Court Opinion

ID: 9395802
Source: CourtListenerOpinion
Date Created: 2023-05-18 17:03:38.070591+00
Date Added: 2024-06-11T17:19:11.558184
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

      CUSTOM ACCOUNTING CORPORATION, Plaintiff/Appellee,

                                         v.

   SAL E. MANDER ENTERPRISES, LLC, et al., Defendants/Appellants.
                              No. 1 CA-CV 22-0519
                                FILED 5-18-2023

           Appeal from the Superior Court in Maricopa County
                          No. CV2018-009543
               The Honorable Bradley H. Astrowsky, Judge
           The Honorable Richard F. Albrecht, Judge pro tempore

                AFFIRMED IN PART, VACATED IN PART

                                    COUNSEL

Medalist Legal PLC, Chandler
By Patrick R. MacQueen, Brandon P. Bodea, Devin M. Tarwater
Counsel for Plaintiff/Appellee

Beth K. Findsen PLLC, Scottsdale
By Beth K. Findsen
Counsel for Defendants/Appellants

Charles Kirkland Companies, LLC, Phoenix
By Troy D. Roberts
Counsel for Defendants/Appellants

GAMESQ, PLC, Phoenix
By Garrick A. McFadden
Counsel for Defendants/Appellants
           CUSTOM ACCOUNTING v. SAL E. MANDER, et al.
                     Decision of the Court

                        MEMORANDUM DECISION

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

C A T L E T T, Judge:

¶1             Like all humans, judges make mistakes (yes, even appellate
judges). Arizona Rule of Civil Procedure 60 accounts for that fallibility.
Rule 60(a), for example, allows a superior court to amend a final judgment
to fix “a clerical mistake or a mistake arising from oversight or omission.”
And Rule 60(b) allows a superior court to relieve a party from a final
judgment due to, among other things, a “mistake.”

¶2             This appeal requires us to decide whether Rule 60(a) applies
after summary judgment for failure to repay a promissory note when an
undisputed principal amount owed, an award of pre-judgment interest,
and a higher post-judgment interest rate are omitted from a final judgment.
We hold that Rule 60(a) permits later inclusion of an undisputed principal
amount in an amended judgment, but not a new award of pre-judgment
interest or a higher post-judgment interest rate. We, thus, affirm in part and
vacate in part the superior court’s amended judgment.

             FACTS AND PROCEDURAL BACKGROUND

¶3            Sal E. Mander Enterprises, LLC (“Sal E. Mander”) agreed with
Custom Accounting Corporation (“Creditor”) to purchase certain assets
(primarily, a client list) of Creditor’s accounting business for $165,000. Sal
E. Mander made a down payment of $50,000 and, along with its manager,
signed a promissory note for the remaining $115,000, “bear[ing] no
interest.” Sal E. Mander never made the payment. Creditor sued Sal E.
Mander and others (collectively, “Debtors”) for breach of the promissory
note and later moved for summary judgment, which the superior court
granted. On January 11, 2021, after resolving other disputes, the court
issued a “final judgment in [Creditor’s] favor on Count I – Breach of
Contract of the Verified Complaint[.]” We refer to that judgment as the
“original judgment.” The original judgment included “fees in the amount
of $72,568.50 and taxable costs in the amount of $1,966.10, plus post-
judgment interest at the statutory rate of 6.25% per annum [from] the date
of Judgment until paid in full.” The original judgment did not contain a
monetary award for breach of contract.

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           CUSTOM ACCOUNTING v. SAL E. MANDER, et al.
                     Decision of the Court

¶4            More than fifteen months later, Debtors filed a motion to
enforce the original judgment, arguing the total amount of damages due
was $74,534.60 because the original judgment listed only an amount for
attorneys’ fees and costs and not for principal owed on the promissory note.
Creditor responded with a motion under Rule 60(a) to amend the original
judgment to include the $115,000 principal amount owed on the promissory
note, plus 10% interest. Debtors argued the requested amendment
stemmed from a substantive omission, not a clerical mistake, and thus
Creditor’s only avenue for relief was Rule 60(b). Debtors argued Creditor
could not obtain relief under Rule 60(b) because Creditor’s motion came
more than six months after entry of the original judgment. See Ariz. R. Civ.
P. 60(c)(1).

