Weird judgment - wondering whether to vacate?

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Latest post Mon, Jun 13 2016 12:11 PM by campergirlaz. 7 replies.
  • Sun, Jun 12 2016 8:52 AM

    Weird judgment - wondering whether to vacate?

    Hello! We hired a fraudulent bookkeeper (contractor not employee) who did not file any taxes for us during her 10 week tenure. This caused us almost $2k in penalties/interest from the state, various cities, IRS and unemployment. She filed no returns and paid no taxes on our behalf for two months. She didn't fulfill any of her bookkeeping duties except to pay A/P. So we didn't pay her after we fired her and replaced her. We went to small claims court (she sued us for non-payment) and I proved with hundreds of pages of evidence our contract, when the contract was broken (within the first month) and the damages resulting thereof. She filed no evidence and kept saying that we didn't respond to her emails, which was a lie. Regardless, she offer no evidence to that claim. I proved that we had no prior penalties/interest in 12 yrs and that we hired a bookkeeper immediately after this one who righted our books within weeks. We counter-sued the Plaintiff for damages based on Material Breach of Contract.

    The hearing officer found in her favor for her claim of payment due for $1300 on her claim and found in our favor for the counterclaim for material breach and damages. He did not award us our damages ($3k) but instead awarded us the same amount as the Plaintiff. 

    We are considering a Motion to Vacate Judgment which is our only appeal option in Arizona. The appeal is below. My question is what are the possible consequences of this Motion? The only reason we are appealing (besides the issue of fairness) is because we don't want to have to tell our insurance (in perpetuity) that we have a judgment against us. It's ridiculous. 

    I appreciate any advice you may have to offer and we are prayerfully considering our actions which have to be decided within 10 days.  Thank you! CampergirlAZ

    Our Motion: We are asking the Court to: vacate the judgment for this case. The Defendant proved with copious evidence a Material Breach of Contract including: the existence of an oral contract, a breach in the contract’s terms that fundamentally broke the contract and damages to the Defendant from the Plaintiff’s breach. The evidence submitted by the Defendant proves that all three elements occurred within the first month of Plaintiff’s contract when she did not file any tax payments or returns resulting in penalties to Defendant. As these non-actions resulted in multiple penalties and interest to the Defendant, the Defendant was harmed and suffered a substantial loss.The Defendant also proved with evidence work of unacceptably poor quality by the Plaintiff as well as fraudulent billing practices.  This judgment as such gives life to the Plaintiff’s claim that she did quality work in total, fulfilled her obligations and is due payment. The evidence presented in court shows definitively that she did not. The Plaintiff breached the implied duty of good faith and fair dealing in the contract with the Defendant.

    This judgment does not reflect the evidence presented in court. The judgment in this case suggests that the Plaintiff won her argument and is due her damages when, in fact, the contract was breached by the Plaintiff in April 2015, the first month of her contract. Then the judgment states that the Defendant won their case but is not due their damages, rather, the same amount sought by the Plaintiff.

    We are asking for the evidence in this case to be reviewed and for the judgment to be vacated.

  • Sun, Jun 12 2016 12:37 PM In reply to

    Re: Weird judgment - wondering whether to vacate?

    campergirlaz:

    We are asking for the evidence in this case to be reviewed and for the judgment to be vacated.

    Not going to happen.

    You'll be wasting your time as any motion to vacate will be denied out of hand.

    • Small Claims Division of Justice Courts ARS 22-519 Appeals
    • There shall be no appeal in a small claims procedure and the decision of the hearing officer or justice of the peace shall be final and binding on both parties.

    http://www.azleg.state.az.us/ArizonaRevisedStatutes.asp?Title=22

    Sorry, but final means final and the court won't let you do an end run around final by moving to vacate. There are no provisions in the small claims law for setting aside a final judgment.

