Opinion
1 CA-CV 09-0686
03-27-2012
LONNIE REED and CHERYLANN HOWARD, Plaintiffs/Appellants, v. MARGUERITE KIRK, individually; MARK MOORE, individually; DAVID WILHELMSEN, individually; FAVOUR, MOORE & WILHELMSEN, P.A., an Arizona professional corporation; MARK MOORE and DAVID WILHELMSEN, individually in their capacity as officers, directors, and/or shareholders known as FAVOUR, MOORE & WILHELMSEN, P.A.; NEAL KLEIN CONSTRUCTION CORP., an Arizona corporation; THOMAS WALTER, individually, Defendants/Appellees.
Lonnie Reed and Cherylann Howard In Propria Persona Broening, Oberg, Woods & Wilson, P.C. By Donald Wilson, Jr. Brian W. Purcell Attorneys for Defendants/Appellees
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED
EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
Ariz. R. Crim. P. 31.24
MEMORANDUM DECISION
(Not for Publication - Rule 28, Arizona Rules of Civil Appellate Procedure)
Appeal from the Superior Court in Yavapai County
Cause No. V1300CV820060102
The Honorable Douglas L. Rayes, Judge
AFFIRMED
Lonnie Reed and Cherylann Howard
In Propria Persona
Sedona
Broening, Oberg, Woods & Wilson, P.C.
By Donald Wilson, Jr.
Brian W. Purcell
Attorneys for Defendants/Appellees
Phoenix KESSLER, Presiding Judge
¶1 Lonnie Reed and Cherylann Howard (collectively, the "Reeds") appeal from the entry of summary judgment against them on their claims of abuse of process, invasion of privacy, and civil conspiracy. For the reasons stated below, we affirm the trial court's judgment.
FACTUAL AND PROCEDURAL HISTORY
¶2 The Reeds filed a three-count fourth amended complaint against attorneys Marguerite Kirk, Mark Moore, and David Wilhelmsen and the law firm Favour, Moore & Wilhelmsen, P.A. (collectively, "Kirk"); and the attorneys' clients, Neal Klein Construction Corp. and Thomas Walter (collectively, "Klein"), all collectively referred to as "Defendants." The complaint alleged abuse of process, invasion of privacy, and civil conspiracy.
¶3 The abuse of process claim arose from another lawsuit the Reeds filed against Klein, Reed v. Neal Klein Construction Corp., Yavapai County Superior Court No. CV 820030343 ("underlying case"), dealing with disputes over a house Klein built for the Reeds. As explained more fully below, the trial court dismissed all but two of the counts in the underlying case.
¶4 In the abuse of process claim now before us, the Reeds alleged that Defendants made intentional misrepresentations to the trial court during the underlying case. In the invasion of privacy and conspiracy claims, the Reeds alleged Defendants obtained information about the Reeds' bank accounts while seeking to enforce an award of attorneys' fees in yet another case the Reeds brought against Klein for defamation (the "defamation action").
¶5 The trial court granted two separate motions for summary judgment in favor of Defendants: it first dismissed the abuse of process claim and then later dismissed the remaining claims, both in unsigned minute entries, after which the court entered a signed judgment dismissing all the claims. The Reeds timely appealed. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101(A)(1) (Supp. 2011).
DISCUSSION
¶6 "In reviewing the granting of a motion for summary judgment, we must view the facts in a light most favorable to the party opposing the judgment. We determine de novo whether a genuine issue of material fact exists and whether the trial court correctly applied the substantive law." Campbell v. SZL Props., Ltd., 204 Ariz. 221, 223, ¶ 8, 62 P.3d 966, 968 (App. 2003) (internal citation omitted).
I. Abuse of Process
¶7 Regarding their abuse of process claim, the Reeds alleged that Defendants knowingly misrepresented facts and law to the court in the underlying action with the ulterior purpose of delaying the proceedings, depriving the Reeds of a fair trial, increasing the cost of litigation, and causing the Reeds emotional distress, humiliation, inconvenience, and anxiety. The Reeds alleged Defendants made 133 separate misrepresentations.
