Vidales v. Huth ( 2015 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
ANGELA J. VIDALES, an individual,
Plaintiff/Appellant,
v.
DONALD B. HUTH, an Arizona certified
home inspector, Certificate No. 40519;
HOOTY’S HOME INSPECTIONS, LLC,
Defendants/Appellees.
Nos. 1 CA-CV 14-0406, 1 CA-CV 14-0610
(Consolidated)
FILED 5-14-2015
Appeal from the Superior Court in Maricopa County
Nos. CV2013-005038, CV2013-005129
The Honorable J. Richard Gama, Judge
The Honorable Colleen French, Judge Pro Tempore
The Honorable Maria del Mar Verdin, Judge, Retired
REVERSED AND REMANDED
COUNSEL
Gallagher & Kennedy, P.A., Phoenix
By Jeffrey D. Gross, Christopher W. Thompson
Counsel for Plaintiff/Appellant
Simmons & Gottfried, PLLC, Scottsdale
By Jared C. Simmons, David Marhoffer
Counsel for Defendants/Appellees
VIDALES v. HUTH
Decision of the Court
MEMORANDUM DECISION
Judge Michael J. Brown delivered the decision of the Court, in which
Presiding Judge Samuel A. Thumma and Judge Patricia A. Orozco joined.
B R O W N, Judge:
¶1 In these consolidated appeals, Angela J. Vidales challenges
the superior court’s (1) denial of her request for relief, pursuant to Arizona
Rule of Civil Procedure (“Rule”) 60(c), from the dismissal of her complaint
against Donald B. Huth and Hooty’s Home Inspections, LLC (collectively,
“Hooty”) with prejudice in 1 CA-CV 14-0406, and (2) award of attorneys’
fees to Hooty in 1 CA-CV 14-0610. For the following reasons, we reverse
the court’s Rule 60(c) ruling and remand for further proceedings. We also
reverse the court’s attorneys’ fees award.
BACKGROUND
¶2 Vidales purchased a home in December 2010. Before the close
of escrow, Vidales’ realtor, Dorathey Duffield, arranged for Huth to
conduct a property inspection. Less than two months after escrow closed,
a substantial roof leak occurred, though such defect was not reported in
Huth’s inspection report.
¶3 Because Hooty declined to accept responsibility for the
inspection oversight, Vidales filed a complaint against Huth with the
Arizona State Board of Technical Registration (“Board”). Following its
investigation, the Board issued a Consent Agreement, Order of Discipline,
and a Letter of Reprimand, finding that Huth “failed to conduct the home
inspection in accordance with the Standards of Professional Practice for
Arizona Home Inspectors,” and specifically, that he “[f]ailed to properly
identify the condition of the leaking roof.”
¶4 In May 2013, Vidales filed a pro per complaint against Hooty
and Duffield in superior court, cause number CV2013-005038 (“Case 1”).
Although Vidales’ complaint included some factual information (including
a copy of the Consent Agreement), the complaint did not identify a theory
of recovery or request specific relief.
¶5 Duffield moved to dismiss under Rule 12(b)(6), asserting the
complaint was procedurally defective, that she could not be held
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VIDALES v. HUTH
Decision of the Court
vicariously liable for Hooty’s alleged negligent inspection of the property,
and that the claim was barred by the statute of limitations. Hooty also filed
a motion to dismiss under Rule 12(b)(6), asserting the complaint failed to
state a claim upon which relief could be granted and did not include
required provisions such as jurisdiction, venue, or the elements of a cause
of action. Hooty therefore argued the complaint was “technically and
procedurally insufficient.” Attached to Hooty’s motion was a proposed
order dismissing the case with prejudice. In response the motions to
dismiss, Vidales stated that her complaint was filed without claim
information, that she had “several receipts to submit,” that she was
obtaining a subpoena for a report from the City of Goodyear, and that her
damages were still unknown.
¶6 The superior court issued an unsigned minute entry granting
both motions to dismiss and “dismissing the matter without prejudice.”
The court also directed Duffield and Hooty to lodge a form of order.
