KITAGUCHI v. VELASCO

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

In the Matter of the Estate of:

BETTY J. KITAGUCHI, Deceased.
__________________________________________________

TERRY KITAGUCHI,
Plaintiff/Counterdefendant/Appellant/Appellee

v.

FELIPE VELASCO, et al.,
Defendants/Counterclaimants/Appellees/Appellants.
__________________________________________________

HYMSON GOLDSTEIN PANTILIAT & LOHR, PLLC
and JOHN L. LORH, JR., Intervenors/Appellees

No. 1 CA-CV 25-0956 PB
FILED 10-09-2026

Appeal from the Superior Court in Maricopa County
No. CV2024-002360, PB2024-002113
The Honorable Lisa A. Vandenberg, Judge, Retired
The Honorable Kerstin G. LeMaire, Judge

VACATED

COUNSEL

Payneless Law, Phoenix
By Christopher D. Payne
Counsel for Defendants/Counterclaimants/Appellees/Appellants

Ahwatukee Legal Office, P.C., Phoenix
By David L. Abney
Counsel for Plaintiff/Counterdefendant/Appellant/Appellee

Hymson Goldstein Pantiliat & Lohr, PLLC, Scottsdale
By John L. Lohr, Jr., David B. Goldstein, Eddie A. Pantiliat
Counsel for Intervenors/Appellees

MEMORANDUM DECISION

Presiding Judge Andrew J. Becke delivered the decision of the Court, in
which Judge James B. Morse Jr. and Chief Judge Randall M. Howe joined.

B E C K E, Judge:

¶1 Plaintiff Terry Kitaguchi (“Kitaguchi”) appeals the superior
court’s entry of default and subsequent awards of attorneys’ fees and
statutory damages. Defendant Felipe Velasco (“Velasco”) also appeals the
superior court’s award of attorneys’ fees and statutory damages. For the
following reasons, we vacate and remand.

FACTUAL AND PROCEDURAL HISTORY

¶2 Kitaguchi’s mother Betty passed away in 2023. In 2016, Betty
had amended her will and trust instrument. These amendments changed
her estate’s personal representative and trust’s successor trustee from her
son, Kitaguchi, to her neighbor, Velasco. Betty also amended the trust such
that, upon her passing and after distributing three small bequests to family
members, the balance of the trust, including Betty’s house, would go to
Velasco.

¶3 Kitaguchi brought a civil action against Velasco over the will
and trust instrument amendments, alleging that Betty was incapacitated
before her death and that Velasco had exercised undue influence over her.
Velasco asserted counterclaims against Kitaguchi based on Kitaguchi’s
attempts to gain possession of Betty’s home after her death. In a separate

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action, Kitaguchi also petitioned to probate Betty’s earlier 2011 will that
named him as personal representative. In October 2024, the civil and
probate cases were consolidated.

¶4 In August 2024, before the consolidation and around the time
Velasco filed his counterclaims, Adult Protective Services (“APS”) released
records of its investigations regarding Betty, including letters to Kitaguchi
stating that APS could not substantiate any claims of neglect or exploitation.
These reports caused Kitaguchi’s counsel, lawyers at Hymson Goldstein
Pantiliat & Lohr, PLLC (“HGPL”), to reassess Kitaguchi’s claims as unlikely
to be successful. At that time, HGPL advised Kitaguchi to voluntarily
dismiss the case.

¶5 Settlement negotiations began after APS released its reports,
but Kitaguchi and Velasco were unable to come to an agreement. During
these negotiations, Kitaguchi still had not filed an answer to Velasco’s
counterclaims. In September and October, communication difficulties arose
between HGPL and Kitaguchi. On October 15, after settlement discussions
stalled, Velasco applied for an entry of default on his counterclaims because
Kitaguchi had not yet filed a responsive pleading. On October 28, Kitaguchi
filed both an answer to and a motion to dismiss Velasco’s counterclaims.

¶6 Citing fundamental disagreements about the case, HGPL
moved to withdraw as Kitaguchi’s counsel of record on November 4. Doug
Newborn Law Firm, PLLC (“Newborn”) appeared as Kitaguchi’s counsel
of record on November 7.

