Sears Roebuck and Co. v. Walker

• Decision Date: 18 December 1980
• Docket Number: CA-CIV,No. 1,1
• Citation: Sears Roebuck and Co. v. Walker, 621 P.2d 938, 127 Ariz. 432 (Ariz. App. 1980)
• Parties: SEARS ROEBUCK AND COMPANY, a New York Corporation, Plaintiff-Appellee, v. Peter J. H. WALKER and Louise Walker, his wife, Defendants-Appellants. 5221.
• Court: Arizona Court of Appeals

Page 938

621 P.2d 938

127 Ariz. 432

SEARS ROEBUCK AND COMPANY, a New York Corporation, Plaintiff-Appellee, v.Peter J. H. WALKER and Louise Walker, his wife, Defendants-Appellants.

No. 1 CA-CIV 5221.

Court of Appeals of Arizona, Division 1, Department A.

Dec. 18, 1980.

Peter J. H. Walker, Louise A. Walker, in pro. per.

Ronald W. Meyer, Phoenix, for plaintiff-appellee.

OPINION

CONTRERAS, Judge.

The issue raised in this appeal is whether the trial court properly struck appellants' answers and dismissed their counterclaims for failure to adequately answer interrogatories, thereby permitting appellee to obtain a default judgment.Because a threshold jurisdictional issue is presented, it is necessary to outline the procedural history which has taken place before multiple judges in the trial court and also an intermediate trip to this court by way of special action.

TRIAL COURT PROCEEDINGS

Appellee initiated this litigation in 1977 by filing a complaint against appellants, Peter Walker and Louise Walker, for the collection of an overdue account.Sears sought to recover an indebtedness of $2,157.69 and attorney's fees in the amount of $719.00.On the same day that appellants' default was entered and a default judgment taken, motions to dismiss the complaint were filed.The default judgment and appellants' default were eventually set aside and appellants, who have represented themselves throughout most of this litigation, filed separate answers and counterclaims.Both appellants denied the allegations of the complaint and raised several affirmative defenses, including misrepresentation of merchandise, sale of unfit merchandise, payment, separate as opposed to joint or community obligation, lack of notice that the account was overdue and prematurity of action for the entire balance, and usury.AppellantPeter Walker's counterclaim alleged usury and sought recovery of "interest unlawfully extracted" and attorney's fees.Louise Walker, in her counterclaim, sought recovery of attorney's fees based upon her assertion of an obligation to defend the principal claim of Sears.

On February 21, 1978, appellee served seven requests for admissions on appellants, pursuant to Rule 36 of the Rules of Civil Procedure, and twelve interrogatories, pursuant to Rule 33.After receiving answers from appellants, the appellee filed a motion for sanctions pursuant to Rule 37 based upon the asserted insufficiency of the answers.Appellee asked the court to enter an order compelling appellants to answer the interrogatories completely in ten days and, in the event that appellants failed to respond to the order, that appellants' answers and counterclaims be stricken.A conditional order requiring appellants to answer the interrogatories was entered by the Honorable Fred J. Hyder.After appellants filed supplemental answers, appellee filed objections and moved for dismissal of the answers and counterclaims for failure to comply with the court's order.Judge Hyder granted appellee's motion and, by formal written order dated July 12, 1978, ordered that the answers to the complaint be stricken and that the matter proceed as a default.The court also ordered that the counterclaims be dismissed.

Thereafter, on motion of appellants, the order striking appellants' answers and dismissing their counterclaims was vacated by Judge Hyder on October 5, 1978.On March 16, 1979, appellee renewed its motion to strike answers and dismiss counterclaims for failure to comply with the court's order.Appellee, in essence, asked the court to reconsider the motion previously granted and later vacated by Judge Hyder.The trial court, by Judge Jeffrey S. Cates, entered a comprehensive minute entry on June 11, 1979, setting a time for the filing of all responses to the renewed motion to strike and to dismiss and setting July 6, 1979, as the time for final oral argument on the matter.Appellants thereupon filed a petition for relief by special action in this court, seeking vacation of Judge Cates' ruling on the basis that the previous order of dismissal had been vacated and the interrogatories were adequately answered.This court found no prejudice to appellants in Judge Cates' order and declined to accept jurisdiction of the special action.The July 6, 1979, hearing date in the superior court was rescheduled for September 14.After taking the matter under advisement, Judge Cates made a minute entry ruling granting appellee's motion to strikeappellants' pleading.The substance of this ruling is incorporated into a written order signed by Judge Rudolph J. Gerber on October 17, 1979.This order reads in part as follows:

Good cause appearing, and the Court finding that Defendants' non-compliance with this Court's previous order directed to Defendants with respect to Defendants' compliance with Plaintiff's outstanding discovery to be willful and in bad faith, and not by reason of Defendants' inability to comply,

IT IS ORDERED granting Plaintiff's Motion to Strike Answer and Motion to Dismiss Counterclaim in accordance with its request, striking Defendants' Answer on file in this action allowing Plaintiff to proceed upon its Complaint as though the matter were a default.

