Walker v. Lipin

54 Arizona Cases Digest 23

500 P.3d 331

Gary WALKER, Personal Representative for the Estate of Eve F. Walker; Gary Walker, Trustee of the Robert W. Walker Dynasty Trust, Plaintiffs/Appellees,

v.Niles S. LIPIN, Defendant/Appellant.

No. 2 CA-CV 2021-0023

Court of Appeals of Arizona, Division 2.

Filed October 6, 2021,

Fennemore Craig P.C., Phoenix, By David A. Timchak, Counsel for Plaintiffs/Appellees

Davillier Law Group, Phoenix, By Alexander Kolodin, Chris Ford, and Christopher Viscovic, Counsel for Defendant/Appellant

Presiding Judge Espinosa authored the opinion of the Court, in which Vice Chief Judge Staring and Judge Eckerstrom concurred.

ESPINOSA, Presiding Judge:

¶1 In this action on a judgment, appellant Niles Lipin challenges the trial court's entry of judgment on the pleadings in favor of Gary Walker, in Walker's capacity as personal representative of the Estate of Eve F. Walker and as trustee of the Robert W. Walker Dynasty Trust ("Trust"). Lipin contends the court erred by permitting Walker's substitution as plaintiff and by rejecting Lipin's defense that the judgment had lapsed under A.R.S. § 12-1611. He also challenges the court's sanction of attorney fees pursuant to A.R.S. § 12-349. For the reasons stated below, we affirm.

Factual and Procedural Background

¶2 In reviewing the grant of a motion for judgment on the pleadings, we accept as true the well-pled factual allegations of the complaint. Shaw v. CTVT Motors, Inc. , 232 Ariz. 30, ¶ 8, 300 P.3d 907 (App. 2013). The relevant facts here, however, are largely undisputed. On May 21, 2010, Eve and Robert Walker ("the Walkers"¹ ) obtained a final monetary judgment against Lipin as part of a Pinal County civil lawsuit for fraud. On September 16, 2011, Lipin filed for Chapter 11 Bankruptcy. In December 2011, the Walkers instituted an adversary proceeding in the bankruptcy court alleging their judgment was non-dischargeable. Five years later, the bankruptcy court ruled, contrary to Lipin's argument, that the Walkers’ time to renew their judgment had been tolled during the pendency of the bankruptcy stay. The bankruptcy court ultimately entered a final judgment on November 22, 2017 excepting the Walkers’ 2010 judgment from discharge.

¶3 In May 2017, Lipin filed a civil action in Pinal County Superior Court against the Walkers requesting a declaratory judgment that their renewal time—five years pursuant to § 12-1611—had expired and their judgment was unenforceable. The court granted the Walkers’ motion for judgment on the pleadings, finding Lipin's action barred by the doctrines of claim and issue preclusion. The court further determined that regardless of preclusion, Lipin's claims failed as a matter of law because the Walkers’ time to bring their enforcement action tolled during the bankruptcy proceeding, had not lapsed, and would not lapse "until December 7, 2020 at the earliest."² We affirmed the court's ruling on appeal. Lipin v. Estate of Walker , No. 2 CA-CV 2018-0182, 2019 WL 3425184 (Ariz. App. July 29, 2019) (mem. decision).

¶4 In November 2019, the Walkers, in the name of their estates, filed the instant action on the 2010 judgment. Lipin moved to dismiss, arguing that the recently amended language of § 12-1611 barred the claim, and the trial court denied the motion. The Walkers then moved for judgment on the pleadings, and Lipin moved for summary judgment. Lipin later urged dismissal for lack of standing and, in the alternative, alleging neither estate was a real party in interest. In response, Gary Walker, as personal representative of Eve Walker's estate and trustee of the Trust, ratified the actions taken in the matter and requested substitution as the proper plaintiff, which the court granted.

¶5 After oral argument, the trial court granted the Walkers’ motion for judgment on the pleadings and denied Lipin's motion for summary judgment. The court reasoned that Lipin was precluded from arguing that the Walkers’ time to renew their judgment had lapsed in light of the previous trial court's ruling that the time to renew would not lapse until December 7, 2020 at the earliest and this court's decision affirming that ruling. The court also rejected Lipin's argument that the amended language of § 12-1611 rendered the Walkers’ action untimely and granted the Walkers’ request for attorney fees pursuant to § 12-349. A signed, final order was thereafter entered, from which Lipin appealed. We have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1), 12-2101(A)(1).

