Williamsfield v. Stren ( 2020 )


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  •                       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    UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
    WILLIAMSFIELD/HIGLEY LIMITED PARTNERSHIP,
    Plaintiff/Appellee,
    v.
    CYNTHIA STREN, Defendant/Appellant.
    No. 1 CA-CV 18-0322
    FILED 2-11-2020
    Appeal from the Superior Court in Maricopa County
    No. CV2016-052096
    The Honorable Aimee L. Anderson, Judge (Retired)
    The Honorable Cynthia J. Bailey, Judge
    REVERSED AND REMANDED
    COUNSEL
    Clark Hill PLC, Scottsdale
    By Ryan J. Lorenz
    Counsel for Defendant/Appellant
    Porter Law Firm, Phoenix
    By Robert S. Porter
    Counsel for Plaintiff/Appellee
    WILLIAMSFIELD v. STREN
    Decision of the Court
    MEMORANDUM DECISION
    Presiding Judge Samuel A. Thumma delivered the decision of the Court, in
    which Judge Jennifer M. Perkins and Judge Michael J. Brown joined.
    T H U M M A, Judge:
    ¶1             Defendant Estate of Steven Stren by administrator Cynthia
    Stren (collectively the Estate) appeals the denial of a motion to set aside
    judgment and for new trial. The judgment for nearly $700,000, entered in
    favor of plaintiff Williamsfield/Higley Limited Partnership (Partnership),
    was the product of a stipulation by the Estate’s attorney who stated in open
    court that he had been unable to contact his client to discuss the proposed
    stipulation. Because the stipulation was not binding on the Estate, and
    because the Estate properly demonstrated legitimate potential defenses, the
    denial of the motion to set aside is reversed and this matter is remanded for
    further proceedings consistent with this decision.
    FACTS AND PROCEDURAL HISTORY
    ¶2            The facts leading up to this case span more than two decades,
    and the procedural history is unusual and complicated. In 1997, Steven
    Stren was the sole member-manager of Williamsfield Management L.L.C.
    (LLC). At that time, in a written agreement, the LLC became the general
    partner of the Partnership, agreeing to accept “all the powers, privileges
    and obligations of the general partner.” That written agreement, however,
    did not specify what obligations the LLC assumed.
    ¶3            Between 2002 and 2006, various individuals and entities
    related in some way to the Partnership and the LLC signed several
    promissory notes. Some notes were between the LLC and Stren; others were
    between Jaystren Holdings Limited and the LLC or the Partnership; while
    still others were between Stren and the Partnership. The notes set the
    annual interest rate at either four or five percent.
    ¶4            In 2012, Stren died. As a result, the LLC was administratively
    dissolved for lack of a statutory agent and valid agent address.
    ¶5           In April 2016, the Partnership sued the Estate, seeking: (1)
    $462,043 plus ten percent interest, alleged to be owing on the 1997 written
    agreement with the LLC and (2) $97,322.40 plus ten percent interest, alleged
    to be owing on the notes. The five-page operative complaint did not provide
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    any specifics about the 1997 written agreement or the notes and did not
    attach any exhibits. The complaint did not seek to pierce the form of the
    LLC or any other entity and did not allege why the Estate would be liable
    for the LLC’s debts.
    ¶6         The litigation did not go well for the Estate, given the inaction,
    lack of communication and improper representations by the Estate’s
    counsel.
    ¶7           Two defaults were entered against the Estate at the outset.
    The Estate eventually filed an answer in January 2017, nine months after
    the Partnership sued. When the Estate failed to respond to a motion to
    amend, the Partnership was allowed to amend its complaint. When the
    Estate did not respond to the amended complaint, the Partnership filed
    another application for entry of default. Only then, did the Estate answer
    the amended complaint.
