Honeywell v. Kilgore ( 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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
HONEYWELL INTERNATIONAL, INC., by its division ADI,
Plaintiff/Appellant/Cross-Appellee,
v.
JARED KILGORE,
Defendant/Appellee/Cross-Appellant.
No. 1 CA-CV 13-0759
FILED 3-10-2015
Appeal from the Superior Court in Maricopa County
No. CV2012-000167
The Honorable Lisa Daniel Flores, Judge
AFFIRMED
COUNSEL
Hammerman & Hultgren, PC, Phoenix
By Stanley M. Hammerman, Allan R. Draper
Counsel for Plaintiff/Appellant/Cross-Appellee
Wilenchik & Bartness, PC, Phoenix
By Dennis I. Wilenchik, Tyler Q. Swenson, Brian J. Hembd
Counsel for Defendant/Appellee/Cross-Appellant
HONEYWELL v. KILGORE
Decision of the Court
MEMORANDUM DECISION
Judge Patricia A. Orozco delivered the decision of the Court, in which
Presiding Judge Samuel A. Thumma and Judge Michael J. Brown joined.
O R O Z C O, Judge:
¶1 Honeywell International Inc. appeals from the trial court’s
decision dismissing its action to domesticate a New York default judgment
and vacating that judgment against Jared Kilgore1 on the grounds that New
York lacked personal jurisdiction over Kilgore. Kilgore cross-appeals the
court’s denial of his request for attorney fees as untimely. For the following
reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 In December 2010, Honeywell obtained a default judgment
for more than $830,000 against Kilgore, American Alarm Company, Inc.,
and Danielle Paletz in the Supreme Court of the State of New York, County
of Suffolk. As to Kilgore, the default judgment was based on Honeywell’s
claim that Kilgore signed a guarantee to pay Honeywell by American
Alarm Company. In January 2012, Honeywell filed a copy of the judgment
in Maricopa County Superior Court, along with an Affidavit Substantiating
a Foreign Judgment.
¶3 Kilgore filed a Notice of Limited Appearance and Motion to
Vacate Default Judgment and Motion to Dismiss. Kilgore argued the
judgment was void based on lack of due process because he was never
properly served and never had actual notice of the New York action and
disputed Honeywell’s allegations of its attempts at service. Kilgore denied
having signed the guarantee that was the basis of the judgment and argued
that, New York never had personal jurisdiction over him.
¶4 Honeywell disputed Kilgore’s claim that he did not sign the
guarantee and argued that New York had personal jurisdiction based on a
provision in the guarantee declaring that New York would have
jurisdiction to adjudicate any disputes arising out of the guarantee.
Honeywell further argued that Kilgore was properly served in Maricopa
1 Kilgore legally changed his name to Babe Kilgore in 2008.
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HONEYWELL v. KILGORE
Decision of the Court
County, Arizona with the summons and verified complaint in the New
York action under New York law by “nail and mail” service effectuated by
the end of August 2010.
¶5 Without objection, the court held an evidentiary hearing to
address the alleged forgery of Kilgore’s signature on the guarantee and the
“nail and mail” service. At the hearing, Kilgore testified that Danielle Paletz
owned two separate companies, American Alarm Company, Inc., and
American Alarm Partners of Arizona, Inc. He acknowledged doing
consulting work for American Alarm Partners, but testified that he had
never worked for American Alarm Company and that he had never been
an officer, director, or owner of either company. Kilgore denied signing the
guarantee, alleging that the handwriting on the document was that of
Plaetz’s colleague and then-fiancé, whom Kilgore knew to have forged
other documents. He also noted that the guarantee did not identify any
particular account number. For the New York action, Kilgore denied
receiving personal service, service by mail, or service by attachment of the
complaint to his residence. He argued that he would have been home and
his wife was also at home when service was allegedly attempted and,
accordingly, could not explain not having received the documents if service
was in fact attempted as indicated on an affidavit of service.
¶6 Joshua Foster, an attorney for Honeywell, testified that he was
unaware that American Alarm Company and American Alarm Partners
were two separate companies. He also acknowledged that no account
number was listed on the guarantee where it should have been and could
not state from personal knowledge that the guarantee was affiliated with
any particular account.
¶7 Based on the evidence and argument provided, the court
found that Honeywell failed to prove that the guarantee was related to
American Alarm Company, whose debt was the subject of the lawsuit.
Because personal jurisdiction over Kilgore was based entirely on provisions
in the guarantee and the guarantee was not found to be related to the debt,
the court found that New York never acquired personal jurisdiction over
Kilgore. The court vacated the default judgment as void.
