Cuen v. Cuen

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

TERESA CUEN,
Plaintiff/Appellee,

v.

PEDRO S. CUEN,
Defendant/Appellant.

No. 1 CA-CV 19-0105
FILED 3-25-2020

Appeal from the Superior Court in Maricopa County
No. CV2018-052199
The Honorable Bruce R. Cohen, Judge
The Honorable Steven K. Holding, Judge Pro Tempore Retired

AFFIRMED IN PART, VACATED IN PART, AND REMANDED

COUNSEL

Hymson Goldstein Pantiliat & Lohr, PLLC, Scottsdale
By John L. Lohr Jr., Lori N. Brown
Counsel for Plaintiff/Appellee

Pedro S. Cuen, Tucson
Defendant/Appellant
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Decision of the Court

MEMORANDUM DECISION

Judge James B. Morse Jr. delivered the decision of the Court, in which
Presiding Judge David D. Weinzweig and Judge Jennifer M. Perkins joined.

M O R S E, Judge:

¶1 Defendant Pedro S. Cuen ("Pedro") appeals from the superior
court's entry of default as a sanction in favor of Teresa Cuen ("Teresa"), and
denial of his motion to set aside the judgment.1 For the reasons that follow,
we affirm in part, vacate in part, and remand for further proceedings
consistent with this decision.

FACTS AND PROCEDURAL BACKGROUND

¶2 In 2007, Teresa began helping her brother, Pedro "Pete" Cuen
("Pete"), the father of defendant Pedro, by paying the mortgage, taxes,
insurance, and upkeep on the house Pete owned in Maricopa County (the
"Property").2 Pete made an oral promise to Teresa that "she could have the
Property when he died." Pete died in January 2017, without a will, and
Teresa moved into the Property. In November 2017, Pedro filed a probate
affidavit and obtained title to the Property. He then attempted to serve
Teresa with a notice to terminate tenancy. When Pete died, and for the
duration of the lawsuit, Pedro was incarcerated in various correctional
facilities operated by the Arizona Department of Corrections ("ADOC").

¶3 Teresa sued Pedro in April 2018 to quiet title to the Property.
Pedro filed an answer, but failed to provide a disclosure statement as
required by Arizona Rule of Civil Procedure 26.1 and instead filed multiple
requests for an extension of time. Teresa moved to compel a disclosure

1 Because the parties share the name Cuen, we will refer to them
individually by their first names.

2 Because Pedro's statement of facts does not include citations to the
record as required by ARCAP 13(a)(5), we have disregarded it and rely
upon Teresa's statement of facts as well as our own review of the record.
See Sholes v. Fernando, 228 Ariz. 455, 457 n.2 (App. 2011). We invited both
parties to file supplemental briefs and deny Teresa's motion to strike
Pedro's supplemental brief.

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statement, then moved for sanctions. The superior court granted Pedro a
three-month extension and warned him that failure to file a disclosure
statement could result in sanctions. When Pedro did not file a disclosure
statement by the new October 2018 deadline, the court granted Teresa's
renewed sanctions request, struck Pedro's answer, and entered default
against Pedro. Teresa moved for a default judgment hearing. Pedro
responded by filing a motion to dismiss. After holding a hearing in
December 2018, the court entered a default judgment against Pedro,
awarding Teresa the Property and her fees and costs. The court then denied
Pedro's motion to dismiss and his subsequent motion to set aside the
default judgment.

¶4 Pedro timely appealed. We have jurisdiction pursuant to
A.R.S. §§ 12-120.21(A)(1) and -2101(A)(1)-(2); see also Sears Roebuck & Co. v.
Walker, 127 Ariz. 432 (App. 1980) (holding that entering default, and the
resulting default judgment, as a sanction are appealable as a final
judgment); Hanen v. Willis, 8 Ariz. App. 175, 178 (1968) ("[A]n order setting
aside or refusing to vacate default judgment is a special order made after
judgment and is therefore appealable.").

