City Ctr. Exec. Plaza, LLC v. Jantzen

• Court: Arizona Court of Appeals
• Writing for the Court: HOWE, Judge
• Citation: City Ctr. Exec. Plaza, LLC v. Jantzen, 237 Ariz. 37, 344 P.3d 339 (Ariz. App. 2015)
• Decision Date: 24 February 2015
• Docket Number: No. 1 CA–SA 14–0254.,1 CA–SA 14–0254.
• Parties: CITY CENTER EXECUTIVE PLAZA, LLC ; Information Solutions, Inc., Jerry and Cindy Aldridge, Petitioners, v. The Honorable Lee F. JANTZEN, Judge of the Superior Court of the State of Arizona, in and for the County of Mohave, Respondent Judge, Brian Thienes, an individual; John Ball and Monica Ball, husband and wife; The Thompson Family Trust; Juan Bracamonte and Jacqueline Bracamonte, husband and wife; The Refuge Community Association, Inc., Real Parties in Interest.

237 Ariz. 37

344 P.3d 339

CITY CENTER EXECUTIVE PLAZA, LLC ; Information Solutions, Inc., Jerry and Cindy Aldridge, Petitioners

v. The Honorable Lee F. JANTZEN, Judge of the Superior Court of the State of Arizona, in and for the County of Mohave, Respondent JudgeBrian Thienes, an individual; John Ball and Monica Ball, husband and wife; The Thompson Family Trust; Juan Bracamonte and Jacqueline Bracamonte, husband and wife; The Refuge Community Association, Inc., Real Parties in Interest.

No. 1 CA–SA 14–0254.

Court of Appeals of Arizona, Division 1.

Feb. 24, 2015.

Perkins Coie, LLP, By Daniel C. Barr, Joshua M. Crum, John H. Gray, Phoenix, Counsel for Petitioners.

Ekmark & Ekmark, LLC, By Penny L. Koepke, Nicole A. Miller, Scottsdale, Beus Gilbert, PLLC, By Franklyn D. Jeans, Cory L. Broadbent, Cassandra H. Ayres, Phoenix, Counsel for Real Parties in Interest.

Judge RANDALL M. HOWE delivered the opinion of the Court, in which Presiding Judge MARGARET H. DOWNIE and Judge PATRICIA K. NORRIS joined.

OPINION

HOWE, Judge:

¶ 1 City Center Executive Plaza, LLC; Information Solution, Inc.; and Jerry and Cindy Aldridge (collectively, “City Center”) seek special action relief from a trial court order that they must post a supersedeas bond of 25% of the full amount of the money judgments. City Center argues that Arizona Revised Statutes (“A.R.S.”) § 12–2108 and Arizona Rule of Civil Appellate Procedure (“ARCAP”) 7¹ limit the amount of the bond to the total amount of damages awarded, which it claims is $1.00.

¶ 2 Special action jurisdiction is appropriate here because City Center has “no equally plain, speedy and adequate remedy by appeal” and challenges the setting of a supersedeas bond. See Ariz. R.P. Spec. Act. 1(a) ; Salt River Sand & Rock Co. v. Dunevant, 222 Ariz. 102, 105–06 ¶ 7, 213 P.3d 251, 254–55 (App.2009) (citing Bruce Church, Inc. v. Superior Court, 160 Ariz. 514, 515, 774 P.2d 818, 819 (App.1989) ) (providing that challenge to the setting of a supersedeas bond is a circumstance where special action jurisdiction is appropriate). Therefore, we accept jurisdiction, grant relief and vacate the trial court's order, and remand the matter for the court to set the supersedeas bond at $1.00, the total amount of damages awarded.

FACTS AND PROCEDURAL HISTORY

¶ 3 In 2010, Brian Thienes, John and Monica Ball, the Thompson Family Trust, Juan and Jacqueline Bracamonte, and the Refuge Community Association (collectively, the “Association”) sued City Center—owners of a neighboring golf course—seeking injunctive relief and damages. The Association opposed redevelopment of the golf course, which included reducing the golf course's size to accommodate an RV park. The matter was tried before a jury, and the jury awarded the Association $1.00 in damages and recommended granting injunctive relief. The trial court accepted the recommendation and permanently enjoined City Center from using the golf course for anything other than golf-related activities. The order did not resolve the parties' requests for attorneys' fees and costs. City Center appealed from the injunction.

¶ 4 In March 2014, the trial court awarded attorneys' fees and costs to the Association and entered two judgments pursuant to Arizona Rule of Civil Procedure 54(b), totaling $2,390,296.87.² City Center appealed those judgments (“money judgments”).³ City Center then moved to stay the money judgments pending their appeal. It also requested that the court set a supersedeas bond at $1.00 pursuant to ARCAP 7. The rule provides that the bond amount necessary to stay execution of a judgment shall be the lowest of the following: total amount of damages awarded excluding punitive damages, 50% of appellant's net worth, or $25 million. See ARCAP 7(a). Because the total amount of damages awarded was $1.00 and Rule 7 “strictly limits the amount of a supersedeas bond to ‘the total amount of damages awarded,’ ” City Center argued that the court should set the bond at $1.00.