¶7 On December 3, Velasco filed a 12-page motion to strike
Kitaguchi’s answer to Velasco’s counterclaims, citing Arizona Rule of Civil
Procedure (“Rule”) 12(f) (the “12/3 Motion”). Velasco argued Kitaguchi’s
answer was a “sham answer” in violation of Rules 8 and 11 and sought
entry of default as a sanction. On December 11, Kitaguchi filed a two-page
response in which he raised only procedural arguments, including that the
12/3 Motion did not comply with Rule 7.1(f)’s two-page limit on motions
to strike.

¶8 On December 23, Velasco moved to strike Kitaguchi’s motion
to dismiss Velasco’s counterclaims, pursuant to Rule 7.1(f) (the “12/23
Motion”). Velasco argued that Kitaguchi’s motion was untimely and lacked
a Rule 7.1(h) good faith consultation certificate.

¶9 Kitaguchi responded, raising procedural arguments similar
to those he raised against the 12/3 Motion. The signature block of the
response reflects that it was signed on January 2, 2025. But, for unknown

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reasons, the court clerk hand-stamped Kitaguchi’s response as having been
filed on November 26, 2024, nearly a month before the motion to which it
responded.

¶10 On January 17, 2025, Kitaguchi moved for leave to amend his
answer to Velasco’s counterclaims. This one-page motion did not include
any grounds justifying leave to amend. On the same day, the court granted
Velasco’s 12/23 Motion based, at least in part, on the mistaken belief that
Kitaguchi had not responded to the motion.

¶11 In a January 24 minute entry, the court granted the
12/3 Motion. To justify striking Kitaguchi’s answer, the court “embrace[d]
the analysis” in the 12/3 Motion, found that Kitaguchi’s answer had
violated Rule 8 by providing only “boilerplate language regarding denials
and alleged affirmative defenses,” and found the answer to be untimely.

¶12 After striking Kitaguchi’s motion to dismiss and answer, the
court found that Kitaguchi had not responded to Velasco’s counterclaims.
The court denied Kitaguchi leave to amend his answer and ultimately
entered default judgment in favor of Velasco. The court determined that the
default on Velasco’s counterclaims resolved all merit questions and that
only attorneys’ fees were left to be determined.

¶13 After the entry of default, Velasco applied for an award of
statutory damages and attorneys’ fees against Kitaguchi pursuant to A.R.S.
§§ 33-420(A) and 12-1103(B). The court awarded those attorneys’ fees and
statutory damages against Kitaguchi because of the default judgment.

¶14 Velasco also requested the court sanction Kitaguchi, HGPL,
and Newborn under A.R.S. § 12-349, alleging that Kitaguchi’s claims lacked
substantial justification and that Kitaguchi and his attorneys had
unreasonably expanded and delayed the litigation. Kitaguchi, HGPL, and
Newborn all submitted responses in opposition to Velasco’s application for
attorneys’ fees.

¶15 Before imposing § 12-349 sanctions, the superior court held a
“culprit hearing.” See Marquez v. Ortega, 231 Ariz. 437, 444, ¶ 26 (App. 2013).
In anticipation of that hearing, HGPL moved to file a letter to the court
under seal (“Exhibit 32”) ex parte for in camera review. HGPL claimed
Exhibit 32 was covered by attorney-client privilege because the letter
included correspondence between HGPL and Kitaguchi concerning case
strategy. Although the court granted HGPL’s motion to file Exhibit 32
under seal, the court later declined to review or consider the letter ex parte.
Although marked as an exhibit, the letter was not admitted into evidence.

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¶16 The court ultimately awarded Velasco sanctions pursuant to
§ 12-349 only against Kitaguchi. The court awarded attorneys’ fees based
on the exhibits it had admitted into evidence, which did not include
Exhibit 32.

¶17 After being appointed as personal representative of Betty
Kitaguchi’s estate, Velasco also applied for attorneys’ fees under A.R.S.
§ 14-1105(A) to be assessed jointly and severally against Kitaguchi, HGPL,
and Newborn. The court never explicitly ruled on that application.

¶18 During the litigation about attorneys’ fees and exhibits,
Kitaguchi moved for reconsideration, in which he again requested leave to
amend his answer. He also moved, pursuant to Rules 59(d) and 60(b), for
relief from judgment. Both of those motions were denied.

¶19 Kitaguchi and Velasco both timely filed separate notices of
appeal. We have jurisdiction under Article 6, Section 9 of the Arizona
Constitution and A.R.S. § 12-2101(A).

