Kellin v. Lynch

• Decision Date: 10 September 2019
• Docket Number: No. 1 CA-SA 19-0143,1 CA-SA 19-0143
• Citation: 247 Ariz. 393,449 P.3d 719
• Parties: Sandy G. KELLIN, Petitioner, v. The Honorable Steven LYNCH, Judge Pro Tempore of the Superior Court of the State of Arizona, in and for the County of Maricopa, Respondent Judge, AmericanWest Bank, f/k/a Banner Bank, successor by merger to AmericanWest Bank, Real Party in Interest.
• Court: Arizona Court of Appeals

247 Ariz. 393

449 P.3d 719

Sandy G. KELLIN, Petitioner,

v. The Honorable Steven LYNCH, Judge Pro Tempore of the Superior Court of the State of Arizona, in and for the County of Maricopa, Respondent Judge,AmericanWest Bank, f/k/a Banner Bank, successor by merger to AmericanWest Bank, Real Party in Interest.

No. 1 CA-SA 19-0143

Court of Appeals of Arizona, Division 1.

FILED September 10, 2019

Clark Hill PLC, Scottsdale, By Ryan J. Lorenz, Counsel for Petitioner

Snell & Wilmer L.L.P., Phoenix, By Steven D. Jerome, Benjamin W. Reeves, and James G. Florentine, Counsel for Real Party in Interest

Presiding Judge Paul J. McMurdie delivered the opinion of the Court, in which Judge Lawrence F. Winthrop and Chief Judge Peter B. Swann joined.

McMURDIE, Judge:

¶1 Sandy Kellin requests special action relief from two superior court orders. Kellin challenges a superior court order setting supersedeas bonds of $50,000 each on Kellin’s appeals from two judgments of garnishment against two financial institutions, BMO Harris Bank, N.A. ("BMO") and Betterment LLC ("Betterment"). Kellin and his wife, Robyn Kellin (collectively, the "Kellins"), held accounts with these institutions. This court issued an order accepting jurisdiction but denying relief with a decision to follow. This is that decision. We hold: (1) Arizona Rule of Civil Appellate Procedure ("Rule") 7(a)(6) affords the superior court discretion to set a supersedeas bond to cover an estimate of attorney’s fees and costs that may be incurred in an appeal, provided a basis to award such fees and costs is authorized; and (2) in an appeal from a judgment of garnishment, Arizona Revised Statutes ("A.R.S.") section 12-1580(E) authorizes an appellate award of attorney’s fees.¹

FACTS AND PROCEDURAL BACKGROUND

¶2 In September 2014, Banner Bank ("Banner")² domesticated a Utah deficiency judgment against Kellin for $1,285,777.89, plus post-judgment interest. The outstanding balance on the judgment as of April 2019 was calculated to be $2,415,615.15. Banner’s efforts to collect the judgment have been strenuously contested, and the litigation has generated three separate appellate decisions and petitions for review that deserve a brief discussion.

¶3 In American West Bank v. Kellin ("Kellin I "), No. 1 CA-CV 18-0060, 2018 WL 6787394 (Ariz. App. Nov. 27, 2018) (mem. decision), the Kellins argued Banner was barred from enforcing its judgment against any of their community property by Arizona Revised Statutes ("A.R.S.") section § 25-214(C)(1), which requires joinder of both spouses to bind the community to "[a]ny transaction for the acquisition, disposition or encumbrance of an interest in real property other than an unpatented mining claim or a lease of less than one year." This court held that because the underlying transaction that gave rise to Banner’s deficiency judgment "did not constitute a transaction for the acquisition, disposition or encumbrance of an interest in real property ... the protections of A.R.S. § 25-214(C)" did not apply, and the deficiency judgment could be enforced against the Kellins’ community. Kellin I , 2018 WL 6787394, at *2, ¶ 12.

¶4 In American West Bank v. Kellin ("Kellin II "), No. 1 CA-CV 18-0481, 2019 WL 1341803 (Ariz. App. Mar. 26, 2019) (mem. decision), Kellin raised the same argument from Kellin I to challenge an order denying a motion to quash a writ of special execution against real property and a charging order against the Kellins’ membership interests in a limited liability company under A.R.S. § 29-655. This court held that the "law of the case" doctrine barred the parties from relitigating the enforceability of the judgment against the Kellins’ community property and affirmed the superior court’s orders. Kellin II , 2019 WL 1341803 at *3–4, ¶¶ 13–16.

¶5 Finally, in Kellin v. Banner Bank ("Kellin III "), No. 1 CA-CV 18-0356, 2019 WL 1341800 at *5, ¶ 21 (Ariz. App. Mar. 26, 2019) (mem. decision), this court held that a declaratory judgment action filed while the enforcement proceedings were ongoing was an impermissible attempt to horizontally appeal the superior court’s rulings in the enforcement proceedings.

¶6 The Kellins filed petitions for review from Kellin I , Kellin II , and Kellin III . On July 8, 2019, the Arizona Supreme Court denied Kellin’s petition for review from Kellin I . Whether this court correctly resolved the issue in Kellin I is not subject to further review. Therefore, the holding that the Kellins’ community property can be used to satisfy Banner’s deficiency judgment is final.

