Opinion
1 CA-CV 24-0062
10-31-2024
J AND J PROPERTY HOLDINGS, L.C., Plaintiff/Appellee, v. VALERIE ASHTIANI, Defendant/Appellant.
Barry Becker, P.C., Phoenix By Barry C. Becker Counsel for Plaintiff/Appellee Combs and Saal, P.C., Phoenix By Christopher A. Combs, Haille Saal-Khalili Counsel for Defendant/Appellant
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Navajo County No. S0900CV202200389 The Honorable Melinda K. Hardy, Judge
Barry Becker, P.C., Phoenix By Barry C. Becker Counsel for Plaintiff/Appellee
Combs and Saal, P.C., Phoenix By Christopher A. Combs, Haille Saal-Khalili Counsel for Defendant/Appellant
Presiding Judge Cynthia J. Bailey delivered the decision of the Court, in which Judge Anni Hill Foster and Judge Angela K. Paton joined.
MEMORANDUM DECISION
BAILEY, JUDGE:
¶ 1 Valerie Ashtiani appeals the superior court's order denying her motion to set aside a default judgment for J and J Property Holdings, L.C. ("J&J"), which filed a complaint seeking to foreclose on real property in Show Low, Arizona ("the Property") to satisfy a tax lien. For the following reasons, we vacate the superior court's order denying Ashtiani's motion to set aside the default judgment as void for lack of personal jurisdiction based on insufficient service of process, and remand for further proceedings.
FACTS AND PROCEDURAL HISTORY
¶ 2 In 2016, Ashtiani's mother passed away, leaving the Property to Ashtiani. In June 2017, Ashtiani filed an Affidavit for Transfer of Title of Real Property ("Affidavit") with the Navajo County Superior Court's Clerk of Court. The Affidavit included Ashtiani's cell phone number and her then-current home address in Irvine, California ("the Irvine Home"). Ashtiani did not immediately record the Affidavit in the County Recorder's Office, however. In 2019, Ashtiani moved to her current residence in Lake Forest, California ("the Lake Forest Home").
¶ 3 From 2019 through 2022, J&J purchased tax liens from the Navajo County Treasurer for the Property's unpaid property taxes. In June 2022, Ashtiani recorded the Affidavit in the County Recorder's Office. Ashtiani did not update the Affidavit, which still showed her address as the Irvine Home.
¶ 4 In August 2022, J&J mailed a 30-day notice of intent to foreclose, see Ariz. Rev. Stat. ("A.R.S.") § 42-18202, to the three addresses it had linked to Ashtiani: (1) the Property, (2) the Irvine Home, and (3) the Lake Forest Home. All three envelopes containing the notices of intent to foreclose were returned as undeliverable.
¶ 5 In September 2022, J&J filed a complaint to foreclose on the Property. The next month, J&J unsuccessfully attempted to personally serve the complaint at the unoccupied Property and the Irvine Home, but not at the Lake Forest Home. J&J then moved to serve Ashtiani by publication, while asserting without explanation that an "online investigation" had led it to believe the best address for Ashtiani was the Irvine Home. The superior court granted the motion, and J&J conducted service by publication through a newspaper in Holbrook, Arizona.
¶ 6 In February 2023, the superior court granted J&J's motion for a default judgment, foreclosing Ashtiani's right to redeem the Property. Two months later, J&J acquired a Treasurer's Deed to the Property for the delinquent property taxes.
¶ 7 In May 2023, Ashtiani returned to the Property to find she had been locked out and J&J had foreclosed on the Property. Ashtiani moved for relief from the default judgment, see Ariz. R. Civ. P. 60(b)(4), asserting it was void due to insufficient service of process.
¶ 8 Following responsive briefing and oral argument, the superior court denied the motion and issued a final judgment pursuant to Rule 54(c), Ariz. R. Civ. P. We have jurisdiction over Ashtiani's timely appeal under A.R.S. § 12-2101(A)(2).
DISCUSSION
¶ 9 Ashtiani argues J&J's service by publication was insufficient and the superior court erred in denying her motion for relief from the judgment. We agree with Ashtiani that J&J failed to perform reasonably diligent efforts to determine her current address and service by publication was not the best means practicable under the circumstances.