¶8 Examples the Reeds cite of Defendants' alleged misrepresentations of law include: (1) "Defendant . . . misled the Court by misrepresenting the law regarding amending complaints."; (2) "Defendant . . . misled the Court as Arizona corporations must register trade names with the Department of Real Estate in order to sale [sic] real estate."; and (3) "Defendant . . . misled the Court by claiming that Plaintiffs had misrepresented the holding in Medasay."
¶9 Examples the Reeds cite of Defendants' alleged misrepresentations of fact include: (1) "Defendant . . . misled the Court . . . by claiming that Plaintiffs' accusations that defense counsel had lied and misrepresented law numerous times were unfounded."; and (2) Defendants misled the trial court by stating the multiple amended complaints were largely "verbatim," "duplicated," or a "reprint" of the earlier filed complaints.
¶10 The trial court granted summary judgment on the abuse of process claim, finding that collateral estoppel barred the Reeds from challenging the accuracy of the statements that they asserted were misrepresentations. The court found "plaintiffs had a full and fair opportunity to litigate those statements, . . . the court entered a valid decision on the merits, and . . . resolution of the issues [was] essential to the decision." On appeal, the Reeds argue collateral estoppel does not apply.
¶11 We affirm the trial court's ruling on two grounds. First, collateral estoppel bars the Reeds' abuse of process claim on all but two of the underlying claims. Second, the Reeds did not present evidence to support the elements of an abuse of process claim.
A. Collateral estoppel
¶12 "We review the availability of collateral estoppel de novo." Garcia v. Gen. Motors Corp., 195 Ariz. 510, 513, ¶ 6, 990 P.2d 1069, 1072 (App. 1999). A defendant may prevent a plaintiff from relitigating an issue if "(1) the issue was actually litigated in the previous proceeding, (2) the parties had a full and fair opportunity and motive to litigate the issue, (3) a valid and final decision on the merits was entered, [and] (4) resolution of the issue was essential to the decision." Campbell, 204 Ariz. at 223, ¶ 9, 62 P.3d at 968.
The fifth element of collateral estoppel—commonality of parties—is not required in cases, as here, where a defendant is asserting collateral estoppel. Campbell, 204 Ariz. at 223, ¶ 10, 62 P.3d at 968.
i. Finality
¶13 For purposes of collateral estoppel, a final judgment may include "any prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect." Elia v. Pifer, 194 Ariz. 74, 81, ¶ 33, 977 P.2d 796, 803 (App. 1998) (quoting Restatement (Second) of Judgments ("Restatement") § 13 (1982)). A "judgment will ordinarily be considered final . . . if it is not tentative, provisional, or contingent and represents the completion of all steps in the adjudication of the claim by the court." Restatement § 13 cmt. b. "Factors for determining whether a ruling is sufficiently final include the nature of the decision, the adequacy of the hearing, and the opportunity for review." Garcia, 195 Ariz. at 515, ¶ 11, 990 P.2d at 1074.
¶14 Although two claims in the underlying case, breach of contract and breach of warranty of habitability/fitness (counts one and two) are still pending, the trial court dismissed the Reeds' other twenty-four claims. The trial court dismissed with prejudice claims three through twelve of the original complaint in a minute entry in 2004 and signed a "Partial Final Judgment" with respect to those claims in March 2006 pursuant to Arizona Rule of Civil Procedure 54(b). The Reeds did not timely appeal. Therefore, that decision is final as to claims three through twelve.
¶15 As to claims thirteen through twenty-six, in April 2005 the trial court dismissed those claims and granted the Reeds leave to amend. The Reeds filed an amended complaint again alleging the original claims thirteen through twenty-six, but in November 2005 the court again dismissed those claims with leave to amend. The Reeds then filed their second amended complaint. In November 2006, the court—in an unsigned minute entry—ordered the second amended complaint stricken as untimely and in violation of the Rules of Civil Procedure. This ruling ended the litigation as to claims thirteen through twenty-six.
