Court Opinion

ID: 2688825
Source: CourtListenerOpinion
Date Created: 2014-08-01 14:52:54.848984+00
Date Added: 2024-06-11T08:38:11.131578
License: Public Domain

IN THE COURT OF APPEALS                    FILED BY CLERK
                           STATE OF ARIZONA                          DEC 29 2010
                             DIVISION TWO
                                                                      COURT OF APPEALS
                                                                        DIVISION TWO

JAMES E. BLAIR and SOUTHERN           )
VENTURES, INC.,                       )
                                      )
                Plaintiffs/Appellees, )           2 CA-CV 2010-0028
                                      )           DEPARTMENT B
          v.                          )
                                      )           OPINION
CLIFTON BURGENER and JANE DOE )
BURGENER, husband and wife;           )
TIGERLILLY INVESTMENTS, LLC; and )
BONANZA REALTY MANAGEMENT, )
LLC,                                  )
                                      )
              Defendants/Appellants. )
                                      )

         APPEAL FROM THE SUPERIOR COURT OF COCHISE COUNTY

                              Cause No. CV200800466

                        Honorable James L. Conlogue, Judge
                         Honorable Ann R. Littrell, Judge

                                   AFFIRMED

Peter A. Kelly                                                             Palominas
                                                    Attorney for Plaintiffs/Appellees

Lawrence K. Lynde                                                          Phoenix
                                                 Attorney for Defendants/Appellants

V Á S Q U E Z, Presiding Judge.
¶1            In this breach of contract action, appellants Clifton Burgener; Tigerlilly

Investments, LLC; and Bonanza Realty Management, LLC (collectively, Appellants)

appeal from the trial court‟s denial of their motion to set aside default judgment in favor

of appellees, James Blair and Southern Ventures, Inc. (collectively, Blair). Appellants

contend the court abused its discretion in permitting alternative means for service of

process and, in any event, Blair failed to effect service properly under the terms of the

court‟s order. For the reasons set forth below, we affirm.

                                  Facts and Procedure

¶2            “We view the facts in the light most favorable to upholding the trial court‟s

ruling on a motion to set aside a default judgment.” Ezell v. Quon, 224 Ariz. 532, ¶ 2,

233 P.3d 645, 647 (App. 2010); see also Goglia v. Bodnar, 156 Ariz. 12, 20, 749 P.2d
921, 929 (App. 1987). In May 2007, Blair entered into a contract with Tigerlilly and

Bonanza, which included the conveyance of Blair‟s residence to Tigerlilly. Pursuant to

the contract, Tigerlilly was required to transfer the residence back to Blair upon his

performance of additional terms in the contract. In May 2008, Blair filed a complaint in

superior court, alleging breach of contract, civil conspiracy, and fraud against Appellants,

arising from their failure to reconvey the residence to him. Blair also alleged Burgener

controlled and operated Tigerlilly and Bonanza as his alter egos.1

       1
        Blair later filed an amended complaint adding additional defendants. However,
they are not parties to this appeal.

                                             2
¶3            Blair made numerous attempts to serve Appellants by attempting to serve

Burgener individually and as statutory agent for Tigerlilly and Bonanza, at Appellants‟

business address in Phoenix. On May 21, 2008, the process server went to Appellants‟

office and was told Burgener “was not in.” Although it is unclear from the record, the

process server either telephoned or visited the office seven times over the following two

weeks, between 9:30 a.m. and 1:40 p.m., in an attempt to determine whether Burgener

was there. Each time the process server was told Burgener was not in the office. Blair

then authorized the process server to attempt to locate Burgener‟s home address and

serve him there. The process server located Burgener‟s residence in Phoenix, confirming

with a neighbor that Burgener indeed lived at that address, and attempted to serve him

there five times over the next eight days, between 4:10 p.m. and 8:40 p.m.