DISCUSSION

¶5 We consider three issues on appeal. First, the superior court's
entry of default as a sanction for a discovery violation without holding a
hearing on the motion for sanctions. Second, Pedro's motion to set aside
the resulting default judgment based on the failure to receive notice of the
default judgment hearing. Finally, the court's order requiring Pedro to pay
deferred court costs from his prisoner spendable account.

I. Default as a Sanction.

¶6 Pedro argues the superior court denied him due process
when it struck his answer and found him in default as a sanction. Although
we generally review an order imposing a sanction for an abuse of
discretion, "[t]his discretion is more limited" when the court enters default
as a sanction. Poleo v. Grandview Equities, Ltd., 143 Ariz. 130, 133 (App. 1984).
Therefore, we "review the record and determine whether there is a
reasonable basis for the trial court's ruling." Id.

¶7 "It is well established that [a trial court] has the authority to
dismiss or to enter default judgment, depending on which party is at fault,
for failure . . . to comply with its orders." Green v. Lisa Frank, Inc., 221 Ariz.
138, 149, ¶ 29 (App. 2009) (alterations in original) (citation omitted). Courts
have found that "a willful disregard of discovery obligations, bad faith, or

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other fault by a party may form a valid basis for striking pleadings or
entering default judgment." Roberts v. City of Phoenix, 225 Ariz. 112, 119, ¶
27 (App. 2010); see Poleo, 143 Ariz. at 133 (finding a willful and bad faith
failure to produce documents sufficient to impose a default); see also Green,
221 Ariz. at 154, ¶ 45 (identifying other factors courts consider). Although
there is "a preference for a hearing to determine whether a [discovery
violation] was willful or in bad faith and whether the circumstances justify
drastic action," due process does not require a hearing prior to the
imposition of sanctions "[w]here willfulness or bad faith or fault of the party
is clear from the record." Robinson v. Higuera, 157 Ariz. 622, 624 (App. 1988).

¶8 Here, the superior court record was sufficiently clear to find
Pedro at fault for his failure to provide the disclosure statement and that his
conduct warranted the sanction. First, as a party proceeding pro per, there
is no dispute that Pedro is responsible for any discovery violations. See
Hammoudeh v. Jada, 222 Ariz. 570, 573, ¶ 9 (App. 2009) (finding hearing
unnecessary when "it is apparent from the record, and undisputed, that [the
party] was personally aware of, and responsible for, the inadequate
discovery responses."). Second, the record supports a finding of a willful
and bad faith failure to comply with the disclosure requirements. Pedro
never provided a disclosure statement despite receiving a three-month
extension by the court. The court placed Pedro on notice that failure to
comply could result in sanctions, but he failed to respond to Teresa's
renewed motion for sanctions. Further, the court found Pedro's delay
prejudiced Teresa by exposing her "to greater and greater fees and costs."
Finally, the record shows that the court considered imposing lesser
sanctions. See Montgomery Ward & Co. v. Superior Court, 176 Ariz. 619, 622
(App. 1993) (noting court must consider "other, less severe, sanctions before
resorting to the most extreme." (citation omitted)). The court found that
"[t]he only viable sanction is to enter a default against Defendant."

¶9 Because the facts supporting the superior court's decision are
apparent from the record, we cannot say the court abused its discretion by
entering the sanction.

II. Denial of Motion to Set Aside Default Judgment.

¶10 Pedro also argues the superior court erred by denying his
Rule 60(b) motion to vacate the default judgment. We generally review the
denial of a motion under Rule 60 for an abuse of discretion, Ezell v. Quon, 224 Ariz. 532, 536, ¶ 15 (App. 2010), but we "review de novo whether a
default judgment is void and should be vacated pursuant to Rule 60(b)(4),"
BYS Inc. v. Smoudi, 228 Ariz. 573, 578, ¶ 18 (App. 2012) (as amended). "At

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the outset we note that it is a highly desirable legal objective that cases be
decided on their merits and that any doubts should be resolved in favor of
the party seeking to set aside the default judgment." Hirsch v. Nat'l Van
Lines, Inc., 136 Ariz. 304, 308 (1983).

