Opinion
No. 2 CA-CV 2019-0108
05-29-2020
ARIZONA CUSTOM CONTRACTING, INC., DBA ALL VALLEY CUSTOM CONTRACTING, AN ARIZONA CORPORATION, Plaintiff/Appellant, v. DAVID GREEN, AN INDIVIDUAL; THOMAS GREEN, AN INDIVIDUAL; CASA DE VERDE ENTERPRISES, INC., AN ARIZONA CORPORATION; GREEN FURNITURE & APPLIANCE; BRAND SOURCE APPLIANCE; ARIZONA GUNS & AMMO, Defendants/Appellees.
COUNSEL Keith R. Lalliss, Mesa Counsel for Plaintiff/Appellant Larson & Simpson PLC, Chandler By Gregory J. Larson and John A. Salskov Counsel for Defendants/Appellees
THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
NOT FOR PUBLICATION
See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f). Appeal from the Superior Court in Graham County
No. CV201800058
The Honorable Timothy M. Wright, Judge
REVERSED AND REMANDED
COUNSEL Keith R. Lalliss, Mesa
Counsel for Plaintiff/Appellant Larson & Simpson PLC, Chandler
By Gregory J. Larson and John A. Salskov
Counsel for Defendants/Appellees
MEMORANDUM DECISION
Judge Brearcliffe authored the decision of the Court, in which Presiding Judge Staring and Chief Judge Vásquez concurred. BREARCLIFFE, Judge:
¶1 Arizona Custom Contracting, Inc. ("ACC") appeals from the trial court's judgment in favor of David Green, Thomas Green, Casa De Verde Enterprises, Inc., Green Furniture & Appliance, Brand Source Appliance, and Arizona Guns & Ammo (collectively "Green"), its November 27, 2018 order granting Green's motion to enforce settlement agreement, and its March 22, 2019 order refusing to grant ACC's motion for new trial. ACC contends that the court erred when it enforced the settlement agreement because the wording of the offer was open to interpretation, ambiguous, and the only "fair" interpretation is that there was no meeting of the minds. Green contends that the "parties entered into a binding settlement agreement complete with offer, acceptance, and consideration." We reverse and remand for proceedings consistent with this decision.
Factual and Procedural Background
¶2 In determining that the parties had reached a settlement, based on the undisputed facts, the trial court "effectively granted summary judgment regarding the existence, terms, and enforceability of the parties' settlement agreement" and we thus "employ the summary judgment standard of review" and view the facts in the light most favorable to ACC, as the non-prevailing party. See Robertson v. Alling, 237 Ariz. 345, ¶ 8 (2015). On June 12, 2018, ACC filed a complaint against Green, alleging breach of contract. ACC alleged that it had contracted with Green to perform roofing services, and Green agreed to pay ACC for services rendered. ACC claimed that although it had performed the roofing services, Green had not paid the full amount for the services. Specifically, ACC alleged that Green had paid $50,000 at the time the complaint was filed and that he owed ACC an additional $99,018.84. The parties agreed to an open-ended extension of time for Green to file an answer to facilitate settlement negotiations.
¶3 On August 9, 2018, Green's counsel sent an email to ACC's counsel with an attachment titled "Settlement Correspondence." The email, in part, stated:
My clients offer to settle this dispute for a walk away agreement with Arizona Custom Contracting, Inc. to pay the $30,000 allegedly owed to Roofline Supply & Delivery, accepting $0.00 from my clients. In exchange, my clients will walk away and waive any claims they may have against Arizona Custom Contracting, Inc. . . . .It also stated the specific counterclaims Green would allege against ACC, including fraud, breach of contract, and racketeering. On August 15, 2018, ACC's counsel emailed a response stating:
This email serves as a response to your letter dated August 9, 2018. My client hereby accepts your client[']s offer of $30,000.00 to resolve all disputes between the parties. Would you like to draft the mutual release agreement?
¶4 Eleven minutes later, Green's counsel emailed a reply to ACC's counsel stating, "I want to make sure we are on the same page." He then quoted language from his email and stated that it meant, "that Arizona Custom Contracting, Inc. pays the $30k allegedly owed to Roofline Supply & Delivery, and my clients pay a total of $0.00," and concluded by stating, "if we are not in agreement, please advise." No response was sent.
¶5 On October 5, 2018, Green's counsel emailed a settlement agreement to ACC's counsel for signature, and stated that he expected to report to the judge, at a scheduled status conference, that the parties had settled and would file dismissal paperwork with the trial court. On October 5, 2018, ACC's counsel replied, "We did not come to an agreement on this matter . . . I believe it is time for your client to file their answer."
¶6 On October 24, 2018, Green filed a Motion to Enforce Settlement Agreement. Green requested that the trial court "enter an order enforcing the settlement agreement between the parties and dismissing the case." Green reasoned that the settlement agreement was valid and binding because there was consideration, the agreement was in writing, and the terms were sufficiently specific. ACC filed an opposition to the motion, claiming that there was no "meeting of the minds" because ACC did not agree to the terms Green proposed, because ACC had understood the offer to be that Green would pay $30,000 to ACC. The court granted Green's motion, and found that "a settlement agreement was reached by the Parties and therefore the Parties are bound by such agreement." The court identified the issue as whether the August 15, 2018 email was an acceptance of the August 9, 2018 offer. It found that the email was an acceptance because it had explicit language assenting to the terms of the offer, contained no language indicating a rejection of the offer, a counter-offer, or a conditional acceptance, and the objective evidence indicated an "unequivocal" acceptance.
