Opinion
1 CA-CV 23-0257
01-23-2024
FANNIE MAE, a corporation organized and existing under the laws of the United States, Plaintiff/Appellee, v. GUSTAVO M. UNGO, and JANE DOE UNGO, husband and wife, Defendants/Appellants.
Snell & Wilmer LLP, Phoenix By Benjamin W. Reeves Counsel for Plaintiff/Appellee. Zwillinger Wulkan PLC, Phoenix By Scott H. Zwillinger, Mark A. Ryan, Robert Weeks Counsel for Defendants/Appellants.
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Mohave County No. L8015CV201407354 The Honorable Lee Frank Jantzen, Judge.
Snell & Wilmer LLP, Phoenix By Benjamin W. Reeves Counsel for Plaintiff/Appellee.
Zwillinger Wulkan PLC, Phoenix By Scott H. Zwillinger, Mark A. Ryan, Robert Weeks Counsel for Defendants/Appellants.
Presiding Judge James B. Morse Jr. delivered the decision of the Court, in which Judge Cynthia J. Bailey and Judge Brian Y. Furuya joined.
MEMORANDUM DECISION
MORSE, JUDGE.
¶1 Gustavo Ungo Jr. ("Ungo ") appeals the superior court's denial of his Arizona Rules of Civil Procedure ("Rule") 60 motion to set aside a post-judgment award of attorney fees entered against him on August 23, 2022. For the following reasons, we reverse, vacate, and remand.
FACTS AND PROCEDURAL BACKGROUND
¶2 In 2016, in the Mohave superior court, Fannie Mae prevailed in a breach of contract claim against Gustavo Ungo Sr. ("Father"). The court entered a judgment against Father and ordered him to pay Fannie Mae's attorney fees and costs.
¶3 To collect on the judgment, Fannie Mae domesticated it in California, Father's state of residence. In January 2020, Fannie Mae filed a new action in California against Father, alleging the fraudulent transfer of properties to his son, Ungo, to evade enforcement of the 2016 judgment. In July 2020, Father passed away, and Ungo became the personal representative and executor of his estate. In July 2023, Fannie Mae prevailed in the California litigation when the California Second District Court of Appeal dismissed Ungo's writ of mandate.
¶4 In June 2022, Fannie Mae filed a statement with the Mohave superior court noting the death of Father and a motion to substitute Ungo as the defendant. In July 2022, citing the parties' contract, Fannie Mae filed an application with the court for $747,175.78 in post-judgment attorney fees and costs incurred in the California litigation. Later in July, Fannie Mae filed an affidavit of service indicating it had complied with Rule 4.2 and served the motion to substitute parties, the statement noting death, an application for an award of post-judgment attorney fees and costs, and a statement of verified costs (collectively, "Post-Judgment Filings") on Ungo at his Los Angeles home via Federal Express ("FedEx"). The FedEx return receipt indicated that "C. Chris" signed for the documents.
¶5 Ungo did not appear, and in August 2022, the court awarded Fannie Mae its requested attorney fees and costs. In January 2023, Ungo filed a Rule 60(b) motion to set aside the judgment of attorney fees. Ungo contended he had not been served with the "documents "and should not be liable for Father's debts. In response, Fannie Mae argued that they had properly served Ungo under Rule 4.2, Ungo does not qualify for relief under Rule 60, and his motion was untimely.
¶6 In March 2023, the court held oral argument on the Rule 60 motion. Ungo contended that he did not primarily reside in the Los Angeles home, and Fannie Mae knew his primary home was in Palm Springs. Ungo also argued that his son lived at the Los Angeles home, signed the receipt for service, and failed to tell Ungo about the service "because he wasn't exactly aware of what it was." Fannie Mae argued Ungo's deposition transcript showed that his primary residence was the Los Angeles home. Fannie Mae also asserted that the post-judgment attorney fees and costs order was proper, Ungo untimely filed the Rule 60 motion, Fannie Mae had adequately carried out service, and Ungo was attempting to evade paying the attorney fees.
¶7 The court denied Ungo's Rule 60 motion because Ungo "was served, and the judgment is appropriate." On March 29, the court issued a written order denying the Rule 60 motion and certified the judgment as final and appealable under Rule 54(c). Ungo timely appealed the denial of his Rule 60 motion, and we have jurisdiction under A.R.S. § 12-2101(A)(1).
