Merrick v. Rottman

663 P.2d 586, 135 Ariz. 594, 1983 Ariz. App. LEXIS 414
CourtCourt of Appeals of Arizona
DecidedJanuary 13, 1983
DocketNo. 1 CA-CIV 5585
StatusPublished
Cited by4 cases

This text of 663 P.2d 586 (Merrick v. Rottman) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Merrick v. Rottman, 663 P.2d 586, 135 Ariz. 594, 1983 Ariz. App. LEXIS 414 (Ark. Ct. App. 1983).

Opinions

OPINION

JACOBSON, Presiding Judge.

This appeal presents the question of how far a regulatory state agency may go in seeking voluntary compliance with what it perceives to be a violation by one of its regulated members.

This action was instituted by appellants, Charles A. Merrick, his wife and Tucson Memorial Parks, Inc., (collectively referred to as Merrick) against the Arizona State Board of Funeral Directors and Embalmers, a state agency, and its members (the Board) seeking declaratory and injunctive relief. At issue was the validity of a “Funeral Establishment Cease and Desist Notification” issued by the Board and directed against Merrick. On cross-motions for summary judgment, the trial court granted judgment in favor of the Board, finding that the Board had implied power to issue the notification in question and no action would lie in Merrick’s favor by reason of the Board’s action. This appeal by Merrick followed.

The facts, for summary judgment purposes, are not in dispute. Charles Merrick is a licensed funeral director in charge of South Lawn Mortuary, a funeral establishment owned by Tucson Memorial Parks, Inc., located in Tucson, Arizona. The Board has statutory authority to regulate, supervise and to issue, suspend or revoke licenses of funeral directors and embalmers within this state. See, Title 32, chapter 12, “Funeral Directors and Embalmers,” A.R.S. § 32-1301, et seq. There is no question that the activities of Merrick, as a funeral director and embalmer, fall within the regulatory powers of the Board.

In 1979, Merrick prepared and marketed a prearranged funeral plan which in the opinion of Merrick’s counsel complied with the provisions of A.R.S. § 44-1721, et seq. (Title 44, chapter 11, Article 8, “Prearranged Funeral Plans”). Advertisements for this plan appeared in various Tucson newspapers, including the Arizona Daily Star and the Tucson Citizen.

[596]*596On September 26, 1979, the secretary of the Board wrote Merrick, requesting a meeting with the Board to review the prearranged funeral plan and the advertising of that plan. On October 8, 1979, Merrick and his counsel met with the Board at which time the plan and advertisement were explained and discussed. At the conclusion of the meeting, the Board suggested that one provision be added to the plan and the Board voted unanimously to “close the matter”. Following this meeting, counsel for the Board, in reviewing the material presented by Merrick at the meeting, concluded that because the advertising describing the plan stated that the cost of the funeral was fixed and that the consumer “will never pay additional money” while the plan itself allowed South Lawn to receive interest on the money paid into the plan, that in fact the purchase price of the funeral was variable in amount (depending upon the interest that would accrue between payment and death) and therefore the statement in the advertising of a “fixed price” was misleading. Counsel’s conclusions were relayed to the Board.

Counsel’s post meeting conclusions and advice to the Board were not disclosed to Merrick or his counsel. Merrick heard nothing further from the Board or its counsel until January 29, 1980, when Merrick, while attending a board meeting in Phoenix, Arizona, concerning proposed legislation, was confronted by a news reporter from the Arizona Republic who handed Merrick an unsigned copy of a letter dated January 28,1980, from the Board addressed to Merrick and requested Merrick’s comments.

The letter was entitled “Funeral Establishment Cease and Desist Notification.” The letter in pertinent part stated:

It is the opinion of the Board that the price-guarantee language in the described advertisement is in violation of A.R.S. § 44 — 1521, et seq. (the Consumer Fraud Act), and of § 32-1383, subsection A, paragraph 5 of the Funeral Directors Act which provides that the Board may take disciplinary action against an establishment if it advertises “in an inaccurate, misleading or fraudulent manner.” ******
The positive assurance of South Lawn in its advertisement to guarantee a fixed price of future funerals without disclosure of the variance of the actual amount which the consumer ultimately pays is deemed to be inaccurate and misleading to the consumer. THEREFORE, SOUTH LAWN MORTUARY & CEMETERY IS HEREBY DIRECTED TO IMMEDIATELY CEASE AND DESIST IN THE PREPARATION, PUBLICATION, OR OTHER COMMUNICATION OF THESE ADVERTISEMENTS UNTIL THE DECEPTIVE LANGUAGE DESCRIBED ABOVE IS REMOVED OR MODIFIED. (Emphasis in original).

The letter went on to state that if a response to the notification was not received within 30 days, “the Board may elect to initiate formal disciplinary proceedings against your establishment.”

At the meeting of the Board on January 29, 1980, the Board’s counsel recommended to the Board that it “request the cooperation of Tucson Newspapers, Inc., by not publishing the above-mentioned advertisement in the future until the violations were corrected.” Pursuant to this recommendation, letters were sent by the Board to the editor and publisher of the Arizona Daily Star and the Tucson Citizen which stated in pertinent part:

The Board has determined that the failure to disclose certain important pricing information in such advertising may be misleading to consumers in the Tucson area.
******
We would appreciate the cooperation of your newspaper by not publishing these advertisements in the future....

The following day, newspaper headlines appeared in the Tucson newspapers stating “Board Finds South Lawn Mortuary Ad is Deceptive,” and “Mortuary Ordered to Alter Ads.”

[597]*597Prior to January 29, 1980, Merrick had received no notice of any action to be taken by the Board, although the printed agenda of the Board meeting contained an item entitled — “South Lawn.”

On February 15, 1980, counsel for Merrick requested the Board to rescind its cease and desist notification and conduct an inquiry into the reasons for its issuance. On March 24, 1980, the Board declined to rescind its notification and having determined that Merrick had ceased its advertising (apparently some time in December, 1979, prior to the Board’s letter of January 28, 1980), voted not to initiate any disciplinary action against Merrick. On March 24, 1980, this action was instituted in Superior Court which granted judgment to the Board on July 14, 1980.

Merrick’s contentions on appeal may be summarized as follows:

(1) That the “Cease and Desist Notification” given to Merrick constituted an administrative injunction which the Board was without statutory authority to issue; and
(2) That the issuance of the “Notification” which impugned the integrity of Merrick and impaired its right to earn a living without notice and an opportunity to be heard, constituted a denial of due process.

The Board on the other hand, urges these contentions:

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Bluebook (online)
663 P.2d 586, 135 Ariz. 594, 1983 Ariz. App. LEXIS 414, Counsel Stack Legal Research, https://law.counselstack.com/opinion/merrick-v-rottman-arizctapp-1983.