American Asphalt v. CMX

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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 AMERICAN ASPHALT & GRADING COMPANY, an Arizona corporation, ) ) ) Plaintiff/Appellant, ) ) v. ) ) CMX, L.L.C., an Arizona limited ) liability company; CMX GROUP, ) INC., an Arizona corporation, ) ) Defendants/Appellees. ) ) __________________________________) DIVISION ONE FILED: 07-22-2010 PHILIP G. URRY,CLERK BY: GH 1 CA-CV 09-0634 DEPARTMENT B MEMORANDUM DECISION (Not for Publication Rule 28, Arizona Rules of Civil Appellate Procedure) Appeal from the Superior Court in Maricopa County Cause No. CV2008-009602 The Honorable John A. Buttrick, Judge AFFIRMED Lang Baker & Klain PLC By Kent A. Lang William G. Klain Michael Walter Thal Attorneys for Plaintiff/Appellant Scottsdale Folk & Associates PC Phoenix By P. Douglas Folk Benjamin L. Hodgson Attorneys for Defendants/Appellees CMX, LLC and CMX Group, Inc. P O R T L E Y, Judge ¶1 Plaintiff/appellant American Asphalt and Grading Company ( American Asphalt ) appeals the denial of its request for relief pursuant to Arizona Rule of Civil Procedure 60(c) and Arizona Revised Statutes ( A.R.S. ) section 12-504 (2003) after its action against CMX, L.L.C. ( CMX ) was dismissed for lack of prosecution. Finding no abuse of discretion, we affirm. FACTS AND PROCEDURAL HISTORY ¶2 American subdivision Asphalt development for Element a project Homes ( Element Homes ). surveyor was contractor for on Element a residential H-CMSMR, L.L.C. CMX was the civil engineer and land Homes. American Asphalt sued CMX and Element Homes in April 2008 and amended the complaint on July 22, 2008. The professional amended negligence complaint and breach asserted of claims common-law for implied warranty of accuracy and suitability because the mass-grading plans for the inaccurate project and caused that CMX had American prepared Asphalt were to materially significantly underestimate its bid to excavate the material. ¶3 After it was served, CMX filed a motion to dismiss and motion to compel arbitration. November 21, 2008, and in The court denied the motion on the interim, issued a 150-day order on October 1, 2008. following: 2 court administration The order stated the A motion to Set and Certificate of Readiness or an Appeal from Arbitration shall be filed on or before 1/20/2009. . . . If Rule 38.1 is not complied with, the case will be placed on Inactive Calendar on the date shown above and it will be dismissed pursuant to Rule 38.1, without further notice, on or after 3/23/2009. ¶4 CMX parties filed stipulated its answer that on American counsel in February 2009. December Asphalt 31, 2008. could The substitute The case was dismissed on April 29, 2009, when court administration entered a judgment of dismissal for lack of prosecution and failure to comply with Rule 38.1. ¶5 American Asphalt immediately filed a motion to reinstate the action pursuant to Rule 60(c)(1) or (6), Arizona Rules of complaint asserted Civil Procedure, pursuant that its to or A.R.S. failure alternatively § to 12-504. file a to refile American motion to certificate of readiness was an inadvertent mistake. the Asphalt set and American Asphalt explained that the deadline to file the certificate of readiness passed transferring the while case former and while and its current current counsel counsel were was analyzing the complicated factual and technical aspects of the case in order to prosecute the issues. attached a draft captioned American Asphalt also Plaintiff s Disclosure Statement. 