Webb v. Erickson, 1
| Decision Date | 31 December 1981 |
| Docket Number | No. 1,CA-CIV,1 |
| Parties | James WEBB, Plaintiff-Appellant, v. Carl S. ERICKSON and Nancy J. Erickson, husband and wife, Defendants, and James M. Bates, Garnishee-Defendant-Appellee. 5138. |
| Court | Arizona Court of Appeals |
At issue is whether the trial court abused its discretion in vacating a default judgment entered against garnishee-defendant-appellee. We find that the trial court's action was not justified under any subsection of Rule 60(c), Arizona Rules of Civil Procedure, and therefore reverse.
On August 5, 1975, appellant Webb obtained a default judgment against Carl S. Erickson and Nancy J. Erickson, husband and wife, in the amount of $5,000 plus interest, plus $1,500 in attorneys' fees. The judgment represented two (2) promissory notes and a check for insufficient funds executed by Carl Erickson.
On November 22, 1975, appellant Webb served a summons and writ of garnishment on appellee Bates at his home. Appellee Bates did not answer the writ.
Appellee Bates stated in a subsequent affidavit that he did not have a clear memory of his reaction to receiving the summons in 1975 and that he had recently been discharged from St. Luke's Hospital for treatment of depression. He stated that he assumed that the summons was not intended for him because he had never heard of James Webb, and was not connected with a dispute between James Webb and Carl and Nancy Erickson. Bates stated that he probably knew that Carl Erickson was the real estate agent who had been concerned with selling the Bates' house in November 1975. However, it was his impression that the proceedings were in escrow at Minnesota Title. He felt that he had no control, or considered that he had no control, over the escrow proceedings in Minnesota Title and that he had never paid any money to Carl Erickson.
On February 27, 1976, Webb obtained a default judgment against the garnishee, appellee Bates, for the full amount of the underlying judgment against the Ericksons. The default judgment had been supported by a motion filed by appellant Webb, in which he sought judgment by virtue of A.R.S. § 12-1583. The record reflects that no copy of the default judgment obtained pursuant to A.R.S. § 12-1583 was mailed to the garnishee Bates.
The record reflects that no action was taken in respect to the default judgment that Webb had obtained against garnishee-appellee Bates on February 27, 1976, for three and one-half years. On August 7, 1979, Webb filed a writ of garnishment with the Salt River Project, garnishing Bates' wages on the basis of the default judgment obtained in 1976, and seeking to collect the original amount of the judgment against the Ericksons.
On August 16, 1979, garnishee-appellee Bates filed a motion to vacate judgment pursuant to Rule 60(c) and a motion to stay the execution of the judgment. After a response and oral argument, the superior court issued an order granting garnishee-appellee Bates' motion setting aside the default judgment and entry of default and quashing the writ of garnishment as to Bates' employer. (Minute entry of September 6, 1979). A formal judgment to this effect was entered on September 19, 1979. This appeal follows.
Appellee contends that relief under clauses 4, 5 and/or 6 of Rule 60(c) was justified by the following facts:
1. The ineffective quality of notice provided by the summons on garnishment to the non-commercial garnishee defendant.
2. The fact that the role of the garnishee defendant is unfamiliar to the non-commercial garnishee and appellant made no effort to communicate with the garnishee, either before or after the default judgment was obtained, to explain the nature of the action.
3. The delay of some three and one-half years before notifying appellee of the default judgment.
4. The fact that Erickson listed the underlying debt on a petition for discharge in bankruptcy.
5. The possibility that appellant may have received multiple recoveries on the same underlying judgment.
6. The fact that appellee Bates owed no clear, ascertainable, or noncontingent "debt" to either the judgment creditor Webb or to the judgment debtor Erickson at the time the garnishment was served.
The foregoing will be referred to as appellee's fact # 1, 2, 3, 4, 5 or 6 under appropriate headings. Appellant Webb contends that the default judgment entered against Bates was not inequitable and did not fall within any of the provisions of Rule 60(c) justifying relief from the judgment.
Rule 55(c), Arizona Rules of Civil Procedure, provides:
55(c) Setting aside default. For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(c).