    ¶8            In August 2017, the court set a two-day jury trial for
    December 4 and 5, 2017, and ordered the parties to make pretrial filings by
    November 9, 2017. On November 9, 2017, the Partnership made several
    filings (proposed verdict forms, requested jury instructions, time estimates
    and its pretrial statement), noting the Estate “has not provided any input”
    and had failed to engage or participate in what should have been a joint
    filing. The Partnership also moved for sanctions, stating the Estate “has
    failed to submit any disclosure statement” to the Partnership, and failed to
    submit court-ordered exhibits, jury instructions, verdict forms or time
    estimates. The proposed form of order submitted with the request (which
    is not in the record on appeal) apparently sought sanctions against the
    Estate’s attorney, not the Estate.
    ¶9            Almost immediately, the court struck the Partnership’s filings
    and directed the parties to make joint pretrial filings by November 16, 2017.
    In doing so, the court noted the Estate’s “failure to timely file anything or
    cooperate with [the Partnership] in filing what was previously Court
    ordered is unacceptable.”
    ¶10           On November 16, 2017, the Partnership again made various
    filings, again noting the Estate’s counsel “has neither contacted [the
    Partnership’s] attorney nor provided him any portion of [the Estate’s]
    submission of the Pretrial Statement.” The Partnership also sought leave to
    unilaterally make these filings, noting the Estate’s counsel “has not
    cooperated with [the Partnership’s] counsel and has been unresponsive.”
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    The Partnership repeated its request for sanctions, noting the proposed
    form of order imposing sanctions it submitted earlier.
    ¶11          A few minutes before 4:00 p.m. on November 17, 2017, the
    Estate’s counsel filed a motion for extension of time to file a final pretrial
    statement, along with various other filings, stating: (1) the filings were
    “following the call with the Court staff on Thursday (11/1) made from
    counsel’s family home” and (2) noting “the untimely passing of counsel’s
    uncle” and related issues.
    ¶12           With the December 4, 2017 trial fast approaching, the court set
    a pretrial hearing for November 20, 2017. At that hearing, the Partnership’s
    counsel avowed that “[t]here has been no disclosure statement from the”
    Estate at any time. In addressing requested sanctions, the Partnership’s
    counsel added “the conduct of the attorney here is, at a minimum, grossly
    negligent or reflects willful misconduct,” also seeking to strike the Estate’s
    “answer or render a default judgment.” The Partnership’s counsel noted
    the “proposed order” for sanctions, previously submitted, “explicitly said
    against the [Estate’s] attorneys. I don’t know about the [E]state.” The
    Partnership’s counsel then raised the issue of a “culprit hearing” to
    determine whether the sanctions should be against the Estate’s counsel, the
    Estate or both. The Partnership’s counsel concluded that, for the sanctions
    requested, “gross negligence[ and] willful misconduct” is “required when
    an attorney has failed to act.”
    ¶13            The Estate’s counsel responded that all documents had been
    disclosed to the Partnership, adding that “there wasn’t anything that was
    privileged that we could even call, as I recall.” He then added “we have an
    elderly woman in Canada whose husband was a lawyer who passed away.
    She had no involvement in the case. So it’s been laborious and taxing to try
    to get information.” The Estate’s counsel admitted “[t]he issue with the pre-
    trial was on me, it’s not on” the Estate, citing counsel’s “back issues and
    trying to recover and then the passing of” his family member, “but that has
    nothing to do with [the Estate] at all.” The Estate’s counsel added “I think
    counsel and I could probably agree to a bench trial as opposed to a jury
    trial” and also suggested possible resolution short of trial.
    ¶14           The court then summarized the recent procedural history,
    including the Estate’s violations of various orders and rules, but did not
    allocate fault between the Estate’s counsel and the Estate. After that
    summary, the court: (1) denied the Estate’s motion for extension of time to
    make pretrial filings; (2) ordered the Estate could not offer at trial any
    exhibits, could not mark any exhibits for trial and could not call any
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    WILLIAMSFIELD v. STREN
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    witnesses at trial; (3) admitted all of the Partnership’s exhibits in evidence
    and (4) declared only the Partnership’s pretrial statement would be
    considered. The court also prohibited the Estate from submitting any jury
    instructions or asking voir dire questions, issues that became moot when
    the trial became a bench trial. After taking a break for counsel to address
    whether the trial would be to a jury or the bench, the Estate’s counsel
    indicated it would be “[a] bench trial, Your Honor,” and the Partnership’s
    counsel agreed. The court then confirmed a Monday, December 4, 2017
    bench trial.