DISCUSSION

¶20 Kitaguchi argues on appeal that the superior court erred in
entering default because: (1) the court should have preferred adjudicating
this case on the merits; (2) his answer to Velasco’s counterclaims was both
timely and in compliance with Rule 8; and (3) he did respond to the
12/23 Motion.

¶21 Kitaguchi and Velasco both appeal the court’s award of
attorneys’ fees and statutory damages. Kitaguchi argues that the court had
no basis to award fees because it erred in entering default. Velasco argues
that the sanctions awarded under A.R.S. § 12-349 should also have been
awarded against HGPL and Newborn. Velasco also argues that the court
erred in not ruling on his claim for attorneys’ fees under A.R.S. § 14-1105
and in its handling of HGPL’s Exhibit 32. HGPL filed an intervenor’s brief
opposing Velasco’s appeal.

I. The Court Erred by Granting the Motions to Strike and Entering
Default Judgment.

¶22 Kitaguchi argues the superior court erred in granting the
12/3 Motion that struck his answer and the 12/23 Motion that struck his
motion to dismiss, which ultimately lead to the entry of default judgment
against him on Velasco’s counterclaims.

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¶23 We review the grant of a motion to strike for an abuse of
discretion. Dowling v. Stapley, 221 Ariz. 251, 266, ¶ 45 (App. 2009).
Generally, an abuse of discretion occurs “when there is no evidence to
support a holding or the court commits an error of law when reaching a
discretionary decision.” Id. However, “the scrutiny given to severe
sanctions will naturally be greater in light of the more restrictive standards
for imposing them.” Estate of Lewis v. Lewis, 229 Ariz. 316, 324, ¶ 20 (App.
2012). We discuss each motion to strike in turn.

A. 12/3 Motion

¶24 Kitaguchi argues that the superior court erred in striking his
answer and preventing the resolution of the case on its merits by not
allowing him to amend his answer and entering a default.

¶25 In his 12/3 Motion, Velasco explicitly sought default
judgment “as a sanction for failure to comply with” Rules 8 and 11 of the
Arizona Rules of Civil Procedure. The superior court, in granting the
motion, “embrace[d] the analysis put forth in [the 12/3 Motion],” found
that Kitaguchi’s answer was untimely, and entered default judgment in
Velasco’s favor as a sanction. But Kitaguchi’s answer was both timely and
sufficient under Rule 8. And any Rule 11 violation did not justify the entry
of default as a sanction.

¶26 Kitaguchi’s answer was timely. After an application for
default, if the party claimed to be in default pleads or defends within
10 days, the court may not enter default. Ariz. R. Civ. P. 55(a)(1). While an
answer should be served within 20 days of service of counterclaims per
Rule 12(a)(1)(A)(i), an answer is still “timely filed” if filed within the 10-day
default period. Corbet v. Superior Court, 165 Ariz. 245, 248 (App. 1990).
Kitaguchi’s answer was filed on the ninth day of that 10-day period. As
Velasco conceded to the superior court, Kitaguchi’s response was filed
before the 10-day deadline and was therefore timely. The court erred by
miscalculating the relevant deadline.

¶27 Kitaguchi’s answer was also sufficient under Rule 8. “Arizona
follows a notice pleading standard.” Cullen v. Auto-Owners Ins. Co., 218
Ariz. 417, 419, ¶ 6 (2008). Rule 8 governs the sufficiency of pleadings and
requires only that an answer “state in short and plain terms its defenses to
each claim asserted against it” and “admit or deny the allegations asserted
against it by an opposing party.” Ariz. R. Civ. P. 8(c)(1). The veracity of
denials or admissions is not within the scope of Rule 8. Kitaguchi’s answer
met these minimum standards and complied with Rule 8.

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¶28 Velasco argues that Kitaguchi’s answer did not fairly respond
to the substance of the counterclaims. But Kitaguchi’s answer admitted or
denied each and every allegation of Velasco’s countercomplaint. Rule 8
requires nothing more. The court erred by concluding otherwise.

¶29 Rule 11 requires, among other things, that an attorney signing
a pleading certify that “to the best of the person’s knowledge, information,
and belief formed after reasonable inquiry . . . the denials of factual
contentions are warranted on the evidence or, if specifically so identified,
are reasonably based on belief or a lack of information.” Rule 11(b)(4). The
court is empowered to impose appropriate sanctions for violations of
Rule 11, but that discretion is not unlimited.

