Fidelity National Financial Inc. v. Friedman

SUPREME COURT OF ARIZONA
En Banc

FIDELITY NATIONAL FINANCIAL INC., ) Arizona Supreme Court
) No. CV-10-0096-CQ
)
Plaintiff/Appellee, ) United States Court of
) Appeals, 9th Circuit
) No. 08-16967
)
FIDELITY EXPRESS NETWORK INC., ) United States District
) Court
Claimant/Appellee, ) No. 2:03-cv-01222-RCB
)
v. )
)
COLIN H. FRIEDMAN; et al, ) O P I N I O N
)
Defendants/Appellants, )
)
and )
)
ANITA MESHKATAI, individually )
and as a trustee of the Anita )
Kramer Living Trust, dated July )
23, 1987, )
)
Defendant. )
)
__________________________________)

Certified Questions from the
United States Court of Appeals for the Ninth Circuit

The Honorable Sidney R. Thomas, Judge

The Honorable Betty B. Fletcher, Judge

The Honorable N. Randy Smith, Judge

QUESTIONS ANSWERED
________________________________________________________________

HENNELLY & GROSSFELD LLP Marina Del Rey, CA
 By Orlando F. Cabanday
Janice M. Kroll
Thomas H. Case

And

SHERMAN & HOWARD L.L.C. Phoenix
By Dewain D. Fox
Attorneys for Fidelity National Financial Inc. and Fidelity
Express Network Inc.

SCHIAN WALKER, P.L.C. Phoenix
By Michael R. Walker
Mark C. Hudson
Attorneys for Colin H. Friedman
________________________________________________________________

H U R W I T Z, Vice Chief Justice

¶1 We accepted jurisdiction to answer two questions

certified to us by the United States Court of Appeals for the

Ninth Circuit:

1) Do collection activities (such as filing for a
writ of garnishment or applying for orders from
the court to inspect a safety deposit box or
require a debtor’s exam) taken within Arizona,
renew a judgment previously registered in Arizona?

2) Does the filing of a related lawsuit in a state
other than Arizona renew a judgment previously
registered in Arizona?

¶2 We have jurisdiction pursuant to Article 6, Section

5(6) of the Arizona Constitution, Arizona Revised Statutes

(“A.R.S.”) §§ 12-1861 to 12-1867 (2003), and Arizona Supreme

Court Rule 27.

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 I.

¶3 The facts and procedural history of this litigation

are set forth in detail in the certification order of the Ninth

Circuit, Fidelity Nat’l Fin. Inc. v. Friedman, 602 F.3d 1121,

1122-23 (9th Cir. 2010), and are summarized here.

¶4 In 2002, Fidelity National Financial Inc. (“Fidelity”)

obtained a monetary judgment against Colin and Hedy Friedman and

Farid and Anita Meshkatai (collectively the “Debtors”) in the

United States District Court for the Central District of

California. Fidelity registered the judgment in the United

States District Court for the District of Arizona in November

2002. During the next five years, Fidelity obtained court

orders in Arizona authorizing writs of garnishment, inspection

of the Debtors’ safety deposit box, and debtors’ examinations

(collectively, the “Arizona collection activities”). In 2006,

Fidelity filed a new action in the Central District of

California (the “California racketeering suit”), alleging that

the Debtors had violated federal racketeering laws and

California state fraud laws by using family trusts and other

devices to avoid paying the 2002 judgment.

¶5 In 2008, the Debtors filed a motion in the Arizona

federal court contending that Fidelity could not enforce the

2002 judgment because more than five years had passed since its

entry. The district court denied the motion, concluding that

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the 2002 judgment had been renewed pursuant to A.R.S. § 12-

1551(B) (Supp. 2009) and § 12-1611 (2003)1 by the Arizona

collection activities and California racketeering suit.

Fidelity appealed, and the Ninth Circuit certified the two

questions to us.2

II.