    ¶15           At about 3:30 p.m. on Friday, December 1, 2017, the Estate
    filed a motion to continue trial for 30 days. The motion stated that Ms. Stren
    had fallen and injured her ankle a day earlier and was unable to travel to
    Phoenix. The filing added, somewhat cryptically, that the Estate’s counsel
    had authorized the motion from a hospital “while his wife remains in
    surgery.”
    ¶16           The court addressed the motion to continue early on Monday,
    December 4, 2017, when trial was set to begin. The court, however, had not
    yet received a copy of the motion, which resulted in some confusion and
    frustration. After the court noted Ms. Stren was precluded from testifying
    as a sanction, the Estate’s counsel avowed that the Estate “agree[d] to
    reimburse the travel and related expenses for the [Partnership’s] witnesses
    that came in so that Ms. Stren can get healthy and get back down here to
    testify.” The Estate’s counsel then said he was “hopeful” that a settlement
    could be reached. After a recess to allow the Estate’s counsel to try to contact
    Ms. Stren, the Estate’s counsel said he had been unable to reach his client
    but that “we have an agreement that we’ve reached.”
    ¶17            The Partnership’s counsel then recounted that the Estate’s
    counsel agreed that trial would be continued for at least 30 days and that
    the parties stipulated that by January 15, 2018, either: (1) “the parties will
    have settled” or (2) if such a settlement was not reached, the Estate “will
    pay the airplane tickets for Mr. Eisenberg . . ., his hotel expenses and meals
    for two days, and reasonable compensation for his time” to be paid in cash.
    If the Estate did not pay the travel expenses “in cash by January 15 because
    we haven’t settled,” then “judgment will be entered in favor of the
    [Partnership] and against the [Estate] for the amount sought as set forth in
    the [operative pleading] and the pre-trial statement.” The Partnership’s
    counsel added that the Estate’s counsel agreed that the Estate had no
    defense to the amounts claimed for the promissory notes. The Estate’s
    counsel confirmed that “accurately recited our discussions, and we agree”
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    and accepted the stipulation. Accordingly, the court rescheduled trial for
    late January 2018 and entered a minute entry reflecting the stipulation.
    ¶18           January 15, 2018 came and went with no settlement and no
    payment of expenses. On January 18, 2018, the Partnership submitted a
    proposed form of judgment, avowing that the Estate’s counsel “has not
    contacted [the Partnership’s] attorney at all since December 4, 2017 trial.”
    This filing also avowed that the Partnership’s counsel had attempted to
    contact the Estate’s counsel “a number” of times but had “received no
    response of any type from the attorney for the” Estate. A few days later, the
    court entered the proposed form of judgment, which awarded the
    Partnership approximately $700,000 in damages, plus interest at ten or 4.25
    percent, depending upon the claim and time period.
    ¶19            Post-judgment motion practice revealed that the Estate’s
    counsel had not been in contact with his client during relevant times in
    December 2017 and January 2018. Of particular significance, the Estate’s
    counsel did not inform Ms. Stren about the trial continuance or the
    December 4, 2017 stipulation, which she first learned about “later from a
    review of publicly available minute entries” after the entry of judgment.
