Williams v. Peralta ( 2023 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
TONY WILLIAMS, Plaintiff/Appellant,
v.
JUAN DE DIOS PERALTA, et al., Defendants/Appellees.
No. 1 CA-CV 22-0279
FILED 2-16-2023
Appeal from the Superior Court in Maricopa County
No. CV2021-015499
The Honorable Mary Collins Cronin, Judge Pro Tempore
AFFIRMED
COUNSEL
Michael J. Fuller, Attorney at Law, Phoenix
By Michael J. Fuller
Counsel for Plaintiff/Appellant
The Finefrock Law Firm, PLLC, Scottsdale
By Marcus Rocky Finefrock
Counsel for Defendants/Appellees
WILLIAMS v. PERALTA, et al.
Decision of the Court
MEMORANDUM DECISION
Chief Judge Kent E. Cattani delivered the decision of the Court, in which
Presiding Judge Maria Elena Cruz and Judge Angela K. Paton joined.
C A T T A N I, Chief Judge:
¶1 Tony Williams appeals the superior court’s order setting
aside a default judgment he obtained against Juan De Dios Peralta and
Rosalva Herrera (the “Peralta Defendants”). The Peralta Defendants had
filed an eviction action against Williams in justice court and apparently
believed that a quiet title lawsuit subsequently filed by Williams was a
response to their eviction action and did not require an additional response.
The superior court accepted their explanation and, after finding that the
Peralta Defendants had a meritorious defense to Williams’s claims, granted
their request to set aside the default judgment. For reasons that follow, we
affirm.
FACTS AND PROCEDURAL BACKGROUND
¶2 The Peralta Defendants have owned a residence in Phoenix
(the “Property”) since May 2009. For several years, the Peralta Defendants’
daughter, Stephanie, had a romantic relationship with Williams. The two
lived at the Property in 2019 until, according to Stephanie, Williams forced
her to leave.
¶3 According to Williams, the Peralta Defendants orally agreed
to sell him the Property in 2018. He claims that he paid the Peralta
Defendants $45,000 toward the purchase and made over $100,000 in
improvements to the Property in reliance on the agreement. He relies
primarily on a June 2021 text he received from Stephanie stating:
So [I] told my [D]ad [you] offered for us to the house he’ll give
you what you gave them back and what you’re saying you
put into the house so if you have the receipts or whatever and
give it to him and he’ll pay you he wants to buy the house
back for me and my kids to move in there so you let me know
how much you saying it was.
Williams responded, “That won’t happe[n].”
2
WILLIAMS v. PERALTA, et al.
Decision of the Court
¶4 According to the Peralta Defendants, they orally agreed to sell
the Property to Stephanie, not Williams, and she paid $39,000 toward the
purchase. They dispute the value of any alleged improvements to the
Property, noting that they had never given Williams permission to make
any improvements, and that he had never provided proof that he had done
so.
¶5 In July 2021 and again in August 2021, Williams’s attorney
wrote to the Peralta Defendants, demanding they sign a quit claim deed
conveying the Property to Williams. In response, the Peralta Defendants
filed an eviction action against Williams in justice court in September 2021,
apparently in reliance on advice from deputy clerks at the justice court.
¶6 On October 1, 2021, Williams sued the Peralta Defendants for
breach of contract, promissory estoppel, and unjust enrichment, and to
quiet title to the Property. One week later, the justice court dismissed the
Peralta Defendants’ eviction action without prejudice due to lack of
jurisdiction. The Peralta Defendants mistakenly believed that their case
was transferred to the superior court, not dismissed. Williams served the
Peralta Defendants on October 16, 2021, but the Peralta Defendants
apparently believed that Williams’s complaint was his response to their
eviction action, and they did not file an answer. Williams filed an
application for default in November 2021. See Ariz. R. Civ. P. 55(a). When
the Peralta Defendants did not respond, Williams filed a motion for default
judgment by hearing in December 2021. See Ariz. R. Civ. P. 55(b)(2).