¶4            After the attempts at personal service were unsuccessful, Blair filed a

motion for alternate service, in which he alleged Appellants were attempting to avoid

service and requested permission to effect service “upon any person in charge of the

office located at 40[2] W. Roosevelt, Suite E, Phoenix, AZ.”2 He supported his motion

with the process server‟s affidavit of non-service, describing the failed attempts to effect

service. The trial court granted the motion and, in addition to allowing Blair to serve the

person in charge of the office, it also ordered Blair to mail a copy of the process and the

       2
       Blair‟s motion and the trial court‟s order list the business address as “400 W.
Roosevelt, Suite E, Phoenix, AZ.” However, as Blair states in his brief, this appears to
have been a clerical error, given that the process server had initially attempted service at
402 W. Roosevelt, and there is no dispute concerning the correct business address of
Appellants. And, although the process server apparently initially mailed service to 400
W. Roosevelt, this mistake was rectified by re-mailing service to the correct address.
                                             3
court‟s order “to the last known residence or business address of each party receiving

alternate service.”

¶5            The process server served Appellants at the business address by leaving

copies of the required documents with a woman working at the front desk of the office.

The woman gave her first name to the process server but refused to provide her last name

or proof of identity. He also mailed copies of the process to the business address. After

the time for responding had passed, Blair filed an application for entry of default

judgment, and the trial court entered default judgment on November 12, 2008, in the

amount of $252,000.

¶6            On June 22, 2009, Appellants filed a motion to set aside the entry of

default, asserting that they had not been properly served under the Arizona Rules of Civil

Procedure and the judgment therefore was void. After oral argument, the trial court

denied their motion. This appeal followed.

                                  Standard of Review

¶7            Although default judgments are not favored, Harper v. Canyon Land Dev.,

L.L.C., 219 Ariz. 535, ¶ 4, 200 P.3d 1032, 1033-34 (App. 2008), we review a trial court‟s

denial of a motion to set aside a default judgment for an abuse of discretion, Daou v.

Harris, 139 Ariz. 353, 359, 678 P.2d 934, 940 (1984). Generally, a party will only be

entitled to relief if it can demonstrate: “1) that its failure to file a timely answer was

excusable under one of the subdivisions of Rule 60(c), 2) that it acted promptly in

seeking relief and 3) that it had a substantial and meritorious defense to the action.”

                                             4
Almarez v. Superior Court, 146 Ariz. 189, 190-91, 704 P.2d 830, 831-32 (App. 1985).

However, a trial court “must vacate . . . a [void] judgment[,] . . . [and] a party seeking

relief from a void judgment need not show that their failure to file a timely answer was

excusable, that they acted promptly . . . , or that they had a meritorious defense.” Master

Fin., Inc. v. Woodburn, 208 Ariz. 70, ¶ 19, 90 P.3d 1236, 1240 (App. 2004). Even where

a judgment is challenged on voidness grounds, “[t]he movant generally bears the burden

of demonstrating his entitlement to have a default judgment set aside.” Miller v. Nat’l

Franchise Servs., Inc., 167 Ariz. 403, 406, 807 P.2d 1139, 1142 (App. 1991).

                                       Discussion

¶8           Appellants maintain the trial court abused its discretion by not setting aside

the default judgment, arguing it was void for lack of personal jurisdiction over them. See

Ariz. R. Civ. P. 60(c)(4) (party may be relieved from void final judgment); Master Fin.

Inc., 208 Ariz. 70, ¶ 19, 90 P.3d at 1240 (lack of personal jurisdiction over defendants

renders judgment void). In particular, they contend service of process had not been made

upon them. Although Appellants assign ten different issues on appeal, the essential

questions raised are (1) whether the court erred in concluding Blair had demonstrated that

personal service was impracticable under Rule 4.1(m), Ariz. R. Civ. P., such that

alternate service was appropriate, (2) whether the means of alternate service authorized

by the court violated Appellants‟ due process rights, and (3) whether Blair sufficiently

complied with the court‟s order of alternate service. We address each of these issues in

turn.

                                            5
¶9            Preliminarily, we note that Appellants have not provided this court with a

transcript of the hearing on their motion to set aside judgment. It is the appellant‟s

burden to ensure that “the record on appeal contains all transcripts or other documents

necessary for us to consider the issues raised.” Baker v. Baker, 183 Ariz. 70, 73, 900
P.2d 764, 767 (App. 1995); see also Ariz. R. Civ. App. P. 11(b)(1). And, in the absence

of a transcript, we presume the evidence and arguments presented at the hearing support

the trial court‟s ruling. Kohler v. Kohler, 211 Ariz. 106, n.1, 118 P.3d 621, 623 n.1 (App.

