Arizona Court of Appeals
Division One
COASTAL INVESTMENTS CORP., an Arizona corporation,
Petitioner,
vs.
THE SUPERIOR COURT OF MARICOPA COUNTY, and the Hon. ANNA M. BACA, as a Judge thereof,
Respondents, and
CHARLES M. GILES and SUSAN K. GILES, husband and wife; CHARLES M. GILES, P.C., an Arizona professional corporation; R & K BUILDING SUPPLY, INC., an Arizona corporation; and CALIBER BANK, N.A., a national banking association,
Real Parties-Respondent in Interest.
No. ___________________________
Maricopa County Superior Court No.
CV 95-05865
SPECIAL ACTION PETITION
Brian K. Stanley
State Bar No. 004619
Attorney & Counselor at Law
2828 North 44th Street, Suite D
Phoenix, Arizona 85008-1554
(602) 956-8688
Attorney for Petitioner Coastal
Investments Corporation
June 15, 1995
Arizona Court of Appeals
Division One
No. 1 CA-SA ______
Coastal Investments Corp. vs. Superior Court of Maricopa County (Hon. A. M. Baca, J.), Charles & Susan Giles et al.
SPECIAL ACTION PETITION
___________________________________________________________________
TABLE OF AUTHORITIES CITED
JURISDICTION AND REASONS FOR ACCEPTING SPECIAL ACTION
QUESTIONS PRESENTED
FACTUAL BACKGROUND
ARGUMENT
III. If The Action, As Against Giles, Is Subject To Change Of Venue Pursuant To Giles’ Motion, The Action Should Be Severed. 7
CASES
Bishop v. Marks, 117 ARIZ. 50, 570 P.2D 821 (App. 1977)………………………………………………………………………………………….. 1
Brown v. Beck, 64 ARIZ. 299, 303, 169 P. 2D 855 (1946)……………………………………………………………………………………………… 5
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 110 S.CT. 2447, 2459, 100 L.ED.2D 359 (1990)…………………………….. 6
First National Bank of Arizona v. Superior Court, 116 ARIZ. 482, 483, 569 P. 2D 1380 (1977)………………………………….. 6
Haley v. Cochise County Hospital, 27 ARIZ. APP. 484, 556 P.2D 332…………………………………………………………………………. 1
Landry v. Superior Court, 125 ARIZ. 337, 609 P.2D 607 (App. 1980)…………………………………………………………………………. 1
Zuckernick v. Superior Court, 140 ARIZ. 605, 606, 684 P. 2D 177 (App. 1984)…………………………………………………………… 4
STATUTES
12 U.S.C. § 94…………………………………………………………………………………………………………………………………………………….. 2, 3, 6, 7
A.R.S. § 10-012 (1)………………………………………………………………………………………………………………………………………………………… 4
A.R.S. § 10-901 et seq.…………………………………………………………………………………………………………………………………………………… 2
A.R.S. § 10-905………………………………………………………………………………………………………………………………………………………….. 2, 8
A.R.S. § 12-120.21 (A) (4)…………………………………………………………………………………………………………………………………………….. 1
A.R.S. § 12-401 (10)…………………………………………………………………………………………………………………………………………….. passim
A.R.S. § 12-401 (18)………………………………………………………………………………………………………………………………………………….. 2, 8
RULES
A.R.CIV.P. 4.1 (b)……………………………………………………………………………………………………………………………………………………… 1, 3
A.R.CIV.P. 15 (a) (1)……………………………………………………………………………………………………………………………………………………… 4
ARIZ.R.EV. R. 201………………………………………………………………………………………………………………………………………………………… 6
F.R.CIV.P. 11…………………………………………………………………………………………………………………………………………………………………. 6
Arizona Court of Appeals
Division One
No. 1 CA-SA _________
Coastal Investments Corp. vs. Superior Court of Maricopa County (Hon. A. M. Baca, J.), Charles & Susan Giles et al.
SPECIAL ACTION PETITION
___________________________________________________________________
The Court has jurisdiction of this action under A.R.S. § 12-120.21 (A) (4).
