Chalmers v. East Valley Fiduciary

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

WILLIAM JOHN CHALMERS, Plaintiff/Appellant,

v.

EAST VALLEY FIDUCIARY SERVICES, et al., Defendants/Appellees.

No. 1 CA-CV 21-0055
No. 1 CA-CV 21-0385
(Consolidated)
FILED 5-5-2022

Appeal from the Superior Court in Maricopa County
No. CV2019-053790
The Honorable Sally Schneider Duncan, Judge

AFFIRMED

COUNSEL

S. Alan Cook PC, Phoenix
By S. Alan Cook, Sharon L. Ottenberg
Counsel for Plaintiff/Appellant

Gallagher & Kennedy PA, Phoenix
By Mark C. Dangerfield, Hannah H. Porter
Counsel for Defendants/Appellees East Valley Fiduciary Services, Inc., Michael
D. Bogle, Michale A. Bogle, Andrew C. Stone, Jessica Stone
Broening Oberg Woods & Wilson, PC, Phoenix
By Donald Wilson, Jr., Jathan P. McLaughlin, Kelley M. Jancaitis
Counsel for Defendants/Appellees Michael J. Doyle, Gary T. Doyle, Baumann
Doyle Paytas & Bernstein PLLC

Zelms Erlich & Mack, Phoenix
By Robert B. Zelms, Anthony S. Vitagliano, Ian R. King
Counsel for Defendants/Appellees Ryan M. Scharber, Hoopes Adams & Scharber
PLC

MEMORANDUM DECISION

Judge Angela K. Paton delivered the decision of the Court, in which
Presiding Judge Paul J. McMurdie and Vice Chief Judge David B. Gass
joined.

P A T O N, Judge:

¶1 “[T]he pendency of a prior action between the same parties
for the same cause in a state court of competent jurisdiction gives grounds
for the abatement of a subsequent action either in the same court or in
another court of the state having like jurisdiction . . . .” Allen v. Super. Ct. of
Maricopa Cnty., 86 Ariz. 205, 209 (1959) (citation omitted). Appellant
William John Chalmers’s (“Chalmers”) claims against the parties in this
appeal either have been or will be resolved in preexisting family court and
probate court cases. We therefore affirm the superior court’s entry of
judgment on the pleadings.

FACTS AND PROCEDURAL HISTORY

¶2 We state the relevant factual allegations from Chalmers’s first
amended complaint and assume them to be true for this appeal. Muscat by
Berman v. Creative Innervisions LLC, 244 Ariz. 194, 197, ¶ 7 (App. 2017)
(citation omitted). Chalmers petitioned for separation from his ex-wife in
September 2016. The family court later converted the case to a dissolution
proceeding. Chalmers’s counsel referred Chalmers “for assessment and the
possible appointment of a guardian and/or conservator,” which initiated a
separate probate case.

¶3 In August 2017, the probate court ordered Appellee Gary T.
Doyle to serve as Chalmers’s court-appointed counsel (Appellees Gary T.

2
 CHALMERS v. EAST VALLEY FIDUCIARY, et al.
Decision of the Court

Doyle, Michael J. Doyle, and Baumann, Doyle, Paytas & Bernstein, PLLC,
collectively referred to as “CAC” or “Doyle”) in that case. The probate
court also appointed Appellee East Valley Fiduciary Services, Inc.
(Appellees East Valley Fiduciary Services, Michael D. and Michale A. Bogle,
and Andrew and Jessica Stone, collectively referred to as “EVFS”) to serve
as Chalmers’s temporary conservator. Appellee Ryan M. Scharber
(Appellees Ryan Scharber, Jane Doe Scharber, and Hoopes, Adams &
Scharber, PLC, collectively referred to as “Scharber”) represented EVFS in
the probate conservatorship case.

¶4 Chalmers later asked CAC to move to terminate the
guardianship and conservatorship, but CAC refused. Nonetheless, the
probate court terminated the guardianship but kept the conservatorship in
place.

