Daou v. Harris, 16693-PR

• Decision Date: 14 February 1984
• Docket Number: No. 16693-PR,16693-PR
• Citation: 678 P.2d 934,139 Ariz. 353
• Parties: Patricia M. DAOU, Plaintiff/Appellee, v. Albert J. HARRIS, M.D., Defendant/Appellant.
• Court: Arizona Supreme Court

Page 934

678 P.2d 934

139 Ariz. 353

Patricia M. DAOU, Plaintiff/Appellee, v. Albert J. HARRIS, M.D., Defendant/Appellant.

No. 16693-PR.

Supreme Court of Arizona, In Banc.

Feb. 14, 1984.

Reconsideration Denied March 6, 1984.

Culbert & DeNinno by David R. Pardee, Globe, for plaintiff/appellee

George F. Klink, Phoenix, for defendant/appellant.

HAYS, Justice.

On August 26, 1981, petitioner Patricia M. Daou filed a medical malpractice complaint against respondent Albert J. Harris The court of appeals found the superior court lacked subject matter jurisdiction and held the default judgment void. Four issues confront us: whether the trial court had jurisdiction to enter the default judgment without referring the cause to a medical liability review panel pursuant to A.R.S. § 12-567(A), whether Harris' failure to answer was excusable under Ariz.R.Civ.P., rule 60(c), whether the damages awarded Daou were excessive, and whether a violation of rule 77(g) by the court clerk provides ground for relief from a default judgment. We have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3), and Ariz.R.Civ.App.P., rule 23. We affirm the judgment of default. The opinion of the court of appeals is vacated.

M.D. Harris was personally served at his office on September 14, 1981. Harris failed to answer within the 20-day period allowed by law, see Ariz.R.Civ.P., rule 12(a), and a default was entered against him on October 6, 1981, pursuant to Ariz.R.Civ.P., rule 55(a). A hearing on damages was held November 4, 1981. Judgment by default was then entered on November 24, 1981. See Ariz.R.Civ.P., rule 55(b).

JURISDICTION ISSUE

At the time of the filing of the complaint in this case, A.R.S. § 12-567(A) provided:

Upon the filing of a complaint in any medical malpractice action, the matter shall be referred to a medical liability review panel appointed pursuant to this section. Such action shall be referred to the panel within ten days after the expiration of the time for defendant's answer except that the presiding judge may waive the review panel requirement upon stipulation of all the parties. ¹

Respondent Harris, citing Barclay v. Jones, 127 Ariz. 282, 619 P.2d 1059 (App.1980), argues the statute mandates referral to a medical liability review panel and therefore the superior court lacked jurisdiction to enter a default judgment until the matter had been referred to a panel and the panel returned a decision. It has also been argued the ten-day period is jurisdictional and therefore the superior court had jurisdiction until ten days after the expiration of the time for defendant's answer, but not thereafter. We hold the statute is not jurisdictional, and therefore the superior court did have jurisdiction to enter a default judgment.

Article 6, section 14, of the Arizona Constitution provides that "[t]he superior court shall have original jurisdiction of: 1. Cases and proceedings in which exclusive jurisdiction is not vested by law in another court." The question, therefore, is whether A.R.S. § 12-567(A) divested the superior court of jurisdiction.

In making such a determination, the presumption is in favor of retention rather than divestiture of jurisdiction. See Dockery v. Central Arizona Light & Power Co., 45 Ariz. 434, 443, 45 P.2d 656, 659 (1935); Varnes v. White, 40 Ariz. 427, 431, 12 P.2d 870, 871 (1932); State v. Villados, 55 Hawaii 394, 520 P.2d 427, 430 (1974); Paley v. Coca Cola Co., 389 Mich. 583, 593, 209 N.W.2d 232, 235-36 (1973). "Because the divestiture of jurisdiction is a serious matter, before a party can claim that an act or statute has the effect of divesting jurisdiction which has regularly and fully vested, the law in favor of such divestment must be clear and unambiguous." Villados, supra, 520 P.2d at 430. Any doubt is resolved in favor of retention of jurisdiction. Paley, supra, 389 Mich. at 593, 209 N.W.2d at 235. Thus, this court will not simply infer that the legislature meant to divest the superior court of jurisdiction, but instead requires the legislature to enunciate such an intent explicitly and clearly.

We do not find such clear language in A.R.S. § 12-567(A). First, we presume that the legislature, when it passes a statute, knows the existing laws. E.g., Arizona State Board of Directors for Junior Colleges v. Phoenix Union High School, 102 Ariz. 69, 72, 424 P.2d 819, 822 (1967). We presume, therefore, that when passing A.R.S. § 12-567(A), the legislature knew of rule 12(a) (20 days to answer a complaint) and rule 55 (entry of default and default judgment). Had the legislature intended to divest the superior court of jurisdiction to enter a default judgment against a nonanswering defendant, it would have stated so explicitly. See, e.g., A.R.S. § 13-4040.

