C & I v. Performance
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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 IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE C&I ENGINEERING, LLC, a Washington limited liability company, Plaintiff/Appellant, v. PERFORMANCE IMPROVEMENT OF VIRGINIA, a Virginia corporation; STEVEN SWARTHOUT and KATHLEEN SWARTHOUT, husband and wife, Defendants/Appellees. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) No. DIVISION ONE FILED: 04/17/2012 RUTH A. WILLINGHAM, CLERK BY: sls 1 CA-CV 11-0111 1 CA-CV 11-0319 (Consolidated) DEPARTMENT A MEMORANDUM DECISION (Not for Publication Rule 28, Arizona Rules of Civil Appellate Procedure Appeal from the Superior Court in Maricopa County Cause No. CV2010-093130 The Honorable Emmet J. Ronan, Judge DISMISSED IN PART, AFFIRMED IN PART, REVERSED IN PART, REMANDED The Calhoun Law Firm PLC By S. Jay Calhoun Attorneys for Plaintiff/Appellant Tempe Owens & Pyper PLC Phoenix By Bradley T. Owens Attorneys for Defendants/Appellees ________________________________________________________________ T I M M E R, Judge ¶1 These consolidated appeals stem from the superior court s dismissal of C&I Engineering, LLC s ( C&I ) complaint against Performance Improvement of Virginia ( PIV ) and Steven and Kathleen Swarthout for lack of personal and subject matter jurisdiction. In addition to challenging the merits of the dismissal, C&I also contests the court s award of attorneys fees and costs to PIV and the Swarthouts. For the reasons that follow, we dismiss the appeal in CV 11-0111. affirm in part, reverse in part, and In CV 11-0319, we remand for further proceedings. BACKGROUND 1 ¶2 In August 2009, C&I, a Washington company authorized to conduct business in Arizona, entered in a written contract with PIV, a Virginia corporation, for the latter to perform services at a nuclear generating station located in California. Steven Swarthout, a Virginia resident, signed the contract for PIV in his capacity as President. 1 The contract includes a On review of a judgment dismissing a complaint, we consider the facts alleged in the complaint to be accurate. Dunlap v. City of Phoenix, 169 Ariz. 63, 65, 817 P.2d 8, 10 (App. 1990). We do not consider facts asserted by the parties that are not supported by the record. GM Dev. Corp. v. Cmty. Am. Mortgage Corp., 165 Ariz. 1, 4, 795 P.2d 827, 830 (App. 1990) (stating appellate court review limited to evidence in trial court record at time of challenged decision). Likewise, we do not consider as evidence any statements of counsel at oral argument on the motion to dismiss. London v. Green Acres Trust, 159 Ariz. 136, 141, 765 P.2d 538, 543 (App. 1988) ( A statement by counsel is not . . . evidence before the court. ). 2 forum-selection clause, which provides that any lawsuit arising from the contract will be brought in the appropriate court in Maricopa County, Arizona. 2 ¶3 Disputes arose between the parties and, in May 2010, C&I filed a complaint in the superior court in Maricopa County asserting claims intentional for breach interference Swarthouts. with of contract business against expectancy PIV against and the The complaint also asks the court to pierce PIV s corporate veil and hold Mr. Swarthout liable for PIV s breach of contract. 3 Appellees moved the court to dismiss the complaint pursuant to Arizona Rule of Civil Procedure ( Rule ) 12(b)(1), (2), and (6) because (1) the court lacked personal jurisdiction over the Swarthouts, (2) the court lacked subject matter jurisdiction, and (3) C&I failed to state a cognizable claim against the Swarthouts. After briefing and oral argument, the court granted the motion in a signed minute entry on the basis of lack of personal and subject matter jurisdiction. immediately filed a notice of appeal (CV 11-0111). on motion of Appellees, the court awarded C&I Thereafter, them $7,819 attorneys fees and $223 in costs and entered judgment. in C&I 2 The contract is not in the record. Counsel for PIV and the Swarthouts admitted at oral argument on the motion to dismiss that the contract contains a forum-selection clause specifying Arizona as the appropriate forum. 