Opinion
No. 1 CA-CV 19-0496
06-18-2020
BADA BING GENTLEMENS CLUB, LLC, Plaintiff/Appellee, v. POJO ENTERPRISES, INC., Defendant/Appellant.
COUNSEL Zachar Law Firm, PC, Phoenix By Benjamin Robert Jemsek Counsel for Plaintiff/Appellee LaVelle & LaVelle, Phoenix By Michael J. LaVelle, Matthew K. LaVelle Counsel for Defendant/Appellant
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. Appeal from the Superior Court in Maricopa County
No. CV2014-002961
The Honorable Margaret R. Mahoney, Judge
AFFIRMED
COUNSEL Zachar Law Firm, PC, Phoenix
By Benjamin Robert Jemsek
Counsel for Plaintiff/Appellee LaVelle & LaVelle, Phoenix
By Michael J. LaVelle, Matthew K. LaVelle
Counsel for Defendant/Appellant
MEMORANDUM DECISION
Judge Kent E. Cattani delivered the decision of the Court, in which Presiding Judge Paul J. McMurdie and Judge Jennifer B. Campbell joined. CATTANI, Judge:
¶1 Pojo Enterprises, Inc., appeals the judgment for breach of contract and conversion and award of attorney's fees in favor of Bada Bing Gentlemen's Club, LLC. For reasons that follow, we affirm.
FACTS AND PROCEDURAL BACKGROUND
¶2 Beginning in early 2013, Bada Bing leased property from Pojo to operate an adult-oriented business. Bada Bing repaired and remodeled the exterior and interior of the building with a new stage, flooring, lighting, bathroom fixtures, and a VIP section with granite countertops. Bada Bing also installed new furnishings and equipment, including custom signs; stage lighting and lasers; a DJ booth with a computer and mixing boards; concert-style speakers and subwoofer; ice machine, cold-plate, and bar-sink; 12 security cameras; and office equipment—including a large safe.
¶3 On February 20, 2014, Pojo locked Bada Bing out of the premises for alleged breaches of the lease. Pojo's principal, Jeanne Occhino, authorized Tap Reeve to effectuate the lockout, and Reeve called Bada Bing's principal, Greg Casteel, to inform him after the lockout was accomplished.
¶4 Bada Bing filed a complaint in superior court challenging the lockout and seeking an order for immediate possession as well as damages and attorney's fees. After a forcible entry trial on the limited issue of the right to possession, the court found that the lockout was improper and awarded Bada Bing possession of the premises. After that ruling was entered on April 16, 2014, Casteel returned to the property to find the interior stripped and Bada Bing's possessions gone.
¶5 Bada Bing then amended its complaint against Pojo to seek damages for, as relevant here, (1) breach of contract based on the wrongful lockout and Pojo's failure to secure and account for Bada Bing's possessions during the lockout and (2) conversion based on Pojo taking Bada Bing's possessions during the lockout. Pojo asserted a counterclaim for breach of contract, ultimately seeking damages for unpaid rent and insurance. The case eventually went to trial before a jury.
The complaint also named Occhino and Reeve as defendants. The parties stipulated midtrial to dismiss the claims against Occhino with prejudice, and the jury ultimately returned a verdict in favor of Reeve.
¶6 Casteel testified that, after returning to the property, he was able to retrieve video recorded by Bada Bing's security cameras during a portion of the lockout. Recordings from a few days before the forcible entry hearing showed Reeve gathering furniture and removing the granite countertops and lighting that had been installed by Bada Bing. The video also showed a man Casteel identified as Michael Chavez loading items from the property onto a trailer and hauling them away. Chavez had previously worked for Bada Bing and still had keys to the building and knew the alarm code. Casteel recounted seeing Occhino, Reeve, and Chavez meeting at the property on the day of the forcible entry hearing.
¶7 Casteel also listed items removed from the property—ranging from the granite countertops, stage lighting, and security cameras to tables and chairs, DJ equipment and speakers, the safe with several thousand dollars in petty cash, and miscellaneous other tools and equipment—and estimated each item's value, yielding a total of $71,400 in items lost.
¶8 Reeve testified about his role in the lockout. He explained that he became involved in February 2014 after Chavez contacted him at Occhino's request. Reeve then spoke directly with Occhino, who told him Bada Bing had breached the lease and asked him to perform the lockout. In exchange, Occhino would allow him to lease the premises to operate his own strip club.