    In fact:

    • ARS 22-504. Transfer to justice court
    • A. If any party whose rights are or may be adjudicated by an action in the small claims division, at least ten days before the time set for hearing objects to the proceedings being held in the small claims division, the action shall be transferred from the small claims division to the justice court and the provisions relating to civil actions in justice court shall apply.
    • B. The complaint form used in the small claims division of each justice court shall contain the following language printed in no smaller than ten point bold-faced type:
    • "Warning - you do not have the right to appeal the decision of the hearing officer or the justice of the peace in a small claims court. If you wish to preserve your right to appeal, you may have your case transferred to the justice court pursuant to section 22-504, subsection A, Arizona Revised Statutes, if you request such transfer at least ten days prior to the day of the scheduled hearing."

    You could have preserved your right to appeal by understanding and following that warning.

    campergirlaz:
    The only reason we are appealing (besides the issue of fairness) is because we don't want to have to tell our insurance (in perpetuity) that we have a judgment against us. It's ridiculous. 

    I can't imagine why any insurance company would be concerned about a contract dispute that turned out to be a wash, especially since your commercial liability insurance doesn't cover liabilities arising out of contracts.

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • Sun, Jun 12 2016 1:19 PM In reply to

    Re: Weird judgment - wondering whether to vacate?

    Thanks for your reply Adjuster Jack.  We were not appealing as we know you can't but you can vacate the judgment if there was an error in the law. Not being a professional, I thought that if you prove Breach, you get damages. Had no idea that a judge or hearing officer could say, "Hey, you proved your case but you don't get your damages, only what I think you should get." I'm so black and white that I thought that if you go to case prepared, with a massive amount of evidence to prove your claims, you win. I didn't know that you could fumble, bumble and lie and win. First timer, idealistic and mad now. 

    Yes, hopefully our insurance won't care about that but anyone researching our heretofor unblemished company would find a judgment against us and that's disturbing since we were the injured party. Our attorney says that the county attornies won't touch this case even though we're the 4th company she's done this to. DH told me not to bring up the fact that she was indicted by a grand jury for theft and that her pattern is to not do the work, bill fraudently and hugely and then sue you when you don't pay. She used the wrong registered agent for us and then tried to file for a default judgment. She's done this with every company. But I didn't bring that up during our hearing because I wasn't sure it was pertinent to the case.

    We did consider suing her in justice court but she's recently divorced, short-saled her home and has no clients. So we were sure that we would't get to see the $10k that we'd sue her for.

    Justice isn't blind and there are no scales. I'm not sure justice exists in this world.

    Thanks again, AJ. 

    CampergirlAZ

  • Sun, Jun 12 2016 1:41 PM In reply to

    Re: Weird judgment - wondering whether to vacate?

    Adjuster Jack - not being familiar with courts and judges, I don't understand how I could prove Breach + Damages and the judge not find in my favor? Contract law in AZ is pretty well understood and backed up by our SC that the contracted party must do a fair and reasonable job by the contracting party's expectations. To be contracted for bookkeeping and then neglecting to file any and all taxes is not within any business' expectations. The hearing officer looked at this and said that she should still be paid. 

    The implied covenant of good faith and fair dealing prohibits "a party from doing anything to prevent other parties to the contract from receiving the benefits and entitlements of the agreement." The Wells Fargo vs. Arizona Laborers, etc. case thus states a new test to determine if there is a breach of the implied duty of good faith. The Court held that where one party "wrongfully exercised the contractual power for a reason beyond the risks that the (other party) assumed, or for a reason inconsistent with the (other party's) justified expectations, "there could be a breach of the implied duty of good faith.

    This bookkeeper knew that we needed our state transaction privilege taxes to be filed and paid, payroll deposits made and quarterly reports filed, unemployment, etc. and still did not do this. I proved oral instructions with two people and a list of tasks that she had along with filing dates and instructions.

    I'm really confused how a judge looks at that and then says that she deserves to be paid. I showed him how she billed us for $1k when the Quickbooks audit trail showed no work done. 