    Ms. Stren asserted the Estate’s counsel “was incommunicative” throughout
    the representation. Ultimately, it was not until February 7, 2018 that she
    “learned what happened,” including the entry of the judgment and that the
    firm employing the Estate’s counsel had “terminated [his] employment,”
    adding the firm “will be reporting his conduct to the State Bar of Arizona”
    and recommended the Estate “obtain other Arizona counsel to protect your
    interests in the litigation.”1
    ¶20           The law firm that had employed the Estate’s counsel filed a
    timely motion pursuant to Arizona Rules of Civil Procedure (Rule) 59 and
    60 (2020)2 “to preserve [the Estate’s] rights.” That motion was denied, and
    the Estate retained new counsel, which filed a motion to set aside the
    judgment under Rule 60(b). After full briefing, the court treated this Rule
    60(b) motion as timely but denied it. This court has jurisdiction over the
    1 Due to his conduct in this case and an extreme driving while intoxicated
    issue, the Estate’s counsel was suspended from the practice of law by the
    Arizona Supreme Court for six months and a day.
    2Absent material revisions after the relevant dates, statutes and rules cited
    refer to the current version unless otherwise indicated.
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    Estate’s timely appeal under Ariz. Rev. Stat. (A.R.S.) sections 12-
    120.21(A)(1) and 12-2101(A)(2).
    DISCUSSION
    ¶21           The Estate presses four interrelated arguments on appeal: (1)
    the Estate did not authorize the stipulation resulting in the entry of
    judgment, meaning the court should not have accepted that stipulation; (2)
    the Estate was entitled to Rule 60 relief; (3) the sanctions imposed were
    improper and (4) the Estate has, but was not permitted to raise, meritorious
    defenses to the Partnership’s claims. This court addresses these arguments
    in turn.
    I.     The Stipulation, Entered Without Authority, is not Binding on the
    Estate.
    ¶22            The Estate claims its attorney lacked authority to enter into
    the stipulation on December 4, 2017 that resulted in the entry of judgment
    for more than $700,000 against the Estate. An attorney’s actions bind a client
    if the attorney acts with actual or apparent authority. Robertson v. Alling, 
    237 Ariz. 345
    , 349 ¶ 17 (2015). An attorney has apparent authority “if the other
    party to the agreement ‘reasonably assumes that the lawyer is authorized
    to do the act on the basis of the client’s (and not the lawyer’s) manifestation
    of such authorization.’” 
    Id. (quoting Restatement
    (Third) of Law Governing
    Lawyers § 27) (emphasis added). Retention of an attorney alone, however,
    does not establish apparent authority. 
    Id. The client’s
    manifestation is based
    upon the client’s assent or intention through words or conduct. 
    Id. ¶23 The
    transcript from the December 4, 2017 hearing shows the
    Estate’s counsel lacked such authority. After the recess, the court asked the
    Estate’s counsel if he had been able to reach his client to discuss what was
    later offered as a stipulation that resulted in the entry of judgment against
    the Estate. In response, the Estate’s counsel conceded “No, Your Honor.”
    The transcript contains no evidence of a manifestation by the Estate (in
    contrast to the Estate’s counsel) of an agreement to enter into the
    stipulation. In attorney disciplinary proceedings against the Estate’s
    counsel, he later admitted that he “failed to discuss the agreement with his
    client prior to entering it;” he never informed the Estate of the stipulation
    and his agreement that the Estate lacked a valid defense regarding the
    promissory notes was without the knowledge or agreement of the Estate.
    In the Matter of John P. Flynn, PDJ-2018-9136, at 8-9 ¶¶ 20–21 (2019). On this
    record, the Estate’s counsel lacked both actual and apparent authority to
    agree to the stipulations. See 
    Robertson, 237 Ariz. at 349
    ¶ 17.
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    ¶24           The Partnership relies on Rutledge v. Arizona Board of Regents,
    
    147 Ariz. 534
    (App. 1985) in asserting the December 4, 2017 stipulations
    were binding on the Estate. Rutledge, however, is quite different. In Rutledge,
    while describing the scope of one cause of action during direct examination
    of a witness at trial, the attorneys stipulated that “grabbing face masks and
    pulling helmets is not an assault,” wherein plaintiff’s counsel stated,
    “[t]hat’s not my 
    claim.” 147 Ariz. at 549
    . Finding the statement was a
    waiver, Rutledge affirmed a ruling reflecting that waiver. 
