Opinion
No. 1 CA-CV 12-0854
01-23-2014
BARRY A. REISS, Plaintiff/Appellant, v. MAX WEISBERG and MARCIA WEISBERG, husband and wife; SWAN FINANCIAL SERVICES, INC., an Arizona corporation; THE TERM STORE, LLC, an Arizona limited liability company; WEALTH ASSURANCE, LLC, an Arizona limited liability company; UNION CENTRAL LIFE INSURANCE CO., an Ohio corporation, Defendants/Appellees.
The Law Offices of Libby Banks, Phoenix By Libby Hougland Banks Counsel for Plaintiff/Appellant Baugh Dalton Carlson & Ryan, LLC, Phoenix By Jamie B. Palfai Counsel for Defendants/Appellees Weisberg, Swann Financial Services, Inc., The Term Store, LLC and Wealth Assurance, LLC Lewis Roca Rothberger, LLP, Phoenix By Edwin A. Barkel, Jason M. Porter and Jared L. Sutton Counsel for Defendant/Appellee Union Central Life Insurance Company
NOTICE: NOT FOR PUBLICATION.
UNDER ARIZ. R. SUP. CT. 111(c), THIS DECISION DOES NOT CREATE LEGAL PRECEDENT
AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.
Appeal from the Superior Court in Maricopa County
No. CV2011-012539
The Honorable Maria del Mar Verdin, Judge
AFFIRMED IN PART, REVERSED IN PART/REMANDED
COUNSEL
The Law Offices of Libby Banks, Phoenix
By Libby Hougland Banks
Counsel for Plaintiff/Appellant Baugh Dalton Carlson & Ryan, LLC, Phoenix
By Jamie B. Palfai
Counsel for Defendants/Appellees Weisberg, Swann Financial Services, Inc., The
Term Store, LLC and Wealth Assurance, LLC
Lewis Roca Rothberger, LLP, Phoenix
By Edwin A. Barkel, Jason M. Porter and Jared L. Sutton
Counsel for Defendant/Appellee Union Central Life Insurance Company
MEMORANDUM DECISION
Judge Patricia A. Orozco delivered the decision of the Court, in which Presiding Judge Randall M. Howe and Judge Samuel A. Thumma joined. OROZCO, Judge:
¶1 Barry A. Reiss (Reiss) appeals from the trial court's order denying Reiss's request to continue his suit on the Inactive Calendar, dismissing the case without prejudice, denying Reiss's Motion to Set and Certificate of Readiness, and denying Reiss's Motion for New Trial and Motion for Savings Provision in the order of dismissal. For the reasons set forth below, we affirm in part, reverse in part, and remand for further proceedings consistent with this decision.
FACTS & PROCEDURAL HISTORY
¶2 Reiss filed this suit on June 2, 2011, seeking damages for breach of contract and various torts against Appellees Max and Marcia Weisberg, Swan Financial Services, Inc., The Term Store, LLC, and Wealth Assurance, LLC (collectively, the Weisberg Defendants) and Union Central Life Insurance Company (Union Central).
¶3 The complaint alleges that when Appellee Max Weisberg sold Reiss a $2 million universal life insurance policy issued by Union Central in April 2006 (the Policy), Weisberg promised Reiss he could resell the Policy to a third-party investor and that Reiss would receive a profit from the sale. Although Weisberg told Reiss that Reiss would have to pay the insurance premiums on the Policy for two years before it could be sold, Reiss alleged that Weisberg never advised him that this investment had any risk. Reiss alleged that he would not have purchased the Policy if he had known of the possible risks. In March 2010, after paying $251,075 in premiums, Reiss stopped paying the premiums and allowed the Policy to lapse after the secondary market "collapsed," and Weisberg was unable to resell the Policy. Reiss alleged that Appellees concealed the secondary market risk and that this concealment was an intentional misrepresentation.
¶4 On July 9, 2011, the Weisberg Defendants filed a Motion to Dismiss Reiss's complaint pursuant to Arizona Rule of Civil Procedure 12(b)(6), arguing that it violated the statute of limitations. They argued that even if legal claims for purchase of the April 2006 Policy were tolled, the claims were only tolled until April 2008, when Reiss had constructive, "if not actual," knowledge that Weisberg's purported representations regarding the third party sale of the Policy were incorrect. In response, Reiss moved to amend his complaint.
The record before us does not indicate whether the trial court ever ruled on Riess's Motion to Amend.
¶5 The trial court denied the Weisberg Defendants' Motion to Dismiss, and thereafter the parties agreed to mediate the dispute. Union Central did not join the Weisberg Defendants' Motion to Dismiss. The record does not indicate that any of the Appellees have presently answered the complaint.
