Wieman v. Roysden, 1

• Decision Date: 27 November 1990
• Docket Number: CA-CV,No. 1,1
• Citation: 166 Ariz. 281,802 P.2d 432
• Parties: Clarence WIEMAN and Caroline Wieman, husband and wife, Plaintiffs-Appellees, v. Brunn W. ROYSDEN, Jr., Nonparty-Appellant. 89-443.
• Court: Arizona Court of Appeals

Page 432

802 P.2d 432

166 Ariz. 281

Clarence WIEMAN and Caroline Wieman, husband and wife, Plaintiffs-Appellees, v. Brunn W. ROYSDEN, Jr., Nonparty-Appellant.

No. 1 CA-CV 89-443.

Court of Appeals of Arizona Division 1, Department B.

Nov. 27, 1990.

Gary M. Gallner, P.C. by Gary M. Gallner, Sun City, for plaintiffs-appellees.

Brunn W. Roysden, Jr., Tempe, in pro. per.

OPINION

JACOBSON, Judge.

In this appeal by a nonparty attorney, we determine (1) whether this court has jurisdiction of an appeal brought by an attorney who was sanctioned by the trial court in his capacity as counsel for the defendants below, and (2) whether the trial court erred in imposing such a sanction. Finding we have jurisdiction, we reverse.

FACTUAL BACKGROUND

In May 1987, Steve Arbuckle and appellee Clarence Wieman executed a promissory note whereby Wieman agreed to loan Arbuckle $20,000.00, with interest at three percent per month payable on the fifth day of each month, with thirty days notice to pay or demand payment in full. Upon default in the payment of any installment when due, the note provided that interest would accrue at a rate of ten percent per annum until paid on the entire unpaid balance and accrued interest.

Arbuckle made no payment to Wieman after August 5, 1987, and, on January 5, 1988, Wieman declared Arbuckle in default and demanded payment of the entire amount due by February 5th. Arbuckle did not respond, and in February 1988, Wieman filed suit ¹ against Arbuckle and his wife, Phyllis, alleging: (1) pursuant to the terms of the note, the principal amount of $20,000.00 was to bear interest at a rate of three percent per month, payable in payments of interest only on or before the fifth day of each month, and (2) Arbuckle had made no payments since August 5, 1987. Wieman prayed for judgment against the Arbuckles, "both separately and as a community, if applicable," in the amount of the note plus interest.

Through their attorney, appellant Brunn Roysden, Jr., the Arbuckles filed an answer in April 1988, admitting that Steve Arbuckle had executed the note, and that he had made no payments thereunder since August 5, 1987. However, the Arbuckles claimed as affirmative defenses (1) that the complaint failed to state a claim for which relief could be granted against Phyllis Arbuckle, and (2) that:

the note was procured for reasons of common law [usurious interest] rates, and accordingly, under the doctrines of unclean hands, and/or in pari delicti [sic], [Wieman] should be precluded from recovering any sums except the principal amount actually paid to Defendant Steve Arbuckle, less all payments made by Steve Arbuckle.

Wieman subsequently moved for summary judgment based on the admissions in the Arbuckles' answer. As to the affirmative defense of usury, Wieman argued that he and Arbuckle agreed to the three percent per month rate in writing, and that the defense of usury was therefore inapplicable pursuant to A.R.S. § 44-1201(A). ² Wieman also requested expenses, attorneys' fees, and double damages under A.R.S. § 12-349, ³ alleging that the Arbuckles' answer was filed in bad faith, without substantial justification, and as a means of delaying the proceedings and harassing Wieman. The Arbuckles did not file a response.

Because Wieman's motion was not accompanied by a separate statement of facts, pursuant to Rule IV(f), Uniform Rules of Practice of the Superior Court, the trial court considered it as a motion for judgment on the pleadings pursuant to Rule 12(c), Arizona Rules of Civil Procedure, and granted the motion as to Steve Arbuckle. The court ordered that judgment be entered against Arbuckle in the principal amount of $20,000.00 plus interest at three percent per month from August 5, 1987 to the date of judgment. The court also found that Arbuckle's answer violated both A.R.S. § 12-349 and Rule 11(a), Arizona Rules of Civil Procedure, entitling Wieman to damages of $1,000.00 plus attorneys' fees against Arbuckle and attorney Roysden, jointly and severally. However, the trial court denied Wieman's motion as to Phyllis Arbuckle, finding that it could not presume a community liability because the complaint failed to allege that the Arbuckles were husband and wife at all relevant times.

