State Bar v. Goodman

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

STATE BAR OF ARIZONA, et al., Plaintiffs/Appellees,

v.

GRANT H. GOODMAN, Defendant/Appellant.

No. 1 CA-CV 18-0152
FILED 12-27-2018

Appeal from the Superior Court in Maricopa County
No. CV2016-016709
The Honorable Sherry K. Stephens, Judge

AFFIRMED

COUNSEL

State Bar of Arizona, Phoenix
By James D. Lee, Lisa M. Panahi
Co-Counsel for Plaintiff/Appellee State Bar of Arizona

Bonnett, Fairbourn, Friedman & Balint P.C., Phoenix
By William G. Fairbourn, Lisa T. Hauser
Co-Counsel for Plaintiff/Appellee State Bar of Arizona

Grant H. Goodman, Phoenix
Defendant/Appellant
 STATE BAR v. GOODMAN
Decision of the Court

MEMORANDUM DECISION

Acting Presiding Judge Paul J. McMurdie delivered the decision of the
Court, in which Chief Judge Samuel A. Thumma and Judge Kent E. Cattani
joined.

M c M U R D I E, Judge:

¶1 Grant H. Goodman appeals the summary judgment entered
in favor of the State Bar of Arizona (the “State Bar”) and the dismissal of his
counterclaims. For the following reasons, we affirm.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 Goodman, a lawyer, was disbarred in 2014. That same year,
the superior court entered Administrative Order No. 2014-029 (the
“Administrative Order”) declaring Goodman a vexatious litigant and
prohibiting him from filing any new causes of action without leave of the
civil presiding judge. Goodman did not seek special action review of the
Administrative Order.

¶3 Two months after his disbarment, Goodman obtained an
assignment (the “Assignment”) from Karen Mothershead granting him all
right, title, and interest in certain legal claims belonging to Mothershead,
which arose out of the administration of her deceased husband’s estate.
Goodman and Mothershead later executed an addendum to the
Assignment (the “Addendum”), which broadly defined the causes of action
that could be brought in either state or federal court. The Assignment and
Addendum gave Goodman thirty percent of the proceeds for such causes
of action, while Mothershead retained a seventy percent interest in any
recovery achieved by “settlement, judgment, collection efforts, arbitration,
mediation, trial, [or] appeal,” both net of payment of costs and expenses.
Mothershead also retained the right to appear on her own behalf if any
court deemed her claims to be non-assignable. Mothershead later revoked
the Assignment.

¶4 Pursuant to the Assignment and Addendum, Goodman made
filings in both state and federal courts in furtherance of the assigned legal
claims. He also made court appearances in furtherance of the claims.

2
 STATE BAR v. GOODMAN
Decision of the Court

¶5 In 2016, the State Bar filed a complaint in superior court
seeking to enjoin Goodman from engaging in the unauthorized practice of
law and from enforcing any legal claim based on an assignment in which
the assignor retained an interest in the claim. In response, Goodman filed a
“Counterclaim and Independent Action” against the State Bar,
Mothershead, and Superior Court Judge Randall Warner as the presiding
civil judge (collectively, “Counter-Defendants”). Goodman’s counterclaim
alleged that (1) there was no basis for the Administrative Order, (2) his
constitutional rights were violated by the Administrative Order, and (3) the
Counter-Defendants engaged in a “fraudulent subterfuge” to eliminate his
right to self-representation.

¶6 The Counter-Defendants separately moved to dismiss
Goodman’s counterclaims. While their motions were pending, Goodman
and the State Bar cross-moved for summary judgment. Ultimately, the
superior court granted each Counter-Defendant’s motion to dismiss and
entered summary judgment in favor of the State Bar. Goodman timely
appealed, and we have jurisdiction pursuant to Arizona Revised Statutes
(“A.R.S.”) section 12-2101(A)(1).

DISCUSSION

¶7 Goodman appeals the entry of summary judgment in favor of
the State Bar on its claim that Goodman engaged in the unauthorized
practice of law. Summary judgment is appropriate if “there is no genuine
dispute as to any material fact and the moving party is entitled to judgment
as a matter of law.” Ariz. R. Civ. P. 56(a). We review the superior court’s
grant of summary judgment de novo, determining whether any issue of
material fact exists and whether the court properly applied the law. See
Deutsche Bank Nat’l Tr. Co. v. Pheasant Grove LLC, 245 Ariz. 325, ¶ 15 (App.
2018). Goodman also challenges the superior court’s dismissal of his
counterclaims. We review the court’s grant of a motion to dismiss de novo.
See Pivotal Colo. II, L.L.C. v. Ariz. Pub. Safety Pers. Ret. Sys., 234 Ariz. 369, 370,
¶ 4 (App. 2014). We will affirm the dismissal if correct for any reason. See
Sw. Non-Profit Hous. Corp. v. Nowak, 234 Ariz. 387, 391, ¶ 10 (App. 2014).