¶7 ACC then filed a Motion for New Trial or to Amend the Minute Order, arguing that the trial court should reconsider the reasoning of the order or reconsider the order in light of the contemporaneously filed affidavit of its counsel. Green responded, reasserting his arguments as to the motion to enforce, and additionally asserted that ACC had waived and was estopped from arguing that the settlement agreement was not enforceable. The court denied ACC's motion, reasoning that the affidavit was not newly discovered evidence, thus was not proper grounds to obtain the relief of a new trial, and generally reaffirmed the reasoning of its order to enforce the settlement agreement. It further determined that "[b]ased on the Court's ruling above, it is not necessary for the Court to decide the waiver and/or estoppel arguments."
¶8 The trial court entered a final judgment pursuant to Rule 54(c), Ariz. R. Civ. P. in favor of Green, and against ACC. This appeal followed. We have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).
Analysis
¶9 As stated above, in our review, we "employ the summary judgment standard of review." Robertson, 237 Ariz. 345, ¶ 8. Thus, we review de novo whether the parties presented any genuine issue of material fact that could prevent judgment as a matter of law and whether the trial court correctly applied the law. Id.; see also Republic Ins. Co. v. Feidler, 178 Ariz. 528, 531 (App. 1993).
¶10 The only evidence offered below to the trial court before its ruling of November 27, 2018, was the correspondence between counsel for the parties; that is, the August 2018 e-mails and the later October 2018 e-mails described above. Neither party has disputed the authenticity of those communications.
ACC offered new evidence by an affidavit with its motion for new trial/motion for reconsideration. The trial court properly refused to consider this new evidence in its denial of the motion. See Roberts v. Morgensen Motors, 135 Ariz. 162, 165 (App. 1982) (evidence available to moving party at time of trial will not be considered in deciding motion for new trial or for reconsideration).
¶11 ACC argued below, and on appeal, that the language of the settlement agreement was ambiguous and subject to multiple interpretations, and thus that ACC "believed that the offer was that there would be a walk away between the parties and that the materials bill would be paid by Green." This misunderstanding, it contends, is why the purported acceptance reads "My client accepts your client's offer of $30,000 . . . ." and not "My client accepts [ACC's] obligation to pay $30,000 for the materials . . . ." Green, to the contrary, argued below, and on appeal, that ACC "clearly expressed its assent to enter into the settlement agreement, communicated by its lawyer of record." Additionally, in support of their arguments below, the parties provided and referenced evidence of their e-mail correspondence, including the "offer," "acceptance," and Green's clarification e-mail.
¶12 "Construction and enforcement of settlement agreements, including determinations as to the validity and scope of release terms, are governed by general contract principles." Emmons v. Superior Court, 192 Ariz. 509, ¶ 14 (App. 1998). "For an enforceable contract to exist, there must be an offer, an acceptance, consideration, and sufficient specification of terms so that obligations involved can be ascertained." K-Line Builders, Inc. v. First Fed. Sav. & Loan Ass'n, 139 Ariz. 209, 212 (App. 1983). "[B]efore a binding contract is formed, the parties must mutually consent to all material terms. A distinct intent common to both parties must exist without doubt or difference, and until all understand alike there can be no assent." Hill-Shafer P'ship v. Chilson Family Tr., 165 Ariz. 469, 473 (1990).
¶13 An "[a]cceptance of an offer is a manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer." Restatement (Second) of Contracts § 50 (1979); see also Perry v. Ronan, 225 Ariz. 49, ¶ 10 (App. 2010) ("Absent Arizona law to the contrary, we may rely on the Restatement for guidance."). "To create mutual consent and therefore a contract, acceptance of the offer must be unequivocal." Richards v. Simpson, 111 Ariz. 415, 417 (1975); see also Clark v. Compania Ganadera de Cananea, S.A., 94 Ariz. 391, 400 (1963) ("An acceptance must comply exactly with the requirements of the offer . . . ."). "It is not enough that the words of a reply justify a probable inference of assent." Restatement § 57 cmt. b. An attempt to accept the offer on terms materially different from those in the offer constitutes a rejection and counter-offer. See United Cal. Bank v. Prudential Ins. Co. of Am., 140 Ariz. 238, 271 (App. 1983); Restatement § 59. "[M]utual assent is based on objective evidence," and thus, "what is operative is the objective manifestations of assent by the parties." Hill-Shafer, 165 Ariz. at 474.