Subsequently, the Peralta Defendants each filed an answer in propria
persona. After a hearing on January 12, 2022, the superior court entered a
default judgment.
¶7 In March 2022, attorney Marcus Finefrock, representing the
Peralta Defendants, filed a notice of appearance as well as the Peralta
Defendants’ answer and counterclaim. He concurrently filed a motion to
set aside the default judgment on the grounds of excusable neglect or any
other reason justifying relief. See Ariz. R. Civ. P. 55(c), 60(b)(1), (6). After a
hearing, the superior court granted the motion and set aside the default
judgment. The court accepted the Peralta Defendants’ assertion of
confusion about the relationship between the proceedings in justice court
and superior court and concluded that they had a meritorious defense to
Williams’s claims.
¶8 Williams timely appealed, and we have jurisdiction under
A.R.S. § 12-2101(A)(2).
3
WILLIAMS v. PERALTA, et al.
Decision of the Court
DISCUSSION
I. Relief from Judgment.
¶9 Williams argues that the superior court erred by setting aside
the default judgment. We review orders setting aside a default judgment
for abuse of discretion. Gonzalez v. Nguyen, 243 Ariz. 531, 533, ¶ 8 (2018);
BYS Inc. v. Smoudi, 228 Ariz. 573, 577, ¶ 14 (App. 2012). In doing so, we note
the Arizona Supreme Court’s guidance that “[t]he law favors resolution on
the merits,” so “if the trial court has doubt about whether to vacate a default
judgment, it should rule in favor of the moving party.” Daou v. Harris, 139
Ariz. 353, 359 (1984).
A. Rule 60(b)(1).
¶10 To set aside a judgment under Rule 60(b)(1), the moving party
must show: “(1) mistake, inadvertence, surprise, or excusable neglect, in
failing to answer; (2) prompt action in seeking relief; and (3) a meritorious
defense to the action.” Addison v. Cienega, Ltd., 146 Ariz. 322, 323 (App.
1985); see also Ariz. R. Civ. P. 60(b)(1); Daou, 139 Ariz. at 358–59. Here, the
superior court’s discretionary resolution of those issues, only the first and
last of which are challenged, is supported by the record.
1. Excusable Neglect.
¶11 Williams first contends that the superior court erred when it
found that the Peralta Defendants demonstrated sufficient evidence of
“mistake [and] inadvertence” to set aside the default judgment. “[M]ere
carelessness” does not justify setting aside a default judgment. Daou, 139
Ariz. at 359. Whether the neglect or inadvertence is excusable depends on
what “might be the act of a reasonably prudent person under the same
circumstances.” Coconino Pulp & Paper Co. v. Marvin, 83 Ariz. 117, 120
(1957). “Diligence is the ‘final arbiter of whether mistake or neglect is
excusable.’” Aloia v. Gore, 252 Ariz. 548, 552, ¶ 15 (App. 2022) (citation
omitted). Here, the superior court found that the Peralta Defendants “had
filed a document in the Justice Court and there was confusion with regard
to the relationship of Justice Court and the Superior Court.”
¶12 Williams claims that the superior court improperly accepted
the Peralta Defendants’ claim of confusion, arguing—for the first time on
appeal—that, contrary to the Peralta Defendants’ assertion in superior
court, they were represented by counsel when they defaulted. He bases his
argument on the fact that the pleadings the Peralta Defendants filed in the
eviction action stated: “Overviewed by Attorney Marcus Finefrock . . . (Pro
4
WILLIAMS v. PERALTA, et al.
Decision of the Court
Bono).” Williams also asserts that “[a]n attorney’s bad advice is not legally
excusable” and that a reasonable person would not ignore retained legal
counsel’s advice in favor of remarks from a justice court clerk.
¶13 Williams’s new argument that the Peralta Defendants were
represented by counsel before defaulting is waived. See BMO Harris Bank
N.A. v. Espiau, 251 Ariz. 588, 593–94, ¶ 25 (App. 2021) (noting that legal
theories must be presented timely to the superior court; otherwise, they are
waived on appeal). Waiver notwithstanding, Williams’s argument fails.
