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Southwest Gas Corp. v. Irwin - 2/29/2012

Arizona Court of Appeals Division Two Holds That an Appeal of a Rule 54(b) Judgment Entered in Favor of One Defendant Does Not Divest the Trial Court of Jurisdiction Over Claims Against the Remaining Defendants.


Plaintiff Grubb filed suit against numerous defendants, including Southwest Gas and Do It Best Corporation (“DIB”).  The trial court granted DIB’s motion for summary judgment and entered a judgment in favor of DIB pursuant to Rule 54(b).  Grubb appealed that judgment.  The trial court then ruled that the appeal divested it of jurisdiction as to Grubb’s claims against the remaining defendants and stayed all further proceedings.  Southwest Gas moved to lift the stay but the trial court denied the request, explaining that the appeal “divested [him] of jurisdiction” and that he had “no authority to make such ruling.”  Southwest Gas then filed a special action.

The ArizonaAppeals Court accepted jurisdiction of the special action because Southwest Gas could not challenge the trial court’s orders by direct appeal, Southwest Gas could not obtain justice by other means given that the issue would be moot once the appeal is resolved, and the special action involved a pure question of law.

On the merits, the Court granted Southwest Gas relief, holding that an appeal of a Rule 54(b) judgment does not divest the trial court of jurisdiction over claims against parties that remain.  Although an appeal from a final judgment “generally divests the trial court of jurisdiction to proceed,” Castillo v. Indus. Comm’n, 21 Ariz. App. 465, 467, 520 P.2d 1142, 1144 (1974), this principle does not apply to matters pending before the trial court that do not relate to an intermediate or interlocutory appeal.  An appeal of a Rule 54(b) judgment is such an intermediate appeal.  Rule 54(b) allows a trial court in a multi-party or multi-claim action to “direct the entry of final judgment as to one or more but fewer than all of the claims or parties . . . upon an express determination that there is no just reason for delay.”  By permitting trial courts to certify a judgment as final and appealable as to one but not all parties, the rule allows that piece of the case to be severed from the rest and therefore permits the portion of the case that is not part of the appeal to proceed.  See Egan-Ryan Mech. Co. v. Cardon Meadows Dev. Corp., 169 Ariz. 161, 166067, 818 P.2d 146, 151-52 (App. 1990) (allowing remaining claims to proceed where other claims were subject of Rule 54(b) judgment).      

The Court rejected Grubb’s argument that it should decline jurisdiction because the trial court had inherent discretion to stay all further proceedings, explaining that the trial court did not exercise this general discretion, but instead expressly relied on its incorrect conclusion that it lacked jurisdiction. 

Judge Espinosa authored the opinion; Judges Vasquez and Kelly concurred.

Posted by: Sharad H. Desai.

Posted On: 3/7/2012