O'Keefe v. Grenke
| Decision Date | 30 January 1992 |
| Docket Number | No. 1,CA-CV,1 |
| Citation | 825 P.2d 985,170 Ariz. 460 |
| Parties | , 16 UCC Rep.Serv.2d 746 Michael J. O'KEEFE and Theresa O'Keefe, Plaintiffs-Appellants, Cross Appellees, v. Gary GRENKE and Jean Grenke, husband and wife; Brian Winstanley and Lori Winstanley, husband and wife; Interpleaders-Appellees, Cross Appellants. 89-378. |
| Court | Arizona Court of Appeals |
The primary issue on appeal is whether the trial court erroneously dismissed plaintiffs' amended claim against the interpleaders for a violation of the Arizona Bulk Sales Transfer Act, A.R.S. § 47-6101 et seq., (bulk sales act), based on the court's conclusion that the statute of limitations imposed by the act had run. The cross-appeal raises issues whether defending against a violation of the bulk sales act is an action arising out of contract so as to allow the interpleaders attorneys' fees against plaintiffs, and whether interpleaders were entitled to setoff against the interpled funds their judgment for attorneys' fees against defendants arising from a stipulated judgment on their crossclaim. We affirm.
In July 1982, Michael J. O'Keefe and Theresa A. O'Keefe (plaintiffs) entered into a contract (management agreement) with William E. Conry and Lyvia Conry (defendants), which provided that defendants would manage a business owned by plaintiffs known as Convenient Food Mart. The management agreement, as amended, also provided defendants with an option to purchase the business for $50,000 but provided that until defendants had paid fifty-one percent of the purchase price, plaintiffs would retain title to the store franchise, the fixtures and equipment, and all inventory. Defendants exercised this option to purchase in March 1984, but did not make payments exceeding fifty-one percent of the $50,000 price.
On February 18, 1987, defendants agreed to sell the business to Gary Grenke, Jean Grenke, Brian Winstanley, and Lori Winstanley (collectively, interpleaders) for $90,000; $60,000 to be paid upon transfer and the $30,000 balance to be paid in installments under a promissory note. The purchase contract transferred to interpleaders all right, title, and interest in the business including the store fixtures, inventory, interest in a lease agreement, goodwill, business customers, and personnel. Paragraph 6 of the purchase contract provided:
Bulk Sales Act: The Sellers state and agree that the only outstanding debts associated with the business are listed on Exhibit "D". Sellers agree that they will be responsible for all of these outstanding debts and any other debt, including tax debts the Sellers may have incurred in relation to the business.... Sellers further agree they shall comply with the Bulk Sales Act.
Exhibit "D" listed the following creditors:
1. Pepsi Cola $ 800.00
2. Central Arizona Distributing Co. 125.00
3. Salt River Project (Last month's utilities) 1,100.00
These creditors were paid from the proceeds of the sale. No notice of the transfer was sent to plaintiffs, and defendants did not pay the balance of the $50,000 option price to plaintiffs.
On March 28, 1987, an agent of plaintiffs discovered that the business had been sold to interpleaders. On May 15, 1987, plaintiffs filed suit against defendants alleging breach of the management agreement, conversion/trespass, racketeering, fraudulent concealment and nondisclosure, and sought issuance of provisional remedies (garnishment and attachment). This complaint named no other parties, although it did allege that the Grenkes and the Winstanleys were "subsequent purchasers," and attached a U.C.C. financing statement and security agreement that named the interpleaders as the transferees. The complaint requested damages in the amount of $90,000, and sought attachment of the security interest to satisfy the judgment.
On June 23, 1987, plaintiffs amended the complaint to add a sixth count, alleging that the sale constituted a bulk transfer as defined by A.R.S. § 47-6101, that defendants violated the bulk sales act by failing to supply a list of creditors and failing to give proper notice of the transfer, and that interpleaders knew or had reason to know that defendants owed a debt to plaintiffs at the time of the transfer. The complaint requested "an order voiding the purported sale ... from the Conrys to the Grenkes and Winstanleys," "an order of attachment allowing the O'Keefes to proceed against any and all of the property transferred in violation of the Bulk Sales Transfer Act," and attorneys' fees and costs. The amended complaint again did not formally join the interpleaders as parties, but did add fictitious defendants "whose true identity or role in this lawsuit is unknown at present." Plaintiffs sent a copy of this complaint to the interpleaders on June 23, 1987, and again on July 24, 1987, together with letters from plaintiffs' attorney advising interpleaders that their property interest in the business may be affected by the suit, and advising them to seek legal advice.
