Cline v. Ticor Title Ins. Co. of California, 1

• Citation: 742 P.2d 844,154 Ariz. 343
• Decision Date: 04 August 1987
• Docket Number: No. 1,CA-CIV,1
• Parties: Paul D. CLINE and Marsha R. Cline, Plaintiffs-Appellants, v. TICOR TITLE INSURANCE COMPANY OF CALIFORNIA, a California corporation, Defendant-Appellee. 9163.
• Court: Court of Appeals of Arizona

Page 844

742 P.2d 844

154 Ariz. 343

Paul D. CLINE and Marsha R. Cline, Plaintiffs-Appellants, v. TICOR TITLE INSURANCE COMPANY OF CALIFORNIA, a California corporation, Defendant-Appellee.

No. 1 CA-CIV 9163.

Court of Appeals of Arizona,

Division 1, Department A.

Aug. 4, 1987.

Jennings, Strouss & Salmon by Jefferson L. Lankford, Michael R. Palumbo, Phoenix, for plaintiffs-appellants.

[154 Ariz. 344] Streich, Lang, Weeks & Cardon, P.A. by William S. Hawgood, II, E. Jeffrey Walsh, Robert E. Miles, Phoenix, for defendant-appellee.

OPINION

CONTRERAS, Judge.

Plaintiffs Paul and Marsha Cline's suit against defendant Ticor Title Insurance Company of California was dismissed for failure to comply with Uniform Rule V(e), Ariz.Unif.R.P.Super.Ct. 17A A.R.S. ¹ Two days after entry of the order of dismissal, the plaintiffs' filed a motion to set aside the order of dismissal and reinstate the case pursuant to Rule 60(c), Ariz.R.Civ.P., 16 A.R.S. ² The trial court denied the motion without stating the reason or basis for the denial.

Plaintiffs argue on appeal that the trial court erred or abused its discretion in denying Rule 60(c) relief. Plaintiffs ask us to find that they established Rule 60(c) grounds for relief and that they were not required to make a showing of a meritorious claim in order to have the Rule V dismissal set aside. Because of the Arizona Supreme Court's recent clarification in the case of Gorman v. City of Phoenix, 152 Ariz. 179, 731 P.2d 74 (1987), regarding the circumstances in which Rule 60(c) relief should be granted in cases dismissed under Rule V, we allowed the parties to file supplemental briefs directed to a discussion of the effect of Gorman on this appeal. Based upon our understanding of Gorman we conclude that the trial court abused its discretion in denying appellants' motion. In line with Gorman and for reasons delineated in this opinion, we remand this case to the trial court for the sole purpose of permitting the plaintiffs the opportunity to show whether they have a meritorious claim.

PROCEDURAL BACKGROUND

The plaintiffs filed suit against the defendant in May, 1985, alleging breach of contract, breach of fiduciary duty, bad faith, and intentional infliction of emotional distress regarding the defendant's handling of the escrow and title insurance for plaintiffs' sale of real property. In December, 1985, both parties began to conduct discovery and remained very actively engaged in discovery efforts throughout the next six months.

The attorneys for the plaintiffs had filed three other suits involving similar claims against defendant Ticor Title Insurance Company of California on behalf of three other plaintiffs. On February 21, 1986, the trial court, although denying a motion to consolidate the four cases for trial, granted a motion to consolidate the cases as to pretrial proceedings only.

On March 11, 1986, a minute entry order was entered pursuant to Rule V placing this case on the inactive calendar for dismissal without further notice on June 11, 1986, unless a motion to set and certificate of readiness was filed by that date. Timely motions to set and certificates of readiness were filed by plaintiffs' counsel in the other three related suits. When plaintiffs' counsel received a copy of the March 11, 1986 minute entry, he took steps to ensure that the motion to set and certificate of readiness would be timely filed in this case. Plaintiffs' counsel timely filed plaintiffs' list of witnesses and exhibits on May 15, 1986, as a preliminary requirement to filing the motion to set and certificate of readiness. Thereafter, however, plaintiffs' counsel neglected to timely file the motion to set and certificate of readiness. It appears that due to the press of other work he was doing, plaintiffs' counsel failed to heed the notice placed on his own calendar that the motion to set and certificate of readiness was to be filed by June 11, 1986. It further appears that in spite of their usual practice, his secretary failed to remind him on that date to file the requisite motion to set. The case was dismissed without prejudice for lack of prosecution on July 1, 1986.

