SMITH & WESSON CORP. and SMITH & WESSON HOLDING CORP., Plaintiffs/Appellees,
THE WUSTER (d/b/a AIRSPLAT.COM), Defendant/Appellant.
from the Superior Court in Maricopa County No. CV2015-012668
The Honorable J. Richard Gama, Judge, Retired The Honorable
Michael L. Barth, Judge Pro Tempore
Garcia, Aguirre & Villarreal, P.L.C., Yuma By Araceli
Rodriguez, Jacqueline R. Luger Counsel for
Ballard Spahr LLP, Phoenix By Craig C. Hoffman Counsel for
Judge Samuel A. Thumma delivered the opinion of the Court, in
which Presiding Judge Kenton D. Jones and Judge Jon W.
Defendant The Wuster d/b/a Airsplat.com appeals from
a default judgment entered in favor of plaintiffs Smith &
Wesson Corp. and Smith & Wesson Holding Corporation
(collectively S&W). Airsplat argues the superior court
abused its discretion in denying its motion for enlargement
of time to file a motion to dismiss and erred in exercising
personal jurisdiction over Airsplat. As discussed below,
Airsplat has shown no abuse of discretion in denying its
motion for enlargement of time. On the record presented,
however, the court erred in concluding that the well-pleaded
factual allegations of the complaint, deemed admitted given
default entered against Airsplat, authorized the exercise of
personal jurisdiction over Airsplat. Accordingly, default
judgment is vacated and this action is dismissed without
prejudice for lack of personal jurisdiction.
AND PROCEDURAL HISTORY
In November 2015, S&W filed this case alleging Airsplat
breached a written agreement resolving patent litigation in
the United States District Court for the District of Arizona
(the Settlement Agreement) by failing to pay $40, 000.
Airsplat is a California business with its principal place of
business in California and S&W served Airsplat in
When Airsplat failed to plead or otherwise defend, S&W
filed an application for entry of default. See Ariz.
R. Civ. P. 55(a)(2015). When Airsplat did not timely plead or
otherwise defend in response to the application, default
against Airsplat became effective. See Ariz. R. Civ.
P. 55(a)(3), (a)(4).
The day after default became effective, see Ariz. R.
Civ. P. 6(a), Airsplat filed a motion to dismiss for lack of
personal jurisdiction. S&W's opposition argued the
motion to dismiss was untimely, given the default. S&W
then argued that, because all allegations in the complaint
"including the jurisdictional allegations, should be
deemed admitted and binding in this case, " Arizona
could exercise personal jurisdiction over Airsplat.
S&W's opposition did not attach or rely upon any
Along with its reply in further support of the motion to
dismiss, Airsplat filed a motion for enlargement of time,
arguing its failure to timely respond to the complaint
"was the result of excusable neglect." See
Ariz. R. Civ. P. 6(b). Airsplat argued, with a supporting
affidavit, that it "was prepared to file" the
motion to dismiss in a timely fashion, but its law
"firm's docketing system and entire computer system
was attached [sic] by a virus and then crashed, "
meaning the motion to dismiss was filed after default became
effective. S&W opposed the motion for enlargement of
time, arguing Airsplat failed to promptly move to set aside
the default, failed to show excusable neglect and failed to
show a meritorious defense.
After full briefing, the superior court denied Airsplat's
motion for enlargement of time. The court found that
Airsplat's failure to timely respond to the complaint was
caused by "mere carelessness and as such does not
warrant a finding of excusable neglect." As a result,
the default remained in place.
At the same time, the superior court addressed whether
Arizona could exercise personal jurisdiction over Airsplat.
The court first stated that specific personal jurisdiction
was lacking, noting Airsplat "did not engage in
purposeful conduct that targeted an Arizona company" and
Airsplat "did not have sufficient contacts with
[Arizona] to make the exercise of jurisdiction
'reasonable and just.'" Because the default
meant Airsplat's motion to dismiss was untimely, however,
the court "accepted] the jurisdictional facts [alleged
in the complaint] as having been deemed admitted and binding
on the parties." On that basis, the court retained
personal jurisdiction over Airsplat and, after a hearing,
entered a final default judgment against Airsplat.
See Ariz. R. Civ. P. 54(c). This court has