AL CARRANZA, A MARRIED MAN, Plaintiff/Cross-Defendant/Appellant,
MARIO A. MADRIGAL, AN INDIVIDUAL; MARTHA C. MADRIGAL, Defendants/Cross-Defendants/Appellees and BRYANT C. MADRIGAL, Defendant/Cross-Claimant/Appellee, INVESTIGATION SERVICES, INC., Intervenor/Appellee
Appeal from the Superior Court in Maricopa County. The Honorable Emmet J. Ronan, Judge. No. CV2010-092356, CV2011-004777. Memorandum Decision of the Court of Appeals, Division One. 1 CA-CV 12-0359, 1 CA-CV 12-0643. (Consolidated).
Edward D. Fitzhugh (argued), Tempe, Attorney for Al Carranza.
Ben R. Jemsek (argued), Thrasher Jemsek PLLC, Phoenix, Attorney for Martha and Bryant Madrigal.
JUSTICE BRUTINEL authored the opinion of the Court, in which CHIEF JUSTICE BALES, VICE CHIEF JUSTICE PELANDER, and JUSTICES BERCH and TIMMER joined.
[¶1] Arizona Rule of Civil Procedure 17(a) requires a trial court to allow a reasonable opportunity to substitute parties before it dismisses an action for lack of prosecution by the real party in interest. We hold that in order to substitute a party, one must file a Rule 15(a) motion to amend, and the motion may be denied if the court finds undue delay or prejudice.
[¶2] Martha and Mario Madrigal brought a wrongful death action against the City of Mesa. Attorney Edward Fitzhugh represented the Madrigals, but later withdrew. The contingent fee agreement between Fitzhugh and the Madrigals provided that if Fitzhugh withdrew for any reason, he would be entitled to 25% of any recovery the Madrigals later obtained in the case. The Madrigals hired another lawyer, Raymond Slomski, who settled the case for $3 million.
[¶3] Fitzhugh demanded 25% of the settlement pursuant to the agreement. Slomski and the Madrigals rejected the demand, but Slomski retained the disputed amount in his client trust account pending a final resolution. Instead of suing the Madrigals, Fitzhugh assigned his rights under the fee agreement to Al Carranza. Carranza sued the Madrigals for the claimed contingency amount, asserting claims for breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, and quantum meruit (" fee-collection action" ). The Madrigals asserted, among other defenses, that the assignment to Carranza was invalid.
[¶4] The Madrigals subsequently divorced. The divorce decree provided that, upon resolution of the fee-collection action, any remaining funds would be split equally among Martha, Mario, and their son, Bryant. Later, Mario and Carranza entered into a settlement agreement that called for $300,000 of the disputed funds to be released to Mario and Carranza (" settlement agreement" ). The Joint Notice of Settlement erroneously stated that the divorce decree did not allocate the proceeds of the fee-collection action and that Mario was entitled to half of the proceeds as community property. The superior court approved the settlement and ordered Slomski to pay $300,000 to Mario and Carranza. To resolve the conflicting claims, Slomski filed an interpleader action.
[¶5] Martha Madrigal moved for reconsideration and to set aside the order approving the settlement agreement. The superior court granted relief under Rule 60(c), Arizona Rules of Civil Procedure, and vacated the order releasing the funds. Martha then moved for summary judgment in the fee-collection action.
[¶6] The following day, Carranza moved to substitute Fitzhugh as the real party in interest in both the fee-collection action and the interpleader action pursuant to Rule 17(a). He did not seek to amend the pleadings in either case under Rule ...