Short v. Dewald (12/28/2010)

January 12, 2011

Arizona Court of Appeals Division One Holds That An Order Dismissing Without Prejudice And Granting Leave To Re-File After the Statute of Limitations Had Run Was an Appealable Order; Defendants’ Failure To Appeal Precluded Reconsideration of the Decision To Allow Re-Filing.

After a series of alleged mistakes in Ms. Short’s treatment, the Shorts filed a medical malpractice claim against some of her treating physicians.  After receiving two extensions of the service time, the Shorts served additional defendants.  While a third motion for extension of time was pending, the trial court held a status conference during which the court heard argument on the issue whether the court should dismiss the case with leave to re-file under A.R.S. § 12-504(A), the “savings statute” which allows re-filing after the statute of limitations has run.  The court dismissed with leave to re-file and the Shorts filed a new action.

Some of the defendants moved to dismiss, asking the new judge to vacate the order granting relief under the savings statute and dismiss the case as time-barred.  The court granted the motion and later awarded the remaining defendants summary judgment based on the statute of limitations.  The Shorts appealed and the Court of Appeals unanimously reversed.

First, the Court of Appeals held that the original dismissal with leave to re-file under the savings statute was a final, appealable order. Although appellate review is normally reserved for “final judgments,” one exception gives appellate jurisdiction over “any order affecting a substantial right made in any action when the order in effect determines the action and prevents judgment from which an appeal might be taken.”  A.R.S. § 12-2101(D).  The Court reasoned that the decision to grant relief under the savings statute affected defendants’ “substantial rights” because it affected the defendants’ rights to enforce the statute of limitations. Furthermore, the dismissal without prejudice and the relief under the savings statute prevented the entry of a final judgment.  Thus, the order was appealable under Section 12-2101(D).

Second, the Court held that the trial court erred when it reconsidered and vacated the order granting relief under the savings statute.  Dismissals without prejudice “may be sufficiently final for purposes of issue preclusion.”  That was true in this case because the order of dismissal left nothing to be determined in the original action and was therefore “a final judgment” subject to appeal.  Because the defendants failed to appeal, they defendants were precluded from raising the issue in the second case.

Finally, the Court rejected one defendant’s argument that it could raise a defense that the original case had been abated.  Under the savings statute, a defendant may assert a defense “if it was or could have been timely asserted in the prior action.”  See A.R.S. § 12-504(C).  The defendant had raised an abatement defense in the first case and argued that Subsection (C) allowed it to be raised again.  But under Section 12-504(A), a court has discretion to allow re-filing even when there have been procedural defects, including abatement.  Construing Sections 12-504(A) and (C) together, the Court held that a “court that grants” savings-statute relief “necessarily has considered the defects and determined that the plaintiff” can start over with a new case.  Thus, Section 12-504(C) did not preserve “defenses related to procedural defects unique to the prior case.”  Consequently, the defendant could not assert a defense in the new action that the original action had been abated.

Judge Hall authored the opinion; Judges Kessler and Orozco concurred.