¶16 Even though there is no Rule 54(b) language in the November 2006 ruling making claims thirteen through twenty-six of the original complaint appealable, the ruling was the trial court's final word on those claims. In its ruling, the court held that the case had gone on far too long, that it gave the Reeds multiple opportunities to bring their complaint into compliance with the law and its orders, that the Reeds failed to comply with those orders, and that there was no basis to allow the Reeds to file additional amendments. Thus, the November 2006 ruling was not tentative, provisional, or contingent on the remaining claims; rather, the decision is firm, with the court having dismissed those claims after pleadings and a hearing on the issue.
¶17 Therefore, between the earlier signed partial judgment and the November 2006 minute entry, with the exception of the first two counts of the original complaint, the trial court's dismissal of all of the claims in the underlying litigation was sufficiently firm so as to be treated as final for purposes of collateral estoppel.
We deal with the remaining two counts of the underlying case later in this decision.
ii. The Reeds had the motive and opportunity to litigate the issues, and the issues were actually litigated.
¶18 The Reeds argue they had no motive or opportunity to litigate the misrepresentations they alleged Defendants made in the underlying litigation, and that the misrepresentations were not litigated. "When an issue is properly raised by the pleadings or otherwise, and is submitted for determination, and is determined, the issue is actually litigated." Chaney Bldg. Co. v. City of Tucson, 148 Ariz. 571, 573, 716 P.2d 28, 30 (1986).
¶19 We reject the Reeds' contention that they had no motive or opportunity to litigate the validity of the alleged misrepresentations in the underlying action. The Reeds had a motive to litigate any misrepresentations because they sought to avoid dismissal of their claims in the underlying case.
¶20 All the alleged misrepresentations occurred either in oral argument in the underlying litigation or in papers Defendants filed in that case, including pleadings, motions for reconsideration, and motions for sanctions. The record discloses that the Reeds vigorously attempted to convince the trial court in the underlying case of Defendants' alleged misrepresentations through the court filings or oral argument. The trial court considered the Reeds' arguments and ruled in Defendants' favor, or in any instances in which the court ruled in the Reeds' favor, the court was not misled.
¶21 Thus, the Reeds had the motive and were afforded the opportunity to bring to the trial court's attention any perceived misrepresentation by Defendants in pleadings or during court proceedings. The trial court's rulings also show the alleged misrepresentations were litigated.
¶22 Without citing legal authority, the Reeds contend that for collateral estoppel to apply, "each one of [Defendants'] 133 instances of misrepresentations of law and fact was required to have been raised to the level of the merits" in the underlying case. We deem the Reeds' failure to cite legal authority or elaborate on that assertion as a waiver of the argument. See ARCAP 13(a)(6); Brown v. U.S. Fid. & Guar. Co., 194 Ariz. 85, 93, ¶ 50, 977 P.2d 807, 815 (App. 1998).
iii. Resolution of the issues was essential to the decision.
¶23 Nor can the Reeds successfully dispute that the alleged misrepresentations were essential to the decision in the underlying case. If the misrepresentations were not essential to the claims in the underlying case, there could be no abuse of process.
¶24 Therefore, the Reeds are collaterally estopped from litigating the abuse of process claim based on the alleged misrepresentations made during the underlying case. The sole exception relates to any misrepresentations that may affect the first two counts of the original complaint. As we discuss below, however, none of the alleged misrepresentations state a claim for an abuse of process.
B. The alleged misrepresentations do not amount to an abuse of process.
¶25 In the trial court and on appeal the parties argued whether the Reeds offered sufficient evidence to proceed to trial on an abuse of process claim. Although the trial court did not reach that issue, we may affirm on any basis that is correct. United Ins. Co. of Am. v. Lutz, 227 Ariz. 411, 413, ¶ 8, 258 P.3d 229, 231 (App. 2011). We agree with Defendants that the Reeds did not offer evidence raising a genuine dispute of material fact to preclude summary judgment.
