Fid. Express Network Inc. v. Friedman

• Decision Date: 19 August 2010
• Docket Number: No. CV-10-0096-CQ.,CV-10-0096-CQ.
• Citation: 238 P.3d 118,225 Ariz. 307
• Parties: FIDELITY NATIONAL FINANCIAL INC., Plaintiff/Appellee, Fidelity Express Network Inc., Claimant/Appellee, v. Colin H. FRIEDMAN; et al, Defendants/Appellants, and Anita Meshkatai, individually and as a trustee of the Anita Kramer Living Trust, dated Jul y 23, 1987, Defendant.
• Court: Arizona Supreme Court

225 Ariz. 307

238 P.3d 118

FIDELITY NATIONAL FINANCIAL INC., Plaintiff/Appellee,Fidelity Express Network Inc., Claimant/Appellee,

v. Colin H. FRIEDMAN; et al, Defendants/Appellants,andAnita Meshkatai, individually and as a trustee of the Anita Kramer Living Trust, dated Jul y 23, 1987, Defendant.

Supreme Court of Arizona. FIDELITY NATIONAL FINANCIAL INC., Plaintiff/Appellee,Fidelity Express Network Inc., Claimant/Appellee,

v. Colin H. FRIEDMAN; et al, Defendants/Appellants,andAnita Meshkatai, individually and as a trustee of the Anita Kramer Living Trust, dated Jul y 23, 1987, Defendant. No. CV-10-0096-CQ. Aug. 19, 2010.

Hennelly & Grossfeld LLP By Orlando F. Cabanday, Janice M. Kroll, Thomas H. Case, Marina Del Rey, CA, and Sherman & Howard L.L.C. By Dewain D. Fox, Phoenix, Attorneys for Fidelity National Financial Inc. and Fidelity Express Network Inc.

Schian Walker, P.L.C. by Michael R. Walker, Mark C. Hudson, Phoenix, Attorneys for Colin H. Friedman.

OPINION

HURWITZ, Vice Chief Justice.

¶ 1 We accepted jurisdiction to answer two questions certified to us by the United States Court of Appeals for the Ninth Circuit:

1) Do collection activities (such as filing for a writ of garnishment or applying for orders from the court to inspect a safety deposit box or require a debtor's exam) taken within Arizona, renew a judgment previously registered in Arizona?

2) Does the filing of a related lawsuit in a state other than Arizona renew a judgment previously registered in Arizona?

¶ 2 We have jurisdiction pursuant to Article 6, Section 5(6) of the Arizona Constitution, Arizona Revised Statutes (“A.R.S.”) §§ 12-1861 to 12-1867 (2003), and Arizona Supreme Court Rule 27.

I.

¶ 3 The facts and procedural history of this litigation are set forth in detail in the certification order of the Ninth Circuit, Fidelity Nat'l Fin. Inc. v. Friedman, 602 F.3d 1121, 1122-23 (9th Cir.2010), and are summarized here.

¶ 4 In 2002, Fidelity National Financial Inc. (“Fidelity”) obtained a monetary judgment against Colin and Hedy Friedman and Farid and Anita Meshkatai (collectively the “Debtors”) in the United States District Court for the Central District of California. Fidelity registered the judgment in the United States District Court for the District of Arizona in November 2002. During the next five years, Fidelity obtained court orders in Arizona authorizing writs of garnishment, inspection of the Debtors' safety deposit box, and debtors' examinations (collectively, the “Arizona collection activities”). In 2006, Fidelity filed a new action in the Central District of California (the “California racketeering suit”), alleging that the Debtors had violated federal racketeering laws and California state fraud laws by using family trusts and other devices to avoid paying the 2002 judgment.

¶ 5 In 2008, the Debtors filed a motion in the Arizona federal court contending that Fidelity could not enforce the 2002 judgment because more than five years had passed since its entry. The district court denied the motion, concluding that the 2002 judgment had been renewed pursuant to A.R.S. § 12-1551(B) (Supp.2009) and § 12-1611 (2003) ¹ by the Arizona collection activities and California racketeering suit. Fidelity appealed, and the Ninth Circuit certified the two questions to us. ²

II.

¶ 6 The starting point in resolving the questions before us is the common law background to Arizona's statutory scheme for renewal of judgments. At common law, judgments generally became dormant if not executed upon within a year of entry and were unenforceable after twenty years. See Browne & Manzanares Co. v. Chavez, 9 N.M. 316, 54 P. 234, 234 (N.M.Terr.1898). A judgment creditor could avoid this problem in two ways. The first was by suing on the judgment in a new action and obtaining a new judgment, which then could be executed upon. See Cont'l Nat'l Bank & Trust Co. of Salt Lake City v. John Seely & Sons Co., 94 Utah 357, 77 P.2d 355, 358 (1938); Simpson v. Cochran & Cherrie, 23 Iowa 81, 81 (1867). The second was through a writ of scire facias, which revived the original judgment and thus allowed execution on it. See Cont'l Nat'l Bank & Trust Co. of Salt Lake City, 77 P.2d at 358; Am. Ry. Express Co. v. F.S. Royster Guano Co., 141 Va. 602, 126 S.E. 678, 679 (1925) (“The proceeding by scire facias is not a new suit ... but a continuation of the old suit.”).

