Blair v. Burgener

• Citation: 226 Ariz. 213,245 P.3d 898
• Decision Date: 29 December 2010
• Docket Number: No. 2 CA-CV 2010-0028.,2 CA-CV 2010-0028.
• Parties: James E. BLAIR and Southern Ventures, Inc., Plaintiffs/Appellees, v. Clifton BURGENER and Jane Doe Burgener, husband and wife; Tigerlilly Investments, LLC; and Bonanza Realty Management, LLC, Defendants/Appellants.
• Court: Arizona Court of Appeals

245 P.3d 898

226 Ariz. 213

James E. BLAIR and Southern Ventures, Inc., Plaintiffs/Appellees,

v.Clifton BURGENER and Jane Doe Burgener, husband and wife; Tigerlilly Investments, LLC; and Bonanza Realty Management, LLC, Defendants/Appellants.

No. 2 CA-CV 2010-0028.

Court of Appeals of Arizona, Division 2, Department B.

Dec. 29, 2010.

Peter A. Kelly, Palominas, Attorney for Plaintiffs/Appellees.

Lawrence K. Lynde, Phoenix, Attorney for Defendants/Appellants.

OPINION

VÁSQUEZ, Presiding Judge.

¶ 1 In this breach of contract action, appellants Clifton Burgener; Tigerlilly Investments, LLC; and Bonanza Realty Management, LLC (collectively, Appellants) appeal from the trial court's denial of their motion to set aside default judgment in favor of appellees, James Blair and Southern Ventures, Inc. (collectively, Blair). Appellants contend the court abused its discretion in permitting alternative means for service of process and, in any event, Blair failed to effect service properly under the terms of the court's order. For the reasons set forth below, we affirm.

Facts and Procedure

¶ 2 "We view the facts in the light most favorable to upholding the trial court's ruling on a motion to set aside a default judgment." Ezell v. Quon, 224 Ariz. 532, ¶ 2, 233 P.3d 645, 647 (App.2010); see also Goglia v. Bodnar, 156 Ariz. 12, 20, 749 P.2d 921, 929 (App.1987). In May 2007, Blair entered into a contract with Tigerlilly and Bonanza, which included the conveyance of Blair's residence to Tigerlilly. Pursuant to the contract, Tigerlilly was required to transfer the residence back to Blair upon his performance of additional terms in the contract. In May 2008, Blair filed a complaint in superior court, alleging breach of contract, civil conspiracy, and fraud against Appellants, arising from their failure to reconvey the residence to him. Blair also alleged Burgener controlled and operated Tigerlilly and Bonanza as his alter egos.¹

¶ 3 Blair made numerous attempts to serve Appellants by attempting to serve Burgener individually and as statutory agent for Tigerlilly and Bonanza, at Appellants' business address in Phoenix. On May 21, 2008, the process server went to Appellants' office and was told Burgener "was not in." Although it is unclear from the record, the process server either telephoned or visited the office seven times over the following two weeks, between 9:30 a.m. and 1:40 p.m., in an attempt to determine whether Burgener was there. Each time the process server was told Burgener was not in the office. Blair then authorized the process server to attempt to locate Burgener's home address and serve him there. The process server locatedBurgener's residence in Phoenix, confirming with a neighbor that Burgener indeed lived at that address, and attempted to serve him there five times over the next eight days, between 4:10 p.m. and 8:40 p.m.

¶ 4 After the attempts at personal service were unsuccessful, Blair filed a motion for alternate service, in which he alleged Appellants were attempting to avoid service and requested permission to effect service "upon any person in charge of the office located at 40[2] W. Roosevelt, Suite E, Phoenix, AZ." ² He supported his motion with the process server's affidavit of non-service, describing the failed attempts to effect service. The trial court granted the motion and, in addition to allowing Blair to serve the person in charge of the office, it also ordered Blair to mail a copy of the process and the court's order "to the last known residence or business address of each party receiving alternate service."

¶ 5 The process server served Appellants at the business address by leaving copies of the required documents with a woman working at the front desk of the office. The woman gave her first name to the process server but refused to provide her last name or proof of identity. He also mailed copies of the process to the business address. After the time for responding had passed, Blair filed an application for entry of default judgment, and the trial court entered default judgment on November 12, 2008, in the amount of $252,000.

¶ 6 On June 22, 2009, Appellants filed a motion to set aside the entry of default, asserting that they had not been properly served under the Arizona Rules of Civil Procedure and the judgment therefore was void. After oral argument, the trial court denied their motion. This appeal followed.

