Hiru Corporation (HIRU)

[satter]

Hiru Motion To Set Aside.

LEAH MARTIN LAW
Leah A. Martin, No. 028728
Carlos S. Salas, No. 040309
2211 E. Highland Avenue, Suite 100
Phoenix, Arizona 85016
[phone] Phone
[phone] Fax
[e-mail]
[e-mail]
Attorneys for Hiru Corporation

IN THE SUPERIOR COURT OF THE STATE OF ARIZONA
IN AND FOR THE COUNTY OF MARICOPA

AMERICA FIRST CREDIT UNION,
Plaintiff,
v.
JOEL NATARIO; HIRU CORPORATION; AZ CUSTOM BOTTLED WATER LLC; SALOME WATER & ICE LLC; and KATHRYN GAVIN,
Defendants.
Case No: CV2023-012400
HIRU CORPORATION’S MOTION FOR RELIEF FROM JUDGMENT UNDER ARIZ. R. CIV. P. 60(b)(1) & (6) AND 60(c)
(Assigned to the Honorable Erik Thorson)


Pursuant to Ariz. R. Civ. P. 60(b)(1), 60(b)(6), and 60(c), HIRU Corporation (“HIRU”) moves to vacate (i) the Court’s July 11, 2025 order granting Plaintiff’s Combined Motion for Summary Judgment and Rule 37 Sanctions as to HIRU, and (ii) the September 9, 2025 Final Judgment entered against HIRU, and to restore this matter for decision on the merits. In the alternative, HIRU seeks modification of the sanctions and leave to file an out-of-time response to summary judgment. This motion is timely under Rule 60(c) because it is filed within a reasonable time and within six months of the September 9, 2025 judgment. See Ex. A (7/11/2025 Minute Entry); Ex. B (Docket).

I. INTRODUCTION
On July 11, 2025, at a setting where HIRU had not filed a response and did not appear through counsel, the Court granted Plaintiff’s combined motion and imposed Rule 37 relief, including striking HIRU’s banking expert, Steven D. Lindsey, and inviting fee/cost submissions. Final Judgment against HIRU followed on September 9, 2025. See Ex. A; Ex. B; see also Ex. Q - Lindsey Preliminary Expert Report (Sept. 30, 2024).

Relief is warranted because: (1) HIRU’s non-appearance/non-response resulted from excusable neglect and extraordinary circumstances during a representation gap; (2) HIRU has meritorious defenses, lack of corporate authority/forgery and AFCU’s release of uncollected funds, already disclosed in HIRU’s October 2024 Initial Disclosures and supported by its expert; and (3) Arizona’s strong policy favors adjudication on the merits rather than by procedural default. Ex. C (3/18/2024 Minute Entry—default set aside); Ex. P (HIRU Initial Disclosures, Oct. 2024); Ex. Q (Lindsey Preliminary Expert Report).

II. PROCEDURAL BACKGROUND
1. Default set aside; merits preserved. After 2023 default activity, the Court set aside the entry of default as to HIRU on March 18, 2024, expressly noting a meritorious defense and excusable neglect (Richas factors). Ex. C (3/18/2024 Minute Entry). HIRU’s Initial Disclosures (Oct. 2024) identify the authority/forgery and uncollected-funds defenses and key witnesses. Ex. P.

2. Scheduling and discovery activity. By November 2024, Plaintiff noticed depositions (including a 30(b)(6) of HIRU), and defense counsel referenced a December
3, 2024 deposition deadline under the Court’s scheduling order—confirming the case was on an active schedule. Ex. O (Nov. 6, 2024 notice email and 30(b)(6)/individual notices).
3. Counsel withdrawal and representation gap. Defense counsel moved to withdraw on March 26, 2025; contemporaneous email traffic shows counsel discussing a summary-judgment response/extension and the prospect of new counsel in April 2025. Ex. I (Bauman Motion to Withdraw); Ex. K (April 2025 emails re extension/new counsel).

4. Dispositive order and sanctions. On July 11, 2025, with no response on file and HIRU unrepresented at the setting, the Court granted the combined MSJ/Rule 37 motion, struck Expert Lindsey, and invited fee/cost applications Final Judgment issued on September 9, 2025. Ex. A; Ex. B; see also the case status summary.

III. LEGAL STANDARD
Relief from a final judgment may be granted for “mistake, inadvertence, surprise, or excusable neglect” under Rule 60(b)(1), or for “any other reason that justifies relief” under Rule 60(b)(6), the latter applied sparingly in extraordinary circumstances. Rule 60(c) requires that the motion be filed within a reasonable time, and for (b)(1)–(3) no later than six months after entry of judgment.

Arizona courts evaluate Rule 60 requests with an eye toward deciding cases on the merits when feasible, weighing diligence/promptness, the existence of a meritorious defense, and prejudice to the non-moving party.

Arizona’s Supreme Court emphasizes liberal application of Rule 60 when a party acts promptly and presents a meritorious defense, balancing finality against justice. Jepson v. New, 164 Ariz. 265, 269–71, 792 P.2d 728 (1990). Additionally, Courts look to diligence and prejudice in applying Rule 60, including factors recognized in City of Phoenix v. Geyler, 144 Ariz. 323, 328–30, 697 P.2d 1073 (1985) (discussing excusable neglect and equitable considerations). Moreover, where the record already reflects a meritorious defense, courts are more willing to reopen to reach the merits. (Here, the Court previously set aside HIRU’s default, expressly finding a meritorious defense and excusable neglect.) Ex. C (3/18/2024 Minute Entry).

