Amanti Electric, Inc. v. Engineered Structures, Inc., Western Surety Company

FILED BY CLERK
IN THE COURT OF APPEALS
STATE OF ARIZONA MAR 28 2012
DIVISION TWO
COURT OF APPEALS
DIVISION TWO

AMANTI ELECTRIC, INC., an )
Arizona corporation, ) 2 CA-CV 2011-0083
) DEPARTMENT B
Plaintiff/Appellant, )
) OPINION
v. )
)
ENGINEERED STRUCTURES, INC., )
an Idaho corporation, and WESTERN )
SURETY COMPANY, a South Dakota )
corporation, )
)
Defendants/Appellees. )
)

APPEAL FROM THE SUPERIOR COURT OF PIMA COUNTY

Cause No. C20088017

Honorable Ted B. Borek, Judge

VACATED AND REMANDED

Durazzo & Eckel, P.C.
By Neal A. Eckel and Eric Hawkins Tucson
Attorneys for Plaintiff/Appellant

Keller & Hickey, P.C.
By Thomas F. Hickey Tempe
Attorneys for Defendants/Appellees

E S P I N O S A, Judge.

¶1 In this action for breach of contract and quantum meruit, Amanti Electric,

Inc., (Amanti), appeals from the trial court’s denial of its motion for relief from
judgment under Rule 60(c)(6), Ariz. R. Civ. P., arguing the court abused its discretion by

failing to take into account considerable equities that favored Amanti. Because it

appears the court did not consider the totality of the circumstances in ruling on Amanti’s

motion, we vacate its order and remand the case for further proceedings as delineated

below.

Background

¶2 In June 2007, Engineered Structures, Inc., a general contractor, entered into

subcontracts with Amanti to perform electrical work on two supermarkets being

constructed in Pima County. In November 2008, Amanti sued Engineered Structures and

its surety Western Surety Co. (collectively referred to as ESI) for $630,127—the amount

ESI allegedly owed on the contract. In December, ESI mailed Amanti a check in the

amount of $409,055, which Amanti did not deposit. Litigation continued, and in

February 2010, unbeknownst to Amanti, ESI placed a stop-payment order on the check,

which was then approximately fourteen months old.

¶3 About one month later, Amanti and ESI entered into a settlement agreement

in which ESI agreed to pay $130,000 “as full and final payment of any and all claims

asserted or which could have been asserted” in the lawsuit.1 Pursuant to the parties’

1
Although during oral argument in this court ESI suggested the 2010 settlement
negotiations addressed the entire claim by Amanti against ESI, including the portion of
the litigation that putatively had been resolved by the December 2008 check, we find that
claim disingenuous in view of ESI’s acknowledgement in its September 2009
Controverting Certificate of Readiness that part of Amanti’s claim had been satisfied by
“payments made by Defendant ESI to Plaintiff following the filing of the Complaint,”
and that no more than $221,072 remained at issue.
2
stipulation, the action was dismissed on March 22, 2010. In September, Amanti

presented the December 2008 check for deposit, but the bank refused to honor it due to

the stop-payment order issued by ESI. Amanti immediately contacted ESI to resolve the

issue. In a letter, ESI explained it had moved its account to a different bank and had

issued the stop-payment order upon noticing the check was still outstanding. ESI also

asserted that any claim Amanti had with respect to the check was barred by the settlement

agreement and concomitant dismissal with prejudice, which resolved all disputes between

the parties.

¶4 Amanti filed a motion for relief from judgment pursuant to Rule 60(c),

arguing it was entitled to relief based on fraud, misconduct, misrepresentation, and

mistake. After oral argument, the trial court denied the motion and Amanti’s subsequent

motion for reconsideration. We review the denial of a Rule 60(c) motion for an abuse of

discretion. Norwest Bank (Minn.), N.A. v. Symington, 197 Ariz. 181, ¶ 11, 3 P.3d 1101,

1104 (App. 2000). An abuse of discretion occurs “when the trial court commits an error

of law in the process of exercising its discretion.” Fuentes v. Fuentes, 209 Ariz. 51, ¶ 23,

97 P.3d 876, 881 (App. 2004).

Discussion

¶5 Although Amanti sought relief in the trial court pursuant to Rule 60(c)(1)

