Caruthers v. Underhill
Arizona Court of Appeals
326 P.3d 268 (2014)
- Written by Salina Kennedy, JD
Facts
James Underhill (defendant) and Clinton Underhill (defendant) were officers and shareholders of Underhill Transfer Company (UTC), a commercial real estate management company. James helped Clinton buy shares of UTC stock from other shareholders, basing the transactions’ prices on false appraisals. Four shareholders—Caruthers, Tanouye, Allen, and Macbeth (the shareholders) (plaintiffs)—sued Clinton for fraud and sued James for conspiracy and aiding and abetting. Midway through the trial, the judge asked the shareholders’ attorney if they had elected a remedy. Caruthers and Tanouye chose to seek rescission, and Allen and Macbeth chose to seek damages. The next day, the trial judge ruled that because Clinton had received the stock and James hadn’t, rescission was unavailable as a remedy against James. Despite this ruling, the trial judge allowed the jury to render an advisory opinion on rescission. The jury found that Allen and Macbeth were entitled to damages and that Caruthers and Tanouye were entitled to rescission. The trial court awarded damages to Allen and Macbeth but did not provide a remedy to Caruthers and Tanouye because their elected remedy—rescission—was unavailable as a matter of law. Caruthers and Tanouye filed a motion for new trial. The trial court denied the motion, reasoning that Caruthers and Tanouye were bound by their election of rescission because they had chosen the remedy knowing that it might be unavailable. Caruthers and Tanouye appealed.
Rule of Law
Issue
Holding and Reasoning (Swann, J.)
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