¶5 In family court, the parties entered into a settlement
agreement under Arizona Rule of Family Law Procedure (“ARFLP”) 69.
Chalmers later objected to the agreement, contending in part that it did not
account for a computer containing source code for a “Mobile Angel project”
that his ex-wife said he could have. The family court rejected all but one of
Chalmers’s objections and entered a decree based on the agreement.
Chalmers appealed from the decree in May 2018.

¶6 Meanwhile, the temporary conservatorship ended in
September 2018, at which point EVFS submitted a final accounting in the
probate case. CAC withdrew as Chalmers’s counsel, and Chalmers
retained his current counsel, S. Alan Cook. Chalmers objected to EVFS’s
final accounting on several grounds. Chalmers alleged that his credit score
had fallen precipitously since EVFS’s appointment and that EVFS’s claim
violated several fee guidelines set forth in § 3-303 of the Arizona Code of
Judicial Administration. See Ariz. R. Prob. P. 33(g). He also separately
objected to multiple pending fee and cost applications submitted by EVFS
and others.

¶7 The day after Chalmers filed his objections, this court issued
its decision in the family case affirming the decree and awarding both
Chalmers’s ex-wife and EVFS attorneys’ fees and costs. Chalmers v.
Chalmers, 1 CA-CV 18-0287 FC, 2019 WL 2651064 (Ariz. App. June 27, 2019)
(mem. decision) (“Chalmers I”).

¶8 Chalmers subsequently filed his complaint in this civil case,
alleging that guardian ad litem Brian Theut (“GAL Theut”), EVFS, Doyle,
and Scharber had breached their fiduciary duties by, among other things,

3
 CHALMERS v. EAST VALLEY FIDUCIARY, et al.
Decision of the Court

failing to recover the “source code” for the Mobile Angel application and
allowing the liquidation of certain tax-deferred funds, which created
significant tax liability for Chalmers. Chalmers again alleged that his credit
score had significantly declined during the conservatorship.

¶9 One week before the probate court hearing date, Chalmers
filed for Chapter 13 bankruptcy protection and removed the probate case
to the bankruptcy court. The bankruptcy court remanded the case to the
probate court in May 2020, at which time the probate court rescheduled the
evidentiary hearing on Chalmers’s objections. Four days before the
rescheduled hearing, Cook moved to withdraw as Chalmers’s counsel, and
the hearing was postponed until mid-December 2020. EVFS then filed a
separate fee application asking the probate court to order Cook to pay the
fees it incurred while Cook represented Chalmers.

¶10 Meanwhile, in the civil case against GAL Theut, GAL Theut
moved for dismissal. See Ariz. R. Civ. P. 12(b)(6). After determining that
judicial immunity applied, the superior court dismissed the case against
GAL Theut with prejudice and included Arizona Rule of Civil Procedure
Rule 54 language. Chalmers appealed that decision, and we later affirmed
it. See Chalmers v. E. Valley Fiduciary Servs., 1 CA-CV 21-0152, 2021 WL
5710014 (Ariz. App. Dec. 2, 2021) (mem. decision) (“Chalmers II”).

¶11 As for the civil case against EVFS and Scharber, the parties
moved for judgment on the pleadings on abatement grounds, with Doyle
joining in EVFS’s motion. The superior court granted EVFS’s and
Scharber’s motions without prejudice and ordered EVFS, Scharber, and
Doyle to file a proposed form of judgment with Rule 54 language. EVFS
did so and included blanks for the superior court to fill in if it chose to
award attorneys’ fees to either EVFS or Scharber. EVFS and Scharber
moved to recover attorneys’ fees as sanctions under A.R.S. § 12-349. In late
December 2020, the superior court entered a Rule 54(b) judgment
dismissing Chalmers’s first amended complaint as against EVFS, Doyle,
and Scharber (the “Original Judgment”). The superior court ruled that “[t]o
the extent the First Amended Complaint sought to challenge any aspect of
[the ARFLP] 69 Agreement, or the issues resolved in [Chalmers I], the First
Amended Complaint is dismissed with prejudice.” The superior court
awarded EVFS taxable costs and denied EVFS’s sanctions claim, but did not
rule on Scharber’s sanctions claim. Chalmers filed a timely notice of appeal
challenging the Original Judgment on January 8, 2021.