I. Standard of Review and Applicable Law
¶ 10 We review the superior court's denial of a motion for relief under Rule 60(b) for an abuse of discretion. See Ezell v. Quon, 224 Ariz. 532, 536, ¶ 15 (App. 2010) (citing Rosen v. Bd. of Med. Exam'rs, 185 Ariz. 139, 143 (1995)). However, proper service is a legal question of personal jurisdiction that we review de novo. Ruffino v. Lokosky, 245 Ariz. 165, 168, ¶ 9 (App. 2018) (citing Duckstein v. Wolf, 230 Ariz. 227, 233, ¶ 19 (App. 2012); Ezell, 224 Ariz. at 536, ¶ 15). We will not set aside the superior court's factual findings unless they are clearly erroneous. Id.
¶ 11 "Proper service of process is essential for the court to have jurisdiction over the defendant." Koven v. Saberdyne Sys., Inc., 128 Ariz. 318, 321 (App. 1980) (citations omitted). A default judgment is void if it was entered without jurisdiction due to a lack of proper service of process. Id.
¶ 12 Under Rule 60(b)(4), a party may move to vacate a void judgment. A void judgment must be vacated. Ruffino, 245 Ariz. at 168-69, ¶ 10 (citing Springfield Credit Union v. Johnson, 123 Ariz. 319, 323 n.5 (1979) ("If an Arizona judgment is void for lack of jurisdiction, the court has no discretion, but must vacate the judgment." (citing Preston v. Denkins, 94 Ariz. 214, 219 (1963)))).
¶ 13 An out-of-state person may be served directly, by mail, or by publication. Ariz. R. Civ. P. 4.2(b), (c), (f). Under Rule 4.2(f)(1), a court may permit service by publication if a party shows that other service is impracticable and if:
(A) the serving party, despite reasonably diligent efforts, has been unable to determine the person's current address; or the person to be served has intentionally avoided service of process;
(B) service by publication is the best means practicable in the circumstances for providing notice to the person of the action's commencement; and
(C) the motion is supported by affidavit that sets forth the serving party's reasonably diligent efforts to serve the person.
Further, if the serving party knows the person's address, the serving party must mail the summons and complaint to the person "on or before the date of first publication." Ariz. R. Civ. P. 4.2(f)(3).
¶ 14 A serving party has not performed "reasonably diligent efforts" when they fail to attempt service at a likely address of the party to be served. See Ruffino, 245 Ariz. at 169, ¶ 13; see also Preston, 94 Ariz. at 222 ("It is not the allegation that the residence is unknown which confers jurisdiction upon service by publication but the existence of the jurisdictional fact that the residence is unknown." (citing Lown v. Miranda, 34 Ariz. 32, 3637 (1928))).
¶ 15 In Ruffino, the serving party located three possible addresses for the party to be served, and further investigation showed two of them were unlikely to be the current address. 245 Ariz. at 169, ¶ 13. Despite this fact, the serving party made no effort to serve at the third address. Id. This court concluded that this failure showed a lack of reasonably diligent efforts to ascertain the address of the party to be served. Id. at ¶ 12. The serving party's failure to attempt to communicate through available online mediums also contributed to their insufficient efforts. Id. at ¶ 14.
II. The Merits
¶ 16 To serve Ashtiani by publication, J&J had to first show it was unable to determine her current address or she was intentionally avoiding service. See Ariz. R. Civ. P. 4.2(f)(1)(A). On this record, J&J did not show it made "reasonably diligent efforts" to find her address. Moreover, J&J made no claim she was avoiding service, and nothing in the record would support such a claim. See Ruffino, 245 Ariz. at 169-70, ¶ 15 (citing cases).
¶ 17 J&J argues it made a reasonably diligent effort because when it mailed the 30-day notice of intent to foreclose to the three addresses it had linked to Ashtiani, each was returned as undeliverable, and the notice sent to the Lake Forest Home had a slightly different stamped notation than the other two returned notices, indicating the Lake Forest Home's address "was explicitly returned as invalid." The record does not support J&J's argument. And, J&J provides no support for its interpretation of the slight differences in the stamped notations, such as an affidavit from a Post Office official or a copy of Post Office rules or regulations, and we decline J&J's invitation to add the word "invalid" to what otherwise appears to be clear language. Cf. Richard M. v. Patrick M., 248 Ariz. 492, 496, ¶ 10 (App. 2020) (recognizing that when a statute is clear, we apply its plain language); Roe v. Austin, 246 Ariz. 21, 26-27, ¶ 17 (App. 2018) (applying the same principle to contract language). As Ashtiani notes, without more, the stamped notation on the letter addressed to the Lake Forest Home can be read as indicating the Post Office attempted to deliver the envelope containing the notice of intent to foreclose, and at the time, Ashtiani was not there. In any event, it does not necessarily indicate the address itself is invalid.