¶5             A superior court judge referred the motions to a court
commissioner. The commissioner reviewed the motions and concluded
that Rule 60(a) applied. The commissioner, therefore, issued a new
judgment, changing the language in the original judgment to the following:
“[G]ranting final judgment in favor of [Creditor] against [Debtor], on Count
I – Breach of Contract of the Verified Complaint, in the amount of
$115,000.00, plus pre-judgment and post-judgment interest at the statutory
rate of 10% per annum from the date of Judgment, January 11, 2021, until
paid in full[.]” We refer to that judgment as the “amended judgment.”

¶6            Debtors timely appealed the amended judgment. We have
jurisdiction under A.R.S. § 12-2101.

                                DISCUSSION

I.     Application of Rule 60(a)

¶7            Debtors argue Rule 60(a) is off limits to amend a judgment to
specify $115,000 owed, plus pre- and post-judgment interest, for a breach
of contract. Debtors argue the court’s only option was Rule 60(b), which
has a six-month deadline that had long passed when Creditor sought the
amended judgment.

¶8             We apply de novo review to the superior court’s decision to
apply Rule 60(a) to the facts presented. See In re $11,660.00 U.S. Currency,
251 Ariz. 106, 108 ¶ 8 (App. 2021). We apply an abuse of discretion review
to the court’s ultimate decision on whether relief is justified under Rule
60(a) and, if so, how relief is provided. Cf. City of Phoenix v. Geyler, 144 Ariz.
323, 328 (1985) (“[T]he standard we apply to the review of a trial court’s
order granting or denying relief under Rule 60(c) is whether the court
abused its discretion.”).

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           CUSTOM ACCOUNTING v. SAL E. MANDER, et al.
                     Decision of the Court

¶9             Rule 60(a) allows a court to “correct a clerical mistake or a
mistake arising from oversight or omission if one is found in a judgment.”
Ariz. R. Civ. P. 60(a). The Rule allows the superior court to make a
correction “on motion or on its own” and contains no deadline. See Ariz. R.
Civ. P. 60(a). Rule 60(b) permits a court to “relieve a party . . . from a final
judgment” based on “mistake, inadvertence, surprise, or excusable
neglect.” Ariz. R. Civ. P. 60(b)(1). Unlike Rule 60(a), Rule 60(b) has a six-
month deadline. See Ariz. R. Civ. P. 60(c)(1).

¶10           “A clerical error occurs when the written judgment fails to
accurately set forth the court’s decision.” Vincent v. Shanovich, 243 Ariz. 269,
271 ¶ 8 (2017). Rule 60(a), therefore, applies when “[t]he error is
inadvertent,” which can take the form of “a misstatement or omission” or
some other form. Id.

¶11           Rule 60(a) does not apply when the error is “judgmental.” “A
judgmental error occurs when the court’s decision is accurately set forth but
is legally incorrect.” Id. Rule 60(a), therefore, does not permit the
“changing of a judgment . . . which was entered as the court intended.” Ace
Auto. Prod., Inc. v. Van Duyne, 156 Ariz. 140, 142–43 (App. 1987). Put
differently, Rule 60(a) “authorizes the correction of ‘clerical’ errors—to
show what the court actually decided but did not correctly represent in the
written judgment; it may not be used to correct ‘judicial errors’—to supply
something that the court could have decided, but did not.” Egan–Ryan
Mech. Co. v. Cardon Meadows Dev. Corp., 169 Ariz. 161, 166 (App. 1990).

¶12            If a party claims a final judgment reflects a clerical error, “the
[superior] court should examine the record to determine whether the
judgment accurately recorded the court’s intent.” Vincent, 243 Ariz. at 271
¶ 8. If the answer is no, “the judgment should be corrected.” Id. Then, the
test on appeal is this: whether the superior court rightly utilized Rule 60(a)
turns on whether the superior court’s mistake “occurred in rendering
judgment or in recording the judgment rendered.” Ace Auto. Prod., Inc., 156
Ariz. at 142.

¶13            Our prior case law discussing Rule 60(a) provides some more
context about those species of amendments that are not clerical. In Ace
Automotive, the superior court entered judgment on a promissory note in an
amount that the defendants later challenged. See id. at 143. The amount
reflected in the judgment (the amount the defendants took issue with) was
the amount the superior court intended to include. See id. We concluded
Rule 60(a) was the wrong vehicle for the defendants’ request to amend the
intended amount because the purported error “was not clerical but

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           CUSTOM ACCOUNTING v. SAL E. MANDER, et al.
                     Decision of the Court

judgmental.” See id. In Egan-Ryan Mech. Co., we held the trial court could
not use Rule 60(a) to amend a judgment to add language disposing of two
counts of a counterclaim. 169 Ariz. at 166. And in Minjares v. State, the
superior court included a standard post-judgment interest provision in the
judgment. 223 Ariz. 54, 60 ¶ 26. We held “[t]he omission of a proviso that,
if the State appealed, the interest rate would be modified . . . was not a
clerical error.” Id. Thus, Rule 60(a) did not apply.

