Donald v. Papadakis

• Decision Date: 27 September 2018
• Docket Number: No. 1 CA-CV 17-0728,1 CA-CV 17-0728
• Parties: TIMOTHY DONALD, et al., Plaintiffs/Appellants, v. ALEC PAPADAKIS, et al., Defendants/Appellees.
• Court: Arizona Court of Appeals

TIMOTHY DONALD, et al., Plaintiffs/Appellants, v. ALEC PAPADAKIS, et al., Defendants/Appellees.

No. 1 CA-CV 17-0728

ARIZONA COURT OF APPEALS DIVISION ONE

September 27, 2018

NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

Appeal from the Superior Court in Maricopa County

No. CV2017-001526

The Honorable Lori Bustamante, Judge

The Honorable Teresa A. Sanders, Judge

AFFIRMED AS MODIFIED

COUNSEL

Stoops, Denious, Wilson & Murray, P.L.C., Phoenix

By Frank L. Murray (argued), Stephanie M. Wilson, Thomas A. Stoops

Counsel for Plaintiffs/Appellants

Quarles & Brady LLP, Phoenix

By Jeffrey H. Wolf, Rodney W. Ott (argued)

Counsel for Defendants/Appellees

MEMORANDUM DECISION

Judge Paul J. McMurdie delivered the decision of the Court, in which Presiding Judge Jennifer B. Campbell and Judge Kent E. Cattani joined.

McMURDIE, Judge:

¶1 Timothy Donald and American Soccer Marketing, L.L.C.¹ appeal the superior court's order dismissing their complaint against United Soccer Leagues, LLC, its owner and CEO, Alex Papadakis, and its President, Tim Holt (collectively, "the League"). For the following reasons, we affirm all but the portion of the order dismissing the complaint "with prejudice."

FACTS AND PROCEDURAL BACKGROUND

¶2 In 2013, Donald entered into a franchise agreement (the "Franchise Agreement") with the League, an organization operating a nationwide, private soccer league, to own and manage a Phoenix area soccer franchise. On February 24, 2014, after a dispute arose over Donald's alleged failure to remedy defaults on certain requirements under the Franchise Agreement, the League terminated Donald's franchise.

¶3 On February 13, 2017, Donald filed a complaint in the superior court in Arizona against the League and Kyle Eng, the new owner of the Phoenix soccer franchise. On the same day, Donald filed a nearly identical lawsuit with the American Arbitration Association's Phoenix office (the "Arbitration Case") against the League. The Arbitration Case was subsequently transferred, per the Franchise Agreement's arbitration clause, to Tampa, Florida. The League moved to dismiss the court action, arguing that valid and enforceable forum-selection and arbitration clauses within the Franchise Agreement required Donald to submit any claim arising between them to an appropriate forum in Hillsborough County, Florida.

¶4 On June 6, 2017, the court granted the League's motion to dismiss the action. The court found that dismissal was appropriate becausethe Franchise Agreement contained "clear and unambiguous" arbitration and forum-selection clauses. The court also found that because Donald failed to meet his burden of establishing either clause's non-enforceability, both clauses were valid and enforceable, and "[Donald's] case against [the League] [could not] be pursued in Arizona."

¶5 Following the court's order dismissing Donald's complaint, the League moved for attorney's fees and costs, requesting $54,796 for fees incurred, $2000 in estimated fees related to the preparation of the fee application, and $322.73 in taxable costs. Over objections to the application, the court granted the League's motion and awarded $56,796 in fees and requested costs. On October 9, 2017, the court entered a final judgment under Arizona Rule of Civil Procedure ("Rule") 54(b), dismissing Donald's complaint against the League "with prejudice." Donald timely appealed from that order.²

DISCUSSION

A. Dismissing Donald's Action Against the League "With Prejudice" Was Inappropriate, But We Nonetheless Have Jurisdiction to Hear Donald's Appeal.

¶6 At the outset, we hold the superior court's dismissal of Donald's claims against the League should have been made without prejudice. Rule 41(b) provides that "[u]nless the dismissal order states otherwise, a dismissal under this Rule 41(b) and any dismissal not under this rule—except one for lack of jurisdiction, improper venue, or failure to join a party under Rule 19—operates as an adjudication on the merits." (Emphasis added). A dismissal based on valid and enforceable forum-selection and arbitration clauses effectively acknowledges that the court lacks jurisdiction to hear the action on the merits, and therefore dismissal without prejudice is more appropriate. "A dismissal of claims subject to arbitration should be entered without prejudice, to allow forfurther judicial determinations that may prove necessary." Duenas v. Life Care Ctrs. of America, Inc., 236 Ariz. 130, 142, ¶ 40 (App. 2014).

