Demichele v. Kim

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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 GINO DEMICHELE and TANYA DEMICHELE, husband and wife, ) ) ) ) ) ) ) ) ) ) ) ) ) ) Plaintiffs/Appellees, v. YUIN KIM and KIMCORP USA, LLC, an Arizona limited liability company; and CONDO USA, LLC, an Arizona limited liability company, Defendants/Appellants. 1 CA-CV 10-0885 DIVISION ONE FILED: 12/08/2011 RUTH A. WILLINGHAM, CLERK BY: DLL DEPARTMENT A MEMORANDUM DECISION Not for Publication (Rule 28, Arizona Rules of Civil Appellate Procedure) Appeal from the Superior Court in Maricopa County Cause No. CV2009-002956 The Honorable Eileen S. Willett, Judge REVERSED AND REMANDED Murphy Karber PLC By Richard B. Murphy Robert M. Karber Attorneys for Appellants Phoenix Keyt Law Offices By Norman C. Keyt Attorney for Appellees Phoenix B A R K E R, Judge 1 ¶1 Yuin Kim, Kimcorp USA, and Condo USA (collectively Defendants or Appellants ) seek review of the trial court s entry of default judgment as a sanction for their failure to appear at a scheduled status conference. court s denial of their Rule 60(c) Appellants argue the motion and/or Rule motion for new trial was an abuse of discretion. 59(a) Because the court expressly found that a key fact was undisputed, when the record shows that it was in dispute, we reverse. Facts and Procedural History ¶2 In February 2009, Gino and Tanya DeMichele ( Plaintiffs or Appellees ) sued Appellants for fraud, unjust enrichment, rescission of contract, and other claims arising out of a real estate contract between the two parties. About a year later, Appellants counsel filed a motion to withdraw as counsel of record without consent. have substantially counsel, that the failed The motion stated that Appellants to withdrawal fulfill will have their no obligations adverse effect to on Appellants interests, and that the clients have been notified, in writing, and orally, of the status of this case. Appellants counsel also filed a certificate in support of the motion certifying that Defendants have been notified in writing of the status of this case including the dates and times of any court hearings or trial settings, pending compliance with any existing court orders, and the possibility of sanctions. 2 On February 16, 2010, the court granted counsel s motion to withdraw and ordered Kimcorp USA and Condo USA as LLC s [to] obtain counsel within 45 days of the filing of this order or sanctions will issue. ¶3 On summary March 30, judgment. The Appellees motion filed was a motion rejected by for the partial court as untimely because it was past the March 22 deadline for filing dispositive motions. reconsideration Appellees explaining that filed its a motion for had been motion intentionally delayed to wait for new defense counsel to appear. Because Appellants had still failed to obtain new counsel as of March 30, Appellees then filed the motion. On reconsideration, the trial court permitted Appellees motion for summary judgment to be filed and ordered Appellants to file a response in 30 days. A copy of the minute entry memorializing this order was sent to Appellants. ¶4 On May 11, Appellants failed to appear for a scheduled telephonic status conference. At the conference, the trial court noted that Appellants had been ordered to obtain counsel, had not complied with the order, and had failed to appear for the conference. Appellees moved for sanctions asking the court to strike Appellants pleadings. that Appellants had failed to The court did so and, finding appear to permitted Appellees to proceed by default. 3 defend the matter, On May 25, 2011, the court entered $172,361.88 judgment and against dismissed, Appellants with in the prejudice, amount of Appellants counterclaims. ¶5 On June 11, Appellants obtained defense counsel and filed a motion for relief from judgment pursuant to Rule 60(c). The motion explained that Appellants had been putting forth diligent effort to obtain new counsel and that Appellants had not been aware of the scheduled status conference. In an unsigned minute entry, the trial court denied Appellants motion finding that they had failed to meet their burden of proof. Appellants then filed a motion for reconsideration pursuant to Rule 59(a), which was also denied by the court in an unsigned minute entry filed on October 29. Appellants now appeal the default sanctions trial judgment court and challenge striking the Appellant s imposed pleadings and by the entering default judgment against Appellants as an abuse of discretion. We have jurisdiction pursuant to Article 6, Section 9 of the Arizona Constitution section 12-2101(A)(2) and Arizona (2011) ( any Revised special Statutes order ( A.R.S ) made after final judgment ). 