¶12 In mid-January 2021, the probate court ruled on Chalmers’s
objections to the pending fee applications. In one minute entry, the probate

4
 CHALMERS v. EAST VALLEY FIDUCIARY, et al.
Decision of the Court

court (1) denied several still-pending fee applications from 2018 because
“the requesting parties did not file the required notices [under A.R.S. § 14-
5109(A)]” and they “ha[d] already received substantial compensation for
their work,” (2) declined to revisit the prior judge’s fee rulings, and (3)
approved the remainder of EVFS’s final accounting. In a separate minute
entry, the probate court ordered Cook to personally pay attorneys’ fees and
costs incurred by Scharber and GAL Theut during Cook’s representation of
Chalmers under Rule 11 and A.R.S. § 12-349. The probate court certified
both minute entries as final under Rule 54(c).

¶13 EVFS and Scharber then jointly moved to modify the Original
Judgment, noting that the costs awarded to EVFS should have been
awarded to Scharber and that the superior court had not ruled on
Scharber’s sanctions claim. The superior court issued an Amended
Judgment on January 27, 2021, that again denied EVFS’s sanctions claim but
awarded Scharber attorneys’ fees and costs (the “Amended Judgment”).

¶14 On February 8, 2021, Chalmers moved to alter or amend the
probate court sanctions order, which was denied. He also filed a notice of
appeal in the probate case challenging, among other things, “the approval
of the accounting filed by EVFS” and “orders for liquidation of deferred
compensation accounts.”

¶15 The next day, EVFS moved to alter or amend the Amended
Judgment, citing “the probate court’s recent rulings denying Mr.
Chalmers’s claims and sanctioning Attorney Cook under A.R.S. § 12-349.”
Chalmers then moved to vacate the Amended Judgment, contending the
superior court lacked jurisdiction to enter it because he already had
appealed from the Original Judgment. The superior court granted EVFS’s
motion but denied Chalmers’s motion. EVFS submitted an amended fee
application on March 8, 2021.

¶16 Approximately two weeks later, EVFS filed a motion in this
court asking us to revest jurisdiction in the superior court “to correct the
judgment from which the appeal was taken and to resolve issues relating
to the superior court’s awards of attorneys’ fees and costs.” We granted the
motion. The superior court then entered a “Corrected Final Judgment” that
(1) “replace[d] and correct[ed]” the Original and Amended Judgments, (2)
reaffirmed the sanctions award to Scharber, and (3) awarded sanctions to
EVFS. The Corrected Final Judgment imposed both sanction awards jointly
and severally against Chalmers and Cook.

5
 CHALMERS v. EAST VALLEY FIDUCIARY, et al.
Decision of the Court

¶17 Chalmers timely appealed from the Corrected Final
Judgment. We consolidated Chalmers’s appeals from the Original
Judgment and the Corrected Final Judgment and have jurisdiction
pursuant to Article 6, Section 9, of the Arizona Constitution and A.R.S. § 12-
120.21(A)(1) and -2101(A)(1).

DISCUSSION

I. The superior court had jurisdiction to enter the Amended
Judgment and the Corrected Final Judgment.

¶18 Chalmers contends his first notice of appeal challenging the
Original Judgment deprived the superior court of jurisdiction to enter the
Amended Judgment and the Corrected Final Judgment. Generally, we
review the denial of a motion to vacate a judgment for an abuse of
discretion. Delbridge v. Salt River Project Agr. Imp. & Power Dist., 182 Ariz.
46, 53-54 (App. 1994) (citation omitted). But we review whether the
superior court had jurisdiction to enter a judgment de novo. See Danielson
v. Evans, 201 Ariz. 401, 411, ¶ 36 (App. 2001) (citation omitted).

a. The Amended Judgment

¶19 Generally, the superior court loses jurisdiction when a party
files a notice of appeal. In re Marriage of Johnson, 231 Ariz. 228, 230, ¶ 6 (App.
2012) (citation omitted). Scharber contends, however, that Chalmers’s first
notice of appeal was premature because the Original Judgment (1) did not
rule on his pending attorneys’ fees application and (2) erroneously awarded
his taxable costs to EVFS.