2005); Chavarria v. State Farm Mut. Auto. Ins. Co., 165 Ariz. 334, 338, 798 P.2d 1343,

1347 (App. 1990).

A. Alternate service

¶10           Appellants first contend Blair failed to make the requisite showing under

Rule 4.1(m) to establish service upon them was impracticable, such that he was entitled

to effect service through alternate means. Appellants maintain, as to Tigerlilly and

Bonanza, that personal service can never be impracticable. Relying on Rule 4.1(l), they

contend that when service cannot be completed by serving the statutory agent of a

corporation, the plaintiff is required to effect service through the Arizona Corporation

Commission. But Rule 4.1(l) applies only “[w]hen a domestic corporation does not have

an officer or agent in this state upon whom legal service of process can be made.”3 Here,

      3
        And in any event, this means of completing service would have provided no
greater due process protection than the manner of service authorized by the trial court and
employed by Blair, who delivered process to the defendants‟ office and mailed a copy to
the business address. Under Rule 4.1(l), when service is made by depositing the
summons and pleadings with the Corporation Commission, it “shall file one of the copies
                                            6
Appellants do not dispute that Burgener is the statutory agent for both companies. Thus,

Rule 4.1(l) does not apply.

¶11           Rule 4.1(m) provides, in pertinent part: “If service by one of the means set

forth in the preceding paragraphs of this Rule 4.1 proves impracticable, then service may

be accomplished in such manner, other than by publication, as the court, upon motion and

without notice, may direct.”

¶12           There are no Arizona cases interpreting the meaning of “impracticable” as

that term is used in the rule. This court‟s “purpose is to interpret the statutes and rules

according to the drafters‟ intent, and we will first look to the plain language of the statute

or rule as the best evidence of that intent.” Hornbeck v. Lusk, 217 Ariz. 581, ¶ 6, 177
P.3d 323, 325 (App. 2008). When “the language is clear and unambiguous, we give

effect to that language and do not employ other methods of statutory construction.”

Fragoso v. Fell, 210 Ariz. 427, ¶ 7, 111 P.3d 1027, 1030 (App. 2005).

¶13           Relying on Calabro v. Leiner, 464 F. Supp. 2d 470, 472 (E.D. Penn. 2006),

Appellants contend service of process is only impracticable “when personal service

absolutely cannot be made under the applicable rules of civil procedure.” And, they

suggest that four attempts at service at Burgener‟s residence were insufficient as a matter

in its office and immediately mail the other copy, postage prepaid, to the office of the
corporation, or to the president, secretary or any director or officer of such corporation as
appears or is ascertained by the Corporation Commission from the articles of
incorporation or other papers on file in its office, or otherwise.”
                                               7
of law to “warrant alternative service.”4 In Calabro, the court was interpreting Rule

430(a), Penn. R. Civ. P., to determine whether the plaintiff had made reasonable efforts to

effect personal service on the defendant before resorting to alternative means. The rule

provides:

              If service cannot be made under the applicable rule[,] the
              plaintiff may move the court for a special order directing the
              method of service. The motion shall be accompanied by an
              affidavit stating the nature and extent of the investigation
              which has been made to determine the whereabouts of the
              defendant and the reasons why service cannot be made.

Based on its interpretation of the rule, the court determined that alternative service is

only appropriate when the plaintiff has demonstrated a good faith effort to locate the

defendant, has made “practical efforts” to effectuate service of process, and the proposed

alternative means are “reasonably calculated to provide the defendant with notice of the

proceedings against him.” 464 F. Supp. 2d at 472-73. In applying the “practical efforts”

requirement to the facts before it, the court concluded the plaintiff‟s three attempts at

service, two of which were on the same day of the week, and occurred within the same

