By: Sharon Urias, Esq.
Commercial Litigation – A New Court
On July 1, 2015, the Arizona Supreme Court introduced a pilot program that provides a new Superior Court venue for commercial litigation cases. The program and new Commercial Court will be given a three-year run, ending June 30, 2018. The premise for the new Commercial Court is to provide a venue specifically tailored to commercial litigation matters that will have experienced judges and processes specifically shaped for commercial litigation. The Arizona Supreme Court recognizes that there are unique needs of businesses engaged in commercial litigation and that a special venue within the Superior Court can assist in resolving disputes more efficiently and economically.
The Supreme Court’s advisory committee cited several reasons that the Commercial Court would be beneficial to Arizona, including:
- Making Arizona a more favorable forum for resolving business disputes
- Improving the business community’s access to justice
- Efficiently resolving commercial litigation cases
- Reducing the litigation costs of commercial litigation cases
- Generating support for the State of Arizona’s dispute resolution system
- Improving the overall quality of justice
What Kind Of Commercial Cases Are Accepted By The New Court?
The Commercial Court has adopted Experimental Rule 8.1 in the Arizona Rules of Civil Procedure to define the criteria for determining if the Court is the proper venue for your business case and what procedures will apply.
Rule 8.1(a)(1) defines a “commercial case” as one in which:
- At least one plaintiff and one defendant are “business organizations”
- The primary issues of law and fact concern a “business organization,” or
- The primary issues of law and fact concern a “business contract or transaction”
A “business organization” includes a sole proprietorship, corporation, partnership, limited liability company, limited partnership, master limited partnership, professional association, joint venture, business trust, or a political subdivision or government entity that is a party to a business contract or transaction.
A “business contract or transaction” is one in which a business organization sold, purchased, licensed, transferred, or otherwise provided goods, materials, services, intellectual property, funds, realty, or other obligations. The term “business contract or transaction” excludes a “consumer contract or transaction.”
Cases Not Heard By The Commercial Court
The following cases are generally not heard by the new Commercial Court: evictions, eminent domain or condemnation, civil rights, personal injury cases, administrative appeals, family law cases, protective orders or other criminal matters, and wrongful termination of employment.
Please note, however, that there may be occasions where these areas of law intermingle with commercial law cases, and in those instances some of these areas may be heard by the court when the commercial law elements predominate the case.
Additionally, it is important to remember that the Commercial Court is the improper venue for “consumer contracts or transactions,” which are defined as those primarily for personal, family, or household purposes.
Is There An Amount In Controversy Requirement?
Rule 8.1(b) provides that regardless of the amount in controversy, the court will hear a variety of commercial cases. This means that in many instances you do not have to have a case with a specific dollar amount to be heard by the Commercial Court. Cases that qualify under this section of the rule include:
- Matters concerning the internal affairs, governance, dissolution, receivership, or liquidation of a business organization
- The sale, merger, dissolution or a business organization, or the sale of substantially all of the assets of a business organization
- Trade secrets or misappropriation of intellectual property
- Non-solicitation and non-compete employment agreement clauses
- Commercial real estate transactions
- Relationships between a franchisor and a franchisee
Additionally, when an amount in controversy is at least $50,000, the Rule 8.1(c) provides that the Commercial Court will hear a commercial case that:
- Arises from a contract or transaction governed by the Uniform Commercial Code (UCC)
- Involves the sale of services by, or to, a business organization
- Is a malpractice claim against a professional that arises from services the professional provided to a business organization
How The Process Gets Started
If your case meets the definition and criteria of a “commercial case” set forth in Rule 8.1 and you decide to proceed with filing a lawsuit with the Court, you must include in your initial complaint’s caption the words “eligible for commercial court” and you must also complete a civil cover sheet that indicates the action is an eligible commercial case. The Court administrator will review the complaint and civil cover sheet filed in accordance with Rule 8.1(e)(1) and will assign an eligible case to a Commercial Court judge.
Please note that even if you properly file your initial complaint with the Commercial Court, after your case has been assigned to a Commercial Court judge, the judge may reconsider upon motion of a party or through the judge’s own initiative, whether the Commercial Court is the appropriate venue and may reassign the case to a general civil court. Also, there may be instances where a civil court judge transfers a case to the Commercial Court if the judge determines the case meets the criteria of Rule 8.1.