3 Rule 26.1 Initial ¶6 In denying American Asphalt s motion, the court stated the following: The pivotal issue to be decided here is whether Plaintiff s failure to heed the Court s order warning of dismissal constituted excusable neglect. On the record before the Court, Plaintiff has not met its burden to show excusable neglect. Instead, it appears that one or both of the law firms who represented it were simply careless. Carelessness does not equate to excusable neglect. Ulibarri v. Gerstenberger, 178 Ariz. 151 (App. 1993). Rule 60(c) relief is denied. Similarly, Plaintiff s request for relief under the savings statute, Ariz. Rev. Stat. § 12-504, is denied. Again, excusable neglect has not been shown. Jepson v. New, 164 Ariz. 265 (1990) (adopting the excusable neglect standard for Ariz. Rev. Stat. § 12504 relief articulated on Flynn v. CornoyerHedrict Architects & Planners, Inc., 160 Ariz. 187 (App. 1988)). Plaintiff s Motion therefore, denied. to Reinstate is, (Emphasis in original.) ¶7 American Asphalt filed a notice of appeal, and we have jurisdiction pursuant to A.R.S. § 12-2101(C) (2003). DISCUSSION ¶8 Rules American of Civil Asphalt Procedure sought relief 60(c)(1) and pursuant Rule to 60(c)(6). Arizona The purpose of [Rule 60(c)] is to provide relief for those mistakes and errors which inevitably occur despite diligent efforts to 4 comply with the rules. Panzino v. City of Phoenix, 196 Ariz. 442, 445, ¶ 5, 999 P.2d 198, 201 (2000) (quoting City of Phoenix v. Geyler, 144 Ariz. 323, 332, 697 P.2d 1073, 1082 (1985)). We review the trial court s decision on a Rule 60(c) motion for an abuse of discretion. Copeland v. Ariz. Veterans Mem l Coliseum & Exposition Ctr., 176 Ariz. 86, 89, 859 P.2d 196, 199 (App. 1993). ¶9 must To obtain relief under Rule 60(c)(1), the moving party show mistake, inadvertence, surprise or excusable neglect, that it promptly sought relief, and that it had a meritorious claim or defense. Jepson v. New, 164 Ariz. 265, 272-73, 792 P.2d 728, 735-36 (1990); Copeland, 176 Ariz. at 89, 859 P.2d at 199. To obtain relief under Rule 60(c)(6), the moving party must show extraordinary circumstances of hardship or injustice, that the cause was prosecuted vigorously and diligently, that reasonable steps were taken to inform the court of the status of the case, and that substantial prejudice will result unless relief is granted, that relief was sought promptly, and that the moving party had a meritorious claim or defense. Jepson, 164 Ariz. at 273, 792 P.2d at 736; Copeland, 176 Ariz. at 89, 859 P.2d at 199. Relief under Rule 60(c)(6) also requires a showing that the attorney s failure to act was legally excusable. Panzino, 196 Ariz. at 445, ¶ 7, 999 P.2d at 201. 5 ¶10 American Asphalt argues that a single deadline was inadvertently missed when two law firms transferred the case file. It contends that the mistake, which the court termed carelessness, constitutes inadvertence under Rule 60(c)(1). The standard for determining whether conduct is excusable is whether the neglect or inadvertence is such as might be the act of a reasonably prudent person under the same circumstances. Geyler, 144 Ariz. at 331, 697 P.2d at 1081. Whether the person acted diligently is the final arbiter of whether the conduct is excusable. ¶11 a Id. at 332, 697 P.2d at 1082. American Asphalt characterizes its missed deadline as clerical placed mistake on the that inactive is excusable calendar because before the was counsel present matter was substituted into the case, an answer had been received less than two months before present counsel took over, and court administration had not provided a separate notice that the case was on the inactive calendar. ¶12 A secretarial or clerical error resulting in a missed deadline may be excusable. Cook v. Indus. Comm n of Ariz., 133 Ariz. 310, 312, 651 P.2d 365, 367 (1982) (attorney s late filing excusable where attorney relied on erroneous recording of deadline by temporary secretary); see also Coconino Pulp & Paper Co. v. Marvin, 83 Ariz. 117, 119-21, 317 P.2d 550, 551-52 (1957) (attorney s failure to timely 6 file answer excusable where secretary failed to provide attorney with calendar sheet advising of deadline, as was firm s practice). ¶13 The missed deadline here was not a simple clerical mistake. There was no evidence that a secretary or assistant failed to docket a deadline or did so incorrectly. Rather, American Asphalt s former counsel failed to act on the 150-day order, and current counsel did not see the order. The 150-day order was the only pink sheet of paper in one of the two boxes of documents transferred to new counsel. Moreover, on appeal, American Asphalt stated that current counsel