¶7 The proceedings at issue in this special action occurred during and shortly after the appeals in Kellin II and Kellin III . Banner filed applications for writs of garnishment against BMO and Betterment, alleging that each financial institution was "holding nonexempt monies on behalf of [Kellin]." A.R.S. § 12-1572(2)(b). After litigation over Kellin’s objections and motions to quash the writs of garnishment, the court entered judgment against garnishee BMO for $72,744.31 and garnishee Betterment for $409,385.83. Kellin filed notices of appeal from both judgments and moved to set or waive a supersedeas bond to stay enforcement of the judgments under Rule 7. Kellin argued that under Rule 7(a)(6), the court was not required to set supersedeas bonds for each judgment because the garnished funds themselves, which would remain frozen in BMO and Betterment’s possession, were an adequate bond. In response, Banner argued that the court was required to set the supersedeas bond for each judgment at the respective amounts awarded under Rule 7(a)(4). In the alternative, Banner argued that under Rule 7(a)(9) the court should set the bond for each judgment at the respective amounts awarded because of overwhelming evidence that "the Kellins have attempted to intentionally dissipate and conceal assets to avoid paying [the Utah] Judgment."

¶8 After considering the argument regarding the motions for a stay, the court issued the following order:

Based upon the matters presented today, the review of all pleadings, and pursuant to A.R.S. Civ. P. Rule 7.^[3]

IT IS ORDERED that the Kellins[ ] post bond in the amount of $50,000.00 on each of the current garnishments, totaling $100,000.00. Bond must be posted no later than Friday, June 21, 2019.

The Kellins then filed the petition for special action and requested that this court vacate the order setting the $50,000 supersedeas bonds. Kellin also requested this court order the superior court to waive posting of the supersedeas bonds and instruct BMO and Betterment to retain the garnished monies pending the outcome of Kellin’s appeals.

DISCUSSION

A. A Challenge to the Setting of a Supersedeas Bond is Appropriate for Special Action Jurisdiction.

¶9 "Special action jurisdiction is proper when a party has no ‘equally plain, speedy, and adequate remedy by appeal....’ " Phillips v. Garcia , 237 Ariz. 407, 410, ¶ 6, 351 P.3d 1105, 1108 (App. 2015) (quoting Ariz. R.P. Spec. Act. 1(a) ). A challenge to a supersedeas bond is a matter appropriate for special action jurisdiction. Chula Vista Homeowners Ass’n v. Irwin , 245 Ariz. 249, 250, ¶ 1, 426 P.3d 1228, 1229 (App. 2018) ; City Ctr. Exec. Plaza, LLC v. Jantzen , 237 Ariz. 37, 40, ¶ 2, 344 P.3d 339, 342 (App. 2015). Special action jurisdiction is also proper here because this case requires interpretation of recent substantive amendments to Rule 7, a matter of statewide importance and first impression. See Alsarraf v. Bernini , 244 Ariz. 447, 448, ¶ 1, 421 P.3d 157, 158 (App. 2018).

B. The Court of Appeals’ Authority to Award Attorney’s Fees in Appeals from Garnishment Proceedings Justified the Setting of the $50,000 Supersedeas Bonds.

¶10 Kellin argues the superior court abused its discretion by imposing the $50,000 supersedeas bonds because the purpose of setting a supersedeas bond has already been accomplished by the garnishment judgments against BMO and Betterment. Kellin contends that because the judgments themselves "are the bond," the court lacked the authority under Rule 7 to require Kellin to post additional $50,000 bonds to stay enforcement of those judgments. Thus, Kellin concludes, the court acted arbitrarily and capriciously by imposing the $50,000 supersedeas bonds.

¶11 We review the interpretation of statutes and court rules de novo . Premier Physicians Grp., PLLC v. Navarro , 240 Ariz. 193, 194, ¶ 6, 377 P.3d 988, 989 (2016) (statutes); State v. Fitzgerald , 232 Ariz. 208, 210, ¶ 10, 303 P.3d 519, 521 (2013) (court rules). "We interpret statutes and rules in accordance with the intent of the drafters, and we look to the plain language of the statute or rule as the best indicator of that intent." Fragoso v. Fell , 210 Ariz. 427, 430, ¶ 7, 111 P.3d 1027, 1030 (App. 2005). "If the language of a statute or rule is unambiguous, ‘we apply it as written.’ " Gutierrez v. Fox , 242 Ariz. 259, 267, ¶ 28, 394 P.3d 1096, 1104 (App. 2017) (quoting Roberto F. v. DCS , 237 Ariz. 440, 441, ¶ 6, 352 P.3d 909, 910 (2015) ).

¶12 At the outset, we note Kellin failed to provide a transcript of the May 2019 hearing. As a result, we "presume the items not included in the appellate record support [the] trial court’s ruling," Myrick v. Maloney , 235 Ariz. 491, 495, ¶ 11, 333 P.3d 818, 822 (App. 2014), and will "affirm the trial court’s decision if it is correct for any reason, even if that reason was not considered by the trial court," Glaze v. Marcus , 151 Ariz. 538, 540, 729 P.2d 342, 344 (App. 1986). Therefore, the court did not act arbitrarily here if the law governing supersedeas bonds authorized any interpretation of the superior court's ruling.

¶13 "[A] party may file a supersedeas bond to stay enforcement of or execution on a judgment while an appeal is pending." Irwin , 245 Ariz. at 252, ¶ 8, 426 P.3d at 1231. "Arizona ... courts recognize that the purpose of posting a supersedeas bond is to preserve the status quo pending appeal." Bruce Church, Inc. v. Superior Court , 160 Ariz. 514, 517, 774...