Opinion
2 CA-CV 2022-0005
05-10-2023
Kimminau Law Firm, P.C., an Arizona professional corporation, Plaintiff/Appellant, v. Melody Hoopes, a single woman, Defendant/Appellee.
Kimminau Law Firm P.C., Tucson By Chris J. Kimminau Counsel for Plaintiff/Appellant Mesch Clark Rothschild, Tucson By Douglas H. Clark, Nathan S. Rothschild, and Bernardo M. Velasco Counsel for Defendant/Appellee
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Pima County No. C20202695 The Honorable Jeffrey T. Bergin, Judge The Honorable Michael Butler, Judge.
Kimminau Law Firm P.C., Tucson
By Chris J. Kimminau
Counsel for Plaintiff/Appellant
Mesch Clark Rothschild, Tucson
By Douglas H. Clark, Nathan S. Rothschild, and Bernardo M. Velasco
Counsel for Defendant/Appellee
Vice Chief Judge Staring authored the decision of the Court, in which Judge O'Neil and Judge Gard concurred.
MEMORANDUM DECISION
STARING, Vice Chief Judge.
¶1 Kimminau Law Firm P.C. appeals from the judgment in favor of Melody Hoopes on its breach of contract claim. For the following reasons, we reverse in part, vacate, and remand.
Factual and Procedural Background
¶2 In April 2015, Melody hired Kimminau Law Firm to represent her in a dissolution proceeding initiated by her then-spouse, Lance Hoopes. The representation was handled by attorney Chris Kimminau. Pursuant to the fee agreement, Kimminau's standard hourly rate was $325 per hour. When she entered into the agreement, Melody paid Kimminau an initial retainer of $2,000.
For ease of reference, we refer to Kimminau Law Firm and attorney Kimminau collectively as "Kimminau."
¶3 In May 2015, Kimminau received initial disclosure documents, including Lance's Arizona State Retirement System (ASRS) account summary stating that he had been eligible to retire on April 20, 2015. At the time of the disclosure, Kimminau "did not recognize that [Lance's plan] was fully matured and vested." As a result, Kimminau did not discuss with Melody whether she was entitled to payments resulting from the plan.
¶4 In July 2015, the trial court entered a temporary spousal maintenance order requiring Lance to pay Melody $3,500 per month and requiring Melody to make credit card payments toward community debt in the amount of $1,500 per month. Melody and Lance subsequently reached an agreement regarding several remaining issues, and the court entered a decree and Qualified Domestic Relations Order (QDRO) in December 2015. In late December, Melody met with Kimminau to review the decree and QDRO. During the meeting, she stated she could not "believe that nothing c[ould] be done . . . with the matured retirement except for [her] to wait for [Lance] to retire" and she "thought [she] was entitled to this." Kimminau initially stated Melody "was entitled to nothing," but later said, "There might be something called Koelsch," referring to Koelsch v. Koelsch, 148 Ariz. 176 (1986). Up to that point, Melody had paid Kimminau a total of $6,795.15, including the initial retainer.
A QDRO is an order "that is prepared and signed by a judge at the end of a case" and is then "sent to the retirement plan administrator"
In Koelsch, our supreme court addressed "how and when a nonemployee spouse's community property interest in an employee spouse's matured retirement benefit plan is to be paid when the employee wants to continue working, thus delaying receipt of the retirement benefits." 148 Ariz. at 180. It provided "several methods by which the parties or the trial court can satisfy the non-employee spouse's interest in a matured retirement plan"-"the choice of which depends on the equities of the individual case." Id. at 183, 185. Regardless of the method, "[i]f the employee spouse chooses not to retire, he or she would be liable to reimburse the non-employee spouse for the property interest in the monthly pension benefit that is precluded by the employee spouse's decision not to retire." Id. at 185.
¶5 In February 2016, Kimminau raised the Koelsch issue for the first time at a hearing before the trial court. In November, the court ordered Lance to "immediately begin[] paying [Melody] her share of the ASRS benefit in the amount of $4,144 per month." In addition, the court amended the QDRO to reflect this monthly payment and to require Lance to "elect a 50 percent joint survivor annuity form of benefit naming [Melody] as the beneficiary of the 50 percent post-retirement survivor annuity." The court ordered the commencement date for the payments to be November 1, 2016-not May 1, 2015-explaining that, if it were to order retroactive payment, it "would be speculating as to the financial . . . implications that [Melody] considered in requesting that payments begin on May 1, 2015, even though there was never a request made when given the opportunity."