¶6 The starting point in resolving the questions before

us is the common law background to Arizona’s statutory scheme

for renewal of judgments. At common law, judgments generally

became dormant if not executed upon within a year of entry and

were unenforceable after twenty years. See Browne & Manzanares

Co. v. Chavez, 54 P. 234, 234 (N.M. Terr. 1898). A judgment

creditor could avoid this problem in two ways. The first was by

suing on the judgment in a new action and obtaining a new

judgment, which then could be executed upon. See Cont’l Nat’l

Bank & Trust Co. of Salt Lake City v. John Seely & Sons Co., 77

P.2d 355, 358 (Utah 1938); Simpson v. Cochran & Cherrie, 23 Iowa

81, 81 (1867). The second was through a writ of scire facias,

which revived the original judgment and thus allowed execution

1
Absent material change since the events in question, we
cite the current versions of statutes.
2
The Ninth Circuit was “uncertain” about these issues in
light of a depublished opinion of our court of appeals and a
memorandum decision of that court. Fidelity Nat’l. Fin. Inc.,
602 F.3d at 1123. Under Arizona law, however, neither decision
has precedential value. Ariz. R. Civ. App. P. 28(c), (f); Ariz.
R. Sup. Ct. 111(c).
4
on it. See Cont’l Nat’l Bank & Trust Co. of Salt Lake City, 77

P.2d at 358; Am. Ry. Express Co. v. F.S. Royster Guano Co., 126

S.E. 678, 679 (Va. 1925) (“The proceeding by scire facias is not

a new suit . . . but a continuation of the old suit.”).

¶7 Since well before statehood, Arizona statutes have

provided both a deadline for enforcing judgments and a procedure

for extending that deadline. The 1901 Territorial Code

provided:

No execution shall be issued upon any judgment
after the expiration of five years from the date
of its rendition and entry, unless such judgment
be revived by scire facias, or an action of debt
be brought thereon within five years from the date
of such rendition and entry.

1901 Territorial Code § 2558. Section 2959 of the 1901

Territorial Code codified the common law by allowing revival of

a judgment “by scire facias or an action of debt brought thereon

within five years after the date of such judgment.”3

¶8 The first Civil Code enacted after statehood, the 1913

Civil Code, made a significant change to the statutes governing

judgment revival. That Code eliminated scire facias, replacing

the common law writ with a simplified process under which a

judgment was “revived by affidavit.” 1913 Civ. Code § 1353.

3
The common law action of debt was a form of action to
recover a sum certain. 26 C.J.S. Debt, Action of § 1 (2001).
An action on a judgment sought recovery of a sum certain – the
amount owed on the original judgment and accrued interest. See
Brandt v. Meade, 17 Ariz. 34, 35-36, 148 P.2d 297, 298 (1915).
5
The affidavit process was spelled out in detail in the 1913

Code. 1913 Civ. Code §§ 581 to 583. The affidavit could be

filed “at any time within the ninety days next preceding the

expiration of the five year period within which a judgment may

be a lien under existing law.” 1913 Civil Code § 582. The

affidavit, filed in the court that rendered the original

judgment, “operate[d] to renew and revive said judgment to the

extent of the balance shown due in said affidavit for the period

of five years from the date of the filing of such affidavit.”

Id. Thus, like the writ of scire facias, the affidavit

continued the effectiveness of the original judgment so that the

judgment creditor could continue to execute upon it. See Owens

v. McCloskey, 161 U.S. 642, 645 (1896) (describing writ as

“continu[ing] the effect of . . . the former judgment”).

¶9 Although it abandoned the common law writ of scire

facias, the 1913 Civil Code expressly preserved the common law

alternative of suing on the judgment. Thus, § 1353 provided

that a judgment could also be renewed by an

“action . . . brought thereon.” Section 580 similarly provided

for renewal of a judgment “by action brought thereon in any

court of competent jurisdiction within this state at any time

within five years after the date of such judgment.”

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¶10 These provisions from the 1913 Civil Code have been

carried forward without material change into present law.

Section 12-1551(B) now provides as follows:

An execution or other process shall not be issued
upon a judgment after the expiration of five years
from the date of its entry unless the judgment is
renewed by affidavit . . . or an action is brought
on it within five years from the date of the entry
of the judgment or of its renewal.

The affidavit renewal process is set forth in § 12-1612 (2003).

Like its predecessors, § 12-1551(B) preserves the option of

renewal through “an action . . . on” the original judgment.

Section 12-1611, in turn, states that “[a] judgment may be

renewed by action thereon at any time within five years after

the date of the judgment.”

III.

¶11 The question before us is whether any of the Arizona

collection efforts or the California racketeering suit renewed

the 2002 judgment. Our inquiry therefore focuses on § 12-

1551(A), which provides that a judgment is renewed by “an action

brought on it,” and § 12-1611, which refers to renewal by

“action thereon.”

¶12 We start from the premise that the slight difference

in the language of these two sections is of no consequence.

Read together, the two statutes — as did their forebears — enact

a limitations period for the enforcement of a judgment and

7
provide for extension of that period by an action “on” the

judgment. See Pima County by City of Tucson v. Maya Constr.