3 The complaint Swarthout. does not make 3 any allegations against Mrs. then filed a notice of appeal challenging the entire judgment (CV 11-0319). ¶4 We consolidated the appeals. We review the superior court s dismissal for lack of personal and subject matter jurisdiction de novo and view the facts in the light most favorable to C&I as the plaintiff. Rollin v. William V. Frankel & Co., 196 Ariz. 350, 352, ¶ 5, 996 P.2d 1254, 1256 (App. 2000) (citing A. Uberti & C. v. Leonardo, 181 Ariz. 565, 567, 569, 892 P.2d 1354, 1356, 1358 (1995)); Fairway Constructors, Inc. v. Ahern, 193 Ariz. 122, 124, ¶ 6, 970 P.2d 954, 956 (App. 1998). We review whether the court is authorized to award attorneys fees de novo. Camelback Plaza Dev., L.C. v. Hard Rock Café Int l., 200 Ariz. 206, 208, ¶ 4, 25 P.3d 8, 10 (App. 2001). DISCUSSION I. ¶5 Personal jurisdiction Under the Arizona long-arm statute, an Arizona court may exercise personal jurisdiction over a nonresident defendant to the States exercise maximum extent Constitutions. personal permitted Rule by the 4.2(a). jurisdiction over Arizona Arizona a and courts defendant who United will has [either] consented to such jurisdiction or . . . has sufficient minimum contacts with the [] state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Bohreer v. Erie Ins. Exch., 216 Ariz. 4 208, 213, ¶ 19, framework in 165 mind, P.3d we 186, address 191 (App. whether 2007). the With superior this court correctly determined it lacked personal jurisdiction over PIV and the Swarthouts. A. ¶6 PIV Although PIV did not base its motion to dismiss on a lack of personal jurisdiction, and its counsel at oral argument on the motion conceded the superior court possessed personal jurisdiction over PIV, the court nevertheless ruled it lacked personal jurisdiction analysis. after conducting a minimum-contacts On appeal, PIV does not argue in support of the court s ruling concerning personal jurisdiction. ¶7 When a party explicitly consents to personal jurisdiction through an enforceable forum-selection clause in a contract, it obviates the need for the court to conduct minimum-contacts analysis under the due process clause. a Id.; Morgan Bank (Del.) v. Wilson, 164 Ariz. 535, 537, 794 P.2d 959, 961 (App. 1990). long as it is [A] forum selection clause is enforceable as not the result of unfair bargaining or so unreasonable that the plaintiff would be deprived of his or her day in court. Bennett v. Appaloosa Horse Club, 201 Ariz. 372, 377, ¶ 19, 35 P.3d 426, 431 (App. 2001). to disavow a forum-selection prove these circumstances. clause bears The party attempting a heavy burden Id. at 377, ¶ 20, 35 P.3d at 431. 5 to ¶8 PIV executed a contract with C&I in which the parties selected Arizona as the forum arising under the contract. finding that the state to resolve any disputes Nothing in the record supports a forum-selection clause results from unfair bargaining or is so unreasonable it would deprive PIV of its day in court. Consequently, the forum-selection clause is sufficient to confer personal jurisdiction over PIV regardless of the quality of its contacts with Arizona. The superior court erred by finding it lacked personal jurisdiction over PIV. B. C&I ¶9 The Swarthouts does not make any arguments that Arizona may exercise personal jurisdiction over the Swarthouts due to their minimum contacts with the state, and the record does not reveal such contacts. in the personal contract Instead, C&I argues the forum-selection clause between jurisdiction C&I over and the PIV also serves Swarthouts. C&I to confer acknowledges that the Swarthouts are not signatories to the contract. But, relying on Schwab Sales, Inc. v. GN Construction Company, 196 Ariz. 33, 992 P.2d 1128 (App. 1998), C&I argues that because its claims against the Swarthouts arise from the contract, and the forum-selection clause applies to claims directly or indirectly related to the contract, the forum-selection clause applies to them. [id] Schwab Sales, however, addressed claims arising under contract in relation to a discretionary award of 6 attorneys fees pursuant to Arizona Revised Statutes ( A.R.S. ) § 12-341.01(A) (West 2012). 