¶6 In February 2017, Melody fired Kimminau and retained another attorney to represent her through the conclusion of her divorce proceedings, costing her approximately $4,000. Later that month, Melody received a bill from Kimminau for $19,304.81 for legal services rendered directing him or her "to distribute the retirement money[] according to . . . the order." between January 2016 and February 2017. Melody declined to pay the outstanding balance.
¶7 In June 2020, Kimminau filed this action against Melody for breach of contract based on her failure to pay. Melody responded she had not received "'legal services' as contemplated by the contract" and the consideration was inadequate to justify Kimminau's requested fee, asserting defenses including failure of consideration and equitable recoupment. Kimminau moved for summary judgment, arguing Melody's defenses were based on allegations of malpractice and therefore could not be asserted in a contract action absent nonperformance of a specific promise. The trial court denied Kimminau's motion for summary judgment, as well as his motion for reconsideration. It also denied Kimminau's motion to preclude the trial testimony of Robert Lewis, Melody's family-law expert witness, regarding "any alleged imposed condition or duty outside the written contract itself or opinion concerning the value of services rendered."
¶8 Following a two-day trial, the jury found Melody had not breached the contract. Kimminau unsuccessfully moved for a new trial, and the court subsequently awarded Melody $48,547.50 in attorney fees. Kimminau appealed. We have jurisdiction pursuant to A.R.S. §§ 12-120.21 and 12-2101(A)(1).
Discussion
¶9 On appeal, Kimminau argues the trial court erred in denying his motion for summary judgment. Additionally, Kimminau asserts the jury's verdict is contrary to the evidence and the court erred in denying his motion for new trial on that basis. Further, Kimminau contends, the court erred in allowing Lewis's testimony. Finally, Kimminau challenges the court's award of attorney fees to Melody.
Denial of Motion for Summary Judgment
¶10 Kimminau first argues the trial court erred in denying his motion for summary judgment. "Generally, the denial of a summary judgment motion is not reviewable on appeal from a final judgment entered after a trial on the merits." John C. Lincoln Hosp. &Health Corp. v. Maricopa County, 208 Ariz. 532, ¶ 19 (App. 2004). "An appellate court may, however, review a trial court's denial of summary judgment in a case that has gone to trial if the denial is based on a purely legal issue or if the proponent reasserts the issue in a Rule 50, Ariz. R. Civ. P., motion for judgment as a matter of law or other post-trial motion." Desert Palm Surgical Grp., P.L.C. v. Petta, 236 Ariz. 568, ¶ 22 (App. 2015). "We review de novo whether a pure question of law precluded the denial of summary judgment." Id.
¶11 In his motion for summary judgment, Kimminau argued Melody did not "dispute she entered into the contract and has not identified any work which she claims was not performed." Further, citing Collins v. Miller &Miller, Ltd., 189 Ariz. 387, 395 (App. 1996), Kimminau argued the acts of malpractice Melody had alleged as defenses to the breach of contract claim could not be used as such "unless there is a specific promise in the contract and then only to the extent of nonperformance of the specific promise." Thus, Kimminau concluded, because Melody had failed to "identify any breach of a specific promise" included in the fee agreement, her defense sounded in tort rather than contract, and he was entitled to judgment as a matter of law.
¶12 In response to the motion, Melody asserted there was a question of fact as to "whether Kimminau's failure to counsel Melody as to Koelsch and its effects on her case was a failure of consideration justifying her failure to pay the remaining fee, or whether it was an uncured material breach which excused [her] from performing under the contract." Specifically, she argued she had "agreed to pay Kimminau $325 per hour for the receipt of properly performed legal services," which "necessarily included work to be performed competently and diligently," and Kimminau had failed to "advise [her] about the Koelsch issue prior to settling the claim."
¶13 Melody also raised the defense of equitable recoupment based on Kimminau's "malpractice." She argued "Kimminau owed [her] a duty of care" and there was a question of fact as to whether Kimminau had "breached that duty." Melody asserted that she was "not seeking affirmative relief" but rather requesting that Kimminau's damages be reduced by the amount of her damages resulting from Kimminau's malpractice. The trial court denied Kimminau's motion for summary judgment, concluding "questions of fact exist concerning whether [Kimminau had] fully performed under the contract" and "the value, if any, of the earned services provided."
