Opinion
No. 1 CA-CV 12-0123
01-24-2013
ASSET ACCEPTANCE, LLC, Plaintiff/Appellant, v. WILLIAM J. WEIMER and JANE/JOHN DOE WEIMER, Defendants/Appellees.
Fulton Friedman & Gullace LLP By Cynthia L. Fulton Attorneys for Plaintiff/Appellant Law Office of Richard Groves By Richard N. Groves Attorneys for Defendants/Appellees
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED
EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
Ariz. R. Crim. P. 31.24
MEMORANDUM DECISION
(Not for Publication - Rule 28, Arizona Rules of Civil Appellate Procedure)
Appeal from the Superior Court in Maricopa County
Cause No. CV2010-029908
The Honorable Robert H. Oberbillig, Judge
APPEAL DISMISSED IN PART; AFFIRMED IN PART
Fulton Friedman & Gullace LLP
By Cynthia L. Fulton
Attorneys for Plaintiff/Appellant
Phoenix Law Office of Richard Groves
By Richard N. Groves
Attorneys for Defendants/Appellees
Phoenix DOWNIE, Judge ¶1 Asset Acceptance, LLC ("Asset") appeals certain decisions made by a court-appointed arbitrator, as well as the superior court's judgment dismissing its appeal from arbitration. We affirm the superior court's judgment of dismissal but lack jurisdiction to consider the other issues identified in Asset's notice of appeal.
FACTS AND PROCEDURAL HISTORY
¶2 Asset sued William J. Weimer for breach of contract and unjust enrichment, seeking to recover $17,493.56 plus interest in unpaid credit card charges. Asset alleged it was the assignee of the bank that had issued the credit card. Weimer filed an answer that, among other things, denied Asset was the bank's assignee. Based on the amount in controversy, see Arizona Revised Statutes ("A.R.S.") section 12-133(A) (claims under $65,000 are subject to compulsory arbitration), the court appointed an arbitrator. ¶3 An arbitration hearing was set for September 13, 2011. The arbitrator had previously written to counsel in January and July 2011, stating that they were to comply with Rule 75(c), Arizona Rules of Civil Procedure ("Rule") (parties must "confer[], prepare and submit" a joint prehearing statement at least ten days before arbitration hearing). ¶4 On August 1, the arbitrator was advised by Weimer's counsel's office that Asset "had made no attempt to contact or confer" regarding preparation of a joint pretrial statement. Weimer filed a timely unilateral pretrial statement. The arbitrator received Asset's pretrial statement on September 12 -- the day before the hearing -- by email. Asset mailed a copy of that statement to Weimer's counsel. ¶5 At the arbitration hearing, Weimer objected to Asset introducing any evidence, arguing: (1) Asset failed to comply with Rule 75(c); (2) Asset did not serve Weimer with its pretrial statement; and (3) Weimer was prejudiced by Asset's failures. Asset attributed its failures to "an inadvertent [office] mistake" and argued Weimer had not been prejudiced. The arbitrator, however, excluded all of Asset's evidence. ¶6 On September 14, the arbitrator filed a Notice of Decision, stating that Asset had failed to comply with Rule 75(c), failed to serve its pretrial statement on Weimer, and failed to meet its burden of producing admissible evidence to prove its claims at the arbitration hearing. The notice further stated that the arbitrator would enter an award pursuant to Rule 75, whereby Asset would take nothing on its claims and Weimer would be awarded his costs and reasonable attorneys' fees. The arbitrator filed an "Arbitration Award" on September 22. Four days later, Weimer filed an application for attorneys' fees ($12,668) and costs ($223). ¶7 Meanwhile, on September 23, Asset filed a "Motion to Vacate Arbitrator Decision and Remand for Arbitration Hearing," which Weimer opposed. The superior court issued an unsigned minute entry on November 16 that stated:
The Rules permit a de novo appeal. There is no legal authority to vacate and order another arbitration hearing, Therefore,¶8 Asset filed an "Appeal from Arbitration and Motion to Set for Trial" on November 21. Weimer moved to dismiss the appeal, arguing it was untimely and that Asset had waived its right to appeal by failing to participate in good faith in the arbitration proceedings. The superior court granted Weimer's motion in a signed minute entry dated December 16, stating:
IT IS ORDERED denying [Asset's] Motion.
Given the entire procedural overview, the Court finds the Plaintiff failed to participate in good faith at the arbitration hearing, which was properly set by agreement of the parties as required by Rule 75(h).¶9 On December 22, the arbitrator filed a signed judgment in the superior court that read:
IT IS ORDERED granting the Motion to Dismiss for that reason and dismissing the appeal.
IT IS FURTHER ORDERED signing this minute entry as a final written Order of the Court.
Pursuant to the Arbiter's Notice of Decision, dated the 14th day of September, 2011, [Weimer] having filed his Statement of Facts and Motion for Attorney Fees, and no objection being filed by [Asset],¶10 On January 13, 2012, Asset filed a notice of appeal. We have jurisdiction pursuant to A.R.S. § 12-2101(A).
