Bmo Harris v. Tohatan ( 2018 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
BMO HARRIS BANK, NA, Plaintiff/Appellee,
v.
FANEL C. TOHATAN, et al., Defendants/Appellants.
No. 1 CA-CV 17-0330
FILED 4-3-2018
Appeal from the Superior Court in Maricopa County
No. CV2015-013043
The Honorable David W. Garbarino, Judge Pro Tempore
AFFIRMED
COUNSEL
Hinshaw & Culbertson LLP, Phoenix
By Stephen W. Tully, Bradley L. Dunn
Counsel for Plaintiff/Appellee
Ivan & Kilmark PLC, Glendale
By Florin V. Ivan
Counsel for Defendants/Appellants
BMO HARRIS v. TOHATAN, et al.
Decision of the Court
MEMORANDUM DECISION
Judge David D. Weinzweig delivered the decision of the Court, in which
Presiding Judge Michael J. Brown and Judge Maria Elena Cruz joined.
W E I N Z W E I G, Judge:
¶1 This appeal stems from BMO Harris Bank’s efforts to collect
on a domesticated judgment against Fanel and Lidia Tohatan. The
Tohatans appeal from a post-judgment order requiring Ms. Tohatan to
appear for a judgment debtor’s examination and produce financial records,
where the superior court also found the domesticated judgment was timely
registered and enforceable in Arizona. The Tohatans argue the superior
court lacked jurisdiction to enter the order because a prior appeal was
pending before this Court. They also argue the domesticated judgment is
unenforceable as untimely registered. We affirm.
FACTS AND PROCEDURAL BACKGROUND
¶2 Amcore Bank, N.A. sued the Tohatans in Cook County
Circuit Court, Illinois, for allegedly breaching a promissory note. Amcore
sought monetary damages for the breach (“damages count”) and
permission to foreclose on the mortgaged real property that secured the
debt (“foreclosure count”). The Tohatans did not defend. The court entered
two orders on October 21, 2009 (collectively, “2009 judgment”). It found
the Tohatans owed $81,218.24 on the damages count and entered a separate
“judgment of foreclosure and sale” on the foreclosure count, directing the
sale of the mortgaged property with proceeds applied to satisfy the debt.
The court approved a $40,000 sale on January 21, 2010 (“2010 order”), but
did not enter a deficiency judgment.
¶3 After becoming the judgment creditor, BMO Harris moved
for and secured a deficiency judgment on November 6, 2015 (“2015
judgment”). The 2015 judgment observed the Tohatans had not received a
$40,000 credit from the sale proceeds and accordingly reduced the unpaid
damages to $41,218.24.
¶4 BMO Harris promptly initiated the formal statutory process
to domesticate a foreign judgment in Arizona. It filed the 2015 judgment in
Maricopa County Superior Court on November 16, 2015, along with an
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Decision of the Court
affidavit of counsel to domesticate the foreign judgment. A.R.S. §§ 12-1702,
-1703(A). BMO Harris also mailed legal notice of the foreign judgment to
the Tohatans under A.R.S. § 12-1703(B), which prompted a twenty-day
grace period. Arizona law imposes a twenty-day grace period for judgment
debtors to appear and object before a foreign judgment becomes enforceable.
A.R.S. § 12-1704(C). The Tohatans neither appeared nor objected. They
never argued the judgment was unenforceable and never moved to stay its
enforcement. A.R.S. §§ 12-1702, -1704(A). The process concluded on
December 6, 2015, when the foreign judgment was domesticated in Arizona
and enforceable against the Tohatans. A.R.S. § 12-1704(C).
¶5 BMO Harris then moved to collect on the judgment. It first
served a writ of garnishment on Ms. Tohatan’s employer, which coaxed Ms.
Tohatan to first appear on February 24, 2016, and request a hearing on the
garnishment. BMO Harris eventually released the writ and the superior
court awarded $3,049 in attorney’s fees and costs to Ms. Tohatan as the
prevailing party. BMO Harris moved to set-off the award against the
unpaid balance on the domesticated judgment. Ms. Tohatan objected that
set-off was improper because the domesticated judgment was
unenforceable. She pressed three arguments, including that BMO Harris
was not a plaintiff in the Illinois action, had released the debt and did not
renew the 2009 judgment within five years under A.R.S. § 12-1551(B). The
superior court rejected each argument and granted set-off.
¶6 Ms. Tohatan appealed, but added a fourth argument that the
judgment was unenforceable under A.R.S. § 12-544(3) because BMO Harris
waited more than four years to register the Illinois judgment in Arizona.
This Court affirmed, but refused to address the new argument, which had
not been raised prior to the appeal. BMO Harris v. Tohatan, No. 1 CA-CV
17-0013, 2018 WL 718523, at *2, ¶ 10 (Ariz. App. Feb. 6, 2018).
¶7 During the pendency of the first appeal, BMO Harris applied
for an order requiring Ms. Tohatan to appear for a judgment debtor’s
examination and produce financial records. Ms. Tohatan objected on
March 3, 2017. She again argued that the domesticated judgment was
unenforceable, raising the same arguments then on appeal, but adding that
BMO Harris missed the four-year window to domesticate the Illinois
judgment under A.R.S. § 12-544(3).
¶8 The superior court ordered Ms. Tohatan to appear for the
judgment debtor’s examination and provide financial records. The court
reasoned the 2015 judgment was “the operable final judgment in Illinois”
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Decision of the Court
and BMO Harris had domesticated the judgment in Arizona within four
years of its entry. The Tohatans timely appealed.
