Mca Fin. Grp., Ltd. v. Enter. Bank & Trust

• Citation: 703 Ariz. Adv. Rep. 7,236 Ariz. 490,341 P.3d 1161
• Decision Date: 30 December 2014
• Docket Number: No. 2 CA–CV 2014–0007.,2 CA–CV 2014–0007.
• Court: Court of Appeals of Arizona
• Parties: MCA FINANCIAL GROUP, LTD., Appellant, v. ENTERPRISE BANK & TRUST, Plaintiff/Appellee.

236 Ariz. 490
341 P.3d 1161
703 Ariz. Adv. Rep. 7

MCA FINANCIAL GROUP, LTD., Appellant,
v.
ENTERPRISE BANK & TRUST, Plaintiff/Appellee.

No. 2 CA–CV 2014–0007.

Court of Appeals of Arizona,
Division 2.

Dec. 30, 2014.

Vacated.

[341 P.3d 1163]

Snell & Wilmer L.L.P. By Christopher H. Bayley, Jonathan M. Saffer, and Katherine V. Foss, Tucson, Counsel for Appellant.

Minkin & Harnisch PLLC By Ethan B. Minkin and Andrew A. Harnisch, Phoenix, Counsel for Plaintiff/Appellee.

Judge ESPINOSA authored the opinion of the Court, in which Presiding Judge MILLER and Judge BRAMMER ¹ concurred. OPINION
ESPINOSA, Judge.

¶ 1 MCA Financial Group, Ltd. (MCA) appeals from an order requiring it to disgorge over $118,000 in fees paid to it by Enterprise Bank & Trust (Enterprise), arguing that, because MCA was not a party to the underlying proceeding, it was not subject to the trial court's jurisdiction. It also contends the court erred by failing to hold an evidentiary hearing on the merits of the disgorgement claim and by failing to conclude Enterprise had waived any objection to MCA's fees. Because we agree the court lacked jurisdiction, its order must be vacated.

Factual and Procedural Background

¶ 2 “We view the facts in the light most favorable to upholding the trial court's ruling.” Hammoudeh v. Jada, 222 Ariz. 570, ¶ 2, 218 P.3d 1027, 1028 (App.2009). In April 2009, Enterprise agreed to loan $4,182,000 to Americana Nogales, LLC (Americana) to acquire a hotel in Santa Cruz County. The following year, Enterprise filed a lawsuit alleging that Americana had defaulted on its loan obligations by failing to remit payments as required under the loan agreement and promissory note.² In addition to seeking monetary relief, Enterprise requested that a receiver be appointed pursuant to a provision in the deed of trust that Americana had executed to secure the loan.

¶ 3 In January 2011, the trial court appointed “Robert Itkin of MCA Financial Group, Ltd.” as receiver in an order that directed him to, among other things, “operate, manage, maintain, preserve and protect the Receivership Property; ... employ any person or firm to collect, manage, lease, maintain and operate the Receivership Property[; and] hire ... consultants, property management companies, brokers and any other personnel or employees which the Receiver deems necessary to assist it in the discharge of its duties.” Enterprise subsequently filed an “Oath of Receiver,” in which Itkin swore to “faithfully discharge the duties of receiver” and “obey all orders of the Court.” Itkin executed this oath on a line designated for his signature.

¶ 4 From January to October 2011, MCA on a monthly basis submitted bills to Enterprise for “professional services” rendered by several of its employees, including Itkin. Enterprise paid the invoices by checks made out to “MCA Financial Group.” In October, Enterprise filed a “Notice of Receiver's Change of Firm,” in which it stated that Itkin, who had been “appointed as Receiver over the subject collateral pursuant to this Court's Order,” had become a managing director at Simon Consulting Group, LLC. Following Itkin's departure, both he and MCA continued to perform management and consulting services, but MCA ceased billing for Itkin's services. In November 2012, the trial court granted Enterprise's application to appoint a new receiver, Resolute Commercial Services, LLC (Resolute), and an amended

[341 P.3d 1164]

order of appointment was filed to reflect this change.

¶ 5 The following month, Itkin filed a receivership report “containing, among other things, all receivership expenses, fees, and a narrative description of [his] performed duties and related information for the period of [his] appointment as Receiver.” In response, Enterprise filed a motion objecting to Itkin's receivership report and requesting disgorgement of fees it had paid to MCA on the ground the fees were excessive. MCA, not having been joined by Enterprise as a party for purposes of its disgorgement motion or any other matter, entered a special appearance “for the limited purpose of responding to the allegations and arguments contained in [Enterprise's motion],” and argued that such a motion for relief from a non-party who had “never served as the receiver” was “procedurally improper” and should be summarily denied on that basis. In the alternative, MCA requested an evidentiary hearing to determine whether the fees charged were, in fact, excessive. The trial court heard argument on the motion in September 2013, and took the issues raised by the parties, including the necessity of an evidentiary hearing, under advisement. In October, the court issued a ruling that determined a reduction of fees was warranted because “MCA did not [ ] execute their duties appropriately.” Implicitly denying MCA's request for an evidentiary hearing on the matter, the court granted Enterprise's motion and ordered MCA to disgorge $118,185.93. Its order expressly referred to the period when “MCA served as receiver.”