(mistake, inadvertence, surprise, or excusable neglect), 60(c)(3) (fraud,

misrepresentation, or other misconduct of an adverse party), and 60(c)(6) (any other

reason justifying relief), on appeal it argues only that the court erred in denying relief

requested pursuant to Rule 60(c)(6). Specifically, Amanti contends ESI’s improper
3
conduct in failing to disclose the stop-payment order both before and during the

settlement negotiations provides grounds for relief under Rule 60(c)(6). ESI counters

that, because Amanti’s arguments were colorable under clauses (1) and (3) of Rule 60(c),

relief was unavailable under clause (6).2

¶6 “The need for finality [in judgments] must give way in extraordinary

circumstances,” Park v. Strick, 137 Ariz. 100, 104, 669 P.2d 78, 82 (1983), and

“Rule 60(c)(6) gives the courts ample power to vacate judgments whenever such action is

appropriate to accomplish justice,” Gendron v. Skyline Bel Air Estates, 121 Ariz. 367,

368, 590 P.2d 483, 484 (App. 1979). The grounds for relief in clause (6) and the other

grounds for relief allowed under Rule 60(c) are usually mutually exclusive. See, e.g.,

Davis v. Davis, 143 Ariz. 54, 57, 691 P.2d 1082, 1085 (1984); Webb v. Erickson, 134

Ariz. 182, 186, 655 P.2d 6, 10 (1982). Relief nevertheless has been granted “‘with[] a

more liberal dispensation than a literal reading of the rule would allow’” in “‘cases of

extreme hardship or injustice.’” Roll v. Janca, 22 Ariz. App. 335, 337, 527 P.2d 294, 296

(1974), quoting 11 Charles A. Wright & Arthur R. Miller, Federal Practice and

Procedure § 2864, at 219-20 (1973); see also Webb, 134 Ariz. at 187, 655 P.2d at 11

(purpose of clause (6) to grant equitable relief “whenever the circumstances are

extraordinary and justice requires”), citing Roll, 22 Ariz. App. at 337, 527 P.2d at 296.

2
Amanti does not dispute ESI’s assertion that relief under Rule 60(c)(1) and
60(c)(3) was time-barred. See Ariz. R. Civ. P. 60(c) (request for relief under clauses (1),
(2), and (3) must be filed within six months after judgment or order entered).
4
¶7 Rule 60(c)(6), like its federal counterpart,3 is a catch-all provision that “has

been described as a ‘grand reservoir of equitable power to do justice in a particular

case.’” Roll, 22 Ariz. App. at 337, 527 P.2d at 296, quoting Radack v. Norwegian Am.

Line Agency, Inc., 318 F.2d 538, 542 (2d Cir. 1963). This remedial principle is

articulated not only in Arizona’s jurisprudence, but also in Rule 60(c)’s federal

underpinning, and “[i]t is appropriate to look to federal courts’ interpretations of federal

rules that mirror Arizona rules.” Haroutunian v. Valueoptions, Inc., 218 Ariz. 541, n.8,

189 P.3d 1114, 1121 n.8 (App. 2008); see Roll, 22 Ariz. App. at 337, 527 P.2d at 296.

Application of the rule “tend[s] to rest on fact-specific considerations informed by the

nature and circumstances of the particular case.” Ungar v. Palestine Liberation Org.,

599 F.3d 79, 83 (1st Cir. 2010). Thus, as this court recognized in Roll, courts must

consider “[t]he totality of facts and circumstances” to determine whether Rule 60(c)(6)

relief is appropriate. 22 Ariz. App. at 337, 527 P.2d at 296; see Gendron, 121 Ariz. at

369, 590 P.2d at 485.

¶8 In determining the merits of motions for relief from judgment under

Rule 60(c)’s federal analogue, courts have considered factors relating to “the nature and

circumstances of the particular case,” including “the timing of the request for relief, the

extent of any prejudice to the opposing party, the existence or non-existence of

meritorious claims of defense, and the presence or absence of exceptional

circumstances.” Ungar, 599 F.3d at 83. These factors are not applied rigidly, but “are

3
See Fed. R. Civ. P. 60(b)(6).
5
incorporated into a holistic appraisal of the circumstances,” which “may—or may not—

justify the extraordinary remedy of vacatur.” Id. at 84; see also Good Luck Nursing

Home, Inc. v. Harris, 636 F.2d 572, 577 (D.C. Cir. 1980) (rule allowing relief from

judgment preserves “‘delicate balance between the sanctity of final judgments . . . and the

incessant command of the court’s conscience that justice be done in light of all the

facts’”), quoting Bankers Mortg. Co. v. United States, 423 F.2d 73, 77 (5th Cir. 1970)

(alteration in Good Luck Nursing Home); Brooks v. Walker, 82 F.R.D. 95, 97 (D. Mass.