IT IS HEREBY ORDERED THAT [WEIMER] IS AWARDED:
1. Costs $ 223.00
2. Attorney Fees $ 12,668.00
Total Judgment $ 12,891.00
plus interest at the maximum allowable statutory rate until paid in full.
DISCUSSION
A motions panel of this Court denied Asset's motion to supplement the record with "post-judgment proceedings," so we do not specifically address those proceedings. Our conclusion that the arbitrator lacked jurisdiction to award fees and costs to Weimer, see ¶ 15 infra, may, however, affect those proceedings.
I. Appellate Jurisdiction
¶11 Asset's notice of appeal states that it is appealing from: (1) the arbitrator's September 22, 2011 award; (2) the superior court's December 16 order of dismissal; and (3) the arbitrator's December 22 judgment. We have an independent duty to determine our appellate jurisdiction, Sorensen v. Farmers Insurance Co. of Arizona, 191 Ariz. 464, 465, 957 P.2d 1007, 1008 (App. 1997) (citation omitted), and we conclude that only the December 16 dismissal order is properly before us. ¶12 Rules 72 through 77 prescribe the compulsory arbitration process, including the manner by which an arbitration award becomes final. An arbitrator must file a Notice of Decision within ten days of an arbitration hearing. Rule 76(a). The parties have ten days thereafter to submit proposed forms of award, including any requests for attorneys' fees and costs. Id. If a party submits a proposed award, the opposing party has five days to object to it. Id. The arbitrator then has ten days to file "one signed original award." Id. ¶13 The arbitrator here filed a Notice of Decision on September 14. This filing triggered the parties' right to submit proposed forms of award, as well as applications for fees and costs, within ten days. Id. For reasons not explained by the record, though, on September 22, the arbitrator filed an "Arbitration Award" that contained the same findings of fact and conclusions of law as the Notice of Decision, including a determination that Weimer was entitled to costs and fees. ¶14 Because the arbitrator's September 22 filing did not resolve fees and costs, it was not a final arbitration award. See Bittner v. Superior Court (Galati), 182 Ariz. 434, 436, 897 P.2d 736, 738 (App. 1995) (the rules contemplate "two separate filings by the arbitrator" -- the "notice of decision," which prompts either party to submit a proposed award and fee/cost requests, objections by the opposing party, and "the award," which triggers the 20-day appeal period); see also Decola v. Freyer, 198 Ariz. 28, 31, ¶ 10, 6 P.3d 333, 336 (App. 2000) ("The filing of this second item, the 'award,' is the event that triggers the time for the appeal."). When 50 days elapsed without a "formal award" being filed, by operation of law, the September 14 Notice of Decision became the final award. See Rule 76(b) ("Unless a formal award . . . is filed with the court within 50 days from the date of filing the notice of decision, the notice of decision shall constitute the award of the arbitrator."). ¶15 The 50 days contemplated by Rule 76(b) expired on November 3. Asset filed its arbitration appeal in the superior court on November 21, making it timely. See Rule 77(a) (an appeal may be taken "within 20 days after the filing of the award or 20 days after the date upon which the notice of decision becomes an award under Rule 76(b)") (emphasis added). No later than November 21, the arbitrator was divested of jurisdiction. See Varga v. Hebern, 116 Ariz. 539, 541, 570 P.2d 226, 228 (App. 1977) ("[F]iling of the award divests the arbitrator of jurisdiction . . . ."). The arbitrator's December 22, 2011 judgment purporting to award fees and costs to Weimer is therefore a nullity -- subject to neither enforcement nor appeal.
The Uniform Rules of Procedure for Arbitration discussed in Bittner and Decola have since been replaced by Rules 72 through 77. In relevant respects, the two sets of rules are the same.
