General Elec. Capital Corp. v. Osterkamp

• Decision Date: 23 January 1992
• Docket Number: CA-CIV,No. 2,2
• Citation: 172 Ariz. 191,836 P.2d 404
• Parties: GENERAL ELECTRIC CAPITAL CORPORATION, formerly known as General Electric Credit Corporation, successor in interest to RCA Corporation (RCA Service Company), a New York corporation, Plaintiff/Appellee, v. Elizabeth OSTERKAMP, Defendant/Appellant. 91-0107.
• Court: Arizona Court of Appeals

Page 404

836 P.2d 404

172 Ariz. 191

GENERAL ELECTRIC CAPITAL CORPORATION, formerly known as General Electric Credit Corporation, successor in interest to RCA Corporation (RCA Service Company), a New York corporation, Plaintiff/Appellee, v. Elizabeth OSTERKAMP, Defendant/Appellant.

No. 2 CA-CIV 91-0107.

Court of Appeals of Arizona,

Division 2, Department B.

Jan. 23, 1992.

As Amended on Denial of

Reconsideration March 5, 1992.

Review Denied Sept. 22, 1992. ^*

[172 Ariz. 192] Norling, Oeser & Williams by Darrell E. Davis and Steven H. Williams, Phoenix, for plaintiff/appellee.

Molloy, Jones & Donahue, P.C. by David J. Diamond, Tucson, for defendant/appellant.

OPINION

HATHAWAY, Judge.

In this case arising from a breach of contract action, Elizabeth Osterkamp appeals from a default judgment in favor of General Electric Capital Corporation. We affirm.

FACTS AND PROCEDURAL HISTORY

On December 27, 1988, General Electric Capital Corporation (GE) filed a complaint in Pima County Superior Court against Tucson Hotel Properties Limited Partnership for breach of an equipment lease agreement involving televisions and related equipment (the Pima County case). GE later amended its complaint to add as defendants Horst Osterkamp, Tucson Hotel's general partner, and Jane Doe Osterkamp, his wife. On November 18, 1989, Elizabeth Osterkamp, Horst's wife at the time he executed the lease agreement, was personally served with a summons and the amended complaint at her California home.

At approximately the same time, GE brought a parallel breach of contract action against Nogales Hotel Properties Limited, of which Horst was also general partner, in Santa Cruz County Superior Court (the Santa Cruz County case). Also on November 18, GE served a summons and an amended complaint on Elizabeth Osterkamp in the Santa Cruz County case. The relevant facts of the Santa Cruz County case are set forth in this court's decision General Electric Capital Corporation v. Elizabeth Osterkamp, 172 Ariz. 185, 836 P.2d 398 (1992).

On December 22, 1989, GE applied for entry of default against Elizabeth and mailed her a copy of the application. On December 27, 1989, default was entered. In accordance with Ariz.R.Civ.P. 55(a)(2), 16 A.R.S., the default was to become effective on January 11, 1990, if an answer was not filed by the end of that day.

On January 19, 1990, Elizabeth's Arizona counsel filed an answer on her behalf. On January 29, 1990, he filed a motion to set aside the entry of default, asserting that the failure to timely answer was due to excusable neglect. The excusable neglect related to several telephone conversations between Elizabeth's Arizona counsel and Steven Williams, GE's counsel, which took place late in the day on January 11. A more complete description of the facts regarding the phone conversations between the parties' attorneys is set out in General Electric, 172 Ariz. at 187, 836 P.2d at 400.

Elizabeth's Arizona counsel asserts in his affidavits that he initially believed that Williams was granting him an extension of time to file an answer, despite the expiration of the ten-day grace period provided by Rule 55(a)(2). He also states that during the second conversation with Williams, he realized that such an extension was not being offered. Williams states in his affidavit that Arizona counsel then told Williams that he believed that an answer filed after entry of default, but before a motion for entry of default judgment, was valid. Williams asserts that he twice advised Arizona counsel that the rule provided otherwise, and that once the grace period expires, a party must show both excusable neglect and a meritorious defense before the court will set aside default. According to Williams, Arizona counsel maintained that he considered this to be a legal question to be submitted to the court. Arizona counsel does not dispute these assertions in either of his affidavits. Moreover, Arizona counsel argued to the court, in support of his motion to set aside default, that he did not file an answer by the end of the day on January 11 based on this understanding of the applicable law.

