Opinion
No. 1 CA-CV 18-0643 FC
10-29-2019
SHERRI LEE PORTER, Petitioner/Appellee/Cross-Appellant, v. GARY RAY LANE, Respondent/Appellant/Cross-Appellee.
COUNSEL Phelps & Moore, PLLC, Scottsdale By Jon L. Phelps, Shannon Linder Counsel for Petitioner/Appellee Law Offices of Matthew S. Schultz, PC, Tempe By Matthew S. Schultz Counsel for Respondent/Appellant
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. Appeal from the Superior Court in Yavapai County
No. P1300DO201700331
The Honorable Don C. Stevens, Judge
REVERSED AND REMANDED
COUNSEL Phelps & Moore, PLLC, Scottsdale
By Jon L. Phelps, Shannon Linder
Counsel for Petitioner/Appellee Law Offices of Matthew S. Schultz, PC, Tempe
By Matthew S. Schultz
Counsel for Respondent/Appellant
MEMORANDUM DECISION
Judge Kent E. Cattani delivered the decision of the Court, in which Presiding Judge Lawrence F. Winthrop and Judge Diane M. Johnsen joined. CATTANI, Judge:
¶1 Gary Lane ("Husband") appeals from the superior court's order denying his motion to set aside a default divorce decree entered while he was incarcerated that awarded Sherri Porter ("Wife") all of the parties' community property assets. Wife cross-appeals, asserting that the superior court lacked authority to consider Husband's motion to set aside the decree given its prior denial of the same motion. For reasons that follow, we reject Wife's arguments on cross-appeal and confirm that the superior court had and has authority to rule on Husband's motion to set aside. Further, and for reasons that follow, we reverse the superior court's summary denial of Husband's motion to set aside the decree and remand for further proceedings consistent with this decision.
FACTS AND PROCEDURAL BACKGROUND
¶2 The parties were married for over 40 years before Wife filed a petition for dissolution on April 28, 2017, and personally served Husband while he was jailed in Yavapai County. Husband did not respond to the petition, and Wife applied for entry of default on May 26, 2017. Husband again did not respond, making the default effective July 5, 2017. On September 7, 2017, Wife moved for entry of a default decree, which the superior court entered on October 2, 2017. The default decree awarded Wife all the parties' community property, with a net value of over $550,000, including a monthly pension of $2,000.
¶3 Approximately one week later, Husband filed a response to the dissolution petition and moved to set aside the default decree, offering reasons for his failure to timely respond to the dissolution petition. See Ariz. R. Fam. Law P. ("Family Rule") 44(C). According to Husband, he was arrested in February 2017 and charged with multiple counts of child molestation and attempted child molestation. He pleaded guilty in April 2017 and was sentenced the following month. Husband explained that between sentencing and his transfer to the Arizona Department of Corrections in June 2017, he was unable to access any of his legal documents. Husband claimed that, until July 2017, he was unable to communicate with his daughter (to whom he had given a power of attorney) to obtain funds to pay filing fees, and that when he finally reached her, she assured him that she would pay the fees. According to Husband, he began drafting motions in August 2017, including a motion opposing entry of default, and mailed them to the superior court for filing and to Wife's attorney on August 28, only to later discover that the filing fee had not been paid. In early October 2017, Husband applied for a deferral of court fees, which the court granted, and he moved to set aside the default decree.
The Family Rules were substantially changed in January 2019. Because the proceedings here took place before the change, we cite to the Rules in effect at the time. --------
¶4 Before the superior court ruled on the motion to set aside, Husband filed a notice of appeal from the default decree. While that appeal was pending, the superior court summarily denied Husband's motion to set aside. This court subsequently dismissed Husband's appeal for lack of appellate jurisdiction.
¶5 Several months later, Husband moved for relief from judgment, arguing that the superior court lacked jurisdiction when it denied his motion to set aside because Husband's appeal was pending at the time. See Family Rule 85(C)(1)(d). The court granted Husband's motion for relief from judgment and vacated the order denying Husband's motion to set aside, then entered a new order denying Husband's motion to set aside the default decree.
¶6 Husband timely appealed the denial of his motion to set aside, and Wife timely cross-appealed. We have jurisdiction under A.R.S. § 12-2101(A)(2).