¶6 Approximately five months after Reiss filed his Complaint, on November 9, 2011, the trial court issued a 150 Day Order pursuant to Arizona Rule of Civil Procedure 38.1, which instructed the parties to file a Motion to Set and Certificate of Readiness or an appeal from arbitration. This order further warned the parties that if Rule 38.1 "is not complied with, the case will be placed on Inactive Calendar on [February 27, 2012,] and it will be dismissed pursuant to Rule 38.1, without further notice, on or after 04/27/2012." Given that warning, Reiss continued to pursue mediation with Defendants, but he made no apparent discovery efforts.
¶7 Reiss faxed the trial court a letter on April 26, 2012, to avoid the April 27, 2012, scheduled dismissal of the case. In this letter, Reiss informed the trial court that the parties had stipulated to mediation and requested the matter be continued on the Inactive Calendar. The trial court entered a minute entry acknowledging receipt of the letter but advising Reiss to immediately file a proper motion to continue on the inactive calendar.
¶8 Reiss waited until May 11, 2012, to file a formal motion to retroactively vacate the deadline of April 27, 2012. Reiss requested that the trial court continue the case on the Inactive Calendar and vacate its deadline to dismiss the matter until after the parties had a "reasonable opportunity to complete discovery." The Weisberg Defendants opposed Reiss's motion.
¶9 Although no formal discovery had been completed, the trial court had not ruled on Reiss's motion to retroactively vacate the April 27deadline, and Appellees had not filed an Answer to the Complaint, on June 11, 2012; Reiss filed a Motion to Set and Certificate of Readiness. This motion asserted, inter alia, that (1) the case had been joined and (2) the parties would have a reasonable opportunity to complete discovery within sixty days of filing the motion.
¶10 On July 2, 2012, the trial court denied Reiss's request that the case remain on the Inactive Calendar and dismissed the case without prejudice, two months after the original date that the case was to be dismissed and more than a year after Reiss filed his Complaint. On July 25, 2012, the trial court denied Reiss's Motion to Set and Certificate of Readiness.
¶11 Subsequently, Reiss filed a Motion for New Trial and a Motion for Savings Provision, which the trial court denied in August 2012, over fourteen months after the initial complaint was filed. Reiss timely filed his notice of appeal from the trial court's dismissal of his action.
DISCUSSION
I. Jurisdiction
¶12 Generally, a trial court's order dismissing an action without prejudice is not a final judgment and is therefore not an appealable order. See McMurry v. Dream Catcher USA, Inc., 220 Ariz. 71, 74, ¶ 4, 202 P.3d 536, 539 (App. 2009); see also Arizona Revised Statutes (A.R.S.) § 12-2101.A.1 (Supp. 2013) (general rule limiting appellate jurisdiction to appeals from a final judgment). Although Appellees argue that this court lacks jurisdiction to hear this matter and should dismiss this action because the order is a dismissal without prejudice, see McMurray, 220 Ariz. 71, 202 P.3d 536; "an order dismissing a case for want of prosecution under Rule [38.1, formerly Uniform Rule V,]" is an appealable order. Campbell v. Deddens, 93 Ariz. 247, 250, 379 P.2d 963, 965 (1963).
The two cases Appellees cite to the contrary are readily distinguishable because neither case directly addressed an appeal from a dismissal without prejudice for lack of prosecution. See, e.g., Garza v. Swift Transp. Co., Inc., 222 Ariz. 281, 282, ¶ 1, 213 P.3d 1008, 1009 (2009) (holding that this court lacked jurisdiction from an order denying class certification); McMurry v. Dream Catcher USA, Inc., 220 Ariz. 71, 74, ¶ 4, 202 P.3d 536, 538-39 (App. 2009) (holding that this court lacked jurisdiction to hear an appeal from a dismissal without prejudice arising from a motion to dismiss on the grounds that the statute of limitation had not run).
