Opinion
No. 1 CA-CV 11-0136
12-13-2011
ALVIN C. FENTON and MELODIE A. FENTON, husband and wife, Plaintiffs/Appellants, v. RICHARD A. HUNT and OMA LONETTE HUNT, husband and wife; and TRULY NOLEN OF AMERICA, INC., an Arizona corporation, Defendants/Appellees.
The Sutherland Law Firm by Douglas D. Sutherland Attorneys for Plaintiffs/Appellants Sippel Law Firm PLLC by Mark A. Sippel Attorneys for Defendants/Appellees Hunt Quarles & Brady LLP by Edward A. Salanga Lauren Elliott Stine Attorneys for Defendant/Appellee Truly Nolen of America, Inc.
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED
EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
Ariz. R. Crim. P. 31.24
MEMORANDUM DECISION
(Not for Publication - Rule 28, Arizona Rules of Civil Appellate Procedure
Appeal from the Superior Court in Mohave County
Cause No. CV-2004-0160
The Honorable Charles W. Gurtler, Jr., Judge
AFFIRMED
The Sutherland Law Firm
by Douglas D. Sutherland
Attorneys for Plaintiffs/Appellants
Kingman
Sippel Law Firm PLLC
by Mark A. Sippel
Attorneys for Defendants/Appellees Hunt
Kingman
Quarles & Brady LLP
by Edward A. Salanga
Lauren Elliott Stine
Attorneys for Defendant/Appellee Truly Nolen of America, Inc.
Phoenix TIMMER, Presiding Judge
¶1 Alvin C. Fenton and Melodie A. Fenton (the "Fentons") appeal the superior court's dismissal of their complaint against Richard A. Hunt and Oma Lonette Hunt (the "Hunts") and Truly Nolen of America, Inc. ("Truly Nolen") alleging a variety of claims arising from the Fentons' purchase of a home from the Hunts. The court dismissed the complaint pursuant to Arizona Rule of Civil Procedure 41(b) for failure to prosecute. For the reasons that follow, we affirm.
BACKGROUND
¶2 The Fentons entered in a contract to purchase a home in Kingman from the Hunts in August 2003. Soon after taking possession of the home that Fall, the Fentons discovered extensive termite damage, which ultimately lead to demolition of the home in May 2004. The Fentons sued the Hunts and Truly Nolen, alleging a variety of claims related to the termite infestation.
In February 2004, the Hunts filed suit against the Fentons seeking declaratory relief and damages for defamation. The Fentons then filed a counterclaim against the Hunts and a third-party complaint against Truly Nolen alleging negligence, fraud, breach of warranties and Consumer Fraud Act violations. On February 3, 2005, pursuant to the parties' stipulation, the superior court dismissed the Hunts' complaint and realigned the parties by designating the Fentons as plaintiffs and the Hunts and Truly Nolen as defendants.
¶3 The case was inactive from February 2005 through March 2010, when the Fentons served defendants with an unverified Rule 26.1 Initial Disclosure Statement. The record does not reflect that the superior court placed the case on the inactive calendar during that time.
¶4 In May 2010, Truly Nolen filed a notice of change of judge. Next, the Fentons filed a motion to set and certificate of readiness on June 29, 2010, which the defendants controverted. The Hunts and Truly Nolen then moved to dismiss the Fentons' claims for lack of prosecution pursuant to Arizona Rule of Civil Procedure 41(b) and Mohave County Local Rule CV-2. Following briefing and oral argument, the superior court ruled that the Fentons had offered no legitimate excuse for their failure to prosecute the case and therefore dismissed the lawsuit.
¶5 After denying the Fentons' motion for reconsideration, and awarding partial attorneys' fees to Truly Nolen and the Hunts, the court entered a judgment dismissing the case with prejudice on December 27, 2010. This timely appeal followed. We review the superior court's ruling for an abuse of discretion. Cooper v. Odom, 6 Ariz. App. 466, 469, 433 P.2d 646, 649 (1967).
Richard Hunt died on September 16, 2011. His spouse survives, and the claims against them are not in the categories of claims abating upon death. See Ariz. Rev. Stat. ("A.R.S.") § 14-3110 (2005) (providing that all claims, except those for breach of promise to marry, seduction, libel, slander, separate maintenance, alimony, loss of consortium, and the invasion of the right of privacy, survive "the death of the person entitled thereto or liable therefor" and may be asserted by or against the personal representative). Moreover, the complaint (formerly the counterclaim) alleges that the Hunts "were acting on behalf of the marital community for each other."
