In 2010 AEA Federal Credit sued Yuma Funding, Inc. alleging breach of several loan agreements and requesting damages and the appointment of a receiver.  Yuma Funding had obtained three hundred loans from AEA to assist customers in purchasing vehicles from an auto dealership.  AEA filed the complaint after Yuma Funding defaulted and because it learned that one of Yuma’s owner’s wife was destroying business records.  The court entered an order appointing a receiver.

Yuma’s owner Stevenson and Sherman personally appeared at court proceedings but did not retain counsel, did not file an answer or an objection to the appointment of the receiver, and did not request a hearing on the receivership.  AEA accordingly applied for entry of default, which was entered by the court on March 8, 2010.  In June 2010, after the receiver had been operating Yuma for months, AEA requested that the receivership be terminated and that all property in the receiver’s possession be turned over to AEA to satisfy Yuma Funding’s debt.  The receiver joined the request and the trial court entered an order releasing the receiver on July 16, 2010.

In December 2012, AEA filed a motion to dismiss and for release of the receivership bond.  Yuma then filed its first appearance and after a thirty day extension, a written objection from Yuma, and oral argument, the trial court denied AEA’s motion for voluntary dismissal but released the receivership bond.  In November 2013, Yuma Funding filed a motion to set aside the order appointing the receiver and seeking to “restore the status quo ante as it existed on January 22, 2010,” alleging jurisdictional defects and due process violations.  The trial court denied Yuma Funding’s motion on January 20, 2014 and Yuma Funding filed its notice of appeal on February 5, 2014.

On appeal, AEA argued that the Court of Appeals lacked jurisdiction over the appeal.  The Court analyzed A.R.S. § 12-2101(A)(5)(b) which provides that an appeal may be taken “[f]rom an order . . . [g]ranting or dissolving an injunction, or refusing to grant or dissolve an injunction or appointing a receiver.”  Yuma Funding argued that the removal of a comma between “injunction” and “or appointing a receiver” in a 1974 amendment meant that the “refusing to grant or dissolve” language applies to “appointing a receiver.”  The Court did not agree, reasoning that “the mere deletion of the grammatically optional serial comma, in the absence of any other changes,” did not indicate “a legislative intent to change the scope of [the Court’s] appellate jurisdiction with respect to receivership orders[.]”

Yuma also argued that the terms “preliminary injunction,” “temporary restraining order,” and “receivership” should be treated interchangeably within A.R.S. § 12-2101(A)(5)(b).  The Court again did not agree, noting that “the use of different terms in [the statute] evidences an intent to treat the circumstances differently for purposes of appellate jurisdiction.”  The Court then held that the plain language of A.R.S. § 12-2101(A)(5)(b) did not grant jurisdiction of an appeal from an order refusing to set aside an order appointing a receiver.

Yuma lost big time. In Arizona Corporations, LLC’s and Limited Partnerships may not be represented in Court by their owners. They must have lawyers.

Feel free to call Bill Miller from Scottsdale, Arizona at 602-319-6899 if you need help in an Arizona Court proceeding. His office is off the 101 in Scottsdale.

We also handle, Breach of contract, Non-compete agreements, Non-disclosure agreements, Employee theft and embezzlement, Insurance purchases and enforcement of policy coverage, Negotiation and/or enforcement of commercial leases, Negligence and gross negligence resulting in losses, Intentional acts causing a company to suffer damages, Tortious interference with contractual relationships, Unjust enrichment, Real Estate fraud, Consumer fraud, Conversion/Theft, Intentional and/or negligent misrepresentation, Business torts and Real estate title & escrow.

 

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