SANDY G. KELLIN, Petitioner,
THE HONORABLE STEVEN LYNCH, Judge Pro Tempore of the SUPERIOR COURT OF THE STATE OF ARIZONA, in and for the County of MARICOPA, Respondent Judge, AMERICANWEST BANK, f/k/a BANNER BANK, successor by merger to AMERICANWEST BANK, Real Party in Interest.
Petition for Special Action from the Superior Court in
Maricopa County No. CV2014-095947 The Honorable Steven P.
Lynch, Judge Pro Tempore
Hill PLC, Scottsdale By Ryan J. Lorenz Counsel for Petitioner
& Wilmer L.L.P., Phoenix By Steven D. Jerome, Benjamin W.
Reeves, and James G. Florentine Counsel for Real Party in
Presiding Judge Paul J. McMurdie delivered the opinion of the
Court, in which Judge Lawrence F. Winthrop and Chief Judge
Peter B. Swann joined.
Sandy Kellin requests special action relief from two superior
court orders. Kellin challenges a superior court order
setting supersedeas bonds of $50, 000 each on Kellin's
appeals from two judgments of garnishment against two
financial institutions, BMO Harris Bank, N.A.
("BMO") and Betterment LLC
("Betterment"). Kellin and his wife, Robyn Kellin
(collectively, the "Kellins"), held accounts with
these institutions. This court issued an order accepting
jurisdiction but denying relief with a decision to follow.
This is that decision. We hold: (1) Arizona Rule of Civil
Appellate Procedure ("Rule") 7(a)(6) affords the
superior court discretion to set a supersedeas bond to cover
an estimate of attorney's fees and costs that may be
incurred in an appeal, provided a basis to award such fees
and costs is authorized; and (2) in an appeal from a judgment
of garnishment, Arizona Revised Statutes ("A.R.S.")
section 12-1580(E) authorizes an appellate award of
AND PROCEDURAL BACKGROUND
In September 2014, Banner Bank
("Banner") domesticated a Utah deficiency judgment
against Kellin for $1, 285, 777.89, plus post-judgment
interest. The outstanding balance on the judgment as of April
2019 was calculated to be $2, 415, 615.15. Banner's
efforts to collect the judgment have been strenuously
contested, and the litigation has generated three separate
appellate decisions and petitions for review that deserve a
In American West Bank v. Kellin ("Kellin
I"), No. 1 CA-CV 18-0060, 2018 WL 6787394 (Ariz.
App. Nov. 27, 2018) (mem. decision), the Kellins argued
Banner was barred from enforcing its judgment against any of
their community property by Arizona Revised Statutes
("A.R.S.") section § 25-214(C)(1), which
requires joinder of both spouses to bind the community to
"[a]ny transaction for the acquisition, disposition or
encumbrance of an interest in real property other than an
unpatented mining claim or a lease of less than one
year." This court held that because the underlying
transaction that gave rise to Banner's deficiency
judgment "did not constitute a transaction for the
acquisition, disposition or encumbrance of an interest in
real property . . . the protections of A.R.S. §
25-214(C)" did not apply, and the deficiency judgment
could be enforced against the Kellins' community.
Kellin I, 2018 WL 6787394, at *2, ¶ 12.
In American West Bank v. Kellin ("Kellin
II"), No. 1 CA-CV 18-0481, 2019 WL 1341803 (Ariz.
App. Mar. 26, 2019) (mem. decision), Kellin raised the same
argument from Kellin I to challenge an order denying
a motion to quash a writ of special execution against real
property and a charging order against the Kellins'
membership interests in a limited liability company under
A.R.S. § 29-655. This court held that the "law of
the case" doctrine barred the parties from relitigating
the enforceability of the judgment against the Kellins'
community property and affirmed the superior court's
orders. Kellin II, 2019 WL 1341803 at *3-4,
Finally, in Kellin v. Banner Bank ("Kellin
III"), No. 1 CA-CV 18-0356, 2019 WL 1341800 at *5,
¶ 21 (Ariz. App. Mar. 26, 2019) (mem. decision), this
court held that a declaratory judgment action filed while the
enforcement proceedings were ongoing was an impermissible
attempt to horizontally appeal the superior court's
rulings in the enforcement proceedings.
The Kellins filed petitions for review from Kellin I,
Kellin II, and Kellin III. On July 8, 2019, the
Arizona Supreme Court denied Kellin's petition for review
from Kellin I. Whether this court correctly resolved
the issue in Kellin I is not subject to further
review. Therefore, the holding that the Kellins'
community property can be used to satisfy Banner's
deficiency judgment is final.
The proceedings at issue in this special action occurred
during and shortly after the appeals in Kellin II
and Kellin III. Banner filed applications for writs
of garnishment against BMO and Betterment, alleging that each
financial institution was "holding nonexempt monies on
behalf of [Kellin]." A.R.S. § 12-1572(2)(b). After
litigation over Kellin's objections and motions to quash
the writs of garnishment, the court entered judgment against
garnishee BMO for $72, 744.31 and garnishee Betterment for
$409, 385.83. Kellin filed notices of appeal from both
judgments and moved to set or waive a supersedeas bond to
stay enforcement of the judgments under Rule 7. Kellin argued
that under Rule 7(a)(6), the court was not required to set
supersedeas bonds for each judgment because the garnished
funds themselves, which would remain frozen in BMO and
Betterment's possession, were an adequate bond. In
response, Banner argued that the court was required to set
the supersedeas bond for each judgment at the respective
amounts awarded under Rule 7(a)(4). In the alternative,
Banner argued that under Rule 7(a)(9) the court should set
the bond for each judgment at the respective amounts awarded
because of overwhelming evidence that "the Kellins have
attempted to intentionally dissipate and conceal assets to
avoid paying [the Utah] Judgment."
After considering the argument regarding the motions for a
stay, the court issued the following order:
Based upon the matters presented today, the review of all
pleadings, and pursuant to A.R.S. ...