Opinion
No. 1 CA-CV 13-0439
10-21-2014
KERN INVESTORS, Plaintiff/Appellant, v. DENNIS LINK and DENISE LINK, husband and wife dba GARAGEMASTER; AARON J. LINK and JANE DOE LINK dba GARAGEMASTER, Defendants/Appellees.
COUNSEL Alvarez & Gilbert, Scottsdale By John T. Gilbert, Steven G. Ford Counsel for Plaintiff/Appellant Law Office of Charles W. Bassett, PLLC, Chandler By Charles W. Bassett Counsel for Defendants/Appellees
NOTICE: NOT FOR PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED. Appeal from the Superior Court in Maricopa County
No. CV2008-054081
The Honorable Alfred M. Fenzel, Judge
VACATED AND REMANDED
COUNSEL Alvarez & Gilbert, Scottsdale
By John T. Gilbert, Steven G. Ford
Counsel for Plaintiff/Appellant
Law Office of Charles W. Bassett, PLLC, Chandler
By Charles W. Bassett
Counsel for Defendants/Appellees
MEMORANDUM DECISION
Judge Samuel A. Thumma delivered the decision of the Court, in which Presiding Judge Margaret H. Downie and Judge Andrew W. Gould joined. THUMMA, Judge:
¶1 Kern Investors Inc. (Kern) challenges the superior court's order granting a motion to enforce a settlement agreement in favor of Dennis Link, Denise Link, Aaron Link and Link Industries dba Garagemaster (the Links), finding Kern waived its right to enforce a stipulated judgment. Because the parties did not provide the superior court an appropriate evidentiary record to consider, and because the issue of waiver could not be resolved on legal arguments alone, the order and resulting judgment are vacated and this matter is remanded for further proceedings.
FACTS AND PROCEDURAL HISTORY
¶2 In 2008, the Links defaulted on their obligations under a commercial lease with Kern. After Kern sued the Links for breach of the lease and conversion, the parties negotiated and then signed a written settlement agreement. The settlement agreement required the Links to pay Kern a total of $25,000 over a period of 25 months in $1,000 monthly payments in exchange for Kern's agreement not to execute on a stipulated judgment of $67,412 plus costs.
¶3 The Links made periodic payments for a time on the balance owed under the settlement agreement. In February 2011, the Links stopped making payments. In April 2011, Kern sent a written default notice, which stated that the Links were $4,000 in arrears and that if the Links did not pay the delinquent amount and a $150 late fee within 10 calendar days, Kern would be entitled to immediately execute upon the stipulated judgment pursuant to the settlement agreement. Although the Links received the default notice, they did not timely cure.
¶4 Kern then began collection efforts on the outstanding amount of the stipulated judgment and obtained a garnishment order in July 2011. Apparently, the Links made some additional payments after receiving the default notice, including a check with a "paid in full" notation that Kern rejected.
¶5 In May 2012, Kern obtained another garnishment order and sought to satisfy the stipulated judgment by charging the Links' ownership interests in another entity. In response, the Links filed a motion to enforce the settlement agreement, arguing Kern had waived its right to enforce the stipulated judgment. As relevant here, the motion to enforce attached four exhibits, including a "Wells Fargo Online Bill Payment schedule with indicated memo line notations" that was not verified, notarized or substantiated by any foundational support. Kern opposed the motion to enforce arguing, among other things, that the Links "have not and cannot identify any facts" showing a waiver by Kern, that "[n]o factual or legal basis exists for [the Links'] request" and that "no facts exist to support the notion that [Kern] impliedly waived its right to collect the full [stipulated j]udgment." The Links filed a reply in further support of the motion to enforce.
¶6 The superior court considered the filings without oral argument and granted the Links' motion to enforce "[f]or the reasons stated by" the Links. The resulting judgment states Kern "waived the right to enforce the [stipulated j]udgment, and must accept final payment in accordance with the settlement agreement amount." The judgment also awarded the Links attorneys' fees "under the express terms of the settlement agreement." From Kern's timely appeal of that judgment, this court has jurisdiction pursuant to Arizona Revised Statutes (A.R.S.) sections 12-2101(A)(1) and 12-120.21(A)(1) (2014).
After the entry of judgment, Kern filed a motion to reconsider, the Links filed a response and the superior court denied the motion, none of which alters this court's jurisdiction.
Absent material revisions after the relevant dates, statutes and rules cited refer to the current version unless otherwise indicated.