1 1 Appellees argue that we do not have jurisdiction because Appellants did not timely file their appeal. Because both denials of Appellants motions were effectuated by unsigned minute entries, there were no signed orders for purposes of determining the time period for appeal. See Tripati v. Forthwith, 223 Ariz. 81, 84, ¶ 15, 219 P.3d 291, 294 (App. 4 Discussion ¶6 First, Appellants challenge the trial court s denial of their Rule 60(c) motion for relief from judgment. We review a trial court s denial of a motion for relief from judgment under Rule 60(c) for an abuse of discretion. Aileen H. Char Life Interest v. Maricopa County, 208 Ariz. 286, 298, ¶ 39, 93 P.3d 486, 498 (2004). In reviewing the trial court s ruling on a Rule 60(c) motion, we are mindful of the broad discretion the courts possess, the public policy favoring finality of judgments, and the highly desirable legal objective that cases be decided on their merits. Hirsch v. Nat l Van Lines, Inc., 136 Ariz. 304, 308, 666 P.2d 49, 53 (1983); see also Panzino v. City of Phoenix, 196 Ariz. 442, 448, ¶ 19, 999 P.2d 198, 204 (2000). ¶7 Here, the court denied Appellants motion, finding they failed to meet their burden of proof under Rule 60(c). As 2009). Appellants notice of appeal, filed on November 17, 2010, in response to the court s rulings, was premature because there was no signed order. A signed order is required to determine the cutoff date; however, [b]ecause only the ministerial act of entering a signed order denying the [motions] remained to be accomplished, [Appellants ] premature notice of appeal is deemed effective after entry of the signed order. Tripati, 223 Ariz. at 84-85, 219 P.3d at 294-95. We stayed this matter. The trial court then entered judgment by signed order on February 23, 2011, and this appeal was properly reinstated. Appellees also assert that the only jurisdiction we have is over the denial of the Rule 60(c) motion. Because our ruling on the Rule 60(c) motion makes the trial court s ruling on the Rule 59 motion moot, we need not address this issue. 5 the basis for its ruling, the court stated that Defendants were advised of the Status Conference by their prior counsel and do not dispute this fact. for a properly Defendants nevertheless failed to appear noticed Status Conference. The ruling specifically states the fact that Defendants do not dispute that they were advised of the status conference as the basis for finding they failed to meet their burden of proof. However, in Appellants Rule Rule verification attached 60(c) motion thereto, and in Appellants Kim s expressly set 80(i) forth that they were not aware - and had never received notice - of the status conference scheduled for May 11. ¶8 We will not substitute our judgment for that of the trial court on questions of disputed fact; however, where the court s ruling is based on a mistaken fact, it is necessarily an abuse of discretion. A trial court s discretion is a legal, and not an arbitrary or personal discretion . . . . [a] proper showing of facts is a prerequisite to the exercise of the discretion given the trial court. Richas v. Superior Court (Rozar), 133 Ariz. 512, 514, 652 P.2d 1035, 1037 (1982). Thus, the court abused its discretion in denying Appellants motion by basing its decision on the finding undisputed when in fact it was disputed. 6 that a key fact was Conclusion ¶9 For the reasons stated above, we vacate the court s ruling denying Appellants motion for relief from judgment and remand for Fundamental proceedings fairness may consistent require an with this evidentiary decision. hearing to provide Appellants an opportunity to defend the issue of whether they were actually advised of the status conference. See Weaver v. Synthes, Ltd., 162 Ariz. 442, 445, 784 P.2d 268, 271 (App. 1989). We neither foreclose nor suggest the possibility that there may be other grounds pertinent to ruling on Appellants Rule 60(c) motion. 7 ¶10 incorrect Our decision is based upon the court s reliance on an fact which formed the foundation for its ruling. However, we note that granting default as a sanction for failure to comply with a court order is the most severe sanction; a court s discretion to enter default is more limited than its discretion to employ other sanctions. See Seidman v. Seidman, 222 Ariz. 408, 411, ¶ 18, 215 P.3d 382, 385 (App. 2009). In particular, we are not endorsing an approach in which the trial court simply corrects the factual error noted and then proceeds to enter judgment. /s/ _____________________________ DANIEL A. BARKER, Judge CONCURRING: /s/ ____________________________________ ANN A. SCOTT TIMMER, Presiding Judge /s/ ____________________________________ PATRICK IRVINE, Judge 8

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