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¶13 Thus, we have jurisdiction pursuant to A.R.S. § 12-2101.A.3 (Supp. 2013). II. Trial Court's Dismissal Without Prejudice
A. Motion to Vacate and Continue on the Inactive Calendar
¶14 The trial court may place an action on the Inactive Calendar when "a Motion to Set and Certificate of Readiness has not been served within nine months." Ariz. R. Civ. P. 38.1(d). Cases "remaining on the Inactive Calendar for two months shall be dismissed without prejudice for lack of prosecution." Id. This timing is important because drafters of Rule 38.1 intended "to standardize the inherent power of trial courts to dismiss cases for lack of prosecution." See BCAZ Corp. v. Helgoe, 194 Ariz. 11, 17, ¶ 29, 972 P.2d 260, 266 (App. 1998). As applicable here, "[m]otions submitted for ruling after the dismissal date but prior to the entry of an order of dismissal will be subject to the excusable neglect standard of Rule 6(b) . . . and the good cause standard of Rule 38.1(d)(2)." See Rule 38.1 Inactive Calendar Guidelines, Guideline III.B, available at http://www .arizonarulesofcivilprocedure.net/section6.html (Rule 38.1 Inactive Calendar Guidelines).
¶15 Rule 38.1's deadlines are not absolute. Rule 38.1(d) provides several exceptions that permit the trial court to use its discretion to continue a case on the Inactive Calendar if, before the expiration of the two month deadline, either (1) the plaintiff serves a proper Motion to Set and Certificate of Readiness, (2) the plaintiff files a motion requesting a continuance on the Inactive calendar for a specific period of time and provides "good cause shown," or (3) in a case assigned to arbitration, the parties have filed a notice of decision with the clerk of court. Ariz. R. Civ. P. 38.1(d)(1)-(d)(3). This case was not assigned to arbitration, therefore, the only proper exception that Reiss had to a Rule 38.1 dismissal was to provide a motion showing good cause why the case should continue on the Inactive Calendar.
¶16 Reiss filed the Complaint in the present case on June 2, 2011. In November 2011, five months after filing the case, Appellees had not answered the Complaint, Reiss had not commenced formal discovery proceedings, and had not filed a Motion to Set and Certificate of Readiness. Accordingly, the trial court issued a 150 Day Order warning Reiss that if he failed to comply with Rule 38.1 in the prosecution of the case, the trial court would place the case on the Inactive Calendar if Reiss had not filed a Motion to Set and Certificate of Readiness on or before February 27, 2012, and that noncompliance with Rule 38.1 would result in dismissal of the case on or after April 27, 2012. In the record before us, nothing indicates Reiss initiated discovery or made any other efforts to advance the pending case in the time between receipt of the 150 Day Order and the scheduled dismissal of the case. In fact, the only evidence in the record that the parties made an effort to resolve the case is that on February 20, 2012, the parties provided the trial court with a joint alternative dispute resolution statement and made plans to participate in mediation.
¶17 On April 26, 2012, the day before the scheduled Rule 38.1 dismissal, Reiss faxed the trial court a letter notifying the court that the parties had agreed to privately mediate the litigation and requested the trial court to vacate the pending dismissal. Because Reiss did not file a formal motion requesting the trial court to continue the case on the Inactive Calendar, the trial court acknowledged receipt of Reiss's letter and advised Reiss to file a proper motion, which Reiss did not file until May 11, 2012. Because Reiss filed his Motion to Vacate and Continue on the Inactive Calendar after the April 27, 2012, dismissal date but before the order of dismissal on July 2, 2012, the motion was subject to the trial court's evaluation under both the excusable neglect standard pursuant to Rule 6(b) and the good cause standard pursuant to Rule 38.1. See Rule 38.1 Inactive Calendar Guidelines, Guideline III.B.
B. Excusable Neglect pursuant to Rule 6(b)
¶18 The test for excusable neglect is generally whether a lawyer's failure to act may "befall a reasonably prudent lawyer under similar circumstances." See Ellman Land Corp. v. Maricopa Cnty., 180 Ariz. 331, 339, 884 P.2d 217, 225 (App. 1994). Generally, clerical or secretarial errors in office procedures can constitute excusable neglect. City of Phoenix v. Geyler, 144 Ariz. 323, 332, 697 P.2d 1073, 1082 (1985). However, diligence is often the deciding factor whether a mistake is excusable as neglect. Id.
¶19 On the facts of this case, a trial court could find that the late filing of the Motion to Continue on the Inactive Calendar was not one that a reasonably prudent, diligent lawyer would make under similar circumstances. For example, Reiss has demonstrated that he was aware of the April 27, 2012, deadline because he submitted a letter to the court requesting an extension on the Inactive Calendar the day before this deadline, yet Reiss did not file the Motion to Set before the dismissal date because the parties were, in fact, not ready to set the trial. Moreover, Reiss fails to address any excusable neglect that occurred with the belated filing of his Motion to Vacate and Continue on the Inactive Calendar. On appeal, Reiss argues that the late filing was excusable neglect because he faxed the April 26, 2012, letter to the trial court, and he assumed that the parties would stipulate to continue the case on the inactive calendar because the parties had been working together to arrange mediation.