¶14 On appeal, Kimminau maintains Melody improperly asserted failure of consideration as a defense to the breach of contract action, and the court's finding that questions of fact existed as to whether Kimminau had "fully performed" was not supported by "the facts or law." Specifically, Kimminau argues "the contract in question was a simple time-for-money agreement," "there was no specific manner of performance stipulated in the contract," and "neither [Melody] nor the trial court identified any explicit lack of performance" of any contractual term. Thus, Kimminau asserts, citing Collins, "[b]ecause no express contract condition was not performed and no special contractual agreement or undertaking existed, summary judgment was required." Further, Kimminau contends the court's finding that "questions of fact exist[ed] concerning the value, if any, of the earned services provided" was also unsupported by the facts or law because "[t]he value of Kimminau's services [was] set forth and determined by the contract and was not subject to a trier of fact's determination."
¶15 Claims for legal malpractice are generally tort claims and do not sound in contract "[a]bsent some special contractual agreement or undertaking." Collins, 189 Ariz. at 395 (alteration in Collins) (quoting Barmat v. John &Jane Doe Partners A-D, 155 Ariz. 519, 524 (1987)). "[E]ven where there is an express contract between the professional and the client, an action for breach of that contract cannot be maintained if the contract merely requires generally that the professional render services." Id. Rather, as Kimminau argued below, "[o]nly if there is a specific promise contained in the contract can the action sound in contract, and then only to the extent the claim is premised on the nonperformance of that promise." Id. "The key word is 'nonperformance,' and the distinction to be drawn is that between nonfeasance and malfeasance." Keonjian v. Olcott, 216 Ariz. 563, ¶ 17 (App. 2007). The fact that an attorney may have carried out a task "in a negligent manner, in violation of the duty imposed on him by law to represent his client in accordance with the applicable standard of care, does not change the gravamen of the action from tort to contract." Collins, 189 Ariz. at 395.
¶16 In the fee agreement, Kimminau made no specific promises about filing documents in court or providing advice on specific aspects of Melody's claims. Cf. Asphalt Eng'rs, Inc. v. Galusha, 160 Ariz. 134, 136 (App. 1989) (jury may find breach of contract when attorney fails to fulfill promise to file liens and institute foreclosure lawsuits if necessary); Towns v. Frey, 149 Ariz. 599, 600-01 (App. 1986) (legal malpractice claim sounded in contract when attorney agreed to file lawsuit and achieve satisfactory results). Further, the agreement states Melody "acknowledge[s] that [Kimminau has] made no guarantees . . . with respect to the disposition of any phase of this matter or any matters for which [Kimminau has] been retained."
¶17 Thus, although an uncured material breach excuses a nonbreaching party from performing and discharges that party from the contract, see Murphy Farrell Dev., LLLP v. Sourant, 229 Ariz. 124, ¶ 33 (App. 2012), Kimminau's allegedly incompetent performance does not constitute a breach of the fee agreement between the parties, see Collins, 189 Ariz. at 395-96. Melody's failure of consideration defense fails. See Glubauer v. Smith, 10 Ariz.App. 328, 333 (App. 1969) (failure of consideration "refers to the nonoccurrence of an agreed-upon exchange").
¶18 Kimminau, however, fails to establish Melody's equitable recoupment defense was similarly invalid. "[R]ecoupment is an equitable doctrine which can be used to reduce or eliminate a judgment, but not for affirmative relief." Ness v. Greater Ariz. Realty, Inc., 117 Ariz. 357, 360 (App. 1977). A recoupment defense must "arise[] out of some feature of the transaction upon which the plaintiff's action is grounded." Aetna Fin. Co. v. Pasquali, 128 Ariz. 471, 473 (App. 1981). In Ness, we explained that although a negligence "counterclaim would be time-barred," negligence, "if proven[,] could be used to eliminate" judgment on a note "under a theory of recoupment." 117 Ariz. at 360. Thus, while the trial court erred in denying Kimminau's motion for summary judgment with respect to Melody's failure of consideration defense, we cannot say it erred in denying the motion as to Melody's equitable recoupment defense. At the very least, an issue of fact existed concerning whether Kimminau had been negligent in connection with Melody's representation. Accordingly, we reverse in part the court's denial of Kimminau's motion for summary judgment.
Verdict and Motion for New Trial
¶19 Additionally, Kimminau argues the jury's verdict in Melody's favor is "contrary to the evidence because there is no dispute [she] entered into a contract with Kimminau requiring she pay for time spent and she failed and refused to pay for the time spent." For the same reasons, Kimminau argues the trial court erred in denying his motion for new trial. Given our conclusion that the court erred in denying Kimminau's motion for summary judgment on Melody's failure of consideration defense, and the jury appears to have returned a verdict in Melody's favor on that basis, we need not address Kimminau's arguments.