The Pima County and Santa Cruz County actions share identical procedural histories to this point. Elizabeth made the same arguments with respect to excusable neglect in both actions.

After a hearing, the Pima County trial court ruled on the motion on October 15, 1990, denying the motion and entering judgment in favor of GE. The court based its decision on two grounds: (1) the purported stipulation to extend the time to answer was not in writing or made in open court as required by Ariz.R.Civ.P. 80(d), 16 A.R.S.; and, (2) as a matter of law, application for entry of default is not the same as an application for the entry of default judgment.

On October 30, 1990, Elizabeth filed a motion to set aside the default judgment based on assertions in her affidavit that she did not receive adequate notice due to insufficient service of process. She states that the complaint was served on her cook whose first language was not English. Finding that this assertion constituted newly-discovered evidence, the court granted the motion and set aside the default judgment. GE then filed a motion for reconsideration and submitted evidence to refute the alleged lack of notice. On February 25, 1991, the court vacated its previous minute entry and confirmed the default judgment in favor of GE, finding that Elizabeth had not fully disclosed the facts. Elizabeth now appeals from default judgment. ¹

STANDARD OF REVIEW

At the appellate level, there is an initial presumption that a judgment is correct. Chase v. State Farm Mut. Auto. Ins. Co., 131 Ariz. 461, 641 P.2d 1305 (App.1982). The burden is on the party who disagrees with the judgment to show that the trial court abused its discretion. Yoo Thun Lim v. Crespin, 100 Ariz. 80, 411 P.2d 809 (1966). Additionally, the decision whether to set aside a default judgment lies entirely within the discretion of the trial court and will not be disturbed on appeal absent a clear abuse of that discretion. Hirsch v. National Van Lines, Inc., 136 Ariz. 304, 666 P.2d 49 (1983).

In our review of judgments, we are obliged to affirm the trial court's ruling if the result was legally correct for any reason. State v. Perez, 141 Ariz. 459, 687 P.2d 1214 (1984). Implied in every judgment, in addition to the express findings made by the court, are any additional findings necessary to sustain the judgment, if reasonably supported by the evidence and not in conflict with the express findings. Thus, if the judgment can be sustained on any theory framed by the pleadings and supported by the evidence, we must affirm it. Coronado Co., Inc. v. Jacome's Dept. Store, 129 Ariz. 137, 139, 629 P.2d 553, 555 (App.1981).

DISCUSSION

Elizabeth makes the following arguments on appeal: (1) the trial court abused its discretion by relying on Ariz.R.Civ.P. 80(d), 16 A.R.S., in denying the motion to set aside the entry of default; (2) Elizabeth met the legal standard for setting aside entry of default or default judgment; and, (3) the trial court improperly ignored the facts and law indicating that the court had no jurisdiction over Elizabeth because of insufficient service of process and consequent lack of adequate notice.

I.

Whether to set aside an entry of default or a default judgment is entirely within the trial court's discretion. Daou v. Harris, 139 Ariz. 353, 678 P.2d 934 (1984); United Imports and Exports, Inc. v. Superior Court, 134 Ariz. 43, 653 P.2d 691 (1982). A default may be set aside by the trial court where the moving party shows excusable neglect as defined in Ariz.R.Civ.P. 60(c), 16 A.R.S., a meritorious defense, and has promptly applied for relief. Id. We will not disturb the trial court's finding absent a showing of abuse of discretion. Id.

We find that the court acted properly in denying the motion to set aside the entry of default. We need not address the issue of whether the trial court erred in applying Rule 80(d) to a default situation. Regardless of the propriety of that action, sufficient other grounds exist to support the court's decision. Indeed, the court's minute entry impliedly recognized these other grounds.

In reviewing GE's appeal from summary judgment in the Santa Cruz County action, this court considered the same facts and issues relative to the Santa Cruz...