Substitution of Real Party in Interest

¶6 Lipin first contends the trial court erred by denying his motion to dismiss and granting Gary Walker's motion to substitute as the real party in interest. As noted above, Lipin moved to dismiss the Walkers’ complaint for the estates’ lack of standing as the real parties in interest. In response, Gary Walker "ratifie[d] the actions taken" by the estates and requested substitution as follows, "Gary R. Walker, personal representative of the Estate of Eve F. Walker in place of the Estate of Eve F. Walker" and "Gary R. Walker, trustee of the Walker Dynasty Trust, in place of the Estate of Robert W. Walker." The court granted the request, and we review its ruling for an abuse of discretion. See Valley Farms, Ltd. v. Transcon. Ins. Co. , 206 Ariz. 349, ¶ 6, 78 P.3d 1070 (App. 2003).

¶7 In Carranza v. Madrigal , our supreme court clarified the procedure for the substitution of a real party in interest. 237 Ariz. 512, ¶¶ 9-12, 354 P.3d 389 (2015). Rule 17(a)(3), Ariz. R. Civ. P., which provides that "[t]he court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action," is "not self-executing, nor does it provide a mechanism for substitution of a party." Carranza , 237 Ariz. 512, ¶ 9, 354 P.3d 389. Rule 15(a), Ariz. R. Civ. P., "governs the amendment of pleadings to substitute or add a party." Carranza , 237 Ariz. 512, ¶ 12, 354 P.3d 389. As Lipin correctly points out, the court in Carranza held that a trial court may deny a Rule 15(a) motion if it finds undue delay or prejudice to the opposing party. Id. ¶ 13.

¶8 Lipin contends that because Gary Walker failed to follow "the proper procedural method" and file a separate "motion to substitute under Rule 15(a)," instead requesting substitution in response to Lipin's motion to dismiss, the trial court "unequivocally erred" by granting substitution. But Lipin has provided no authority that the court must deny a request for substitution under such circumstances. In fact, Rule 7.1(b)(1), Ariz. R. Civ. P., provides that upon a party's failure to substantially comply with subsection (a) as to the requirements for the form of a motion, the court may summarily grant or deny a motion, but such a ruling is not mandated. In any event, the court was free to deem Walker's "request for substitution" a motion for leave to amend under Rule 15(a). See Carranza , 237 Ariz. 512, ¶ 13, 354 P.3d 389.

¶9 Lipin further asserts the trial court erred in failing to deny substitution on the grounds of undue delay and prejudice. We note, however, that Lipin did not raise his delay or prejudice arguments in opposition to Walker's substitution. Those arguments were not raised until Lipin's motion for reconsideration of the court's grant of judgment on the pleadings to the Walkers and denial of Lipin's motion for summary judgment. "Generally we do not consider arguments on appeal that were raised for the first time at the trial court in a motion for reconsideration" because "the prevailing party below is routinely deprived of the opportunity to fairly respond." Evans Withycombe, Inc. v. W. Innovations, Inc. , 215 Ariz. 237, ¶ 15, 159 P.3d 547 (App. 2006). Here, the trial court denied Lipin's motion for reconsideration without response from the Walkers and they had no opportunity to demonstrate they had not unduly delayed substitution or caused prejudice to Lipin. We therefore follow our general rule and decline to consider this portion of Lipin's argument.³ See id.

¶10 To the extent Lipin contends Gary Walker lacked standing as the real party in interest, we disagree. See Ariz. R. Civ. P. 17(a)(1)(A), (E); A.R.S. § 14-3110 (cause of action surviving decedent may be asserted by personal representative); Ader v. Estate of Felger , 240 Ariz. 32, ¶ 22, 375 P.3d 97 (App. 2016) (estate has no capacity to bring lawsuit, but sues through personal representative who acts on behalf of estate). Notably, Lipin's motion to dismiss acknowledged Gary Walker as the trustee of the Trust and the personal representative of Eve Walker's estate. Lipin nevertheless appears to suggest Walker lacked standing because Eve Walker's estate had closed as of November 3, 2020, before Gary's substitution was granted. In denying Lipin's motion for reconsideration on this issue and granting substitution, the court implicitly rejected his contention that Eve Walker's estate had closed and found that Gary Walker was the personal representative of Eve Walker's open estate, findings supported by the record.⁴ See Engstrom v. McCarthy , 243 Ariz. 469, ¶ 4, 411 P.3d 653 (App. 2018) ("[W]e defer to the court's findings of fact unless they are clearly erroneous."). Lipin has failed to demonstrate the trial court abused its discretion in granting substitution. See id. (court abuses discretion when commits error of law or record devoid of competent evidence to support decision).

Timeliness of Action on Judgment

¶11 Lipin next contends the trial court erred by precluding him from arguing the Walkers’ action was untimely and failing to address his argument that the judgment had lapsed based on § 12-1611 as amended.⁵ In 2018, the legislature amended § 12-1611 to extend the statute of limitations on renewal-of-judgment actions from five years to ten years. 2018 Ariz. Sess. Laws, ch. 36, § 2. The statute was further...