Even assuming the Peralta Defendants spoke with a “pro bono” attorney,
attorney Finefrock did not file a document identifying himself as attorney
of record until March 2022. Moreover, nothing in the record indicates the
extent to which attorney Finefrock assisted the Peralta Defendants during
the eviction action, much less whether he was assisting them in responding
to Williams’s complaint. Accordingly, the superior court did not abuse its
discretion by concluding that the Peralta Defendants were unrepresented
and confused when navigating between the justice court and superior court
proceedings.
¶14 Citing Maher v. Urman, 211 Ariz. 543, 551, ¶ 23 (App. 2005),
Williams also argues that the superior court erred because the Peralta
Defendants’ ignorance of the rules does not constitute excusable neglect.
But in Maher, this court upheld the superior court’s discretionary ruling
denying a plaintiff’s motions for relief from a judgment that had dismissed
a complaint without prejudice for failure to timely serve the defendants. Id.
at 545, ¶ 1. The plaintiff argued that the superior court erred by finding that
his failure to serve was not excusable neglect, but this court disagreed,
noting that the superior court could have reasonably concluded that the
failure “evidenced a desire to delay service” and was “an intentional
choice.” Id. at 550–51, ¶ 23. This court’s decision there to uphold the
superior court’s finding that the plaintiff had not established good cause
merely because he was an “unrepresented layperson,” see id. at 549, ¶¶ 16–
19, does not compel reversing the superior court’s ruling here. Maher in fact
confirms the superior court’s discretion in ruling on a motion for relief from
judgment, noting that “[a]bsent an abuse of discretion, the trial court’s
ruling must stand.” Id. at 550, ¶ 20.
¶15 In sum, the record supports the superior court’s conclusion
that the Peralta Defendants’ failure to respond to the complaint was not
intentional and instead resulted from confusion about the relationship
between two courts. The Peralta Defendants acted with diligence in
responding to Williams’s demand letter by filing an eviction action. Cf.
Aloia, 252 Ariz. at 552, ¶ 15. And although the justice court dismissed the
5
WILLIAMS v. PERALTA, et al.
Decision of the Court
eviction action for lack of jurisdiction, the Peralta Defendants believed it
had been transferred to superior court. Given the circumstances presented,
the superior court did not abuse its discretion by finding that the Peralta
Defendants demonstrated excusable neglect.
2. Meritorious Defense.
¶16 Williams also contends that the superior court erred by
finding that the Peralta Defendants have a meritorious defense under the
statute of frauds. The burden on the moving party to assert a meritorious
defense is “minimal” and requires only “some legal justification for the
exercise of the power, some substantial evidence to support it.” Gonzalez,
243 Ariz. at 534, ¶ 12 (citations omitted).
¶17 The Peralta Defendants satisfied this burden by raising the
statute of frauds, alleging that there was no written agreement to sell the
property. Arizona’s statute of frauds requires a signed writing for an
agreement to sell real property to be enforceable. See A.R.S. § 44-101(6).
Here, there is no evidence of a written agreement between the Peralta
Defendants and Williams to sell the Property.
¶18 Williams argues that the statute of frauds fails as a defense
because the text messages between Stephanie and Williams acknowledged
the existence of an agreement to sell the Property. Williams raises this issue
for the first time on appeal, so the argument is waived. See Cont’l Lighting
& Contracting, Inc. v. Premier Grading & Utils., LLC, 227 Ariz. 382, 386, ¶ 12
(App. 2011). Moreover, to satisfy the statute of frauds, a written agreement
must be signed by “the party against whom the contract is sought to be
enforced.” Passey v. Great W. Assocs. II, 174 Ariz. 420, 424–25 (App. 1993).
