Moore v. Browning
| Decision Date | 25 July 2002 |
| Docket Number | No. 2 SA-CA 2002-0021.,2 SA-CA 2002-0021. |
| Citation | 50 P.3d 852,203 Ariz. 102 |
| Parties | Eric Gregory MOORE and Patricia Mary Moore, husband and wife, Petitioners, v. Hon. Christopher C. BROWNING, Judge of the Superior Court of the State of Arizona, in and for the County of Pima, Respondent, and Leon Ulan, individually and as Co-Trustee of the Leon and Sylvia Ulan Revocable Trust of August 9, 1994, and Sylvia Ulan, individually and as Co-Trustee of the Leon and Sylvia Ulan Revocable Trust of August 9, 1994, Real Parties in Interest. |
| Court | Arizona Court of Appeals |
John A. Baade, Tucson, for petitioners.
Malcolm K. Ryder, Tucson, McNamara, Goldsmith & Jackson, P.C., by Eugene N. Goldsmith, Tucson, for Real Parties in Interest.
? 1 Eric Gregory Moore and Patricia Moore, defendants in the underlying action for breach of contract and fraudulent transfer, seek special action relief from the respondent judge's order denying their motion for partial summary judgment. In that motion, the Moores had asked the judge to dismiss the cause of action for fraudulent transfer filed by real parties in interest Leon Ulan and Sylvia Ulan on the ground the cause of action has been extinguished by the statute of repose in the Uniform Fraudulent Transfer Act (UFTA). A.R.S. ?? 44-1001 through 44-1010. In accordance with the admonitions of our supreme court, we generally decline to accept jurisdiction of a special action petition challenging a trial court's denial of a motion for summary judgment. See Piner v. Superior Court, 192 Ariz. 182, 962 P.2d 909 (1998)
; City of Phoenix v. Yarnell, 184 Ariz. 310, 909 P.2d 377 (1995); Ft. Lowell-NSS Ltd. Partnership v. Kelly, 166 Ariz. 96, 800 P.2d 962 (1990). As the supreme court has noted, however, there are "a few exceptional cases" in which it is appropriate to accept jurisdiction. Piner, 192 Ariz. 182, ? 8, 962 P.2d 909, ? 8; see also In re Guardianship/Conservatorship of Denton, 190 Ariz. 152, 945 P.2d 1283 (1997); Orme School v. Reeves, 166 Ariz. 301, 802 P.2d 1000 (1990). We believe this is such a case.
? 2 First, the issue is one of law, requiring the interpretation of a statute and the determination of what law applies. See Piner, Denton. Moreover, it presents a case of first impression that will affect other cases in the state. Piner, Denton. In addition, we can adequately determine the legal issue on the record before us. See Piner. More importantly, however, petitioners have no "equally plain, speedy, and adequate remedy by appeal." Ariz.R.P. Special Actions 1(a), 17B A.R.S. Because the respondent judge ruled that the limitations period does not begin until the debtor obtains a judgment on the underlying debt, the impending trial will not address the issue of when the Ulans actually did or reasonably could have discovered the alleged fraudulent nature of the subject transfers, an essential part of the Moores' statute of repose defense. Because that issue must inevitably be determined, it makes little sense for us to permit the trial to proceed knowing that it will not then be addressed. See Harris Trust Bank of Ariz. v. Superior Court, 188 Ariz. 159, 162, 933 P.2d 1227, 1230 (App.1996)
(). Accordingly, we conclude it is appropriate for us to accept special action jurisdiction. We do so and grant the Moores partial relief.
? 3 The Ulans sued the Moores in 1998 for breach of contract, alleging they had defaulted on a promissory note executed in 1985 that the Ulans had purchased in 1995 from the Resolution Trust Corporation, the receiver for the savings and loan association that had lent the Moores money. In July 2001, the Ulans moved to amend their complaint to add a cause of action for fraudulent transfer. The respondent judge granted the motion on September 10, and the Ulans filed their second amended complaint on September 13. The Moores later moved for partial summary judgment, arguing the UFTA statute of repose had extinguished the Ulans' new cause of action. See ? 44-1009. The respondent judge denied the motion, concluding that the statutory period does not begin until judgment is entered on the underlying debt. The special action petition followed.
