Opinion
2 CA-CV 2021-0045
10-29-2021
Advanced Property Tax Liens, Inc., an Arizona corporation, Plaintiff/Appellee, v. Coquina Property Investments, LLC, an Arizona limited liability company; Eve Industries, LLC, an Arizona limited liability company;Pinal County Treasurer, an Arizona political subdivision, Defendants/Appellants.
Barry Becker P.C., Phoenix By Barry C. Becker Counsel for Plaintiff/Appellee Hymson Goldstein Pantiliat &Lohr PLLC, Scottsdale By John L. Lohr Jr. and Jackson D. Hendrix Counsel for Defendants/Appellants Coquina Property Investments LLC and Eve Industries LLC Kent Volkmer, Pinal County Attorney By Kevin Costello, Deputy County Attorney, Florence Counsel for Defendant/Appellant Pinal County Treasurer
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Pinal County No. S1100CV202000659 The Honorable Stephen F. McCarville, Judge
Barry Becker P.C., Phoenix By Barry C. Becker Counsel for Plaintiff/Appellee
Hymson Goldstein Pantiliat &Lohr PLLC, Scottsdale By John L. Lohr Jr. and Jackson D. Hendrix Counsel for Defendants/Appellants Coquina Property Investments LLC and Eve Industries LLC
Kent Volkmer, Pinal County Attorney By Kevin Costello, Deputy County Attorney, Florence Counsel for Defendant/Appellant Pinal County Treasurer
Vice Chief Judge Staring authored the decision of the Court, in which Presiding Judge Espinosa and Judge Eckerstrom concurred.
MEMORANDUM DECISION
STARING, Vice Chief Judge
¶1 Eve Industries LLC appeals from the trial court's denial of its motion to set aside the default judgment entered against it. For the following reasons, we reverse and remand.
Eve and Coquina Property Investments LLC "share the same ownership and management structures." Thus, we refer to Eve alone when discussing matters related to both parties.
Factual and Procedural Background
¶2 We view the facts in the light most favorable to sustaining the trial court's order. See MacLean v. Newgioco Grp., Inc., 251 Ariz. 31, ¶ 8 (App. 2021). In May 2020, Advanced Property Tax Liens Inc. filed a complaint against Eve seeking to foreclose on a property in Casa Grande on which Advanced had obtained a tax lien. Thereafter, Advanced unsuccessfully attempted service at the addresses the Arizona Corporation Commission (ACC) identified as belonging to Eve's manager and statutory agent. The summons and complaint were ultimately delivered to the ACC.
¶3 In July, Advanced applied for entry of default, arguing Eve had "failed to appear and answer in the time allowed by law," and, approximately two months later, the trial court entered default judgment against Eve. Eve subsequently moved to set aside the default pursuant to Rule 60(b), Ariz. R. Civ. P., arguing Advanced had failed to provide it with the application for default pursuant to Rule 55(a)(3)(A), Ariz. R. Civ. P., "the default judgment [was] void for ineffective service" of process, "good cause exist[ed] to set aside the entry of default pursuant to Rule 55(c)," and relief was warranted under Rule 60(b)(1) and (6). In its ruling denying Eve's motion, the court concluded Eve had not demonstrated it had a meritorious defense, further stating Eve had been "properly served," the court "had personal jurisdiction over" it, and "entry of Judgment was proper." This appeal followed. We have jurisdiction pursuant to A.R.S. § 12-2101(A)(2) . See Wyckoff v. Mogollon Health All., 232 Ariz. 588, ¶ 4 (App. 2013).
Although an appeal under this subsection must generally "raise different issues than those that would be raised by appealing the underlying judgment," In re Marriage of Dorman, 198 Ariz. 298, ¶ 3 (App. 2000), in this instance, we agree with appellant that the denial of a motion to set aside "is appealable even if it raises issues that could have been litigated via an appeal of the judgment," Ryan v. Rosenfeld, 395 P.3d 689, 69091 & 690 (Cal. 2017) (addressing motion to set aside judgment that plaintiff abandoned claim); see Kotterman v. Killian, 193 Ariz. 273, ¶ 68 (1999) (judicial decisions from other states, although not controlling, "may prove useful").
Discussion
¶4 We generally review a trial court's denial of a motion to set aside for an abuse of discretion, but we review de novo a court's denial of a motion to vacate an allegedly void judgment under Rule 60(b)(4). See Ruffino v. Lokosky, 245 Ariz. 165, ¶ 9 (App. 2018); Laveen Meadows Homeowners Ass'n v. Mejia, 249 Ariz. 81, ¶ 10 (App. 2020). Rule 60(b) provides that a court may relieve a party from a judgment based on "mistake, inadvertence, surprise, or excusable neglect" or "any other reason justifying relief," or if the judgment is void. Usually, "[a] party seeking to set aside a default judgment must show that it sought relief from the judgment promptly, that the failure to timely answer the complaint was excusable under Rule 60([b]), and that it had a meritorious defense to the action." BYS Inc. v. Smoudi, 228 Ariz. 573, ¶ 14 (App. 2012). Further, under Rule 60(b)(6), commonly known as the catchall provision, the movant must show "extraordinary circumstances of hardship or injustice justifying relief," "a reason for setting aside the judgment other than" those enumerated in Rule 60(b), and a meritorious defense. Skydive Ariz., Inc. v. Hogue, 238 Ariz. 357, ¶ 25 (App. 2015) (quoting Hilgeman v. Am. Mortg. Sec., Inc., 196 Ariz. 215, ¶ 15 (App. 2000)); see Gonzalez v. Nguyen, 243 Ariz. 531, ¶ 12 (2018). However, because a court must vacate a void judgment, the party seeking relief from such judgment need only demonstrate it is void. Ruffino, 245 Ariz. 165, ¶ 10 &n.5 (App. 2018); see Ariz. R. Civ. P. 60(b)(4).