¶11 Pedro asserts the default judgment is void because his due
process rights were violated when he did not receive notice of the default
judgment hearing as required by Rule 55(b)(2)(C). That rule provides, in
relevant part, that:

If the party against whom a default judgment is sought has
appeared personally or by a representative, that party or its
representative must be served with written notice of the
application for default judgment at least 3 days before the
hearing. The notice must include the date, time, and place of
the hearing.

Ariz. R. Civ. P. 55(b)(2)(C). If an appearing defendant does not receive the
required written notice of the default judgment hearing, the default
judgment is void. McClintock v. Serv-Us Bakers, 103 Ariz. 72, 74 (1968); BYS
Inc., 228 Ariz. at 578, ¶ 21; Gustafson v. McDade, 26 Ariz. App. 322, 323 (1976).

¶12 Here, Teresa requested a default judgment hearing, and the
judgment states that a hearing was held on December 4, 2018. Although
the record does not include a minute entry for this hearing, we take judicial
notice that the superior court calendar shows the hearing scheduled for 1:30
p.m. on December 4, 2018. See In re Sabino R., 198 Ariz. 424, 425, ¶ 4 (App.
2000) (holding appellate court can take judicial notice of trial court records).
There is no evidence in the record, nor does Teresa assert, that Pedro
received notice of the hearing. Further, Pedro could not have appeared; the
court's sanctions order vacated "any orders that mandated ADOC to make
Defendant available by telephone for scheduled proceedings in this
matter." Because Pedro did not receive the requisite notice of the hearing,
the default judgment is void. Teresa's arguments to the contrary are
unpersuasive.

¶13 Teresa first argues that the superior court correctly entered
judgment "[p]ursuant to Ariz. R. Civ. P. 37(b)(2)(A)(vi) and 37(d)."
However, this misstates the superior court's sanctions order, which directs
that Teresa "may now seek a default judgment under Rule 55(b)." The
court's sanction did not abrogate Pedro's due process protections under
Rule 55(b)(2). See Poleo, 143 Ariz. at 134 ("Rule 55(b)(2) embodies important
concepts of due process."). As this Court previously held, a "party whose

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pleadings have been stricken as a sanction under Rule 37 must be given
notice of the application for judgment as required by Rule 55(b)(2) because
that party has 'appeared' in the action." Id.; see also Cook v. Steiner, 22 Ariz.
App. 505, 507 (1974) (remanding to allow defendant, defaulted under Rule
37(d), full participation at a Rule 55(b)(2) hearing).

¶14 Teresa then argues, without citing any authority, that Pedro
received constructive notice of the default judgment hearing. Although
Pedro received Teresa's motion requesting a default judgment hearing, and
the court published the hearing date and time on its website, this is
insufficient. The party must be served, and "[t]he notice must include the
date, time, and place of the hearing." Ariz. R. Civ. P. 55(b)(2)(C).

¶15 Next, Teresa argues that no hearing was required because she
sought quiet title to the Property, not money damages. Citing
Searchtoppers.com, LLC v. TrustCash LLC, 231 Ariz. 236, 240-41 (App. 2012),
Teresa asserts that an evidentiary hearing is limited to circumstances where
the plaintiff seeks an award of unliquidated damages. But in TrustCash, the
majority held that under Rule 55(b)(1) an appearing party is not entitled to
a hearing when the damages are "liquidated" and "the defendant has been
defaulted for failing to plead or otherwise defend." Id. at 239, ¶ 12; but cf.
BYS Inc., 228 Ariz. at 578, ¶ 20 (holding that an appearing defaulted party
is always entitled to a hearing under Rule 55(b)(2)). The majority in
TrustCash further noted that Rule 55(b)(1) "does not apply to parties who
appeared prior to the entry of default but against whom default judgment
has been entered as a sanction." 231 Ariz. at 239, ¶ 12 n.6 (citing Poleo, 143
Ariz. at 134). Because Pedro was not defaulted for failure to appear, the
superior court could not enter judgment under Rule 55(b)(1) and was
required to proceed under Rule 55(b)(2).