¶20 And, as to Melody's assertion that the jury's verdict could properly have been based on the fee agreement's refund clause, we disagree. Melody briefly and vaguely argued at trial that the refund clause entitled her to a refund based on the value of representation. She asserts on appeal that the express language of the refund clause supports the verdict because it permitted the parties to "qualitatively assess the value" of Kimminau's representation upon termination of services. Thus, Melody contends she was entitled to a "refund"-or excused from paying the outstanding balance in the first place-based on the lack of value of the representation provided to her.
¶21 "In reviewing a jury verdict, we view the evidence in a light most favorable to sustaining the verdict, and if any substantial evidence could lead reasonable persons to find the ultimate facts sufficient to support the verdict, we will affirm the judgment." Styles v. Ceranski, 185 Ariz. 448, 450 (App. 1996). "[T]he interpretation of a contract is a question of law, which this court reviews de novo." Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588, ¶ 9 (App. 2009). We first look to the plain meaning of the words in a contract, and where the intent of the parties is expressed clearly and unambiguously, we "give effect to the contract as written." Id. (quoting Grubb &Ellis Mgmt. Servs., Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, ¶ 12 (App. 2006)).
¶22 The refund clause in the fee agreement states, "Client may nevertheless discharge Attorney at any time and in that event may be entitled to a refund of all or part of the fee based upon the value of the representation ...." Based on its plain language, we agree with Kimminau that the refund clause "only applies to monies which [Melody] had already paid, not to money she refused to pay." Melody discharged Kimminau and then received the final invoice showing a balance of $19,304.81. She did not make a payment in this amount and thereafter seek a refund based on the refund clause. Instead, she refused to pay the entirety of the invoice-a situation not governed by the plain language of the clause. Thus, even if the jury concluded Melody had not breached the agreement based on the refund clause, the verdict is contrary to the plain language of the agreement. Accordingly, we vacate the jury's verdict because "there is no evidence in the record to justify it," Styles, 185 Ariz. at 450, and we remand for further proceedings in which Melody may raise the defense of equitable recoupment.
Testimony of Robert Lewis
¶23 Kimminau argues the trial court erred in admitting Lewis's testimony because his "opinions were not of consequence in determining the action" and were thus precluded under Rule 401, Ariz. R. Evid. Under Rule 401, "[e]vidence is relevant if: (a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action." "We will not disturb a trial court's rulings on the exclusion or admission of evidence unless a clear abuse of discretion appears and prejudice results." Gemstar Ltd. v. Ernst &Young, 185 Ariz. 493, 506 (1996).
¶24 "As with all negligence claims, a plaintiff asserting legal malpractice must prove the existence of a duty, breach of duty, that the defendant's negligence was the actual and proximate cause of injury, and the 'nature and extent' of damages." Glaze v. Larsen, 207 Ariz. 26, ¶ 12 (2004). Typically, expert testimony is used to establish the defendant's standard of care and deviation therefrom. Baird v. Pace, 156 Ariz. 418, 420 (App. 1987).
¶25 Lewis's testimony regarding Kimminau's legal services was relevant to Melody's equitable recoupment defense based on Kimminau's alleged malpractice. Indeed, Lewis testified he did not believe Kimminau's legal services were "sufficient" based on the "late notice of the Koelsch issue to [Melody]." He further testified the late notice harmed Melody because she would have received $644 more each month in pension benefits versus spousal maintenance if the Koelsch issue had been timely raised. And, Lewis testified, because a Koelsch issue, once raised, usually "leads to settlement," there likely would not have been a spousal maintenance issue, which would have saved Melody an "enormous amount of attorney's fees." Thus, the trial court did not abuse its discretion in permitting this testimony.
Attorney Fees
¶26 Finally, Kimminau argues the trial court erred in awarding Melody $48,547.50 in attorney fees under A.R.S. § 12-341.01. Given our disposition, we vacate the trial court's award of attorney fees and costs and remand the issue for consideration upon the ultimate disposition of the case. See Squaw Peak Cmty. Covenant Church of Phx. v. Anozira Dev., Inc., 149 Ariz. 409, 414 (App. 1986). In our discretion, we deny Melody's request for attorney fees on appeal pursuant to § 12-341.01.
Disposition
¶27 For the foregoing reasons, we reverse in part the trial court's denial of Kimminau's motion for summary judgment, vacate the jury verdict, and remand for proceedings consistent with this decision.