Opinion
No. 2 CA-CV 2018-0182
07-29-2019
NILES LIPIN, Plaintiff/Appellant, v. THE ESTATE OF ROBERT W. WALKER AND EVE F. WALKER, Defendants/Appellees.
COUNSEL The Potter Law Firm PLLC, Avondale By Trail Potter Counsel for Plaintiff/Appellant Fennemore Craig P.C., Phoenix By David A. Timchak Counsel for Defendants/Appellees
THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
NOT FOR PUBLICATION
See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f). Appeal from the Superior Court in Pinal County
No. CV201700890
The Honorable Brenda E. Oldham, Judge
The Honorable Stephen F. McCarville, Judge
AFFIRMED
COUNSEL The Potter Law Firm PLLC, Avondale
By Trail Potter
Counsel for Plaintiff/Appellant Fennemore Craig P.C., Phoenix
By David A. Timchak
Counsel for Defendants/Appellees
MEMORANDUM DECISION
Chief Judge Vásquez authored the decision of the Court, in which Presiding Judge Brearcliffe and Judge Eppich concurred. VÁSQUEZ, Chief Judge:
¶1 In this action for declaratory relief, Niles Lipin appeals the trial court's order granting the Estate of Robert Walker and Eve Walker's motion for judgment on the pleadings and awarding the Walkers attorney fees and costs. Lipin raises two issues on appeal. First, he argues the court erred in concluding his claim that the Walkers had failed to timely renew their judgment against him was precluded under the doctrine of claim preclusion. Second, Lipin contends the court erred in awarding attorney fees and costs to the Walkers as a sanction against him and his counsel. For the reasons stated below, we affirm.
We use the more modern terms "claim preclusion" and "issue preclusion" instead of "res judicata" and "collateral estoppel," respectively. See Circle K Corp. v. Indus. Comm'n, 179 Ariz. 422, 425 (App. 1993); see also In re Gen. Adjudication of All Rights to Use Water In Gila River Sys. & Source, 212 Ariz. 64, ¶ 14 & n.8 (2006).
Lipin's counsel failed to appear at oral argument before this court. After we set oral argument, Lipin's counsel filed a notice of waiver of oral argument, indicating that he "submits this appeal on the record." This court, having exercised its discretion and granted the Walkers' request for oral argument, consistent with Rule 18, Ariz. R. Civ. App. P., then sent a second order indicating that oral argument would proceed as scheduled.
Although neither this court's orders nor Rule 18 explicitly required counsel to appear for oral argument, the necessity of their presence should be understood. Our rules, and consequently our setting of oral argument, are intended "to achieve the just, speedy, and inexpensive resolution of appeals." Ariz. R. Civ. App. P. 1(c). Although the failure to file an answering brief is generally treated as a confession of error, we are aware of no authority holding that the failure to appear for oral argument constitutes an abandonment of the appeal. Cf. Turf Irrigation & Waterworks Supply v. Mountain States Tel. & Tel. Co., 24 Ariz. App. 537, 540-41 (1975) (failure to file reply brief leaves court without assistance in deciding difficult issues upon which appellant's hopes for reversal depend). Counsel is, however, cautioned against such conduct in the future.
Factual and Procedural Background
¶2 In reviewing the grant of a motion for judgment on the pleadings, we accept as true the well-pled factual allegations of the complaint. Shaw v. CTVT Motors, Inc., 232 Ariz. 30, ¶ 8 (App. 2013). The relevant facts here, however, are undisputed. On May 21, 2010, the Walkers obtained a monetary judgment against Lipin as part of a Pinal County civil lawsuit alleging fraud.
The May 2010 judgment was the last of three judgments obtained by the Walkers against Lipin and his affiliated entities in the Pinal County case. We refer to the judgments collectively throughout this decision.
¶3 On September 16, 2011, Lipin filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. The Walkers filed an adversary proceeding and moved for summary judgment, arguing that their fraud judgment against Lipin was non-dischargeable in bankruptcy. In response, Lipin conceded the Walkers had obtained a judgment against him but argued they had failed to renew the judgment within five years of May 21, 2010, as required. He therefore reasoned that, because the time to renew was not tolled by his filing for bankruptcy, the Walkers lacked an enforceable claim and he was entitled to summary judgment.
¶4 After supplemental briefing and oral argument, the bankruptcy court granted the Walkers' motion for summary judgment and denied Lipin's. The court found, in part, that the Walkers had a valid judgment and that the time in which to renew the judgment was tolled during the automatic bankruptcy stay and had not yet expired. The court subsequently granted Lipin's motion to close the bankruptcy case as of March 28, 2017, providing that the case would be reopened for Lipin to file a final report verifying completion of his bankruptcy-plan payments.
