                      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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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


                     SONG HE, et al., Plaintiffs/Appellees,

                                         v.

               COLES PROPERTIES LLC, Intervenor/Appellant.

                              No. 1 CA-CV 17-0561
                                FILED 10-23-2018


           Appeal from the Superior Court in Maricopa County
                          No. CV2016-053018
           The Honorable Steven K. Holding, Judge Pro Tempore

                       VACATED AND REMANDED


                                    COUNSEL

The Kozub Law Group, PLC, Scottsdale
By William A. Kozub, Richard W. Hundley
Counsel for Plaintiffs/Appellees

Evans Dove Nelson Fish & Grier, PLC, Mesa
By Douglas N. Nelson, Trevor J. Fish, Thomas J. Grier
Counsel for Intervenor/Appellant
                 SONG HE, et al. v. COLES PROPERTIES
                        Decision of the Court



                      MEMORANDUM DECISION

Judge James B. Morse Jr. delivered the decision of the Court, in which
Presiding Judge James P. Beene and Judge Michael J. Brown joined.


M O R S E, Judge:

¶1             Coles Properties LLC ("Coles") appeals the superior court's
order denying Coles' motion to set aside default judgment under Arizona
Rule of Civil Procedure ("Rule") 60(b).1 The superior court found that Coles
was not a party and did not have standing to seek relief under Rule 60(b).
Because Coles was a party with standing, we vacate the superior court's
order and remand for the superior court to decide the merits of Coles'
motion.

                FACTS AND PROCEDURAL HISTORY

¶2            Coles and Appellee Song He both claim to be victims of fraud
perpetrated by Darrell Knoch and Imagine Enterprises, LLC ("Imagine").
This appeal concerns Coles' and Song He's claims to real property
("Property") that Imagine purchased in early 2016 but that Coles currently
owns.

¶3            On September 28, 2016, Appellees filed suit against Imagine
for fraud and other misdeeds, seeking, among other things, an equitable
mortgage on the Property, which Imagine owned at that time. Two days
later, Appellees recorded a lis pendens, giving notice of the pending lawsuit
and claims against the Property. Upon learning of the lis pendens and
lawsuit, Coles convinced Imagine to quitclaim the property to it, and on
December 8, 2016, Coles recorded a quitclaim deed transferring the
Property from Imagine to Coles. On December 13, 2016, Coles sent
Appellees a demand letter, telling Appellees that it held legal title to the
property and requesting that Appellees quitclaim any of their interest to
Coles. On the same day, Appellees moved for default judgment against
Imagine and Knoch, requesting, among other forms of relief, that the court


1     The parties' filings and the superior court's order cite to Rule 60(c).
The Rules were amended in 2017, and what was previously Rule 60(c) is
currently numbered Rule 60(b). See Ariz. R. Civ. P., prefatory cmt. to the
2017 amendments.


                                     2
                 SONG HE, et al. v. COLES PROPERTIES
                        Decision of the Court

grant a "constructive trust and/or equitable mortgage" against the Property
and "that Defendant Imagine Enterprises, LLC, be ordered to hold such
Property as constructive trustees and/or equitable mortgagees for the
benefit of Plaintiffs."

¶4           Appellees did not notify the superior court that Coles was the
new owner of the Property, and they did not seek to join Coles as a party
pursuant to Rule 19. Appellees also did not notify Coles of the default
proceedings. On January 4, 2017, the superior court entered default
judgment against Imagine and Knoch. Among other relief, the judgment
granted Song He an equitable mortgage on the Property and, as requested
by Appellees, ordered Imagine to hold the property "as constructive
trustees and/or equitable mortgagees for the benefit of Plaintiffs."

¶5            On January 10, 2017, Coles moved to intervene. For reasons
not important to this appeal, the parties and the superior court determined
that intervention at that time was not in the interests of the parties, and for
that reason the court denied the motion without prejudice. Coles later
renewed its motion to intervene and on May 8, 2017, the court granted
Coles' motion, finding that Coles met the requirements for a permissive
intervention under Rule 24(b), and also was entitled to intervention as a
matter of right under Rule 24(a).

¶6            Upon successfully intervening, Coles moved to set aside the
part of the default judgment that granted Song He an equitable mortgage
on the Property, arguing excusable neglect and other extraordinary
circumstances under Rule 60(b)(1) and (6). The superior court denied the
motion, finding that Coles was not a party under Rule 60(b), and that Coles
did not have standing. The court entered final judgment, Coles timely
appealed, and we have jurisdiction pursuant to Article 6, Section 9, of the
Arizona Constitution and Arizona Revised Statutes ("A.R.S.") sections 12-
120.21(A)(1) and -2101(A)(1).