FURTHER ORDERED dismissing Defendants' Counterclaim on file in this action.

Appellants' default was entered on October 18, 1979.On October 29, 1979, appellants moved to vacate and set aside the order striking their answers and counterclaims.This motion was denied on November 8, 1979.On November 13, a default judgment was entered in favor of appellee.Appellants did not move to vacate or set aside this judgment.

On December 5, 1979, appellants filed a notice of appeal.The body of the notice reads as follows:

NOTICE IS HEREBY GIVEN that the above named Defendants appeal to the Court of Appeals of the State of Arizona from the order made and entered in this action on the 15th day of October, 1979, Striking Answer and Counterclaim (Formal written order entered October 17, 1979; Motion to Vacate denied on November 8, 1979) and from the consequential default judgment entered on November 13, 1979.

THRESHOLD JURISDICTIONAL ISSUE

Our concern in regard to jurisdiction is based upon the principle, first announced in McLean v. Territory of Arizona, 8 Ariz. 195, 71 P. 926(1903), that a party against whom a default judgment has been entered may not prosecute an appeal until he has first moved in the trial court to set aside the judgment.The basis for this rule is stated in McLean:

The very theory and constitution of a court of appellate jurisdiction only is the correction of errors which a court below may have committed; and a court below cannot be said to have committed an error when their judgment was never called into exercise....

Id. at 199, 71 P. at 928.Thus, the appeal in McLean was dismissed.

In Byrer v. A. B. Robbs Trust Co., 105 Ariz. 457, 466 P.2d 751(1970), our supreme court took pains to articulate a requirement that even when a post-judgment motion pursuant to Rule 60(c) of the Rules of Civil Procedure would merely reiterate a pre-judgment motion to set aside entry of default, such a motion was essential.The court stated:

Defendants argue, in effect, that the reason for the rule that an appeal may not be taken from a default judgment without first having presented a motion to the lower court to set aside the judgment is to allow the court to correct any errors that may have been committed; and that since the court was advised of their position before judgment, they should not be required to move after judgment before appealing.But we think that the trial court should be given the opportunity for further reflection and to exercise a more mature judgment lest litigation be unduly prolonged and unnecessarily expensive.The court should have been afforded the opportunity to reconsider the matter on its merits by presentation of an appropriate motion attacking that portion of the judgment which defendants believe erroneous.

Id. at 458, 466 P.2d at 752.If this portion of Byrer does in fact spell out an absolute requirement of a post-judgment motion in all cases where a party is in default, this court would lack jurisdiction in the present case.

A close study of the Byrer case, however, reveals anomalies, in Byrer, the only issue asserted on appeal was the inclusion in the judgment of an item of $900 for attorneys' fees.The appellants argued that the issue was presentable on appeal because they had raised it in a motion to dismiss which they filed simultaneously with their motion to set aside entry of default.The motion to dismiss, however, was not logically cognizable by the trial court while the defendants-appellants were in default because, as stated in Martin v. Sears, 45 Ariz. 414, 44 P.2d 526(1935): "So long as parties are in default, they have no right to participate in any further proceedings in the case, except a motion to set aside the default and petition for leave to appear and answer, or some similar matter not going to plaintiff's right of action.(citations omitted)."Id. at 419, 44 P.2d at 528.

Where, as here, the parties have filed answers along with counterclaims and have thereafter had their pleadings stricken for insufficiency of discovery, they are not defaulting parties in the sense that they have filed responsive pleadings to the complaint after having succeeded in having a default and default judgment entered against them set aside.¹Under these circumstances, we do not believe that sound judicial policy requires the making of a post-judgment motion as a prerequisite to review by appeal.Procedurally, the instant case is clearly distinguishable from Byrer and the rationale of Byrer simply is not applicable to the instant situation.The default judgment which was entered after appellants' responsive pleadings had been stricken was a final judgment.Where the legislature has granted a right of appeal, as it has in the case of final judgments, the law...