On September 11, 1987, interpleaders filed a "Motion for Joinder and Motion for Interpleader," requesting that the court join them to the suit "for the purposes of interpleading certain funds pursuant to Rule 22," Arizona Rules of Civil Procedure. They requested permissive joinder under Rule 20(a), for the reason that "if plaintiffs are successful it will presumably affect or may affect the intervenors' ownership of the fixtures, some goods and the store itself." They further stated that "it may be that the ongoing monthly payments should in fact be paid to the plaintiffs," and requested
Plaintiffs responded that they had no objection to the joinder of interpleaders, but for the first time requested that interpleaders be joined as defendants for the purposes of the bulk sales claim. Plaintiffs also filed a motion for leave to amend their complaint to add the interpleaders as defendants, and interpleaders responded that they had no objection to that amendment. The trial court granted all these motions.
On December 11, 1987, plaintiffs filed their second amended complaint, naming interpleaders as defendants only on the bulk sales claim, retaining the fictitious defendants, and requesting the same relief as requested in the first amended complaint.
Interpleaders filed an answer, admitting that the sale constituted a bulk transfer; asserting, among other affirmative defenses, that the statute of limitations had run; and requesting attorneys' fees and costs against plaintiff, but not stating a basis for that request. Interpleaders also filed a crossclaim against defendants, asserting that defendants were obligated under the terms of the purchase agreement to be responsible for all debts associated with the business and for compliance with the bulk sales act, and therefore interpleaders would be entitled to a setoff on the promissory note and on funds already paid to defendants pursuant to the original contract "for that amount that cross-claimants are found to be liable to the plaintiffs herein." Interpleaders also requested attorneys' fees against defendants pursuant to A.R.S. § 12-341.01.
Interpleaders then sought and received leave to file an amended answer, which added defenses to the other counts of the second amended complaint, although no relief was sought against them on those counts.
On April 4, 1988, a default judgment was entered on interpleaders' crossclaim against defendants. On April 6, 1988, a stipulated judgment was entered against defendants in interpleaders' favor, as follows:
1. Interpleaders/Cross-claimants herein shall have Judgment against the Defendants/Cross-defendants in an amount equal to that which the Cross-claimants are required to pay to Plaintiffs in chief....
2. The Judgment shall include the principal sum and interest to be paid to the Plaintiffs herein along with the actual attorneys['] fees and costs incurred by Interpleaders/Cross-claimants in defense of their claim in this action.
3. The foregoing shall accrue interest at the legal rate until paid.
Plaintiffs then filed a motion for partial summary judgment against interpleaders, requesting a ruling that the transfer violated the bulk sales act on the basis that the list of creditors did not comply with the statutory requirements and no notice of sale was sent to any creditor. The interpleaders responded, conceding that the statutory notice requirements were not met, but asserting that plaintiffs' action against interpleaders was barred by the six-month statute of limitations in A.R.S. § 47-6111, and cross-moved for summary judgment on that ground. Plaintiffs replied that the statute of limitations did not bar their action because the second amended complaint related back to a date within the statute of limitations, pursuant to Rule 15(c), Arizona Rules of Civil Procedure. Interpleaders' reply put in issue this contention.
After several hearings, additional discovery and a request by the court to brief the issue whether noncompliance with the statutory notice requirements constituted "concealment" of the transfer, which would toll the statute of limitations until plaintiffs discovered the transfer on March 28, 1987, the court held that the transfer was not "concealed" within the meaning of A.R.S. § 47-6111 for purposes of tolling the statute of limitations, that plaintiffs'...
To continue reading
Request your trial
-
Southern Union Co. v. Southwest Gas Corp.
...Central District of California to the District of Hawaii). Fraudulent inducement is a tort claim. See, e.g. O'Keefe v. Grenke, 170 Ariz. 460, 472, 825 P.2d 985, 997 (App. 1992); Southwell-Gray v. Jones, No. CIV. 300CV1539-H, 2001 WL 493165 at *3 (N.D.Tex. May 4, 2001) (applying Texas law); ......
-
Southern Union Company v. Southwest Gas Corporation, CV-99-1294-PHX-ROS (D. Ariz. 7/30/2001)
...Central District of California to the District of Hawaii). Fraudulent inducement is a tort claim. See, e.g. O'Keefe v. Grenke, 170 Ariz. 460, 472, 825 P.2d 985, 997 (App. 1992); Southwell-Gray v. Jones, No. CIV. 300CV1539-H, 2001 WL 493165 at *3 (N.D. Tex. May 4, 2001) (applying Texas law);......
-
Sundevil Power Holdings, LLC v. Ariz. Dep't of Revenue
...deliberate, though ultimately erroneous or unwise, tactical choice cannot be considered a ‘mistake’...." O'Keefe v. Grenke , 170 Ariz. 460, 465–66, 825 P.2d 985, 990–91 (App.1992). This is because, in such situations, the plaintiff did not take a wrong action from "faulty judgment, inadequa......
-
Beltran v. Harrah's Arizona Corp.
...then determined the amended complaint did not relate back to the date of the original complaint, citing O'Keefe v. Grenke, 170 Ariz. 460, 465-66, 825 P.2d 985, 990-91 (App.1992), in which Division One of this court Where a plaintiff knows of the existence and identity of a defendant before ......