State Ex Rel. Thomas C. Horne v. Campos

226 Ariz. 424

250 P.3d 201

603 Ariz. Adv. Rep. 8

STATE of Arizona ex rel. Thomas C. HORNE, Arizona Attorney General, Plaintiff/Appellee,

v.Jaime Lopez CAMPOS; Maria Noe Lopez Escobedo, Defendants/Appellants,andProperty More Particularly Described in Appendix One Hereto, Defendants In Rem.

No. 1 CA–CV 09–0185.

Court of Appeals of Arizona, Division 1, Department D.

March 3, 2011.

Thomas C. Horne, Arizona Attorney General, By Stephen C. Lepley, Assistant Attorney General, and Barton J. Fears, Assistant Attorney General, Phoenix, Attorneys for Plaintiff/Appellee State of Arizona.Wolf & Associates, P.C. By David J. Wolf, Esq., Phoenix, Attorneys for Defendants/Appellants.

OPINION

NORRIS, Judge.

¶ 1 This appeal arises out of a judgment of forfeiture in rem of property claimed by defendant/appellant Jaime Lopez Campos, which the plaintiff/appellee State of Arizona asserted was linked to various racketeering offenses. In entering the in rem judgment, the superior court accepted the State's argument Campos was not entitled to challenge forfeiture because he had failed to file a timely claim to the property. On appeal, Campos argues he was entitled to contest forfeiture because the State waived its objection to his failure to file a timely claim by “actively litigat[ing]” the case and treating him as a claimant for more than three years. We agree.

¶ 2 Campos also appeals from the superior court's alternative ruling granting in rem forfeiture of the property on partial summary judgment, asserting the existence of triable issues of material fact. We agree, but only in part as the State demonstrated the absence of a genuine issue of material fact for the forfeiture of certain, but not all, of the property. We therefore reverse in part and affirm in part the court's entry of partial summary judgment and remand for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 Campos owned, as his sole and separate property, Noe Auto Sales. Campos's wife, Maria Noe Lopez Escobedo, owned Lopez M. Auto Sales as her sole and separate property.

¶ 4 On February 10, 2004, confidential informants acting at the direction of law enforcement paid $11,600 in cash to Noe Auto Sales for two Ford Explorers (“February 2004 sale”). The confidential informants told a Noe salesman the vehicles would be used to “smuggle illegal aliens.” On August 18, 2004, a grand jury indicted Campos for conspiracy, illegally conducting an enterprise, fraudulent schemes and artifices, fraudulent schemes and practices, forgery, and money laundering.

¶ 5 Subsequently, on September 16, 2004, the superior court issued a seizure warrant authorizing the State to seize Campos's and Escobedo's assets that were allegedly the proceeds of racketeering offenses. The State seized the assets of Noe Auto Sales and Lopez M. Auto Sales. The seized assets included 79 vehicles, tools, money, office equipment, and other personal and real property.

¶ 6 On November 15, 2004, the State initiated this action by filing a Notice of Pending Forfeiture and Notice of Seizure for Forfeiture (“Notice”). The Notice identified the property the State had seized for forfeiture and advised all parties who claimed an interest in the property that Arizona Revised Statutes (“A.R.S.”) section 13–4311(D) (2010)¹ required them to submit a claim within 30 days. Escobedo timely submitted a claim in which she identified the specific seized property she claimed to own and avowed she had not committed any illegal acts and had no knowledge of wrongdoing.

¶ 7 Campos did not file a claim. However, before the 30–day deadline for filing a claim expired, he moved to stay discovery as to him until the criminal charges against him were resolved. The State opposed the motion, arguing Campos had not shown his criminal case would be substantially prejudiced by proceeding with the civil forfeiture action. Campos and the State stipulated, and the court ordered, the State would not be required to file its complaint until 30 days after the court ruled on the motion to stay.

¶ 8 On June 16, 2005, Campos pleaded guilty to facilitation of money laundering, a class six undesignated offense in violation of A.R.S. §§ 13–1004 (2010), –2317 (2010). The conviction stemmed from Noe Auto Sales's failure to file a Form 8300² after receiving more than $10,000 in cash in the February 2004 sale. The superior court sentenced Campos to one year of probation and later designated the offense a misdemeanor.

¶ 9 At the State's request, the superior court repeatedly extended the forfeiture action on the inactive calendar until September 2006 when the State filed a verified complaint. Campos and Escobedo denied the material allegations of the complaint in an unverified answer.

