Creditor obtained a judgment against Debtors in 2002 and registered the judgment in federal court in Arizona. During the next five years, Creditor obtained court orders for writs of garnishment and for discovery of Debtors’ assets. In 2006, Creditor filed a new action alleging fraud and racketeering claims relating to Debtors’ efforts to avoid paying the 2002 judgment.
In 2008, Debtors filed a motion in the Arizona federal court contending that Creditor could not enforce the 2002 judgment because more than five years had passed since its entry. The district court denied the motion, concluding that the 2002 judgment had been renewed by Creditor’s collection activities and by the 2006 lawsuit. Creditor appealed and the Ninth Circuit Court of Appeals certified two questions to the Arizona Supreme Court.
The Arizona Supreme Court held that Creditor’s actions had not renewed the judgment in Arizona. Under Arizona law, a judgment may be renewed by a timely “action thereon,” A.R.S. § 12-1611, or by a timely filing of a renewal affidavit, id. § 12-1612. The “action thereon,” however, refers to a common law “action upon a judgment,” which is an action that simply recites the amount owed pursuant to an existing judgment and seeks a new judgment on that debt, subject to such defenses as satisfaction and partial payment.
A central purpose of the Arizona judgment renewal statutes is to notify interested parties, such as potential creditors, of the existence and continued viability of the judgment. This purpose would be thwarted if an action in any jurisdiction to collect upon the judgment resulted in renewal of the judgment. Neither the Creditor’s collection efforts nor its 2006 lawsuit constituted an action “upon the judgment” under Arizona’s judgment renewal statutes.
Justice Hurwitz authored the opinion for the unanimous Court.
Posted By: Mark P. Hummels