Court Opinion

ID: 9369620
Source: CourtListenerOpinion
Date Created: 2023-02-09 16:03:26.288544+00
Date Added: 2024-06-11T17:16:16.181265
License: Public Domain

NOTICE: NOT FOR OFFICIAL PUBLICATION.
 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                 AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

                                    IN THE
             ARIZONA COURT OF APPEALS
                                DIVISION ONE

      ARAPAHO LLC TESCO AS CUSTODIAN, Plaintiff/Appellee,

                                        v.

               CHRISTINE M. SEARLE, Defendant/Appellant.

                             No. 1 CA-CV 22-0478
                               FILED 2-9-2023

           Appeal from the Superior Court in Maricopa County
                          No. CV2021-012279
           The Honorable Gary L. Popham, Judge Pro Tempore

                                  AFFIRMED

                                   COUNSEL

Hymson Goldstein Pantiliat & Lohr, PLLC, Scottsdale
By John L. Lohr, Jr. and Jackson D. Hendrix (argued)
Co-Counsel for Plaintiff/Appellee

Snell & Wilmer L.L.P., Phoenix
By Andrew M. Jacobs (argued), Cory L. Braddock, and Emily R. Parker
Co-Counsel for Defendant/Appellant
                          ARAPAHO v. SEARLE
                           Decision of the Court

                      MEMORANDUM DECISION

Presiding Judge Paul J. McMurdie delivered the Court’s decision, in which
Judge Michael J. Brown and Judge Michael S. Catlett joined.

M c M U R D I E, Judge:

¶1           Christine M. Searle appeals from the superior court’s denial
of her motion to set aside the default judgment. Because the superior court
did not abuse its discretion, we affirm.

             FACTS AND PROCEDURAL BACKGROUND

¶2          Searle failed to pay taxes assessed on real property she owned
in Gilbert (“Gilbert property”). Arapaho, LLC Tesco as Custodian
(“Arapaho”) bought the 2015 and 2016 tax lien certificates on the Gilbert
property.

¶3             In January 2021, Arapaho began a foreclosure action on the
2016 tax lien. Arapaho mailed the foreclosure notice to the Gilbert property
because the Maricopa County Assessor and Treasurer listed the Gilbert
property address as Searle’s mailing address. See A.R.S. § 42-18202.
Someone at the Gilbert property signed and acknowledged receipt of the
foreclosure notice.

¶4           Later, Arapaho filed a complaint to foreclose the 2016 tax lien.
Trying to serve Searle, Arapaho’s counsel identified a Tucson address
(“Tucson property”) “through online research as an address that might be
connected to Ms. Searle.” A process server tried to effect service using the
Tucson property’s address five times but could not gain access.

¶5            Arapaho eventually completed service at the Gilbert property
through a resident who knew Searle. Searle’s son contacted Arapaho’s
counsel after service. They discussed the status of the 2015 and 2016 tax
liens over email. According to Arapaho’s counsel’s sworn declaration,
Searle’s son redeemed the 2016 tax lien on Searle’s behalf. In August 2021,
Arapaho sent a letter to the Gilbert property requesting payment of
attorney’s fees, and someone signed to confirm receipt.

¶6          In June 2021, Arapaho mailed notice of its intent to foreclose
on the 2015 tax lien to the Gilbert property’s address. This notice was

                                     2
                          ARAPAHO v. SEARLE
                           Decision of the Court

marked “return to sender,” and the letter’s recipient noted on the envelope
that the “Property is Rented.” But in a sworn declaration, Searle’s son stated
he lived at the Gilbert property starting in February or March 2021, and he
“receive[d] and review[ed] any mail delivered to the Property.”

¶7            In August 2021, Arapaho filed to foreclose on the Gilbert
property’s 2015 tax lien. Arapaho tried to serve Searle at the Gilbert
property but failed. The process server reported that when attempting
service, “a truck known to belong to Searle or [her son] was in the
driveway.” After searching social media, Arapaho discovered that Searle
frequented a horse-training stable in Tucson (“Tucson stable”). Searle’s
counsel confirmed at the oral argument in the trial court that Searle worked
at the Tucson stable caring for the horses. Arapaho personally served Searle
at the Tucson stable in late August.