Discussion

¶ 6 On appeal, MCA argues the trial court lacked jurisdiction to enter the disgorgement order because MCA was a “third-party vendor” that was “never appointed receiver” or “joined as a party to the case.” Relying on precedents in which we have declined to uphold rulings against non-parties who were not given “a full opportunity to contest” their liability, Heinig v. Hudman, 177 Ariz. 66, 71, 865 P.2d 110, 115 (App.1993); see also Spudnuts, Inc. v. Lane, 139 Ariz. 35, 37, 676 P.2d 669, 671 (App.1984), MCA argues that the court's ability to approve the receiver's expenses did not obviate the joinder requirement because “the only party over whom the trial court had jurisdiction relevant to this dispute was [Itkin].” In support of its factual claim that Itkin served as the receiver in an individual capacity, MCA relies on the court's order designating “Robert Itkin of MCA Financial Group, Ltd.” as receiver, and points to Itkin's departure from MCA as evidence that the receiver role was filled by Itkin in his personal capacity.

¶ 7 Enterprise responds that, although Itkin was the receiver “in a very technical sense,” the agency relationship between Itkin and MCA “bound MCA to the terms of the Receivership Order, including the court oversight provisions” that allowed the trial court to exercise control over compensation.³ In support of its agency theory, Enterprise points to evidence that MCA transmitted bills and collected fees for Itkin's receiver services. Observing that MCA posted the receiver's bond and performed certain receivership tasks, Enterprise also argues the court had the ability to exercise control over fees and expenses directed to both Itkin and MCA. We review the court's exercise of personal jurisdiction de novo. Desarrollo Immobiliario y Negocios Industriales De Alta Tecnologia De Hermosillo, S.A. De C.V. v. Kader Holdings Co., 229 Ariz. 367, ¶ 10, 276 P.3d 1, 5 (App.2012); Arizona Tile, L.L.C. v. Berger, 223 Ariz. 491, ¶ 8, 224 P.3d 988, 990 (App.2010).

Appellate Jurisdiction

¶ 8 Because MCA was neither named as a party to Enterprise's disgorgement request nor ever served with process, we first examine our own jurisdiction to consider the merits of this appeal.⁴ See

[341 P.3d 1165]

Musa v. Adrian, 130 Ariz. 311, 312, 636 P.2d 89, 90 (1981) (appellate court has independent duty to consider its jurisdiction). “Generally, a person who is not a party to an action is not aggrieved and cannot appeal from findings adverse to him.” Wieman v. Roysden, 166 Ariz. 281, 284, 802 P.2d 432, 435 (App.1990); see also Ariz. R. Civ.App. P. 1 (limiting right of appeal to “any party aggrieved by the judgment”). However, this court has held that a non-party with a “direct, substantial and immediate” interest who “would be benefitted by reversal of the judgment” is entitled to appeal under Rule 1, Ariz. R. Civ.App. P. Wieman, 166 Ariz. at 284, 802 P.2d at 435 (attorney permitted to appeal attorney fee award imposed against him), quoting Abril v. Harris, 157 Ariz. 78, 81, 754 P.2d 1353, 1356 (App.1987) (same). MCA is clearly an aggrieved non-party with a direct and substantial interest in the trial court's disgorgement order. We also, however, must determine whether that order is one that may be appealed. See A.R.S. § 12–2101 (enumerating “[j]udgments and orders that may be appealed”).

¶ 9 Under § 12–2101(A)(4), appeal may be taken from “a final order affecting a substantial right made in a special proceeding or on a summary application in an action after judgment.” Our supreme court has held that a court order requiring a receiver to pay a claim is “appealable as a final judgment.” ⁵ In re Prescott State Bank, 36 Ariz. 419, 424, 286 P. 189, 191 (1930); see also Johnson v. Superior Court, 68 Ariz. 68, 72, 199 P.2d 827, 830 (1948) (where court order allows or disallows claim to moneys from receivership or estate “order is not intermediate but final”); cf. Ross v. White, 46 Ariz. 304, 306–07, 50 P.2d 12, 13 (1935) (court's denial of petition for payment of legal services on behalf of insolvent bank not an “interlocutory order,” but “final judgment of the court” and “final order”).⁶ Here, the contested matter was not the receiver's conduct, which would not be appealable until the final accounting, see Ritter v. Ariz. Cattle Co., 34 Ariz. 278, 286, 271 P. 25, 28 (1928), but rather the trial court's order directing MCA, a non-party, to pay the receivership. As such, the order was the converse of, but similar to, an order that the receiver pay a third party and, logically, also a final order. Stated differently, the order “was clearly final on all of [MCA's] rights in the affected property.” Kemble v. Porter, 88 Ariz. 417, 419, 357 P.2d 155, 156 (1960); see Huston v. F.D.I.C., 800 S.W.2d 845, 847 (Tex.1990) (trial court order “that resolves a discrete issue in connection with any receivership has the same force and effect as any other final adjudication of a court, and thus, is...