¶16 Finally, Teresa argues that any hearing on remand would be
superfluous because the entry of default as a sanction in a quiet title case
leaves nothing left to adjudicate. But quiet title actions are not immune
from the requirements of Rule 55(b)(2). See Yeast v. Fleck, 58 Ariz. 469, 472
(1942) (holding that no default judgment could be entered against
appearing defendant in quiet title action without "the three-day written
notice and . . . opportunity to be heard thereon."). A party in default loses
the right to litigate liability, but not the right to appear at the default
judgment hearing or "introduce evidence concerning the extent of their
liability." Tarr v. Superior Court, 142 Ariz. 349, 351 (1984). As this Court has
often stated, the "language of Rule 55(b) evinces an intention to place broad
discretion in the hands of the court to 'conduct such hearings' as would be
in furtherance of 'establishing the truth of the averments' contained in the

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complaint." Dungan v. Superior Court, 20 Ariz. App. 289, 291 (1973); see Ariz.
Dep't of Revenue v. Ariz. Tax Court (Citrus Heights), 165 Ariz. 47, 50 (App.
1990) (noting that trial courts should exercise their discretion in favor of
allowing defendants to participate in default hearings). The superior court
did not exercise any discretion here, but instead scheduled a default
judgment hearing for which only Teresa was given notice and an
opportunity to be heard. See Dungan, 20 Ariz. App. at 290 ("we do not
construe this rule to mean that a 'hearing' ipso facto means a one-sided
presentation by the party seeking the default judgment.").

¶17 Thus, the court erred in denying Pedro's motion to set aside
the default judgment. Pedro also asserts that Teresa's complaint failed to
state a cause of action. See S. Ariz. Sch. For Boys, Inc. v. Chery, 119 Ariz. 277,
281-82 (App. 1978). Because we vacate and remand to the superior court,
we need not address this argument.

III. Inmate Deferred Court Fees and Costs.

¶18 At the superior court, Pedro applied for a deferral of court
fees and costs. Finding Pedro indigent, the court granted the deferral and
ordered that "no payments will be due until further notice." Later, the court
issued an order for assessment and collection of inmate court fees and costs
pursuant to A.R.S. § 12-302(E). Pedro did not object to this order.
"Generally, we do not consider issues that were not raised in the superior
court." TrustCash, 231 Ariz. at 238, ¶ 8. "However, this rule is procedural,
not substantive, and may be suspended in our discretion." Dombey v. Phx.
Newspapers, Inc., 150 Ariz. 476, 482 (1986). Because we conclude that the
issue presented here, involving the interpretation of A.R.S. § 12-302(E), is
an issue of law and a matter of statewide importance, we exercise our
discretion to address the merits of Pedro's claim for fees and costs. See
Dombey, 140 Ariz. at 482. We review the superior court's decision to require
fees for abuse of discretion. See Tripati v. Tucker, 222 Ariz. 372, 375, ¶ 11
(App. 2009). "Whether the court properly interpreted the statute is a
question of law that we review de novo." Id. at 373, ¶ 3.

¶19 The statute provides that if an applicant for a waiver or
deferral of court costs, "is an inmate who is confined to a correctional facility
operated by the state department of corrections and who initiates a civil
action or proceeding, the inmate is responsible for the full payment of actual
court fees and costs" and requires ADOC to "withhold twenty percent of all
deposits into the prisoner's spendable account." A.R.S. § 12-302(E)
(emphasis added). The purpose of § 12-302(E) is "to stem the tide of
frivolous prisoner lawsuits." Beck v. Symington, 972 F. Supp. 532, 536 (D.