It is well established that venue rulings are particularly appropriate subjects for review by special action. Landry v. Superior Court, 125 ARIZ. 337, 609 P.2D 607 (App. 1980); Bishop v. Marks, 117 ARIZ. 50, 570 P.2D 821 (App. 1977); Haley v. Cochise County Hospital, 27 ARIZ. APP. 484, 556 P.2D 332. Where the Superior Court misconstrues governing venue statutes at the outset of litigation, there is no effectual way to correct such error, and vindicate the important purposes of the venue statutes, apart from review by special action.
The following table identifies the real parties in interest and lists their respective venue-related attributes:
| Party | Resident In[1] | Found In[2] | |
| 1. | Petitioner Coastal Investments Corp. (“Plaintiff”) | Maricopa | N/A |
| 2. | Defendant Caliber Bank, N.A. | Maricopa[3] | Maricopa |
| 3. | Defendant R & K Building Supply, Inc. | Maricopa | Maricopa |
| 4. | Defendant Giles, P.C. | Pima[4] | [Not served] |
| 5. | Defendants Charles & Susan Giles | Pima | Pima |
Petitioner Coastal Investments Corp. (“Plaintiff”) commenced the underlying civil action in Maricopa County Superior Court. Defendants Giles filed a timely motion for change of venue. In a timely response, Plaintiff pointed out that both counts of the Complaint sound in tort, and that “any of the several defendants” (to wit, Defendants R & K Building Supply and Caliber Bank) reside in and/or or had already been “found” and served in, Maricopa County. Plaintiff contended that venue in Maricopa County is therefore proper under A.R.S. § 12-401 (10). Plaintiff also pointed out that Defendant Caliber Bank is subject to suit only in Maricopa County. Caliber Bank, not served with the Motion for Change of Venue, filed a Notice of Joinder in Plaintiff’s response to that motion promptly upon learning of the venue dispute.
Thereafter, the Respondent Judge entered a minute order granting Defendant Giles’ Motion for Change of Venue, without other comment.
As an explicit exception to the general rule that “no person shall be sued out of the county in which such person resides,” A.R.S. § 12-401 (10) provides that “When the foundation of the action is a crime, offense or trespass for which an action in damages may lie, the action may be brought … in the county in which the defendant or any of the several defendants reside or may be found,” subject to an express limitation for libel actions which is not relevant here. It is well settled that “trespass,” as used in § 12-401 (10), means “tort.” Zuckernick v. Superior Court, 140 ARIZ. 605, 606, 684 P. 2D 177 (App. 1984).
Plaintiff’s Complaint alleges that Defendant Charles Giles (and, in the First Amended Complaint filed pursuant to A.R.CIV.P. 15 (a) (1), Defendant Giles, P.C. as well), acting as the authorized agent of Defendant R & K Building Supply, Inc., inserted illegal and misleading language into a writ which Giles procured from the Pima County Superior Court, and proceeded to serve the improperly worded writ upon Caliber Bank in Maricopa County, with the result that Coastal’s account at Caliber was frozen without legal justification. As against “the R & K Defendants” (i.e., Giles, Giles uxor, Giles P.C. and R & K itself), the action is clearly one for abuse of process and/or wrongful garnishment, and therefore it plainly sounds in tort.
Defendant Caliber Bank is a national bank with its headquarters in Phoenix. It was “found” in Phoenix, at the office of its Vice-President specifically designated to receive service of process and other legal papers, on April 17, 1995, as the process server’s affidavit filed with the Respondent Court plainly shows.
Defendant R & K Building Supplies, Inc., has a substantial place of business, including its corporate offices, in Gilbert, Maricopa County, and maintains dozens of employees there. It has no other place of business or regular offices (apart from its A.R.S. § 10-012 (1) “known place of business,” i.e., the office of its designated agent for service of process). R & K’ s authorized agent was served at R & K’s “known place of business” in Mesa on April 14, 1995, and hence it, too, was “found” in Maricopa County.