¶7 Duffield submitted a proposed form of order dismissing the
matter with prejudice, which included a footnote explaining that “the basis
for [Duffield’s] motion was substantive[,] not procedural,” and for “this
reason” dismissal is “with prejudice.” Hooty submitted its own proposed
form of order dismissing the matter with prejudice, but without an
explanation for why dismissal should be with prejudice. Neither of these
submittals reflected the relief ordered by the minute entry, which dismissed
the matter without prejudice. In an unsigned minute entry issued October
2, 2013, the court noted that the proposed forms of order “contain[ed]
language that dismissal should be with prejudice.” Noting that Vidales
failed to object to the proposed language, the court signed an order
dismissing the case with prejudice as to both Duffield and Hooty.
¶8 Before the court had granted dismissal with prejudice in
CV2013-005038, on September 20, 2013, Vidales filed a second pro per
complaint against Hooty and Duffield in superior court under a new cause
number, CV2013-005129 (“Case 2”). The complaint set forth specific factual
information relating to jurisdiction, venue, and her alleged claims relating
to the roof leak. After the superior court had dismissed Vidales’ complaint
with prejudice in Case 1, Hooty filed a motion to dismiss her complaint in
Case 2, asserting the claims were barred by res judicata and requesting an
award of attorneys’ fees.
¶9 On November 18, 2013, Vidales filed a motion for relief from
the order entered in Case 1 pursuant to Rule 60(c)(1), (3) and (6), explaining
that she “did not notice” that, unlike the language of the superior court’s
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VIDALES v. HUTH
Decision of the Court
minute entry, Hooty’s proposed form of order directed dismissal with
prejudice. Vidales explained she “had no reason to think the parties would
file proposed forms of order inconsistent” with the ruling in the court’s
minute entry. The court denied the request for Rule 60(c) relief, finding that
Vidales “was given the opportunity to participate in the judicial process
and chose not to do so” by failing to object to the proposed form of order.
¶10 Following the superior court’s denial of Vidales’ request for
Rule 60(c) relief in Case 1, Hooty filed a motion for summary adjudication
in Case 2. The court granted Hooty’s motion and dismissed Vidales’
complaint with prejudice. The court also awarded Hooty $3,495.92 in
attorneys’ fees. Vidales timely appealed from the order denying Rule 60(c)
relief and the order awarding attorneys’ fees.1 This court, on its own
motion, consolidated the cases for appellate review.
DISCUSSION
A. Denial of Request for Rule 60(c) Relief in Case 1
¶11 Pursuant to Rule 58(a), a proposed form of judgment “shall
be served upon all parties and counsel.” A judgment includes “an order
from which an appeal lies.” Ariz. R. Civ. P. 54(a). Upon being served with
the form of judgment, the opposing party has a five-day period to lodge
any objections. Ariz. R. Civ. P. 58(d). In this case, it is undisputed that
Vidales received Hooty’s proposed form of order and failed to file a timely
objection.
¶12 Vidales contends that notwithstanding her failure to object,
the dismissal with prejudice order should be set aside on three grounds: (1)
“mistake, inadvertence, surprise or excusable neglect” (Rule 60(c)(1)); (2)
“fraud, misrepresentation or other misconduct of an adverse party” (Rule
60(c)(3)); and (3) “any other reason justifying relief from the operation of
the judgment” (Rule 60(c)(6)).
¶13 The purpose of Rule 60(c) “is to provide relief for those
mistakes and errors which inevitably occur despite diligent efforts to
comply with the rules.” City of Phoenix v. Geyler, 144 Ariz. 323, 332, 697 P.2d
1073, 1082 (1985). The rule “is primarily intended to allow relief from
judgments that, although perhaps legally faultless, are unjust because of
extraordinary circumstances that cannot be remedied by legal review.”
1 Vidales has not appealed the dismissal of her claims against Duffield
in either case.
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Hyman v. Arden-Mayfair, Inc., 150 Ariz. 444, 446, 724 P.2d 63, 66 (1986)
(internal quotation omitted).
¶14 We review a superior court’s order denying relief under Rule
60(c) for an abuse of discretion. Geyler, 144 Ariz. at 328, 697 P.2d at 1078.