Lipin voluntarily dismissed his appeal of the bankruptcy court's ruling.
¶5 On May 11, 2017, Lipin filed the current civil action in Pinal County Superior Court, requesting a declaratory judgment that: (1) "there is no suspension of time for judgment renewal under Arizona law," (2) "no judgment renewal affidavit or action to renew was timely filed by [the Walkers]," (3) the Walkers' judgment "has expired and is no longer enforceable," and (4) in the event the bankruptcy proceedings tolled the time to renew the judgment, the Walkers "had no more than thirty (30) days after the case was closed on March 28, 2017 and notice given, to file a renewal action and failed to do so," making the judgment "expired and unenforceable."
¶6 The Walkers filed a motion for judgment on the pleadings, asserting Lipin's complaint failed to state a claim for relief. They reasoned that Lipin was barred by the doctrines of claim preclusion and issue preclusion from arguing the judgment had not been timely renewed because the bankruptcy court had entered a final judgment that the Walkers' "time to renew the[] judgment by action on the judgment . . . is tolled for the entire time period that the [Walkers are] precluded from enforcing the judgment" during the bankruptcy stay. The Walkers further asserted, even disregarding the bankruptcy court's ruling, they were entitled to judgment as a matter of law because the time had not yet expired for them to renew by filing an action on the judgment.
¶7 After hearing oral argument, the trial court granted the Walkers' motion in an under-advisement ruling. The court agreed with the Walkers that the relief sought by Lipin was barred by the doctrines of claim preclusion and issue preclusion. In addition, the court determined that Lipin's claims failed as a matter of law. Accordingly, the court ordered Lipin's complaint dismissed. In addition, the court found Lipin "brought this action in bad faith and without probable cause." As such, it awarded the Walkers attorney fees and costs as a sanction, naming Lipin and his counsel jointly and severally liable. The court directed the Walkers to submit a form of judgment and an application for attorney fees and costs.
¶8 After the Walkers lodged a form of judgment, Lipin filed an objection, arguing, in part, that the "proposed order . . . wrongly asserts that the same precise issues raised by this action for declaratory relief were actually litigated in the . . . bankruptcy court." The Walkers filed a motion to strike Lipin's objection, claiming it was "nothing more than another attempt to argue the substance of the issue after briefing and oral argument ha[d] occurred." The trial court granted the motion to strike and awarded the Walkers attorney fees and costs associated with filing their motion. The Walkers then filed an application for attorney fees and costs, to which Lipin also objected, raising several issues related to the merits of the award, as well as the amount requested. The court, however, disregarded Lipin's substantive arguments, finding that it could not "address the basis for the award, only the amount," because Lipin "did not seek a motion for reconsideration prior to filing [his] Notice of Appeal cannot." After resolving the amount, the court entered a final judgment, and Lipin appealed. We have jurisdiction pursuant to A.R.S. §§ 12-120.21, 12-2101(A)(1).
Lipin filed a premature notice of appeal on June 25, 2018, challenging the trial court's order granting the Walkers' motion for judgment on the pleadings, which included the Walkers' request for attorney fees. In that order, the trial court directed the Walkers to submit an application for fees and costs and a proposed judgment. Final judgment was not entered until September 21, 2018.
Standard of Review
¶9 A motion for judgment on the pleadings under Rule 12(c), Ariz. R. Civ. P., "tests the sufficiency of the complaint, and judgment should be entered for the defendant if the complaint fails to state a claim for relief." Giles v. Hill Lewis Marce, 195 Ariz. 358, ¶ 2 (App. 1999). The motion should be granted only "if the moving party is clearly entitled to judgment." In re 15453 N. Second Ave., 185 Ariz. 35, 36 n.1 (App. 1996). We will affirm the trial court's ruling if legally correct for any reason. Muscat by Berman v. Creative Innervisions LLC, 244 Ariz. 194, ¶ 7 (App. 2017).
Claim Preclusion
¶10 Lipin argues the trial court erred by granting the Walkers' motion for judgment on the pleadings. He challenges each of the court's conclusions therein—that his claims were barred by the doctrines of claim preclusion and issue preclusion and failed as a matter of law. In addressing Lipin's arguments, it is necessary to first review the relevant statutes and case law and chronicle the pertinent filings and hearings in both the adversary proceeding in the bankruptcy court and the current declaratory-relief action.