4 11, 992 P.2d authority at holds 1132. that a Schwab Sales, 196 Ariz. at 37, ¶ Neither party Schwab can Sales bind nor others any to known a forum- selection clause merely by bringing claims against them that arise from the contract containing the clause. Indeed, such a holding is at odds with the general notion that only parties to a contract and their assignees are bound by its provisions. ¶10 Next, C&I argues the Swarthouts are bound by the forum-selection clause because Mr. Swarthout signed the contract for PIV and warning that jurisdiction. performed his under the actions contract, subjected so him he to had fair personal But the law is clear that an agent who signs an agreement on behalf of a principal is not personally bound. See Ferrarell v. Robinson, 11 Ariz. App. 473, 475, 465 P.2d 610, 612 (1970) ( One who signs an agreement as the agent of a fully disclosed principal is not a party to that agreement and thus incurs no personal liability for the principal s breach of that agreement. ). ¶11 themselves C&I lastly argues the Swarthouts voluntarily subjected to jurisdiction in Arizona courts by asking for attorneys fees in the reply concerning their motion to dismiss. 4 Absent material revisions after the date of the events at issue, we cite a statute s current version. 7 To support its argument, C&I relies on National Homes Corporation v. Totem Mobile Home Sales, Inc., 140 Ariz. 434, 682 P.2d 439 (App. 1984), which held that a defendant waives the defense of insufficiency of service of process by seeking affirmative relief from the court, which usually arises when a defendant files a voluntary counter-claim or cross-claim. Id. at 437, 682 P.2d at 442; see also Carlton v. Emhardt, 138 Ariz. 353, 356, waives 674 P.2d defense third-party of 907, lack 910 of complaint). (App. personal C&I does 1983) (holding jurisdiction not cite defendant by filing any a authority supporting its contention that a request for fees is a request for affirmative relief on par with a counterclaim or crossclaim, and we are not aware of any. et al., Federal (discussing the See 5C Charles Alan Wright Practice & Procedure § principle in terms asserting of 1391 (West 2011) causes of action). And a request for fees expended to obtain a dismissal based on lack of assertion the court jurisdiction lacks is not inconsistent jurisdiction to with adjudicate an the plaintiff s claim; it is simply collateral to the challenge. See Moore v. Permanente Med. Grp., Inc., 981 F.2d 443, 445 (9th Cir. 1992) (explaining it is clear that an award of attorney s fees is a collateral matter over which a court normally retains jurisdiction even after being divested of jurisdiction on the merits ); see also Prime Ins. 8 Syndicate, Inc. v. Soil Tech Distribs. Inc., 270 F. App x 962, 965 (11th Cir. 2008) (to same effect). For these reasons, we do not consider a request for attorneys fees as a voluntary adjudication on the merits. submission of a claim for See Bituminous, Inc. v. Uerling, 607 S.W.2d 331, 333 (Ark. 1980) (rejecting plaintiff s argument that seeking attorneys fees amounts to a prayer for affirmative relief that waives any venue objection). ¶12 In summary, the Swarthouts are not bound by the forum- selection clause contained in the contract between C&I and PIV. Because the Swarthouts have no contacts with Arizona, the superior court correctly ruled it could not exercise personal jurisdiction over them. Dismissal was proper regardless of the propriety of the court s subject matter jurisdiction, which we now address to decide whether the court properly dismissed the complaint against PIV. II. C&I ¶13 lacked Subject matter jurisdiction argues subject the matter superior court jurisdiction as erred the by court authorized to adjudicate contract-based actions. finding is it clearly PIV responds the court lacks subject matter jurisdiction because Arizona has no contacts contract clause at with either issue, cannot confer or the the such parties, dispute, the and jurisdiction. performance of the the forum-selection