Old Republic v. New Falls Corp. (CA1 6/15/10)

This decision allows one creditor to play shady procedural games at the expense of another concerns dismissal of a garnishment action for failure to prosecute.

AMC, Old Republic’s successor-in-interest to a judgment against A, garnished B. The garnishment was contested but the parties continued the hearing because they thought it might violate the bankruptcy stay of a related case. Three years later, B agreed that AMC could have judgment. That upset New Falls, which also had a judgment against A and wanted to garnish B. New Falls moved to intervene in AMC’s garnishment action and, on special action, the Court of Appeals let it.

New Falls then moved to dismiss the action for lack of prosecution; there had been no formal activity in if for three years. The trial court granted the motion; the Court of Appeals affirmed.

The garnishment statutes allow the hearing to be continued for good cause but not for more than ten days unless requested by the judgment debtor. AMC argued that that statute (12-1580B) doesn’t mention dismissal. But it does mention the “need for speedy determination” which, the court says, would be meaningless if the legislature hadn’t meant to include the power to dismiss.

AMC also argued that the Court of Appeals, in New Falls’ special action, had characterized the garnishment as being at an “early stage” because there hadn’t been a hearing yet. AMC had forgotten that words mean what courts choose them to mean, neither more nor less. “This comment merely addressed the timeliness of New Falls’ motion to intervene and that its motion would not disrupt a decision on the merits.” That comment might make some sense if the court explained it; as things stand it lacks as much logic as grammar. And “disrupt a decision on the merits” is of course precisely what New Falls intended to do and what this decision permits. The court goes on to explain, equally logically, that by spending time negotiating a stipulated judgment  AMC had not been prosecuting the action and had shown no apparent interest in it.

New Falls also argued Maricopa County Rule 3.6 a(3) – dismissal for failure to prosecute. AMC argued that the case was not actually dormant, that the parties were actively pursuing discovery in a later case involving the same or similar issues. But the cases were not consolidated and nothing in the earlier case file showed any activity.

The obvious question, of course, is how a voluntary newcomer to a case can complain about its lack of prosecution. Well, actually, it must not have been obvious because AMC didn’t raise it until the Reply brief, which was too late.


(link to opinion)