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Phillips v. O'Neil

Supreme Court of Arizona

December 20, 2017

Brent Randall Phillips, Petitioner,
v.
The Honorable William O'Neil, Presiding Disciplinary Judge, Respondent Judge, State Bar of Arizona, Real Party in Interest.

         Special Action from the Office of the Presiding Disciplinary Judge No. PDJ2016-9128

          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.

          OPINION

          LOPEZ JUSTICE

          ¶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.

         ¶3To 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.

         ¶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 ...


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