The superior court agreed with PIV, reasoning parties cannot confer subject matter 9 jurisdiction on the court when it would not exist otherwise and concluding the court lacked jurisdiction because the contract at issue has nothing to do with Arizona. ¶14 PIV and the superior court conflate the principles of subject matter and personal jurisdiction to reach an incorrect result. Although personal jurisdiction turns on a party s submission to jurisdiction or minimum contacts, see Williams v. Lakeview Co., 199 Ariz. 1, 3, ¶ 6, 13 P.3d 280, 282 (2000), subject matter jurisdiction addresses a court s statutory or constitutional power to hear and determine a particular type of case. State v. Moldanado, 223 Ariz. 309, 311, ¶ 14, 223 P.3d 653, 655 (2010) (citations omitted); see also Sil-Flo Corp. v. Bowen, 98 Ariz. 77, 81-82, 402 P.2d 22, 25 (1965) ( Jurisdiction of the subject matter . . . includes every issue within the scope of the general power vested in the court, by the law of its organization, to deal with the abstract question. (citation omitted)). Whether the court possesses subject matter jurisdiction turns on the nature of the allegations set forth in the complaint. Gatecliff v. Great Republic Life Ins. Co., 154 Ariz. 502, 507, 744 P.2d 29, 34 (App. 1987). a breach-of-contract claim against PIV, Here, C&I alleges which unquestionably falls within the superior court s general jurisdiction. Id.; Ariz. Const. art. 6, § 14 (providing general jurisdiction of 10 superior court consists of [c]ases and proceedings in which exclusive jurisdiction is not vested by law in another court ). ¶15 PIV argues parties cannot confer subject matter jurisdiction on the court by agreement when it would not exist otherwise. 588, See Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 594-95, ¶¶ 12-14, 218 P.3d 1045, 1051-52 (App. 2009); Guminski v. Ariz. State Veterinary Med. Examining Bd., 201 Ariz. 180, 184, ¶ 18, 33 P.3d 514, 518 (App. 2001). Although we agree with this principle, it is irrelevant because subject matter jurisdiction in this case is not dependent on the forum- selection clause; it exists because the court has jurisdiction to adjudicate contract claims. Additionally, we reject PIV s contention court that jurisdiction concerning the superior because a the contract Minimum-contacts lawsuit performed analysis is lacks involves in a invoked subject foreign foreign to residents jurisdiction. determine jurisdiction, not subject matter jurisdiction. matter personal See A. Uberti & C., 181 Ariz. at 569-70, 892 P.2d at 1358-59 (stating minimumcontacts analysis used to decide whether exercise of personal jurisdiction complies with due process). to support jurisdiction. the opposite The cases cited by PIV conclusion concern personal See Morgan Bank (Del.), 164 Ariz. 535, 794 P.2d 959; Global Packaging, Inc. v. Superior Court, 127 Cal. Rptr. 3d 813 (Ct. App. 2011). 11 ¶16 it For these reasons, the superior court erred by finding lacked subject matter contract claim against PIV. jurisdiction to adjudicate C&I s We therefore reverse the judgment to the extent it dismisses the complaint against PIV and remand for further proceedings. III. Attorneys fees and costs ¶17 C&I next argues the court improperly awarded attorneys fees and costs to the Swarthouts 5 because (1) it had been divested of jurisdiction to rule in light of C&I s pending appeal, personal and and (2) according subject matter to its ruling, jurisdiction the over court the lacked Swarthouts and, therefore, it could not award them affirmative relief. We address each issue in turn. 6 A. Effect of initial appeal 5 C&I also challenges the award to PIV. But because we reverse the judgment to the extent it dismisses the complaint against PIV, we also vacate the fee award in its favor. We therefore address C&I s arguments only as they concern the Swarthouts. 