¶11 "Arizona law allows a judgment creditor to execute on a judgment within five years after entry of the judgment." In re Smith, 209 Ariz. 343, ¶ 10 (2004); see A.R.S. § 12-1551(A). To execute on the judgment after five years, the creditor must renew the judgment within ninety days before the end of that five-year period. Smith, 209 Ariz. 343, ¶ 10. There are two avenues for renewing the judgment—renewal by action under A.R.S. § 12-1611 and renewal by affidavit under A.R.S. § 12-1612. See Hall v. World Sav. & Loan Ass'n, 189 Ariz. 495, 502 (App. 1997) ("A judgment may be renewed either by filing a lawsuit thereon or by filing an affidavit of renewal with the clerk of the appropriate court."). "The renewal statutes are designed to notify interested parties of 'the existence and continued viability of the judgment.'" Fid. Nat'l Fin. Inc. v. Friedman, 225 Ariz. 307, ¶ 19 (2010) (quoting Smith, 209 Ariz. 343, ¶ 10). "The enforcement period may be tolled and extended, however, during the time a creditor is precluded from attempting to collect on the judgment." Harle v. Williams, 246 Ariz. 330, ¶ 5 (App. 2019).
In August 2018, the Arizona legislature amended § 12-1551(A) and the related statutes to give judgment creditors ten years to execute on judgments. Compare 2018 Ariz. Sess. Laws, ch. 36, § 1, with 2013 Ariz. Sess. Laws, ch. 79, § 1. We refer to the prior version throughout this decision.
¶12 "Under the bankruptcy laws, a petition for bankruptcy operates to stay any action to 'create, perfect, or enforce' liens or judgments." Smith, 209 Ariz. 343, ¶ 11 (quoting 11 U.S.C. § 362(a)). "Actions to collect from the debtor may be filed or reinstituted either '30 days after notice of the termination or expiration of the stay,' or after a period set by 'applicable nonbankruptcy law,' as extended by 'any suspension of such period' that results from the bankruptcy proceedings." Id. (quoting 11 U.S.C. § 108(c)(1), (2)). Section 12-1551 has been deemed an "'applicable nonbankruptcy law' setting the time for 'commencing or continuing a civil action.'" Id. (quoting In re Smith, 293 B.R. 220, 223 (B.A.P. 9th Cir. 2003)).
¶13 Thus, "[u]nder Arizona law, enforcement is stayed and the time in which to enforce the judgment is tolled during the pendency of bankruptcy actions." Id. ¶ 12. However, "the time to file an affidavit of renewal of judgment is not changed or extended by the pendency of a bankruptcy case." Id. ¶ 15. Our supreme court has provided the following example: "[A] creditor with a judgment entered on January 1, 2000, who was prevented by [a] . . . bankruptcy stay from executing on the judgment until January 1, 2004, could nonetheless file a renewal affidavit within the ninety days preceding January 1, 2005." Id. ¶ 14. "But even if an affidavit were not filed, the time in which to enforce the judgment would be tolled and extended through January 1, 2009, to accommodate the time the creditor was precluded by the bond or stay from attempting to collect on the judgment." Id.
¶14 Turning to the issues raised in the bankruptcy-court proceedings, as part of their motion for summary judgment, the Walkers argued that their May 2010 judgment against Lipin was non-dischargeable under 11 U.S.C. § 523(a)(2). Lipin, however, responded that the Walkers had failed to renew their judgment and it had abated because "the duty to file a renewal affidavit . . . is not tolled by an enforcement stay such as 11 U.S.C. § 362." As part of his argument, Lipin cited § 12-1611, § 12-1612, and Smith, 209 Ariz. 343. Despite acknowledging the differences between § 12-1611 and § 12-1612, Lipin focused his argument on the Walkers' failure to file an affidavit of renewal.
¶15 At a hearing in September 2016, the bankruptcy court pointed out that it thought § 12-1611 applied, such that the Walkers' "judgment can be renewed by action." The court, however, was unclear whether the adversary proceeding would constitute an "action" renewing the judgment pursuant to § 12-1611. Because the parties had not addressed this issue in their motions, the court directed them to submit supplemental briefs. In their brief, the Walkers argued that the filing of their adversary proceeding was "the 'action' that was needed, according to . . . § 12-1611, to so renew." Lipin countered that "an adversary proceeding to determine dischargeability is not a common law 'action brought on [a judgment]' to renew it, and th[e] bankruptcy court is not the proper court authorized to renew a state court judgment."
¶16 At the next hearing in December 2016, after oral argument, the bankruptcy court determined that the adversary proceeding did not constitute a renewal by action on the judgment under § 12-1611. It focused on the renewal statutes' purpose of notice and found that the filing of the adversary proceeding would not adequately alert third parties. However, the court concluded that "the time period to file an action to renew this judgment" pursuant to § 12-1611 "has been tolled under applicable law." Relying on Smith, 209 Ariz. 343, ¶¶ 12-15, the court observed, although the "time to [file] a renewal affidavit [under § 12-1612] was not tolled by a bankruptcy filing, the [Arizona Supreme Court] noted that tolling would apply regarding the time to file an action" under § 12-1611. The court further explained that the automatic bankruptcy stay "has not lifted" and, pursuant to 11 U.S.C. § 362(c)(2)(C), will continue "until the earliest of the time a discharge is granted or denied." At that point, the court noted that under 11 U.S.C. § 108(c) the time in which to file an action on the judgment "runs from the latter of when the state law period ends or 30 days af[te]r the stay terminates." Because Lipin had not filed an application for discharge, the court reasoned that the Walkers "still have time to file an action to renew the judgment." After also finding that the May 2010 judgment had preclusive effect under the doctrine of issue preclusion, the court granted the Walkers' motion for summary judgment and denied Lipin's cross-motion.
