Powers Reinforcing Fabricators, L. L.C. v. Contes

• Decision Date: 25 August 2020
• Docket Number: No. 1 CA-SA 20-0083,1 CA-SA 20-0083
• Citation: 249 Ariz. 585,473 P.3d 714
• Parties: POWERS REINFORCING FABRICATORS, L.L.C., and William J. Powers, Petitioners, v. The Honorable Connie CONTES, Judge of the Superior Court of the State of Arizona, IN AND FOR the COUNTY OF MARICOPA, Respondent Judge, The Quinlan Law Firm, L.L.C., and William J. Quinlan, Real Parties in Interest.
• Court: Arizona Court of Appeals

249 Ariz. 585

473 P.3d 714

POWERS REINFORCING FABRICATORS, L.L.C., and William J. Powers, Petitioners,

v. The Honorable Connie CONTES, Judge of the Superior Court of the State of Arizona, IN AND FOR the COUNTY OF MARICOPA, Respondent Judge,The Quinlan Law Firm, L.L.C., and William J. Quinlan, Real Parties in Interest.

No. 1 CA-SA 20-0083

Court of Appeals of Arizona, Division 1.

FILED August 25, 2020

Molever Connelly PLLC, Scottsdale, By Loren Molever, Co-Counsel for Petitioners

Tiffany & Bosco, P.A., Phoenix, By Robert A. Royal, Amy D. Sells, and Jack R. Vrablik, Co-Counsel for Petitioners

Lewis Roca Rothgerber Christie LLP, Phoenix, By Robert F. Roos and Jared L. Sutton, Counsel for Real Parties in Interest

Presiding Judge Paul J. McMurdie delivered the opinion of the Court, in which Judge Jennifer B. Campbell and Vice Chief Judge Kent E. Cattani joined.

OPINION

McMURDIE, Judge:

¶1 William J. Powers ("Bill Powers") and his company, Powers Reinforcement Fabricators, L.L.C. ("Powers Reinforcement"),¹ petition for special-action review of the superior court's refusal to allow the immediate appeal of its order dismissing Petitioners’ action against William J. Quinlan and the Quinlan Law Firm (collectively the "Quinlan Defendants") in a case consolidated with two other actions that are still being litigated. We accept jurisdiction, deny relief, and hold: (1) when disposing of a cause of action consolidated with other causes, the court has the discretion to certify the dismissal under either Rule 54(c) or (b); and (2) when reviewing the superior court's decision, we presume the court's refusal to finalize a judgment under 54(c) reflects the court's discretionary determination that issues in the other pending actions are related.

FACTS AND PROCEDURAL BACKGROUND

¶2 In Maricopa County Cause Number CV2018-001278, Powers Steel & Wire Products, Inc. sued several former employees and employees of a competitor, alleging the former employees made an improper agreement with Powers Steel's competitor to solicit Powers Steel's critical employees and customers to the competitor. Among the defendants Powers Steel sued were Bill Powers, who was Powers Steel's former vice president and a current shareholder, and his new business, Powers Reinforcement. In the second action—CV2018-053612—Bill Powers sued Powers Steel, seeking access to books and records and dissenter's rights.

¶3 The Quinlan Defendants represented Powers Steel in the first two actions. In connection with this representation, the Quinlan Defendants sent three demand letters on behalf of Powers Steel to Powers Reinforcement customers and contractors, claiming that Bill Powers was in breach of his fiduciary duty and duty of loyalty to Powers Steel. In the letters, the Quinlan Defendants, on behalf of Powers Steel, threatened to sue the recipients for aiding and abetting the breach of fiduciary duty and for tortious interference with Powers Steel's business expectancy.

¶4 In response to CV2018-001278 (first action), Bill Powers filed a counterclaim against Powers Steel, alleging defamation and tortious interference with business expectancy. At the same time, Petitioners also filed a new complaint in CV2018-054762 (third action) against the Quinlan Defendants alleging defamation and tortious interference based on the demand letters. Powers Steel moved to consolidate the three matters, and the court granted the request without objection.

¶5 Following the consolidation, Petitioners moved to have the Quinlan Defendants disqualified from representing any party in any of the consolidated cases. Petitioners argued:

Prior to the consolidation, disqualification was not required. Quinlan was not an advocate and a party in the same action. (Although, sending the letters did trigger the Counterclaim against [Powers Steel] in this action and that, alone, might have required withdrawal or disqualification because Quinlan would be a witness, even though not also a party.) Whether Quinlan and [Powers Steel] have [a] conflict of interest irrespective of the consolidation, giving rise to a voluntary withdrawal by Quinlan is an issue left to the lawyer and its client. But, absent a withdrawal by Quinlan, its status as advocate, witness and party is untenable.

¶6 The Quinlan Defendants moved to dismiss the complaint in the third action, arguing the litigation privilege protected the letters at issue. See Goldman v. Sahl , 248 Ariz. 512, 519, ¶ 17, 462 P.3d 1017 (App. 2020) (lawyers are privileged to publish defamatory matter in communications preliminary to a judicial proceeding). The court ultimately granted summary judgment to the Quinlan Defendants and dismissed the third action, finding "no fact question and, at a minimum, no sufficient evidence that the three ‘demand’ letters constitute[d] improper conduct." The court then denied Petitioners’ motion to disqualify as moot.