6 The Swarthouts argue C&I waived these issues by failing to present them in a response to the request for fees. Because C&I presented the issues in a Notice and a reply regarding that notice, C&I sufficiently preserved them. See William Shakespeare, Romeo and Juliet, act 2, sc. 2 ( What s in a name? That which we call a rose / By any other name would smell as sweet. ). Additionally, challenges to a court s subject matter jurisdiction can be made at any time, including for the first time on appeal. Health for Life Brands, Inc. v. Powley, 203 Ariz. 536, 538, ¶ 12, 57 P.3d 726, 728 (App. 2002). 12 ¶18 On January 7, 2011, the court dismissed C&I s complaint without prejudice in a signed minute entry due to lack of jurisdiction. 7 C&I filed a notice of appeal on January 12. Nine days later, on January 21, the Swarthouts moved the court for an costs. award The of attorneys court entered fees a and filed signed its judgment statement dismissing of the complaint and awarding attorneys fees and costs on April 6. [RA 70] C&I s second notice of appeal followed. ¶19 C&I argues the January 7 signed minute entry constituted a final appealable judgment pursuant to Rule 58(a), and its notice of appeal filed on January 12 therefore divested the superior court of jurisdiction to award attorneys fees and costs. See Focal Point, Inc. v. Court of Appeals, 149 Ariz. 128, 129-30, 717 P.2d 432, 433-34 (1986) (holding signed minute entry can be a judgment ); Sw. Gas Corp. v. Irwin ex rel. County of Cochise, 629 Ariz. Adv. Rep. 16, ¶ 8 (App. Feb. 29, 2012) (noting that when a party files a notice of appeal from final judgment, it usually divests the superior court of jurisdiction to proceed except in furtherance of the appeal). The Swarthouts respond that the January 7 order was not appealable because their claim for fees remained outstanding, 7 The court entered an unsigned minute entry on December 22, 2010 setting forth its ruling, but the court later withdrew that order for clerical error. We therefore consider the January 7, 2011 order as the initial ruling on Appellees motion to dismiss. 13 and the court therefore acted within its jurisdiction by awarding fees and costs. 8 ¶20 We begin by examining rules governing entry of civil judgments. Rule 58(g) provides that a judgment shall not be entered until claims for attorneys fees have been resolved and are addressed in the judgment, unless the court certifies a merits decision for immediate appeal pursuant to Rule 54(b). According to State Bar Committee Notes to the 1999 Amendments to Rule 58(g), this procedure fosters resolution of all issues in one judgment for efficient review in a single appeal. Thus, in the absence of Rule 54(b) certification, a signed order only constitutes a final judgment for purposes of appeal if it adjudicates all claims, including claims for attorneys fees. Nat l Broker Assocs., Inc. v. Marlyn Nutraceuticals, Inc., 211 Ariz. 210, 218, ¶ 37, 119 P.3d 477, 485 (App. 2005). ¶21 The requesting Swarthouts an award in dismiss for lack request for attorneys claims ). of submitted the reply jurisdiction. fees in a claim concerning See answer id. and in for the fees by motion to (characterizing open court as Although a motion for fees was not pending at the 8 Although it is not improper for the superior court to issue signed minute entries, we encourage to court to avoid doing so when claims for attorneys fees are outstanding. Nothing is gained by signing a minute entry when claims are pending, and parties are often confused by the impact of such orders and file multiple notices of appeal to protect their interests, as occurred in this case. 14 time the court entered the January 7 order, we agree with this court s decision in Britt v. Steffen, 220 Ariz. 265, 270, ¶ 22, 205 P.3d 357, 362 (App. 2008), that the superior court retained jurisdiction to consider a timely filed motion for fees. In Britt, the plaintiff filed a breach-of-contract complaint, the defendant requested fees in the answer, and the court entered a signed order dismissing the complaint for failure to prosecute and later granted the defendant s fee motion, which was timely filed after entry of the signed order. P.3d at 360. the Britt Id. at 268, ¶ 12, 205 After reviewing amendments to procedural rules, court held that the superior court retains jurisdiction to consider a timely filed motion for attorneys fees. Id. at 270, ¶ 22, 205 P.3d at 362. As the Britt court noted, it would defy reason to hold that the court deprives itself of awarding attorneys fees to the prevailing party by entering a signed order that the party, in fact, prevailed and qualifies for a fee award. ¶22 Id. January Based on the foregoing authorities, we decide that the 7 signed minute entry was not a final appealable judgment because the Swarthouts fee claim remained outstanding, the time for filing a motion for fees had not expired, and the court did not certify the order pursuant to Rule 54(b). 