       4
         Appellants also heavily rely on cases dealing with service by publication pursuant
to Rule 4.1(n), and they apparently seek to import into the standard of impracticability the
requirement of due diligence in locating a defendant before effecting service by
publication. See, e.g., Barlage v. Valentine, 210 Ariz. 270, ¶ 8, 110 P.3d 371, 374 (App.
2005); Sprang v. Petersen Lumber, Inc., 165 Ariz. 257, 261-62, 798 P.2d 395, 399-400
(App. 1990). However, even assuming the reasoning of these cases applies outside the
service-by-publication context, a proposition we doubt, the issue in this case is not Blair‟s
ability to locate the defendants. Blair independently confirmed that Burgener actually
resided at the residential address through a neighbor, and Blair was consistently told that
Burgener was not present in the office at 402 W. Roosevelt—not that Burgener did not
work there. Blair thus met any requirement for due diligence and indeed was successful
in locating the defendants for the purpose of service of process.
                                              8
ninety-minute period of time, were insufficient to “meet her burden of showing that she

ha[d] undertaken practical efforts to serve the defendants under the circumstances.” Id.

at 473.

¶14           Calabro is distinguishable from this case. Unlike our Rule 4.1(m), Rule

430, Penn. R. Civ. P., permits alternative service only when “service cannot be made

under the applicable rule” and also requires an affidavit detailing the plaintiff‟s efforts to

locate and serve the defendant.       These requirements are more closely akin to the

heightened “due diligence” showing necessary for service by publication in Arizona.

See Ariz. R. Civ. P. 4.1(n) (“party or officer making service shall file an affidavit

showing the manner and dates of the publication and mailing, and the circumstances

warranting the utilization of the procedure); Sprang v. Petersen Lumber, Inc., 165 Ariz.
257, 261, 798 P.2d 395, 399 (App. 1990) (before service by publication, party must file

“affidavit setting forth facts indicating it made a due diligent effort to locate an opposing

party to effect personal service”). Thus we do not find Calabro instructive.

¶15           Relying on Kelly v. Lewis, 632 N.Y.S.2d 186, 186 (App. Div. 1995), Blair

contends “the standard of impracticability is different from the more stringent one of „due

diligence.‟” The service of process rule at issue in that case gives trial courts “discretion

to direct alternative service of process . . . when it has determined that the methods set

forth [in the service of process statute] are „impracticable.‟” 632 N.Y.S.2d at 485. And

in Kelly, the New York Appellate Division defined the standard of impracticability as

“different from the more stringent one of „due diligence‟ . . . . That is, to meet the

                                              9
standard on impracticability does not require satisfying due diligence, or even showing

that actual prior attempts to serve a party under each and every method provided in the

statute have been undertaken[.]” Id. (citing cases). Applying this standard, the court

concluded that three attempts at service on three different days constituted sufficient

efforts to warrant alternative means of service. Id. at 486.

¶16           Like the rule in Kelly, Rule 4.1(m), Ariz. R. Civ. P., permits alternative

service of process when traditional service is “impracticable” under the circumstances.

And, we agree this standard requires something less than the “due diligence” showing

required before service by publication may be utilized. If the drafters of Rule 4.1(m) had

intended plaintiffs to meet the same burden of establishing due diligence for alternative

service as for service by publication, it would have used the same language and included

the same requirements in both subsections. See Fragoso, 210 Ariz. 427, ¶ 12, 111 P.3d at

1031.

¶17           Other courts, in various contexts, have held the term “impracticable” “does

not mean that . . . impossibility . . . must be established,” but rather requires a showing

that the act to be performed “is extremely difficult or inconvenient.” Pac. Fire Ins. Co. v.

Reiner, 45 F. Supp. 703, 708 (E.D. La. 1942) (interpreting numerosity requirement for

class certification under federal rules of procedure); see also Garner v. Ellingson, 18
Ariz. App. 181, 182, 501 P.2d 22, 23 (1972) (doctrine of commercial frustration “not

necessarily limited to strict impossibility, but includes impracticability caused by extreme

or unreasonable difficulty or expense”); Gen. Motors Corp. v. Superior Court, 416 P.2d
10
492, 496 (Cal. 1966) (equating impracticability with futility, not impossibility, in

addressing statute of limitations argument); Bldg. Indus. Ass’n of San Diego County v.

State Water Res. Control Bd., 22 Cal. Rptr. 3d 128, 138, 145 (Cal. App. 2004) (in

discussing whether water permit requirements “impracticable or unreasonable,” noting

“practicable” something more than “possible”; impracticability means difficulty or

inconvenience, not impossibility). This interpretation of the word impracticable also is

consonant with its use in Rule 4.1(m), in that the showing for alternative service requires

something less than a complete inability to serve the defendant because the defendant‟s

current address is unknown or the defendant completely has avoided service of process.