¶20 Attorneys’ fees and cost claims must be resolved before
entering a Rule 54(b) judgment, and fee awards must be included in the
judgment. Ariz. R. Civ. P. 54(h). This rule exists because attorneys’ fees
claims are substantive, not ministerial, as a fees award amount can be the
subject of an appeal. AU Enters. Inc. v. Edwards, 248 Ariz. 109, 112, ¶ 10
(App. 2020) (citation omitted). We have previously held that sanctions,
which the fees awarded to Scharber are, are also “a non-ministerial matter
requiring resolution . . . before [a] judgment [can] become final.” Lopez v.
Food City, 234 Ariz. 349, 350-51, ¶ 4 (App. 2014) (citing Santee v. Mesa
Airlines, Inc., 229 Ariz. 88, 89-90, ¶¶ 7-8 (App. 2012)). Even though the
Original Judgment contained Rule 54(b) language, it was not final because
it did not resolve Scharber’s pending attorneys’ fees claim. Cf. Britt v.
Steffen, 220 Ariz. 265, 270, ¶ 22 (App. 2008) (“[A] trial court has jurisdiction
to rule on any timely motion for attorneys’ fees that falls within the scope
of Rule 54(g).”).

6
 CHALMERS v. EAST VALLEY FIDUCIARY, et al.
Decision of the Court

¶21 Chalmers also contends that Rule 54(h)(2)(C) obligated
Scharber to move to alter or amend the Original Judgment, which he did
not do. That subsection, however, only applies if the court “enters a
judgment under Rule 54(b) or (c) without first receiving a motion for
judgment or a proposed form of judgment.” Ariz. R. Civ. P. 54(h)(2)(C).
EVFS filed a proposed form of judgment more than a month before the
superior court entered the Original Judgment that included blanks for its
and Scharber’s fees claims. Chalmers’s first notice of appeal therefore did
not deprive the superior court of jurisdiction to enter the Amended
Judgment.

b. The Corrected Final Judgment

¶22 The Corrected Final Judgment resulted from EVFS’s timely
motion to alter or amend the Amended Judgment. See Ariz. R. Civ. P.
54(h)(2)(C), 59(d). Moreover, we suspended the appeal to allow the
superior court to consider the motion. Chalmers did not oppose EVFS’s
request to revest jurisdiction in the superior court. Therefore, his notice of
appeal did not deprive the superior court of jurisdiction to enter the
Corrected Final Judgment.

II. The superior court correctly determined Chalmers’s claims
were abated.

¶23 We now turn to the merits of Chalmers’s appeal. “‘A motion
for judgment on the pleadings . . . tests the sufficiency of the complaint,’
and a defendant is entitled to judgment ‘if the complaint fails to state a claim
for relief.’” Mobile Cmty. Council for Progress, Inc. v. Brock, 211 Ariz. 196, 198,
¶ 5 (App. 2005) (quoting Giles v. Hill Lewis Marce, 195 Ariz. 358, 359, ¶ 2
(App. 1999)). In reviewing a grant of judgment on the pleadings, we accept
the complaint’s allegations as true and review the court’s legal conclusions
de novo. Muscat by Berman, 244 Ariz. at 197, ¶ 7 (citation omitted).

¶24 Chalmers broadly argues that claim preclusion does not bar
his claims against all Appellees. The superior court did not rely on claim
preclusion in dismissing the first amended complaint, presumably because
the probate court had not yet made its final rulings. See e.g., Lawrence T. v.
Dep’t of Child Safety, 246 Ariz. 260, 262-63, ¶ 8 (App. 2019) (claim preclusion
requires “a final judgment on the merits in the previous litigation”) (citation
omitted). Instead, the superior court found Chalmers’s claims were abated
because he had already asserted them in the family and probate cases.