Rule 60(c), Arizona Rules of Civil Procedure, provides:
60(c) Mistake; inadvertence; surprise; excusable neglect; newly discovered evidence; fraud, etc. 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: (1) mistake, inadvertence, surprise or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(d); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released or discharged, or a prior judgment on which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be filed within a reasonable time, and for reasons (1), (2) and (3) not more than six months after the judgment or order was entered or proceeding was taken....
In Sloan v. Florida-Vanderbilt Development Corp., 22 Ariz.App. 572, 529 P.2d 726 (1974), this court set forth the general principles governing our review of the trial court's decision:
[W]e must carefully scrutinize the record before us to see if there exists a reason under Rule 60(c) by which the exercise of discretion was justified. In this search we are mindful of several well-established principles which should guide us: First, default judgments are not favored by the courts; second, it is a desirable legal objective that a case be decided on the merits; third, doubt, if any, should be resolved in favor of setting aside a default judgment; and fourth, the decision reached by the trial court will be sustained on appeal unless the record demonstrates a clear abuse of discretion.
At the same time, there are other principles which confront us in our duty. First, when a judgment becomes final, the power of the court to open it is governed by specific rules set forth in the Arizona Rules of Civil Procedure; second, a judgment must at some reasonable point in time achieve finality; third, a burden of explanation as to why a party has not responded to lawful service of process is placed upon the party seeking to set aside a default judgment.
22 Ariz.App. at 574, 529 P.2d at 728.
A mere showing of "good cause" is insufficient grounds for setting aside a default judgment; a showing of one of the specific grounds set forth in Rule 60(c) is required. Id.
While it has been held that more liberality should be shown in setting aside a judgment against a defaulting garnishee than one against a defaulting defendant, Gutierrez v. Romero, 24 Ariz. 382, 210 P. 470 (1922); Comision Monetaria v. Sonora Bank & Trust Co., 28 Ariz. 369, 236 P. 1114 (1925); cf. Riggs v. Huachuca Investment Co., 2 Ariz.App. 527, 410 P.2d 149 (1966), no such distinction is made explicit in the current statutes or rules, and Rule 60(c) applies to defaults taken against garnishees as well as those taken against other defendants.
A default judgment can be set aside on grounds of "mistake, inadvertence, surprise or excusable neglect." Appellee's facts # 1 and 2 allege "excusable neglect." But a motion alleging such grounds must be filed "not more than six months after the judgment or order was entered." Appellee failed to file the motion within six months of the default judgment, and therefore relief is unavailable under Rule 60(c)(1).
The six-month limitation is strictly adhered to, and the fact that appellee received no notice of the judgment until three years later (appellee's fact # 3) does not affect the unavailability of relief. That fact does not "toll" the six-month period set forth in the rule. Leahy v. Ryan, 20 Ariz.App. 110, 510 P.2d 421 (1973); Gendron v. Skyline Bel Air Estates, 121 Ariz. 367, 590 P.2d 483 (App.1979). (But note the inconsistent treatment in Leahy and Gendron of the Rule 60(c)(6) claim, discussed below).
A default judgment can be set aside on grounds that "the judgment is void." It is clear that the six-month time limit applicable to motions based on Rule 60(c)(1), (2) or (3) is not applicable to a motion on the grounds that the judgment is void. Walls v. Stewart Bldg. & Roofing Supply, Inc., 23 Ariz.App. 123, 531 P.2d 168 (1975).
It has been stated that the courts will not "condone ... lengthy delays" in filing motions on this ground. Price v. Sunmaster, 27 Ariz.App. 771, 774, 558 P.2d 966, 969 (1976). Likewise, where the grounds for relief are not specified, it has been held that unreasonable delay in filing the motion precluded granting the motion. State v. Swingle, 110 Ariz. 66, 514 P.2d 1254 (1973). On the other hand, it has been held that even the "reasonable time"...
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Webb v. Erickson
...The court of appeals held that the trial court's action was an abuse of discretion and reversed. Webb v. Erickson, 133 Ariz. ---, 655 P.2d 15 (App.1981). Bates petitioned this court for review. We have jurisdiction pursuant to Ariz. Const. art. 6, § 5, and Rule 23, Rules of Civil Appellate ......