¶14          Here, the superior court used Rule 60(a) to change three
components of the original judgment—(1) a missing amount for principal
owing under the promissory note, (2) a missing pre-judgment interest
award, and (3) a higher interest rate for post-judgment interest (10% vs.
6.25%). This requires us to answer the following question: Does each
change stem from a clerical or judgmental mistake? We conclude that
omitting the principal amount due was a clerical mistake, but omitting an
award of pre-judgment interest and including a lower interest rate for post-
judgment interest were both judgmental mistakes.

¶15           Taking the amount of damages first, the superior court used
Rule 60(a) to amend the original judgment to reflect the principal amount
due on the promissory note. Debtors argue the failure to include that
amount was a judgmental error. Debtors contend damages in the original
judgment were only intended to include attorneys’ fees and costs and that
the superior court “could have put in $100,000.00,” rather than $115,000.00.

¶16           Debtors’ view is fantastical. Within days of the pleadings
closing, Creditor moved for summary judgment on its breach of contract
claim. In a separate statement of facts in support of that motion, Creditor
asserted that it “is currently owed $115,000 under the Note.” In response
to the motion for summary judgment, Debtors argued exclusively that
Creditor’s prior material breach excused Debtors’ further performance.
Debtors did not argue they ever made any payment on the promissory note,
and they did not produce evidence supporting the existence of a material
factual dispute regarding the amount owed. The superior court noticed the
lack of disagreement regarding the amount owed and commented on it in
its subsequent ruling granting summary judgment: “It is undisputed that
Defendants executed the promissory note and that they did not make the
$115,000 payment.”

¶17          Defendants also did not contest the amount owed when they
later opposed Creditor’s request for entry of the amended judgment. To
the contrary, Debtors tacitly admitted the amount due was $115,000 by
accusing Creditor of failing to offer evidence why it “left $115,000 off of the

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           CUSTOM ACCOUNTING v. SAL E. MANDER, et al.
                     Decision of the Court

Final Judgment.” The first time Debtors suggested that the principal
amount could have been anything other than $115,000 is to us on appeal.
See Cullum v. Cullum, 215 Ariz. 352, 355 ¶ 14 n.5 (App. 2007) (noting that “a
party cannot argue on appeal legal issues not raised” in the trial court).

¶18           We hold that Rule 60(a) applies when the superior court omits
a number reflecting an uncontested amount for damages from a final
judgment. Entering a judgment missing an amount for damages upon
which all parties agree, and the trial court then adopts, is a clerical, not
judgmental, error. When an uncontested damages amount is omitted, the
final judgment reflects “what the court actually decided but did not
correctly represent,” and not “something that the court could have decided,
but did not.” See Egan-Ryan Mech. Co., 169 Ariz. at 166. Thus, Rule 60(a)
permitted the superior court to amend the final judgment to reflect the
undisputed principal amount owing on the note.

¶19            Debtors argue the superior court erred by not hearing
testimony or making factual findings about why the original final judgment
was missing a damages amount. Debtors rely on Crye v. Edwards, where we
said that “[t]rial courts must generally engage in factfinding to determine
whether to grant relief under Rule 60(a).” 178 Ariz. 327, 329 (App. 1993).
Debtors’ reliance on that statement is misplaced in two respects. First,
neither Crye nor any other opinion—not to mention the actual text of Rule
60(a)—says that the superior court must engage in factfinding before
correcting a clerical mistake. Second, context matters—and the Crye court
made the relied-upon statement in a markedly different context. There, the
party moving under Rule 60(a) claimed the court clerk made a clerical
mistake. In that situation, factfinding was appropriate “to resolve Crye’s
allegation of a filing error by the clerk.” See id.; see also Todd v. Todd, 137
Ariz. 404, 407–08 (App. 1983) (requiring the trial court to act as a factfinder
to determine whether the clerk of this Court caused a timely appeal to be
recorded as untimely); M-11 Ltd. P’ship v. Gommard, 235 Ariz. 166, 170 ¶ 12
(App. 2014) (explaining that a Rule 60(a) request “triggered the superior
court’s factfinding function, requiring it to determine if the filing date of
record, August 7, 2012, was a clerical mistake[.]”).