The bankruptcy court distinguished Lipin's bankruptcy proceeding from that of M.P., Lipin's partner who was also a named defendant in the May 2010 judgment. With regard to M.P., the court explained:
[M.P.]'s petition date was September 16th, 2011. The time from the petition date to the entry of her discharge on September 25th, 2012 was one year and nine days. The state law five year deadline to renew was May 21st, 2015 because the judgment was entered on May 21st, 2010.
Once the one year and nine days is added to the May 21st, 2015 deadline, the new deadline is May 30th of 2016. [The Walkers] did not file an action to renew the judgment against [M.P.] during this time period and accordingly they are now time barred.
¶17 Next, we turn to the Walkers' motion for judgment on the pleadings in the current declaratory-relief proceeding. The trial court determined that under the doctrine of claim preclusion the relief sought by Lipin was precluded because his claims effectively had been brought in the bankruptcy court. It reasoned that the bankruptcy court had determined "the time to renew the [May 2010 judgment] by filing an action on the judgment pursuant to . . . § 12-1611 was tolled during the pendency of the bankruptcy proceeding" and that "the time to file an action to renew the judgment pursuant to . . . § 12-1611 would be extended by the amount of time the [Walkers] could have executed on the [j]udgment had the bankruptcy not been filed." Applying that reasoning, the trial court determined that the Walkers "will have 1,343 days after [Lipin] is granted or denied a discharge (which has yet to occur) to file an action on the judgment pursuant to . . . § 12-1611 to renew the [May 2010 judgment]." The trial court also concluded that Lipin's claims were barred by issue preclusion and failed as a matter of law.
¶18 Because it is dispositive, we focus our analysis on the doctrine of claim preclusion. At issue here is the preclusive effect of a judgment issued by the bankruptcy court. See Health for Life Brands, Inc. v. Powley, 203 Ariz. 536, ¶ 15 (App. 2002) (bankruptcy court unit of federal district court). Accordingly, federal law controls our analysis. Howell v. Hodap, 221 Ariz. 543, ¶ 17 (App. 2009); see Marrese v. Am. Acad. of Ortho. Surgeons, 470 U.S. 373, 375 (1985). "[Claim preclusion] is a question of law that this court reviews de novo." Better Homes Constr., Inc. v. Goldwater, 203 Ariz. 295, ¶ 10 (App. 2002); see also Blasi v. Williams, 775 F.2d 1017, 1018 (9th Cir. 1985).
¶19 Claim preclusion "bars litigation in a subsequent action of any claims that were raised or could have been raised in the prior action." Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001) (quoting W. Radio Servs. Co. v. Glickman, 123 F.3d 1189, 1192 (9th Cir. 1997)). It "is intended to promote judicial efficiency and the finality of judgments by requiring that all related claims be brought together or forfeited." Amadeo v. Principal Mut. Life Ins. Co., 290 F.3d 1152, 1160 (9th Cir. 2002); see also In re Baudoin, 981 F.2d 736, 739 (5th Cir. 1993) (discussing "important interest" in finality of judgments in bankruptcy cases). "Under the doctrine of [claim preclusion], '[a] final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action' even if that judgment 'may have been wrong or rested on a legal principle subsequently overruled in another case.'" Paulo v. Holder, 669 F.3d 911, 917 (9th Cir. 2011) (quoting Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981)).
¶20 On appeal, Lipin seems to conflate the doctrines of claim preclusion and issue preclusion. He argues there are "four criteria" for "issue or claim preclusion": "(1) the same parties, (2) the same legal issues, (3) the same evidence arising from the same transactional nucleus of facts, and (4) a final ruling that actually turns on the same facts and legal issues." He appears to suggest that neither doctrine applies here because the issue now presented was not "the issue actually litigated to a determination on the merits" before the bankruptcy court.