“To find an abuse of discretion, there must either be no evidence to support
the superior court’s conclusion or the reasons given by the court must be
‘clearly untenable, legally incorrect, or amount to a denial of justice.’”
Charles I. Friedman, P.C. v. Microsoft Corp., 213 Ariz. 344, 350, ¶ 17, 141 P.3d
824, 830 (App. 2006) (quoting State v. Chapple, 135 Ariz. 281, 297 n.18, 660
P.2d 1208, 1224 n.18 (1983)).
¶15 In response to Vidales’ motion for Rule 60(c) relief, Hooty
asserted “the substantive arguments made by all the Defendants”
regarding the statute of limitations justified the superior court’s dismissal
of Vidales’ complaint with prejudice. Contrary to Hooty’s representation,
the record reflects that only Duffield raised a statute of limitations challenge
to Vidales’ complaint. In its motion to dismiss, Hooty argued the complaint
was “technically and procedurally insufficient” based on Vidales’ failure to
set forth a cognizable theory for relief. Hooty neither independently raised
a substantive challenge nor joined in Duffield’s motion.
¶16 On appeal, Hooty no longer claims there was a substantive
basis for dismissal with prejudice. Instead, Hooty asserts for the first time
that “the language ‘with prejudice’ may have been innocently and
inadvertently copied” from a “different proposed order.” According to
Hooty, “this is an error that, on occasion happens in a busy law office, and
it was incumbent upon Vidales . . . to catch this error” by Hooty’s counsel
and “and bring it to the attention of the trial court.”
¶17 To obtain relief under Rule 60(c)(3), the movant must (1) have
a meritorious claim, (2) that was not fully presented before judgment, (3)
because of the adverse party’s fraud, misrepresentation, or misconduct.2
See Estate of Page v. Litzenburg, 177 Ariz. 84, 93, 865 P.2d 128, 137 (App. 1993).
Under Rule 60(c)(3), “misconduct,” unlike “fraud” and
“misrepresentation,” is broadly construed to include “accidental” and
“inadvertent” errors not motivated by bad faith. See Norwest Bank, N.A. v.
Symington, 197 Ariz. 181, 186, ¶¶ 19, 22, 3 P.3d 1101, 1106 (App. 2000)
(holding an inadvertent discovery violation constitutes misconduct under
2 Based on the Consent Agreement, in which Huth acknowledged his
inspection fell below professional standards, Vidales has demonstrated a
meritorious claim that she was not able to fully present before judgment.
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Rule 60(c)(3)); Estate of Page, 177 Ariz. at 93, 865 P.2d at 137 (noting
“misconduct” under Rule 60(c) “may include even accidental omissions”);
see also Anderson v. Cryovac, Inc., 862 F.2d 910, 923 (1st Cir. 1988) (analyzing
analogous federal rule and concluding “[m]isconduct does not demand
proof of nefarious intent or purpose as a prerequisite to redress. . . .
Accidents—at least avoidable ones—should not be immune from the reach
of the rule.”) (internal quotations omitted).
¶18 Applying this broad construction of “misconduct” to the
unique factual scenario presented here, we conclude the superior court
erred in denying Vidales’ request for Rule 60(c) relief. First, in the superior
court, Hooty erroneously represented that it had raised a substantive
challenge to Vidales’ complaint. Second, on appeal, Hooty confesses error
in submitting the proposed form of judgment that dismissed Vidales’
claims with prejudice. Rather than acknowledging the error before the
superior court, Hooty advocated that the wording change was legally
proper and accepted the benefit of its mistake. Third, Hooty does not
defend the dismissal with prejudice other than to shift responsibility to
Vidales based on her failure to object. Finally, because Hooty’s motion to
dismiss was based solely on the complaint’s procedural defects and did not
raise any substantive challenges, there was no substantive basis upon
which the complaint could properly be dismissed with prejudice.
¶19 Therefore, given the circumstances of this case, particularly
with the confession of error by Hooty on appeal, rejection of Vidales’ claim
for Rule 60(c) relief results in a denial of justice. We therefore vacate the
order dismissing Vidales’ complaint with prejudice and remand for further
proceedings consistent with this decision.