Co., 158 Ariz. 151, 155, 761 P.2d 1055, 1059 (1988) (“[I]f

statutes relate to the same subject and are thus in pari

materia, they should be construed together . . . as though they

constituted one law.”). The “action thereon” described in § 12-

1611 is plainly the same “action brought on” the judgment to

which § 12-1551 refers.

¶13 Our post-statehood case law confirms that every

judgment continues to give rise to an “action to enforce it,

called an action upon a judgment.” Associated Aviation

Underwriters v. Wood, 209 Ariz. 137, 180 ¶ 150, 98 P.3d 572, 615

(App. 2004) (citation and internal quotation marks omitted).

“The main purpose of an action on a judgment is to obtain a new

judgment which will facilitate the ultimate goal of securing the

satisfaction of the original cause of action.” Id. (citations

and internal quotation marks omitted).

¶14 As was true at common law, the defendant in an action

on the judgment under our statutory scheme is generally the

judgment debtor, id., and the amount sought is the outstanding

liability on the original judgment, Brandt v. Meade, 17 Ariz.

34, 35-36, 148 P.2d 297, 298 (1915). The judgment debtor cannot

deny the binding force of the judgment, Miller Rubber Co. of

N.Y. v. Peggs, 60 Ariz. 157, 159, 132 P.2d 439, 440 (1942), but

8
can assert such defenses as satisfaction or partial payment,

Brandt, 17 Ariz. at 41, 148 P. at 301. If indebtedness remains

on the original judgment, the action results in a new judgment

in the amount owed. Associated Aviation Underwriters, 209 Ariz.

at 180 ¶ 150, 98 P.3d at 615.

¶15 “Legislative intent often can be discovered by

examining the development of a particular statute.” Carrow Co.

v. Lusby, 167 Ariz. 18, 20, 804 P.2d 747, 749 (1990). The

history of §§ 12-1551 and 12-1611, dating from before statehood,

is particularly instructive. It demonstrates that our current

statutes, in referring to an action “brought” on a judgment or

an “action thereon,” were meant by the legislature to describe

the common law action on a judgment.

IV.

A.

¶16 In arguing that the Arizona collection efforts and the

California racketeering suit were actions on the judgment,

Fidelity relies primarily on a general definitional statute,

which provides that:

In the statutes and laws of this state, unless the
context otherwise requires:

1. “Action” includes any matter or proceeding in a
court, civil or criminal.

A.R.S. § 1-215 (Supp. 2010). Fidelity contends that any “matter

or proceeding” seeking to facilitate collection on a judgment or

9
indicating the judgment creditor’s continued intent to enforce

the judgment is an action on the judgment.

¶17 The argument is not persuasive. The definition of

“action” currently in § 1-215(1) did not appear in Arizona

statutes until 1928. See 1928 Code § 3040(4). Because §§ 12-

1551 and 12-1611 descended directly from the 1901 Territorial

Code and the 1913 Civil Code, a general definitional statute

enacted after 1913 is of little use in interpreting the current

statute’s use of the word “action.”

¶18 More importantly, § 1-215 makes plain that its general

definition of “action” applies “unless the context otherwise

requires.” Sections 12-1551 and 12-1611 refer not merely to an

“action,” but to an action “brought” on a “judgment” or an

action “thereon.” These statutes, like their predecessors, thus

describe not simply an action in some way related to the earlier

judgment, but rather a specific form of suit — the common law

action on a judgment.

B.

¶19 Our construction of §§ 12-1551 and 12-1611 is

consistent not only with the history of these statutes, but also

with their central purpose. The renewal statutes are designed

to notify interested parties of “the existence and continued

viability of the judgment.” In re Smith, 209 Ariz. 343, 345

¶ 10, 101 P.3d 637, 639 (2004). Among the parties most

10
interested in the status of the judgment are those considering

extending credit to the judgment debtor.

¶20 If, as Fidelity argues, a judgment could be renewed by

“any matter or proceeding in a court, civil or criminal,” § 1-

215(1), a prospective creditor would face an onerous task in

determining the judgment’s continued effect. Under Fidelity’s

view, the potential lender would be required to search the

records of at least every court in the state – and perhaps the

nation — to determine whether a writ of garnishment or other

proceeding relating to the judgment had been instituted. See

Ellsworth Land & Livestock Co. v. Bush, ___ Ariz. ___, ___ ¶ 11,

233 P.3d 655, ___ (App. 2010) (“‘[A] debt may be garnished

wherever personal jurisdiction may be exercised over the

garnishee.’” (quoting Restatement (Second) Conflict of Laws § 68

(1971))). Such a reading of §§ 12-1551 and 12-1611 would hardly

afford interested parties effective notice of the status of the

original judgment.