¶26 To state a claim for abuse of process, a plaintiff must be able to show "(1) a willful act in the use of judicial process; (2) for an ulterior purpose not proper in the regular conduct of the proceedings." Nienstedt v. Wetzel, 133 Ariz. 348, 353, 651 P.2d 876, 881 (App. 1982). Although we have recognized that under certain circumstances an abuse of process claim may arise from the misuse of legitimate litigation processes, id., there are limits to such claims. Thus, liability will not result simply from an attorney acting with "bad intentions." Id. Rather, liability will "result only when the sense of awareness" that an attorney's action will subject the opposing party to additional legal expenses "progresses to a sense of purpose." Id. at 354, 651 P.2d at 882. "In addition, the utilization of the procedure for the purposes for which it was designed" must be "so lacking in justification as to lose its legitimate function as a reasonably justifiable litigation procedure." Id. Therefore, to establish an abuse of process claim, a plaintiff must present evidence the defendant used the legal process primarily for an improper purpose and "took an action that could not logically be explained without reference to the defendant's improper motives." Crackel v. Allstate Ins. Co., 208 Ariz. 252, 259, ¶ 19, 92 P.3d 882, 889 (App. 2004).
¶27 As we explained in Crackel, the misuse must be so egregious that there is no way to logically explain it except by reference to an improper motive. Id. Otherwise, any attorney who makes any misstatement of fact or law, or who merely disagrees with the opposing party about such a fact or law in an earlier case, could be subject to a claim for abuse of process, thus chilling the attorney's duty to his clients.
¶28 The record does not contain a genuine dispute of material fact with respect to any of the alleged misrepresentations on which the Reeds base their claim for abuse of process. Although the Reeds cite alleged factual and legal misrepresentations by Defendants, the trial court in the underlying case did not find any of the statements to be false. Even if there were some misstatements, an issue we need not decide, the Reeds do not point to any action by Defendants that "could not logically be explained without reference" to improper motives. See id.'
Although we have upheld abuse of process claims based on conduct sanctioned by the court in the underlying litigation, see Nienstedt, 133 Ariz, at 351, 352, 354-55, 651 P.2d at 879, 880, 882-83; Crackel, 208 Ariz. at 261, 262, ¶¶ 28, 32, 92 P.3d at 891, 892, the Reeds do not argue that the trial court in the underlying action imposed sanctions on Defendants.
¶29 Absent evidence of improper motive on Defendants' part, the Reeds' abuse of process claim is based only on an assertion that Defendants were successful in the underlying litigation because they misrepresented facts and law to the court in that case. But the remedy for such conduct, if it occurred, is to seek relief pursuant to Arizona Rule of Civil Procedure 60(c) or to appeal the judgment in the underlying case. See Linder v. Brown & Herrick, 189 Ariz. 398, 406-07, 943 P.2d 758, 766-67 (App. 1997).
¶30 The Reeds failed to present evidence of alleged misstatements that could not be logically explained without reference to improper motives in Defendants' pleadings, motions, or statements to the court. Nor did they show that the court in the underlying case had sanctioned the Defendants for misconduct, even though the Reeds brought the alleged misrepresentations to that court's attention. Rather, the Reeds' abuse of process claim attempted to resurrect the settled claims from the underlying case, which we will not allow. Thus, in addition to the collateral estoppel grounds, which we have addressed above, summary judgment on the Reeds' entire abuse of process claim was also appropriate on the merits, including any alleged misrepresentations which relate to the remaining two counts in the underlying complaint.
II. Invasion of Privacy
¶31 Arizona recognizes the tort of invasion of privacy, also known as intrusion upon seclusion. Hart v. Seven Resorts, Inc., 190 Ariz. 272, 279, 947 P.2d 846, 853 (App. 1997); see also Restatement (Second) of Torts § 652B (1977). One is liable for invasion of privacy if he or she "intentionally intrudes, physically or otherwise, upon the solitude or seclusion of another or his private affairs or concerns, . . . if the intrusion would be highly offensive to a reasonable person." Restatement (Second) of Torts § 652B.