Arbuckle, through Roysden, moved for reconsideration, contending that the court improperly ordered interest on the note to accrue at a rate of three percent per month. Arbuckle contended that, under the terms of the note, interest would accrue on default at a rate of ten percent per annum, and that, at worst, the court should have awarded interest of three percent per month from August 5, 1987 to February 5, 1988, and ten percent per annum from February 5th, the date of default, to the date of judgment. Arbuckle also argued that the usury defense was not groundless because Phyllis Arbuckle did not agree in writing to an interest rate of three percent per month, see A.R.S. § 44-1201(A), and therefore Wieman's attempt to collect a usurious interest rate as to her "constituted unclean hands and in pari delicto sufficient to provide a defense as to both [of the Arbuckles]." The trial court denied Arbuckle's motion for reconsideration, ruling that he had no usury defense; however, the court ordered judgment against Arbuckle "in the amount of $20,000.00 plus 10% per annum until paid." (Emphasis added.)

Arbuckle again moved for reconsideration solely on the issue of sanctions. ⁴ He argued that Wieman sought a judgment at three percent per month, notwithstanding the plain terms of the note which provided that he was only entitled to ten percent per annum after default. Moreover, Arbuckle argued, the court in fact ultimately rejected Wieman's prayer, awarding Wieman only ten percent per annum. Thus, although his interest rate challenge "was not presented in the most elegant way," Arbuckle's contention that Wieman was entitled to no interest was closer to the final award of ten percent per annum than Wieman's prayer for three percent per month, but it was Arbuckle who was sanctioned by the court. Finally, Arbuckle argued, even if his defense of usury was erroneous, it was an abuse of discretion for the court to impose sanctions merely because it was pled in his answer.

Judgment was ultimately entered against Arbuckle in the principal amount of $20,000.00 plus interest at a rate of ten percent per annum from August 5, 1987 until the date of judgment. The court found that Arbuckle's answer violated Rule 11 and § 12-349 because default was acknowledged, and "the defense of 'usury' was not warranted by existing law or a good faith argument for extension, modification, or reversal of existing law." Accordingly, after granting judgment against Steve Arbuckle, severally, the court awarded Wieman damages against Arbuckle and Roysden, jointly and severally, in the amount of $1,000.00, and reasonable attorneys' fees in the amount of $1,519.25.

After conducting discovery, Wieman filed a motion for summary judgment against Phyllis Arbuckle, which the court granted. In their objection to the form of that judgment, the Arbuckles again argued that their usury defense, even if erroneous, did not rise to the sanctionable level. The Arbuckles argued that, in any event, the judgment should provide that the award against them and Roysden be characterized as "sanctions," not as "damages." The court agreed that the $1,000.00 was awarded as "sanctions," but overruled the balance of the objection:

[T]he sanction was imposed because [the Arbuckles] without any legal or factual justification filed an answer which the court found to be for the purpose of delay and harassment, which also necessitated considerable court activity and time. It was not simply a matter of good-faith debate about applicable interest rates. Indeed, following the proper course--to allow a default--would have resulted in the same judgment absent the sanction.

A final judgment was then entered as to Phyllis Arbuckle, also providing that Wieman be awarded sanctions against Steve and Phyllis Arbuckle and Roysden, jointly and severally, in the amount of $1,000.00, and reasonable attorneys' fees in the amount of $1,519.25. Roysden appealed from "the Judgment entered against [him]." The Arbuckles did not appeal.

JURISDICTION

Although not raised by either party, we initially question whether we have jurisdiction to consider the merits of an appeal brought by a person who was not a party in the proceedings below. See Musa v. Adrian, 130 Ariz. 311, 312, 636 P.2d 89, 90 (1981) (appellate court must determine that it has jurisdiction, even though the parties do not raise the issue).

Rule 1, Arizona Rules of Civil Appellate Procedure, provides that "[a]n appeal may be taken by any party aggrieved by the judgment." Generally, a person who is not a party to an action is not aggrieved and cannot appeal from findings adverse to him. Great Southwest Fire Ins. Co. v. Triple "I" Ins. Servs., Inc., 151 Ariz. 280, 282, 727 P.2d 333, 335 (App.1986), approved in part, vacated in part on other grounds, 151 Ariz. 283, 727 P.2d 336 (1986) (persons dismissed as defendants were not parties aggrieved by the judgment).

Undoubtedly, although he was "aggrieved by the judgment" by the joint liability of the sanctions, Roysden was not a "party" to the action below. Nevertheless, we believe that, under these circumstances, Roysden should be permitted to appeal from that part of the judgment affecting him. Division Two of this court has held that a nonparty attorney against whom the trial court has imposed attorneys' fees ⁵ is entitled to appeal from that portion of the judgment adverse to him. Abril v. Harris, 157 Ariz. 78, 754 P.2d 1353 (App.1987). In such a case, the Abril court found, the attorney "has been aggrieved, his interest is direct, substantial and immediate, he would be benefitted by reversal of the judgment and his pecuniary interest has been directly affected." Id. at 81, 754 P.2d at 1356. We...