Brumgard v. Gamble
Decision Date | 13 January 2017 |
Docket Number | No. 2 CA-CV 2015-0081,2 CA-CV 2015-0081 |
Parties | RICHARD C. BRUMGARD AND KAY BRUMGARD, HUSBAND AND WIFE, Plaintiffs/Appellants, v. FREDERICK G. GAMBLE AND JANE DOE GAMBLE, HUSBAND AND WIFE; JOHN YOUNG AND MARGARET YOUNG, HUSBAND AND WIFE; YOUNG BUILDERS, INC.; AND YOUNG BUILDERS, INC., PROFIT SHARING AND RETIREMENT TRUST, Defendants/Appellees. RICHARD C. BRUMGARD AND KAY BRUMGARD, HUSBAND AND WIFE, Plaintiffs/Appellants/Cross-Appellees, v. YOUNG BUILDERS, INC., PROFIT SHARING AND RETIREMENT TRUST, Defendant/Appellee/Cross-Appellant. |
Court | Arizona Court of Appeals |
THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
NOT FOR PUBLICATION
See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f).
Appeal from the Superior Court in Pinal County
The Honorable Edward O. Burke, Judge
The Honorable Michael J. Herrod, Judge
AFFIRMED IN PART; REVERSED IN PART
Richard C. Brumgard and Kay Brumgard, Casa Grande
Law Offices of Frederick G. Gamble, Chandler
By Frederick G. Gamble
Judge Staring authored the decision of the Court, in which Judge Espinosa and Judge Miller concurred.
¶1 This appeal follows many years of disputes and associated lawsuits involving appellants Richard and Kay Brumgard, appellee Young Builders, Inc., Profit Sharing & Retirement Trust (hereinafter "the Trust"), its owners and related business entities. The parties challenge the trial court's July 2010 ruling denying the Brumgards leave to amend their complaint, a June 2014 under-advisement ruling following a bench trial, and the final judgment entered in December 2014. We affirm in part and reverse in part.
¶2 We view the facts in the light most favorable to affirming the trial court's decisions. Hammoudeh v. Jada, 222 Ariz. 570, ¶ 2, 218 P.3d 1027, 1028 (App. 2009). The underlying disputes involve the shared ownership of two adjoining parcels of real property, various debts encumbering the properties, and the management of a storage business, known as Casa Grande Mini, located on one of the parcels. The Brumgards filed their initialcomplaint in this matter in August 2008, alleging, inter alia, claims of fraud and racketeering, quiet title, lien prioritization, foreclosure and abuse of process, and in a series of amended complaints, alleged claims against the Trust and other defendants. The Brumgards' claims were all resolved before trial.
¶3 The Trust asserted several counterclaims, three of which were tried to the court in March 2014. In its counterclaims, the Trust sought to foreclose on a lien it held by virtue of its payment of the Brumgards' share of property taxes, to obtain an accounting of the income and expenses of the storage business, which the Brumgards managed, and to enforce several judgment liens it held against the Brumgards as a result of prior litigation. The court issued its under-advisement ruling in June 2014 and entered a final judgment in favor of the Trust in December 2014.
¶4 The Brumgards and the Trust both appealed. We have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1).
¶5 The Brumgards argue the trial court erred when it denied their motion for leave to file a third amended complaint. The proposed complaint specified that the Brumgards' claim for malicious prosecution was related to a bankruptcy court finding that Young had engaged in bad faith in proceedings related to the Brumgards' bankruptcy. The trial court denied the motion based on its conclusion that the Brumgards' claim was barred by the one-year limitations period of A.R.S. § 12-541.
¶6 We review a trial court's denial of a party's request for leave to file an amended complaint for an abuse of discretion. See Owen v. Superior Court, 133 Ariz. 75, 79, 649 P.2d 278, 282 (1982). A court may deny leave to amend when the proposed amendment would be "futile." See Walls v. Ariz. Dep't of Pub. Safety, 170 Ariz. 591, 597, 826 P.2d 1217, 1223 (App. 1991).