    Id. at 549-50.
    In
    doing so, Rutledge noted reliance on the waiver by all participants at trial,
    something not applicable here. 
    Id. at 550.
    Moreover, because the waiver in
    Rutledge occurred during trial, the client was present and could see the
    consequences of the waiver (and, presumably, confer with his attorney if he
    did not agree with the waiver). Finally, and again unlike this case, there was
    no claim in Rutledge that the attorney lacked authority to enter into any
    stipulation.
    ¶25            On this unique record, where the Estate’s counsel expressly
    acknowledged he had not contacted his client before entering the
    stipulations, the Estate cannot properly be held to those stipulations. See
    
    Robertson, 237 Ariz. at 349
    ¶ 17 (prohibiting “[a]n attorney without actual
    authority to settle a dispute” unless the other party “reasonably assumes”
    the lawyer is authorized to do so based on “the client’s (and not the
    lawyer’s) manifestation of such authorization”) (quotation omitted).
    Accordingly, the stipulations agreed to by the Estate’s counsel at the
    December 4, 2017 hearing were not binding on the Estate.
    II.    The Estate Was Entitled to Relief Under Rule 60(b)(6).
    ¶26            This court reviews the “denial of relief from judgment under
    Rule 60 for an abuse of discretion.” Woodbridge Structured Funding, LLC v.
    Ariz. Lottery, 
    235 Ariz. 25
    , 29–30 ¶ 21 (App. 2014). To obtain relief from a
    final judgment under Rule 60(b)(6) (allowing for relief from a judgment for
    “any other reason justifying relief”), the movant must show: (1) “a reason
    for setting aside the judgment other than one of the reasons set forth in the
    preceding five clauses of rule 60([b]);”3 (2) “extraordinary circumstances of
    hardship or injustice justifying relief;” and (3) a meritorious defense.
    Skydive Ariz., Inc. v. Hogue, 
    238 Ariz. 357
    , 364 ¶ 25 (App. 2015) (quoting
    Hilgeman v. Am. Mortg. Sec., Inc., 
    196 Ariz. 215
    , 220 ¶ 15 (App. 2000)) (as to
    (1) and (2)) and Gonzalez v. Nguyen, 
    243 Ariz. 531
    , 534 ¶ 12 (2018) (as to (3))
    (citing cases). In determining whether Rule 60(b)(6) relief is appropriate,
    3 Although substantively identical, Rule 60(c) was re-numbered as Rule
    60(b) effective January 1, 2017. Citations here are to the current Rule 60(b).
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    WILLIAMSFIELD v. STREN
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    courts “must consider the totality of facts and circumstances.” Skydive 
    Ariz., 238 Ariz. at 364
    ¶ 25.
    A.     Rule 60(b)(1)-(5) Do Not Provide Any Basis for Relief.
    ¶27            The Estate sought relief under Rule 60(b)(1), (2), (3) and (6).
    The stipulations and resulting judgment were not the product of mistake or
    excusable neglect, because a reasonably prudent attorney would not enter
    into stipulations of this type without client consent. See Aileen H. Char Life
    Interest v. Maricopa Cty., 
    208 Ariz. 286
    , 299 ¶ 40 (2004). On appeal, the Estate
    does not argue in earnest that newly discovered evidence under Rule
    60(b)(2) applies, and the Partnership argues the Estate had no newly
    discovered evidence. Nor is there any argument by the Estate that the
    Partnership engaged in misconduct, Rule 60(b)(3),4 or that the judgment is
    void or has been satisfied, released or discharged, Rule 60(b)(4), (5).
    Accordingly, because relief is not available under these other subparts of
    Rule 60(b), the first requirement for relief under Rule 60(b)(6) is met.