The notices sent to the Property and the Irvine Home came back stamped "Return To Sender; Unclaimed; Unable to Forward," and the notice sent to the Lake Forest Home came back stamped "Return To Sender; Attempted-Not Known; Unable to Forward."
¶ 18 Despite having three potentially valid addresses for Ashtiani, J&J chose to attempt personal service on only two addresses-the Property and the Irvine Home-before determining no one had lived at the Property for several years and the Irvine Home was clearly a "[b]ad address." J&J then sought to serve Ashtiani by publication, despite never attempting personal service or service by mail at the Lake Forest Home and-outside of a general statement that it had conducted an "online investigation"- never explaining its "belief" that the best address for Ashtiani was the Irvine Home.
¶ 19 Moreover, J&J never tried to determine whether the Lake Forest home was a "good" address by attempting to call Ashtiani at her cell phone number, which J&J had in its possession, or presumably to contact Ashtiani by any other means, such as readily available online sources. Nevertheless, in denying Ashtiani's motion for relief from the default judgment, the superior court attempted to distinguish this court's opinion in Ruffino from this case by reasoning that, "in this case, there is no previous communication between the parties, so there's really no way for [J&J] to know if that is a valid phone number or not." The superior court's analysis simply yields a distinction without a difference. Whether the parties had previously communicated is not determinative, and J&J could have discovered whether Ashtiani's phone number was valid by simply calling the number. On this record, J&J did not make reasonably diligent efforts because it did not attempt to serve a known, verifiable address for a home owned by Ashtiani-the Lake Forest Home-or to otherwise locate Ashtiani, and publication was not the best means of service available under the circumstances.
The cell phone number listed on the top of the first page of the Affidavit is still Ashtiani's cell phone number.
¶ 20 Even if J&J had proven it made reasonably diligent efforts to learn Ashtiani's address, Rule 4.2(f)(1)(B) and due process required that service by publication be the best means practicable to provide notice to Ashtiani. As with this court's analysis in Ruffino, we agree that in an increasingly digital society, modern communication methods were more likely to give Ashtiani notice of a suit than publication in a newspaper distributed in a rural area in an adjoining state. See 245 Ariz. at 170, ¶ 16 (citations omitted); see also Ritchie v. Salvatore Gatto Partners, L.P., 223 Ariz. 304, 307, ¶ 8 (App. 2010) ("It is axiomatic that actual notice via publication is less certain ...." (citations omitted)).
¶ 21 "Availability of alternative means of service is a factor a court must consider when determining if publication was the best means practicable, and a plaintiff serving by publication should be prepared to explain why alternative service would be impracticable." Ruffino, 245 Ariz. at 170, ¶ 17. On appeal, J&J makes no reasoned argument that service by publication was in fact the best means to reach Ashtiani. And it appears from the record that J&J did not mail a copy of the summons and complaint to the Lake Forest Home on or before the date of first publication, see Ariz. R. Civ. P. 4.2(f)(3), which is further evidence J&J did not make a serious effort to apprise Ashtiani of the suit before seeking and obtaining a default judgment, see Ruffino, 245 Ariz. at 170, ¶ 17. In this case, service by publication was insufficient and not the best means practicable under the circumstances. III. Attorneys' Fees and Costs on Appeal
¶ 22 We deny Ashtiani's attorneys' fees request under A.R.S. § 12349. We also deny the parties' requests for fees under Rule 21, ARCAP, which does not provide a substantive basis for a fee award. See, e.g., Ezell, 224 Ariz. at 539, ¶ 31. As the prevailing party, Ashtiani is awarded her taxable costs on appeal upon compliance with ARCAP 21.
CONCLUSION
¶ 23 The superior court erred in declining to vacate the default judgment because it lacked personal jurisdiction over Ashtiani due to insufficient service of process. Accordingly, we vacate the court's order denying Ashtiani's motion for relief from the judgment and remand for further proceedings consistent with this decision.