Haroutunian v. ValueOptions, Inc. – 7/10/2008

July 23, 2008

Arizona Court of Appeals Division Two Finds that Trial Court Abused Its Discretion When It Required Showings of Good Cause and Excusable Neglect to Obtain Relief Under ARCAP Rules 9(a) and 6(b).

ValueOptions timely filed motions under ARCAP Rule 9(a), seeking to expand the time to appeal a jury verdict, and Rule 6(b), seeking to enlarge the time for filing post-trial motions.  Both requests were based on the fact that the court clerk’s office had filed the notice of entry of judgment more than 30 days after the judgment was entered.  The trial court had filed a minute entry one month earlier indicating that the court “would sign the form of judgment submitted by [the Plaintiff],” but when ValueOptions’ counsel had called the clerk’s office, she was incorrectly informed that no judgment had been entered.  The trial court found that ValueOptions did not receive notice of the entry of judgment within 21 days of entry and that Haroutanian had not shown prejudice.  Nevertheless, the trial court denied the request for Rule 6(b) motion on the grounds that ValueOptions had failed to show “excusable neglect” and denied the request for an extension of time to appeal under Rule 9(a) because ValueOptions had not shown “good cause.”

Judge Pelander, writing for the majority, reversed and remanded for further proceedings on the post-judgment motions.  The majority found that the trial court abused its discretion when it required ValueOptions to show “good cause” and “excusable neglect” to obtain relief under Rule 9(a).  The majority concluded that the trial court incorporated an incorrect legal standard in contravention of the Rule 9(a)’s express language and purpose based on the 1994 amendments to the rule.  Similarly, the majority found that the trial court abused its discretion when it denied ValueOptions’ Rule 6(b) motion.  The majority noted that the 1994 amendments to Rule 6(b) created ambiguity in the rule.  Harmonizing Rules 6(b) and 9(a), the majority concluded that neither good cause nor excusable neglect must be shown under Rule 6(b) when the party seeking relief establishes the rule’s express prerequisites:  (1) failure to receive notice within 21 days of entry of judgment and (2) lack of prejudice to any party. 

Judge Brammer disagreed with the majority, noting that inherent in the trial court’s discretion is the right to expect that a party seeking relief provide some reason beyond the rule’s explicit elements warranting the relief sought.  Judge Brammer felt that the record supported the trial court’s conclusion that Value Options failed to exercise due diligence in determining whether a judgment had been entered because Value Options only made a single phone call to the clerk about the judgment and failed to review the court’s electronic docket.  Judge Brammer further disagreed with the majority’s conclusion that Rule 6(b) is ambiguous and felt that the only reasonable interpretation of the rule would require that a party show excusable neglect.  Thus, Judge Brammer concluded that the trial court did not abuse its discretion when it found that ValueOptions had not shown excusable neglect in denying its motion under Rules 6(b) and 9(a).

Judge Pelander authored the majority opinion, with Judge Howard concurring; Judge Brammer dissented.

Note:  In a recent unpublished memorandum decision, Watson v. The Roman Catholic Church of the Diocese of Phoenix, Inc., Division One of the Arizona Court of Appeals affirmed a trial court’s denial of a request for relief from judgment pursuant to Arizona Rule of Civil Procedure 60(c) in a case where the party requesting relief did not receive notice of a judgment that had been entered.  The majority opinion included a lengthy discussion of attorney due diligence and reached a different conclusion than the majority in Haroutunian v. ValueOptions, Inc