O'Brien v. Scottsdale Discount Corp.

• Decision Date: 18 March 1971
• Docket Number: No. 2,CA-CIV,2
• Citation: 14 Ariz.App. 224,482 P.2d 473
• Parties: Alan T. O'BRIEN, Appellant, v. SCOTTSDALE DISCOUNT CORPORATION and Schenectady Discount Corporation, Appellees. 932.
• Court: Arizona Court of Appeals

Page 473

482 P.2d 473

14 Ariz.App. 224

Alan T. O'BRIEN, Appellant, v. SCOTTSDALE DISCOUNT CORPORATION and Schenectady Discount Corporation, Appellees.

No. 2 CA-CIV 932.

Court of Appeals of Arizona, Division 2.

March 18, 1971.

Rehearing Denied April 20, 1971.

Stuart Herzog, Tucson, for appellant.

Shimmel, Hill & Bishop, P.C., by James B. Rolle III, Phoenix, for appellees.

KRUCKER, Chief Judge.

This appeal is from the granting of a summary judgment by the trial court in favor of the appellees (defendants below) on appellees' motion. The parties will hereinafter be referred to as they appeared below; that is, plaintiff and defendants. ¹ The basis upon which the trial court ruled was that it found that the complaint filed in the instant case was a cause of action which should have been presented by a counterclaim in an earlier proceeding, filed in 1966 in Maricopa County by the defendants against the plaintiff, and was therefore barred as res judicata as a compulsory counterclaim under Rule 13(a), as amended, Rules of Civil Procedure, 16 A.R.S. The Maricopa County proceeding will hereinafter be referred to as the earlier case; the subject of this appeal, as the instant case.

The factual background of the situation at bar is that the plaintiff was in the mobile home sales business in 1964 and 1965 in Tucson, Arizona. The defendants financed certain aspects of this operation, including floor plan financing of the plaintiff's merchandise before he sold it and retail financing by buying the retail installment contracts the plaintiff obtained upon sales of mobile homes. The plaintiff signed personal guarantees of the retail installment contracts to the defendants.

The earlier action was filed by the defendant Scottsdale in Maricopa County against the plaintiff for, among other things, the plaintiff's failure to pay a balance due ($4,911) on two inventory trust receipts, given to defendant Scottsdale by the plaintiff as a part of the floor plan financing referred to above. This earlier action was filed October 11, 1966 and the answer was filed November 2, 1966. Judgment for the amount of $4,911 was entered against plaintiff on June 26, 1969, after a trial without a jury on June 17, 1969; interest on this amount was granted from October 11, 1966.

The instant complaint alleges, among other things, ² that the defendants failed to pay approximately $27,000 due plaintiff under retail installment contracts assigned to Scottsdale; that plaintiff had guaranteed certain retail installment contracts assigned to Scottsdale in return for Scottsdale's agreement to provide accurate credit evaluations, to collect the contracts diligently, and to preserve properly all rights under the contracts (defendants deny agreeing to these three alleged agreements); that the defendants hold certain funds ³ as security for these guarantees, and since defendants have breached the agreements (which they deny making), these funds should be released to the plaintiff, the guarantees cancelled and punitive damages should be awarded plaintiff; that defendants are trustees of these funds for the benefit of the plaintiff and have breached their fiduciary relationship by using the funds to their (the defendants') benefit to the end that a court-administered trust of the funds should be set up and punitive damages should be awarded to plaintiff; and, finally, that improper handling of repossessions and resales by defendants occurred and the profits from these resales are due the plaintiff. The plaintiff served interrogatories on the defendants and took depositions of the president of Schenectady and the manager of the Scottsdale office of Schenectady, which was doing business as Scottsdale Discount.

The defendants filed a motion for summary judgment, supported by the affidavit of the president of Schenectady. Defendants attached as exhibits to this affidavit, and incorporated by reference, the complaint, answer and judgment in the earlier case. An opposition, supported by the affidavit of plaintiff, was filed by the plaintiff.

The trial court granted summary judgment on the basis that all the matters in the complaint in the instant case were compulsory counterclaims under Rule 13(a), supra, in the earlier Maricopa County proceeding (as urged in defendants' motion) and, therefore, should have been asserted by plaintiff in that action, stating that the doctrine of res judicata was applicable and citing Biaett v. Phoenix Title & Trust Co., 70 Ariz. 164, 217 P.2d 923 (1950), and Technical Air Products, Inc. v. Sheridan-Gray, Inc., 103 Ariz. 450, 445 P.2d 426 (1968). The trial court expressly found that:

'* * * the plaintiff's claims arose out of the same transaction as were (sic) involved in Maricopa County Cause Number 190032, that they did not require the presence of the parties who are not or could not be before the Court, that they were not the subject of any other pending action, and that they were in existence at the time of the commencement of Cause Number 190032 in the Superior Court of Arizona, Maricopa County.'

The only question here is whether or not the record before us shows the complaint in the instant action consists of matters which were compusory counterclaims, which should have been raised in the earlier case. If so, we must affirm the trial court's granting of summary judgment against the plaintiff.

Rule 13(a), supra, reads as follows:

'Compulsory counterclaims. A pleading shall state as a counterclaim any claim which at any (sic) time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. But the pleader need not state the claim if (1) at the time the action was commenced the claim was the subject of another pending action, or (2) the opposing party brought suit upon his claim by attachment or other process by which the court did not acquire jurisdiction to render a personal judgment on that claim, and the pleader is not stating any counterclaim under this Rule 13.' ⁴

The policy behind this rule is the avoidance of 'multiplicity of actions and to achieve resolution in a single lawsuit of all disputes arising out of common matters.' Southern Construction Co. Inc. v. Pickard, 371 U.S. 57, 83 S.Ct. 108, 9 L.Ed.2d 31 (1962); Biaett v. Phoenix Title & Trust Co., supra.

The plaintiff urges that the trial court erred for a number of reasons in ruling that the complaint in the case at bar was the subject of a compulsory counterclaim under Rule 13(a), supra, but, in view of the disposition we make of this appeal, we need...