¶7 Modifying the judgment in this manner raises the question of whether Donald's appeal should be dismissed for lack of jurisdiction, as we "generally do not have appellate jurisdiction when a case is dismissed without prejudice." Dunn v. FastMed Urgent Care PC, 245 Ariz. 35, 37, ¶ 9 (App. 2018). But as we recently reaffirmed in Dunn, "[d]ismissal pursuant to a forum-selection clause . . . is an appealable order under A.R.S. § 12-2101(A)(3)." Id.; see also Dusold v. Porta-John Corp., 167 Ariz. 358, 361 (App. 1990) (finding appellate jurisdiction under predecessor to § 12-2101(A)(3) to consider the dismissal and jurisdictional aspects of the trial court's order transferring arbitration to Michigan).

¶8 Accordingly, although the dismissal should have been made without prejudice, we nonetheless have jurisdiction to consider Donald's appeal under Arizona Revised Statutes ("A.R.S.") § 12-2101(A)(3).

B. The Superior Court Properly Entered a Final Judgment under Rule 54(b) Regarding Donald's Claims Against the League.

¶9 Donald argues the superior court erred by certifying its October 9, 2017 order as a final judgment pursuant to Rule 54(b) because "there was nothing about [the] case that was final" when the court dismissed Donald's claims against the League. We disagree.

¶10 Although we typically review a court's Rule 54(b) certification for an abuse of discretion, when "the issue is whether 'the judgment in fact is not final, i.e., did not dispose of at least one separate claim of a multi-claim action,' . . . we review the trial court's determination de novo." Kim v. Mansoori, 214 Ariz. 457, 459, ¶ 6 (App. 2007) (quoting Davis v. Cessna Aircraft Corp., 168 Ariz. 301, 304 (App. 1991)).

¶11 Rule 54(b) provides an exception to the general rule that appellate court jurisdiction is "limited to final judgments which dispose of all claims and all parties." Musa v. Adrian, 130 Ariz. 311, 312 (1981); see also A.R.S. § 12-2101(A) (setting forth the instances where an appeal may be taken to the court of appeals from the superior court). When an action concerns multiple claims for relief or multiple parties, Rule 54(b) permits the superior court to direct entry of a final judgment as to fewer than all the claims or parties, but "only if the court expressly determines there is no just reason for delay and recites that the judgment is entered under Rule 54(b)." Ariz. R. Civ. P. 54(b). "That an order or judgment contains Rule 54(b) language, however, does not make it final and appealable; the certificationalso must be substantively warranted." Sw. Gas Corp. v. Irwin ex rel County of Cochise, 229 Ariz. 198, 202, ¶ 12 (App. 2012). "A final judgment . . . decides and disposes of the cause on its merits, leaving no question open for judicial determination." Ruesga v. Kindred Nursing Ctrs., L.L.C., 215 Ariz. 589, 593, ¶ 10 (App. 2007) (omission in original) (quoting Props. Inv. Enters., Ltd. v. Found. for Airborne Relief, Inc., 115 Ariz. 52, 54 (App. 1977)).

¶12 The superior court properly certified its dismissal under Rule 54(b). After finding the arbitration and forum-selection clauses within the Franchise Agreement valid and enforceable,³ the court correctly held that Donald's claims against the League and its officers could not be pursued in Arizona. See Bennett v. Appaloosa Horse Club, 201 Ariz. 372, 377-78, ¶ 25 (App. 2001) (affirming the superior court's dismissal based on an enforceable forum-selection clause). The court's order dismissing Donald's action against the League, based on the arbitration and forum-selection clauses, disposed of all claims against the League and its officers, and Rule 54(b) certification following that order was proper. See Ariz. R. Civ. P. 54(b) ("[I]f multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties.").

¶13 None of the arguments Donald raises challenging the judgment's finality are availing. Donald first argues that the dismissal was not a final judgment because it was entered before the Arbitration Case ended and while proceedings against Eng continue. The Arbitration Case and the proceedings in the superior court are entirely separate actions, brought by separate complaints within separate tribunals. That Donald filed identical complaints on the same calendar day or may ultimately seek enforcement of any arbitration award in Arizona is irrelevant. And we are unaware of any law authorizing this court to treat the Arbitration Case and the superior court action as one and the same.

¶14 As for Donald's action against Eng, Rule 54(b) was specifically designed to address a situation where entering final judgment is proper for some parties, but proceedings must continue for others. "It is logical, if not axiomatic, that [Rule 54(b)] thereby permits the portion of the case that isnot part of the appeal to proceed in the trial court while the appeal moves forward." Sw. Gas Corp., 229 Ariz. at 202, ¶ 10.

¶15 Donald also contends the superior court erred because it entered a final judgment under Rule 54(b) only on the pleadings, before the court heard any evidence or witness testimony. Donald does not explain, however, why the court needed to hear evidence or witness testimony to conclude that the forum-selection and arbitration clauses within the Franchise Agreement necessitated dismissal. And dismissal on the pleadings is typical in cases where a...