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Harle v. Williams - 3/14/2019

Arizona Court of Appeals Division One holds that a contractual agreement barring a party from executing on the judgment tolls the enforcement period.

Plaintiff partner sued defendant partner for breach of their partnership agreement in 2010.  In May 2011, the partners settled and defendant partner agreed to pay a settlement sum in monthly installment payments and waive his interest in certain property.  The partners also agreed to a stipulated judgment greater than the settlement sum, and a covenant not to execute, which would become null and void if the defendant partner failed to timely make the monthly payments.  The defendant partner ceased making payments in November 2014, and the plaintiff partner began formal collections on March 23, 2016, when he recorded a judgment and sought writs of garnishment.  After debtor’s examinations in June 2017, defendant partner contended that the time for judgment had expired under A.R.S. § 12-1551(B) and plaintiff partner had not timely renewed under A.R.S. § 12-1612.  The superior court found the judgment was enforceable because the period for collections was tolled while the plaintiff partner was barred from enforcing it.

The Court of Appeals affirmed.  At the time judgment was entered, A.R.S. § 12-1551(B) prohibited process on a judgment after the expiration of five years (the limitations period has since been extended to ten years).  The enforcement period is tolled and extended, however, if a creditor is precluded from collecting.  A private agreement that includes a covenant not to execute precludes the creditor from collecting thus tolls and extends the collecting period. While the enforcement period is tolled, a creditor has no need to renew the judgment.

Judge Howe delivered the unanimous opinion of the court; Judges Johnsen and Cruz joined.

Posted by: Emma J. Cone-Roddy

Posted On: 4/1/2019