Opinion
No. 1 CA-CV 18-0388
07-18-2019
SW REAL ESTATE ENTERPRISES LLC, Plaintiff/Appellee, v. REBECA PALOMINO, et al., Defendants/Appellants.
COUNSEL Rebeca Palomino, Phoenix Defendant/Appellant Carlos Contreras, Litchfield Park Defendant/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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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 Maricopa County
No. CV2017-001948
The Honorable David W. Garbarino, Commissioner
AFFIRMED
COUNSEL Rebeca Palomino, Phoenix
Defendant/Appellant Carlos Contreras, Litchfield Park
Defendant/Appellant
MEMORANDUM DECISION
Judge Jon W. Thompson delivered the decision of the Court, in which Presiding Judge Michael J. Brown and Judge Kenton D. Jones joined. THOMPSON, Judge:
¶1 Appellants Rebeca Palomino and Carlos Contreras challenge the superior court's denial of their motions to set aside default judgments entered against them in favor of Appellee SW Real Estate Enterprises LLC ("SW"). Appellants also challenge the denial of their motions for new trial. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 SW sued Appellants and two other individuals in March 2017 alleging each had breached a commercial lease guaranty. Appellants did not answer the complaint, and the superior court entered default judgment against them in July 2017.
¶3 SW moved to set debtor's examinations for Appellants in November 2017. Upon receiving notice of the examinations, Appellants moved to set aside the default judgment pursuant to Arizona Rule of Civil Procedure (Rule) 60(b)(1) and 60(b)(6), contending they had left the business that leased the property, the business had ceased operations, and the lease had been assigned to another entity. They further contended they were not personally served with the complaint. They also contended the amount of the judgment—$101,148.88 including attorney fees and costs—constituted extraordinary circumstances entitling them to relief.
¶4 The court denied relief under Rule 60(b)(6) but set an evidentiary hearing to determine whether Appellants could show excusable neglect under Rule 60(b)(1). Before the hearing, they submitted affidavits from Rebeca and Carlos' wife, Gisell. The court struck the affidavits and, having heard testimony from both Appellants, denied the motions to set aside.
¶5 Appellants then moved for a new trial. The court denied the motions, and Appellants timely appealed. We have jurisdiction under Arizona Revised Statutes (A.R.S.) section 12-2101(A)(2)(2019).
We cite to the current version of any statute unless that statute was amended after the pertinent events and such amendment would affect the result of this appeal.
DISCUSSION
¶6 The superior court has broad discretion in deciding whether to set aside a default judgment; we will not disturb its ruling absent a clear abuse of that discretion. BYS Inc. v. Smoudi, 228 Ariz. 573, 577, ¶ 14 (App. 2012). Our review on appeal is limited to those issues raised in the motions to set aside. Hirsch v. Nat'l Van Lines, Inc., 136 Ariz. 304, 311 (1983). Generally, we resolve doubts in favor of the party seeking to set aside a default judgment because the law favors resolution on the merits. Richas v. Superior Court, 133 Ariz. 512, 514 (1982). We also review the denial of a motion for new trial for an abuse of discretion. Spring v. Bradford, 243 Ariz. 167, 170, ¶ 11 (2017).
SW did not file an answering brief. When debatable issues exist and a party fails to file an answering brief, we may consider it a confession of reversible error but are not required to do so. Compassionate Care Dispensary, Inc. v. Arizona Dep't of Health Services, 244 Ariz. 205, 216 n.9, ¶ 36 (App. 2018). In our discretion, we address the merits of this appeal. --------
¶7 Appellants contend they were entitled to relief under Rule 60(b)(6), repeating their arguments from their motions for new trial nearly word-for-word. A court may relieve a party from a judgment under Rule 60(b)(6) in cases of extraordinary hardship or injustice caused by something other than the reasons listed in subsections (1) through (5) of the rule. Rogone v. Correia, 236 Ariz. 43, 48, ¶ 12 (App. 2014). The court should consider the totality of facts and circumstances in deciding whether to apply subsection (6). Skydive Ariz., Inc. v. Hogue, 238 Ariz. 357, 364, ¶ 25 (App. 2015).
¶8 Citing Gonzalez v. Nguyen, 243 Ariz. 531 (2018), Appellants first contend the superior court erred in requiring a showing of excusable neglect. While excusable neglect is not an element under subsection (6), the court considered Appellants' lack of excusable neglect in denying relief under subsection (1). Gonzalez, 243 Ariz. at 535, ¶ 15; see Ariz. R. Civ. P. 60(b)(1) (court may relieve a party from a judgment in cases of "mistake, inadvertence, surprise, or excusable neglect"). Appellants do not contend the court erred in denying them relief under subsection (1).
¶9 Appellants also contend they established a meritorious defense, specifically, that the default judgment "is unsupported by the evidence and is excessive." First, we note that appellants failed to provide this court with a transcript of the evidentiary hearing. Additionally, the superior court found SW may not have fully credited the initial deposit paid by the lessee. What is lacking in this record, however, is any showing of extraordinary circumstances of hardship or injustice justifying relief. See Hyman v. Arden-Mayfair, Inc., 150 Ariz. 444, 448 (App. 1986) ("To justify relief under this clause, the facts must go beyond the factors enumerated in clauses 1 through 5 and raise extraordinary circumstances of hardship or injustice."); Marks v. LaBerge, 146 Ariz. 12, 16 (App. 1985) ("Two separate limitations are inherent in [subsection (6)'s] application: (1) the reason for setting aside the default must not be one of the reasons set forth in the other clauses; and, (2) the 'other reason' must justify relief.") (emphasis in original).
¶10 Appellants contend the amount of the damages award constituted extraordinary circumstances because they were not "given a fair opportunity to litigate their disputed claims," alleging that "the Lease payments were current when the Lease was assigned." Default judgments are, by their very nature, not fully litigated. And again, the meritorious defense requirement is separate from the extraordinary circumstances requirement. Gonzalez, 243 Ariz. at 534, ¶ 12; see also Minjares v. State, 223 Ariz. 54, 61, ¶ 28 (App. 2009) (stating that subsection (6) "authorizes relief only when the interest in according finality of judgments is outweighed by 'extraordinary circumstances of hardship or injustice'") (quoting Webb v. Erickson, 134 Ariz. 182, 187 (1982)). Contending the judgment is excessive does not by itself entitle Appellants to relief under subsection (6). Gonzalez, 243 Ariz. at 535, ¶ 14.
CONCLUSION
¶11 We affirm the denial of Appellants' motions to set aside the default judgment and motions for new trial. We decline to award SW attorney fees or taxable costs because it did not file an answering brief.