Olewin v. Nobel Mfg., LLC
| Decision Date | 05 January 2023 |
| Docket Number | 1 CA-CV 20-0706 |
| Citation | 87 Arizona Cases Digest 7,523 P.3d 413 |
| Parties | Charlene OLEWIN, Plaintiff/Appellant, v. NOBEL MANUFACTURING, LLC, Defendant/Appellee. |
| Court | Arizona Court of Appeals |
Law Office of Timothy M. Collier PLLC, Scottsdale, By Timothy M. Collier, Counsel for Plaintiff/Appellant
Guidant Law PLC, Tempe, By Gary M. Smith, Counsel for Defendant/Appellee
¶1 Plaintiff Charlene Olewin appeals from the superior court's order and related judgment setting aside a Default Judgment she obtained against defendant Nobel Manufacturing, LLC ("Nobel") after she moved to reopen the case following the court's earlier dismissal for lack of prosecution. We reject Nobel's arguments that (1) the motion was void for lack of service, and (2) Olewin's claims had already been adjudicated on the merits under Arizona Rule of Civil Procedure ("Rule") 41(a), which governs voluntary dismissals by a plaintiff. We therefore reverse the court's order and related judgment, and we remand for reinstatement of the Default Judgment.
¶2 Olewin and Mark Stapels, who were in a relationship with each other, jointly owned Nobel, formed in 2015. A year after their personal relationship ended, they signed a redemption agreement in which Nobel agreed to buy Olewin's 50% interest in the company for $160,000. Because the company's assets were sold in 2017 and she had not been paid, Olewin sued Nobel and Stapels for breach of contract, breach of implied covenant of good faith and fair dealing, unjust enrichment, and fraud; she separately alleged alter ego liability as to Stapels. Nobel did not respond to the complaint, but Stapels filed an answer.
¶3 In April 2018, Olewin filed an application and affidavit for entry of default against both defendants. Because Nobel failed to respond or answer within 10 days, entry of default became effective. See Ariz. R. Civ. P. 55(a)(4), (5). Olewin, however, took no further steps to obtain a default judgment against Nobel and the case was placed on the dismissal calendar. See Ariz. R. Civ. P. 38.1(d). In February 2019, the superior court dismissed the case without prejudice for lack of prosecution.
¶4 Because Stapels, the manager and sole member of Nobel, allegedly had assets in other states, in January 2019 Olewin sued Nobel and Stapels in New York state court.1 Several weeks later, local counsel for Olewin filed a "stipulation of discontinuance," see N.Y. C.P.L.R. 3217 (McKinney 2012), stating that the action "is hereby discontinued without prejudice." In October 2019, Olewin sued Nobel and Stapels in Michigan state court. In January 2020, local counsel for Olewin filed a notice of dismissal without prejudice.
¶5 Shortly thereafter Olewin moved to reopen the Arizona lawsuit, citing Rules 60(b) and 55(a)(4), and asking the court to allow her to complete her previous filings, including finalizing the default judgment process against Nobel. Nobel did not respond, and for "[g]ood cause" the superior court granted the motion to reopen. Olewin moved for entry of default judgment and attached a statement of taxable costs, a sum certain affidavit, and an application for attorneys’ fees. Olewin then moved to clarify that she was only seeking a default judgment against Nobel. Nobel does not dispute that Olewin mailed the motion to reopen and each of these subsequent filings to Nobel's statutory agent and Stapels’ attorney. The court later entered the Default Judgment against Nobel for $160,000, plus attorneys’ fees and costs.
¶6 When Olewin sought a debtor's examination, Nobel moved to set aside the Default Judgment under Rule 60(b)(1), (3)–(6). Nobel argued that Olewin (1) tried to "sneak past" service by mailing it instead of "serving it by process server" on Nobel, (2) concealed and misrepresented her "serial filings and dismissals," (3) used fraud and surprise to obtain the Default Judgment, and (4) presented no authority justifying the relief she requested and received. Nobel also argued the Default Judgment was void under Rule 41(a) because the New York dismissal was "automatically on the merits and with prejudice."
¶7 Olewin countered that Rule 41(a) did not bar her claims and that she properly served her motion to reopen. She added that Nobel was "well aware" of her filings and it "made the conscious strategic decision not to respond." Olewin argued that accepting Nobel's claim of lack of notice would require believing that its statutory agent had failed to send multiple filings to Stapels, the sole member of Nobel, and that Stapels’ personal attorney "who appeared at the default hearing in this matter" also failed to send Stapels those filings. In its reply, Nobel repeatedly stated it was not served but did not counter Olewin's assertion that Stapels’ personal attorney was present at the default hearing.