¶21 But claim preclusion and issue preclusion are distinct concepts with different requirements. The doctrine of issue preclusion bars relitigating issues adjudicated in an earlier proceeding if: (1) the issue decided in the previous proceeding is identical to the one sought to be relitigated; (2) the first proceeding ended with a final judgment on the merits; and (3) the party against whom issue preclusion is asserted was a party or was in privity with a party in the first proceeding. Reyn's Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 (9th Cir. 2006). However, with claim preclusion, "[i]t is immaterial whether the claims asserted subsequent to the judgment were actually pursued in the action that led to the judgment; rather, the relevant inquiry is whether they could have been brought." United States ex rel. Barajas v. Northrop Corp., 147 F.3d 905, 909 (9th Cir. 1998). Thus, claim preclusion applies when the earlier lawsuit "(1) involved the same 'claim' or cause of action as the later suit, (2) reached a final judgment on the merits, and (3) involved identical parties or privies." Mpoyo v. Litton Electro-Optical Sys., 430 F.3d 985, 987 (9th Cir. 2005).
¶22 The second and third elements of claim preclusion are not at issue in this case. As to the second, a dismissal based on summary judgment is a decision on the merits for purposes of claim preclusion. See, e.g., id. at 988; Jackson v. Hayakawa, 605 F.2d 1121, 1125 (9th Cir. 1979). And as to the third, Lipin concedes that the adversary proceeding involved the same parties or privies as the current declaratory-relief action. Lipin challenges, however, the first element, contending that "[t]he issues in this action versus the claims in the [adversary proceeding] are not identical."
¶23 In determining whether the two lawsuits involve the same claim or cause of action for purposes of claim preclusion, courts must consider: (1) whether the two lawsuits "arise out of the same transactional nucleus of facts," (2) "whether rights or interests established in the prior judgment would be destroyed or impaired by prosecution of the second action," (3) whether the two lawsuits involve an "infringement of the same right," and (4) "whether substantially the same evidence is presented in the two actions." Mpoyo, 430 F.3d at 987. Although these factors are not applied "mechanistically," id., the first is the most important, Turtle Island Restoration Network v. U.S. Dep't of State, 673 F.3d 914, 918 (9th Cir. 2012); see also Owens, 244 F.3d at 714.
Lipin does not identify these four factors in his opening brief, perhaps because he relies primarily on Arizona case law. See Sholes v. Fernando, 228 Ariz. 455, ¶ 16 (App. 2011) (appellant's failure to develop and support argument waives issue on appeal). However, he does suggest that the two proceedings do not "aris[e] from the same transactional nucleus of facts" and he also discusses the Walkers' "right" to enforce their judgment. Accordingly, we address the factors based on the limited arguments and record before us. See Adams v. Valley Nat'l Bank of Ariz., 139 Ariz. 340, 342 (App. 1984) (courts prefer to decide cases on merits rather than dismiss on procedural grounds).
¶24 Lipin's complaint contains four claims or requests for relief. Those claims, however, turn on his underlying request for "a declaratory judgment that there is no suspension of time for judgment renewal under Arizona law." We agree with the Walkers and the trial court that "[t]his is the same exact claim that was made by Lipin" as part of the adversary proceeding. In his response to the Walkers' motion for summary judgment before the bankruptcy court, Lipin argued that he was entitled to summary judgment because the Walkers were "required to renew [their] judgment[] within the ninety days before the fifth anniversary of the [May] 2010 judgment" but failed to do so. He further asserted that "the duty to file a renewal affidavit . . . is not tolled by an enforcement stay such as 11 U.S.C. § 362." Accordingly, he maintained the judgment had abated or lapsed. Moreover, at the December 2016 hearing, Lipin asserted, "[T]here's nothing that necessarily tolls the judgment renewal process." The bankruptcy court addressed this issue directly, ruling that the automatic bankruptcy stay tolls the time to file an action on the judgment under § 12-1611. Lipin's first claim in this action is therefore the same as that raised in the adversary proceeding, satisfying the first element of claim preclusion. See Mpoyo, 430 F.3d at 987.
¶25 Lipin's three remaining claims—his requests for a declaratory judgment that "no judgment renewal affidavit or action to renew was timely filed by [the Walkers]," that the Walkers' judgment "has expired and is no longer enforceable," and that if the bankruptcy proceedings stayed the renewal period, the Walkers had only thirty days after the case was closed on March 28, 2017, to file an action on the judgment but failed to do so—may not have been so explicitly raised in the adversary proceeding, but they were nonetheless inextricably tied to his first claim, which was. In determining if the claims are the same for purposes of claim preclusion, the first factor is whether the two lawsuits "arise out of the same transactional nucleus of facts." Owens, 244 F.3d at 713-14 (quoting Frank v. United Airlines, Inc., 216 F.3d 845, 851 (9th Cir. 2000)). Both the adversary proceeding and the current declaratory-relief action are based on the Walkers' May 2010 judgment against Lipin. Specifically, Lipin challenged the validity of that judgment because the Walkers did not renew it within five years of its entry. This declaratory-relief proceeding therefore arises from the same transactional nucleus of facts as the adversary proceeding. Cf. Mpoyo, 430 F.3d at 987 (plaintiff's claims arise from same transactional nucleus of facts when based on "cohesive narrative" of employee-employer relationship and controversial termination).