    B.     The Estate Has Established Extraordinary Circumstances.
    ¶28           To obtain relief under Rule 60(b)(6), the moving party also
    must demonstrate “extraordinary circumstances of hardship or injustice
    justifying relief.” Webb v. Erickson, 
    134 Ariz. 182
    , 187 (1982). Here,
    stipulations entered by an attorney, who expressly disavowed having client
    contact to obtain authority to enter into such stipulations, resulted in a
    judgment for the entire amount of the plaintiff’s claim sought in the
    complaint. Although extraordinary circumstances of hardship or injustice
    cannot comprehensively be defined, it is difficult to imagine a situation
    more extraordinary than what happened here. Moreover, after the Estate
    retained new counsel, it acted promptly in seeking to set aside the resulting
    judgment. Given these unique circumstances, the Estate has established
    extraordinary circumstances of hardship or injustice, which justify relief.
    See Skydrive Ariz., Inc., 238 at 364 ¶ 27 (finding extraordinary circumstances
    under Rule 60(b)(6) when defendant took action so that summary judgment
    would be stayed while he was on active duty but then, after a change in
    judge, the court granted summary judgment and entered judgment against
    him).
    4At oral argument on appeal, however, the Partnership conceded that it
    had access to the promissory notes but had not disclosed them before the
    entry of judgment.
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    C.     Because the Estate was Not Properly Sanctioned, the Court
    Could Not Find It Lacked a Meritorious Defense.
    ¶29           Finally, the Estate had the burden to demonstrate a
    meritorious defense. 
    Gonzalez, 243 Ariz. at 534
    ¶ 12. “This burden is
    ‘minimal,’” requiring only some facts that, if proven at trial, would
    constitute a defense. 
    Id. (citations omitted).
    The evidence to be considered
    in determining whether the movant has met this burden need not be
    extraneous to the record. 
    Id. at 534
    ¶ 13. Whether the Estate could show a
    meritorious defense turns on whether the sanctions imposed were proper.
    ¶30          The court found the Estate could not establish a meritorious
    defense because it had been precluded from calling any witnesses or
    submitting evidence as a sanction. Specifically, the court held:
    Defendant failed to disclose her defenses, any
    witnesses or a pretrial statement in preparation
    for trial. This failure led to the Court precluding
    Defendant from calling any witnesses or
    submitting any exhibits at trial. To the extent
    that Defendant believes that she was prevented
    from presenting her “meritorious defense” as
    outlined extensively in her pleadings, that
    failure was not due to Plaintiff’s fraud,
    misrepresentation or misconduct, but on her
    own actions.
    These failures are not genuinely disputed and clearly warrant sanctions.
    What the record does not show, however, is whether the sanctionable
    conduct was attributable to the Estate’s counsel, the Estate or both.
    ¶31            “[W]here the party is not guilty of misconduct in the
    discovery process, he should not suffer default as the result of his counsel’s
    guilty conduct.” Lenze v. Synthese, Ltd., 
    160 Ariz. 302
    , 305 (App. 1989). A
    corollary to this is that “[w]here there is a question as to whether the party
    is guilty or innocent of misconduct, a hearing is required to settle the
    question.” 
    Id. at 305
    (citing Robinson v. Higuera, 
    157 Ariz. 622
    (App.1988);
    Birds Int’l Corp. v. Ariz. Maintenance Co., 
    135 Ariz. 545
    (App. 1983)); accord
    Treadaway v. Meador, 
    103 Ariz. 83
    , 84 (1968) (noting superior court “clearly
    abused its discretion in failing to set aside the judgment . . . upon
    determining the true state of facts . . . they had engaged an attorney and
    had fully attempted to comply with the court’s directions”). “The
    requirement that a court conduct a ‘culprit hearing’ is aimed at protecting
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    WILLIAMSFIELD v. STREN
    Decision of the Court
    a party from dispositive sanctions when the fault lies only with counsel.