DISCUSSION
¶7 In discussing the appropriate standard of review, the parties cite cases for the propositions that a decision addressing post-judgment relief is typically reviewed for an abuse of discretion, that issues of law are reviewed de novo and that the interpretation of a settlement agreement is an issue of law. The Links, however, cited no procedural rule upon which they relied in their motion to enforce the settlement agreement. This court previously has found that, when a superior court grants a motion to enforce a settlement agreement, it effectively grants summary judgment regarding the existence and terms of the agreement and, as applicable here, whether those terms have been waived. See Canyon Contracting Co. v. Tohono O'Odham Hous. Auth., 172 Ariz. 389, 390, 837 P.2d 750, 751 (App. 1992) (finding a superior court granted summary judgment regarding the existence and terms of an alleged settlement agreement when it held no evidentiary hearing and based its ruling on counsels' arguments and filings). This court reviews the grant of a motion for summary judgment de novo. Andrews v. Blake, 205 Ariz. 236, 240 ¶ 12, 69 P.3d 7, 11 (2003).
¶8 The Links argue that the superior court "had more than enough reason and evidence before it" to support the order and judgment challenged on appeal. Without the attachments to the Links' motion to enforce the settlement agreement, however, it is clear that the motion could not have been granted. Because, in essence, that motion sought entry of summary judgment, the Links were required to "demonstrate by admissible evidence that [they had] met [their] burden of proof and that [they are] entitled to judgment as a matter of law." Wells Fargo Bank, N.A. v. Allan, 231 Ariz. 209, 211 ¶ 1, 292 P.3d 195, 196 (App. 2012) (emphasis added). Yet, the attachments to the Links' motion were not verified, notarized or substantiated by any foundational support. Kern noted this evidentiary gap before the superior court, arguing "[n]o factual or legal basis exists for [the Links'] request." Accordingly, the Links offered no admissible evidence that the superior court properly could have considered in addressing the motion to enforce the settlement agreement. See, e.g., Ariz. R. Civ. P. 56(e); Ariz. R. Evid. 901, 902.
¶9 Apart from this evidentiary gap, Kern disputed that it had waived any rights under the settlement agreement and disputed that the Links were entitled to enforce the terms of the settlement agreement. Indeed, Kern argued that "under general waiver law, no waiver of [Kern's] rights under the [s]ettlement [a]greement occurred" and that Kern "did not waive, compromise, or diminish its right to the full [stipulated j]udgment amount, and [the Links'] unsupported arguments otherwise fail." In this case, the dispute about whether terms of the settlement agreement had been waived could not be resolved on legal argument alone, but instead required an evidentiary record. See, e.g., Brake Masters Sys., Inc. v. Gabbay, 206 Ariz. 360, 365 ¶¶ 13-14, 78 P.3d 1081, 1086 (App. 2003) (citing cases from various jurisdictions).
¶10 Finally, the fact-specific nature of the Links' claim of waiver underscores the need for a factual record that the superior court could consider. Waiver can either be express or implied by conduct. See Am. Cont'l Life Ins. Co. v. Ranier Constr. Co., 125 Ariz. 53, 55, 607 P.2d 372, 374 (1980) (citations omitted). The Links do not argue express waiver, and implied waiver typically presents a fact-based issue to be decided on an evidentiary record rather than legal argument alone. See, e.g., Home Owners' Loan Corp. v. Bank of Ariz., 54 Ariz. 146, 156, 94 P.2d 437, 441 (1939) ("If there is such a waiver, it must be inferred from the facts and circumstances."); Am. Cont'l Life Ins. Co., 125 Ariz. at 55, 607 P.2d at 374 ("Waiver by conduct must be established by evidence of acts inconsistent with an intent to assert the right."). Because the motion to enforce the settlement agreement was not properly supported by a factual record, the superior court could not properly resolve the fact-intensive waiver argument. Accordingly, the grant of the motion to enforce the settlement agreement, and resulting judgment based on a waiver finding, cannot stand. Given that conclusion, the Links are no longer the prevailing parties and the attorneys' fee award similarly cannot stand.
Given that this resolution is necessitated by the lack of an evidentiary record presented to the superior court, this court need not (and expressly does not) address the numerous other arguments presented by the parties on appeal.
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¶11 Both the Links and Kern request attorneys' fees and costs on appeal. Because the Links did not prevail on appeal, their request is denied. In the exercise of this court's discretion, Kern's request for attorneys' fees on appeal is denied without prejudice to its reassertion at the conclusion of the case. Kern is awarded its taxable costs on appeal, conditioned on compliance with Arizona Rule of Civil Appellate Procedure 21.
CONCLUSION
¶ 12 The superior court's grant of the Links' motion to enforce the settlement agreement and the resulting judgment are vacated and this matter is remanded for further proceedings.