¶26 Turning to the second and third factors in determining if there is an identity of claims, the two lawsuits concern the same basic rights or interests—principally, the Walkers' right to enforce the judgment. See id. The current action would further that right to the extent the Walkers, consistent with the bankruptcy court's ruling, have 1,343 days after Lipin is granted or denied a discharge in the bankruptcy proceeding to initiate an action on the judgment under § 12-1611. Lastly, as to the fourth factor, based on the record before us, both lawsuits seem to involve "substantially the same evidence." Id. Accordingly, there is an identity of claims between the lawsuits regarding Lipin's second, third, and fourth claims, further satisfying the first element of claim preclusion. See id.
Lipin challenges the trial court's finding that the Walkers had 1,343 days after the grant or denial of a discharge in which to file an action on the judgment because that "calculation was not a specific finding of the bankruptcy court." However, as the Walkers point out, courts may take judicial notice of the calendar and the computation of time. See 31A C.J.S. Evidence § 173; see also Fed. R. Evid. 201(b)(2) (court may judicially notice fact not subject to reasonable dispute because it "can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned"). Lipin does not argue that the trial court calculation itself was incorrect given the bankruptcy court's reasoning.
¶27 Relying on Howard v. City of Coos Bay, 871 F.3d 1032 (9th Cir. 2017), Lipin nevertheless contends that "claim preclusion does not apply to claims that accrue after the filing of the operative complaint." He reasons that "factual circumstances and legal issues [changed] after the stay ended on March 28, 2017, and the Pinal County action was filed on May 11, 2017." We find Howard distinguishable.
¶28 In Howard, the Ninth Circuit Court of Appeals explained that "[w]hether two suits arise out of the same transactional nucleus depends upon whether they are related to the same set of facts and whether they could conveniently be tried together." 871 F.3d at 1039 (quoting Turtle Island Restoration Network, 673 F.3d at 918). There, the plaintiff could not have brought her retaliation claims as part of her first lawsuit filed in 2009 and amended in 2010 because at that time she had not yet applied for the director position for which she was rejected in 2011, and that rejection was the basis of her second lawsuit. Id. at 1040. Thus, the court explained that the plaintiff's retaliation claims in her second lawsuit were not barred by claim preclusion. Id.
¶29 Here, by contrast, Lipin's claims were known and identifiable issues in 2016 when the bankruptcy court was addressing the parties' cross-motions for summary judgment. Indeed, as discussed above, these claims were actually part of the litigation before the bankruptcy court. Although subsequent events occurred that may have changed the factual calculus—as will often be the case with issues of claim preclusion—the legal claims themselves remained the same. See Lester v. Nat'l Broad. Co., 217 F.2d 399, 400 (9th Cir. 1954) ("To permit repeated attacks on a judgment and to open up judgments years later on the second or third attack each time a new reason (really, here, an expansion of facts concerning the same reason) occurs to a party would soon lead to chaos.").
¶30 Moreover, we fail to see how the closure of the bankruptcy case has any effect on the bankruptcy court's ruling. That court essentially concluded the Walkers would have 1,343 days after the grant or denial of Lipin's request for a discharge—not the closure of the case, or thirty days thereafter—in which to file an action on the judgment pursuant to § 12-1611.
We express no opinion on the propriety of this ruling. See Paulo, 669 F.3d at 917; see also 11 U.S.C. § 108(c) (where applicable nonbankruptcy law fixes period for commencing lawsuit, and such period has not expired before filing of bankruptcy petition, period ends later of "the end of such period" or "30 days after notice of the termination" of bankruptcy stay); 11 U.S.C. § 362(c)(2) (automatic bankruptcy stay continues until earlier of "the time the case is closed" or, for case under chapter 11, "the time a discharge is granted or denied").
