Silence v. Betts

553 P.3d 192

Joseph SILENCE, Plaintiff/Appellee,

v.Shane T. BETTS, Defendant/Appellant.

No. 1 CA-CV 23-0178

Court of Appeals of Arizona, Division 1.

Filed June 27, 2024

As Amended July 26, 2024

Appeal from the Superior Court in Maricopa County, No. CV2019-000419, The Honor- able Richard F. Albrecht, Judge Pro Tempore. AFFIRMED

Jaburg & Wilk, P.C., Phoenix, By Thomas S. Moring, Corrinne R. Viola, Kate A. Myers, Counsel for Plaintiff/Appellee

By Shane Betts, Defendant/Appellant

Presiding Judge Anni Hill Foster delivered the opinion of the Court, in which Judge Brian Y. Furuya and Vice Chief Judge Randall M. Howe joined.

OPINION

FOSTER, Judge:

¶1 Defendant Shane Betts appeals the superior court’s denial of his motion to quash a continuing lien under a writ of garnishment obtained by Joseph Silence and his motion for reconsideration. This case requires this Court to consider how Proposition 209, a voter initiative related to debt collection, affects ongoing wage garnishments.

¶2 Among other things, Proposition 209 amended the statute defining a debtor’s disposable earnings subject to garnishment. Ariz. Legis. Serv. Prop. 209 § 6. But Proposition 209 contains a Saving Clause stating it "applies prospectively only" and "does not affect rights and duties that matured before the effective date of this act." Id. at § 10. Recently, this Court rejected a constitutional challenge to the Saving Clause, but the parties in that case lacked standing for this Court to decide "how [Proposition 209] impacts individual garnishment proceedings." Ariz. Creditors Bar Ass’n, Inc. v. State, — Ariz. —, — ¶¶ 21, 549 P.3d 205, 211 (Ariz. App. 2024) (mem. decision). This Court has also addressed garnishment proceedings arising after Proposition 209’s effective date when those garnishments are based on a judgment obtained before Proposition 209 became effective. Id. at —¶ 32, 549 P.3d at 214 (citing HJ Ventures, LLC v. Candelario, 1 CA-CV 23-0331, 2024 WL 449970, at *2, ¶¶ 13-14 (Ariz. App. Feb. 6, 2024) (mem. decision)). Now this Court must address the effect of Proposition 209 when the judgment and garnishment arose before the effective date.

¶3 Because Silence’s rights in the judgment were vested before Proposition 209’s enactment, this Court affirms the superior court’s denial of Betts’s motion to quash and motion for reconsideration. But because the amount of each future paycheck subject to the garnishment order has not yet been determined, Proposition 209’s statutory changes affect the amount that may be garnished from each pay period after Proposition 209 became effective.

FACTS AND PROCEDURAL HISTORY

¶4 In 2020, Silence obtained a superior court judgment against Betts for unpaid legal services he provided and for attorneys’ fees and costs awarded. On appeal, this Court affirmed the judgment. Betts v. Samuel E. Carr, D.C., P.C.,1 CA-CV 21-0008, 2021 WL 5575195, at *3, ¶ 14 (Ariz. App. Nov. 30, 2021) (mem. decision). During the appeal, the superior court issued a writ of garnishment ordering Betts’s employer to turn over Betts’s future nonexempt earnings to Silence, also issuing a continuing lien. The employer complied.

¶5 In November 2022, Arizona citizens passed Proposition 209. Betts moved to quash or amend the continuing lien and garnishment because of the changes Proposition 209 made to the law and because he works and receives earnings outside Arizona. But the court denied the motion, finding that the judgment arose before Proposition 209 became effective and that Proposition 209 did not affect rights and duties that matured before the effective date. Betts moved for reconsideration, which the court denied, and Betts timely appealed.

¶6 This Court has jurisdiction under A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1).

DISCUSSION

[1–4] ¶7 This Court reviews motions to quash for an abuse of discretion. See Leach v. Hobbs, 250 Ariz. 572, 577, ¶ 23, 483 P.3d 194, 199 (2021) (motion to quash subpoena); Abbey v. City Court, 7 Ariz. App. 330, 331, 439 P.2d 302 (1968) (motion to quash complaints). Similarly, this Court reviews the superior court’s denial of a motion to alter or amend under Arizona Rule of Civil Procedure (Rule) 59 for an abuse of discretion. See Mullin v. Brown., 210 Ariz. 545, 547, ¶ 2, 115 P.3d 139, 141 (App. 2005). A court abuses its discretion when its discretion is "manifestly unreasonable, or exercised on untenable grounds, or for untenable reasons." Tilley v. Delci, 220 Ariz. 233, 238, ¶ 16, 204 P.3d 1082, 1087 (App. 2009). This Court also reviews motions for reconsideration for an abuse of discretion. Worldwide Jet Charter, Inc. v. Christian, 255 Ariz. 67, 70, ¶ 10, 527 P.3d 352, 355 (App. 2023). But "issues of law, including statutory interpretation," are reviewed de novo. 4QTKIDZ, LLC v. HNT Holdings, LLC, 253 Ariz. 382, 385, ¶ 5, 513 P.3d 1106,1109 (2022).

