MICHAEL D. RIPSON, Plaintiff/Appellee,
BECKY HYSLOP; R. G. HYSLOP aka GARY HYSLOP, Defendants/Appellants.
Not for Publication – Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Maricopa County No. CV2011-056402 The Honorable John R. Doody, Judge Pro Tempore
Michael D. Ripson, Scottsdale In Propria Persona Plaintiff/Appellee
Becky Hyslop and R.G. "Gary" Hyslop, Surprise In Propria Persona Defendants/Appellants
Judge John C. Gemmill delivered the decision of the Court, in which Presiding Judge Maurice Portley and Judge Kent E. Cattani joined.
¶1 Becky and R.G. "Gary" Hyslop ("the Hyslops") appeal the entry of default and default judgment against them in a mortgage deficiency claim. We affirm for the following reasons.
¶2 This appeal arises from a mortgage deficiency action brought by Michael D. Ripson against the Hyslops. In 2003, the Hyslops and two other corporate entities signed a promissory note that secured a $400, 000 loan from Webber & Associates in connection with the purchase of several parcels of undeveloped real property in Maricopa County. In 2005, Webber & Associates transferred the promissory note to PACRO, LLC, which, in 2007, transferred the note to Ripson Capital, LLC ("Ripson Capital"). Ripson Capital eventually pursued non-judicial foreclosure, and on August 15, 2011, a trustee's sale was conducted. Ripson Capital purchased the property at the trustee's sale on a credit bid of $123, 000. On November 1, 2011, Ripson Capital endorsed the promissory note to Ripson personally. Ripson additionally produced documentation that the deed from the trustee's sale was also assigned to him personally from Ripson Capital on the same date as the assignment of the promissory note, November 1, 2011.
¶3 Later in November 2011, Ripson filed a complaint containing multiple claims, including a mortgage deficiency claim, against the Hyslops and the corporations named in the promissory note. The Hyslops were served with the complaint on or about January 25, 2012. They did not respond within twenty days as required by Arizona Rule of Civil Procedure ("Rule") 12(a)(1)(A), and on February 23, 2012, Ripson applied for default in accordance with Rule 55(a). Under Rule 55(a)(2) and (3), the default was effective ten days thereafter. On March 23, 2012, the Hyslops filed a motion to dismiss Ripson's complaint, their first filing in response to the complaint.
¶4 Ripson filed a Proposed Form of Judgment on March 27, 2012, seeking approximately $618, 000 as the mortgage deficiency balance. In a minute entry entered a few days after Ripson filed the proposed form of judgment, the trial court held that:
Because [the Hyslops'] motion [to dismiss] was not filed before March 8, 2012, it does not constitute a pleading or other defense to the Complaint within the meaning of Rule 55(a). However, it does constitute an "appearance" requiring Plaintiff to set a hearing on the proposed default judgment with notice to [the Hyslops.]
Additionally, the court noted that Ripson had not correctly pled other claims included in the complaint and ruled that Ripson could either proceed to judgment on the deficiency claim or amend the complaint to correctly plead each claim.
¶5 Ripson elected to proceed to judgment on the deficiency claim, and he filed a motion on April 27, 2012, for entry of default judgment. The trial court set a default hearing date for June 5, 2012. A few days after the hearing date was set, the Hyslops filed a motion to set aside entry of the default. Then, a few days prior to the default judgment hearing, the Hyslops filed an "Application for Fair Market Value Hearing Pursuant to Arizona Revised Statutes ("A.R.S.") § 33-814(A). Subsequently, the default judgment hearing date was rescheduled to June 19.
¶6 On June 12, the trial court issued a minute entry denying the motion to set aside default, holding that the Hyslops failed to show the requisite elements for setting aside the default in accordance with Rule 55(c) and Arizona case law. Specifically, the court summarized its conclusions as follows:
While the [Hyslops] arguably acted promptly in filing this [motion to set aside default], the motion is denied because [the Hyslops] neither showed that their failure to respond [to] the complaint in the first place was due to excusable neglect, nor that they have a defense to the complaint on the merits.
Moreover, the court noted that the Hyslops' contention that "they felt it was safe not to respond to the complaint because nothing in the docket told them they had to do so" amounted to "an error of law, " and errors of law do not constitute excusable neglect for these purposes, citing General Electric Capital Corp. v. Osterkamp, 172 Ariz. 191, 194, 836 P.2d 404, 407 (App. 1992) and Daou v. Harris, 139 Ariz. 353, 360, 678 P.2d 934, 940 (1984). The trial court also stated that the Hyslops "introduced no evidence to show that they have any defense to the merits [of the deficiency claim]."
¶7 Six days prior to the re-set default judgment hearing, the Hyslops filed a second "Application for Fair Market Value Hearing Pursuant to A.R.S. § 33-814(A)" that also included a "Motion to Vacate Default Hearing." Notwithstanding the motion, the hearing proceeded as scheduled on June 19, with the trial court noting in its minute entry that, in addition to the subject of default judgment, the Hyslops' applications for a fair market value determination were also before the court as well as their motion to vacate the default hearing.
¶8 At the hearing, the trial court heard testimony and admitted fourteen exhibits into evidence concerning the property in question. The record on appeal does not include a transcript of the June 19 default judgment hearing. The court entered judgment against the Hyslops in the amount of the deficiency, approximately $618, 000. The Hyslops timely appeal, ...