¶25 When two actions that “present a substantial identity as to
parties, subject matter, issues involved, and relief demanded” are filed

7
 CHALMERS v. EAST VALLEY FIDUCIARY, et al.
Decision of the Court

within the same state, the later-filed action is abated. Rohan Mgmt., Inc. v.
Jantzen, 246 Ariz. 168, 172-73, ¶ 13 (App. 2019) (citation omitted);
Tonnemacher v. Touche Ross & Co., 186 Ariz. 125, 128 (App. 1996). Chalmers
contends abatement does not apply, citing multiple issues from his first
amended complaint that he says were not raised in the family or probate
cases. We address each in turn.

a. Mobile Angel cell phone application

¶26 Chalmers argues his “Mobile Angel cell phone application”
arises out of “the fiduciaries[‘] failure to do discovery in the family court
case.” The first amended complaint, however, does not claim damages for
the alleged failure to seek discovery. Instead, it demands $7.5 million “for
loss of the source code for the cell phone App.” Moreover, Chalmers raised
this issue in family court, contending in his objections to the ARFLP 69
agreement that his ex-wife possessed the computer that “had the source
codes for the Mobile Ang[el] project.” Chalmers also raised this claim in
his objections to EVFS’s final accounting in the probate court, where he
argued that EVFS and others had “fail[ed] to secure the source code for the
texting application.”

b. Threat of permanent conservatorship

¶27 The first amended complaint also alleges that GAL Theut,
who is not a party to this appeal, threatened to “file for a permanent
conservatorship if [Chalmers] did not agree to the [ARFLP] 69 Agreement.”
Chalmers made the same allegation in his objections to EVFS’s final
accounting in the probate case. He also raised this issue in the family court
appeal:

[Chalmers] argues that his GAL threatened to move for a
permanent conservator if he did not sign the [ARFLP 69]
Agreement. The record belies this assertion because the issue
of appointing a permanent conservator for [Chalmers] was
already before the court when it consolidated the cases in
August 2017, six months before [Chalmers] signed the
Agreement.

Chalmers I, 1 CA-CV 18-0287 FC, at *3, ¶ 20.

c. Failure to terminate conservatorship

¶28 Chalmers also contends the first amended complaint seeks
relief for all Appellees’ failure to either terminate the temporary

8
 CHALMERS v. EAST VALLEY FIDUCIARY, et al.
Decision of the Court

conservatorship or appoint his sister as conservator. The first amended
complaint does not mention his sister and instead alleges that (1) Chalmers
obtained a doctor’s report in October 2017 that recommended he no longer
needed a conservator and (2) GAL Theut and Doyle separately refused to
terminate the conservatorship. Chalmers relied on the same doctor’s report
in his objections to EVFS’s final accounting, although he cited it as an
example of GAL Theut’s alleged malfeasance, not Doyle’s.

¶29 In his opening brief, Chalmers also cites multiple subsections
of § 7-202(J) of the Arizona Code of Judicial Administration, which he
argues obligated “the fiduciaries” to terminate the conservatorship in
October 2017. Many of these same subsections, however, were cited by
Chalmers in his objections to EVFS’s final accounting in the probate case.

d. Adverse tax consequences

¶30 Chalmers also cites his allegation that Appellees and others
“liquidated his IRAs,” causing “more than $100,000 in tax consequences.”
He further contends EVFS did not give him “his one-half of the sale
proceeds” of certain firearms and failed to maintain his credit rating. He
also broadly alleges that EVFS “largely refused to speak to [him],” which
increased the fees charged by multiple Appellees. Each of these issues,
however, were raised by Chalmers in his objections to EVFS’s final
accounting in the probate case.