¶ 7 Since well before statehood, Arizona statutes have provided both a deadline for enforcing judgments and a procedure for extending that deadline. The 1901 Territorial Code provided:

No execution shall be issued upon any judgment after the expiration of five years from the date of its rendition and entry, unless such judgment be revived by scire facias, or an action of debt be brought thereon within five years from the date of such rendition and entry.

1901 Territorial Code § 2558. Section 2959 of the 1901 Territorial Code codified the common law by allowing revival of a judgment “by scire facias or an action of debt brought thereon within five years after the date of such judgment.” ³

¶ 8 The first Civil Code enacted after statehood, the 1913 Civil Code, made a significant change to the statutes governing judgment revival. That Code eliminated scire facias, replacing the common law writ with a simplified process under which a judgment was “revived by affidavit.” 1913 Civ.Code § 1353. The affidavit process was spelled out in detail in the 1913 Code.1913 Civ.Code §§ 581 to 583. The affidavit could be filed “at any time within the ninety days next preceding the expiration of the five year period within which a judgment may be a lien under existing law.” 1913 Civil Code § 582. The affidavit, filed in the court that rendered the original judgment, “operate[d] to renew and revive said judgment to the extent of the balance shown due in said affidavit for the period of five years from the date of the filing of such affidavit.” Id. Thus, like the writ of scire facias, the affidavit continued the effectiveness of the original judgment so that the judgment creditor could continue to execute upon it. See Owens v. McCloskey, 161 U.S. 642, 645, 16 S.Ct. 693, 40 L.Ed. 837 (1896) (describing writ as “continu [ing] the effect of ... the former judgment”).

¶ 9 Although it abandoned the common law writ of scire facias, the 1913 Civil Code expressly preserved the common law alternative of suing on the judgment. Thus, § 1353 provided that a judgment could also be renewed by an “action ... brought thereon.” Section 580 similarly provided for renewal of a judgment “by action brought thereon in any court of competent jurisdiction within this state at any time within five years after the date of such judgment.”

¶ 10 These provisions from the 1913 Civil Code have been carried forward without material change into present law. Section 12-1551(B) now provides as follows:

An execution or other process shall not be issued upon a judgment after the expiration of five years from the date of its entry unless the judgment is renewed by affidavit ... or an action is brought on it within five years from the date of the entry of the judgment or of its renewal.

The affidavit renewal process is set forth in § 12-1612 (2003). Like its predecessors, § 12-1551(B) preserves the option of renewal through “an action ... on” the original judgment. Section 12-1611, in turn, states that “[a] judgment may be renewed by action thereon at any time within five years after the date of the judgment.”

III.

¶ 11 The question before us is whether any of the Arizona collection efforts or the California racketeering suit renewed the 2002 judgment. Our inquiry therefore focuses on § 12-1551(A), which provides that a judgment is renewed by “an action brought on it,” and § 12-1611, which refers to renewal by “action thereon.”

¶ 12 We start from the premise that the slight difference in the language of these two sections is of no consequence. Read together, the two statutes-as did their forebears-enact a limitations period for the enforcement of a judgment and provide for extension of that period by an action “on” the judgment. See Pima County by City of Tucson v. Maya Constr. Co., 158 Ariz. 151, 155, 761 P.2d 1055, 1059 (1988) (“[I]f statutes relate to the same subject and are thus in pari materia, they should be construed together ... as though they constituted one law.”). The “action thereon” described in § 12-1611 is plainly the same “action brought on” the judgment to which § 12-1551 refers.

¶ 13 Our post-statehood case law confirms that every judgment continues to give rise to an “action to enforce it, called an action upon a judgment.” Associated Aviation Underwriters v. Wood, 209 Ariz. 137, 180 ¶ 150, 98 P.3d 572, 615 (App.2004) (citation and internal quotation marks omitted). “The main purpose of an action on a judgment is to obtain a new judgment which will facilitate the ultimate goal of securing the satisfaction of the original cause of action.” Id. (citations and internal quotation marks omitted).

¶ 14 As was true at common law, the defendant in an action on the judgment under our statutory scheme is generally the judgment debtor, id., and the amount sought is the outstanding liability on the original judgment, Brandt v. Meade, 17 Ariz. 34, 35-36, 148 P. 297, 298 (1915). The judgment debtor cannot deny the binding force of the judgment, Miller Rubber Co. of N.Y. v. Peggs, 60 Ariz. 157, 159, 132 P.2d 439, 440 (1942), but can assert such defenses as satisfaction or partial payment, Brandt, 17 Ariz. at 41, 148 P. at 301. If indebtedness remains on the original judgment, the action results in a new judgment in the amount owed. Associated Aviation Underwriters, 209 Ariz. at 180 ¶ 150, 98 P.3d at 615.

¶ 15 “Legislative intent often can be discovered by examining the development of a particular statute.” Carrow Co. v. Lusby, 167 Ariz. 18, 20, 804 P.2d 747, 749 (1990). The history of §§ 12-1551 and 12-1611, dating from before statehood, is...