DISCUSSION
¶6 The superior court has inherent power to dismiss a case for lack of prosecution. Hartford Acc. & Indem. Co. v. Sorrells, 50 Ariz. 90, 93-94, 69 P.2d 240, 242 (1937); see also Ariz. R. Civ. P. 41(b) (authorizing a party to move to dismiss a complaint for failure to prosecute); Rule CV-2(A)(2), Mohave County Local Rules of Practice (permitting court to dismiss a complaint for "appropriate reasons"). Although, as the Fentons submit, courts prefer to resolve cases on their merits, "there is a limit to which judicial leniency can be stretched." Adams v. Valley Nat. Bank of Ariz., 139 Ariz. 340, 342, 678 P.2d 525, 527 (App. 1984). To justify a dismissal, the record must reflect that the delay in prosecution demonstrates "either that the cause of action has been abandoned by plaintiff or else that it has resulted in injury to some one [sic] not responsible for the delay." Price v. Sunfield, 57 Ariz. 142, 148, 112 P.2d 210, 212 (1941); Cooper, 6 Ariz. App. at 469, 433 P.2d at 649 (same).
¶7 The Fentons argue the superior court erred by dismissing their complaint because they did not abandon the case, no party was prejudiced by the delay, and the clerk of the court failed to place the case on the inactive calendar. Alternatively, the Fentons assert the court erred by dismissing the complaint against Truly Nolen because it had waived its right to seek dismissal due to its active participation in the case. We address each argument in turn.
1. Abandonment
¶8 As the superior court noted, after the Fentons were designated plaintiffs, five years passed in this lawsuit without any activity. No disclosure statements were exchanged during that time, no discovery conducted, and no documents filed with the court. Courts have granted dismissal motions following substantially shorter periods of inactivity. See Price, 57 Ariz. at 148, 112 P.2d at 212 (four years); Paul v. Paul, 28 Ariz. 598, 603, 238 P. 399, 401 (1925) (sixteen months); Copeland v. Ariz. Veterans Mem'l Coliseum & Exposition Ctr., 176 Ariz. 86, 87-88, 859 P.2d 196, 197-98 (App. 1993) (fourteen months); Old Republic Nat'l Title Ins. Co. v. New Falls Corp., 224 Ariz. 526, 530, ¶ 16, 233 P.3d 639, 643 (App. 2010) (two and one-half years).
¶9 The Fentons nevertheless justify their inactivity by pointing to a lack of resources and insufficient time to pursue the matter due to their extensive work on the home. They also blame the Hunts for prematurely forcing them into the litigation by filing the initial declaratory judgment action, which required the Fentons to file a compulsory counterclaim and third party complaint. We reject both contentions.
¶10 Our supreme court has held that "financial inability to prosecute a suit is not an excuse for an unreasonable delay." Price, 57 Ariz. at 149, 112 P.2d at 213. Regardless, as the superior court noted, the Fentons had sufficient funds to pay to demolish the home, and they failed to explain why they could not take a loan on the property or make other arrangements to pay counsel. Nor did the Fentons explain why they could not proceed without counsel. The court did not err by rejecting the Fentons' financial shortages as evidence they did not abandon their lawsuit.
¶11 The record further supports that the five-year delay is attributable to the Fentons alone rather than to the Hunts' act in filing their complaint. The Hunts were entitled to file their complaint, and they did not engage in wrongdoing simply because they spurred the Fentons to file claims against the Hunts and Truly Nolen before the Fentons felt ready to proceed. Once the Fentons asserted their claims, they had a duty to ensure their case was brought to trial within a reasonable time frame; the Hunts and Truly Nolen bore no such obligation. Price, 57 Ariz. at 148-49, 112 P.2d at 212-13.
¶12 In light of the record, the superior court did not abuse its discretion by concluding the Fentons abandoned the lawsuit.
2. Prejudice
¶13 The Fentons also argue the superior court erred by ruling that defendants were prejudiced by the five-year period of inactivity. They point out that Truly Nolen actually inspected the home before it was demolished and the Hunts were given an opportunity to inspect, so the physical evidence of termite infestation is available. Additionally, the Fentons contest defendants' representations about the availability of necessary witnesses. We cannot say the court abused its discretion by concluding defendants were prejudiced by the delay.