¶7 A claim for malicious prosecution requires "prov[ing] defendant (1) instituted a civil action which was (2) motivated by malice, (3) begun without probable cause, (4) terminated in plaintiff's favor, and (5) damaged plaintiff." Bradshaw v. State Farm Mut. Auto. Ins. Co., 157 Ariz. 411, 416-17, 758 P.2d 1313, 1318-19 (1988). "A malicious prosecution action does not accrue until the prior proceedings have terminated in the defendant's favor." Moran v. Klatzke, 140 Ariz. 489, 490, 682 P.2d 1156, 1157 (App. 1984). The Brumgards argue their claim for malicious prosecution accrued in March 2008, when the Bankruptcy Appellate Panel (BAP) upheld the bankruptcy court's order requiring John Young, a beneficiary and co-trustee of the Trust, and his attorney Frederick Gamble to pay attorney fees as a sanction for their conduct in proceedings related to the Brumgards' bankruptcy.1 The Trust argues the claim accrued in May 2007, when the bankruptcy court's decision concerning the merits of certain disputes related to the Brumgards' bankruptcy was affirmed on appeal.2
¶8 In denying the Brumgards leave to file the third amended complaint with respect to the claim of malicious prosecution, the trial court found the amendment "futile as barred by the statute[] of limitations." Although the proposed amended complaint briefly mentioned a May 2005 hearing before the bankruptcy court and subsequent sanctions imposed against Young and Gamble for bad faith, the complaint failed to describe any specific proceeding brought against the Brumgards and terminated in their favor within one year prior to the date they filed their complaint. Moreover, the BAP's 2008 decision established Young and Gamble were not sanctioned for conduct against the Brumgards,but for concealing assets in the Youngs' bankruptcy. Young v. Waterfall, Economidis, Caldwell, Hanshaw & Villamana, P.C. (In re Brumgard), No. AZ-07-1358-KPaJu, 2008 WL 8444799, at *1-2 (B.A.P. 9th Cir. Mar. 13, 2008). The bankruptcy court's order was not, therefore, the resolution of a proceeding filed against the Brumgards, much less one that had terminated in their favor within one year before the August 2008 complaint was filed in this action. The Brumgards have thus failed to sustain their burden of establishing the trial court abused its discretion in denying their motion for leave to file a third amended complaint alleging a claim of malicious prosecution.3
¶9 In September 2005, the bankruptcy court found the Brumgards had inappropriately used business funds to pay for personal expenses, entitling the Trust to a compensating distribution of $12,783.67. In its counterclaim for an accounting of the business income and expenses in this action, the Trust alleged the Brumgards had failed to pay the Trust, and sought judgment for this amount, together with interest from the date of the order, which the trial court granted. Although the Brumgards did not raise the issue below, they contend on appeal the trial court lacked subject matter jurisdiction to effectively enforce the bankruptcy court's order. Subject matter jurisdiction is a question of law, which we review de novo, Buehler v. Retzer ex rel. Indus. Comm'n, 227 Ariz. 520, ¶ 4, 260 P.3d 1085, 1086 (App. 2011), and may be raised for the first time on appeal. See Rojas v. Kimble, 89 Ariz. 276, 279, 361 P.2d 403, 406 (1961).
¶10 The Brumgards cite Deitz v. Ford (In re Deitz), 760 F.3d 1038 (9th Cir. 2014), in support of their argument that only thebankruptcy court could reduce the underlying claim to a judgment. But Deitz concerned the scope of the bankruptcy court's jurisdiction under 28 U.S.C. § 157(b)(2) to hear a "core proceeding," and merely confirmed existing precedent that "a bankruptcy court may liquidate a debt and enter a final judgment in conjunction with finding the debt nondischargeable." 760 F.3d at 1043, 1050. Deitz does not support the Brumgards' argument that the bankruptcy court's authority to issue a judgment on non-dischargeable debt preempts a state court from later issuing a judgment when the bankruptcy court has not done so. Nor do the cases the Brumgards cite in their reply brief support that proposition. See In re Sasson, 424 F.3d 864, 868-70 (9th Cir. 2005) ( ); MSR Expl., Ltd. v. Meridian Oil, Inc., 74 F.3d 910, 916 (9th Cir. 1996) ( ); Pierce v. Carson (In re Rader), 488 B.R. 406, 418 (B.A.P. 9th Cir. 2013) ( ).
¶11 Further, the bankruptcy code explicitly contemplates judicial enforcement of claims after a bankruptcy case is closed and the stay on collection activity is lifted. 11 U.S.C. § 362(a)(1), (c)(2)(A). "The stay does not operate as a bar to the action, but only as a suspension of proceedings until the question of the bankrupt's discharge shall have been determined in the [bankruptcy court]." Hill v. Harding, 107 U.S. 631, 633 (1883). And claims surviving bankruptcy are routinely enforced in non-bankruptcy courts. See Hinduja v. Arco Prods. Co., 102 F.3d 987, 988-89 (9th Cir. 1996) ( ); cf. In re Walker, 151 B.R. 1006, 1008 (E.D. Ark. 1993) ( ); Zitani v. Reed, 992 So. 2d 403, 409-10 (Fla. Dist. Ct. App. 2008) (...
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