¶8            In September, Arapaho applied for a default judgment,
alleging Searle failed to plead or defend against the judicial foreclosure
claim timely. Arapaho mailed copies of the application for entry of default
judgment to the address for the Tucson stable and the Gilbert property’s
address.1 After a default hearing, the superior court entered a default
judgment against Searle, finding that she received proper notice and failed
to answer or appear.

¶9            In late March 2022, Searle moved to set aside the default
judgment under Arizona Rule of Civil Procedure 60(b)(4), arguing the
judgment was void because Arapaho “failed to mail the application for
entry of default to Searle’s known whereabouts as required by [Arizona
Rule of Civil Procedure] 55(a)(3)(A).” She claimed Arapaho should have
mailed the application to the Tucson property, along with the Gilbert
property. Arapaho responded that the judgment was not void because it
fully complied with Rule 55 by mailing the application to the Gilbert
address and the Tucson stable. Searle replied that Arapaho knew she
resided at the Tucson property and thus needed to mail the application to
the Tucson property’s address to comply with Rule 55(a)(3)(A) to provide
Searle with the “best notice practicable under the circumstances.”

1      Before the superior court, Searle disputed that Arapaho mailed the
application to the Gilbert property’s address. But the superior court found
that Arapaho did mail the application to the Gilbert property, and Searle
does not challenge this finding on appeal.

                                      3
                           ARAPAHO v. SEARLE
                            Decision of the Court

¶10           After oral argument, the superior court denied the motion to
set aside. The court found that “Arapaho complied with the notice
requirements” by mailing the application to the Gilbert property and the
Tucson stable. The court noted that the Gilbert property’s address was
Searle’s identified mailing address, Arapaho successfully delivered mail
there in January and August 2021, and Arapaho successfully used this
address to reach Searle’s son and discuss the tax liens on the property.
Moreover, Arapaho had served Searle at the horse stable, a place she
frequented. The court found that Arapaho complied with Rule 55 by
mailing notice to the Gilbert property and the Tucson stable because those
properties’ “addresses were known whereabouts where Plaintiff Arapaho
successfully had found and communicated with Defendant Searle in the
months leading up to Arapaho’s filing of its [application].”

¶11            The court rejected Searle’s argument that Rule 55(a)(3)(A)
required Arapaho to mail the application for entry of default to the Tucson
property. It reasoned that Arapaho “never successfully found” Searle at the
Tucson address. Moreover, citing Ruiz v. Lopez, 225 Ariz. 217 (App. 2010),
the court noted that a person’s known “whereabouts” are not “limited to a
defendant’s residence.”

¶12          Searle appealed. We           have   jurisdiction under     A.R.S.
§ 12-2101(A)(2).

                               DISCUSSION

¶13           Searle contends that because Arapaho did not mail notice to
the Tucson address, the superior court should have set aside the default
judgment as void under Rule 60(b)(4). But we conclude the superior court
correctly denied Searle’s motion to set aside the default judgment because
Arapaho complied with Rule 55(a)(3)(A).

¶14            We review the denial of a motion to set aside a judgment for
an abuse of discretion. Duckstein v. Wolf, 230 Ariz. 227, 231, ¶ 8 (App. 2012).
“[W]e defer to the superior court’s factual findings, and will not set them
aside unless they are clearly erroneous.” Bank of N.Y. Mellon v. Dodev, 246
Ariz. 1, 6, ¶ 15 (App. 2018) (quoting Ruffino v. Lokosky, 245 Ariz. 165, 168,
¶ 9 (App. 2018)).

¶15           A party seeking to enter default judgment must provide
notice to the party claimed to be in default. Ariz. R. Civ. P. 55(a)(3). “If the
party requesting the entry of default knows the whereabouts of the party
claimed to be in default, a copy of the application for entry of default must
be mailed to the party claimed to be in default.” Ariz. R. Civ. P. 55(a)(3)(A).