¶9 Reeve recounted that Occhino instructed him to "secure the premises and remove the property." Reeve relied on Chavez, who had a key to the property, to unlock the doors and then install a new lock. As Reeve understood it, he and Chavez were working together during the lockout: Reeve securing the furniture and audiovisual equipment, which Occhino had told him belonged to Pojo, and Chavez gathering the items belonging to Bada Bing to "put[] it in a safe place for Ms. Occhino." Reeve did not know the details, but Chavez was responsible for hauling all of the items away to be held somewhere off-premises. Later, after Bada Bing left the premises and Reeve's strip club was leasing the property, Chavez brought back the furniture and audiovisual equipment—the items Reeve believed belonged to Pojo—for Reeve's use as a tenant.
¶10 Occhino testified at the trial as well. She acknowledged that she authorized Reeve to perform the lockout but testified that she had never met Chavez and had not hired or authorized him to do anything. According to Occhino, Reeve was authorized to do anything necessary to secure the building and its contents against Casteel and Bada Bing, and when asked if she told Reeve to remove items from the building, she indicated that she did not remember but "would approve of it if it was suggested and I think so." She denied instructing Reeve to "steal" anything from the property but also asserted that "[t]hose things in there did not belong to Mr. Casteel, so it wasn't stealing." Occhino further denied any knowledge of what items had been removed from the premises or where they were stored after removal. As to Pojo's counterclaim, Occhino testified that Bada Bing owed prorated rent for the portions of February and April 2014 during which it had possession of the property and that Bada Bing was required to reimburse Pojo $502.80 for insurance coverage.
¶11 The jury returned a verdict form marked in favor of Bada Bing on its breach of contract and conversion claims against Pojo, with a single damages award of $53,550, and in favor of Pojo on its contract counterclaim for $167.60 in damages. Bada Bing and Pojo filed cross-applications for attorney's fees, and the superior court awarded Bada Bing its attorney's fees as the successful party.
¶12 The superior court entered judgment in favor of Bada Bing, and Pojo timely appealed. We have jurisdiction under A.R.S. § 12-2101(A)(1).
DISCUSSION
¶13 Pojo challenges the sufficiency of the evidence to support the jury's verdict on conversion. Pojo further asserts that the jury's verdict on Bada Bing's contract claim was nonresponsive (or that the verdict reflected liability but awarded no damages on that claim) and thus contends that the court erred by awarding Bada Bing its attorney's fees.
I. Conversion Claim.
¶14 Pojo argues that no evidence supported the jury's verdict holding Pojo (as opposed to Reeve or Chavez individually) liable for conversion.
¶15 Preliminarily, to raise an appellate challenge to the sufficiency of the evidence after a jury verdict, a party must first move for a new trial in superior court. A.R.S. § 12-2102(C). Pojo did not do so. Pojo's midtrial motion for judgment as a matter of law under Rule 50(a) of the Arizona Rules of Civil Procedure did not satisfy this requirement. See Marquette Venture Partners II, L.P. v. Leonesio, 227 Ariz. 179, 183, ¶ 13 (App. 2011). And although a post-verdict motion for judgment as a matter of law under Rule 50(b) would have sufficed, see S. H. Kress & Co. v. Evans, 70 Ariz. 175, 176 (1950), Pojo did not press such a motion. Accordingly, the issue of sufficiency of the evidence to support the jury's verdict against Pojo is not properly before us.
¶16 Moreover, even if Pojo had properly preserved the issue, ample evidence supported the jury's verdict. "Conversion is an intentional exercise of dominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel." Miller v. Hehlen, 209 Ariz. 462, 472, ¶ 34 (App. 2005) (citation omitted). And here—even setting aside Chavez's involvement—the evidence showed that Pojo, through Occhino, instructed Reeve to take items belonging to Bada Bing.
¶17 Although acknowledging that it gave Reeve authority to effectuate the lockout, Pojo asserts that it never authorized Reeve to take Bada Bing's possessions. But Reeve testified that Occhino told him to remove furniture and audiovisual equipment, which she told him belonged to Pojo. While Occhino suggested that "[t]hose things in there did not belong to Mr. Casteel, so it wasn't stealing," Pojo offered no basis for the assertion that the tenant's personal property belonged to Pojo.
¶18 Although Pojo attempts to characterize this case as the imposition of vicarious liability on an innocent principal for the intentional torts of a contractor over whom the principal had no control, Pojo cannot escape liability when the jury could find that Pojo expressly instructed its agent to engage in the tortious conduct. See Restatement (Second) of Torts § 877(a) (1979) ("For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he . . . orders or induces the conduct, if he knows or should know of circumstances that would make the conduct tortious if it were his own . . . ."); Restatement (Second) of Agency § 212 (1958) ("A person is subject to liability for the consequences of another's conduct which results from his directions as he would be for his own personal conduct if, with knowledge of the conditions, he intends the conduct, or if he intends its consequences . . . .").