Plaintiffs moved immediately to reinstate the case by filing a motion for Rule 60(c) relief on July 3, 1986. Plaintiffs argued that their attorney's failure to file the motion to set and certificate of readiness, which caused the suit to be dismissed pursuant to Rule V, amounted to excusable neglect. They further argued that other factors were present which, combined with the excusable neglect of their attorney, provided grounds for setting the dismissal aside. They pointed out that this was a case which was being actively litigated; the parties had conducted extensive discovery in preparation for trial; and plaintiffs had timely filed a list of witnesses and exhibits as a prerequisite to filing the motion to set. They also argued that a reinstatement of the case would cause no prejudice to the defendant because no statute of limitations had yet run on plaintiffs' claims and therefore, the plaintiffs could merely refile their suit since the dismissal had been without prejudice. Rather than pursue a second suit, though, plaintiffs urged that as a matter of judicial economy, this suit should be reinstated.

In response to the Rule 60(c) motion, defendant argued that no excusable neglect in failing to file the motion to set and certificate of readiness had been shown and instead that the case was one in which mere carelessness and forgetfulness had played a role. The defendant obtained deposition testimony of plaintiffs' counsel, his secretary and another attorney assisting with the case in order to demonstrate that the conduct which had resulted in the failure to file the motion to set and certificate of readiness had been carelessness rather than excusable neglect. The defendant also disputed plaintiffs' contention that no statute of limitations had run on the claims and argued that at least some of the claims would now be barred by the statute of limitations. Finally, defendant argued that relief should not be granted to the plaintiffs because even if they had shown sufficient grounds for relief under Rule 60(c), they had failed to provide proof that they had a meritorious claim which defendant argued is a separate requirement for setting aside an order of dismissal.

In reply, plaintiffs reiterated their original arguments. As for the defendant's contention that a meritorious claim must be shown, the plaintiffs, instead of supplying proof that they had a meritorious claim, took the position that proof of a meritorious claim is not required in order for a plaintiff to set aside a non-prejudicial dismissal for failure to prosecute.

The trial court by minute entry and later by formal order denied the plaintiffs' motion stating "IT IS ORDERED denying Plaintiffs' Motion to Reinstate Case on the Active Calendar." The trial court did not set forth any reason or basis for denying plaintiffs' motion. This appeal followed.

Plaintiffs argued on appeal that the trial court abused its discretion if it concluded that grounds for relief under Rule 60(c) had not been shown. They further argue that if the trial court denied the motion because no meritorious claim had been presented, the trial court erred in ruling that such a showing was required. As previously noted the trial court did not specify the reasons for its ruling and we cannot determine from this record the reason or basis for denying the requested relief. We conclude that plaintiffs acted promptly in seeking relief from the dismissal order. We further conclude that Rule 60(c)(6) grounds for relief were shown in this case, but that plaintiffs under Gorman are also required to demonstrate that they have a meritorious claim in order to obtain the requested relief. For reasons hereafter set forth we remand this case to the trial court for further proceedings.

We find that Gorman and the case which Gorman was written to clarify, Bickerstaff v. Denny's Restaurant, Inc., 141 Ariz. 629, 688 P.2d 637 (1984), together control the issues raised in this case. We therefore proceed directly to a discussion of these two cases.

EXISTENCE OF RULE 60(c) GROUNDS

In Bickerstaff, as in the case presently before us, the suit had been dismissed pursuant to Rule V because of plaintiff Bickerstaff's neglect in failing to file a motion to set and certificate of readiness. The trial court had denied Bickerstaff's motion to set aside the dismissal in which she had sought relief pursuant to Rule 60(c)(1) and 60(c)(6). ³

The Arizona Supreme Court upheld the trial court's denial of Rule 60(c) relief. As to clause (1), the court found that the facts alleged as reasons for failing to file the motion to set and certificate of readiness did not amount to "excusable neglect" defined as "neglect or inadvertence ... such as might be the act of a reasonably prudent person under similar circumstances." 141 Ariz. at 631-632, 688 P.2d at 639-640 (citing Daou v. Harris, 139 Ariz. 353, 678 P.2d 934 (1984)).

As to clause (6) of Rule 60(c), the court observed that to justify relief under that clause, "extraordinary circumstances" must be presented. 141 Ariz. at 632, 688 P.2d at 640 (citing Webb v. Erickson, 134 Ariz. 182, 655 P.2d 6 (1982)). A factor present in Bickerstaff bearing on whether "extraordinary circumstances" were shown was the fact that the statute of limitations had run on Bickerstaff's claim prior to the dismissal and she was therefore barred from refiling the action. Division Two of the Court of Appeals, which had initially reviewed the trial court's ruling, had found that the statute of limitations made this an extraordinary case requiring relief from the dismissal. The Arizona Supreme Court, however, disagreed, concluding that the passing of the statutory limitation period could be considered as one of many factors in a determination of "extraordinary circumstances," but that, standing alone,...