DISCUSSION
¶8 On appeal, Ungo contends the court erred because (i) Fannie Mae did not properly serve him with the Post-Judgment Filings, (ii) the court lacked subject-matter jurisdiction over fees Fannie Mae incurred in the California litigation, and (iii) the court lacked authority to award attorney fees related to the California litigation. Generally, the denial of a Rule 60 motion is reviewed for an abuse of discretion, but proper service of process and subject-matter jurisdiction is reviewed de novo. See Ruffino v. Lokosky, 245 Ariz. 165, 168, ¶ 9 (App. 2018) (noting that "proper service under the rule is a legal question of personal jurisdiction which we review de novo"); Glover v. Glover, 231 Ariz. 1, 6, ¶ 18 (App. 2012) (subject-matter jurisdiction). "The scope of an appeal from a denial of a Rule 60 motion is restricted to the questions raised by the motion to set aside." Hirsch v. Nat'l Van Lines, Inc., 136 Ariz. 304, 311 (1983).
I. Service of Process.
¶9 Where parties dispute evidence related to service, we view "the facts in the strongest light possible in favor of supporting the trial court's decision." Hilgeman v. Am. Mortg. Sec., Inc., 196 Ariz. 215, 219, ¶ 10 (App. 2000) (quoting Daou v. Harris, 139 Ariz. 353, 360 (1984)).
A. FedEx.
¶10 Ungo argues that service via FedEx is improper because out-of-state service can only be effectuated through a governmental postal service under Rule 4.2(c). During oral argument, Ungo conceded that he did not "specifically" raise this argument below. "Generally, matters not raised below, including constitutional issues, will not be considered on appeal." Murphy v. Town of Chino Valley, 163 Ariz. 571, 578 (App. 1989). While we retain discretion to consider "the interpretation and application of statutes" not argued below, Evenstad v. State, 178 Ariz. 578, 582 (App. 1993), we exercise our discretion and find Ungo waived this argument, see Englert v. Carondelet Health Network, 199 Ariz. 21, 26, ¶ 13 (App. 2000) (noting that issues first raised on appeal are waived).
B. Return Receipt.
¶11 Next, Ungo argues the order for post-judgment fees and costs is void because he never signed the return receipt for the Post-Judgment Filings. "[W]e review de novo the interpretation and application of the Arizona Rules of Civil Procedure," and strive "to effectuate the drafters' intent, and the rule's plain language is the best indicator of that intent." Clayton v. Kenworthy, 250 Ariz. 65, 67-68, ¶ 8 (App. 2020). "Rules dealing with service of process . . . that allow acquisition of jurisdiction through other than personal service must be strictly construed." Llamas v. Superior Court, 13 Ariz.App. 100, 101 (1970).
¶12 Rule 4.2(c) authorizes service of process by mail outside the state but within the United States. When "a serving party knows the address of the person to be served," the serving party may "serve the person by mailing the summons and a copy of the pleading being served to the person at that address by any form of postage-prepaid mail that requires a signed and returned receipt." Ariz. R. Civ. P. 4.2(c)(1). The rule "envisions that the party being served receive service and sign the receipt." Snow v. Superior Court, 183 Ariz. 320, 324 n.2 (App. 1995). And Rule 4.2(c)(2) requires the serving party to file an affidavit stating "the serving party received a signed return receipt, which is attached to the affidavit and which indicates that the person received the described documents."
The Rules were revised, effective January 1, 2017, to reflect comprehensive stylistic and substantive changes. The changes to Rule 4.2(c) were largely stylistic.
¶13 The receipt of service provided by Fannie Mae reflects that "C. Chris" signed the receipt of service and the affidavit of service provides that copies of the "Pleadings" were signed for by "an adult individual residing at" Ungo's Los Angeles address. Unlike Rule 4.1(d)(2), which allows for service by "leaving a copy . . . at that individual's dwelling or usual place of abode with someone of suitable age and discretion who resides there," service by mail pursuant to Rule 4.2(c) requires a "signed returned receipt" indicating "that the person received the described documents ...." The signed receipt evidences that someone other than Ungo signed for and received service.