¶8 Kilgore then filed an application for an award of his costs and
attorney fees. The court awarded costs to Kilgore as the prevailing party,
but denied the request for fees as untimely, noting Kilgore failed to request
fees in his motion challenging jurisdiction.
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HONEYWELL v. KILGORE
Decision of the Court
¶9 Honeywell timely appealed the vacating of the New York
judgment and Kilgore timely cross-appealed the court’s denial of his
request for attorney fees. This court has jurisdiction pursuant to Article 6,
Section 9 of the Arizona Constitution and Arizona Revised Statutes (A.R.S.)
section 12-2101.A.1. (West 2015).2
DISCUSSION
I. Honeywell’s Appeal
¶10 “The Full Faith and Credit Clause of [Article 2, Section 1] the
United States Constitution requires that a judgment rendered in a state
court be accorded the same validity and effect in every other court in the
United States as it has in the state rendering it.” Springfield Credit Union v.
Johnson, 123 Ariz. 319, 322-23 (1979). An authenticated foreign judgment is
prima facie evidence of the rendering court’s jurisdiction to enter it. Id. at
323. Such a judgment filed in Arizona is treated in the same manner, “has
the same effect and is subject to the same procedures, defenses and
proceedings for reopening, vacating, or staying as a judgment of a superior
court of this state[.]” A.R.S. § 12-1702 (West 2015).
¶11 A foreign judgment may be attacked on grounds of lack of
personal or subject matter jurisdiction, lack of due process, incompetency
of the foreign court, extrinsic fraud, and the invalidity or unenforceability
of the judgment. Bebeau v. Berger, 22 Ariz. App. 522, 523 (App. 1974); Coffee
v. Nat’l Equip. Rental, Ltd., 9 Ariz. App. 249, 251 (App. 1969). The party
attacking the judgment has the burden of proving that the judgment is not
entitled to full faith and credit. Cristall v. Cristall, 225 Ariz. 591, 594, ¶ 16
(App. 2010).
¶12 Whether a foreign judgment is entitled to full faith and credit
is a question of law we review de novo. Grynberg v. Shaffer, 216 Ariz. 256,
257, ¶ 5 (App. 2007). We are bound by the trial court’s findings of fact
unless clearly erroneous. Sabino Town & Cnty Estates Ass’n v. Carr, 186 Ariz.
146, 149 (App. 1996). We view the evidence and reasonable inferences from
that evidence in the light most favorable to the prevailing party. Inch v.
McPherson, 176 Ariz. 132, 136 (App. 1993). We do not reweigh conflicting
evidence and defer to the trial court’s determination of witness credibility.
2 We cite the current version of applicable statutes when no revisions
material to this decision have since occurred.
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HONEYWELL v. KILGORE
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In re Estate of Pouser, 193 Ariz. 574, 579, ¶ 13 (1999); Gutierrez v. Gutierrez,
193 Ariz. 343, 347-48, ¶ 13 (App. 1998).
¶13 Honeywell argues that Kilgore’s testimony was self-serving
and not credible and that the evidence presented did not support the court’s
finding that Kilgore did not sign the guarantee. However, the court did not
make such a finding. The court instead found that Honeywell failed to
show that the guarantee was “related to American Alarm Company, Inc.,
the entity that apparently incurred the debt to” Honeywell. Because the
provisions in the guarantee governing jurisdiction and choice of law were
the only basis on which Honeywell claimed New York had jurisdiction over
Kilgore, the court found that New York lacked personal jurisdiction. The
court did not resolve Kilgore’s claims that he did not sign the guarantee and
did not receive service.
¶14 The record supports the court’s findings. As noted in the
testimony of both Kilgore and Foster, the guarantee includes a blank for the
applicable account number, but no account number appears in the
document, and the guarantee does not otherwise identify the entity for
whose debt the guarantee was given. When asked whether he had personal
knowledge that the guarantee was associated with any particular account,
Foster testified that he had personal knowledge that Honeywell had sought
guarantees from three individuals to continue credit for the American
Alarm Company account. He could not, however, connect the guarantee
document to American Alarm Company.
¶15 Honeywell has not challenged on appeal the court’s finding
that Honeywell failed to prove that the guarantee was connected to the debt
or the court’s legal reasoning that the failure to show such a connection
meant that the New York court lacked personal jurisdiction over Kilgore.3
Consequently, we affirm the trial court’s decision finding that New York
lacked personal jurisdiction over Kilgore.
¶16 Honeywell argues that the trial court lacked the authority to
vacate the underlying New York judgment except for its application in
3 In its reply brief, Honeywell asserts for the first time that the court
had not ruled on whether Kilgore had signed the guarantee but decided
New York lacked jurisdiction because the guarantee was not shown to be
related to the debt. Honeywell argues that the court’s actions and decision
constituted an unpermitted retrial of the merits of the case. Arguments first
raised in a reply brief are waived. In re the Marriage of Pownall, 197 Ariz.