Although the text messages between Williams and Stephanie acknowledge
some type of agreement, they contain neither the terms of an agreement
between Williams and the Peralta Defendants, nor signatures from any
party. Instead, they merely show communications between Williams and
a third-party. Accordingly, the text messages do not satisfy the requirement
of a written agreement. See A.R.S. § 44-101(6).
¶19 Williams also argues that his “part performance” establishes
a basis for overcoming the statute of frauds. But his unsupported assertion
that he made a down payment and made improvements to the property is,
at best, an arguable rejoinder to the Peralta Defendants’ statute of frauds
defense. See Owens v. M.E. Schepp Ltd. P’ship, 218 Ariz. 222, 225–27, ¶¶ 14–
18 (2008). Williams did not provide any receipts for improvements or
payments. The only record evidence is the text messages between Williams
6
WILLIAMS v. PERALTA, et al.
Decision of the Court
and Stephanie, in which Stephanie asks for those receipts and Williams
provides nothing in response. Moreover, the Peralta Defendants avowed
that they never consented to any improvements to the Property and never
received proof of any such improvements. Stephanie likewise stated that
she was not aware of any renovations at the house. Accordingly, the
superior court did not abuse its discretion by concluding that the Peralta
Defendants showed a meritorious defense to Williams’s claims.
B. Rule 60(b)(6).
¶20 Williams also argues that the superior court abused its
discretion by setting aside the default judgment under Rule 60(b)(6), which
authorizes relief from judgment for “any other reason justifying relief.” See
also Gonzalez, 243 Ariz. at 534, ¶ 12. Because we affirm the superior court’s
ruling under Rule 60(b)(1), we need not address the propriety of relief
under Rule 60(b)(6). See Webb v. Erickson, 134 Ariz. 182, 186 (1982).
II. Other Arguments.
A. Misrepresentation of Controlling Law.
¶21 Williams contends that the Peralta Defendants
misrepresented the law to the superior court regarding the proper
application of Rule 60 by suggesting that their meritorious defense was a
strong enough factor to justify relief under Rule 60(b)(6) without regard to
surprise or excusable neglect (which they also asserted). But the party’s
argument regarding the law is not dispositive, and here, the superior court
expressly found that the Peralta Defendants established not only a
meritorious defense, but also mistake and inadvertence, thus satisfying
their burden of proof for relief under Rule 60(b)(1).
B. Fraud Upon the Court.
¶22 Williams also contends that the Peralta Defendants engaged
in three acts of fraud upon the court: (1) hiding the fact attorney Finefrock
provided legal advice since September 2021, (2) calling the Peralta
Defendants “elderly,” and (3) representing that Stephanie paid the Peralta
Defendants for the Property. Williams did not raise these tangential and
fact-intensive arguments in superior court, and we thus decline to consider
them here. See Cont’l Lighting, 227 Ariz. at 386, ¶ 12.
7
WILLIAMS v. PERALTA, et al.
Decision of the Court
C. Request to Strike Portions of Williams’s Brief.
¶23 The Peralta Defendants request that we strike several portions
of Williams’s opening brief in which he raises facts and legal theories never
presented to the superior court. In an exercise of our discretion, we decline
to do so.
III. Attorney’s Fees, Costs, and Sanctions on Appeal.
¶24 Williams requests an award of his reasonable attorney’s fees
and costs on appeal under A.R.S. §§ 12-341 and -349, as well as sanctions
against the Peralta Defendants and their attorney under A.R.S. § 12-349 and
ARCAP 25. The Peralta Defendants also request an award of their
attorney’s fees and costs on appeal and sanctions against Williams under
A.R.S. §§ 12-341.01 and -349. Because the case has not been resolved on its
merits, we defer any decision on attorney’s fees to the superior court after
the successful party has been identified. We decline to impose fees as a
sanction. As the prevailing parties on appeal, however, the Peralta
Defendants are entitled to an award of their costs on appeal upon
compliance with ARCAP 21. Cf. A.R.S. § 12-342(A).
CONCLUSION
¶25 For the foregoing reasons, we affirm.
AMY M. WOOD • Clerk of the Court
FILED: AA
8