DISCUSSION
¶9 We have jurisdiction pursuant to A.R.S. § 12-2101(A)(2)
because the superior court sua sponte treated the Tohatans’ response in
opposition to BMO Harris’ application for a judgment debtor’s examination
as a motion to vacate under Rule 60, Ariz. R. Civ. P. See M & M Auto Storage
Pool, Inc. v. Chem. Waste Mgmt., Inc., 164 Ariz. 139, 141 (App. 1990) (“An
order denying or granting a motion to set aside a judgment under Rule
60(c), Arizona Rules of Civil Procedure, is appealable as a ‘special order
made after final judgment.’”).1
¶10 The Tohatans contend the superior court committed legal and
jurisdictional error. Our review is de novo. Engel v. Landman, 221 Ariz. 504,
508, ¶ 10 (App. 2009).
¶11 The Tohatans first argue the superior court lacked jurisdiction
to enter a post-judgment enforcement order because their earlier appeal
was pending in this Court. We disagree for two reasons. The Tohatans
only moved to set a supersedeas bond after the superior court entered its
order. Castillo v. Indus. Comm’n, 21 Ariz. App. 465, 467 (1974) (“[I]n the
absence of supersedeas, the trial court in a civil proceeding retains
jurisdiction pending the appeal to take such action as might be necessary to
enforce its previously entered judgment.”). What is more, the superior
court’s order did not negate the pending appeal or frustrate the appellate
process; indeed, this Court’s earlier decision expressly avoided the issue
resolved by the superior court and appealed here. See State v. O’Connor, 171
Ariz. 19, 22 (App. 1992) (“[A] trial court retains jurisdiction to act so long as
that act cannot negate the decision in a pending appeal or frustrate the
appeal process.”). The superior court thus retained jurisdiction to enter the
order.
¶12 The Tohatans next contend the superior court erred in
concluding the foreign judgment was enforceable because BMO Harris
missed the four-year limitations period to domesticate the judgment in
Arizona. A.R.S. § 12-544(3). Their argument turns on when the Illinois
1 The superior court noted the issue had not been “squarely
presented” in a motion to vacate the judgment, but “nevertheless” reached
the issue to advance judicial economy.
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Decision of the Court
court issued its final judgment on BMO Harris’ count for monetary
damages. The Tohatans point to the 2009 judgment, while BMO Harris
points to the 2015 judgment.2
¶13 We begin with two guiding principles. First, the Tohatans
bear the burden to demonstrate the 2015 judgment is not the final and
enforceable judgment. Oyakawa v. Gillett, 175 Ariz. 226, 229 (App. 1993).
And second, we consult Illinois law to determine which of the Illinois
judgments and orders represents the final judgment. Grynberg v. Shaffer,
216 Ariz. 256, 258, ¶ 8 (App. 2007).
¶14 The Tohatans have not met their burden. They offer no
Illinois statutes or decisions to support their argument. Oyakawa, 175 Ariz.
at 229 (“A duly authenticated judgment of a sister state is prima facie
evidence of that state’s jurisdiction to render it and of the right which it
purports to adjudicate.”). This omission alone defeats their appeal.
¶15 But the appeal fails on the merits, too. A final judgment or
order under Illinois law “must dispose of the rights of the parties as to the
entire controversy or some part of the controversy which is definite and
separate, so that nothing remains but execution of the judgment.” In re
Marriage of Petraitis, 636 N.E.2d 691, 702 (Ill. App. 1993). The final judgment
or order “will finally determine, fix, and dispose of the parties’ rights as to
the issues made by the suit.” Lubben v. Lubben, 481 N.E.2d 856, 858 (Ill. App.
1985) (quotation omitted).
¶16 Against that backdrop, the 2009 judgment did not represent
the final judgment on either the damages or foreclosure count, but was
instead a non-final judgment of foreclosure. JP Morgan Chase Bank v.
Fankhauser, 890 N.E.2d 592, 599 (Ill. App. 2008) (“A judgment of foreclosure
is not final and appealable because it does not dispose of all the issues
between the parties and it does not terminate the litigation.”). The 2009
judgment authorized the mortgaged property to be sold, but did not
approve an actual sale or account for sale proceeds to reduce the total debt.
2 Although contrary to their argument here, the Tohatans suggest this
Court’s earlier decision necessarily decided the domesticated judgment
was enforceable “as a matter of logic,” which presumably obviates the need
to reexamine the issue here. This Court did not, however, address the four-
year limitations argument because it had not been raised in the superior
court. BMO Harris v. Tohatan, No. 1 CA-CV 17-0013, 2018 WL 718523, at *2,
¶ 10 (Ariz. App. Feb. 6, 2018).
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Decision of the Court
¶17 The 2010 order did not represent the final judgment on the
damages count, either. Armour & Co. v. Mid-America Protein, Inc., 344 N.E.2d
639, 641 (Ill. App. 1976) (holding that order approving sale was not a final
order and trial court retained jurisdiction to enter deficiency judgment). It
resolved the foreclosure count by approving the $40,000 sale, thus
describing itself as “a final appealable order” on that count. It did not,
however, resolve the damages count because it never accounted for the sale
proceeds, reduced the debt accordingly or entered “a personal deficiency
judgment.”
¶18 By contrast, the 2015 judgment did represent the final
judgment because it conclusively resolved the damages count and nothing
remained but execution of the judgment. It provided the missing
information—namely, a concrete and final accounting of unpaid damages
that determined and fixed how much money BMO Harris could collect
from the Tohatans in Arizona. Lubben, 481 N.E.2d at 858. BMO Harris
domesticated the 2015 judgment well within the four-year limitations
under A.R.S. § 12-544(3). The domesticated judgment is thus enforceable.
CONCLUSION
¶19 For the reasons stated, we affirm.
AMY M. WOOD • Clerk of the Court
FILED: AA
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