                                       4
                            ARAPAHO v. SEARLE
                             Decision of the Court

“A party should receive the best notice practicable under the
circumstances.” Ruiz, 225 Ariz. at 221, ¶ 15. If the party seeking default fails
to satisfy the notice requirements, the resulting judgment is void, and the
court will set aside the default judgment. Id. at 222, 223, ¶¶ 18, 21. When
challenging the judgment, the moving party must establish that the
judgment should be set aside. Miller v. Nat’l Franchise Servs., Inc., 167 Ariz.
403, 406 (App. 1991).

¶16            We consider two policies when reviewing a motion to set
aside a default judgment. First, “if the trial court has doubt about whether
to vacate a default judgment, it should rule in favor of the moving party.”
Gonzalez v. Nguyen, 243 Ariz. 531, 534, ¶ 11 (2018) (quoting Daou v. Harris,
139 Ariz. 353, 359 (1984)). But “[t]here is also, however, a principle of finality
in proceedings which is to be recognized and given effect.” Id.

¶17            In Ruiz v. Lopez, we held that in the context of Rule 55,2 the
“whereabouts” of a party means “a particular or specific ‘place’ where that
person can be found or located.” Ruiz, 225 Ariz. at 221, ¶ 13. For example, a
private mailbox qualifies as a person’s known whereabouts if the
“defendant regularly used that box for multiple purposes and mail was
reasonably calculated to reach her there.” See id. (citing Barlage v. Valentine,
210 Ariz. 270, 276, ¶¶ 22–23 (App. 2005)); see also Advanced Prop. Tax Liens,
Inc. v. Coquina Prop. Invs., LLC, 2 CA-CV 2021-0045, 2021 WL 5027453, at *2,
¶ 7 (Ariz. App. Oct. 29, 2021) (mem. decision) (A post office box qualified
as the defendant’s “whereabouts” because the county assessor listed the
address as the defendant’s mailing address, and the plaintiff previously
sent mail there and received a return receipt confirming delivery.).

¶18            Moreover, “because [Rule 55] refers to ‘whereabouts’ rather
than to [a] residential or home address, it contemplates the possibility of
mailing a notice to some other ‘place’ where the party can be found.” Ruiz,
225 Ariz. at 222, ¶ 15. Thus, we have held that mailing a notice to a
defendant’s place of employment can satisfy the notice requirements if the
defendant had been served there. Id. at 220, 221, ¶¶ 6, 13; see also MACWCP
II, LLC v. Alton, 1 CA-CV 14-0552, 2016 WL 126281, at *2, ¶ 10 (Ariz. App.
Jan. 12, 2016) (mem. decision) (Mailing the application for default to the

2      Ruiz discusses Arizona Rule of Civil Procedure 55(a)(1)(i). But Rule
55 has since been amended, and the notice requirements are now found in
Arizona Rule of Civil Procedure 55(a)(3). For purposes of this decision, no
material differences exist between the two versions.

                                        5
                          ARAPAHO v. SEARLE
                           Decision of the Court

property address was sufficient because the property owner had been
served there.).

A.    The Superior Court Did Not Err by Finding that the Gilbert
Property and the Tucson Stable Were Searle’s Known Whereabouts.

¶19           The Gilbert property was one of Searle’s known whereabouts.
Searle owned the Gilbert property and listed the address as her mailing
address with the Maricopa County Assessor and Treasurer. See Coquina, 2
CA-CV 2021-0045, at *2, ¶ 7. The property was the subject of the foreclosure,
and Arapaho had completed service using the Gilbert property’s address.
See MACWCP II, 1 CA-CV 14-0552, at *2, ¶ 10. Arapaho had successfully
mailed letters there and reached Searle’s son by using the address. See
Coquina, 2 CA-CV 2021-0045, at *2, ¶ 7. Because the Gilbert property’s
address was on public record as Searle’s mailing address, and the parties
communicated through that address, Rule 55(a)(3)(A) required Arapaho to
mail a copy of the default application to Searle at the Gilbert property’s
address. See Ruiz, 225 Ariz. at 221, ¶ 13.

¶20            Even so, Searle asserts that sending mail to the Gilbert
property’s address, not the Tucson property’s address, was unreasonable.
She argues that the “return to sender” letter supports her position. Searle
did not raise this argument before the superior court when Arapaho
referenced the same letter to cast doubt on Searle’s son’s credibility. And
Searle’s argument discounts that Arapaho successfully delivered mail to
this address both before and after the returned letter. Also, Searle’s son
resided at the property when Arapaho sent both the returned letter and the
notice of the default application, and he declared he received and reviewed
Searle’s mail while living there. We conclude that the trial court did not
abuse its discretion by finding that the Gilbert property’s address was one
of Searle’s known whereabouts in September 2021.

