Brent Randall Phillips v. Hon. o'neil/state Bar

CourtArizona Supreme Court
DecidedDecember 20, 2017
DocketCV-17-0122-SA
StatusPublished

This text of Brent Randall Phillips v. Hon. o'neil/state Bar (Brent Randall Phillips v. Hon. o'neil/state Bar) is published on Counsel Stack Legal Research, covering Arizona Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brent Randall Phillips v. Hon. o'neil/state Bar, (Ark. 2017).

Opinion

IN THE

SUPREME COURT OF THE STATE OF ARIZONA BRENT RANDALL PHILLIPS, Petitioner,

v.

THE HONORABLE WILLIAM O’NEIL, PRESIDING DISCIPLINARY JUDGE, Respondent Judge,

STATE BAR OF ARIZONA, Real Party in Interest.

No. CV-17-0122-SA Filed December 20, 2017

Special Action from the Office of the Presiding Disciplinary Judge No. PDJ2016-9128 JURISDICTION ACCEPTED; RELIEF GRANTED

COUNSEL:

Ralph Adams (argued), Karen Clark (argued), Adams & Clark, PC, Phoenix, Attorneys for Brent Randall Phillips

James D. Lee (argued), Senior Bar Counsel, Attorney for State Bar of Arizona

Mark Brnovich, Arizona Attorney General, Dominic E. Draye, Solicitor General, Jennifer M. Perkins (argued), Assistant Solicitor General, Phoenix, Attorneys for Amicus Curiae State of Arizona

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

JUSTICE LOPEZ, opinion of the Court: PHILLIPS V. HON. O’NEIL/STATE BAR Opinion of the Court

¶1 This case concerns the application of Arizona Rules of Evidence 408 and 613 when the State Bar of Arizona seeks to use a consent judgment entered in another matter in attorney disciplinary proceedings. We hold that Rule 408 precludes use of a consent judgment to prove substantive facts to establish liability for a subsequent claim, and a consent judgment likewise cannot be used for impeachment purposes under Rule 613.

BACKGROUND

¶2 Disciplinary proceedings are currently pending against attorney Brent Phillips before the Presiding Disciplinary Judge (“PDJ”). Prior to these proceedings, the Arizona Attorney General sued Phillips for violations of the Arizona Consumer Fraud Act (“CFA”), A.R.S. §§ 44-1521 to -1534. The state alleged that he mailed deceptive advertisements to Arizona consumers. Among other violations, the advertisements led consumers to mistakenly believe they were eligible for mortgage payment or interest rate deductions and were worded in a way that made some consumers think the mortgage lenders sent the advertisements. The advertisements also made the program look selective when it was not, and Phillips’ fee agreements required consumers to pay attorney fees up front, even if the lender ultimately denied the application to modify the consumers’ mortgage loan terms. The disciplinary proceedings also relate to this conduct.

¶3 To resolve the Attorney General’s CFA action, Phillips agreed to a consent judgment (“Judgment”). The Judgment waived Phillips’ right to a trial, admitted that his actions violated the CFA and a federal regulation, and required him to pay restitution, attorney fees, and civil penalties. The Judgment also precluded its use in most other proceedings:

With the exceptions of paragraphs 12 and 13 above and the State’s enforcement of this Consent Judgment, this Consent Judgment is not and shall not in any event be used as an admission or evidence of any alleged wrongdoing or liability by defendant Brent Randall Phillips, defendant Phillips Law Center, and defendant Farmer’s Law Group in any other civil, criminal, or administrative court, administrative agency or other tribunal anywhere in the United States of America.

2 PHILLIPS V. HON. O’NEIL/STATE BAR Opinion of the Court

¶4 Paragraphs 12 and 13 concern the state’s rights to enforce the Judgment during a bankruptcy proceeding or subsequent civil litigation. The parties stipulated that the Judgment was the result of a compromise and settlement agreement and that only the parties could seek its enforcement.

