Brian Ezell and Jeff Quon entered into an oral partnership agreement to each contribute $15,000.00 and jointly buy a fifty percent interest in a convenience store for $30,000.00. Ezell was to remain a silent partner. Ezell’s contribution to the purchase, and interest in the store, was to remain hidden from the other partner in the store. Without Ezell’s knowledge, however, Quon purchased the half interest in the store at a lower price of $20,000.00. Quon paid using the money Ezell had contributed, and signed a promissory note to pay the remaining balance. After Quon failed to make profit distributions to Ezell, Ezell discovered that Quon had used Ezell’s money to purchase the partnership interest, and that Quon had not contributed any of his own money. Ezell filed a complaint against Quon in superior court. After Quon failed to timely respond to the complaint, Ezell requested a default judgment. The court held a default hearing at which it heard evidence and then entered judgment in favor or Ezell. The judgment awarded Ezell compensatory and punitive damages, the right to purchase Quon’s remaining interest in the business, and attorney’s fees. Quon appealed the judgment, but the appeal was dismissed for lack of jurisdiction. Quon then filed a motion with the trial court to set aside the judgment, which was denied. Quon appealed again.
The Arizona Appeals Court affirmed. The Court rejected Quon’s argument that the Appeals Court had incorrectly dismissed his original appeal for lack of jurisdiction. The Court held that, contrary to Quon’s contention, he was required to move to have the default judgment set aside before he could appeal. The Court also rejected Quon’s argument that the relief granted by the trial court exceeded the relief requested in the pleadings and that the trial court, therefore, did not have jurisdiction to enter an award. The Court pointed out that a pleading “need only ‘contain a plain and concise statement of the cause of action and give defendants fair notice of the allegations as a whole.” The Court also rejected Quon’s argument that the trial court’s award of punitive damages was beyond the scope of the complaint because Ezell failed to allege conduct that would warrant a punitive damages award. The court held that the facts as alleged in the complaint were sufficient to show that Quon intended to harm Ezell and that Quon was indifferent to the harm that it would cause. The Court further held that a complaint need only contain a “general prayer for punitive damages.” The Court also rejected Quon’s argument that the trial court lacked jurisdiction to divest him of his partnership interest. The Court rejected Ezell’s claim for attorneys’ fees because his request for fees cited no basis for the request. Judge Gemmill dissented from the majority’s decision to refuse attorneys’ fees because the record showed that Ezell had consistently sought attorneys’ fees based on A.R.S. § 12-341.01 throughout the course of the lawsuit.
Judge Hall authored the opinion; Judges Weisberg concurred; Judge Gemmill concurred in part and dissented in part.
Posted By: James K. Rogers