DISCUSSION
I. Superior Court's Jurisdiction.
¶7 Wife challenges the superior court's grant of Husband's motion for relief from judgment, which cleared the way for the court to re-enter the denial of Husband's motion to set aside that is now before us. Wife argues that the superior court erred by concluding that Husband's then-pending appeal deprived the court of jurisdiction to enter the first order denying Husband's motion to set aside the default decree, and that the court thus erred by granting Husband's motion for relief from judgment. We review a ruling granting relief from judgment for an abuse of discretion. City of Phoenix v. Geyler, 144 Ariz. 323, 328-29 (1985).
¶8 After a party files a notice of appeal, the superior court generally loses jurisdiction over the case, meaning any acts it takes (other than those in furtherance of the appeal) during the pendency of the appeal are void. See In re Marriage of Johnson, 231 Ariz. 228, 230, ¶ 6 (App. 2012). Under limited circumstances in which "no real question concerning the invalidity of the notice of appeal exists," as when a party attempts to appeal from a substantively non-appealable order, the superior court may proceed even after a notice of appeal has been filed. See id. at 231, ¶ 9; Burke v. Gottfried, 7 Ariz. App. 96, 97 (App. 1968). But if there is a question whether the notice of appeal may be valid, the superior court should wait for and defer to this court's ruling regarding appellate jurisdiction. Johnson, 231 Ariz. at 231, ¶ 9 (citing Schultz v. Hinshaw, 18 Ariz. App. 557, 557-58 (App. 1972)).
¶9 Wife argues that, because Husband was attempting to appeal directly from a default judgment, his notice of appeal was obviously invalid (or at least premature) and thus did not deprive the superior court of jurisdiction to decide the motion to set aside. But a default judgment is in fact appealable, albeit under limited circumstances. Hirsch v. Nat'l Van Lines, Inc., 136 Ariz. 304, 311 (1983). At the time the superior court initially ruled on Husband's motion to set aside, the court arguably lacked an adequate basis to conclusively determine that Husband's appeal failed to raise any permissible issues and was necessarily invalid. Although this court ultimately dismissed the appeal, that dismissal restored the superior court's jurisdiction prospectively, not retroactively. See In re Marriage of Flores, 231 Ariz. 18, 21, ¶ 10 (App. 2012).
¶10 Considering the complex procedural history of the case and the existence of some question as to the superior court's jurisdiction to resolve Husband's motion to set aside in the wake of his appeal, the court reasonably exercised its discretion under Family Rule 85 to grant Husband relief from the premature ruling denying his motion to set aside.
II. Motion to Set Aside.
¶11 Husband challenges the merits of the superior court's denial of his motion to set aside the default decree. We review the denial of a motion to set aside a default decree for an abuse of discretion. Duckstein v. Wolf, 230 Ariz. 227, 231, ¶ 8 (App. 2012). Because the Family Rules parallel the Arizona Rules of Civil Procedure ("Civil Rules"), in determining whether the superior court properly denied a motion to set aside a default decree, we look to the case law on setting aside a default judgment in the civil context. See Family Rule 1 cmt.
¶12 Default judgments are disfavored. Marsh v. Riskas, 73 Ariz. 7, 9 (1951). In determining whether to grant a motion to set aside a default judgment, the superior court is guided by equitable principles and must consider whether it would be unjust to enforce the judgment, resolving all doubts in favor of the moving party. See Daou v. Harris, 139 Ariz. 353, 359 (1984); Wellton-Mohawk Irr. & Drainage Dist. v. McDonald, 1 Ariz. App. 508, 509 (App. 1965).
¶13 To set aside a default judgment, the party against whom the judgment was entered generally must establish that (1) his failure to timely answer was excusable under one of the six subsections of Civil Rule 60(b) (or here, Family Rule 85(C)), (2) he acted promptly in seeking relief from the default judgment, and (3) he has a substantial and meritorious defense. See United Imp. & Exp., Inc. v. Superior Court, 134 Ariz. 43, 45 (1982). If a party presents sufficient facts supporting these criteria and requests an evidentiary hearing, the superior court must conduct a hearing. See Duckstein, 230 Ariz. at 235, ¶ 26.