I. The Superior Court Has Jurisdiction.

¶8 Betts argues that Arizona has no jurisdiction to garnish wages that are neither earned nor paid in Arizona. He contends the court relied on what Arizona’s Supreme Court declared a "legal fiction" in Harris v. Balk, 198 U.S. 215, 25 S.Ct. 625, 49 L.Ed. 1023 (1905), to improperly exercise quasi in rem jurisdiction over his out of state wages. "[T]he Harris fiction [is] that a debt follows the debtor and is located wherever the debtor can be found." State v. W. Union Fin. Servs., Inc., 220 Ariz. 567, 574, ¶ 22, 208 P.3d 218, 225 (2009); accord Harris, 198 U.S. at 222, 25 S.Ct. 625 ("The obligation of the debtor to pay his debt clings to and accompanies him wherever he goes."). Betts’s reliance on Harris is misinformed because the superior court relied on personal jurisdiction, not quasi in rem jurisdiction. Betts also relies on several other cases for his position that Arizona needs in rem jurisdiction over his earnings before it can garnish them. None support his position.

¶9 Betts cites First Nat’l Bank & Trust Co. v. Pomona Mach. Co., 107 Ariz. 286, 486 P.2d 184 (1971) (stating that though the court lacked personal jurisdiction over the defendants, it held in rem jurisdiction existed because the garnishee was served with the writ in Arizona, the garnishee admitted the debt was owed and the property was located in the state), W. Union Fin. Servs., Inc., 220 Ariz. at 567-68, ¶ 1, 208 P.3d at 219 (which was distinguished from a post-judgment garnishment case because it involved seizure of wired funds between parties outside the state), and Polacke v. Superior Court, 170 Ariz. 217, 823 P.2d 84 (App. 1991) (where the court was asked to enforce a judgment from another state where there were no Arizona contacts) to support his appeal. But each of these cases are inapposite because they do not involve similar facts — a garnishment that was issued in Arizona against an Arizona defendant.

[5] ¶10 An analogous case to Betts’s is Ellsworth Land and Livestock Inc. v. Bush, 224 Ariz. 542, 545, 233 P.3d 655, 658 (App. 2010). There, the superior court awarded a judgment, and the prevailing party sought a continuing lien against a Canadian company to garnish annuity payments to the debtor. Id. at 543, ¶¶ 1–2, 233 P.3d at 656. By relying on the Restatement (Second) of Conflict of Laws (1971) and finding that the annuity payments were a debt, the court concluded garnishment was proper if the trial court had personal jurisdiction over the Canadian company. Id. at 544–545, ¶¶ 10–11, 233 P.3d at 657-58. Similarly, here, the superior court correctly exercised personal jurisdiction over Betts’s employer; a summons was properly served on its authorized agent within the state. See Ariz. R. Civ. P. 4.1(a), (i) (allowing service on a corporation by delivering a summons on the corporation’s authorized agent). Thus, the court had jurisdiction to garnish Betts’s earnings from his employer.

II. Arizona’s Garnishment is Enforceable.

[6, 7] ¶11 Between the time of the initiation of the garnishment proceedings and the passage of Proposition 209, Betts worked and received his earnings in Colorado and Texas. Betts argues that those earnings were exempt because Colorado and Texas law prohibited garnishing wages. He cites Dalton v. Dalton, 551 S.W.3d 126 (Tex. 2018) as an example of a foreign state not being able to garnish wages earned and paid in Texas. But Dalton involved a party attempting to have Texas enforce a non-Texas order. Dalton, 551 S.W.3d at 129. While giving full faith and credit to the foreign judgment, the Texas court acknowledged that it could follow its procedures for enforcing a judgment without adopting the practices of the other state. Id. at 135–36. Here, Arizona is enforcing an Arizona judgment, and the relevant inquiry is "whether the garnishee is subject to the specific or general jurisdiction of the forum state." Ellsworth Land and Livestock Inc., 224 Ariz. at 545, ¶ 12, 233 P.3d at 658. Arizona has general jurisdiction over Betts’s employer.

III. Betts’s Request for Relief for Mistake or Fraud Was Untimely.

[8] ¶12 Betts argues that the superior court abused its discretion by denying his motion to quash based on mistake, fraud, or change of law. Although a party may seek relief from a judgment because of a mistake or fraud under Rule 60, Betts made no such Rule 60 motion here. Moreover, to be proper, such a motion must be made "within 6 months after the entry of the judgment or order." Ariz. R. Civ. P. 60(b)(1), (c)(1). In addition, with exceptions not applicable here, a Rule 59 motion to alter or amend (which Betts filed here) "must be filed no later than 15 days after the entry of judgment." Ariz. R. Civ. P. 59(d). The garnishment order that Betts seeks relief from was issued in April 2021. Any motion to quash would have been due in October 2021. But he did not file his motions until November 2022 and February 2023, over a year late. Although the superior court issued a judgment in June 2022, the court merely awarded attorneys’ fees and costs incurred upon Betts’s unsuccessful appeal; that judgment did not extend the appeal...