¶ 10 More than one year later, after the parties had engaged in substantial discovery, see infra ¶ 24, Campos and Escobedo moved for summary judgment. In response, the State argued Escobedo, as the only person who had filed a claim under A.R.S. § 13–4311(D), was the sole claimant in the action and because she had only claimed some of the property, it was entitled to forfeiture in rem of the rest of the seized property (the “Noe Property”). The State also argued Campos's conviction for money laundering precluded the court from granting Campos's motion for summary judgment as a matter of law.

¶ 11 The State then applied for an order of forfeiture in rem of the Noe Property, asserting neither Campos, nor anyone else, had filed a timely claim to it pursuant to A.R.S. § 13–4311. As an alternative ground for forfeiture, it also moved for partial summary judgment based on Campos's conviction for facilitation of money laundering.

¶ 12 Over Campos's objection, the superior court granted the State's application for an order of forfeiture in rem³ as well as its motion for partial summary judgment; the court also denied Campos and Escobedo's motion for summary judgment. The court certified the order of forfeiture in rem for immediate appeal under Arizona Rule of Civil Procedure (“Rule”) 54(b). Campos then moved to set aside the order of forfeiture under Rule 60(c)(1), arguing his failure to file a claim was the result of excusable neglect. The superior court denied the motion and subsequently entered a final, appealable order granting the State's motion for partial summary judgment. Campos appealed. We have jurisdiction pursuant to A.R.S. § 12–2101(B)–(C) (2003).

DISCUSSION

I. Order of Forfeiture in Rem

¶ 13 Campos asserts the superior court should not have granted the State's application for forfeiture in rem because the State waived his failure to file a claim by “actively litigat[ing]” the action. In making this argument, Campos argues the circumstances in this case are analogous to those in Jones v. Cochise County, 218 Ariz. 372, 187 P.3d 97 (App.2008). There, we held the defendant county waived any alleged deficiency in the plaintiff's statutory notice of claim by participating in litigation for six months without raising the purported defect.⁴ Id. at 374, ¶ 5, 381, ¶ 29, 187 P.3d at 99, 106. Campos contends that by treating him as a claimant, engaging in extensive discovery, and not challenging his “standing” to contest the forfeiture for more than three years, the State waived, by conduct, his failure to file a claim.⁵ We agree; because the facts relating to waiver are uncontested and “waiver by conduct is apparent from the extensive litigation record,” we hold, as a matter of law, the State waived, by its conduct, its right to challenge Campos's failure to file a claim. City of Phx. v. Fields, 219 Ariz. 568, 575, ¶ 32, 201 P.3d 529, 536 (2009); see also Jones, 218 Ariz. at 381, ¶ 29, 187 P.3d at 106 (waiver by conduct as a matter of law on undisputed facts).

¶ 14 To contest a civil forfeiture action, one must allege an interest in the property by filing a claim in the forfeiture action. A.R.S. § 13–4311(D); In re $70,269.91 in U.S. Currency, 172 Ariz. 15, 19, 833 P.2d 32, 36 (App.1991). The claimant must file the claim within 30 days after the State files its notice of forfeiture, and the claim must contain specific information prescribed by statute. A.R.S. § 13–4311(D)–(E).

¶ 15 Campos argues he has “standing” despite his failure to file a claim as the statute requires because the circumstances in this case are analogous to those in Jones. In Jones, the county exchanged disclosure statements and other written discovery and participated in seven depositions without raising the allegedly dispositive defect in the plaintiff's notice under A.R.S. § 12–821.01 (2003), a statute that requires a party with a claim against a public entity or employee to notify the public entity or employee of the claim and state an “amount for which the claim can be settled” within 180 days after the cause of action accrues. 218 Ariz. at 380, ¶ 27, 187 P.3d at 105. We held the county waived the alleged defect. Id. at 381, ¶ 29, 187 P.3d at 106. “[W]aiver may be found when a governmental entity has taken substantial action to litigate the merits of the claim that would not have been necessary had the entity promptly raised the defense.” Id. at 380, ¶ 26, 187 P.3d at 105.

¶ 16 The Arizona Supreme Court cited Jones approvingly in City of Phoenix v. Fields, 219 Ariz. 568, 574–75, ¶¶ 29–30 & 33, 201 P.3d 529, 535–36 (2009) (defendant city's active litigation waived its right to seek dismissal due to plaintiff's failure to abide by A.R.S. § 12–821.01). In Fields, the court pointed to arbitration as a useful analogy regarding waiver: “It is widely recognized that even when a dispute is subject to arbitration, that right may be waived by a party who participates substantially in litigation without promptly seeking an order from the court compelling arbitration.” 219 Ariz. at 575 n.4, ¶ 30, 201 P.3d at 536 n.4.

¶ 17 Both Jones and Fields cited Pritchard v. State, which, while based on A.R.S. § 12–821,⁶ an earlier version of the current A.R.S. § 12–821.01,...