¶20            Here, it was the court itself, and not an independent actor (like
the clerk), who was alleged to have made a clerical mistake. The court, thus,
could “examine the record to determine whether the judgment accurately
recorded the court’s intent.” Vincent, 243 Ariz. at 271 ¶ 8. The record
reflected that the parties did not dispute the damages amount for the breach
of contract claim, which the court then adopted. Yet the court omitted the
undisputed amount from the original judgment. The court, therefore, was

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           CUSTOM ACCOUNTING v. SAL E. MANDER, et al.
                     Decision of the Court

legally correct in later proceeding under Rule 60(a). And the court did not
abuse its discretion in granting relief and issuing an amended judgment
reflecting the undisputed principal balance of $115,000.

¶21            Debtors also direct us to the U.S. Supreme Court’s recent
opinion in Kemp v. United States, which involved Federal Rule of Civil
Procedure 60(b), for the proposition that a mistake “includes a judge’s error
of law.” 142 S. Ct. 1856, 1860 (2022). Nothing in Kemp is inconsistent with
prior Arizona decisions applying Rule 60(a) or how we do so here. If a trial
judge makes an error of law, that constitutes a judgmental error falling
outside Rule 60(a). The superior court here did not make an error of law
when it omitted an undisputed amount for damages. Although Debtors
concede “the substantive underlying case and the summary judgment
granted . . . are not at issue in this appeal,” they argue the court made an
error of law because it added a “new amount” which was “guessed at.” But
$115,000 was not “guessed at”—it was the undisputed amount due on the
promissory note, and Debtors never claimed otherwise until they appealed.
Simply amending the original judgment to reflect that amount fulfilled the
court’s original intent. Doing so fixed a mistake made in recording the
judgment, not in rendering it. See Ace Auto. Prod., Inc., 156 Ariz. at 142.

¶22           Debtors next challenge the inclusion of pre- and post-
judgment interest in the amended judgment. The superior court did not
include pre-judgment interest in the original judgment and set post-
judgment interest at 6.25% per year from the date of judgment. In the
amended judgment, the superior court awarded pre-judgment interest and
increased post-judgment interest to 10%, both running from the date of the
original judgment. If omitting pre-judgment interest and setting the post-
judgment rate at 6.25% (instead of 10%) were mistakes, those mistakes were
“judgmental” because they “occurred in rendering judgment.” Unlike
damages for the breach of contract claim, the superior court never made a
substantive decision on pre- or post-judgment interest—the court just
included post-judgment interest in the original judgment. Nothing in the
record supports that the court erred in recording some prior decision about
pre- or post-judgment interest. Instead, rendering a substantive decision
on pre- or post-judgment interest was “something that the court could have
decided, but did not.” See Egan-Ryan Mech. Co., 169 Ariz. at 166.

¶23            That the court legally erred by including post-judgment
interest in the original final judgment, and pre- and post-judgment interest
in the amended judgment, further underscores the “judgmental” nature of
the decision on those matters. See Vincent, 243 Ariz. at 271 ¶ 8 (“A
judgmental error occurs when the court’s decision is accurately set forth but

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           CUSTOM ACCOUNTING v. SAL E. MANDER, et al.
                     Decision of the Court

is legally incorrect.”). At the time of the original and amended judgments,
A.R.S. § 44-1201(A) provided that “[i]nterest on any loan, indebtedness or
other obligation shall be at the rate of ten per cent per annum, unless a
different rate is contracted for in writing, in which event any rate of interest
may be agreed to.” (Emphasis added). The statute also said post-judgment
interest on indebtedness “shall be at the rate of interest provided in the
agreement and shall be specified in the judgment.” A.R.S. § 44-1201(A)(2)
(emphasis added).

¶24            In this case, the “indebtedness” is the promissory note, and
the parties agreed therein the debt would “bear no interest.” See Metzler v.
BCI Coca-Cola Bottling Co. of L.A., Inc., 235 Ariz. 141, 146 ¶ 19 (2014). The
rate of interest statute, therefore, required the court to omit any award of
pre- or post-judgment interest from both the original and amended
judgments. See A.R.S. § 44-1201(A); Fleming v. Tanner, 248 Ariz. 63, 68 ¶ 16
(App. 2019) (“We decline to construe § 44-1201 as operating to impose
interest when the parties have chosen not to require it[.]”). We, accordingly,
vacate the portion of the amended judgment awarding pre- and post-
judgment interest at a rate of 10% per year.

