooper. Judges Hartz, Tymkovich, Holmes, and Gorsuch dissented.

To recap, the Guarantee Clause is located in Article IV, Section 4 of the United States Constitution, and provides that “[t]he United States shall guarantee to every State in this Union a Republican Form of Government….”

Other than ensuring that no hereditary monarchy can be established in any of the States, it’s not clear what else the Guarantee Clause does, and the Supreme Court has previously held Guarantee Clause claims to be non-justiciable under the political question doctrine.

In March, however, the Tenth Circuit ruled that the political question doctrine did not bar a Guarantee Clause challenge to Colorado’s Taxpayer Bill of Rights (known as TABOR), which requires voter approval of any new tax or tax increase. The challengers’ claim is that TABOR is unconstitutional because it removes the core legislative power of raising taxes from the state legislature and grants it to the people. The Court also ruled that five Colorado state legislators have standing to challenge TABOR because it dilutes their power. I wrote about the decision here.

You should also read this post by Prof. Derek Muller of Pepperdine Law School, who discusses yesterday’s decision at his excellent Excess of Democracy blog.

It’s not clear to me why voter approval of new taxes and tax increases would be “un-republican.” Many states allow their citizens to vote on ballot measures to enact ordinary laws or state constitutional amendments. Will ballot initiatives and referenda now be subject to challenge in federal court? If not, how can we say that initiatives and referenda are “republican” while TABOR is “un-republican”? Judge Gorsuch makes this point (much more eloquently) in his dissent, arguing that there are simply no judicial standards by which a Guarantee Clause claim can be evaluated.

Judge Tymkovich’s dissent makes the point that the panel’s logic could subject almost any state constitutional amendment to a challenge by disgruntled legislators arguing that the provision dilutes or nullifies their legislative power. Thus, for example, Judge Tymkovich cites the Colorado Constitution’s protection of the recreational use of marijuana. Legislators could attack that amendment “on the theory that the provision infringes on the legislative core function of codifying the criminal law.”

I am surprised that en banc review was denied. The Tenth Circuit’s decision strikes at the heart of the relationship between the federal government and the States, and opens the door for federal courts to supervise and overrule the States’ legislative processes in previously unimagined ways. I think this case has a good chance of ending up at SCOTUS.

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Anti-Defamation League’s SCOTUS review is tomorrow

I am a big fan of Dean Erwin Chemerinsky’s yearly review of the Supreme Court’s decisions. I’ve seen his live presentations at the Tenth Circuit Bench & Bar Conference, which are truly impressive because of Prof. Chemerinsky’s deep command of the facts and issues, and his ability to speak at length without any notes.

Tomorrow you can watch Prof. Chemerinsky in action by tuning in to the Anti-Defamation League’s “Supreme Court Review 2014,” which will be livestreamed over the Internet from 10:00 a.m. to 11:30 a.m. Mountain time, directly from the National Constitution Center in Philadelphia.

Dean Chemerinsky will be joined by Frederick Lawrence, the president of Brandeis University, and Deborah Lauter, the ADL’s Civil Rights Director.

In addition to discussing the U.S. Supreme Court’s most interesting decisions from the just-concluded October 2013 Term, the panelists will also be discussing the legacy of Brown v. Board of Education, which was decided 60 years ago.

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