¶31 We conclude that all three elements of claim preclusion are satisfied. See Mpoyo, 430 F.3d at 987. Application of the doctrine is even more compelling in this case considering its purpose. See Amadeo, 290 F.3d at 1160-61. As the Fifth Circuit Court of Appeals has explained, "[r]estraining litigious plaintiffs from taking more than 'one bite of the apple' has been our avowed purpose since the common law doctrine of [claim preclusion] first evolved." Baudoin, 981 F.2d at 739-40 (quoting Sure-Snap Corp. v. State Street Bank & Tr. Co., 948 F.2d 869, 870 (2d Cir. 1991)). In a bankruptcy case, "that bite is to be taken as expeditiously and economically as possible, to try to ensure, inter alia, that creditors get their share." Id. at 740. "After all, it has long been the 'general spirit and purpose' of bankruptcy not only to release a bankrupt from the obligation to pay his debts, but also to 'secure a just distribution of the bankrupt's property among his creditors.'" Id. (quoting Wilson v. City Bank, 84 U.S. 473, 480 (1872)). "Because of spiraling litigation costs, increasingly congested courts—especially bankruptcy courts—and expanding theories of recovery, . . . it is more imperative than ever that the doctrine of [claim preclusion] be applied with unceasing vigilance." Id. Accordingly, the trial court did not err in finding Lipin's claims precluded under the doctrine of claim preclusion. See Giles, 195 Ariz. 358, ¶ 2; see also Muscat by Berman, 244 Ariz. 194, ¶ 7.
Attorney Fees and Costs
¶32 Lipin and his counsel, whom the trial court determined were jointly and severally liable, also challenge the award of attorney fees and costs to the Walkers as a sanction under A.R.S. § 12-349. "We review the trial court's findings of fact for clear error, but review de novo its application of the statute." Rogone v. Correia, 236 Ariz. 43, ¶ 23 (App. 2014). In doing so, we view the evidence in the light most favorable to sustaining the award. Phx. Newspapers, Inc. v. Ariz. Dep't of Corr., 188 Ariz. 237, 243 (App. 1997).
¶33 Section 12-349(A) provides that the trial court "shall assess" reasonable attorney fees and costs "against an attorney or party . . . if the attorney or party": (1) "Brings or defends a claim without substantial justification," (2) "Brings or defends a claim solely or primarily for delay or harassment," (3) "Unreasonably expands or delays the proceeding," or (4) "Engages in abuse of discovery." For purposes of this statute, "'without substantial justification' means that the claim or defense is groundless and is not made in good faith." § 12-349(F). "'Groundless' and 'frivolous' are equivalent terms, and a claim is frivolous 'if the proponent can present no rational argument based upon the evidence or law in support of that claim.'" Rogone, 236 Ariz. 43, ¶ 22 (quoting Evergreen W., Inc. v. Boyd, 167 Ariz. 614, 621 (App. 1991)). "The court may allocate the payment of attorney fees among the offending attorneys and parties, jointly or severally, and may assess separate amounts against an offending attorney or party." § 12-349(B).
A "finding that an action or defense was brought 'without substantial justification' no longer requires a determination that it constituted harassment." Reynolds v. Reynolds, 231 Ariz. 313, n.5 (App. 2013).
¶34 "In awarding attorney fees pursuant to § 12-349, the court shall set forth the specific reasons for the award." A.R.S. § 12-350. But "the findings 'need only be specific enough to allow an appellate court to test the validity of the judgment.'" Bennett v. Baxter Grp., Inc., 223 Ariz. 414, ¶ 28 (App. 2010) (quoting Phx. Newspapers, Inc., 188 Ariz. at 243). Section 12-350 lists eight factors that the court may consider as relevant in its determination. See Donlann v. Macgurn, 203 Ariz. 380, n.11 (App. 2002) (§ 12-350 "guides the court in making awards authorized by § 12-349").
¶35 As a preliminary matter, the Walkers argue that this court lacks "jurisdiction to rule upon the challenge to the sanctions imposed against [Lipin's counsel] as he failed to appeal that decision." We agree. Lipin's counsel was not a party to this action, but he nonetheless could have appealed the portion of the final judgment assessing attorney fees and costs against him. See Abril v. Harris, 157 Ariz. 78, 81 (App. 1987) ("[A]n attorney against whom attorney's fees have been imposed can appeal from that part of the judgment affecting him."). Even so, the notice of appeal must "identify the party or parties taking the appeal or cross-appeal." Ariz. R. Civ. App. P. 8(c)(2). The notice in this case only lists Lipin as the appellant. Cf. Abril, 157 Ariz. at 81 (notice of appeal listed both plaintiff and his attorney). Accordingly, because Lipin's counsel did not file a notice of appeal, we lack jurisdiction to determine whether the award of attorney fees and costs as to him was proper. See Bennett, 223 Ariz. 414, ¶ 39.
¶36 Turning to Lipin's argument, he challenges the trial court's award of attorney fees and costs against him because "the order is lacking in specificity or evidentiary findings." Specifically, he maintains the court failed "to address which subsection of [§] 12-349 is the basis for the award" and failed "to address the required factors under § 12-350."
¶37 First, to the extent Lipin challenges the lack of factual findings or conclusions of law, the argument is waived. "[T]he failure of a party to object to the lack of findings of fact and conclusions of law in making awards of attorneys' fees under . . . § 12-349 precludes that party from raising the absence of findings as error on appeal." Trantor v. Fredrikson, 179 Ariz. 299, 301 (1994). The rationale is that the "trial court and opposing counsel should be afforded the opportunity to correct any asserted defects before error may be raised on appeal." Id. at 300.