II. Dismissal of Arbitration Appeal
¶16 Weimer moved to dismiss Asset's appeal to the superior court based on its alleged failure to participate in good faith in the arbitration proceedings. The superior court agreed with Weimer's characterization, dismissing the appeal "for that reason." Asset timely appealed the superior court's December 16 dismissal to this Court. See ARCAP 9(a) (a notice of appeal shall be filed within 30 days after the entry of the judgment from which the appeal is taken). ¶17 In considering the superior court's dismissal order, we begin with the language of Rule 75(h), which reads:
Failure to appear at a hearing or to participate in good faith at a hearing which has been set in accordance with Rule 74(b) shall constitute a waiver of the right to appeal absent a showing of good cause. If the judge finds that further proceedings before the arbitrator are appropriate, the case shall be remanded to the assigned arbitrator.¶18 We review a determination that a party failed to participate in good faith in arbitration proceedings for an abuse of discretion. Romer-Polis v. Ada, 223 Ariz. 300, 302, ¶ 12, 222 P.3d 916, 918 (App. 2009) (citations omitted). In reviewing for an abuse of discretion, "[t]he question is not whether the judges of this court would have made an original like ruling, but whether a judicial mind, in view of the law and circumstances, could have made the ruling without exceeding the bounds of reason." Associated Indem. Corp. v. Warner, 143 Ariz. 567, 571, 694 P.2d 1181, 1185 (1985). ¶19 Rule 75(c) dictates the consequences for failing to list and exchange witnesses and exhibits in a joint pretrial statement, stating:
No witness or exhibit shall be used at the [arbitration] hearing other than those listed and exchanged, except for good cause shown or upon written agreement of the parties.(Emphasis added.) The word "shall" normally indicates a mandatory provision. State v. Seyrafi, 201 Ariz. 147, 150-51, ¶¶ 11-14, 32 P.3d 430, 433-34 (App. 2001) (discussing use of "shall" in statutes); In re Maricopa County Superior Court No. MH 2003-000240, 206 Ariz. 367, 369, ¶ 7, 78 P.3d 1088, 1090 (App. 2003) (citations omitted) ("shall" is usually interpreted as mandating the subsequently-described action). ¶20 Asset did not timely file its pretrial statement or serve Weimer with a copy prior to the arbitration hearing. Although it emailed a belated copy to the arbitrator, Asset merely placed Weimer's copy in the mail, ensuring it would not be received before the hearing the next morning. As for the missed deadline, Asset states simply that "counsel apparently did not remember to calendar" it. Good cause requires more. See State v. Churchill, 82 Ariz. 375, 380, 313 P.2d 753, 756 (1957) ("Good cause means substantial reason, that is, one that [a]ffords a legal excuse."); cf. Ulibarri v. Gerstenberger, 178 Ariz. 151, 163, 871 P.2d 698, 710 (App. 1993) (citations omitted) (in the context of Rule 60, carelessness is not the equivalent of excusable neglect). ¶21 In addition to Asset's failure to demonstrate good cause, non-compliance with an arbitrator's requests for documentation can constitute a lack of good faith participation that frustrates "the spirit and purpose of compulsory arbitration." Romer-Pollis, 223 Ariz. at 303, ¶ 17, 222 P.3d at 919; see also Graf v. Whitaker, 192 Ariz. 403, 407, ¶ 16, 966 P.2d 1007, 1011 (App. 1998) ("Courts have the power to control the proceedings before them and enter orders of default or dismissal when a party fails to abide by the procedural rules of the court."). The arbitrator notified counsel on two separate occasions that they were to comply with Rule 75(c). ¶22 A joint pretrial statement is more than a list of witnesses and exhibits. See Carlton v. Emhardt, 138 Ariz. 353, 355, 674 P.2d 907, 909 (App. 1983) (citations omitted) (pretrial statement controls the course of litigation). It is also designed to promote "the efficient and inexpensive handling of claims" and to encourage agreements by the parties on facts and issues. Rule 75(c). ¶23 In applying an abuse of discretion standard, we cannot say that the superior court clearly erred by dismissing Asset's appeal.
The arbitrator's September 22 award is not properly before us. An appeal from compulsory arbitration is de novo as to both the law and facts. Rule 77(c); see also Schwab Sales, Inc. v. GN Constr. Co., 196 Ariz. 33, 35, ¶ 5, 992 P.2d 1128, 1130 (App. 1998) (citation omitted) (on de novo appeal from arbitration, superior court acts as if it were the court of original jurisdiction). It is the superior court's judgments that are subject to our review, not the arbitrator's.
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III. Attorneys' Fees and Costs
¶24 Weimer requests his costs and attorneys' fees on appeal pursuant to ARCAP 21 and A.R.S. § 12-341.01 (permitting discretionary fee award to successful party in a "contested action arising out of a contract"). ARCAP 21 "sets forth the procedure for requesting fees; it does not provide a substantive basis for a fee award." Smyser v. City of Peoria, 215 Ariz. 428, 442, ¶ 50, 160 P.3d 1186, 1200 (App. 2007); see also ARCAP 21(c) ("All claims for attorneys' fees must specifically state the statute, rule, decisional law, contract, or other provision authorizing an award of attorneys' fees."). ¶25 Weimer has consistently denied the existence of a contract. A court may award fees to a defendant in a contract action if he or she prevails on the basis that there is in fact no contract or that there has been no breach of the contract. Mullins v. S. Pac. Transp. Co. , 174 Ariz. 540, 543, 851 P.2d 839, 842 (App. 1992); Shirley v. Hartford Accident & Indem. Co. , 125 Ariz. 70, 71, 607 P.2d 389, 390 (App. 1979). This tenet is arguably inapplicable here, where the merits of the contract claim have not been litigated. But even assuming that A.R.S. § 12-341.01 permits a discretionary award, after considering the relevant factors, see Associated Indemnity, 143 Ariz. at 570, 694 P.2d at 1184, we decline to award attorneys' fees to Weimer. As the successful party on appeal, though, Weimer is entitled to his appellate costs upon compliance with ARCAP 21.
______________________
MARGARET H. DOWNIE,
Presiding Judge
CONCURRING: ______________________
MAURICE PORTLEY, Judge
______________________
PHILIP HALL, Judge