Lipin v. Estate of Walker, 2 CA-CV 2018-0182

• Decision Date: 29 July 2019
• Docket Number: No. 2 CA-CV 2018-0182,2 CA-CV 2018-0182
• Parties: NILES LIPIN, Plaintiff/Appellant, v. THE ESTATE OF ROBERT W. WALKER AND EVE F. WALKER, Defendants/Appellees.
• Court: Arizona Court of Appeals

NILES LIPIN, Plaintiff/Appellant, v. THE ESTATE OF ROBERT W. WALKER AND EVE F. WALKER, Defendants/Appellees.

No. 2 CA-CV 2018-0182

ARIZONA COURT OF APPEALS DIVISION TWO

July 29, 2019

THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.

NOT FOR PUBLICATION

See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f).

Appeal from the Superior Court in Pinal County

No. CV201700890

The Honorable Brenda E. Oldham, Judge

The Honorable Stephen F. McCarville, Judge

AFFIRMED

COUNSEL

The Potter Law Firm PLLC, Avondale

By Trail Potter

Counsel for Plaintiff/Appellant

Fennemore Craig P.C., Phoenix

By David A. Timchak

Counsel for Defendants/Appellees

MEMORANDUM DECISION

Chief Judge Vásquez authored the decision of the Court, in which Presiding Judge Brearcliffe and Judge Eppich concurred.

VÁSQUEZ, Chief Judge:

¶1 In this action for declaratory relief, Niles Lipin appeals the trial court's order granting the Estate of Robert Walker and Eve Walker's motion for judgment on the pleadings and awarding the Walkers attorney fees and costs. Lipin raises two issues on appeal. First, he argues the court erred in concluding his claim that the Walkers had failed to timely renew their judgment against him was precluded under the doctrine of claim preclusion.¹ Second, Lipin contends the court erred in awarding attorney fees and costs to the Walkers as a sanction against him and his counsel. For the reasons stated below, we affirm.²

Factual and Procedural Background

¶2 In reviewing the grant of a motion for judgment on the pleadings, we accept as true the well-pled factual allegations of the complaint. Shaw v. CTVT Motors, Inc., 232 Ariz. 30, ¶ 8 (App. 2013). The relevant facts here, however, are undisputed. On May 21, 2010, the Walkers obtained a monetary judgment against Lipin as part of a Pinal County civil lawsuit alleging fraud.³

¶3 On September 16, 2011, Lipin filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code. The Walkers filed an adversary proceeding and moved for summary judgment, arguing that their fraud judgment against Lipin was non-dischargeable in bankruptcy. In response, Lipin conceded the Walkers had obtained a judgment against him but argued they had failed to renew the judgment within five years of May 21, 2010, as required. He therefore reasoned that, because the time to renew was not tolled by his filing for bankruptcy, the Walkers lacked an enforceable claim and he was entitled to summary judgment.

¶4 After supplemental briefing and oral argument, the bankruptcy court granted the Walkers' motion for summary judgment and denied Lipin's. The court found, in part, that the Walkers had a valid judgment and that the time in which to renew the judgment was tolled during the automatic bankruptcy stay and had not yet expired.⁴ The court subsequently granted Lipin's motion to close the bankruptcy case as of March 28, 2017, providing that the case would be reopened for Lipin to file a final report verifying completion of his bankruptcy-plan payments.

¶5 On May 11, 2017, Lipin filed the current civil action in Pinal County Superior Court, requesting a declaratory judgment that: (1) "there is no suspension of time for judgment renewal under Arizona law," (2) "no judgment renewal affidavit or action to renew was timely filed by [the Walkers]," (3) the Walkers' judgment "has expired and is no longerenforceable," and (4) in the event the bankruptcy proceedings tolled the time to renew the judgment, the Walkers "had no more than thirty (30) days after the case was closed on March 28, 2017 and notice given, to file a renewal action and failed to do so," making the judgment "expired and unenforceable."

¶6 The Walkers filed a motion for judgment on the pleadings, asserting Lipin's complaint failed to state a claim for relief. They reasoned that Lipin was barred by the doctrines of claim preclusion and issue preclusion from arguing the judgment had not been timely renewed because the bankruptcy court had entered a final judgment that the Walkers' "time to renew the[] judgment by action on the judgment . . . is tolled for the entire time period that the [Walkers are] precluded from enforcing the judgment" during the bankruptcy stay. The Walkers further asserted, even disregarding the bankruptcy court's ruling, they were entitled to judgment as a matter of law because the time had not yet expired for them to renew by filing an action on the judgment.

¶7 After hearing oral argument, the trial court granted the Walkers' motion in an under-advisement ruling. The court agreed with the Walkers that the relief sought by Lipin was barred by the doctrines of claim preclusion and issue preclusion. In addition, the court determined that Lipin's claims failed as a matter of law. Accordingly, the court ordered Lipin's complaint dismissed. In addition, the court found Lipin "brought this action in bad faith and without probable cause." As such, it awarded the Walkers attorney fees and costs as a sanction, naming Lipin and his counsel jointly and severally liable. The court directed the Walkers to submit a form of judgment and an application for attorney fees and costs.

