Sycamore Hills Estates Homeowners Ass'n, Inc. v. Zablotny

481 P.3d 705

SYCAMORE HILLS ESTATES HOMEOWNERS ASSOCIATION, INC., an Arizona non-profit corporation, Plaintiff/Appellant,

v.Kenneth W. ZABLOTNY and Barbara K. Zablotny, husband and wife, individually and as trustees of the Kenneth W. Zablotny and Barbara K. Zablotny Joint Living Trust dated August 29, 1995, Defendants/Appellees.

No. 2 CA-CV 2019-0200

Court of Appeals of Arizona, Division 2.

Filed January 20, 2021

Munger Chadwick & Denker P.L.C., Tucson, By Mark E. Chadwick, Counsel for Plaintiff/Appellant

Davis Miles McGuire Gardner PLLC, Tempe, By Gregory L. Miles and Marshall R. Hunt, Counsel for Defendants/Appellees

Judge Brearcliffe authored the opinion of the Court, in which Presiding Judge Eppich and Chief Judge Vásquez concurred.

BREARCLIFFE, Judge:

¶1 The Sycamore Hills Estates Homeowners Association appeals from the trial court's order denying its motion for relief from judgment, the court's award of supplemental attorney fees to Kenneth and Barbara Zablotny, and the denial of its motion for relief from that fee award. We affirm in part, vacate in part and remand.

Factual and Procedural Background

¶2 Sycamore Hills Estates is a residential community governed by an Amended and Restated Declaration of Covenants, Conditions, Restrictions, and Easements ("CC&Rs"), which establishes the Sycamore Hills Estates Homeowners Association ("the Association"). The Zablotnys are homeowners in Sycamore Hills Estates and bound by the CC&Rs. In 2015, the Zablotnys filed a complaint alleging that the Association had breached the CC&Rs. The parties settled the litigation, entered into a written settlement agreement, and stipulated to a form of final judgment, incorporating the terms of the settlement agreement by reference. In March 2017, the trial court approved the settlement agreement and signed and entered the stipulated final form of judgment.

¶3 In May 2019, following other procedural steps we need not recount here, the Association filed a Rule 60(b)(4), Ariz. R. Civ. P., motion for relief from the March 2017 judgment. In the motion, the Association argued that the parties' settlement agreement was void in part because the Association did not have the authority to agree to certain provisions that conflicted with the CC&Rs. It also asserted that the March 2017 final judgment was void because the trial court did not have "jurisdiction to render the particular judgment or order entered."

¶4 On August 9, 2019, in an unsigned order, the trial court denied the motion, and on September 5, the Association filed a notice of appeal of that order. Before the Association filed that notice of appeal, on August 28, the Zablotnys filed an application for a supplemental award of attorney fees incurred in defending against the Rule 60(b)(4) motion. The court granted the Zablotnys' application, awarding them fees on September 13, before the Association filed any opposition. On September 17, the Association filed its response to the Zablotnys' supplemental fee application. It thereafter filed a Rule 59, Ariz. R. Civ. P., motion for relief from the fee award.¹

The Association then timely appealed from the court's supplemental attorney fees award.

¶5 Because the August 2019 ruling denying the Rule 60(b)(4) motion was unsigned, we suspended that appeal to allow counsel to obtain a signed order and revested the trial court with jurisdiction. A final appealable order was thereafter signed, and the appeal reinstated. We have jurisdiction pursuant to A.R.S. § 12-2101(A)(2).

Analysis

Requests for Relief from the Final Judgment and Settlement Agreement

¶6 The Association argues the trial court erred in denying its Rule 60(b)(4) motion for relief from the final judgment because, as it argued below, the court lacked the "jurisdiction to render the particular judgment or order entered." It further argues that, once we have determined that the final judgment is void, we must relieve it from the settlement agreement because it did not have the authority to enter into certain of its provisions. "We review the denial of a Rule 60(b)(4) motion de novo ." Laveen Meadows Homeowners Ass'n v. Mejia , 249 Ariz. 81, ¶ 10, 466 P.3d 858 (App. 2020). Whether a corporation has engaged in unauthorized—or, ultra vires —acts, such as to render those acts void, is a question of law, which we also review de novo . Tovrea Land & Cattle Co. v. Linsenmeyer , 100 Ariz. 107, 113-14, 412 P.2d 47, 51–52 (1966).