IV. ARGUMENT

A. Excusable Neglect and Extraordinary Circumstances (Rules 60(b)(1) & 60(b)(6))

1. Representation gap and non-response. The docket shows counsel’s withdrawal in spring 2025, shortly after Plaintiff filed its combined MSJ/Rule 37 motion. Ex. I. The July 11 minute entry confirms HIRU was “neither present nor represented” and had filed no response when the Court granted dispositive and sanction relief. Ex. A.

2. Contemporaneous communications. Emails among former counsel and new management in January–April 2025 show: (a) counsel advising new leadership of the case, deponent issues, and the need to substitute/engage counsel; and (b) an offer to request additional time to respond to the MSJ while HIRU retained new counsel. Ex. J (1/5/2025 counsel email to new management); Ex. K (4/23/2025 email noting offer to seek extension).

3. Change of corporate control and conflicting information. Board and transaction documents show new owners/officers by July 2024; new management reports they were misled by prior principals about the nature/status of the case—further explaining the gap in representation and response. Ex. L (10/16/2023 board—Gavin resigns; Vasiljevic appointed); Ex. M (7/15/2024 board—Al-Thani/Thorp appointments); Ex. N (transaction term sheet, Sept. 2024 summary); Ex. K (emails describing misrepresentations).

4. Prejudice & equities. No trial has occurred; merits briefing as to HIRU was never joined; and the judgment followed non-appearance/non-response after a documented withdrawal. Reopening to allow a response, on conditions the Court deems just, will not unduly prejudice Plaintiff, especially where fees/costs can cure any incremental burden and a Rule 37 order already exists to tailor remedies. Ex. A.

Overall, these facts meet Rule 60(b)(1)’s “excusable neglect” and, independently, Rule 60(b)(6)’s “extraordinary circumstances” standard.

B. HIRU Has Meritorious Defenses (Already Recognized by the Court)

1. Unauthorized signature/lack of authority (UCC § 3-403 principles).
The Court previously found HIRU had a meritorious defense when it set aside default. Ex. C.
Initial Disclosures (Oct. 2024) identify witnesses and facts showing Joel Natario was never an officer/director, had no board authorization to sign checks, and admitted he signed Gavin’s name on the six checks drawn on HIRU’s Chase account. Ex. P (Initial Disclosures).
Board records confirm the authority changes in October 2023 (Gavin out; Vasiljevic in) and July 2024 (Al-Thani/Thorp installed), defeating any apparent authority theory tied to Gavin/Natario in 2024–2025. Exs. L–M.

2. Banking-practice failures/uncollected funds (causation/damages).
Expert Lindsey’s Preliminary Report (Sept. 30, 2024) details departures from sound banking standards, including allowing draws on uncollected funds and compliance failures bearing directly on liability and damages. Ex. Q (Lindsey Report).
The July 11 order struck Lindsey as a Rule 37 sanction, a merits-impacting remedy imposed when HIRU lacked counsel and did not appear. Ex. A.

3. Corporate separateness/no corporate benefit.
The Term Sheet and board papers reflect a public company with numerous shareholders and a change-of-control transaction—further corroborating that Natario’s acts were personal and ultra vires to HIRU. Exs. N, L–M.
Overall, these record materials easily clear Rule 60’s “meritorious defense” threshold and show dispositive issues the Court never reached due to the representation gap.

C. The Sanctions and Dispositive Relief Warrant Reconsideration or Tailoring

The July 11 order imposed severe case-ending consequences (summary judgment + striking HIRU’s expert) on a non-appearance/non-response record. Arizona law favors proportional Rule 37 remedies and decisions on the merits. Re-opening to allow an out-of-time response (and reinstating or permitting substitution of an expert, with fee/cost conditions as appropriate) will align with the Rules’ remedial purpose and the equities here.

D. Timeliness (Rule 60(c))
This motion is filed within a reasonable time after final judgment (September 9, 2025) and within the six-month outer limit applicable to Rule 60(b)(1). Ex. B.

V. REQUESTED RELIEF

Hiru respectfully requests that the Court:

1. Vacate, as to HIRU only, the Court’s July 11, 2025 order granting Plaintiff’s Combined Motion for Summary Judgment and Rule 37 Sanctions and the September 9, 2025 Final Judgment, and restore the case to the pre-July 11 posture; authorize HIRU to file an out-of-time response to Plaintiff’s combined motion within 20 days of the Court’s order, with Plaintiff’s reply due within 10 days thereafter.

2. Vacate or tailor the Rule 37 relief to reinstate Expert Lindsey (or permit substitution) and, if needed, re-open limited discovery on conditions the Court deems just (including fee/cost shifting to cure any specific prejudice).

3. Alternatively, if the Court declines to vacate the July 11 order in full at this time: (a) rescind the sanction striking HIRU’s expert (or permit substitution) and re-open a targeted record (limited expert/discovery for 60 days); and (b) allow HIRU to file an out-of-time opposition so that the Court may reconsider summary judgment on a complete, adversarial record.

4. If a Notice of Appeal has been filed, issue an indicative ruling under ARCAP 9.1 stating that the Court would grant this motion upon remand, so HIRU may seek appropriate relief in the Court of Appeals to revest jurisdiction.

5. Grant any further relief the Court deems just and proper.

VI. CONCLUSION
The record shows excusable neglect and extraordinary circumstances during a documented representation gap; the Court has already recognized that HIRU presents a meritorious defense; and Arizona policy favors decisions on the merits rather than by procedural default. On this showing, the Court should grant relief under Rules 60(b)(1), 60(b)(6), and 60(c) and restore the case, as to HIRU, to a posture where the summary-judgment issues can be resolved on a complete, adversarial record.


/s/Carlos S. Salas
Carlos S. Salas, Esq.
Leah A. Martin, Esq.
Leah Martin Law
2211 E. Highland Avenue, Suite 100
Phoenix, Arizona 85016
Attorneys for Hiru Corporation

Dated this 3rd day of October, 2025.