People Ex Rel. Babbitt v. Green Acres Trust

618 P.2d 1086, 127 Ariz. 160, 1980 Ariz. App. LEXIS 589
CourtCourt of Appeals of Arizona
DecidedApril 8, 1980
Docket1 CA-CIV 4183
StatusPublished
Cited by21 cases

This text of 618 P.2d 1086 (People Ex Rel. Babbitt v. Green Acres Trust) 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
People Ex Rel. Babbitt v. Green Acres Trust, 618 P.2d 1086, 127 Ariz. 160, 1980 Ariz. App. LEXIS 589 (Ark. Ct. App. 1980).

Opinion

OPINION

CONTRERAS, Judge.

This appeal presents the question of whether the attorney general has standing under our consumer fraud legislation to bring an action for injunctive relief, civil penalties and restitution against a party engaging in conduct that is subject to control by an administrative body. It is our opinion that except where the legislature has by particularized and comprehensive legislation entrusted the protection of the consumer to a specific administrative agency, the attorney general may bring such action.

*162 BACKGROUND OF PRESENT LITIGATION

The appellee, Green Acres Trust, Inc., is a non-profit corporation that operates two mortuaries in Maricopa County and provides funeral services. Green Acres Memorial Gardens, Inc., is a corporation operated for profit that owns and operates a cemetery in connection with which it sells space and materials for the disposition of human remains. The appellee, Lisle Hawkins, is a shareholder and the president of both corporations.

For a number of years, the appellee corporations, through their own sales employees, marketed instruments styled “debentures” in denominations of $250.00. This was done without registration of either the debentures or the salesmen with the Arizona Corporation Commission as required by A.R.S. §§ 44-1841 and -1842. A “no-action” letter issued by the Securities Division of the Arizona Corporation Commission in 1961 stated, on the basis of information presented by Green Acres Trust’s then counsel, that this corporation would be exempt from such registration requirements as an eleemosynary institution under the provisions of A.R.S. § 44-1843(6).

The debentures that were issued are somewhat standard-looking debt instruments, the obligor being Green Acres Trust. They were sold in conjunction with an offering and promotion of the goods and services of the two mortuaries operated by Green Acres Trust and the land and other materials sold by Green Acres Memorial Gardens. Generally, the debentures were to be redeemed to pay for the desired goods and services at the time of need. The record indicates that in some instances, at least, a solicitee would declare to the salesman the type of funeral services and other related materials he or she preferred. The salesman would place a monetary value on the materials and services, and the solicitee would purchase debentures in an amount equal ór roughly equal to the amount in question and agree to make payments therefor. The debentures provided for redemption at the time of the solicitee’s death, presumably for application of the proceeds to the cost of funeral and burial services and materials to be rendered for the deceased.

In 1975, Green Acres Trust and one of its debenture salesmen were made parties to proceedings before the Securities Division of the Arizona Corporation Commission. These proceedings culminated in an “Order To Cease And Desist”, issued on November 14, 1975, that prohibited Green Acres Trust and its salesmen from selling Green Acres Trust debentures unless and until both they and any persons selling them or offering them for sale were registered pursuant to our Securities Act. This order was based on the conclusion that, notwithstanding the earlier “no — action” letter, sales of the unregistered debentures by unregistered representatives violated the state Securities Act.

Shortly after the cease and desist order was issued, the attorney general initiated the present litigation, based upon our Consumer Fraud Act, A.R.S. §§ 44-1521 to -1534.

ALLEGATIONS IN THE COMPLAINT

The attorney general’s complaint, as amended and as further articulated in a more definite statement, alleged violations of A.R.S. § 44-1522 set forth in six separate counts: (1) that appellees orally represented to customers that the cost of a “pre-need funeral plan” was fixed when in fact it was to be determined at the time of death and further that appellees offered to sell pre-need funeral plans but in fact sold only Green Acres Trust debentures; (2) that the written memorials of agreement issued by the two corporate appellees were not agreements for pre-need funeral plans but wére, instead, subscription agreements for debentures in the case of Green Acres Trust and purchase contracts for cemetery merchandise in the case of Green Acres Memorial Gardens; (3) that appellees “concealed, suppressed or omitted” to tell solici-tees the material fact that Green Acres Trust had not registered the debentures as required by law; (4) this count is essentially *163 the same as the third count except that it focuses upon the alleged material fact that appellees had not registered as dealers so that they could sell the debentures, as required by law; (5) that appellees “concealed, suppressed or omitted” to tell solici-tees the material fact that they would not deposit funds into a trust account as required by A.R.S. §§ 44-1722 and -1723; and (6) this count appears to be essentially reiterative of the first five counts. The complaint included: a prayer for injunctive relief pursuant to A.R.S. § 44-1528; that civil penalties of $5,000.00 be assessed for each violation pursuant to A.R.S. § 44-1531, that the trial court order restoration to the victims pursuant to A.R.S. § 44-1528; and that appellees reimburse the attorney general for investigative costs and attorney’s fees pursuant to A.R.S. § 44-1534.

RULINGS BY THE TRIAL COURT

The attorney general eventually moved for summary judgment, principally upon the ground that the plans offered by appel-lees were generically “prearranged funeral plan agreements” within the purview of A.R.S. §§ 44-1721 to -1725 but did not comply with the requirements of that legislation. The appellees also moved for a partial summary judgment or, in the alternative, to file an assurance of discontinuance of an act or practice. See A.R.S. § 44-1530. After taking these matters under advisement, the trial court ruled by minute entry that sale by Green Acres Trust of its debentures in connection with the promotion of its funeral operations and Green Acres Memorial Gardens’ cemetery business constituted the sale of a “prearranged funeral plan agreement” so that the failure to make the trust account deposits required by A.R.S.

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Bluebook (online)
618 P.2d 1086, 127 Ariz. 160, 1980 Ariz. App. LEXIS 589, Counsel Stack Legal Research, https://law.counselstack.com/opinion/people-ex-rel-babbitt-v-green-acres-trust-arizctapp-1980.