    Such hearings present an opportunity for the client to reveal to the court its
    lack of involvement in sanctionable conduct.” Lund v. Superior Court, 
    227 Ariz. 572
    , 581 ¶ 34 (App. 2011) (citing cases); accord Marquez v. Ortega, 
    231 Ariz. 437
    , 444 ¶ 26 (App. 2013).
    ¶32           On appeal, the Partnership argues that Marquez requires a
    “culprit hearing” only when the sanctions imposed are “tantamount to [a]
    dismissal” and that the sanctions here do not meet that standard. Not so.
    Although the Partnership relies on one sentence of dicta in Marquez, the
    standard set forth in that case is: “Whether a hearing is necessary depends
    on ‘(1) the circumstances in general; (2) the type and severity of the
    sanctions under consideration; and (3) the judge’s participation in the
    proceedings, knowledge of the facts, and need for further 
    inquiry.’” 231 Ariz. at 444
    ¶ 26 (quoting 
    Lund, 227 Ariz. at 582
    ¶ 37).
    ¶33            As noted twenty years before Marquez, “[t]he heavier the
    sanction contemplated, the more deliberate the process that is due and the
    more thorough the findings that should be made.” Montgomery Ward & Co.,
    Inc. v. Superior Court In and For Cty. of Maricopa, 
    176 Ariz. 619
    , 622 (App.
    1993). Although a culprit hearing may not be required when the record
    clearly shows responsibility for sanctionable conduct, “an evidentiary
    hearing may often be necessary to determine whether responsibility for
    obstructing discovery lies with the party or with his counsel.” Hammoudeh
    v. Jada, 
    222 Ariz. 570
    , 572 ¶ 7 (App. 2009) (citing 
    Lenze, 160 Ariz. at 306
    ).
    ¶34            As applied, the record suggests that the misconduct was
    attributable solely to the Estate’s counsel. In the November 20, 2017 hearing,
    the Estate’s counsel admitted that the issues with the pretrial findings were
    his alone. Moreover, to the extent the record could be read as suggesting
    something other than misconduct solely by the Estate’s counsel, the
    Partnership’s counsel at this same hearing raised the issue of a culprit
    hearing to determine whether the sanctions should be against the Estate’s
    counsel, the Estate or both. On this record, a culprit hearing was necessary.
    See 
    Marquez, 231 Ariz. at 444
    ¶ 26. Because none was held, the sanctions
    imposed — all of which were against the Estate, not the Estate’s counsel —
    cannot stand.
    ¶35           Because the sanctions must be vacated, the finding that the
    Estate could not present a meritorious defense as required for Rule 60(b)(6)
    similarly fails. Depending upon the outcome of the culprit hearing on
    remand, the Estate may be able to show admissible evidence supporting
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    WILLIAMSFIELD v. STREN
    Decision of the Court
    one or more meritorious defenses. Whether the Estate can do so, however,
    will turn on the results of the culprit hearing.
    CONCLUSION
    ¶36          Because the stipulation resulting in the entry of judgment was
    not binding on the Estate, the superior court’s denial of the motion to set
    aside the judgment pursuant to Rule 60(b)(6) is reversed. On remand, the
    superior court is directed to conduct a culprit hearing to determine the
    appropriate sanctions to be imposed on the Estate’s counsel, the Estate or
    both. The outcome of that hearing, in turn, will determine how the case
    should proceed going forward.
    ¶37           The Estate is awarded its taxable costs on appeal, contingent
    upon its compliance with Arizona Rules of Civil Appellate Procedure 21.
    The Estate’s request for attorneys’ fees on appeal pursuant to A.R.S. §§ 12-
    349 and -350 is denied. The parties’ competing requests for attorneys’ fees
    on appeal pursuant to A.R.S. § 12-341.01 are denied without prejudice to
    their reassertion following remand and the conclusion of the culprit
    hearing.
    AMY M. WOOD • Clerk of the Court
    FILED: AA
    12