¶21 Under § 12-1612, a potential creditor need only search

the docket of the court in which the original judgment was

entered for the ninety days preceding the five-year expiration

date to determine whether a judgment has been renewed by

affidavit. It would make little sense for the legislature to

have provided strict temporal and filing limitations on the

affidavit process, while at the same time allowing any action

11
relating to the judgment, filed anywhere, to renew it. If,

however, §§ 12-1551 and 12-1611 authorize renewal by action only

through a common law action on the judgment, no great burden is

placed on potential creditors, because a successful action on a

judgment results in the entry of a new judgment. Those

considering extending credit already must check for extant

judgments in the relevant jurisdiction.

C.

¶22 Finally, Fidelity argues that the Debtors may unjustly

escape liability if the certified questions are answered in the

negative. Our legislature, however, long ago determined that

the judgment debtor will be released from further obligation

unless a judgment creditor timely files a renewal affidavit or

brings an action on the judgment within five years after its

entry. Inherent in any statute of limitations is the risk that

a party who owes money may escape liability if the creditor does

not act in a timely fashion.

¶23 To mitigate any possible unfairness, the legislature

has provided a simple mechanism for renewing the judgment. The

judgment creditor need only file an affidavit, in a form

specified by statute, within a ninety day period before the

judgment expires to obtain renewal and maintain the priority of

12
the original judgment.4 The statute also preserves the more

cumbersome common law action on the judgment. When a judgment

creditor fails to utilize either of these statutory

alternatives, its resultant inability to enforce the original

judgment in Arizona is compelled by law.

V.

¶24 For the reasons above, we conclude that the

“action . . . on” a judgment referred to in § 12-1551 and the

“action thereon” referred to in § 12-1611 are the common law

action on a judgment, which replaced the original judgment with

a new judgment in the amount then owed.5 We turn now to the

certified questions.

¶25 The first certified question asks whether “collection

activities . . . taken within Arizona” serve to renew a

judgment. None of the Arizona collection efforts undertaken by

Fidelity was a common law action on the 2002 judgment. Rather,

4
Fidelity apparently filed an affidavit to renew the Arizona
judgment, but Debtors claim that it was ineffective because it
was filed more than ninety days before the expiration of that
judgment. See A.R.S. § 12-1612(B). This issue has not been
certified to us, and we express no opinion on it.
5
We disapprove any dictum to the contrary in Hall v. World
Savings & Loan Ass’n, 189 Ariz. 495, 502-03, 943 P.2d 855, 862-
63 (App. 1997). And, although we agree with the conclusion in
Associated Aviation Underwriters that §§ 12-1551 and 12-1611
refer to the common law action on a judgment, 209 Ariz. at 180
¶ 150, 98 P.3d at 615, we express no opinion whether, in light
of today's opinion, the court of appeals correctly concluded
that the complaint-in-intervention in that case was such an
action.
13
the writs of garnishment sought to satisfy the judgment by

seizing the Debtors’ property; the other collection efforts

sought to discover assets of the Debtors. The Arizona

collection efforts were attempts to collect upon the 2002

judgment, not to renew it. See In re Smith, 209 Ariz. at 345

¶ 13, 101 P.3d at 639 (recognizing the difference between

enforcing and renewing a judgment). We therefore answer the

first certified question in the negative.

¶26 The second certified question inquires whether the

filing of a “related lawsuit in a State other than Arizona” can

renew an Arizona judgment. Here, the only lawsuit meeting that

description is the California racketeering suit. That suit

clearly was not a common law action on the judgment; it did not

simply recite the amount owed and seek a judgment on that debt.

Instead, the California racketeering suit sought remedies under

federal and California law because of actions allegedly

undertaken by the Debtors to frustrate collection of the 2002

judgment. Indeed, because the California racketeering suit

resulted in a defense verdict in 2010, it did not culminate in a

new judgment against the Debtors. We therefore answer the

second certified question in the negative.6

6
We express no opinion whether the 2002 judgment remains
enforceable in the Central District of California or elsewhere.
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 _____________________________________
Andrew D. Hurwitz, Vice Chief Justice

CONCURRING:

_____________________________________
Rebecca White Berch, Chief Justice

_____________________________________
W. Scott Bales, Justice

_____________________________________
A. John Pelander, Justice

_____________________________________
Michael D. Ryan, Justice (Retired)

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