Big Bell 21, LLC v. Title All. Elite Agency, LLC, No. 1 CA-CV 22-0745, 2024 WL 95847 (App. Jan. 9, 2024), as amended (Jan. 9, 2024)

Thank you, ASU Law Extern Amber Li for the summary of this unpublished decision from Division II Arizona Court of Appeals.

lthough this case arose out of the COVID-19 pandemic, there are important practice pointers from this unpublished opinion: Timing on filing the Application for Entry of Default cannot be premature and if a judgment is entered early, the judgment could be rendered void under Ariz. R. Civ. P. 60(B)(4). Even though the Court of Appeals did not find “mistake, inadvertence, surprise, or excusable neglect” or “any other reason justifying relief,” pursuant to Ariz. R. Civ. P. 60(b)(1) or (6), the timing for the application for default judgment must be precise and executed with care.

Plaintiff sued Defendant for negligent misrepresentation on the status of a real estate transaction. The complaint was served on March 16, 2020, during the COVID-19 pandemic. At the time, the Arizona Supreme Court Administration Order (“A.O.”) No. 2020-47 was in place. After no response from Defendant, Plaintiff prematurely filed its Application for Entry of Default on April 10, 2020, despite the answer not being due until April 20, 2020.

The court entered the default judgment. Months later, after a successful garnishment, Defendant filed a Motion for Relief from Final Judgment pursuant to Ariz. R. Civ. P. 60(b)(1), (4), and (6). Defendant argued that there was excusable neglect due to COVID-19’s mail notice delays, addressed in A.O. 2020-47. With the mail notice delays, Defendant argued the deadline to respond to the complaint had not yet passed when Plaintiff applied for entry of default, making the judgment void. Defendant also argued that service upon the Defendant and its counsel was not proper and that the offices were closed during this time.

The trial court agreed with Defendant, concluding that Plaintiff “could have done more to provide notice of the lawsuit and/or the default proceedings.” The trial court set aside the default judgment Ariz. R. Civ. P. 60(b)(1), for “mistake, inadvertence, or excusable neglect.” Defendant again asked the court to amend its order to grant relief under Rule 60(b)(6) to try to reverse the garnishment. The trial court amended its ruling and set aside the default under Rules 60(b)(1) and (6) but did not address Rule 60(b)(4) and did not rule on Defendant’s request for return of the garnished funds. Plaintiff appealed.

The Appellate Court took a slightly different approach from the trial court but agreed with its ruling. It found that the judgment was void and must be set aside under Ariz. R. Civ. P 60(b)(4), due to A.O. 2020-47, which excluded the time for responding under Ariz. R. Civ. P. Rule 6 from March 16 through 31, 2020. The answer would, therefore, have been due April 20th, but the Application for Entry of Default was filed and served on April 10, 2020.

The Appellate Court opined that the superior court lacked the authority to render the judgment because Defendant was not in default when the judgment was entered. Citing Ariz. R. Civ. P. 60(b)(4), 55(b)(1)(A), Shinn v. Ariz. Bd. of Exec. Clemency, 254 Ariz. 255, 264–65, ?? 33–35 (2022) (judgment is void if the court lacks the authority to render it); Pemberton v. Duryea, 5 Ariz. 8, 9 (1896) (setting aside a default judgment that was “unquestionably premature”); Corbet v. Superior Court, 165 Ariz. 245, 248 (App. 1990). The Court of Appeals did not address the parties’ arguments under Ariz. R. Civ. P. 60(b)(1) and (6). Ariz. R. Civ. P. 60(b)(4) relieves a party from a final judgment if the judgment is void, even if there is significant delay. Ruffino v. Lokosky, 245 Ariz. 165, 169, 425 P.3d 1108, 1112 (App. 2018).

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