¶20 Under these circumstances, however, we cannot find that the trial court abused its discretion in finding that Reiss did not display the diligence that a reasonably prudent attorney, aware of a specific deadline required to continue prosecuting his case, would demonstrate when he failed to file a timely motion to extend a known, long-standing deadline. Moreover, Reiss knew prior to April 26 that he needed an extension because the parties' scheduled mediation was planned to occur after the trial court's dismissal date.
C. Good Cause Pursuant to Rule 38.1(d)(2)
¶21 "Whether facts establish . . . good cause [to continue a case] is a matter left in the sound discretion of the trial court." BCAZ Corp., 194 Ariz. at 14, ¶ 15, 97 P.2d at 263. Although the term "good cause" as used in Rule 38.1(d)(2) is less cause than that required to continue a trial, the proponent must show significantly more than the cause required to extend the time for filing a response to a motion. See Rule 38.1 Inactive Calendar Guidelines, Guideline IV. "The party seeking the continuance is required to show some substantial basis for the continuance and the court's focus is primarily upon whether there are unusual discovery or procedural problems which have prevented the case from proceeding at the presumptive pace." Id. (emphasis added).
¶22 Courts look to the following non-exclusive factors to determine if good cause exists to continue the case on the Inactive Calendar: (1) "whether the underlying circumstances were unforeseeable"; (2) "whether the underlying circumstances were not due to lack of preparation"; (3) "whether the grounds are relevant"; (4) "whether the matter was brought to the court's attention in a timely manner"; and (5) "whether the adversary is prejudiced." Id. When the parties' sole reason for failure to prosecute a case "is that the parties were engaging in settlement negotiations, good cause has not been shown." Jepson v. New, 164 Ariz. 265, 270, 792 P.2d 728, 733 (1990). Finally, the claim's proponent bears the responsibility for "expeditiously prosecuting his case." Thompson v. Mecey, 101 Ariz. 125, 125, 416 P.2d 558, 558 (1966).
¶23 In his Motion to Vacate and Continue on the Inactive Calendar, Reiss explained that the parties had stipulated to postpone litigation until after mediation. Reiss requested that the trial court place the case on the Inactive Calendar for an "indefinite time" and at least until after they had completed the mediation. Reiss also noted that there had been "no discovery of any kind," that Defendants had not "filed their Answers" while mediation was pending, and that the "case is not yet at issue." The Weisberg Defendants opposed Reiss's motion and noted that they did not stipulate to an indefinite continuance. While the trial court may consider settlement negotiations when deciding whether good cause exists to continue a case on the Inactive Calendar, the trial court has the discretion to decide how much weight to give this factor. See Jepson, 164 Ariz. at 271, ¶ 5, 792 P.2d at 733. The Jepson court noted that an exchange of settlement letters "may count for very little." Id. Here, Reiss did not demonstrate an exchange of settlement letters. Rather, he asserted that the case should be continued because the parties had a mediation scheduled.
¶24 Moreover, Reiss failed to address whether the delay was unforeseeable, whether the delay did not result from lack of preparation, whether the adversary would be prejudiced by the continuance. Again, Reiss brought this issue to the court's attention the day before the scheduled dismissal and filed the formal motion after the date for dismissal. Based on the record before us, Reiss not only failed to show good cause in offering that arranging mediation constituted settlement negotiations, but he failed to establish a substantial basis for the continuance or to complete any task that would advance the expeditious prosecution of his case, which as the plaintiff, was his sole responsibility. See Thompson, 101 Ariz. at 125, 416 P.2d at 558.
¶25 Because Reiss did not meet his burden of showing excusable neglect or good cause, we find that the trial court did not abuse its discretion in denying Reiss's Motion to Vacate and Continue on the Inactive Calendar. Accordingly, we affirm the trial court's order denying the Motion to Vacate and Continue on the Inactive Calendar. III. Denial of the Motion to Set & Certificate of Readiness
¶26 A plaintiff's counsel shall present the court with a Motion to Set and Certificate of Readiness in every civil case. Ariz. R. Civ. P. 38.1(a). A Motion to Set and Certificate of Readiness is premature when it does not comply with the requirements of Rule 38.1. See Ace Auto. Prods., Inc. v. Van Duyne, 156 Ariz. 140, 145, 750 P.2d 898, 903 (App. 1987) (noting that a premature motion to set is grounds for a trial court to deny plaintiff's motion to set). If a Motion to Set is not filed within nine months after the initial filing of the case, the case will be placed on the Inactive Calendar by the clerk of court. Ariz. R. Civ. P. 38.1(d). If the case remains on the inactive calendar for two months, the case shall be dismissed without prejudice. Id.
