AEA Federal Credit Union v. Yuma Funding, Inc. – 3/31/2015
Arizona Court of Appeals Division One holds that trial court orders declining to set aside an order appointing or releasing a receiver are not final appealable orders under A.R.S. § 12-2101(A)(5)(b).
This appeal arose out of a 2010 complaint filed by AEA Federal Credit Union against Yuma Funding, Inc. alleging breach of several loan agreements and requesting monetary damages and the appointment of a receiver. Yuma Funding—owned and operated by Ken Stevenson, his wife, and Tammy Sherman, Stevenson’s daughter—had obtained almost three hundred loans from AEA to assist customers in purchasing vehicles from an auto dealership owned by Stevenson. AEA filed its 2010 complaint after Yuma Funding allegedly failed to make payments between September 2009 and January 2010 and because it learned that Stevenson’s wife was allegedly attempting to destroy business records. The trial court entered an ex parte order appointing a receiver, reasoning that the opportunity to protect AEA’s interest in collateral and to satisfy Yuma Funding’s obligations to AEA would be lost or impaired if a receiver were not appointed.
Yuma Funding was served with the complaint and the order appointing a receiver, among other documents, on January 29, 2010. Stevenson and Sherman personally appeared at court proceedings but did not retain counsel, did not file an answer or an objection to the appointment of the receiver, and did not request a hearing on the receivership. AEA accordingly applied for entry of default, which was entered by the court on March 8, 2010. In June 2010, after the receiver had been operating Yuma Funding for several months, AEA requested that the receivership be terminated and that all property in the receiver’s possession be turned over to AEA to satisfy Yuma Funding’s debt. The receiver joined the request and the trial court entered an order releasing the receiver on July 16, 2010.
In December 2012, AEA filed a motion to dismiss and for release of the receivership bond. Yuma Funding then filed its first appearance and after a thirty day extension, a written objection from Yuma Funding, and oral argument, the trial court denied AEA’s motion for voluntary dismissal but released the receivership bond. In November 2013, Yuma Funding filed a motion to set aside the order appointing the receiver and seeking to “restore the status quo ante as it existed on January 22, 2010,” alleging jurisdictional defects and due process violations. The trial court denied Yuma Funding’s motion on January 20, 2014 and Yuma Funding filed its notice of appeal on February 5, 2014.
On appeal, AEA argued that the Court of Appeals lacked jurisdiction over the appeal. The Court analyzed A.R.S. § 12-2101(A)(5)(b) which provides that an appeal may be taken “[f]rom an order . . . [g]ranting or dissolving an injunction, or refusing to grant or dissolve an injunction or appointing a receiver.” Yuma Funding argued that the removal of a comma between “injunction” and “or appointing a receiver” in a 1974 amendment meant that the “refusing to grant or dissolve” language applies to “appointing a receiver.” The Court did not agree, reasoning that “the mere deletion of the grammatically optional serial comma, in the absence of any other changes,” did not indicate “a legislative intent to change the scope of [the Court’s] appellate jurisdiction with respect to receivership orders[.]”
Yuma Funding also argued that the terms “preliminary injunction,” “temporary restraining order,” and “receivership” should be treated interchangeably within A.R.S. § 12-2101(A)(5)(b). The Court again did not agree, noting that “the use of different terms in [the statute] evidences an intent to treat the circumstances differently for purposes of appellate jurisdiction.” The Court then held that the plain language of A.R.S. § 12-2101(A)(5)(b) did not grant jurisdiction of an appeal from an order refusing to set aside an order appointing a receiver.
The Court also declined to adopt several of Yuma Funding’s alternative arguments. The Court dismissed Yuma Funding’s argument that its appeal was viable under A.R.S. § 12-2101(A)(4) as “a final order affecting a substantial right made in a special proceeding or on a summary application in an action after judgment,” because no judgment had yet been entered in the underlying action and because the underlying action was not a special proceeding. The Court also disagreed with Yuma Funding’s argument that the Court’s holding would create an absurdity, stating that it found “no fault in the legislature’s decision to limit the time period in which to appeal an order appointing a receiver.”
The Court also concluded that it lacked jurisdiction over Yuma Funding’s purported appeal of the trial court’s denial of Yuma Funding’s motion to set aside the order discharging the receiver, noting that A.R.S. § 12-2101(A)(5)(b) only deals with the appointment of a receiver and the order at issue was not a “final order” under § 12-2101(A)(4).
Finally, the Court also declined to exercise special action jurisdiction, noting that “[g]enerally, we will not exercise special action jurisdiction where an appeal from an otherwise appealable order is not taken within the time period prescribed by the Arizona Rules of Civil Appellate Procedure,” and that the time for appealing the orders at issue had long since passed.
Judge Jones authored the opinion, which was joined by Presiding Judge Gemmill and Judge Kessler.