¶30 Striking Kitaguchi’s answer for violating Rule 11 and entering
default was not appropriate here. Arizona courts have a longstanding
preference of adjudicating cases on their merits. Colboch v. Aviation Credit
Corp., 64 Ariz. 88, 94 (1946); AG Rancho Equip. Co. v. Massey-Fergusion, Inc.,
123 Ariz. 122, 123 (1979); Green v. Lisa Frank, Inc., 221 Ariz. 138, 153, ¶ 40
(App. 2009). Reflecting that preference, courts should “act cautiously”
when imposing the sanction of default judgment since it is “the most severe
in the spectrum of sanctions.” AG Rancho, 123 Ariz. at 123 (internal
quotation marks omitted).

¶31 Under Rule 11, sanctions should be “appropriate”
considering the opportunities allowed for the party to withdraw or correct
any alleged violations. Ariz. R. Civ. P. 11(c)(1). Motions to strike pleadings
are “generally viewed with disfavor” because of the drastic nature of the
remedy they seek. See Engel v. Landman, 221 Ariz. 504, 509, ¶ 15 n.2 (App.
2009). Because default, dismissal, and striking a pleading are such severe
sanctions, we require more intensive investigation to justify those sanctions
as “appropriate.” Montgomery Ward & Co. v. Superior Court, 176 Ariz. 619,
622 (App. 1993) (assessing Rule 26.1 sanctions); Wayne Cook Enters. v. Fain
Props. Ltd. P’ship, 196 Ariz. 146, 148, ¶ 10 (1999) (assessing Rule 37(d)
sanctions); Green, 221 Ariz. at 150, ¶ 29 (assessing sanctions “based on the
court’s inherent authority to sanction a failure to comply with its orders”).
This requirement is not based on any one rule’s structure but on
“fundamental fairness.” AG Rancho, 123 Ariz. at 124 (quoting Edgar v.
Slaughter, 548 F.2d 770, 773 (8th Cir. 1977)).

¶32 A court’s discretion is “more limited” when it is imposing
sanctions such as dismissal, striking a pleading, or entering a default
judgment. Lewis, 229 Ariz. at 323, ¶ 18 (quoting Roberts v. City of Phoenix,
225 Ariz. 112, 119, ¶ 27 (App. 2010)). Before entering default, courts must

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hold a hearing to determine whether non-compliance was due to the party’s
willfulness or bad faith, Birds Int’l Corp. v. Ariz. Maint. Co., 135 Ariz. 545,
547 (App. 1983), and the record must show that the court thoroughly
considered other, less severe sanctions, Seidman v. Seidman, 222 Ariz. 408,
413, ¶¶ 30–31 (App. 2009) (vacating the sanction of default when court
failed to assess efficacy of less severe sanctions for failure to attend a
deposition).

¶33 At the time the superior court granted the 12/3 Motion, struck
Kitaguchi’s answer, and entered default, the record contained no evidence
of Kitaguchi’s bad faith. The default deadline coincided with discussions
about substituting counsel, and HGPL filed an answer to preserve
Kitaguchi’s claims while he secured substitute counsel. Kitaguchi’s answer
was timely and complied with Rule 8. The court did not hold a hearing or
receive evidence about the claimed Rule 11 violation before granting the
12/3 Motion. Nor does the record reflect that the court considered less
drastic options, like an award of attorneys’ fees, before imposing case-
terminating sanctions. Moreover, both before and after the court granted
the 12/3 Motion, Kitaguchi sought leave to amend his answer. The court
denied leave both times, with little to no stated reasoning.

¶34 To the extent that the court faulted Kitaguchi for his brief,
two-page response to the 12/3 Motion, that was not a valid basis to grant
the motion. Kitaguchi complied with Rule 7.1(f). Motions and responses
filed pursuant to Rule 7.1(f) must be less than two pages in length. Ariz. R.
Civ. P. 7.1(f)(2)(B). Kitaguchi’s response to the 12/3 Motion was slim, but
its brevity was a result of that limit. Kitaguchi should not be faulted for
complying with the Rule, particularly when Velasco did not. 1

¶35 Because the court failed to conduct a hearing, failed to
consider any lesser sanctions, and failed to permit Kitaguchi to amend his
answer, the court erred by granting the 12/3 Motion, striking Kitaguchi’s
answer, and entering default against him. Accordingly, we vacate the
court’s grant of the 12/3 Motion and entry of default.