B. Award of Attorneys’ Fees in Case 2
¶20 In response to Vidales’ filing of a new complaint in Case 2,
Hooty filed a motion to dismiss, arguing the complaint was barred by the
doctrine of res judicata. Hooty also requested an award of its attorneys’
fees pursuant to Arizona Revised Statutes (“A.R.S.”) sections 12-341.01
(claim arising out of contract) and –349 (claim brought without substantial
justification, for purposes of harassment, or unreasonably expanding or
delaying the proceeding). Following the court’s denial of Vidales’ request
for Rule 60(c) relief in Case 1, Hooty filed a motion for summary
adjudication that requested an award of attorneys’ fees pursuant to A.R.S.
§ 12-349 only. The court entered an order for summary adjudication that
awarded Hooty its attorneys’ fees and costs without identifying the
statutory basis for the fee award or setting forth any findings.
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VIDALES v. HUTH
Decision of the Court
¶21 Vidales unsuccessfully moved for reconsideration of the
attorneys’ fees award, expressly noting that under A.R.S. § 12-350 an award
of attorneys’ fees cannot be entered pursuant to § 12-349 unless the court
enters specific findings. In response to Hooty’s affidavit of attorneys’ fees,
Vidales again argued there was no basis for an award of attorneys’ fees
pursuant to § 12-349 and the court was precluded from entering an award
on that basis absent specific findings made in accordance with A.R.S. § 12-
350. The court subsequently entered a minute entry finding “that the
attorney’s fees requested are reasonable” and awarding Hooty fees in the
amount of $3,495.92.
¶22 Although Hooty initially requested an award of attorneys’
fees pursuant to A.R.S. § 12-341.01, in addition to § 12-349, it has abandoned
that claim, both in the superior court and by failing to defend the attorneys’
fees award on that basis in its appellate briefing. The question before us,
then, is whether the award of attorneys’ fees is supported by A.R.S. § 12-
349.
¶23 Under A.R.S. § 12-349, the court shall assess reasonable
attorneys’ fees “if the attorney or party”: (1) brings or defends a claim
without substantial justification; (2) brings or defends a claim solely or
primarily for delay or harassment; (3) unreasonably expands or delays the
proceeding; or (4) engages in abuse of discovery. “In awarding attorney
fees pursuant to § 12-349, the court shall set forth the specific reasons for the
award[.]” A.R.S. § 12-350 (emphasis added).
¶24 Contrary to Hooty’s argument that Vidales waived this issue,
she twice referred the superior court to § 12-350 and noted the court’s lack
of findings. See Trantor v. Fredrikson, 179 Ariz. 299, 301, 878 P.2d 657, 659
(1994) (explaining a party need only alert the court to the lack of findings to
preserve the issue). Nonetheless, no findings were entered to support an
award of attorneys’ fees pursuant to § 12-349. Because the court did not
make the requisite findings, “its award cannot be upheld,” and we therefore
reverse the award of attorneys’ fees. Estate of Craig v. Hansgen, 174 Ariz.
228, 239, 848 P.2d 313, 324 (App. 1992) (reversing an award of attorneys’
fees pursuant to A.R.S. § 12-349 because the court failed to set forth the
specific reasons for its award as required by A.R.S. § 12-350); see also State v.
Richey, 160 Ariz. 564, 565-66, 774 P.2d 1354, 1355-56 (1989) (reversing an
attorneys’ fees award based on the superior court’s failure to enter specific
findings).
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VIDALES v. HUTH
Decision of the Court
C. Attorneys’ Fees and Costs on Appeal
¶25 Hooty has requested an award of its attorneys’ fees and costs
pursuant to A.R.S. §§ 12-341.01 and -349. Given the outcome of the appeal,
we deny the request. We award taxable costs to Vidales subject to her
compliance with Arizona Rule of Civil Appellate Procedure 21.
CONCLUSION
¶26 We reverse the superior court’s denial of Vidales’ request for
Rule 60(c) relief and remand for further proceedings in Case 1. We also
reverse the court’s award of attorneys’ fees to Hooty in Case 2.
:ama
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