¶14 It is possible that "[e]ven though the parties manifest mutual assent to the same words of the agreement, there may be no contract because of material difference of understanding as to the terms of the exchange." Restatement § 20 cmt. c. "Relief is proper if the writing evidencing the purported agreement is uncertain or ambiguous" or if "some extrinsic facts could create 'a latent ambiguity in otherwise clear and intelligible language.'" Hill-Shafer, 165 Ariz. at 474 (quoting Buckmaster v. Dent, 146 Ariz. 521, 523 (App. 1985)). The misunderstandings "must be reasonable before a court may properly find a lack of mutual assent." Hartford v. Indus. Comm'n of Ariz., 178 Ariz. 106, 112 (App. 1994). For instance, in Hill-Shafer, a seller conveyed a parcel of land to a buyer using a legal description that neither buyer nor seller understood, and which did not reflect what seller thought he was selling. 165 Ariz. at 475-76. Our supreme court explained that there can be no meeting of the minds and no contract when one party thinks he is buying one thing and the other party thinks he is selling another thing. Id. at 473. The court further explained that although the legal description was specific, the parties' misunderstanding was reasonable under the circumstances and because there was no mutual assent, there was no contract. Id. at 475-76. It thus upheld the trial court's grant of summary judgment in favor of the seller. Id.
¶15 Here, Green offered one resolution, and ACC offered a different one. Green, by his own description, offered a resolution in which ACC would pay the $30,000 allegedly owed to Roofline Supply & Delivery and Green would pay nothing to ACC; the litigation would simply end. ACC then—despite its introductory statement that it was "hereby accept[ing]" Green's offer—restated the offer as one in which Green "offer[ed] . . . $30,000 to resolve all disputes between the parties." The facial disparity between these two proposals was reflected by Green himself, when his counsel, almost immediately after receiving ACC's purported acceptance, wrote "I want to make sure we are on the same page," and concluded by stating, "if we are not in agreement, please advise."
¶16 ACC's purported acceptance was not an unequivocal acceptance of the terms of the offer, because it included material terms inconsistent with Green's offer—namely, that Green would pay the $30,000 rather than ACC. Green's doubt about the acceptance, reflected in his response, betrayed the lack of mutual assent. See, e.g., Johnson Int'l, Inc. v. City of Phoenix, 192 Ariz. 466, ¶ 26 (App. 1998) ("A court may look to surrounding circumstances and the conduct of the parties to determine the parties' intent."). The objective evidence here—the written communications between the parties' representatives—indicates that there was a misunderstanding as to a material fact of the settlement agreement, and therefore there was no mutual assent to its terms. Thus, contrary to the trial court's conclusion, "[a]ny reasonable view of the evidence inevitably leads to the conclusion that there was no meeting of the minds and no enforceable contract was formed." Hill-Shafer, 165 Ariz. at 476. Accordingly here, we conclude that the trial court erred in determining that Green and ACC had an enforceable settlement agreement as a matter of law. Indeed, we conclude, as a matter of law, that they did not.
At oral argument, Green conceded that no additional fact-finding was required below and that a conclusion here could be made as a matter of law. --------
¶17 Green claims, however, that ACC has waived or is estopped from any argument that the settlement agreement is not enforceable because it performed the terms of the agreement. This claim, at a minimum, presents an issue of fact. See John C. Lincoln Hosp. & Health Corp. v. Maricopa Cty., 208 Ariz. 532, ¶ 10 (App. 2004) ("Questions of estoppel . . . are fact-intensive inquiries."); Glencross v. Evans, 4 Ariz. 222, 226 (1894) ("Whether the contract has been performed . . . is usually a question of fact, for the jury."). And, although Green preserved the claim of estoppel by raising it below, the trial court found it unnecessary to rule on these arguments. Because the trial court has not yet addressed these arguments, neither will we, and we leave that matter to the trial court to resolve in the first instance on remand.
Attorney Fees
¶18 Citing A.R.S. § 12-341.01, Green requests attorney fees on appeal. A prevailing party in an action may recover attorney fees on appeal if entitled to fees under the terms of a relevant contract or if allowed by statute. See Taylor v. S. Pac. Transp. Co., 130 Ariz. 516, 523 (1981) ("[A]ttorneys fees are not recoverable . . . unless specifically provided for by statute or by an agreement between the parties."). Section 12-341.01 permits a court to award the successful party reasonable attorney fees in an action arising out of contract. Green is not the successful party in this appeal and is thus not entitled to attorney fees.
¶19 In its reply, ACC seeks attorney fees. However, Rule 21(a)(1), Ariz. R. Civ. App. P. requires "[a] party claiming attorneys' fees [to] do so in an opening or an answering brief on appeal." ACC did not seek attorney fees in its opening brief, but only in its reply brief. Consequently, any claim it had to fees is waived. See Cemex Const. Materials S., LLC v. Falcone Bros. & Assocs., Inc., 237 Ariz. 236, n.12 (App. 2015). Additionally, ACC did not state the statutory authority for an award of attorney fees, as required by Rule 21(a)(2), Ariz. R. Civ. App. P. Consequently, neither Green nor ACC are entitled to an award of fees.
Disposition
¶20 We reverse the trial court's judgment in favor of Green and remand the case for further proceedings consistent with this decision. We award ACC its costs on appeal, contingent on its compliance with Rule 21, Ariz. R. Civ. App. P.