¶ 5 The Association countered, however, that the bond amount should be set at the full amount of the money judgments ($2,390,286.87), arguing that the term “damages” under Rule 7 was synonymous with “judgment.” The Association also argued that a bond in the full amount of the money judgments was appropriate because City Center had intentionally dissipated assets outside the ordinary course of business to avoid payment of the judgment. The trial court set the supersedeas bond at the full amount of attorneys' fees and costs, totaling $2,390,296.87, without holding a hearing or resolving whether City Center had dissipated assets.

¶ 6 In May 2014, City Center petitioned for special action relief, contending that the trial court erroneously included attorneys' fees and costs in calculating the supersedeas bond. Specifically, City Center argued that the court's ruling conflicted with Rule 7, as well as A.R.S. § 12–2108, which contains language similar to the rule. We accepted jurisdiction, vacated the trial court's order, and directed the court to conduct a hearing to determine an appropriate amount of the supersedeas bond consistent with § 12–2108 and Rule 7. Specifically, we stated that under the statute and the rule, the trial court “must consider, first, the ‘total amount of damages awarded,’ in accordance with § 12–2108(A)(1) and Rule 7..., and then determine whether an upward or downward deviation from that amount is appropriate.” We did not address whether “damages” was synonymous with “judgment.”

¶ 7 On remand, the trial court held a hearing and reviewed pleadings and evidence from both parties. Pursuant to § 12–2108(A), the court found that the total amount of damages awarded was $1.00, but the “judgment included attorneys' fees.” It noted that “[i]t would be highly ineffective to have the verdict of the jury supported by imposing a supersedeas bond of $1.00 because that is the total amount of actual damages awarded. The supersedeas bond should reflect the real stakes and should be posted to protect the rights of the prevailing party.” The court then considered § 12–2108(B) and (C). It did not find clear and convincing evidence that City Center dissipated assets, but did find by clear and convincing evidence that posting a bond in the “full amount of the judgment” would likely cause City Center substantial economic harm. The court set the supersedeas bond at 25% of the full money judgments, which was $597,574.22. This second petition for special action followed.

DISCUSSION

1. A.R.S. § 12–2108 and ARCAP 7

¶ 8 City Center argues that the trial court erred by setting the supersedeas bond at 25% of the money judgments because A.R.S. § 12–2108 and ARCAP 7 limit the amount to $1.00, the total amount of the actual damages awarded. The interpretation of a statute is a question of law that we review de novo. Pawn 1st, L.L.C. v. City of Phoenix, 231 Ariz. 309, 311 ¶ 13, 294 P.3d 147, 149 (App.2013). Because the trial court erred by including attorneys' fees as damages, we grant relief and remand the matter for the court to set the supersedeas bond at $1.00, the total amount of damages awarded.

¶ 9 Under a former version of Rule 7, the initial focus in setting a supersedeas bond was on the amount of the “judgment remaining unsatisfied,” that is, the “amount which secures the total judgment together with an amount which reasonably covers costs, interest and any damages which might be attributed to the stay pending appeal.” Bruce Church, 160 Ariz. at 517, 774 P.2d at 821. The language of the rule, however, also gave a trial court discretion to set the bond in an amount less than the amount of the judgment and to order security or impose conditions other than or in addition to the bond. Salt River, 222 Ariz. at 106 ¶ 8, 213 P.3d at 255.

¶ 10 In 2011, the Legislature enacted A.R.S. § 12–2108, and in 2012, the Arizona Supreme Court amended Rule 7 to track the statute's language. The language of § 12–2108 and amended Rule 7 changed the standards under which a supersedeas bond amount is set and now require consideration of the provisions set forth in § 12–2108(A) through (C) and Rule 7(a).

¶ 11 Section 12–2108(A) provides:

If a plaintiff in any civil action obtains a judgment under any legal theory, the amount of the bond that is necessary to stay execution during the course of all appeals or discretionary reviews of that judgment by any appellate court shall be set as the lesser of the following:

1. The total amount of damages awarded excluding punitive damages.

2. Fifty percent of the appellant's net worth.

3. Twenty-five million dollars.

A.R.S. § 12–2108(A). Further, notwithstanding subsection A, “if an appellee proves by clear and convincing evidence that appellant is intentionally dissipating assets outside the ordinary course of business to avoid payment of a judgment, the court may require the appellant to post a bond in an amount up to the full amount of the judgment.” Id. § 12–2108(B). But “if an appellant proves by clear and convincing evidence that the appellant is likely to suffer substantial economic harm if required to post bond in an amount required under subsection A,” the court may lower the bond amount. Id. § 12–2108(C).

¶ 12 Thus, the new statute and amended rule set forth a three-step process for determining the amount of a supersedeas bond. The first step requires the trial court to set the bond as the lesser of the following: the total amount of damages awarded, excluding punitive damages; 50% of the appellant's net worth; or $25 million (“the presumed amounts”). A.R.S. § 12–2108(A)(l )–(3) ; ARCAP 7(a)(4)(A)-(C). That is, the statute and rule require the court to compare the three values and select the smallest amount as the presumed amount of the bond. The second step permits an upward deviation from the presumed amount “up to the full amount of the judgment” if an appellee proves by clear and convincing evidence that the appellant is dissipating assets. A.R.S. § 12–2108(B) ; ARCAP 7(a)(5)(A). The third and final step...