¶14 Robert W. Hartley, Truly Nolen's Vice President of Safety and Insurance from 1980 through 2010, submitted an affidavit, attesting that he wrote the Fentons' attorney a letter in February 2004 advising that Truly Nolen had fulfilled its obligations regarding the home. Truly Nolen never heard from the Fentons or the attorney in the coming years, and Hartley assumed the Fentons had abandoned their lawsuit. Consequently, in October 2007, Truly Nolen removed the claim from its active claims files. Hartley additionally attested that none of the technicians who had serviced the home are current Truly Nolen employees.
¶15 The Hunts submitted a joint affidavit stating the Fentons destroyed evidence during the five-year period by removing trees and grading the property. During that time, the health of the Hunts and their realtor deteriorated. Many former neighbors who might have been witnesses had moved, had unknown locations, or were in poor health. The Hunts no longer knew the whereabouts of a plumber who might be a witness. The Hunts also inferred from the passage of time that personnel associated with relevant realtors and title offices were no longer employed by those entities.
We agree with the Fentons that the Hunts cannot complain about demolition of the home in May 2004 as the Hunts were given the opportunity to inspect but apparently did not do so.
¶16 From this evidence, the court was justified in finding that defendants suffered prejudice due to the lengthy period of inactivity in the case. In sum, as the case grew stale, memories about details either faded or were lost. Witnesses scattered or died. As the superior court concluded, permitting the Fentons to pursue their suit after doing nothing for five years would violate the policy in Arizona requiring timely redress of injuries, as reflected in the pertinent statutes of limitation. Ritchie v. Grand Canyon Scenic Rides, 165 Ariz. 460, 464, 799 P.2d 801, 805 (1990). Significantly, had the Fentons waited until March 2010 to file suit, they would have been barred from doing so under the applicable limitations period. See A.R.S. §§ 12-541(5) (2003) (one-year period for liability created by statute), 12-542 (2003) (two-year limitation period for negligence), 12-543 (2003) (three-year limitation period for fraud), 12-548 (2003) (six-year limitation period for written contract). We see no reason why the Fentons should get a better result by filing suit in a timely manner and then doing nothing until after the expiration of the limitations period.
According to the Fentons, they discovered the termite infestation soon after they took possession in Fall 2003, which means its claim for breach of contract was required to be filed by Fall 2009.
3. Inactive calendar
¶17 The Fentons contend that their inaction is one factor in the analysis but must be weighed with the superior court clerk's failure to comply with Arizona Rule of Civil Procedure 38.1. That rule requires the clerk (1) to place a case on the inactive calendar nine months after its commencement if a motion to set and certificate of readiness has not been served, and (2) to send a written notification promptly thereafter. Ariz. R. Civ. P. 38.1(d), (e). Had the court placed the case on the inactive calendar and provided the notice, the Fentons argue, they would have been prompted to prosecute the action.
This case is factually distinguishable from Am. Asphalt & Grading Co. v. CMXr L.L.C., 227 Ariz. 117, 253 P.3d 1240 (2011). In American Asphalt, the Arizona Supreme Court could not ascertain whether the superior court had treated as dispositive its own failure to issue a Rule 38.1(e)-compliant notice at the time a case was placed on the inactive calendar. Id. at 119, ¶ 12, 253 P.3d at 1242. The superior court here considered and rejected the failure to comply with Rule 38.1 as an excuse for failure to prosecute.
¶18 Without doubt, the clerk of the court failed to follow Rule 38.1 and place this case on the inactive calendar. But the court did not dismiss the case pursuant to that rule because it remained on the inactive calendar for two months without a filed motion to set and certificate of readiness for trial. Rather, the court granted the defendants' Rule 41(b) request to dismiss the case for lack of prosecution. Rule 41(b) is not dependent on the clerk's compliance with Rule 38.1. Moreover, we are not aware of any authority compelling the court to permit resurrection of an abandoned lawsuit in light of the clerk's error. Despite the clerk's failure to follow Rule 38.1, the Fentons were charged with diligently prosecuting their case. Because they did not do so, the court acted within its discretion by dismissing the complaint.