¶8 The superior court vacated the Default Judgment, declaring it void under Rule 41. The court did not address whether Nobel had been properly served. In its subsequent judgment, the court explained that Olewin's "multiple voluntary dismissals prior to her return to this Court served as an absolute jurisdictional bar." The court also awarded attorneys’ fees and costs to Nobel. Olewin timely appealed, and we have jurisdiction under A.R.S. § 12-2101(A)(2).
¶9 Olewin argues the superior court erred in setting aside the Default Judgment.
Nobel defends the court's ruling on two grounds: service was insufficient and Rule 41(a) barred Olewin's motion to reopen. Generally, we review the superior court's ruling on a motion to set aside a default judgment for an abuse of discretion and view the facts in the light most favorable to upholding that decision. Ezell v. Quon , 224 Ariz. 532, 534, 536, ¶¶ 2, 15, 233 P.3d 645, 647, 649 (App. 2010). We review de novo, however, whether a default judgment is void. Id. at 536, ¶ 15, 233 P.3d at 649 ; Ruffino v. Lokosky , 245 Ariz. 165, 168, ¶ 9, 425 P.3d 1108, 1111 (App. 2018) ().
¶10 We also review de novo the interpretation of rules. In re $11,660.00 U.S. Currency , 251 Ariz. 106, 108, ¶ 8, 485 P.3d 561, 563 (App. 2021). We interpret the language of a rule in view of the entire text, considering the context and related provisions. See Nicaise v. Sundaram , 245 Ariz. 566, 568, ¶ 11, 432 P.3d 925, 927 (2019) ; State v. Hansen , 215 Ariz. 287, 289, ¶ 7, 160 P.3d 166, 168 (2007) (). If the text is unambiguous, we apply it as written without using other methods of statutory interpretation. State v. Jurden , 239 Ariz. 526, 530, ¶ 15, 373 P.3d 543, 547 (2016).
¶11 Generally, a party seeking to set aside a default judgment under Rule 60(b) must show (1) it acted promptly in seeking relief, (2) its failure to file a timely answer was excusable by one of the reasons listed in Rule 60(b), and (3) it had a meritorious defense. Daou v. Harris , 139 Ariz. 353, 358–59, 678 P.2d 934, 939–40 (1984). But if a default judgment is void, a court may set it aside without these showings. Darnell v. Denton , 137 Ariz. 204, 206, 669 P.2d 981, 983 (App. 1983).
¶12 Nobel argues the Default Judgment was void because Olewin did not properly serve notice of her motion to reopen. "[A] judgment is void if it was entered without jurisdiction because of a lack of proper service." Ruffino , 245 Ariz. at 168, ¶ 10, 425 P.3d at 1111 (citation omitted). Olewin correctly notes that the superior court did not address whether service was improper. But Nobel presented this argument in its motion to set aside, and we will affirm "if the judgment can be sustained on any theory framed by the pleadings and supported by the evidence[.]" Gen. Elec. Cap. Corp. v. Osterkamp , 172 Ariz. 191, 193, 836 P.2d 404, 406 (App. 1992).
¶13 Rule 5 governs service of documents filed after a party has been served with a summons and complaint. See Ariz. R. Civ. P. 5(a)(1). The precise service requirements vary depending on the specific circumstances, including the status of the litigation. Generally, as explained in Rule 5(a)(2) a filing made after service of the original complaint must be served on each party "by a method stated in Rule 5(c)." As stated in Rule 5(c)(2), a "document is served under this rule by any of the following: ... (C) mailing it by U.S. mail to the person's last-known address—in which event service is complete upon mailing." A limited liability company "may be served with any process, notice or demand required or permitted by law by serving its statutory agent." A.R.S. § 29-3119(A). And the agent has the duty to forward to the company any pertinent "process, notice or demand ... that is served on or received by the agent." A.R.S. § 29-3115(C)(1). Nobel does not dispute that Olewin mailed the motion to reopen and her related filings to Nobel's statutory agent.
¶14 Nobel argues service by mail was insufficient, relying on Rule 5(c)(4), titled "Service After Judgment:"
After the time for appeal from a judgment has expired or a judgment has become final after appeal, a motion, petition, complaint, or other pleading requesting modification, vacation, or enforcement of that judgment must be served in the same manner that a summons and pleading are served under Rule 4, 4.1, or 4.2, as applicable.
(Emphasis added.) Within the context of our civil procedure rules, a judgment "includes a decree and any order from which an appeal lies." Ariz. R. Civ. P. 54(a).
¶15 In its motion to set aside, Nobel asserted that "merely mailing" the motion to reopen was improper, citing Rule 5(c)(4). The critical issue as to method of service, then, is whether the superior court's dismissal for lack of prosecution was an appealable judgment. See Ariz. R. Civ. P. 5(c)(4) (...
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