577, 583 n.5 (App. 2000). We therefore do not consider it.
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HONEYWELL v. KILGORE
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Arizona. Honeywell cites three cases in support: Phares v. Nutter, 125 Ariz.
291 (1980); Springfield Credit Union, 123 Ariz. at 319; Stephens v. Thomasson,
63 Ariz. 187 (1945). None of these cases is on point. Each recognizes that a
foreign judgment may be attacked and vacated for lack of personal
jurisdiction, but does not distinguish between the judgment’s being vacated
in the originating state versus the judgment’s being vacated only in
Arizona. Phares, 125 Ariz. at 293-94; Springfield Credit Union, 123 Ariz. at
323; Stephens, 63 Ariz. at 194. The Uniform Enforcement of Foreign
Judgments Act, which both Arizona and New York have adopted, provides
that a filed foreign judgment is subject to the same procedures, defenses
and proceedings for vacating as a judgment of the court in which it is filed.
A.R.S. § 12-1702; N.Y.C.P.L.R. § 5402 (McKinney 2015). Thus, New York
has recognized that judgments by its courts are subject to certain
procedures (including being vacated) in other states, including Arizona.
This statutory directive is consistent with the common law concept that a
foreign judgment entered by a court lacking personal jurisdiction is not
entitled to full faith and credit because it is void. Restatement (Second) of
Conflict of Laws § 104 cmt. a (1971). We are not persuaded that that the
court erred in vacating the judgment.
II. Kilgore’s Cross-Appeal
¶17 Kilgore cross-appeals from the trial court’s denial of his
request for attorney fees as untimely under Arizona Rules of Civil
Procedure 54(g)(1). Kilgore first requested an award of attorney fees after
the trial court granted his motions and vacated the New York judgment.
Honeywell argued the request was untimely and, concluding Balestrieri v.
Balestrieri, 232 Ariz. 25 (App. 2013) applied, the trial court denied the
request.
¶18 Kilgore correctly argues that Rule 54(g)(1) requires claims for
attorney fees be made in the pleadings and that his motions were not
pleadings. See Ariz. R. Civ. P. 7(a). In Balestrieri, this court noted that a
purpose of fee-shifting statutes was to promote settlement by putting
opposing parties on notice that fees would be requested so the parties could
accurately assess the risks and benefits associated with litigating or settling.
232 Ariz. at 27, ¶ 7. Balestrieri held that a party filing a Rule 12(b) motion to
dismiss “forfeits his claim for [attorney] fees if he does not ask for fees at
the time he moves to dismiss.” Id. at 26, ¶ 1.
¶19 Kilgore argues he was not required to file any pleadings, his
motion was different than the motion to dismiss in Balestrieri, and that
therefore the court erred in denying his request for fees. Kilgore’s motion,
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HONEYWELL v. KILGORE
Decision of the Court
however, was filed pursuant to Rule 12(b) (as well as Rule 60(c) and New
York law) and, accordingly, falls within the holding of Balestrieri.4 Because
Kilgore did not present his request for fees until after the court had ruled,
the superior court did not err in finding the request was untimely.
4 Although noting King v. Titsworth, 221 Ariz. 597 (App. 2009), Kilgore
claims King is “inapplicable” as it addressed a party’s request for fees made
for the first time after the close of pleadings and after the completion of trial
and a ruling on the merits. Id. at 598. Kilgore also argues that he did
provide early notice because he anticipates further proceedings in New
York. We reject this argument. Kilgore’s claim was for fees incurred in this
Arizona proceeding and the request was made after the outcome of the
proceeding had been determined.
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HONEYWELL v. KILGORE
Decision of the Court
III. Attorney Fees And Costs
¶20 Honeywell requests an award of attorney fees on appeal, but
cites no substantive authority for such an award. We therefore deny the
request. See Haynes v. Syntek Fin. Corp., 184 Ariz. 332, 341 (1995). Kilgore
seeks an award of attorney fees on appeal pursuant to A.R.S. § 12-341.01.A.
Under A.R.S. § 12-341.01.A., this court has discretion to determine the
successful party. Fulton Homes Corp. v. BBP Concrete, 214 Ariz. 566, 569, ¶ 9
(App. 2007). Because both parties prevailed in part, we find that neither
was successful for purposes of a fee award, and deny the requests. For these
same reasons, we decline to award costs to either party.
CONCLUSION
¶21 We affirm the judgment of the trial court.
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