54(g)(2). Rule Like the defendant in Britt, the Swarthouts timely filed a motion for fees and statement of costs after entry of 15 the January 7 signed minute entry. 346(A). See Rule 54(g); A.R.S. § 12- The superior court therefore retained jurisdiction to award fees and costs. Nat l Broker Assocs., 211 Ariz. at 218, ¶ 37, 119 P.3d at 485; Rule 58(g). Consequently, C&I s notice of appeal from the January 7 order was ineffective as that order was not a final, appealable judgment. We therefore dismiss that appeal (CV 11-0111). 9 B. Effect of jurisdictional ruling ¶23 C&I next argues the superior court erred by awarding attorneys fees and costs in light jurisdiction over the Swarthouts. of its ruling it lacked This argument is a variant of C&I s contention that the Swarthouts waived their jurisdictional challenge by seeking attorneys fees, and we reject it for the reasons previously explained. ¶24 See supra ¶ 11. In summary, the superior court did not act in excess of its jurisdiction by awarding attorneys fees and costs to the Swarthouts. ATTORNEYS FEES ON APPEAL ¶25 All parties request an pursuant to A.R.S. § 12-341.01. award of attorneys fees In our discretion, we award fees to the Swarthouts, subject to their compliance with Arizona 9 Because C&I appealed from the entirety of the April 6, 2011 judgment, its challenge to the superior court s dismissal of the complaint for lack of personal and subject matter jurisdiction is properly before us. See supra ¶¶ 5-16. 16 Rule of Civil Appellate Procedure ( ARCAP ) 21. The fee application must not seek fees attributable solely to addressing issues relating to PIV. Although C&I prevailed in this appeal as against PIV, because no party has yet prevailed on the merits of the case, we decline to award fees to C&I. prevails on the merits of its complaint, If C&I ultimately it may move the superior court for reimbursement of attorneys fees incurred in this appeal. MOTIONS ON APPEAL ¶26 Appellees move to strike C&I s reply brief or portions of it relating to the court s personal jurisdiction over the Swarthouts, the bond on appeal, and a new statement of the case and facts. In light of our resolution of the jurisdiction issue in favor of the Swarthouts, and because we do not rely on the other contested sections of the brief, we deny the motion as moot. ¶27 C&I moves for an award of sanctions against Appellees for filing their motion to strike. We do not find the motion so lacking in merit that sanctions are warranted under ARCAP 25. We therefore deny the motion. Additionally, we deny C&I s request for an extension of time to file the reply to its motion for sanctions. 17 CONCLUSION ¶28 For the foregoing reasons, we dismiss the appeal in CV 11-0111 because we lack jurisdiction to decide an appeal taken from a judgment that is not final. decide the appeal in CV 11-0319. judgment to prejudice to extent against jurisdiction reverse the and the the awards extent it We have jurisdiction to In that appeal, we affirm the dismisses Swarthouts them the the for attorneys judgment against PIV and awards fees to PIV. complaint lack fees of and dismisses without personal costs. the We complaint We award attorneys fees to the Swarthouts subject to their compliance with ARCAP 21(c), and we deny the remaining parties request for fees. Finally, we remand to the superior court for further proceedings. /s/ _____ Ann A. Scott Timmer, Judge CONCURRING: /s/ Maurice Portley, Presiding Judge /s/ Andrew W. Gould, Judge 18
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