e. Attorneys’ fees rulings in probate case

¶31 Chalmers also contends “we now have [the probate court’s]
findings that neither . . . EVFS, nor Scharber . . . ever filed the required
statutory notices which rendered their fee requests waived.” After briefing
was completed in this appeal, we vacated that ruling and remanded to
allow the probate court “to decide whether EVFS’s [and] Scharber’s . . .
failure to comply with [A.R.S. § 14-5109] waived their right to seek
compensation, and thus whether the 2018 fee orders were manifestly
erroneous or unjust.” Chalmers v. E. Valley Fiduciary Servs., Inc., 1 CA-CV
21-0163, 2021 WL 5895612, at *3, ¶ 15 (Ariz. App. Dec. 14, 2021) (mem.
decision) (“Chalmers III”). Because these are once again before the probate
court, they cannot be raised again in this case. See Allen, 86 Ariz. at 209
(explaining “where courts have concurrent jurisdiction the first court to
assume jurisdiction retains it”) (citation omitted).

f. Medical privacy claim

9
 CHALMERS v. EAST VALLEY FIDUCIARY, et al.
Decision of the Court

¶32 At oral argument, Chalmers contended that his allegation that
EVFS “disclosed information about [his] health to third parties . . . without
obtaining the necessary HIPAA release,” thereby violating his right to
privacy, is new to this case. We assume, without deciding, that Chalmers
intends to assert a negligence claim based on this allegation. See Shepherd v.
Costco Wholesale Corp., 250 Ariz. 511, 517, ¶ 31 (2021) (“[W]e find the weight
of authority permitting the use of HIPAA to inform the standard of care [in
a negligence case] persuasive.”) (citation omitted).

¶33 Chalmers does not develop this argument on appeal, as the
quoted allegation appears only once in the opening brief as part of a five-
page block quotation of a large portion of the first amended complaint. In
any event, he raised this issue in the probate case. In an addendum to his
objections to Appellees’ Rule 33 fee applications, he cited alleged violations
of his “right to privacy, including his HIPAA rights” as one of several
reasons why “EVFS should be ordered to disgorge every single cent they
have been paid in this case.” The probate court expressly considered
Chalmers’s addendum. As such, this claim—to the extent it is a claim—has
been abated.

III. We deny Chalmers’s request on appeal to file a second
amended complaint.

¶34 Chalmers also asks us to direct the superior court to give him
“a reasonable period of time to amend his complaint to include the more
recently discovered breaches of fiduciary duty.” At oral argument, he
asserted that he orally moved for leave to file a second amended complaint
with new breach of fiduciary duty claims. That oral motion is not in the
record on appeal. Moreover, he does not identify any specific “more
recently discovered breaches.” He therefore has waived this argument. See
Contreras Farms Ltd. v. City of Phoenix, 247 Ariz. 485, 489-90, ¶ 13 (App. 2019)
(concluding that appellant waived arguments not raised in the superior
court); see also Blumenthal v. Teets, 155 Ariz. 123, 131 (App. 1987) (affirming
denial of leave to amend where the plaintiff “did not file any motion to
amend the complaint”).

CONCLUSION

¶35 The first amended complaint asserts claims against EVFS,
Scharber, and Doyle that were, or will be, resolved in the family case or the
probate case. The superior court did not err in granting judgment on the
pleadings on abatement grounds. Ad Hoc Comm. of Parishioners of Our Lady
of Sun Cath. Church, Inc. v. Reiss, 223 Ariz. 505, 515, ¶¶ 28-29 (App. 2010).

10
 CHALMERS v. EAST VALLEY FIDUCIARY, et al.
Decision of the Court

EVFS, Scharber, and Doyle may recover their taxable costs incurred in this
appeal upon compliance with Arizona Rule of Civil Appellate Procedure
21. See A.R.S. § 12-341. Scharber requests attorneys’ fees but does not plead
any basis for us to award them and we deny the request. We deny
Chalmers’s request under A.R.S. § 12-349.

AMY M. WOOD • Clerk of the Court
FILED: AA

11