? 4 In their amended complaint, the Ulans alleged that Greg Moore had solicited Leon Ulan to purchase the promissory note at an auction held in Kansas City, Missouri, and had agreed to repay Ulan's costs of purchasing the note plus interest at eighteen percent per year. The Ulans also alleged that the Moores had transferred the majority of their assets to other persons with the intent to hinder, delay, or defraud their creditors and without receiving adequate consideration in exchange. According to the complaint, the Moores had transferred their stock in Laundryman of Arizona, Inc., and ownership of their residence to family trusts created in the Cook Islands, transfers the Ulans had only recently discovered. The Ulans alleged that the transfers violated UFTA, entitling them to garnish the property from the fraudulent transferees, to avoid the transfers to the extent necessary to satisfy the Ulans' claim, or to attach the assets to secure their claim.
? 5 In their summary judgment motion, the Moores argued that ? 44-1009, the statute of repose in UFTA, had extinguished the Ulans' cause of action because they had filed it more than four years after the 1989 transfers and more than one year after they had discovered or should have discovered the allegedly fraudulent nature of the transfers. Because the Ulans do not dispute that the transfers occurred in 1989, if UFTA applies as written, their only viable claim under the Act requires them to show they did not actually discover and reasonably could not have discovered the fraudulent nature of the transfers earlier than one year before they filed their amended complaint on September 13, 2001.
? 6 Despite having expressly cited only UFTA in their complaint, the Ulans asserted in their response to the Moores' summary judgment motion that they had also alleged a common law cause of action for fraudulent transfer. Because the Moores did not contest that assertion and the respondent judge accepted it, we accept it as well. The Ulans argued that the general rule at common law was that the period of limitations does not begin until the creditor has obtained a judgment against the debtor on the underlying debt.
? 7 In his minute entry denying the motion for summary judgment, the respondent judge noted that, "[u]nder a strict reading of the statute, with no further analysis, the [Moores] appear to have made a strong argument that the [Ulans'] claims of fraudulent transfers are time-barred." But the judge agreed with the Ulans that they had stated a cause of action under the common law as well as under UFTA, concluding, without further discussion, that their common law claims were therefore timely. The judge noted the strong public policy that favors resolving cases on their merits instead of dismissing them as barred by the statute of limitations. Finally, relying on a California case and public policy, the judge concluded that, for a cause of action under UFTA, the statute of limitations period does not begin until the underlying claim has been reduced to judgment.
? 8 As a threshold matter, we must determine whether a common law cause of action for fraudulent conveyance continues to exist under Arizona law or whether, as the Moores contend, UFTA has displaced any body of common law on fraudulent conveyances. In order to adequately address that issue, however, we must first trace the history of the law on fraudulent conveyances in Arizona.
? 9 Under the early common law in England, a property owner "had absolute dominion over his own property." Rochester v. Sullivan, 2 Ariz. 75, 79, 11 P. 58, 59 (1886). Parliament adopted legislation in 1570, known as the Statute of Elizabeth, that limited an owner from conveying his property with "the express or implied intent to hinder, delay, or defraud his creditors." Id.; see also 37 C.J.S. Fraudulent Conveyances ? 3 (1997). In its earliest territorial code, the Howell Code of 1864, Arizona declared such conveyances void. Howell Code ch. XXXVI, ?? 1, 3, 11, 20 (1864). In addition, those statutes declared void certain types of conveyances not made in writing, proclaimed as conclusive evidence of fraud sales of goods and chattels not accompanied by immediate delivery, made the question of the grantor's fraudulent intent one of fact, and prohibited a court from finding that a conveyance was fraudulent based solely on the lack of valuable consideration. Howell Code ch. XXXVI, ?? 6, 8, 12, 13, 15, 21, 23. Similar provisions were included in the 1887, 1901, and 1913 revised codes. Rev.Stat.Ariz. ?? 2030 through 2038 (1887); Rev.Stat.Ariz. ?? 2696 through 2708 (1901); Rev.Stat.Ariz. Civil Code ?? 3272 through 3282 (1913).
? 10 In 1919, Arizona enacted the Uniform Fraudulent Conveyance Act (UFCA). 1919 Ariz.Sess.Laws, ch. 131, ?? 1 through 14. With that Act, the statutes requiring certain transactions to be in writing and accompanied by immediate delivery were separated from the statutes making fraudulent conveyances void. For the first time, the fraudulent conveyance statutes expressly stated the remedies available to a creditor whose debtor had fraudulently conveyed his or her assets. Section 9 listed the rights available to creditors whose claims had matured, and ? 10 listed the rights available to creditors whose claims had not yet matured. And, a creditor was defined as "a person having any claim, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent." 1919 Ariz.Sess.Laws, ch. 131, ? 1. The Uniform Act was proposed to obtain uniformity in the law of fraudulent conveyances,...
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