¶38 Here, Lipin did not challenge the lack of specificity of findings in the trial court's order below. In his objection to the Walkers' proposed form of judgment, which was ultimately struck by the trial court in any event, Lipin questioned the merits of the court's award, arguing that there was "nothing frivolous about the issues" raised in this case. In addition, although his objection to the Walkers' application for attorney fees and costs seemed to suggest that the court's order was somehow deficient, his argument focused on the Walkers' failure to prove their case rather than the court's lack of findings. Indeed, when addressing Lipin's objections, which it did in a thorough ruling, the court did not recognize this as one of Lipin's arguments. Accordingly, the court had no opportunity to address and correct this issue. See id.; see also Tucson Estates Prop. Owners Ass'n, Inc. v. McGovern, 239 Ariz. 52, n.5 (App. 2016) (applying waiver to appellant's failure to request findings required by § 12-350).
To the extent Lipin suggests the trial court erred in striking his objection to the form of judgment, we disagree. Rule 58, Ariz. R. Civ. P., on which Lipin's objection was based, allows objections to form, not substance. See United Bank of Ariz. v. Allyn, 167 Ariz. 191, 197 (App. 1990). However, Lipin's objection was directed at the merits of the proposed judgment.
¶39 Second, even assuming Lipin's argument had not been waived, the trial court provided the reasoning for its award, as required by § 12-349 and § 12-350. The court's order was as follows:
The Court finds that [Lipin] has brought this action in bad faith and without probable cause. The relief requested by [Lipin] in this matter is barred as a matter of law for three distinct reasons as found herein. Moreover, the single argument made by [Lipin's] counsel in relation to collateral estoppel (issue preclusion)—which is entirely dispositive of [Lipin's] case—was and is false. The record makes clear that the issue was actually litigated; moreover, counsel for [Lipin] admitted at the oral argument in this matter that he was present for the oral argument in which [Lipin] made the identical argument to the Bankruptcy Court as he made here. Counsel for [Lipin] therefore knew that the argument he had made in relation to collateral estoppel (issue preclusion) was frivolous. Under these circumstances it is clear that sanctions are warranted in accordance with . . . § 12-349.The court thus explained its rationale for the sanctions award, finding both bad faith and frivolousness, as required by § 12-349(A)(1). See § 12-349(F); Rogone, 236 Ariz. 43, ¶ 22. And we cannot say the court's findings are clearly erroneous considering our agreement with the court on the application of claim preclusion. See Rogone, 236 Ariz. 43, ¶ 23. Moreover, contrary to Lipin's suggestion otherwise, the court was not required to explicitly address the factors mentioned in § 12-350—those are merely a guide in applying § 12-349. See Donlann, 203 Ariz. 380, n.11.
¶40 Lipin also argues that he had no notice or opportunity to be heard before the trial court imposed the sanctions award. "We agree that the imposition of sanctions should be preceded by some form of notice and opportunity to be heard on the propriety of imposing the sanctions." Precision Components, Inc. v. Harrison, Harper, Christian & Dichter, P.C., 179 Ariz. 552, 555 (App. 1993). However, as with his last argument, Lipin "failed to raise this issue below and never requested a hearing" after receiving the proposed form of judgment. Id. at 556.
¶41 We recognize that the first time § 12-349 appeared as the basis for the sanctions award was in the Walkers' proposed form of judgment, which was lodged after the hearing on the motion for judgment on the pleadings. However, as discussed above, Lipin did not argue that he was not afforded notice and an opportunity to be heard in his objection to the form of judgment. And he did not file a motion for reconsideration after his objection was struck. Although Lipin did raise this issue in his objection to the Walkers' application for attorney fees and costs, as the trial court pointed out, raising the issue at that stage in the case was too late given that the amount was the only issue before it at that time. Thus, like in Precision Components, Inc., 179 Ariz. at 555, Lipin never provided the court an opportunity to reconsider the imposition of sanctions in light of his argument that he was not afforded proper notice and opportunity to be heard. Accordingly, the argument is waived. See id.
Attorney Fees and Costs on Appeal
¶42 Lipin requests his attorney fees and costs on appeal as a sanction, pursuant to Rule 25, Ariz. R. Civ. App. P., and § 12-349, "if this matter is reversed and the court determines the Walkers have engaged in litigation without legal basis on a judgment that expired in May of 2015, due to their failure to renew." However, because Lipin initiated this declaratory-relief action and this appeal, and because we find no error with respect to the trial court's claim-preclusion determination, we deny Lipin's request.
Disposition
¶43 For the reasons stated above, we affirm.