¶14 Nevertheless, the court found that "service was completed" and sufficient "under [Barlage v. Valentine, 210 Ariz. 270 (App. 2005)] and other cases to show that the Defendant knew about this judgment. "In Barlage, this court upheld an out-of-state service when the person to be served authorized a United Parcel Service ("UPS") store to accept certified mail on her behalf, and a UPS employee signed the receipt for service on her behalf. Barlage, 210 Ariz. at 276, ¶ 21. But unlike the situation in Barlage, nothing in this record suggests "C. Chris" had an agency relationship with Ungo or that Ungo had authorized "C. Chris" to accept or sign for mail on his behalf. Therefore, Fannie Mae's affidavit of service did not meet the requirements of Rule 4.2(c).
¶15 At oral argument, Fannie Mae contended that personal jurisdiction was acquired via the original action against Father such that the superior court retained personal jurisdiction over Ungo as successor. But Fannie Mae did not raise this argument in its answering brief. Nor did Fannie Mae provide any authority for the proposition that personal jurisdiction against Father in the original breach-of-contract action establishes personal jurisdiction against Ungo, as the representative of Father's estate, in an action to recover attorney fees for post-judgment collection actions. But see Ariz. R. Civ. P. 25 (requiring service "in the same manner that a summons and pleading are served under Rule 4, 4.1, or 4.2 . . ." for motions to substitute parties). Accordingly, Fannie Mae has waived this argument. See Webster v. Culbertson, 158 Ariz. 159, 163 (1988) (finding issue waived when it was not raised in the opening brief); Ritchie v. Krasner, 221 Ariz. 288, 305, ¶ 62 (App. 2009) ("Opening briefs must present and address significant arguments, supported by authority that set forth the appellant's position on the issue in question."); ARCAP 13(b) (requiring "[t]he appellee's answering brief [to] follow the requirements" of an opening brief).
¶16 Citing Creach v. Angulo, 186 Ariz. 548 (1996), Fannie Mae argues Ungo must show prejudice of a substantial right from any technical defect in service. Creach is distinguishable because this case involves the lack of proper service to establish personal jurisdiction, rather than a defect in documenting that service. In Creach, the defendants were properly served with the original complaint, personal jurisdiction was uncontested, and the technical defect in the service related to the timing of an affidavit of service for an application for default judgment. Id. at 549. Notably, the defendants were properly served with the default application and the technical error related only to the subsequent affidavit of service. Id. Because the defendants did "not allege that they were served improperly or that jurisdiction was in any way defective," the court found any error in filing the affidavit of service was harmless. Id. at 551-52. Here, Ungo contested both personal jurisdiction and service, and Fannie Mae's attempted service did not comply with Rule 4.2(c).
¶17 Rule 60(b)(4) permits a party to move to vacate a void judgment. Ruffino, 245 Ariz. at 168, ¶ 10. "[A] judgment is void if it was entered without jurisdiction because of a lack of proper service." Id. "If an Arizona judgment is void for lack of jurisdiction, the court has no discretion, but must vacate the judgment." Springfield Credit Union v. Johnson, 123 Ariz. 319, 323 n.5 (1979). Nor are there any time limits in which Rule 60(b)(4) motions must be brought, and "[i]t is well established that a party need not demonstrate that he has a meritorious defense to vacate a void default judgment." Ruffino, 245 Ariz. at 170, ¶ 18 n.5 (quoting Corbet v. Superior Court, 165 Ariz. 245, 248 (App. 1990)). Because Fannie Mae had not properly served Ungo under Rule 4.2(c), the court erred in denying his Rule 60 motion.
¶18 Because we find that service was improper and vacate the judgment, we need not address Ungo's other arguments regarding subject-matter jurisdiction, the court's authority to award attorney fees, and whether the California litigation was final. The court may address such arguments in the first instance on remand.
CONCLUSION
¶19 For the foregoing reasons, we reverse the court's denial of Ungo's Rule 60 motion, vacate the judgment awarding fees and costs, and remand for further proceedings. Ungo requests attorney fees pursuant to A.R.S. §§ 12-341.01 and 12-349, and Fannie Mae requests its fees and costs pursuant to ARCAP 21, A.R.S. §§ 12-341, and 12-341.01. However, we defer an award of attorney fees on appeal pending the ultimate determination of the successful party in the superior court. See Tierra Ranchos Homeowners Ass'n v. Kitchukov, 216 Ariz. 195, 204, ¶ 37 (App. 2007) (deferring the parties' requests for attorney fees on appeal to the superior court's discretion pending resolution of the matter on the merits).