    I suppose I'm just very confused and disgusted with this process and need to go back to my bubble and go camping and throw knives and shoot my bow.

    Warmly, CampergirlAZ

     

  • Sun, Jun 12 2016 1:56 PM In reply to

    Re: Weird judgment - wondering whether to vacate?

    campergirlaz:
    I suppose I'm just very confused and disgusted with this process

    It's small claims court.

    Not only are the rules relaxed but so are the decisions.

    In Arizona "judges" aren't relaly judges, nor are they lawyers, they are political hacks that run for office every few years, usually unopposed.

    Their decisions are typically "meet in the middle" or "split the difference" or "break even."

    I used small claims court several times while I owned rental properties and one time I sued a tenant who had left me about $2000 in damage and I ended up leaving the court with an award of $100 plus the $500 deposit I kept.

    Believe me, I sympathize.

     

     

     

    • The right of the people 
    • to keep and bear arms,
    • shall not be infringed.
  • Sun, Jun 12 2016 5:40 PM In reply to

    Re: Weird judgment - wondering whether to vacate?

     

    adjuster jack:
    Believe me, I sympathize.

    Thank you. You actually made me feel better today. I appreciate your time, advice and sentiments.

  • Mon, Jun 13 2016 9:48 AM In reply to

    Re: Weird judgment - wondering whether to vacate?

    Sorry, but a motion to vacate on the premise that you proved facts to the court that the court did not find at the close the of the trial will not be successful. You keep saying you proved all this stuff, but if that were true the court would have found entirely in your favor. It didn't, which means you didn't convince the court of what you thought you did. I've seen a lot of pro se parties in court who think their evidence proves things that, in fact, it truly doesn't and who think they have much stronger cases than they really do. That is not surprising; parties to a case tend to strongly believe they are totally in the right and that the whole world is going to agree with them regardless of what the evidence truly looks like to an objective outsider.

    Telling the judge in the motion to vacate that you proved X, Y, & Z with “copious evidence” isn't going to change the judge's mind regarding what you proved at trial. A motion to vacate is not an opportunity to re-try the facts of the case. Nor do you get to do that on appeals, even if an appeal had been allowed. If the judge made errors of law that would be a different matter. But there isn't much you can do if the judge disagrees with your version of the facts.

  • Mon, Jun 13 2016 12:11 PM In reply to

    Re: Weird judgment - wondering whether to vacate?

    I know how it sounds. It's as crazy to me as it does to anyone else. We all agreed on the oral contract and the fact that the bookkeeper didn't pay any and all taxes, thus breaching the contract and incurring penalties. She stated that state sales tax can be paid whenever the company has money and wants to pay as long as you don't keep any extra. I showed the judge the regulations from AZDOR and my request for penalty abatement that was denied. We've been doing this blemish-free for 12 years so we know what we're doing. She didn't pay or file any unemployment or payroll taxes. Quickbooks audit trail showed $1k worth of billing where no work was done. Her answer was that we didn't answer our emails. It was a lie and she offered no evidence. 

    As I presented my case against her claim and for our counterclaim for 45 mins with hundreds of documents as evidence, I feel that I must have overwhelmed the "judge." It was my stupid idea to settle. I sent a letter to the Plaintiff last year, before she sued us, saying that we'd consider it a wash if she just goes away. I presented that in court and the HO thought that that was a good idea and used it for his judgment. 

    But I don't want to argue evidence on my motion. I want to argue that you can't find for us, the Defendent, for Material Breach of Contract and then award judgment to the Plaintiff who wants to be paid for her proven shoddy and incomplete work. It's a non sequitur. 

    Our AZ Supreme Court established that the contracting party has certain reasonable expectations that have to be met by the contracted party. Obviously ours weren't met and that failed the Good Faith Duty. The HO/realtor missed that.

    That's all. It's a mute point. Thanks for your input.

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