Standard of Review

¶ 7 Although default judgments are not favored, Harper v. Canyon Land Dev., L.L.C., 219 Ariz. 535, ¶ 4, 200 P.3d 1032, 1033-34 (App.2008), we review a trial court's denial of a motion to set aside a default judgment for an abuse of discretion, Daou v. Harris, 139 Ariz. 353, 359, 678 P.2d 934, 940 (1984). Generally, a party will only be entitled to relief if it can demonstrate: "1) that its failure to file a timely answer was excusable under one of the subdivisions of Rule 60(c), 2) that it acted promptly in seeking relief and 3) that it had a substantial and meritorious defense to the action." Almarez v. Superior Court, 146 Ariz. 189, 190-91, 704 P.2d 830, 831-32 (App.1985). However, a trial court "must vacate ... a [void] judgment [,] ... [and] a party seeking relief from a void judgment need not show that their failure to file a timely answer was excusable, that they acted promptly ..., or that they had a meritorious defense." Master Fin., Inc. v. Woodburn, 208 Ariz. 70, ¶ 19, 90 P.3d 1236, 1240 (App.2004). Even where a judgment is challenged on voidness grounds, "[t]he movant generally bears the burden of demonstrating his entitlement to have a default judgment set aside." Miller v. Nat'l Franchise Servs., Inc., 167 Ariz. 403, 406, 807 P.2d 1139, 1142 (App.1991).

Discussion

¶ 8 Appellants maintain the trial court abused its discretion by not setting aside the default judgment, arguing it was void for lack of personal jurisdiction over them. See Ariz. R. Civ. P. 60(c)(4) (party may be relieved from void final judgment); Master Fin. Inc., 208 Ariz. 70, ¶ 19, 90 P.3d at 1240 (lack of personal jurisdiction over defendants renders judgment void). In particular, they contend service of process had not been made upon them. Although Appellants assign ten different issues on appeal, the essential questions raised are (1) whether the court erred in concluding Blair had demonstrated that personal service was impracticable under Rule 4.1(m), Ariz. R. Civ. P., such that alternate service was appropriate, (2)whether the means of alternate service authorized by the court violated Appellants' due process rights, and (3) whether Blair sufficiently complied with the court's order of alternate service. We address each of these issues in turn.

¶ 9 Preliminarily, we note that Appellants have not provided this court with a transcript of the hearing on their motion to set aside judgment. It is the appellant's burden to ensure that "the record on appeal contains all transcripts or other documents necessary for us to consider the issues raised." Baker v. Baker, 183 Ariz. 70, 73, 900 P.2d 764, 767 (App.1995); see also Ariz. R. Civ.App. P. 11(b)(1). And, in the absence of a transcript, we presume the evidence and arguments presented at the hearing support the trial court's ruling. Kohler v. Kohler, 211 Ariz. 106, n. 1, 118 P.3d 621, 623 n. 1 (App.2005); Chavarria v. State Farm Mut. Auto. Ins. Co., 165 Ariz. 334, 338, 798 P.2d 1343, 1347 (App.1990).

A. Alternate service

¶ 10 Appellants first contend Blair failed to make the requisite showing under Rule 4.1(m) to establish service upon them was impracticable, such that he was entitled to effect service through alternate means. Appellants maintain, as to Tigerlilly and Bonanza, that personal service can never be impracticable. Relying on Rule 4.1(1), they contend that when service cannot be completed by serving the statutory agent of a corporation, the plaintiff is required to effect service through the Arizona Corporation Commission. But Rule 4.1(1) applies only "[w]hen a domestic corporation does not have an officer or agent in this state upon whom legal service of process can be made." ³ Here, Appellants do not dispute that Burgener is the statutory agent for both companies. Thus, Rule 4.1(1) does not apply.

¶ 11 Rule 4.1(m) provides, in pertinent part: "If service by one of the means set forth in the preceding paragraphs of this Rule 4.1 proves impracticable, then service may be accomplished in such manner, other than by publication, as the court, upon motion and without notice, may direct."

¶ 12 There are no Arizona cases interpreting the meaning of "impracticable" as that term is used in the rule. This court's "purpose is to interpret the statutes and rules according to the drafters' intent, and we will first look to the plain language of the statute or rule as the best evidence of that intent." Hornbeck v. Lusk, 217 Ariz. 581, ¶ 6, 177 P.3d 323, 325 (App.2008). When "the language is clear and unambiguous, we give effect to that language and do not employ other methods of statutory construction." Fragoso v. Fell, 210 Ariz. 427, ¶ 7, 111 P.3d 1027, 1030 (App.2005).

¶ 13 Relying on Calabro v. Leiner, 464 F.Supp.2d 470, 472 (E.D.Penn.2006), Appellants contend service of process is only impracticable "when personal service absolutely cannot be made under the applicable rules of civil procedure." And, they suggest that four attempts at service at Burgener's residence were insufficient as a matter of law to "warrant alternative service." ⁴ In Calabro,the court was interpreting Rule 430(a), Penn. R. Civ. P., to determine whether the plaintiff had made reasonable efforts to effect personal service on the defendant before resorting to alternative means. The rule provides:

If service cannot be made under the applicable rule[,] the plaintiff may move the court for a special order directing the method of service. The motion shall be accompanied by an affidavit stating the nature and extent of the investigation which has been made to determine the

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