Although Smoudi discusses Rule 60(c), the rule has since been amended, and the pertinent requirements are now found in Rule 60(b). See Ariz. Sup. Ct. Order R-16-0010 (Sept. 2, 2016).
¶5 Eve argues on appeal that the default judgment was void because Advanced failed to "mail the application for default to [Eve's] known whereabouts." See Ariz. R. Civ. P. 55(a)(3)(A) ("If the party requesting the entry of default knows the whereabouts of the party claimed to be in default, a copy of the application for entry of default must be mailed to the party claimed to be in default ...."). Specifically, it claims Advanced "knew of four mailing addresses for [Eve] but failed to mail the Application for Default to any of these," and instead mailed the application for default to the ACC. Advanced, however, responds that because the ACC became Eve's statutory agent pursuant to A.R.S. § 29-606, Eve "properly received the Application" for default. See 2006 Ariz. Sess. Laws, ch. 320, § 33. Moreover, it claims there was no reason it should have recognized any of the suggested addresses as Eve's "whereabouts."
¶6 We find Ruiz v. Lopez, 225 Ariz. 217 (App. 2010), particularly instructive. There, Ruiz challenged the trial court's order setting aside its default judgment entered against Lopez, in which it concluded Ruiz had not complied with Rule 55's notice requirement. Id. ¶¶ 1-2, 6. Ruiz argued that because Lopez's place of employment did not constitute her "whereabouts," Ruiz was not required to send the application for default there, and that she had satisfied Rule 55 by instead mailing the application to Lopez's apartment complex, despite her failure to include an apartment number in the mailing address. Id. ¶ 11. We concluded:
Ruiz discusses Rule 55(a)(1)(i). However, Rule 55 has since been amended, and the pertinent requirements are now found in Rule 55(a)(3)(A). See Ariz. Sup. Ct. Order R-16-0010.
[T]he word "whereabouts" is defined as "the place or general locality where a person or thing is." Although this definition refers to both a "place" and a "general locality," in the context of Rule 55[], the "whereabouts" of the defaulting party means a particular or specific "place" where that person can be found or located, not a "general area or locale" where she might possibly be found. The record here supports the trial court's finding that [Ruiz] could have mailed the notice to [Lopez]'s place
of employment because the notice, like the summons and complaint, was likely to have reached her there.Id. ¶ 13 (citations omitted) (quoting Webster's Ninth New Collegiate Dictionary 1342 (1988)). We further determined the application "was unlikely to reach" Lopez at her apartment complex, thus, sending it there without further specificity "was tantamount to sending no notice at all and did not meet" Rule 55's requirements. Id. ¶ 15.
¶7 Here, the Pinal County Assessor listed a Post Office Box (PO Box) in Amado as Eve's "tax bill mailing address." Thus, it is likely that Eve could have been found or located there, and that address could therefore serve as its "whereabouts." Moreover, approximately eight months before Advanced applied for default, it sent notice of its intent to foreclose on the property at issue to that PO Box and received a signed return receipt confirming delivery of this notice. Thus, the PO Box qualified as Eve's known whereabouts for purposes of Rule 55(a)(3)(A). See id. ¶ 15 ("[A] party should receive the best notice practicable under the circumstances ....").
Advanced claims, without citation to the record, that although it had mailed several tax bills to the PO Box, the taxes were not paid, and, therefore, either "[t]he P.O. Box [was] a proper mailing address for [Eve] but [it] chose not to pay the property taxes," or it "was no longer a proper mailing address for [Eve] and the current user of the P.O. Box was simply discarding the notices." The record before us, however, supports the conclusion that Eve could have been found or located via the PO Box.
¶8 Because Advanced knew Eve's actual whereabouts, the ACC did not qualify as Eve's "whereabouts" for purposes of Rule 55. At the time Advanced filed its application for default, § 29-606(B) provided that if an LLC "fail[ed] to appoint or maintain a statutory agent at the address shown on the records of the commission," the ACC, as an agent of the LLC, could be served with any notice and was required to "immediately cause one of the copies of the . . . notice . . . to be forwarded . . . to the limited liability company at its known place of business." 2006 Ariz. Sess. Laws, ch. 320, § 33. When service was attempted at the ACC's listed address for Eve's statutory agent, the process server could not locate the address and "verified with Google and The Maricopa County Assessor" that the "address d[id] not exist." Thus, § 29-606 applied. However, the ACC's records only showed two addresses: the aforementioned address that purportedly did not exist, and the address of a law firm that claimed it was "not the agent and . . . not authorized to accept . . . service" on Eve's behalf. Therefore, similar to Ruiz's mailing of the application for default to Lopez's apartment complex with no unit number specified, under the circumstances present here, Advanced's notice was not likely to reach Eve after being sent to the ACC. See Ruiz, 225 Ariz. 217, ¶ 15.
¶9 Rule 55(a)(3) requires notice to be provided "[f]or any default entered" under Rule 55. And, "[w]ithout such notice, . . . the entry of default is ineffective, and the default judgment is void." Id. ¶¶ 18, 21. Because Advanced did not provide notice in compliance with Rule 55, the default judgment is void, and "[t]he trial court therefore was required to set it aside under Rule 60([b])(4)." Id. ¶ 21.
Given our conclusion that Advanced knew of at least one address that qualified as Eve's whereabouts, we need not discuss the other addresses Eve relies on. Moreover, we need not address Eve's other arguments as to why the trial court erred in denying its motion.
Disposition
¶10 For the foregoing reasons, we reverse the trial court's order denying Eve's motion to set aside the default judgment and remand for proceedings consistent with this decision.