See Rule 4.1(n) (describing conditions necessary to permit service by publication).

¶18           Here, Blair attempted service at both Appellants‟ place of business and

Burgener‟s residence on five different days and at various times. In addition to these

physical attempts, the process server attempted to ascertain over an additional seven days

whether Burgener was present in the office so that service could be made. Each time he

was told Burgener was not in the office.5 These circumstances demonstrate that service

of process through the usual means would have been “extremely difficult or

inconvenient.” See Pac. Fire Ins. Co., 45 F. Supp. at 708. And, to the extent additional

evidence and argument were presented at the hearing on Appellants‟ motion to set aside

      5
        These efforts are far more substantial than the efforts found insufficient in the
three out-of-state cases Appellants cite in support of their argument. See Calabro, 464
F. Supp. 2d at 473 (three attempts insufficient); Lombay v. Padilla, 895 N.Y.S.2d 503,
505 (N.Y. App. Div. 2010) (three attempts over four days and affixing notice to wrong
door insufficient); Austin v. Tri-County Mem’l Hosp., 834 N.Y.S.2d 419, 420 (N.Y. App.
Div. 2007) (three attempts on consecutive weekday afternoons insufficient).
                                            11
the default, we presume they support the trial court‟s ruling. Kohler, 211 Ariz. 106, n.1,
118 P.3d at 623 n.1. On this record, we therefore cannot say the court abused its

discretion in permitting Blair to serve Appellants through alternate means.

B. Adequacy of service

¶19            Appellants next argue that the means of alternative service authorized by

the trial court and as effected by Blair—which they characterize as “[a]lternative process

upon a receptionist in an eight office building”—did not comply with constitutional due

process. Due process requires notice “reasonably calculated, under all the circumstances,

to apprise interested parties of the pendency of the action and afford them an opportunity

to present their objections.” Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306,

314 (1950).6

¶20            Rule 4.1(m) provides that when alternate means of service of process are

employed, “reasonable efforts shall be undertaken by the party making service to assure

that actual notice of the commencement of the action is provided to the person to be

served,” and the service of process “shall be mailed to the last known business or

      6
        Relying on a state bar committee note pertaining to service by publication,
Appellants argue Blair was required to effect service by “„the best means of notice
practicable under the circumstances.‟” Ariz. R. Civ. P. 4.1, committee note, citing
Mullane, 339 U.S. 306 (1950). Not only is this comment limited to notice by publication,
and inapplicable here, but this is not the standard promulgated in Mullane. Mullane held
only that “notice by publication was constitutionally defective as to known persons
whose whereabouts were also known” because such notice is not reasonably calculated to
apprise them of pending litigation, while other, more effective methods of notice—
notably “the mails”—are available. Dusenbery v. United States, 534 U.S. 161, 162, 162
n.4 (2002), citing Mullane, 339 U.S. at 314, 319.

                                            12
residential address of the person to be served.” These two requirements ensure that a

defendant‟s due process rights have been satisfied. Appellants present no argument that

the trial court‟s order authorizing service upon “any person in charge of the office” in

which each of them conducted business, and by first-class mail to that address, was not

reasonably calculated to inform them of the pending litigation. 7 We conclude the court‟s

order was consistent with the requirements of due process.

¶21           Appellants‟ primary jurisdictional challenge appears to be focused on

whether Blair‟s actual means of service comported with due process. The trial court‟s

order for alternative service authorized personal service on any person “in charge of the

office.” In denying Appellants‟ motion to set aside the default judgment, the court

necessarily rejected their arguments that service by first-class mail and personal service

upon “any person in charge of the office” were not reasonable measures to inform

Appellants of the pending litigation.