¶32 In the trial court, the Reeds argued that Defendants invaded their privacy by asking a private investigator, Don Mayeda, to conduct "a bank account search" on the Reeds that would assist Defendants in collecting an award of attorneys' fees against them from the defamation action. In their motion for summary judgment, Defendants argued that the information they sought was available to the public and the search they requested was not objectively unreasonable because judgment creditors may investigate judgment debtors' bank accounts. Alternatively, Defendants argued that they were not vicariously liable for the acts of the independent contractors Mayeda subsequently retained to perform the search.
¶33 The Reeds' position on this issue is a bit unclear. At times, such as in the trial court, they essentially argued that simply doing a bank account search amounts to an invasion of privacy. At other times, they are more specific, addressing an examination of their bank accounts, which we interpret to mean the balances therein and perhaps the actual account numbers. Regardless of the exact nature of their argument as to the extent of their privacy rights, the trial court did not err in granting summary judgment for Defendants on this claim.
¶34 First, the trial court correctly concluded that an employer is not generally liable for the acts of an independent contractor "unless he has been independently negligent, as by improper selection of the contractor or in some other manner." Ft. Lowell-NSS, Ltd. P'ship v. Kelly, 166 Ariz. 96, 101, 800 P.2d 962, 967 (1990). The Reeds' response did not argue that any of the recognized exceptions to this rule applied in this case. Nor did the Reeds dispute that the investigators were independent contractors. As the court expressly pointed out and the Reeds do not contest on appeal, it was uncontested in the trial court that Defendants' only request to the investigator was simply "to locate" the Reeds' accounts.
¶35 Second, the Reeds' claim for invasion of privacy requires proof that they had an objectively reasonable expectation of privacy in the information at issue. Med. Lab. Mgmt. Consultants v. Am. Broad. Cos., 30 F. Supp. 2d 1182, 1188 (D. Ariz. 1998). The Restatement (Second) of Torts § 652B comment b provides that an "examination into [one's] private concerns, as by . . . examining [one's] private bank account" may constitute an invasion of privacy. (Emphasis added.) The Restatement comment does not apply to the mere determination that one has accounts at a particular banking institution. As one case has explained, "[i]t is no more an invasion of privacy to disclose that a person is a bank customer than that he is a customer of a utility company." Commw. v. Duncan, 817 A.2d 455, 467 (Pa. 2003) (holding that party did not have a protected right to privacy in his or her bank account when police contacted the bank without a warrant and the bank provided the name and address of the account owner). Indeed, by the Reeds' argument, a judgment creditor could not issue writs of garnishment to various banks in an effort to locate bank accounts of a judgment debtor.
¶36 Accordingly, we hold the trial court properly granted summary judgment on the Reeds' claim of invasion of privacy.
III. Civil Conspiracy
¶37 To establish a claim of civil conspiracy, "two or more people must agree to accomplish an unlawful purpose or to accomplish a lawful object by unlawful means, causing damages." Wells Fargo Bank v. Ariz. Laborers, Teamsters & Cement Masons Local No. 395 Pension Trust Fund, 201 Ariz. 474, 498, ¶ 99, 38 P.3d 12, 36 (2002) (citation and internal quotation marks omitted). Our supreme court has held that "liability for civil conspiracy requires that two or more individuals agree and thereupon accomplish an underlying tort which the alleged conspirators agreed to commit." Id. (emphasis added) (citation and internal quotation marks omitted).
¶38 As discussed above, the Reeds failed to meet their burden on summary judgment to show that Defendants invaded their privacy by requesting others to obtain the location of the Reeds' bank accounts. Because the Reeds failed to prove Defendants committed the tort of invasion of privacy, the Reeds cannot prove a conspiracy based on that conduct and thus, cannot maintain an action for civil conspiracy. See id.