Relief from Final Judgment

¶7 Rule 60(b)(4) allows a party to seek relief from a "void" final judgment or order when "the court entering it lacked jurisdiction: (1) over the subject matter, (2) over the person involved, or (3) to render the particular judgment or order entered." Martin v. Martin , 182 Ariz. 11, 15, 893 P.2d 11, 15 (App. 1994). The Association, citing Andrews v. Andrews , 126 Ariz. 55, 58, 612 P.2d 511, 514 (App. 1980), asserts that the scope of a trial court's jurisdiction is limited by the pleadings, and, if it exceeds those limits, its judgment is void. If void, a court must vacate the judgment. Martin , 182 Ariz. at 14, 893 P.2d at 14.

¶8 In the judgment here, the trial court decreed that "[t]he terms of the Settlement Agreement are approved and the Agreement is attached hereto and incorporated herein." Notwithstanding that the Association stipulated to the form of judgment entered, it claims that this approval constituted a "declaratory judgment" of the settlement agreement's validity, which the court "did not have jurisdiction ‘to render.’ " For purposes of this decision, we will assume without deciding that the challenged "approval" language in the final judgment constitutes a declaratory judgment.

¶9 As we stated in Andrews , "[t]he power of a court to render a valid judgment is limited by the nature of the suit, and the issues raised by the pleadings. If the court's judgment exceeds those limits it is void." 126 Ariz. at 58, 612 P.2d at 514. In Andrews , a post-decree child support action, the trial court granted the husband an affirmative judgment against the wife for post-decree mortgage payments. Id. at 56, 612 P.2d at 512. The husband had raised the claim for mortgage payments as an affirmative defense to the wife's demand for increased child support. Id. at 58, 612 P.2d at 514. The wife objected to the judgment. Id. at 57, 612 P.2d at 513. On review, this court vacated that judgment concluding the statutorily limited nature of the relief available to parties in such a case commensurately limited the power of the trial court to grant certain relief. Id. at 58, 612 P.2d at 514. Accordingly, its damages award was void because the court, in a dissolution action, had no authority to enter a civil judgment for claims outside of the scope of the statutory dissolution action. Id . Additionally, the award was invalid because the husband had not sought a civil judgment. Id. ; see Byrer v. A. B. Robbs Tr. Co. , 102 Ariz. 559, 561, 434 P.2d 645, 647 (1967).

¶10 While not challenging the trial court's general authority to enter declaratory judgments, the Association asserts the judgment is void because, as it correctly notes, neither party sought declaratory relief in their pleadings. Certainly, the Zablotnys' complaint did not expressly seek a declaratory judgment as to the validity of the settlement agreement (given, of course, that it did not yet exist). Nonetheless, the stipulation by the parties seeking the court's entry of a judgment approving the settlement agreement—to the extent such was indeed declaratory relief—provided the court the power to grant it.

¶11 Industrial Park Corp. v. U.S.I.F. Palo Verde Corp. , 19 Ariz. App. 342, 507 P.2d 681 (1973) is instructive. Industrial Park Corp. was a forcible entry and detainer action; in such an action, the right to possession is the primary contested issue. Id. at 345, 507 P.2d 681. During the course of the litigation, the landlord and tenant reached a settlement agreement in which the lease was terminated and the landlord received a money judgment against the tenant for breach of the lease. Id . at 343, 507 P.2d 681. That judgment included "further damages to be determined and added by Addendum" with payment of the judgment to be made in installments. Id . The trial court subsequently added additional sums to the money judgment by an addendum to which the parties had also stipulated. Id. The tenant later fell into arrears in the installment payments and the landlord gave notice that it was accelerating the judgment debt and would begin execution. Id. at 343-44, 507 P.2d 681. Following notice of the acceleration, the tenant filed a motion to vacate the acceleration of the debt and recording of the judgment for "accident and mistake." Id. at 344, 507 P.2d 681. The trial court denied the motion. Id.

¶12 On appeal, the tenant asserted that, because the action was a forcible entry and detainer action, the trial court had no jurisdiction to enter the money judgment. Id. It argued that the nature of such an action was for possession only and "the award of damages was therefore beyond the subject matter jurisdiction of the trial court." Id. It also argued the judgment addendum was invalid because, although stipulated to, it "provided a remedy not requested in the pleadings." Id. at 345, 507 P.2d 681. As to the latter issue, we concluded, "[t]he law is quite clear that provisions of a consent judgment may be sustained and enforced, even where the relief sought was outside the pleadings, so long as the court has general jurisdiction over the matters adjudicated." Id. And, because the trial court had constitutional and statutory authority to hear the underlying matter, it had jurisdiction to enter the stipulated judgment. Id. The court "had the necessary requisites for jurisdiction, namely, it had jurisdiction of the subject matter, of the parties, and jurisdiction to render the particular judgment which was stipulated to between the parties."² Id. at 344, 507 P.2d 681.

¶13 Here, the Association does not contest ...