A. Goodman May Not Challenge the Administrative Order by Way of
Appeal.

¶8 The superior court has authority to exercise “such powers as
are necessary to the ordinary and efficient exercise of jurisdiction.” Acker v.
CSO Chevira, 188 Ariz. 252, 254 (App. 1997) (citation omitted). Included
among those powers is the court’s inherent authority to curtail the right of

3
 STATE BAR v. GOODMAN
Decision of the Court

vexatious litigants to initiate new lawsuits asserting new causes of action.
See Madison v. Groseth, 230 Ariz. 8, 14, ¶ 17 (App. 2012).

¶9 Nearly one month after Goodman was disbarred, the
presiding judge of the superior court entered the Administrative Order
designating Goodman as a vexatious litigant. The court found that
Goodman had filed cases for “delay or harassment” and had filed
numerous civil actions routinely naming the same defendants. The
Administrative Order limited Goodman’s ability to “file future lawsuits,
motions, and requests for relief” and expressly prohibited him from filing
any “new causes of action” without leave of the civil presiding judge. It also
prohibited Goodman from making any new filings in a civil case “in which
judgment concluding the case ha[d] been entered” without leave of court.

¶10 On appeal, Goodman seeks to challenge the merits of the
Administrative Order. An administrative order designating an individual
as a vexatious litigant is not an appealable order. See Madison, 230 Ariz. at
14, ¶ 16, n.8 (explaining that this court does not have appellate jurisdiction
over administrative orders, and, therefore, review of such orders must
proceed by special action). Therefore, Goodman may not challenge the
merits the Administrative Order in this appeal.

B. The Court Correctly Found Goodman was Engaged in the
Unauthorized Practice of Law and Enjoined Him from Doing so in the
Future.

¶11 Under article III of our constitution “the practice of law is a
matter exclusively within the authority of the Judiciary.” In re Creasy, 198
Ariz. 539, 541, ¶ 6 (2000); Ariz. Const. art. III. Included in this authority is
the ability to define the practice of law. See State Bar of Ariz. v. Ariz. Land
Title & Tr. Co., 90 Ariz. 76, 87 (1961) (“[T]hose acts, whether performed in
court or in the law office, which lawyers customarily have carried on from
day to day through the centuries must constitute ‘the practice of law.’”).
Arizona Supreme Court Rule (“Rule”) 31 provides a non-exhaustive list of
conduct that when performed by a person who is not authorized constitutes
the unauthorized practice of law. Ariz. R. Sup. Ct. 31(a)(2)(A)–(B)(1).
Specific acts include: preparing a document intended to affect or secure
legal rights for a specific person; representing another in a judicial
proceeding; and preparing a document to be filed in any court for a specific
person or entity. Ariz. R. Sup. Ct. 31(a)(2)(A).

¶12 Pursuant to Rule 31, a disbarred member of the State Bar shall
not practice law or in any way represent that he has authority to practice

4
 STATE BAR v. GOODMAN
Decision of the Court

law. See Ariz. R. Sup. Ct. 31(c). The State Bar is authorized to investigate,
prosecute, and obtain judgments in superior court against individuals who
have engaged in the unauthorized practice of law. See Ariz. R. Sup. Ct.
75–80; State v. Lang, 234 Ariz. 457, 461, ¶ 15 (App. 2014).

¶13 Two months after Goodman was disbarred, he obtained the
Assignment from Mothershead, which purportedly assigned to Goodman
“all right, title, and interest” in certain “causes of actions and claims.”
However, the Assignment and Addendum clearly reflect that Mothershead
retained a seventy percent financial interest in the proceeds derived from
any settlement, judgment, collection efforts, arbitration, mediation, trial, or
appeal arising from the claims. In addition, Mothershead reserved the right
to represent herself in litigation as a party-plaintiff if a court determined the
claims were non-assignable. Relying on the Assignment and Addendum,
Goodman prepared and filed court documents that affected or secured
Mothershead’s legal rights. He also appeared in court in connection with
those filings.

¶14 Goodman argues that he is not providing legal advice or
services to Mothershead but is simply acting as an assignee under an
absolute assignment. He relies on the United States Supreme Court’s
decision in Sprint Commc’ns Co. v. APCC Servs., Inc., 554 U.S. 269 (2008),
which held that assignees of payphone operators’ claims had standing to
bring a collection action against long-distance carriers. 554 U.S. at 271. The
State Bar here, however, has not challenged Goodman’s standing to file suit
on behalf of Mothershead under the Assignment. Accord Cruz v. Lusk
Collection Agency, 119 Ariz. 356, 360 (App. 1978). Rather, the State Bar has
brought an action to enjoin Goodman, a disbarred attorney, from practicing
law.