                               DISCUSSION

¶7            Generally, we review rulings on a motion for relief under
Rule 60(b) for an abuse of discretion. See Gonzalez v. Nguyen, 243 Ariz. 531,
534, ¶ 11 (2018) ("The rule . . . creat[es] a very broadly worded ground for
relief, which we construe as investing extensive discretion in trial courts.").
However, whether a person has standing is a legal question which we
review de novo. Aegis of Ariz., L.L.C. v. Town of Marana, 206 Ariz. 557, 562,
¶ 16 (App. 2003).




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                  SONG HE, et al. v. COLES PROPERTIES
                         Decision of the Court

¶8              Coles has standing under traditional standing principles
because the judgment imposes a mortgage and lessens the value of Coles'
Property. See Biggs v. Cooper ex rel. County of Maricopa, 236 Ariz. 415, 418,
¶ 8 (2014) ("To have standing, 'a plaintiff must allege a distinct and palpable
injury.'" (quoting Sears v. Hull, 192 Ariz. 65, 69, ¶ 16 (1998))). Appellees
argue, however, that Coles cannot seek relief under Rule 60(b) because
Coles was not specifically mentioned in the judgment and was not a party
to this action when default judgment was entered. However, Rule 60(b)
provides that "the court may relieve a party or its legal representative from
a final judgment," and does not explicitly limit relief to those who were
parties at the time of the judgment. Ariz. R. Civ. P. 60(b). Coles successfully
intervened and, therefore, was "a party" at the time the court ruled on the
motion for relief under Rule 60(b).

¶9             In addition, Coles is Imagine's "legal representative" because
it stands in the same position as Imagine with respect to the Property. See
11 Charles Allan Wright & Arthur R. Miller, Federal Practice and Procedure
§ 2852 (3d ed. 2018) ("The reference to the party's legal representative has
been construed to refer solely to persons who effectively stand in the shoes
of a party, such as a trustee or guardian, and not to include the lawyer for
the party."); Matter of El Paso Refinery, LP, 37 F.3d 230, 234 (5th Cir. 1994)
("The term was intended to reach 'only those individuals who were in a
position tantamount to that of a party or whose legal rights were otherwise
so intimately bound up with the parties that their rights were directly
affected by the final judgment.'" (quoting Kem Mfg. Corp. v. Wilder, 817 F.2d
1517, 1520 (11th Cir. 1987))); In re Lovitt, 757 F.2d 1035, 1040 (9th Cir. 1985)
(interpreting "legal representative" to mean a party's "privy").2

¶10          Liston v. Butler, 4 Ariz. App. 460 (1966), is instructive. In that
case, the superior court allowed a non-party to intervene and set aside a
judgment that imposed a lien on his property without naming him. This
Court affirmed, stating:

       We believe that one whose interests are directly affected by a
       judgment in a proceeding to which he is not a party, may
       timely move to set aside such judgment, and the trial court

2      Rule 60(b) is identical in all material respects to Fed. R. Civ. P. 60(b).
"Although a federal court's interpretation of a federal procedural rule is not
binding in the construction of our rule, we recognize its instructive and
persuasive value and that uniformity in interpretation of our rules and the
federal rules is highly desirable." Flynn v. Campbell, 243 Ariz. 76, 80, ¶ 9
(2017) (internal quotation marks omitted).


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                 SONG HE, et al. v. COLES PROPERTIES
                        Decision of the Court

       after notice and hearing may set aside said judgment and
       grant a motion to intervene.

Id. at 466. Thus, even if Coles had not intervened and was not yet a named
party to the lawsuit when it moved to set aside the judgment, the superior
court could consider and grant Rule 60(b) relief and allow it to intervene at
the same time because its "interests are directly affected by [the] judgment."
Id.; cf. Woodbridge Structured Funding, LLC v. Ariz. Lottery, 235 Ariz. 25, 30,
¶ 23 (App. 2014) ("Because Genex had no right to intervene, it is not entitled
to Rule 60 relief from the trial court's entry of judgment . . . .").

                                CONCLUSION

¶11           For the foregoing reasons, we vacate the superior court's
order denying Coles' motion to set aside and remand for consideration of
the motion on the merits. As the successful party, Coles is entitled to costs
on appeal. We defer Coles' request for attorney fees on appeal to the
superior court's discretion pending resolution of the matter on the merits.
See Tierra Ranchos Homeowners Ass'n v. Kitchukov, 216 Ariz. 195, 204, ¶ 37
(App. 2007).




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




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