Both of these Defendant corporations are “residents” of Maricopa County for venue purposes. In any event, both have been “found” and served with process in Maricopa County (pursuant to official designations made and registered by themselves). Hence, the venue requirements of A.R.S. § 12-401 (10) are satisfied four different ways, any one of which would be sufficient to support venue where Plaintiff chose to lay it.
Coastal filed a timely response to Giles’ motion for change of venue, and distinctly pointed out that two “of the several defendants [had been] found” in Maricopa County. The affidavits of service of process reflecting service upon R & K Building Supply in Mesa and upon Caliber Bank in Phoenix were already part of the slender record brought before the Respondent Judge on the motion for change of venue, and were expressly referred to in Coastal’s response. Since the minute entry order granting Giles’ motion did not contain any reasoning or explanation for the Respondent Court’s ruling, whether the Respondent Judge felt that the “any of the several defendants” provision of A.R.S. § 12-401 (10) for some reason is not applicable, or instead (or in addition) she did not think these corporate Defendants had been “found” in Maricopa County within the meaning of the statute, is purely a matter of speculation. Either conclusion would reflect a materially incorrect view of relevant law.
Although the standard of review in special actions is “abuse of discretion,” that phrase is “a legal term indicating that the appellate court is of the opinion that under the circumstances the trial judge committed error of law in the exercise of his discretion.” Brown v. Beck, 64 ARIZ. 299, 303, 169 P. 2D 855 (1946). An “abuse of discretion” standard of review “does not preclude the appellate court’s correction of a [trial] court’s legal errors, e.g., relying on a materially incorrect view of the relevant law in determining that a pleading was not ‘warranted by existing law or a good faith argument’ for changing the law [for purposes of a F.R.CIV.P. 11 sanctions determination].” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 110 S.CT. 2447, 2459, 100 L.ED.2D 359 (1990).
Here, the Respondent Court did not exercise “discretion” in deciding whether to grant the transfer-as-of-right demanded by Defendants Giles on the basis of their Pima County residence. The Superior Court has no discretion in such matters. And there was no need for weighing evidence or balancing interests in determining whether Coastal’s assertion that Maricopa County venue is supported by A.R.S. § 12-401 (10). Determining that this action is one “founded upon a … trespass” within the meaning of the statute and that the subsection 10 “any of the several defendants resides or may be found” provision is applicable is purely a matter of the interpretation of a procedural statute. Determining, from the affidavits of service of process on R & K Building Supply and Caliber Bank that these Defendants had been “found” in Maricopa County was also a matter the legal interpretation of this statutory term.[5] Under these circumstances, the Respondent Court’s apparent disregard of the § 12-401 (10) “county where any of the several defendants may be found” provision amounts to an abuse of discretion.
As its name implies, Defendant Caliber Bank, N.A., is a national banking association. By virtue of 12 U.S.C. § 94, said Defendant may be sued only in the county where its headquarters are located, which is Maricopa County. See First National Bank of Arizona v. Superior Court, 116 ARIZ. 482, 483, 569 P. 2D 1380 (1977).
In its Response to Giles’ Motion for Change of Venue, Plaintiff pointed these facts out, and even cited the First National Bank case. Before the Respondent Judge ruled on the change of venue, Caliber Bank formally joined in Plaintiff’s Response to the Motion for Change of Venue. Such act was surely a sufficient invocation by the bank of its rights under 12 U.S.C. § 94.
Transferring the entire action to Pima County, after the Defendant national bank had been served and in the face of the national bank’s assertion of its non-amenability to suit outside of Maricopa County under controlling federal legislation, was a plain error of law amounting, under the circumstances, to an abuse of discretion. Unless Caliber Bank makes a formal waiver of the federally guaranteed right which has been invoked, Plaintiff will face the prospect that Caliber Bank might at any later time seek to prevent further proceedings in this action (at least as against itself), possibly through collateral proceedings in federal court, or that Caliber Bank might remain free to attack an unfavorable Pima County adjudication, either directly or collaterally, for disregard of tis 12 U.S.C. § 94 rights. The fundamental doubt thus injected into this litigation at the outset would clearly carry the danger of prejudice to Plaintiff, and therefore Plaintiff has standing to seek special action review of the Superior Court’s venue ruling on this ground, as well.