worked with prior counsel for several weeks before formally becoming counsel for American Asphalt. During the transition, none of the lawyers noted the inactive calendar dates. ¶14 American Asphalt argues that the timing of the answer contributed to the error. The argument is unpersuasive given the specificity of the 150-day order and from the need to comply or seek a continuance. ¶15 American Asphalt also argues that the court administrator failed to send a specific notice when the action was placed on the inactive calendar. The 150-day order provided the notice required in Rule 38.1(e); and explicitly stated the date on which the matter was to be placed on the inactive calendar and the date on which it was to be dismissed. order also indicates no further 7 notice will be The provided. Consequently, the failure to receive a specific notice that the matter was placed on the inactive calendar is not excusable neglect. ¶16 for Although former counsel had tried to settle the case two years before the claim, prosecute filing nor suit, did they they did not provide explaining why they did not request extensions. diligently an affidavit Current counsel did not inquire into any deadlines before being substituted, had a short time to act, and missed deadlines additional time to file required pleadings. without seeking The trial court did not abuse its discretion when it found that American Asphalt did not demonstrate excusable neglect that entitled it to relief under Rule 60(c)(1). ¶17 To determine whether relief is warranted under Rule 60(c)(6), we must also consider whether the claim was pursued vigorously. statute of See Gorman, 152 Ariz. at 183, 731 P.2d at 78 (when limitations has expired, the court must consider whether the record shows abandonment or pursuit of the claim; diligence is the hallmark ). ¶18 The record does not show diligent prosecution of the claim. Although the parties had tried to resolve the case for two years before the lawsuit was filed and exchanged information and correspondence on the work each did, including information from American Asphalt s engineer, 8 Lemme Engineering, American Asphalt failed to timely provide its Rule 26.1 initial disclosure statement or its expert witness affidavits pursuant to A.R.S. § 12-2602 (2003). ¶19 In fact, CMX s counsel sent an email to American Asphalt s new counsel on February 9, 2009, suggesting that they needed to agree on a disclosure schedule and advising new counsel that American Asphalt had yet to provide the expert s affidavit. CMX agreed to an extension deadline until February 19, 2009. that deadline. of the disclosure American Asphalt did not meet The disclosure and affidavits were provided in draft form in May 2009, but were not formally filed until June 30, 2009, when American Asphalt filed its reply to its motion for relief from the dismissal. ¶20 CMX s There answer was, and moreover, the very dismissal. little The activity parties between stipulated to substitute counsel and sent emails between counsel extending the date for filing the Rule 26.1 initial disclosure statements and the expert affidavits. American Asphalt s new counsel tried to understand the case and ultimately hired a second consultant, but did not seek additional time to comply with the 150-day order. Homes And, at no time did American Asphalt default Element even though Element Homes responsive pleading. 9 never filed an answer or ¶21 The record does not establish that American Asphalt diligently prosecuted its claim. Consequently, the trial court did not abuse its discretion when it found that American Asphalt was not entitled to Rule 60(c)(6) relief. ¶22 American Asphalt also argues that it was entitled to relief pursuant to A.R.S. § 12-504, the savings statute. The statute provides in pertinent part: If an action timely commenced is terminated . . . for lack of prosecution, the court in its discretion may provide a period for commencement of a new action for the same cause, although the time otherwise limited for commencement has expired. Such period shall not exceed six months from the date of termination. A.R.S. § 