¶8 After the Walkers lodged a form of judgment, Lipin filed an objection, arguing, in part, that the "proposed order . . . wrongly asserts that the same precise issues raised by this action for declaratory relief were actually litigated in the . . . bankruptcy court." The Walkers filed a motion to strike Lipin's objection, claiming it was "nothing more than another attempt to argue the substance of the issue after briefing and oral argument ha[d] occurred." The trial court granted the motion to strike and awarded the Walkers attorney fees and costs associated with filing their motion. The Walkers then filed an application for attorney fees and costs, to which Lipin also objected, raising several issues related to the merits of the award, as well as the amount requested. The court, however, disregarded Lipin's substantive arguments, finding that it could not "address the basis for the award, only the amount," because Lipin "did not seek a motion forreconsideration prior to filing [his] Notice of Appeal cannot."⁵ After resolving the amount, the court entered a final judgment, and Lipin appealed. We have jurisdiction pursuant to A.R.S. §§ 12-120.21, 12-2101(A)(1).

Standard of Review

¶9 A motion for judgment on the pleadings under Rule 12(c), Ariz. R. Civ. P., "tests the sufficiency of the complaint, and judgment should be entered for the defendant if the complaint fails to state a claim for relief." Giles v. Hill Lewis Marce, 195 Ariz. 358, ¶ 2 (App. 1999). The motion should be granted only "if the moving party is clearly entitled to judgment." In re 15453 N. Second Ave., 185 Ariz. 35, 36 n.1 (App. 1996). We will affirm the trial court's ruling if legally correct for any reason. Muscat by Berman v. Creative Innervisions LLC, 244 Ariz. 194, ¶ 7 (App. 2017).

Claim Preclusion

¶10 Lipin argues the trial court erred by granting the Walkers' motion for judgment on the pleadings. He challenges each of the court's conclusions therein—that his claims were barred by the doctrines of claim preclusion and issue preclusion and failed as a matter of law. In addressing Lipin's arguments, it is necessary to first review the relevant statutes and case law and chronicle the pertinent filings and hearings in both the adversary proceeding in the bankruptcy court and the current declaratory-relief action.

¶11 "Arizona law allows a judgment creditor to execute on a judgment within five years after entry of the judgment." In re Smith, 209 Ariz. 343, ¶ 10 (2004); see A.R.S. § 12-1551(A).⁶ To execute on the judgment after five years, the creditor must renew the judgment within ninety daysbefore the end of that five-year period. Smith, 209 Ariz. 343, ¶ 10. There are two avenues for renewing the judgment—renewal by action under A.R.S. § 12-1611 and renewal by affidavit under A.R.S. § 12-1612. See Hall v. World Sav. & Loan Ass'n, 189 Ariz. 495, 502 (App. 1997) ("A judgment may be renewed either by filing a lawsuit thereon or by filing an affidavit of renewal with the clerk of the appropriate court."). "The renewal statutes are designed to notify interested parties of 'the existence and continued viability of the judgment.'" Fid. Nat'l Fin. Inc. v. Friedman, 225 Ariz. 307, ¶ 19 (2010) (quoting Smith, 209 Ariz. 343, ¶ 10). "The enforcement period may be tolled and extended, however, during the time a creditor is precluded from attempting to collect on the judgment." Harle v. Williams, 246 Ariz. 330, ¶ 5 (App. 2019).

¶12 "Under the bankruptcy laws, a petition for bankruptcy operates to stay any action to 'create, perfect, or enforce' liens or judgments." Smith, 209 Ariz. 343, ¶ 11 (quoting 11 U.S.C. § 362(a)). "Actions to collect from the debtor may be filed or reinstituted either '30 days after notice of the termination or expiration of the stay,' or after a period set by 'applicable nonbankruptcy law,' as extended by 'any suspension of such period' that results from the bankruptcy proceedings." Id. (quoting 11 U.S.C. § 108(c)(1), (2)). Section 12-1551 has been deemed an "'applicable nonbankruptcy law' setting the time for 'commencing or continuing a civil action.'" Id. (quoting In re Smith, 293 B.R. 220, 223 (B.A.P. 9th Cir. 2003)).

¶13 Thus, "[u]nder Arizona law, enforcement is stayed and the time in which to enforce the judgment is tolled during the pendency of bankruptcy actions." Id. ¶ 12. However, "the time to file an affidavit of renewal of judgment is not changed or extended by the pendency of a bankruptcy case." Id. ¶ 15. Our supreme court has provided the following example: "[A] creditor with a judgment entered on January 1, 2000, who was prevented by [a] . . . bankruptcy stay from executing on the judgment until January 1, 2004, could nonetheless file a renewal affidavit within the ninety days preceding January 1, 2005." Id. ¶ 14. "But even if an...