Second, Harris' interpretation of A.R.S. § 12-567(A) would thwart the policy of that provision. A purpose of the panel requirement is to help curb medical malpractice premiums by separating frivolous claims from meritorious ones and encouraging pretrial settlements. Eastin v. Broomfield, 116 Ariz. 576, 583, 570 P.2d 744, 751 (1977). To require referral to a panel--with the attendant time, effort and expense of creating and convening the panel--when a party has not answered the complaint, would certainly be contrary to that policy. This is especially true considering that the panel function is to address the issue of liability, and that a default constitutes a judicial admission of liability. E.g., Southern Arizona School for Boys, Inc. v. Chery, 119 Ariz. 277, 282, 580 P.2d 738, 743 (App.1978); Dungan v. Superior Court, 20 Ariz.App. 289, 290, 512 P.2d 52, 53 (1973). The spirit of the act prevails. Phoenix Union, supra, 102 Ariz. at 71, 424 P.2d at 821. Harris' contention would run directly counter to that spirit.

As stated earlier, it has also been argued the ten-day period is jurisdictional and therefore the superior court had jurisdiction until ten days after the expiration of the time for defendant's answer, but not thereafter. Again, for the presumption in favor of retention of jurisdiction to be overcome, the law in favor of divestiture must be clear and unambiguous. That is not the situation in this case. The ten-day period, we believe, is not a clear attempt at jurisdictional divestment, but rather is merely an attempt to direct court procedure. See infra at 938 - 939. Also, to require the superior court to act within ten days after the expiration of the time for defendant's answer or lose jurisdiction simply would not further the policy of the act. There are two possibilities after the ten-day period: either the superior court would lose jurisdiction completely--which would be absurd, for the case either never would be resolved or would have to be refiled--or the court would lose jurisdiction except to refer the matter to a panel. By the latter possibility, before a default judgment could be rendered, the matter would have to be referred to a panel and then back to the court with the panel's recommendation. These actions would be meaningless where a party has not answered the complaint; to require them would make a mockery of the cost-containment policy of the act. Finally, to ensure the efficient administration of justice, courts must be able to control their own dockets. Considering the time, effort, and expense that an arbitrary ten-day "refer to a panel or lose jurisdiction" rule would place on the court and a party confronting a nonanswering defendant, the administration of justice would not be enhanced. The ten-day period is not jurisdictional. See, e.g., Williams v. Williams, 29 Ariz. 538, 542-43, 243 P. 402, 403 (1926); Western Savings & Loan Assoc. v. Diamond Lazy K Guest Ranch, Inc., 18 Ariz.App. 256, 261, 501 P.2d 432, 437 (1972) (rejecting the argument that the constitutional requirement that every case submitted to a superior court judge for his decision shall be decided within sixty days from the submission thereof is jurisdictional).

The next question is whether A.R.S. § 12-567(A) is substantive or procedural. Substantive rights created by statute cannot be enlarged or diminished by rules promulgated by this court. State v. Birmingham, 95 Ariz. 310, 316, 390 P.2d 103, 107 (1964); A.R.S. § 12-109. The An examination of A.R.S. § 12-567(A) reveals that it is in part substantive and in part a procedural direction to the superior court. The substantive law is that part of the law which creates and defines rights. E.g., State v. Birmingham, 96 Ariz. 109, 110, 392 P.2d 775, 776 (1964). The provision in section 567(A) that creates a right to a review panel is substantive. The procedural law prescribes the method by which a substantive law is enforced or made effective. Id.; Sibbach v. Wilson & Co., 312 U.S. 1, 14, 61 S.Ct. 422, 426-27, 85 L.Ed. 479 (1941). The United States Supreme Court has stated further that a procedural provision "does not operate to abridge, enlarge or modify the rules of decision by which [the district] court will adjudicate its rights. It relates merely to 'the manner and means by which a right to recover * * * is enforced.' " Mississippi Publishing Corp. v. Murphree, 326 U.S. 438, 446, 66 S.Ct. 242, 246, 90 L.Ed. 185 (1946) (quoting Guaranty Trust Co. v. York, 326 U.S. 99, 109, 65 S.Ct. 1464, 1470, 89 L.Ed. 2079 (1945)). The provision in section 567(A) providing that the case shall be referred to a review panel within ten days after the expiration of time for defendant's answer does not operate to abridge, enlarge or modify the substantive right to a review panel. Rather, that provision relates merely to the period within which the case is to go to a panel; as such it is procedural and therefore subject to the precedence of rules properly promulgated by this court.

power to govern procedural matters for all courts, however, is vested exclusively with this court. State v. Blazak, 105 Ariz. 216, 217, 462 P.2d 84, 85 (1969); Arizona Podiatry Association v. Director of Insurance, 101 Ariz....