       7
         To the extent Appellants argue service was deficient because it was not sent by
certified mail, we observe that the trial court did not specify any particular manner of
mailing, and Appellants do not argue certified mail was required pursuant to any other
authority. And, contrary to their assertion that “there is no proof that any of the
documents [Blair‟s] process server allegedly mailed to . . . 402 W. Roosevelt were
actually received by any of the Defendants,” the process server‟s affidavit that he had
mailed the process to the correct address constituted substantial evidence. See Lee v.
State, 218 Ariz. 235, ¶ 11, 182 P.3d 1169, 1171-72 (2008) (“[A]lthough a denial of
receipt rebuts the legal presumption that a piece of mail was received, a factfinder may
still infer from the fact of mailing that the mail did reach its destination.”). Thus, faced
with the process server‟s affidavit of service and Appellants‟ affidavits denying receipt, it
was for the trial court to determine which evidence was more credible. See Reliable Elec.
Co. v. Clinton Campbell Contractor, Inc., 10 Ariz. App. 371, 373, 459 P.2d 98, 100
(1969).
                                              13
¶22           Although Appellants describe the person served as a “receptionist,” Blair

described her in his opposition to the motion to set aside the default as “the „front desk‟

woman at 402 Roosevelt, Suite E.” Appellants do not dispute that “402 Roosevelt, Suite

E” is their business address.

¶23           In denying Appellants‟ motion to set aside the default judgment, the trial

court necessarily rejected their arguments that the service Blair employed was

inconsistent with either the court‟s order or due process. “Service of process can be

impeached only by clear and convincing evidence.”           Gen. Elec. Capital Corp. v.

Osterkamp, 172 Ariz. 191, 194, 836 P.2d 404, 407 (App. 1992); see also Hilgeman v.

Am. Mortgage Secs., Inc., 196 Ariz. 215, ¶ 14, 994 P.2d 1030, 1034 (App. 2000) (same).

And this court will not “second-guess or substitute our judgment for that of the trial

court” on questions of disputed fact. Gen. Elec. Capital Corp. v. Osterkamp, 172 Ariz.
185, 188, 836 P.2d 398, 401 (App. 1992). Because Appellants have failed to provide a

transcript of the hearing on their motion, we cannot say the court erred in concluding that

Appellants failed to sustain their burden or that, under the circumstances, due process

considerations had been satisfied and “service upon [Appellants] was adequate.” Kohler,

211 Ariz. 106, n.1, 118 P.3d at 623 n.1.

C. Compliance with order for service

¶24           Finally, Appellants contend that by not mailing a copy of the process to

Burgener‟s residential address and by not enumerating the documents re-mailed to the

correct address of 402 W. Roosevelt in the affidavit of service, Blair did not comply

                                            14
strictly with the trial court‟s order for alternate service and therefore did not “make a

prima facie showing of compliance with the requirements of Rule 4.1(m).” However, the

court‟s order authorized Blair to serve each of the Appellants by “mail[ing the process] to

the last known residence or business address of each party receiving alternate service.”

(Emphasis added.) Blair mailed the process to 402 W. Roosevelt, Suite E, and Burgener

has not disputed that this is his business address. Blair thus strictly complied with this

term of the court‟s order.

¶25           Additionally, the original affidavit of service specifically listed the

documents served in person upon the woman at the front desk and stated a second copy

of the process was mailed to the “above address.” The mailed copies apparently were

returned due to an incorrect address, but the process server‟s affidavit indicated “the

documents” were “re-mailed” to the correct address and not returned. Viewed in this

context, it is abundantly clear that the process server re-mailed the same documents listed

in the original service of process. Blair therefore complied in full with the court‟s order

for alternate service.

                                       Disposition

¶26           Because the trial court did not abuse its discretion in permitting alternative

service by the means employed, it had jurisdiction over Appellants. The entry of default

judgment thus was not void, and Appellants made no other showing of excusable neglect

that would entitle them to relief under Rule 60(c), Ariz. R. Civ. P. See Almarez v.

Superior Court, 146 Ariz. 189, 190-91, 704 P.2d 830, 831-32 (App. 1985). The court

                                            15
therefore did not abuse its discretion in denying Appellants‟ motion to set aside the

default judgment. The default judgment against Appellants is affirmed.

                                           /s/ Garye L. Vásquez
                                           GARYE L. VÁSQUEZ, Presiding Judge

CONCURRING:

/s/ Peter J. Eckerstrom
PETER J. ECKERSTROM, Judge

/s/ Virginia C. Kelly
VIRGINIA C. KELLY, Judge

                                          16