¶27 Reiss filed a Motion to Set and Certificate of Readiness on June 11, 2012, forty-five days after the trial court's April 27 deadline to dismiss the case. Yet, even at that late date, the case was not ready to proceed to trial. In fact, the pleadings had not closed (no answers had been filed); no complete list of witnesses and exhibits accompanied the Motion to Set and Certificate of Readiness and, as a result, the matter could not properly have been set for trial. See Jepson, 164 Ariz. at 275, 792 P.2d at 738.
¶28 Accordingly, the trial court did not abuse its discretion by denying Reiss's Motion to Set and Certificate of Readiness because Reiss filed the motion too late to save the case from dismissal under Rule 38.1 and the motion was premature given the status of the case's progress at the time of the motion. Thus, we affirm the trial court's order denying this motion. IV. Trial Court's Refusal to Issue an Order that Reiss Could Re-File his Case Within Six Months Pursuant to A.R.S. § 12-504
¶29 Finally, we consider whether the trial court abused its discretion by refusing to issue an order that Reiss could re-file his case within six months of the dismissal date pursuant to Arizona's "savings statute," A.R.S. § 12-504 (2003). See Maher v. Urman, 211 Ariz. 543, 551, ¶ 25, 124 P.3d 770, 778 (App. 2005). "We will not disturb the exercise of the trial court's discretion if it is supported by any reasonable evidence." Id. (internal quotation marks omitted).
¶30 In essence, the savings statute allows a trial court to grant relief for certain dismissed actions that are now barred from re-filing by the statute of limitations after the dismissal, to be saved by permitting the plaintiff to re-file the action within a limited six month window after a dismissal. See A.R.S. § 12-504.A; see also Roller Village, Inc. v. Super. Ct. of Ariz. In and For Maricopa Cnty., 154 Ariz. 195, 196, 741 P.2d 328, 329 (App. 1987). To seek relief under this statute, the plaintiff must show that he "vigorously prosecuted his case." See Maher, 211 Ariz. at 551, ¶ 27, 124 P.3d at 778.
¶31 When deciding whether to grant relief under this statute, the trial court should consider several factual issues, including: "[1] whether the plaintiff acted reasonably and in good faith, [2] whether he prosecuted his case diligently and vigorously, [3] whether a procedural impediment exists which affects his ability to file a second action, and [4] whether either party will be substantially prejudiced." Jepson, 164 Ariz. at 272, 792 P.2d at 735 (Jepson factors). The plaintiff bears the burden of presenting the particular circumstances that justify § 12-504 relief. Id.
¶32 "[T]he savings statute was not intended to provide relief for those who dismiss an action because of their own folly . . . or for those who have failed to diligently pursue their cases and want to file a new action so they may start the [Rule 38.1] clock running again." Id. at 274, 792 P.2d at 737 (internal quotation marks omitted). "Where an action is terminated for lack of prosecution, relief under the savings statute should only be granted where the plaintiff demonstrates that despite diligent pursuit of the case, it was dismissed." Id. The trial court has broad discretion in determining whether to grant relief under the savings statute. Id.
¶33 In this case, it is unclear whether § 12-504 relief would have been proper. The savings statute requires the expiration of the statute of limitations on the claim at the time of dismissal, thus precluding the plaintiff from re-filing the action after the dismissal. Here, it is uncertain whether Reiss's actions were barred by the relevant statute of limitations. Although Reiss purchased the Policy in 2006 and the relevant statute of limitations on a contract dispute such as this is six years, A.R.S. § 12-548, the parties disputed whether the cause of action arose in 2006 at the time the Policy was purchased, in 2008 at the time Reiss discovered he could not resell the Policy to a third party after two years, or in 2010 when Reiss stopped making premium payments and allowed the policy to lapse. Thus, the trial court must determine whether the statute of limitations has expired. If the statute of limitations has not expired, Reiss does not need § 12-504 relief because he can simply re-file his claim.
¶34 Therefore, we remand the case to the trial court to determine whether the statute of limitations has expired on Reiss's claims and to consider the Jepson factors in order to make a proper determination as to whether denying § 12-504 relief would have been proper. V. Attorney Fees
¶35 Both Reiss and the Weisberg Appellees have requested attorney fees for this appeal pursuant to A.R.S. § 12-341.01. In our discretion, we decline to award attorney fees to either party.
CONCLUSION
¶36 For the foregoing reasons, we affirm the trial court's decision in part, reverse in part, and remand for further proceedings consistent with this decision.