12-504(A). ¶23 The plaintiff bears the circumstances justifying relief under burden A.R.S. of presenting § 12-504(A). Jepson, 163 Ariz. at 272, 792 P.2d at 735 (quoting Flynn v. Cornoyer-Hedrick Architects & Planners, 192, 772 P.2d 10, 15 (App. 1988)). Inc., 160 Ariz. 187, The plaintiff must show that it acted reasonably and in good faith, that it prosecuted the case diligently and vigorously, that no other impediment exists to filing a second action, and that it will be substantially prejudiced. See McKernan v. Dupont, 192 Ariz. 550, 557, ¶ 26, 968 P.2d 623, 630 (App. 1998), overruled on other grounds by Panzino, 196 Ariz. at 445 n.3, ¶ 8, 999 P.2d at 201 n.3. 10 The trial court has broad discretion in deciding whether to grant relief under the savings statute, and we will not disturb that decision absent an abuse of discretion. Jepson, 164 Ariz. at 274, 792 P.2d at 737. ¶24 Where a case is dismissed for lack of prosecution, relief should be granted under A.R.S. § 12-504 only where the plaintiff shows that pursuit of the case. the dismissal Id. occurred despite diligent The diligence standard that applies to Rule 60(c)(6) relief also applies to the savings statute. Id. at 273, 792 P.2d at 736. Because we have already concluded that American Asphalt did not diligently prosecute the action, the trial court did not abuse its discretion when it denied relief pursuant to A.R.S. § 12-504. ¶25 CMX has requested an award of attorneys fees on appeal pursuant to A.R.S. §§ 12-341.01(C) and -349(A)(1) 1 (2003). Section 12-341.01(C) requires the court to award reasonable attorney fees in any contested action upon clear and convincing evidence that the claim or defense constitutes harassment, is groundless and is not made in good faith. All three elements harassment, groundlessness, and the absence of good faith must be present for fees to be awarded under this section. Rowland v. Great States Ins. Co., 199 Ariz. 577, 587, ¶ 33, 20 P.3d 1 CMX has not identified the subsection of A.R.S. § 12-349 under which it makes its request. We conclude the request is pursuant to § 12-349(A)(1) based on the argument presented. 11 1158, 1168 (App. 2001). any civil action . . Section 12-349(A)(1) provides that in . the court shall assess reasonable attorney fees . . . against an attorney or party . . . if the attorney or party . . . [b]rings or defends a claim without substantial justification. [W]ithout substantial justification means that the claim constitutes harassment, is groundless and is not made in good faith. A.R.S. § 12-349(F). Like A.R.S. § 12-341.01(C), all three elements must be proven. City of Casa Grande v. Ariz. Water Co., 199 Ariz. 547, 555, ¶ 27, 20 P.3d 590, 598 (App. 2001). Under A.R.S. § 12-349, however, they must be proven by a preponderance of the evidence, rather than by clear and convincing evidence. ¶26 CMX groundless. argues that American Id. Asphalt s claims are It has presented no argument with respect to the elements of harassment or lack of good faith. Consequently, CMX has not established the elements required to be entitled to an award of fees under either A.R.S. §§ 12-341.01(C) or -349(A)(1). ¶27 CMX has also requested an award of attorneys fees pursuant to A.R.S. § 34-222 (Supp. 2009). The statute requires a person to provide bonds before entering into a construction contract for certain projects and requires the bonds to include a provision allowing the prevailing party in a suit on a bond to recover reasonable attorneys fees. § 34-222(A), (B). CMX has offered no argument and no factual basis to support application 12 of the statute in this case. We, therefore, deny CMX s request for attorneys fees. CONCLUSION ¶28 We find no abuse of discretion in the court s decision denying American Asphalt s request for relief pursuant to Rule 60(C)(1), (6), and A.R.S. § 12-504. The trial court s ruling is affirmed. /s/ _____________________________ MAURICE PORTLEY, Judge CONCURRING: /s/ ________________________________ JOHN C. GEMMILL, Presiding Judge /s/ ________________________________ LAWRENCE F. WINTHROP, Judge 13

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