¶15 “Public policy is derived from the collective rules, principles,
or approaches to problems that affect the commonwealth or promote the
general good; specifically, principles and standards regarded by the
legislature or by the courts as being of fundamental concern to the state and
the whole of society.” Levine v. Haralson, Miller, Pitt, Feldman & McAnally,
P.L.C., 244 Ariz. 234, 237, ¶ 10 (App. 2018) (quotation omitted) (court denied
the recovery of fees to an attorney for work performed pursuant to an oral
contract when such an agreement violated the Arizona Rules of
Professional Conduct and was thus void as against public policy). Our
supreme court rules clearly prohibit a disbarred lawyer, such as Goodman,
from practicing law in Arizona. Goodman cannot evade these rules by
obtaining an assignment of claims from a third party and asserting those
claims as a pro se plaintiff, particularly when the assignor has clearly

5
 STATE BAR v. GOODMAN
Decision of the Court

retained an interest in the claims. State v. Stewart, 21 Ariz. App. 123, 124
(1973) (“It is axiomatic that a person who is not a member of the Bar of the
State of Arizona cannot practice or represent another in any of the State’s
courts.”).

¶16 This conclusion is supported by the decisions of other
jurisdictions. See Iowa Supreme Court Comm’n on the Unauthorized Practice of
Law v. Sullins, 893 N.W.2d 864, 874 (Iowa 2017) (citing cases). In Sullins, the
Iowa Supreme Court affirmed an injunction prohibiting a disbarred
attorney from self-representation on a claim arising out of an assignment
where the assignor retained an interest in the claims. The assignor assigned
three years’ worth her child support claim—which was valued in full at
approximately $300,000—to a disbarred attorney as repayment for a debt
of approximately $28,000. Id. at 869. However, the court took issue with the
amount of the assignment, which after interest would exceed the amount
the assignor owed the disbarred attorney, and because “[t]he assignment
was silent as to the consideration paid and included no language
extinguishing [the assignor’s] debt to [the disbarred attorney].” Id. at 873
(“Their arrangement was akin to a lawyer working a collection case on a
contingent, percentage fee.”). The Court held that “[w]hen an individual
uses an assignment and pro se litigant status to represent another, the
individual renders legal services and engages in the unauthorized practice
of law.” Id. at 874.

¶17 Like Iowa, Arizona also “allows pro se litigants to represent
their own claims, [but] it does not authorize pro se litigants to prosecute the
claims of others.” Yulin Li ex rel. Lee v. Rizzio, 801 N.W.2d 351, 360 (Iowa Ct.
App. 2011); accord Byers-Watts v. Parker, 199 Ariz. 466, 470, ¶ 19 (App. 2001)
(rule recognizing a parent’s right to sue on behalf of a child does not entitle
the parent to provide legal representation for the child).

¶18 This is not to say that all assignments where the assignee
brings a claim and the assignor retains an interest are void. See Cruz, 119
Ariz. at 360. But when a disbarred attorney acquires an interest through an
assignment, and consideration for that interest appears to be—at least in
part—for an act that the disbarred attorney would otherwise be prohibited
from performing if not for the assignment, that assignment is void as
against public policy. Accordingly, any action taken by the disbarred
attorney with respect to that invalid interest is subject to the rules
prohibiting the unauthorized practice of law. See In re Creasy, 198 Ariz. at
543, ¶ 16. (“[S]ome actions which may be taken with impunity by persons
who have never been admitted to the practice of law, will be found to be in

6
 STATE BAR v. GOODMAN
Decision of the Court

contempt if undertaken by a suspended or disbarred attorney.” (quoting
State v. Schumacher, 519 P.2d 1116, 1125 (Kan. 1974))).

¶19 The undisputed facts of this case reflect that Goodman used
the Assignment to circumvent the effect of his disbarment and to practice
law. Goodman’s conduct falls under Rule 31’s definition of “practicing
law,” and because he was disbarred, Goodman’s actions constitute the
“unauthorized practice of law.” There is no genuine issue of any material
fact regarding the legal determination that Goodman engaged in the
unauthorized practice of law. Thus, we affirm the superior court’s entry of
summary judgment in favor of the State Bar.

C. The Court Properly Dismissed Goodman’s Counterclaims.

¶20 Goodman also challenges the superior court’s dismissal of his
counterclaims. In response to the State Bar’s complaint, Goodman filed a
pleading titled “Counterclaim(s) and Independent Action,” naming the
Counter-Defendants as parties. Goodman’s counterclaim did not address
Rule 31 and the unauthorized practice of law, other than to argue that the
Supreme Court Rules shall not “affect the rights granted in the Arizona or
United States Constitutions.” Rather, Goodman’s counterclaim alleged the
court improperly designated him a vexatious litigant. He asserted claims
for racketeering, impairment of contract, and violation of his constitutional
rights. He also asserted an “Independent Action,” requesting relief from
judgment based on fraud pursuant to Arizona Rule of Civil Procedure
60(b). Presumably, Goodman was attempting to seek relief from the
Administrative Order, but it is unclear.

¶21 As addressed above, Goodman did not file a special action
challenging the Administrative Order, and Goodman’s remaining
counterclaims arise out of the invalid assignment, thus they were properly
dismissed.

CONCLUSION

¶22 For the foregoing reasons, we affirm the entry of summary
judgment in favor of the State Bar and the dismissal of Goodman’s
counterclaims.

AMY M. WOOD • Clerk of the Court
FILED: AA
7