Phares v. Nutter

• Decision Date: 19 March 1980
• Docket Number: No. 14513,14513
• Citation: 125 Ariz. 291,609 P.2d 561
• Parties: Gil K. PHARES, Trustee, Appellee, v. Jack O. NUTTER and Walter J. Duepner, Appellants. Walter J. DUEPNER, Appellant, v. Gil K. PHARES, Trustee for all of the stockholders of Texas Materials, Inc., Appellee.
• Court: Arizona Supreme Court

Page 561

609 P.2d 561

125 Ariz. 291

Gil K. PHARES, Trustee, Appellee, v. Jack O. NUTTER and Walter J. Duepner, Appellants.

Walter J. DUEPNER, Appellant, v. Gil K. PHARES, Trustee for all of the stockholders of Texas Materials, Inc., Appellee.

No. 14513.

Supreme Court of Arizona, In Banc.

March 19, 1980.

Rehearing Denied April 15, 1980.

Gust, Rosenfeld, Divelbess & Henderson by Richard A. Segal, Phoenix, for appellee.

Feller and Cohen by Roger L. Cohen, Phoenix, for appellants.

STRUCKMEYER, Chief Justice.

This is a consolidated appeal challenging the enforcement of a Texas judgment filed pursuant to the Revised Uniform Enforcement of Foreign Judgments Act, A.R.S. § 12-1701 et seq., and the granting of summary judgment in the suit for damages in connection with the transaction out of which the Texas judgment arose. Jurisdiction was accepted pursuant to Rule 19(a) Arizona Rules of Civil Appellate Procedure, 17A A.R.S. Judgment of the Superior Court reversed.

In order to provide the necessary background for the opinion, the facts will be compressed to a minimum and taken in the light most favorable to Nutter and Duepner.

Nutter and Duepner, hereinafter called appellants, purchased a gravel mine for $1,400,000 from Phares, Trustee, appellee. Certain disputes arose between the parties over the inability of Phares to deliver proper title and, unknown to appellants, a suit was filed by Phares against them in Texas. Appellant Nutter was induced to come to Texas from Arizona by Phares on the pretext that another buyer had been located and that appellants could be relieved from any liability on the original purchase agreement. During the meeting in a hotel room near the Houston airport, Nutter was served with process in the Texas action. At that time Nutter was told by Phares that the lawsuit was simply a "technical" suit. Phares introduced Nutter to a lawyer by the name of Selman, and arranged for him to defend appellants against appellee's "technical" lawsuit. Instead, Selman turned the defense of the suit over to an attorney by the name of Harvill. Nutter charges that Harvill was unknown to him and was not authorized to enter a general appearance in the litigation. After the general appearance, requests for admissions were filed in the Texas action by appellee. These were never responded to by appellants because the request for admissions was never made known to them by Selman. Under Texas procedure, the requested admissions were deemed admitted and a summary judgment was granted to appellee.

Appellants first learned of the $1,400,000 judgment rendered in Texas against them five days before the judgment was filed in Arizona pursuant to the Revised Uniform Enforcement of Foreign Judgments Act, A.R.S. § 12-1701 et seq. The action seeking to enforce the Texas judgment was Cause C-304546 of the Maricopa County Superior Court. Upon learning of the filing of the Texas judgment in Maricopa County, appellants filed a motion to stay enforcement of the Texas judgment pursuant to A.R.S. § 12-1704. This motion was denied. Appellants then filed a motion to set aside the Texas judgment pursuant to Rule 60(c), Arizona Rules of Civil Procedure. To this, appellee responded by filing a motion to strike appellants' motion to set aside. The court, for reasons which are not clear, denied the appellants' motion to set aside and granted appellee's motion to strike. Cause C-306807 was filed by Duepner for damages for fraud and breach of contract. It was consolidated with Cause C-304546 in the Superior Court.

On appeal, this Court accepted transfer of the consolidated case in order to clarify an asserted inconsistency between the Court of Appeals decision in Jones v. Roach, 118 Ariz. 146, 575 P.2d 345 (App.1978), and our recent opinion in Springfield Credit Union v. Johnson, 123 Ariz. 319, 599 P.2d 772 (1979). These two decisions and the one presently under consideration deal with the issue of whether a foreign judgment, filed pursuant to A.R.S. § 12-1701 et seq. can be collaterally attacked in the Arizona courts, and, if so, by what procedure and on what grounds can such an attack be made.

Appellee's position is that Jones v. Roach, supra, is similar to the present case, and is therefore controlling. Jones v. Roach is, however, readily distinguishable both on the facts and the issue presented for determination. In it, the judgment debtor, Jones, filed a Rule 60(c) motion in an attempt to prohibit enforcement of a foreign judgment on the ground that he had relied on a co-defendant's representation that counsel would be hired to appear and defend the action in Colorado. Jones and his co-defendants were properly served and filed an answer in the Colorado action. Defense counsel withdrew from representation prior to trial, however all defendants were notified of such withdrawal. At the trial no appearance was made by or on behalf of any of the defendants, and judgment was entered against them. Former counsel advised Jones that judgment had been entered and urged employment of new counsel to effect any available post judgment relief, but Jones took no action. When the Colorado judgment was filed in Arizona pursuant to A.R.S. § 12-1701 et seq., Jones filed a Rule 60(c) motion to prevent the enforcement of the judgment, alleging that he had relied upon a co-defendant's representation that new Colorado counsel would be retained to represent all defendants at trial.

Rule 60(c) provides in part:

"On motion and upon such terms as are just the court may relieve a party or his legal representative from a final judgment, order or proceeding for the following reasons: * * * (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation or other misconduct of an adverse party; (4) the judgment is void; * * * (6) any other reason justifying relief from the operation of the judgment."

In Jones there was no contention made on appeal that the Colorado judgment was not entitled to full faith and credit because it was obtained by extrinsic fraud or that the Colorado court lacked jurisdiction.

The Arizona Court of Appeals said:

"* * * there has grown up a body of case law which holds that * * * a sister state need not give full faith and credit to another state's judgments if the rendering state lacked jurisdiction over the person or subject matter, the judgment was obtained through lack of due process, the foreign court was incompetent to render the judgment, the judgment was the result of extrinsic fraud or if the judgment was invalid...