¶25            Based on the interest-free nature of the promissory note, the
original judgment also should not have included any post-judgment
interest. But Debtors lost the opportunity to challenge that error when they
failed to appeal the original judgment. On remand, therefore, the superior
court should amend the amended judgment (again, under Rule 60(a)) to
revert to the 6.25% post-judgment interest rate in the original judgment.

¶26           Last, Debtors argue that Rule 96(a) of the Rules of the
Supreme Court of Arizona does not grant the superior court commissioner
adjudicatory authority to enter the amended judgment. Debtors did not
object in the superior court to the commissioner’s authority, thereby
waiving the argument. See In re Est. of de Escandon, 215 Ariz. 247, 252 ¶ 16
(App. 2007) (explaining that a litigant “waived any claim that [a court
commissioner] lacked authority to preside over contested probate matters
by not objecting before the hearing commenced”).1

1      We also note that, at all relevant times, the Arizona Supreme Court
had designated all Maricopa County Superior Court commissioners,
including the commissioner presiding in this case, as judges pro tempore to
perform judicial duties, as authorized under A.R.S. § 12-144. See Ariz. Sup.
Ct., Pro Tem Order Nos. 2021-23, 2022-37.

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           CUSTOM ACCOUNTING v. SAL E. MANDER, et al.
                     Decision of the Court

II.    Attorney’s Fees

¶27           During this litigation, the superior court entered several
judgments awarding Creditor attorneys’ fees and costs. In addition to
challenging the amended judgment, Debtors attempt to challenge one of
those awards of attorneys’ fees and costs. On October 6, 2022, the superior
court issued a separate judgment granting Creditor’s application for
attorneys’ fees and costs stemming from post-judgment proceedings. On
November 14, 2022, Debtors filed a second amended notice of appeal of “the
Judgment entered October 6, 2022 awarding additional attorney fees of
$88,484.50 and costs of $1,904.93.” A notice of appeal must be filed “no later
than 30 days” after judgment. Ariz. R. Civ. App. P. 9(a). Because the 30-
day deadline fell on a weekend, Debtors had to file their notice of appeal on
or before Monday, November 7, 2022. Debtors filed their notice of appeal
on Monday, November 14, 2022—a week too late. We, therefore, do not
have jurisdiction over, and do not address, the judgment referenced in
Debtors’ second amended notice of appeal. In re Marriage of Thorn, 235 Ariz.
216, 218 ¶ 5 (App. 2014).

¶28           Both Creditor and Debtors request attorneys’ fees and costs
on appeal. Debtors did not “specifically state the statute, rule, decisional
law, contract, or other authority for an award of attorneys’ fees” in their
opening brief, and so their request is denied. See Ariz. R. Civ. App. P.
21(a)(2); Country Mut. Ins. Co. v. Fonk, 198 Ariz. 167, 172 ¶ 25 (App. 2000)
(denying attorneys’ fees on appeal when the party failed to cite any
substantive authority for the request).

¶29           Creditor requests an award of attorneys’ fees and costs
pursuant to A.R.S. §§ 12-341 and 12-341.01, claiming it is the successful
party. In determining the successful party, a court considers the totality of
the circumstances and the relative success of the parties. See McAlister v.
Citibank, 171 Ariz. 207, 216 (App. 1992). A party may be “successful”
without recovering the full measure of relief it requests. Sanborn v. Brooker
& Wake Prop. Mgmt., Inc., 178 Ariz. 425, 430 (App. 1994). Our vacatur of the
amended judgment’s award of pre- and post-judgment interest does not
change that Creditor generally “accomplished the result sought in the
litigation.” See Schweiger v. China Doll Rest., Inc., 138 Ariz. 183, 189 (App.
1983). In our discretion, therefore, we award Creditor a portion of its
reasonable attorneys’ fees on appeal subject to compliance with Arizona
Rule of Civil Appellate Procedure 21. Creditor’s fee application, as well as
any response from Debtors, should address what percentage of fees
Creditor should be awarded based on the Court’s affirming in part and

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          CUSTOM ACCOUNTING v. SAL E. MANDER, et al.
                    Decision of the Court

vacating in part the amended judgment. In the exercise of our discretion,
we decline to award costs on appeal to any party.

                             CONCLUSION

¶30          We vacate the superior court’s inclusion of pre- and post-
judgment interest in the amended judgment and remand with instructions
to further amend the amended judgment (under Rule 60(a)) to reflect -post-
judgment interest at the “rate of 6.25% per annum” from the date of the
original judgment (January 11, 2021) until paid in full. We otherwise affirm
the amended judgment.

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

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