¶21          The Tucson stable was also one of Searle’s known
whereabouts at that time. Searle frequented the stable, she worked there,
and Arapaho personally served Searle there. See Ruiz, 225 Ariz. at 220, 221,
¶¶ 6, 13; MACWCP II, 1 CA-CV 14-0552, at *2, ¶ 10. We agree with the
superior court that the Tucson stable was a place where Searle could be
found or located. Ruiz, 225 Ariz. at 221, ¶ 13.

¶22            The superior court correctly found that the Gilbert property
and the Tucson stable were Searle’s known whereabouts under Rule
55(a)(3). See Ruiz, 225 Ariz. at 221, ¶ 15.

                                     6
                          ARAPAHO v. SEARLE
                           Decision of the Court

B.     The Superior Court Correctly Found that Arapaho Satisfied Rule
55(a)(3) by Mailing the Application to the Gilbert Property and the
Tucson Stable.

¶23            Searle contends that to achieve the “best notice practicable
under the circumstances,” Arapaho needed to mail the notice to all three
locations: the Gilbert property, the Tucson stable, and the Tucson property.
Searle’s counsel suggested at oral argument in the superior court that
Arapaho should have mailed notice “to every address [it] could possibly
find for [Searle].” But Rule 55(a)(3) does not require a party to send notice
to every location where the defaulting party might appear. Instead, Rule
55(a)(3)(A) requires a claimant to mail an application for entry of default to
the defaulting party’s known whereabouts, which is “a particular or
specific ‘place’ where that person can be found or located, not a ‘general
area or locale’ where she might be possibly found.” Ruiz, 225 Ariz. at 221,
¶ 13.

¶24            Searle contends the superior court abused its discretion by
finding that Arapaho did not know Searle could be located at the Tucson
property. Granted, the process server listed the Tucson property’s address
as Searle’s home address in its affidavit of non-service after attempting
service of a prior lawsuit in March 2021. Counsel explained that it identified
the Tucson address as a possible connection to Searle, and it was standard
practice for them to send process servers to all potential addresses they
found online. But a process server unsuccessfully sought to access the gated
community where the Tucson property is located five times and could not
otherwise find Searle or anyone who knew Searle. There is little record
evidence supporting Searle living at the Tucson address or being present in
September 2021. The declaration that Searle submitted in support of her
March 2022 motion to set aside the default judgment states only, “I reside
at [the Tucson property’s address].” The declaration does not show where
Searle resided six months prior, in September 2021, when Arapaho needed
to comply with Rule 55(a)(3)(A). There is scant, if any, other evidence from
which the superior court could have found that Searle was located at the
Tucson property in September 2021. See Ruiz, 225 Ariz. at 221, ¶ 13. Thus,
the superior court correctly found that the Tucson property was not one of
Searle’s known whereabouts under Rule 55(a)(3).

¶25           Because the Gilbert property and the Tucson stable were
Searle’s known whereabouts in September 2021, and the Tucson property
was not one of her known whereabouts, we conclude that Arapaho
complied with Rule 55(a)(3)(A) by mailing its application for entry of
default to the Gilbert property and the Tucson stable. We, therefore, affirm

                                      7
                           ARAPAHO v. SEARLE
                            Decision of the Court

the superior court’s denial of Searle’s motion to set aside the default
judgment under Rule 60(b)(4).

                    ATTORNEY’S FEES AND COSTS

¶26           Arapaho requests attorney’s fees under A.R.S. § 12-349.
Because Arapaho fails to show how Searle brought a claim “without
substantial justification” or otherwise unjustifiably acted as described by
the statute, we decline this request. See A.R.S. § 12-349. Arapaho is entitled
to appellate costs upon compliance with ARCAP 21.

                               CONCLUSION

¶27           We affirm.

                           AMY M. WOOD • Clerk of the Court
                           FILED: AA

                                        8