¶39 Nor can the Reeds successfully contend that Defendants are liable on a theory that the investigators used illegal means to obtain the information about the Reeds' accounts. As the trial court noted, it gave the Reeds an opportunity to present evidence to show the information obtained about the accounts could only be obtained by illegal means. At oral argument on the motion for summary judgment, more than one year after the motion was filed, the Reeds disclosed that their evidence would be their own expert opinions and they would submit those in affidavits to the court. The court struck those affidavits and the Reeds do not appeal from that decision.
¶40 The Reeds point to deposition testimony from Defendants that they claim shows Defendants did not know of any legal means to obtain that account information. However, that argument ignores that there was no evidence proving Defendants asked the investigators to obtain account balances; it was undisputed Defendants only asked for the location of any accounts.
¶41 Accordingly, there is no evidence that the account balances were obtained illegally or that Defendants somehow could be tarred with liability for an illegal act. Therefore, the trial court properly granted summary judgment on the Reeds' claim of civil conspiracy.
IV. Denial of Leave to Amend Fourth Amended Complaint
¶42 After the trial court entered summary judgment on the invasion of privacy and civil conspiracy claims, but before ruling on the Reeds' motions for reconsideration, the Reeds filed a motion to amend their fourth amended complaint. In support of the invasion of privacy claim, the Reeds sought to add the theory that it was highly offensive to a reasonable person for Defendants to obtain bank account information on the basis of a facially invalid award of attorneys' fees. The trial court denied the motion without comment. On appeal, the Reeds argue that the trial court abused its discretion by failing to state a reason for its denial of the Reeds' motion to amend.
¶43 The trial court is not required to state its reasons for denying a motion to amend. See Walls v. Ariz. Dep't of Public Safety, 170 Ariz. 591, 596 n.5, 826 P.2d 1217, 1222 n.5 (App. 1991) (addressing the propriety of the trial court's denial, without explanation, of motion to amend and assuming the court denied the motion because it was futile). Moreover, a court does not abuse its discretion by denying an amendment that "would not affect the outcome of the litigation and which would add nothing to the status" of the lawsuit. Lewis v. Swenson, 126 Ariz. 561, 567, 617 P.2d 69, 75 (App. 1980).
¶44 Here, the amendment was futile. The allegation the Reeds sought to add (that the alleged conduct was offensive because it was in support of an invalid request for attorneys' fees) would not have salvaged the Reeds' claim, which we hold was properly dismissed. Thus, the court did not abuse its discretion in denying the motion. V. Sanctions on Appeal
Another panel of this Court previously struck the portion of the Reeds' reply brief requesting sanctions against Defendants.
¶45 Defendants ask this Court to sanction the Reeds pursuant to A.R.S. § 12-349 (2003) and Arizona Rule of Civil Appellate Procedure ("ARCAP") 25. Defendants contend that "many of [the Reeds'] positions and factual conclusions in this appeal are frivolous and/or inflated," but in their brief on appeal, they do not elaborate further. Although the Reeds filed multiple motions, some of which did not comply with ARCAP rules, and we are deeply troubled by the Reeds' attempts to relitigate issues that were decided by the trial court in the underlying case, we decline to sua sponte identify each motion and argument that is frivolous or inflated. Therefore, we deny Defendants' request for sanctions.
Defendants allege the Reeds have taken unjustified positions and engaged in abusive conduct in the trial court. We consider only the Reeds' conduct on appeal in a request to award sanctions.
VI. Costs
¶46 The Reeds ask this Court to vacate the award of costs to Defendants below. We decline to do so because Defendants were successful and because the Reeds have not provided any legal or factual justification for the request. We award Defendants their costs on appeal upon compliance with ARCAP 21.
CONCLUSION
¶47 We affirm the entry of summary judgment and denial of the motion to amend the complaint, affirm the award of costs below, and award Defendants their costs on appeal upon compliance with ARCAP 21.
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DONN KESSLER, Presiding Judge
CONCURRING:
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DIANE M. JOHNSEN, Judge
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Pursuant to Article 6, Section 3, of the Arizona Constitution, the Arizona Supreme Court designated the Honorable Sheldon H. Weisberg, as appointed to serve as a judge pro tempore in the Arizona Court of Appeals to sit in this matter.
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