4. Waiver
¶19 The Fentons finally argue that Truly Nolen waived its right to move for dismissal because it filed a notice of change of judge in May 2010. We disagree. The Fentons rely on W.T. Rawleigh Co. v. Spencer, 58 Ariz. 182, 184-85, 118 P.2d 674, 675 (1941), which held that defendants had waived their right to seek dismissal for lack of prosecution by first moving to dismiss on other grounds. According to the court, the defendants' prior motion showed a willingness to try the case on its merits. Id. at 185, 118 P.2d at 675. W.T. Rawleigh is inapplicable here as Truly Nolen's notice of change of judge does not seek substantive relief and therefore was not indicative of a willingness to try the case on its merits.
Attorneys' Fees on Appeal
¶20 The Hunts and Truly Nolen request an award of attorneys' fees incurred in this appeal pursuant to A.R.S. § 12-341.01(A) (2003). The Fentons dispute the applicability of this provision.
The Hunts and Truly Nolen also request an award of attorneys' fees incurred in the superior court. Because the superior court awarded partial fees to defendants, we assume they seek the portion not awarded by the court. Because defendants did not file a cross-appeal from the judgment, we lack jurisdiction to consider the propriety of the superior court's fee award.
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¶21 Under A.R.S. § 12-341.01(A), "[i]n any contested action arising out of contract, express or implied, the court may award the successful party reasonable attorney fees." A party who prevails through dismissal for failure to prosecute qualifies for a fee award under the statute. See Britt v. Steffen, 220 Ariz. 265, 267-68, ¶¶ 10-11, 205 P.3d 357, 359-60 (App. 2008).
¶22 To determine whether an action arises out of contract, we "will look to the nature of the action and the surrounding circumstances to determine whether the claim is one 'arising out of a contract.'" Marcus v. Fox, 150 Ariz. 333, 335, 723 P.2d 682, 684 (1986) (citation omitted). In general, a claim for breach of an express warranty sounds in contract. See Colberg v. Rellinger, 160 Ariz. 42, 51, 770 P.2d 346, 355 (App. 1988) (supp. opinion), overruled on other grounds by Flagstaff Affordable Hous. Ltd. P'ship v. Design Alliance, Inc., 223 Ariz. 320, 325, ¶ 23, 223 P.3d 664, 669 (2010). It is undisputed that the Fentons and the Hunts entered into a sales contract, and the Fentons subsequently sued the Hunts under a number of theories, including breach of an express warranty. The Fentons reiterate the claim in their Rule 26.1 Initial Disclosure Statement. The breach of an express warranty claim arises out of the sales contract and provides a basis for a fee award. See Ponderosa Plaza v. Siplast, 181 Ariz. 128, 132-33, 888 P.2d 1315, 1319-20 (App. 1993) (awarding reasonable attorneys' fees for breach of an express warranty arising out of a contract).
¶23 The Fentons fail to address the express warranty issue in their reply brief. Instead, they rely upon Haldiman v. Gosnell Dev. Corp. , 155 Ariz. 585, 748 P.2d 1209 (App. 1987). Haldiman held that the duty a real estate agent owes to a principal of full and frank disclosure "sounds mainly in tort and its existence does not depend upon a breach of the contract for sale of real estate." Id. at 591, 748 P.2d at 1215. We agree with that principle, but Haldiman did not involve a claim for breach of an express warranty. Accordingly, the Hunts may recover for attorneys' fees incurred with respect to the express warranty claim. See Smith v. City of Phoenix, 175 Ariz. 509, 516, 858 P.2d 654, 661 (App. 1992).
¶24 Truly Nolen's claim for attorneys' fees against the Fentons is more tenuous. There is no express contract between Truly Nolen and the Fentons; Truly Nolen's contract was with the Hunts. It is also difficult to discern the nature of the alleged warranties asserted against Truly Nolen. Any alleged duty to perform in a "workmanlike" manner for the Fentons' benefit was one implied in law. See Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, 16, ¶ 31, 6 P.3d 315, 321 (App. 2000). Such duties do not arise out of contract for purposes of A.R.S. § 12-341.01(A). See id. We therefore decide that Truly Nolen is not entitled to an award of attorneys' fees on appeal.
CONCLUSION
¶25 For the foregoing reasons, we affirm the superior court's dismissal of the Fentons' claim based upon their failure to diligently prosecute the case. We award the Hunts their reasonable attorneys' fees incurred in this appeal. Finally, we deny Truly Nolen's request for attorneys' fees on appeal.
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Ann A. Scott Timmer, Presiding Judge
CONCURRING:
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Patrick Irvine, Judge
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Daniel A. Barker, Judge