II. Contract Claim and Attorney's Fees Award.
¶19 Pojo further argues that the jury's verdict on Bada Bing's contract claim was either nonresponsive or simply awarded no damages, and thus that the superior court had no basis for declaring Bada Bing the successful party for an award of attorney's fees under A.R.S. § 12-341.01.
A. Verdict on Bada Bing's Contract Claim.
¶20 The jury returned a single signed verdict form. The jury found in favor of Pojo on its contract counterclaim, with an award of $167.60 in damages. The jury also marked the verdict form in favor of Bada Bing on both of its claims against Pojo, breach of contract and conversion, but listed an award of $53,550 in damages only on the line next to the conversion claim with no dollar value (not even zero) on the line to the right of the contract claim:
We, the Jury, duly empanelled and sworn in the above-entitled action, upon our oaths, do find in favor of the Plaintiff Bada Bing Gentlemen's Club, LLC on the following claims against the following Defendants:The court held an extended bench conference to consider how to determine whether the verdict as marked meant that the jury (1) intended to award damages only on the conversion claim ($0 for breach of contract) or (2) intended the $53,550 as a combined award representing total damages for both breach of contract and conversion. After consulting with counsel for all parties, the court asked the foreperson in open court to clarify the jury's intent:
X Breach of contract against Defendant Pojo Enterprises, Inc. $___
___ Conversion against Defendant Tap Reeve $___
X Conversion against Defendant Pojo Enterprises, Inc. $53,550
We find the full damages to be the amounts stated to the right of each claim above. As to the claims for which no amount is stated and which are not checked, we find in favor of the stated Defendant.
We find in favor of the Defendant Pojo Enterprises, Inc. on its Counterclaim and find the full amount of damages to be $167.60.
[The Court]: [O]ur question is, was the jury's intent . . . in this verdict form to find in favor of Bada Bing on both its breach of contract against Defendant Pojo and its conversion against Defendant Pojo in the total amount of $53,550?The jury was polled at Pojo's request, and all jurors who had initialed the verdict form affirmed that it was their true verdict.
[Foreperson]: Correct.
¶21 After the court excused the jury, Pojo orally moved for a mistrial asserting that inquiring of the foreperson and "asking them to assign the numbers to both boxes without actually entering that as their verdict" was improper. Noting the extensive prior discussion of the matter and the foreperson's clarification, the court denied the motion.
¶22 On appeal, Pojo argues that the verdict form listed no damages on Bada Bing's contract claim. Pojo asserts that, to the extent the damages award was ambiguous or intended to apply to both contract and conversion claims, the verdict was nonresponsive and that the only proper course under Rule 49 of the Arizona Rules of Civil Procedure was for the court to require the jury to deliberate further and modify the verdict form, not inquire of the foreperson for clarification.
¶23 Rule 49(f)(1) governs the return of a "Defective, Informal, or Nonresponsive Verdict." That rule authorizes the superior court to reform an "informal or defective verdict," with the caveat that the reformation "should take place before the jury is discharged and with their assent." Ariz. R. Civ. P. 49(f)(1). In the case of a verdict that is "not responsive to the issue submitted to the jury," the rule suggests that the court "should inform the jury of the issue and require further deliberations." Id. Generally, a claim of a defective or nonresponsive verdict is waived if not raised before the jury is excused. Trustmark Ins. Co. v. Bank One, Ariz., NA, 202 Ariz. 535, 543, ¶ 39 (App. 2002).
¶24 Here, Pojo offers no basis supported in the record to conclude that it timely preserved its challenge to an allegedly nonresponsive verdict. Pojo largely relies on statements attributed to an "unidentified voice" in the transcript of the bench conference advocating for further deliberations. But Pojo neither suggests that it was the party objecting to the inquiry of the foreperson, nor made any attempt to correct the record of the bench conference to identify the "unidentified voice." See ARCAP 11(g). Indeed, contemporaneous statements by Pojo's counsel expressly approve just inquiring in open court:
So I mean, I think the Court -- the Court's idea was the best. Just ask them in open court. Did you mean this? Did you mean that? And if the answer to both questions is, no. I mean, the court recorder may have to go back and deliberate and fill
out the form. And, if we're going to do this in open court, I think the easiest question is what is your intent with this?Although Pojo did raise the issue in its motion for mistrial, it waited until after the jury was excused to do so.