If the action is not severed (or Defendant Caliber Bank does not formally waive its rights), then the Pima County Superior Court will presumably have to dismiss the action as to Defendant Caliber Bank. Since all the other corporate parties are also subject to suit in Maricopa County, Plaintiff would re-file in Maricopa County as to all Defendants other than Giles, and would then move in the Pima County action (i.e., the original action now transferred to Pima County at Giles’ motion) for a stay of that action pending resolution of the (new) Maricopa County action involving the same issues but the great majority of parties. Severance of the action would achieve the same result, but avoid the necessity for re-filing the complaint as a new action and re-serving the corporate defendants already served in Maricopa County, which Petitioners submit would involve a pointless expenditure of both private and judicial resources.
Another way to pose the question presented is as follows. Where professional X has a practice in County A which he has incorporated, so that legally the practice is conducted by and through X, P.C., which professional corporation conducts business and maintains an office and agents in County A, but X maintains his personal residence in County B, and an action is brought against X and X, P.C. for a tort allegedly committed in the course of the professional practice conducted by them, asserting the liability of X for the alleged tort of X, P.C., pursuant to A.R.S. § 10-905, is X entitled to transfer venue of such action to County B, by virtue of his personal non-residence in County B, a county in which X, P.C., is doing business?
Plaintiff submits that to state the question in this form is to supply the answer. Obviously, the shareholder of a professional corporation should not be able to manipulate the venue of actions arising out of his professional practice simply by choosing to reside “over the county line” from the county where his office is located. Even apart from § 10-905, it is well known that the Professional Corporations Act was intended to enable professional practitioners to avail themselves of certain tax advantages, the flexibility of corporate structures and the permanence of corporate existence, but without insulating professionals from lawsuits arising out of the practice of their profession. Admittedly, such a development as a “corporate” professional practice was probably not contemplated when our venerable venue statute was enacted. The combination of § 10-905 and A.R.S. § 12-401 (18), however, surely provide scope for the courts to devise an appropriate adaptation of procedural law to this new development.
DATED: June 15, 1995.
____________________________________
Brian K. Stanley
Attorney for Petitioner Coastal Investments Corp. (“Plaintiff”)
Arizona Court of Appeals
Division One
No. 1 CA-SA ______
Coastal Investments Corp. vs. Superior Court of Maricopa County (Hon. A. M. Baca, J.), Charles & Susan Giles et al.
SPECIAL ACTION PETITION
___________________________________________________________________
APPENDIX
to Special Action Memorandum
G:\WW\COASTAL\GILES\SA-VENUE\SAPETN.DOC 12/05/19 BKS
[1]. Place of “residence” of corporate parties is taken to be in the county where the corporation’s principal offices are located. In this case, such county in each instance also coincides with the county in which corporation’s “known place of business” and “statutory agent” is located.
[2]. Party was “found” at place where service of process was effected under A.R.CIV.P. 4.1 (b).
[3]. Caliber Bank is a national banking association. Venue of actions brought against national banks is governed by 12 U.S.C. § 94. See First National Bank of Arizona v. Superior Court, 116 ARIZ. 482, 483, 569 P. 2D 1380 (1977).
[4]. Giles, P.C. also conducts business in Maricopa County, advertising its debt collection services there and maintaining an office and agents at 3310 W. Cheryl Drive in Phoenix.
[5]. Admittedly, it was necessary for the Respondent Court to possess some information not explicitly set forth in the affidavits — namely, that Phoenix and Mesa are in Maricopa County. While it is true that Coastal did not formally request the Respondent Judge to notice these facts under ARIZ.R.EV. R. 201, that omission was due to the fact that — to their credit — Defendants Giles had made no issue as to the situation of those municipalities in Maricopa County, nor, indeed, as to the subsection 10 “finding” of these two Defendants in said county.