¶5 During attorney disciplinary proceedings before the PDJ, Phillips’ counsel moved in limine to preclude the State Bar from introducing the Judgment into evidence for any purpose. The State Bar opposed the motion, arguing it should be allowed to use the Judgment to impeach Phillips’ testimony if it differed from the facts contained in the Judgment. The PDJ ruled in favor of the State Bar, allowing it to introduce the Judgment’s stipulated facts (but not the sanctions) for impeachment purposes.

¶6 In his order, the PDJ recognized that the Judgment’s terms precluded its use “as an admission or evidence of any alleged wrongdoing or liability” by Phillips. The PDJ concluded, however, that Rule 408 does not render the stipulated facts inadmissible because the Judgment is being used for a different purpose than in the Attorney General’s original “claim.” Finally, the PDJ quoted Rule 613(b), emphasizing that extrinsic evidence of a witness’s prior inconsistent statement is admissible “if justice so requires.”

¶7 We accepted special action jurisdiction because this case presents a legal issue of statewide importance that is likely to recur. We have jurisdiction pursuant to article 6, section 5(3) of the Arizona Constitution.

DISCUSSION

¶8 Attorney disciplinary proceedings “are neither civil nor criminal, but are sui generis,” and the rules of evidence apply in such proceedings “as far as practicable.” Ariz. R. Sup. Ct. 48(a), (c). We review de novo the interpretation of court rules. State v. Fitzgerald, 232 Ariz. 208, 210 ¶ 10 (2013). “We interpret court rules according to the principles of statutory construction.” State v. Aguilar, 209 Ariz. 40, 47 ¶ 23 (2004). Under those principles, when a rule is unambiguous, “we apply it without further analysis.” Wade v. Ariz. State Ret. Sys., 241 Ariz. 559, 561 ¶ 10 (2017) (internal quotation marks omitted). If a rule is ambiguous the Court may consider

3 PHILLIPS V. HON. O’NEIL/STATE BAR Opinion of the Court

its “subject matter, legislative history, and purpose, as well as the effect of different interpretations, to derive its meaning.” Fleming v. State Dep’t of Pub. Safety, 237 Ariz. 414, 417 ¶ 12 (2015) (internal quotation marks omitted).

I. Arizona Rule of Evidence 408

¶9 Rule 408(a) provides:

Prohibited Uses. Evidence of the following is not admissible—on behalf of any party—either to prove or disprove the validity or amount of a disputed claim or to impeach by a prior inconsistent statement or a contradiction: (1) furnishing, promising, or offering—or accepting, promising to accept, or offering to accept—a valuable consideration in compromising or attempting to compromise the claim; and (2) conduct or a statement made during compromise negotiations about the claim.

¶10 By its terms, Rule 408(a)(1) indicates that consent judgments cannot be introduced to prove substantive facts to establish liability for a disputed claim. See Michael H. Graham, 3 Handbook of Federal Evidence § 408:1 (8th ed. 2017) (“Pursuant to Rule 408(a)(1) neither the furnishing, promising, or offering, or accepting, promising to accept a valuable consideration in compromising or attempting to compromise the claim, nor the completed compromise itself is admissible to prove or disprove the validity or amount of a disputed claim.”). Subsection (a)(1) renders inadmissible “[e]vidence of . . . accepting . . . a valuable consideration in compromising . . . the claim.” Ariz. R. Evid. 408(a)(1). The Judgment reflects evidence of an exchange of “valuable consideration” between the state and Phillips. Phillips waived his right to a trial, admitted violating the CFA and a federal regulation, and agreed to pay restitution, fees, and penalties in exchange for mitigating liability and settling the state’s action.

¶11 The dissent contends that if the drafters of Rule 408 intended the rule to cover consent judgments and settlement agreements in addition to their preceding offers and negotiations, they would have said so explicitly. ¶ 31, infra.

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Bluebook (online)
Brent Randall Phillips v. Hon. o'neil/state Bar, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brent-randall-phillips-v-hon-oneilstate-bar-ariz-2017.