1 Kitaguchi and Velasco disagree about whether Rule 7.1(f)’s two-page limit

applied to the 12/3 Motion. While Velasco filed the 12/3 Motion pursuant
to Rule 12(f), the 12/3 Motion sought to strike an entire pleading rather than
just insufficient defenses or scandalous or irrelevant material. Therefore,
Kitaguchi was correct that Rule 7.1(f) applied and that his response was
limited to two pages. Velasco’s 12/3 Motion should have also been limited
to two pages.

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B. 12/23 Motion

¶36 Kitaguchi argues that the superior court also erred in granting
the 12/23 Motion because the court incorrectly noted that Kitaguchi had
not filed a response to that motion. The court, in its minute entry, granted
the 12/23 Motion because “[t]here [wasn’t] a Responsive Pleading in the
Electronic Record, nor ha[d] the Court received a copy of such.” However,
Kitaguchi did file a response to the 12/23 Motion. The response is dated
January 2, 2025, and appears in the record, albeit out of the typical
sequential order of filings. It appears that the court (understandably) did
not see the response because of the erroneous date stamp: the filing was
dated by the court as having been filed on November 26, 2024—before
Velasco had even filed the 12/23 Motion. The court erred in granting the
motion based on the mistaken belief that no response had been filed.

¶37 Velasco argues that even if the court had erred in failing to
receive Kitaguchi’s response, the court’s error did not prejudice Kitaguchi.
However, the superior court’s striking of Kitaguchi’s motion to dismiss was
based, at least in part, on the incorrect understanding that Kitaguchi failed
to file a response. Because Kitaguchi did, in fact, file a response, we vacate
the court’s grant of the 12/23 Motion and remand for reconsideration.

II. The Superior Court’s Decisions Concerning Attorneys’ Fees Do
Not Withstand the Reversal of Default.

¶38 Kitaguchi appeals the superior court’s awards of attorneys’
fees and statutory damages pursuant to A.R.S. §§ 12-1103(B) and 33-420(A).
In making these awards, the court relied on the default against Kitaguchi.
Because we vacate the default judgment, we also vacate the court’s awards
of attorneys’ fees pursuant to §§ 12-1103(B) and 33-420(A).

¶39 Both Kitaguchi and Velasco appeal the award of attorneys’
fees and statutory damages pursuant to A.R.S. § 12-349. While awards
under § 12-349 are not linked to any specific litigation outcome, Hamm v.
Y & M Enters., 157 Ariz. 336, 338 (App. 1988), this award of sanctions was
based, at least in part, on the court’s erroneous grant of case-terminating
sanctions. Therefore, we also vacate the § 12-349 sanctions for
reconsideration on remand.

¶40 Velasco argues the court should have addressed his
application for attorneys’ fees under A.R.S. § 14-1105(B). Because “[a]
motion that is not ruled on is deemed denied by operation of law,” we treat
Velasco’s application for attorneys’ fees under § 14-1105(B) as having been
denied. State v. Hill, 174 Ariz. 313, 323 (1993). We similarly vacate the denial

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of this application without prejudice to the court reimposing fees as
appropriate.

¶41 Velasco makes several arguments regarding the court’s
handling of Exhibit 32. Exhibit 32 solely related to the court’s assessment of
§ 12-349 sanctions. Because we vacate the court’s award under § 12-349, we
do not address Exhibit 32.

ATTORNEYS’ FEES AND COSTS

¶42 As the successful parties, Kitaguchi and HGPL are entitled to
an award of costs incurred on appeal upon compliance with ARCAP 21.

¶43 Velasco requests attorneys’ fees on appeal pursuant to A.R.S.
§§ 14-1105, 12-349(A), 12-1103(B), 33-420, and 14-11004(B). Because Velasco
is not the prevailing party, we deny those requests.

¶44 HGPL requests attorneys’ fees pursuant to ARCAP 25 and
§ 12-349. Because we find that Velasco did not act in violation of § 12-349,
we deny that request.

CONCLUSION

¶45 We vacate the superior court’s grants of the 12/3 and 12/23
Motions as well as the entry of default against Kitaguchi. We also vacate
the court’s awards of attorneys’ fees and remand for proceedings consistent
with this decision.

MATTHEW J. MARTIN • Clerk of the Court
FILED: JR

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