¶14 Under Family Rule 85(C)(1)(a) and Civil Rule 60(b)(1), the court may set aside a default judgment for excusable neglect. To determine whether neglect is excusable, we look to how a reasonably prudent person would act under the same circumstances. See Geyler, 144 Ariz. at 331-32. Although carelessness is not excusable neglect, a party is not required to establish extraordinary vigilance to have a default judgment set aside. See Ulibarri v. Gerstenberger, 178 Ariz. 151, 163 (App. 1993).
¶15 Under Family Rule 85(C)(1)(f) and Civil Rule 60(b)(6), the court may set aside a default judgment for "any other reason justifying relief." This catch-all provision provides relief from default judgments that are unjust due to the extraordinary circumstances the movant faced. See Panzino v. City of Phoenix, 196 Ariz. 442, 445, ¶ 5 (2000). This provision applies "when our systemic commitment to finality of judgments is outweighed by extraordinary circumstances of hardship or injustice." Id. at ¶ 6 (internal quotation omitted).
¶16 Here, Husband's motion to set aside the default decree alleged sufficient facts to establish all requisite criteria for these grounds to set aside, and he requested a hearing on the matter. The superior court thus erred by summarily denying Husband's motion without conducting an evidentiary hearing.
¶17 Assuming Husband's assertions are true, his motion established that his failure to timely answer was the result of excusable neglect and that he acted as a reasonably prudent person would under the challenging circumstances he faced. See Family Rule 85(C)(1)(a); Civil Rule 60(b)(1); Ramada Inns, Inc. v. Lane & Bird Advert., Inc., 102 Ariz. 127, 129 (1967). Husband received the dissolution petition while in jail in May 2017; he was transferred the next month to the Arizona Department of Corrections. During this time, he was unable to access any legal documents or communicate with anyone outside the prison until July 2017. By his account, he then worked to have his filing fees paid and, after being informed (incorrectly) that they would be paid, drafted and submitted his opposition to proceeding by default and his answer to the dissolution petition. When he later learned that the filing fees had not been paid, he applied for a deferral of costs and promptly moved to set aside the default judgment just days after the order deferring costs. These facts, if true, would establish excusable neglect, rather than mere inadvertence or forgetfulness, so Husband is entitled to a hearing on whether his failure to timely respond should be excused. See Daou, 139 Ariz. at 360; Tarr v. Superior Court, 142 Ariz. 371, 373 (App. 1984).
¶18 For the same reasons, and because Husband faced extraordinary circumstances of hardship that arguably outweigh "our systemic commitment to finality of judgments," Husband's motion also established a basis for a hearing on whether his failure to timely answer was excusable due to "any other reason justifying relief." See Family Rule 85(C)(1)(f); Civil Rule 60(b)(6); Panzino, 196 Ariz. at 445, ¶ 5.
¶19 Moreover, Husband acted promptly in seeking relief from the default decree. He began drafting his opposition to proceeding by default in August 2017—over a month before the default decree was filed. He mailed that and other motions to the superior court and Wife's attorney that same month believing that his filing fees had already been paid. When he learned that the fees had not been paid, he promptly applied for a deferral of court costs, which was granted on October 10, 2017, only eight days after the entry of the default decree.
¶20 Finally, Husband appears to have a meritorious defense to Wife's proposed division of assets. Although the superior court must equitably divide community property in a dissolution proceeding, see Toth v. Toth, 190 Ariz. 218, 221 (1997), the default decree here does not appear to have done so. The parties were married over 40 years and amassed substantial community property. Despite this, the default decree awarded Wife all the community property, including Husband's entire retirement account. Had Husband timely responded to the dissolution petition and contested Wife's proposed asset division, the superior court presumably would have awarded Husband an equitable share of the community estate.
CONCLUSION
¶21 For the foregoing reasons, we affirm the superior court's order granting Husband's motion for relief from judgment. We reverse the court's summary denial of Husband's motion to set aside and remand for the court to conduct an evidentiary hearing on whether the default decree should be set aside for excusable neglect under Family Rule 85(C)(1)(a) or "any other reason justifying relief" under Family Rule 85(C)(1)(f). Based on our disposition of the case and in an exercise of our discretion, we deny Wife's request for attorney's fees on appeal.