1979) (in considering motion for relief from judgment, court must weigh all attendant

circumstances and balance equities on case-by-case basis).

¶9 Here, the record shows the trial court denied the motion because it

determined Amanti had raised colorable claims under Rule 60(c)(1) and (3), and

concluded relief therefore was categorically unavailable to Amanti under clause (6)

because that provision has been interpreted as mutually exclusive of the five preceding

clauses. See Webb, 134 Ariz. at 186, 655 P.2d at 10. At the hearing on the motion, the

court stated, “[Clause] 6 is the only area that you might be in, but it doesn’t apply when

[clauses] 1 and 3 are the main alleged allegations, the fraud and mistake. I’m inclined

toward thinking that you don’t get relief.” Later in the same hearing, when ruling on the

motion, the court stated, “It’s not one [of] those decisions I like but I can’t—equitably, I

suppose from that standpoint, [Amanti] should have had the $400,000 so it’s somewhat

unjust. I agree there, but I don’t think they have done the steps they should have.”

¶10 We conclude the trial court’s statements demonstrate that it did not believe

it could consider the equitable arguments Amanti had raised in this case because of the
6
mutual exclusivity of Rule 60(c)(6) and the previous five clauses. We acknowledge the

general validity of that principle, but clarify that even when relief might have been

available under one of the first five clauses but for the fact that the time limits of the rule

had elapsed, this does not necessarily preclude relief under clause (6) if the motion also

raises exceptional additional circumstances that convince the court the movant should be

granted relief in the interest of justice.4 See Webb, 134 Ariz. at 187, 655 P.2d at 11 (trial

court has discretion to determine whether facts “go beyond the factors enumerated in

clauses 1 through 5 of Rule 60(c) and raise extraordinary circumstances of hardship or

injustice justifying relief under the residual provision in clause 6”); Roll, 22 Ariz. App. at

336-37, 338, 527 P.2d at 295-96, 297 (despite availability of relief under Rule 60(c)(4),

relief nonetheless also available pursuant to Rule 60(c)(6) “under circumstances going

beyond” foregoing clauses of rule). ESI’s failure to disclose its stop-payment order,

Amanti’s reasonable belief no further action was required to protect its rights, 5 the large

4
For example, we note that when the parties negotiated their settlement, ESI knew
it had stopped payment on the check but never disclosed this to Amanti, who had no
reason to believe the settlement involved anything other than the balance that remained in
dispute and no reason to seek any further judicial action until it learned about the stop-
payment order. See Gendron, 121 Ariz. at 368, 590 P.2d at 484 (though motion to set
aside default should have been brought within six months pursuant to Rule 60(c)(1),
interests of justice warranted Rule 60(c)(6) relief where opposing counsel knew movant
intended to file answer and was unaware default judgment already had been entered, yet
said nothing).
5
The check was ESI’s acknowledgement of a debt owed and unconditional order
to pay Amanti on demand. See generally A.R.S. § 47-3104. Although the wisdom of
waiting so long to negotiate the check certainly can be questioned, Amanti had no legal
obligation to do so immediately after receiving it and had no reason to believe, without
any indication from ESI to the contrary, that the check had become non-negotiable. See
7
windfall ESI stands to gain as a result of its unilateral action, and other circumstances of

this case, when considered together, may justify relieving Amanti from the judgment.

Consideration of these factors by the trial court was indispensible to a correct ruling on

the motion for relief from the judgment. See Roll, 22 Ariz. App. at 337, 527 P.2d at 296.

Disposition

¶11 For the reasons stated above, we vacate the trial court’s ruling on Amanti’s

Motion for Relief from Dismissal and remand this matter to allow the court to reconsider

the motion in view of “[t]he totality of facts and circumstances in the instant case.” Roll,

22 Ariz. App. at 337, 527 P.2d at 296. Because ESI is not the prevailing party on appeal,

its request for attorney fees and costs is denied.

/s/ Philip G. Espinosa
PHILIP G. ESPINOSA, Judge

CONCURRING:

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

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

A.R.S. § 44-302(A)(14) (non-negotiated check not presumed abandoned until three years
after issuance).
8