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Ariz. 1997). Adopting that interpretation, this Court noted the statute
requires "inmates to make some economic choices" before filing a civil suit.
Inzunza-Ortega v. Superior Court, 192 Ariz. 558, 560, ¶ 10 (App. 1998) (citing
Beck, 972 F. Supp. at 536); see also Ford v. State, 194 Ariz. 197, 200, ¶ 11 (App.
1999) (noting "that Arizona inmates are now responsible for court fees and
costs" when suing the state). Pedro did not initiate a civil action or
proceeding before the superior court. Instead, Teresa initiated the quiet title
action by filing suit against Pedro while he was incarcerated. Because the
statute does not apply under these facts, the superior court erred in
requiring Pedro to pay a portion of the deferred filing fees and costs from
his prisoner spendable account. In contrast, this Court properly issued an
order to collect fees on appeal pursuant to A.R.S. § 12-302(E) because, as the
appellant, Pedro initiated the appeal. See Inzunza-Ortega, 192 Ariz. at 561,
¶ 16 (describing practice of ordering inmate costs incurred on appeal).

IV. Pedro's Remaining Arguments.

¶20 Pedro makes additional arguments objecting to the
imposition of the sanction, including (1) access to the courts, (2) his motion
to dismiss cured the default, (3) corruption of blood, and (4) rights against
self-incrimination. These arguments are either waived or frivolous. See,
e.g., Lewis v. Casey, 518 U.S. 343, 355 (1996) (a prisoner's right of access to the
courts is limited to challenging a conviction, sentence, or condition of
confinement); Groat v. Equity Am. Ins. Co., 180 Ariz. 342, 348 (App. 1994)
(finding Rule 55(a), which provides 10 days to cure a default, "inapplicable
where an answer is stricken as a discovery sanction"); Morrisey v. Ferguson, 156 Ariz. 536, 538 (App. 1988) (describing "early English penal requirement
whereby a person convicted of a crime forfeited his land and personal
property to the king."); State v. $19,238.00 in U.S. Currency, 157 Ariz. 178,
183 (App. 1987) ("[A] party to a civil action cannot, simply by invoking the
Fifth Amendment right against self-incrimination, refuse with impunity to
respond to proper discovery."); see also Odom v. Farmers Ins. Co. of Ariz., 216
Ariz. 530, 535, ¶ 18 (App. 2007) ("[A]rguments raised for the first time on
appeal are untimely and deemed waived."). We also reject Pedro's
argument that the superior court lacked jurisdiction due to an alleged
defect with the summons because Pedro consented to personal jurisdiction
by appearing in the action. See Ariz. R. Civ. P. 4(f)(3), (4) (voluntary
appearance has "the same force and effect as if a summons had been issued
and served.").

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CONCLUSION

¶21 We affirm the superior court's order striking Pedro's
pleadings and entering default against him as a sanction but vacate the
default judgment and remand to the superior court for a hearing, with
proper notice, on Teresa's application for entry of judgment. See Mayhew v.
McDougall, 16 Ariz. App. 125, 130 (1971) (recognizing court can "refuse to
set aside a default and yet set aside the default judgment"). We further
vacate the superior court's August 30, 2018, order for assessment and
collection of inmate court fees and costs.3

¶22 Because Pedro is incarcerated, it is within the superior court's
discretion to allow him to attend the hearing in person or telephonically.
Ariz. Dept. of Econ. Sec. v. Valentine, 190 Ariz. 107, 110 (App. 1997). If Pedro
is to appear telephonically, the court must order ADOC to provide Pedro
access to a telephone at the time of the hearing. Id.

¶23 Teresa requests her attorney fees on appeal pursuant to A.R.S.
§ 12-1103(B). In our discretion, we decline to award her fees. Pedro also
requests an award of his fees and costs. As a pro per litigant, he is unable to
recover attorney fees. Hunt Inv. Co. v. Eliot, 154 Ariz. 357, 362 (App. 1987).
Because both parties prevailed in part, we decline to award either party
costs incurred on appeal. See ARCAP 21.

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

3 In addition to the usual distributions, a copy of this decision shall be
mailed to the ADOC, Bureau of Business and Finance.

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