¶7 Petitioners filed a proposed judgment requesting that the court enter the judgment "under Rules 54(b) and/or 54(c)." The Quinlan Defendants objected to Petitioners’ proposed judgment, arguing the "and/or" language was ambiguous. They argued that "[a] judgment must be either a final judgment as to all parties and claims under Rule 54(c), or a partial judgment under Rule 54(b). It cannot be both."

¶8 The court entered the judgment without the requested language. It denied Petitioners’ motion for reconsideration, stating: "The court expressly determines that because not all parties and/or claims have been adjudicated, the court's order ... is not a final appealable order under Ariz. R. Civ. P. 54(b) or 54(c)." Petitioners then brought this special action.

DISCUSSION

¶9 Petitioners argue that the court erred by refusing to certify the judgment as final under either Rule 54(b) or (c) and, if we conclude that 54(c) language was not warranted, by denying their motion to disqualify Powers’ counsel as moot because the dismissal was not a final judgment and the Quinlan Defendants remain "co-parties" in the consolidated action.

¶10 A superior court's refusal to enter Rule 54 language may not be reviewed on direct appeal. S. Cal. Edison Co. v. Peabody W. Coal Co. , 194 Ariz. 47, 53, ¶ 20, n.5, 977 P.2d 769 (1999). "In the proper case, however, the refusal to enter an appealable order may be reviewed for abuse of discretion by special action proceedings." Id. at 53, ¶ 20, 977 P.2d 769. Additionally, questions of first impression are particularly appropriate for special-action review. Dabrowski v. Bartlett , 246 Ariz. 504, 512, ¶ 15, 442 P.3d 811 (App. 2019).

¶11 "In Arizona, our statutes and rules of appellate procedure permit appeals only from final judgments or orders. In the civil context, the right to appeal is not absolute but exists only by statute." S. Cal. Edison Co. , 194 Ariz. at 52, ¶ 16, 977 P.2d 769 (citation omitted). "An appeal may be taken to the court of appeals from the superior court ... [f]rom a final judgment entered in an action ... commenced in a superior court ...." Ariz. Rev. Stat. ("A.R.S.") § 12-2101(A)(1).

After the adoption of the rules of civil procedure liberalizing multi-claim and multi-party litigation, Rule 54(b) ... was promulgated to relieve parties of the delay caused by the ongoing litigation of other claims. The rule allows a trial court to certify finality to a judgment which disposes of one or more, but not all, of the multiple claims, if the court determines that there is no just reason for delay and directs the entry of judgment.

Davis v. Cessna Aircraft Corp. , 168 Ariz. 301, 304, 812 P.2d 1119, 1122 (App. 1991). Thus, "this court lacks jurisdiction over an appeal from a judgment that does not resolve all claims as to all parties and that does not include Rule 54(b) language." Madrid v. Avalon Care Ctr.-Chandler, L.L.C. , 236 Ariz. 221, 224, ¶ 8, 338 P.3d 328 (App. 2014).

¶12 Conversely, Rule 54(c) does not confer jurisdiction on this court; it merely facilitates the exercise of our statutory authority to hear appeals "[f]rom a final judgment entered in an action ... commenced in a superior court." A.R.S. § 12-2101(A)(1). Rule 54(c) "is the product of a rule change petition intended to make clear ‘whether an order of a Superior Court is, or is intended to be, a final, appealable "judgment" ’ and to allow ease in ‘determining the extent to which a putative judgment resolves a case as to all claims and all parties.’ " Madrid , 236 Ariz. at 223, ¶ 4, 338 P.3d 328 (quoting Petition to Amend Rules 54 and 58, Ariz. R. Civ. P., and Rule 9, Ariz. R. Civ. App. P. at 3 (Jan. 9, 2013) (No. R–13–0005)).

A. Dismissal of a Separate Action in a Consolidated Matter May Be Final Under Either Rule 54(b) or (c).

¶13 Arizona courts have not addressed how Rule 54(b) or (c) applies in a consolidated matter when one action has been dismissed, but other actions remain. We review the interpretation of a court rule de novo . Goldman , 248 Ariz. at 522, ¶ 29, 462 P.3d 1017. The Rules "should be construed, administered, and employed ... to secure the just, speedy, and inexpensive determination of every action and proceeding." Ariz. R. Civ. P. 1. Petitioners suggest we turn to federal precedent for guidance "because federal law similarly restricts appellate jurisdiction to ‘final decisions.’ " Grand v. Nacchio , 214 Ariz. 9, 15, ¶ 13, 147 P.3d 763 (App. 2006). But the analysis supporting Petitioners’ desired outcome is less relevant in Arizona because there is no equivalent in the federal rules to our Rule 54(c) ; and, as Petitioners acknowledge, the federal circuits are split about how to resolve the issue. Instead, our analysis is guided by the general rule that courts disfavor piecemeal litigation, see, e.g. , Edler v. Edler , 9 Ariz. App. 140, 144, 449 P.2d 977 (1969), the purpose of Rule 54(b), and consideration of the "traditional exercise of the court's inherent powers over the administration and supervision of its own business," MacAlister v. Guterma , 263 F.2d 65, 69 (2d Cir. 1958).

¶14 A superior court has the power...