¶25 Moreover, the verdict form was not necessarily nonresponsive to the issues submitted: the jury addressed liability on each of Bada Bing's claims, calculated damages, and addressed Pojo's counterclaim. The form itself instructed the jury to find Bada Bing's "full damages," even if it also contemplated placing an amount on the line next to "each claim." Further, a single, combined damages award on Bada Bing's claims made sense because both claims sought compensation for the single loss of Bada Bing's possessions: the conversion claim to the extent Pojo took Bada Bing's possessions, and the contract claim to the extent Pojo simply failed to secure Bada Bing's possessions during the lockout. If Pojo thought a discrete damages award on each separate claim was necessary notwithstanding the jury's combined award, the time to flag that issue was before the jury was excused. See Trustmark, 202 Ariz. at 543, ¶¶ 39-40.
¶26 The court's inquiry of the foreperson (with all of the other jurors present) and subsequent polling of the jury ensured that the jury's intent—to hold Pojo liable on both counts and render a combined damages award—was "ascertained with certainty." See Wright v. Mayberry, 158 Ariz. 387, 388 (App. 1988); see also Ariz. R. Civ. P. 49(f)(1) (permitting the court to reform a defective verdict "before the jury is discharged and with their assent"). The court did not err by acting with the parties' assent to clarify that understanding of the jury's verdict.
B. Attorney's Fees.
¶27 The verdict against Pojo—liable on breach of contract as well as conversion for a combined total of $53,550 in damages related to both claims—disposes of Pojo's argument that Bada Bing was not eligible for an award of attorney's fees under A.R.S. § 12-341.01.
¶28 That statute grants the superior court discretion to award reasonable attorney's fees to the "successful party" in an action "arising out of a contract." A.R.S. § 12-341.01(A). A party that prevails on a contract claim is also eligible for fees incurred litigating an "interwoven" tort claim—one that, considering "the nature of the action and the surrounding circumstances," could not have existed but for the contract claim. Marcus v. Fox, 150 Ariz. 333, 335 (1986); Sparks v. Republic Nat'l Life Ins. Co., 132 Ariz. 529, 543 (1982); Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, 13, ¶ 17 (App. 2000). The superior court has the discretion to determine which party qualifies as "successful," whether based on the totality of the litigation or the party's percentage of success, and should assess the "net winner" in cases involving multiple competing claims and setoffs. Berry v. 352 E. Virginia, L.L.C., 228 Ariz. 9, 13-14, ¶¶ 21-22 (App. 2011) (citations omitted).
¶29 After the verdict, Bada Bing and Pojo filed cross-applications for attorney's fees under A.R.S. § 12-341.01. Pojo sought fees and opposed Bada Bing's application based on the notion that the jury had not awarded Bada Bing any damages on the contract claim, which Pojo argued made Pojo the successful party because it received $167.70 in damages on the contract counterclaim. The superior court disagreed, noting that the jury did award damages on Bada Bing's contract claim as part of the combined award of $53,550 and reasoning that Bada Bing was thus the net winner.
¶30 On appeal, Pojo again asserts that the jury did not award damages on Bada Bing's contract claim. But as described above, the verdict reflected a combined award of $53,550 in favor of Bada Bing—that is, damages for breach of contract, not just conversion. See supra ¶¶ 20-26. Pojo also argues that the conversion claim was not interwoven with Bada Bing's contract claim. While true that a generic conversion claim need not be grounded in a breach of contract, Bada Bing's conversion claim was: tort liability for taking Bada Bing's possessions during the improper lockout when Pojo's failure keep these possessions safe also constituted a breach of the lease. See Marcus, 150 Ariz. at 335 (focusing not on "the form of the pleadings" but rather on "the nature of the action and the surrounding circumstances").
¶31 Given the jury's overall verdict in favor of Bada Bing, the superior court had an adequate basis for determining that Bada Bing was the net winner and thus the successful party in an action arising out of contract. Accordingly, the court did not err by awarding Bada Bing its attorney's fees under § 12-341.01.
CONCLUSION
¶32 Both Pojo and Bada Bing request an award of attorney's fees on appeal under A.R.S. § 12-341.01. Pojo has not prevailed, so we deny its request. In an exercise of our discretion, we award Bada Bing its reasonable attorney's fees upon compliance with ARCAP 21. As the prevailing party, Bada Bing is also entitled to an award of costs on appeal upon compliance with ARCAP 21. See A.R.S. § 12-342(A).
¶33 The judgment is affirmed.