Opinion
No. 2 CA-CV 2018-0033
12-24-2018
BUETTE DEROUSSE COMMERCIAL REAL ESTATE PROPERTIES, LLC; JOHN C. BUETTE AND JENNIFER POST BUETTE, HUSBAND AND WIFE, Plaintiffs/Appellants, v. TRP TWIN PEAKS, LLC, AN ARIZONA LIMITED LIABILITY COMPANY; PIERCE AND BARBARA GOODMAN, HUSBAND AND WIFE; TRYM AND EMILY GIBBONS, HUSBAND AND WIFE; ROBERT AND EMILY BROWN, HUSBAND AND WIFE, Defendants/Appellees.
COUNSEL Talwar Law P.L.L.C., Tucson By Rohit Talwar Counsel for Plaintiffs/Appellants Cline Law Firm PLLC, Tucson By Craig L. Cline 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NOT FOR PUBLICATION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 Pima County
No. C20150818
The Honorable Catherine M. Woods, Judge
AFFIRMED IN PART; VACATED IN PART
COUNSEL Talwar Law P.L.L.C., Tucson
By Rohit Talwar
Counsel for Plaintiffs/Appellants Cline Law Firm PLLC, Tucson
By Craig L. Cline
Counsel for Defendants/Appellees
MEMORANDUM DECISION
Judge Espinosa authored the decision of the Court, in which Presiding Judge Vásquez and Judge Eppich concurred. ESPINOSA, Judge:
¶1 Buette Derousse Commercial Real Estate Properties LLC ("BDCR") brought a multi-count lawsuit against Pierce and Barbara Goodman, Robert and Emily Brown, Trym and Emily Gibbons, and TRP Twin Peaks LLC ("Appellees"). Upon Appellees' motion, the trial court joined John and Jennifer Buette in their individual capacities as plaintiffs. The court subsequently granted summary judgment for Appellees on three of BDCR's four claims. After a bench trial, the court found in favor of Appellees on the fourth claim and awarded their attorney fees and costs pursuant to A.R.S. §§ 12-341 and 12-341.01. On appeal, BDCR and the Buettes ("Appellants") argue the court erred in granting summary judgment, awarding attorney fees, and adding the Buettes as plaintiffs. For the following reasons, we affirm the court's grant of summary judgment and award of attorney fees but vacate the court's order joining John and Jennifer Buette as plaintiffs.
Factual and Procedural Background
¶2 In reviewing the grant of summary judgment, we view all facts in the light most favorable to Appellants, the non-moving parties. Timmons v. Ross Dress for Less, Inc., 234 Ariz. 569, ¶ 2 (App. 2014). A full understanding of the issues raised in this appeal requires a detailed account of the evidence and procedural history of the case.
¶3 Pierce Goodman, Trym Gibbons, and Robert Brown are dentists who practice together. In September 2012, Emily Brown, Robert's wife, hired John Buette, owner of BDCR, to renegotiate a commercial lease for the dental practice. While performing these services, for which he was paid a brokerage commission, Buette learned of a 3.26-acre parcel of land available for sale near the intersection of Tangerine Road and Twin Peaks Road (the "Tangerine Parcel"). Buette approached Emily Brown in May 2013, and asked her if the dental group would be interested in investing in the Tangerine Parcel. Soon after, Buette met with her and the dentists and proposed a plan where the dentists would purchase the Tangerine Parcel, Buette would "get the property ready for sale," and the parties would "sell it and split the profit." The dentists then submitted an offer to purchase the Tangerine Parcel, which was accepted by the seller. The dentists also formed TRP Twin Peaks LLC ("TRP") "for the purpose of purchasing, holding and potentially developing the Tangerine Parcel." Buette was aware of the LLC but he was not a member. From June to August 2013, BDCR contacted water and electric utilities, assisted TRP in obtaining a loan for the Tangerine Parcel, and successfully negotiated a price reduction for the land.
¶4 On August 13, 2013, Buette met with the Goodmans, the Browns, and Trym Gibbons to discuss BDCR's development proposal. The plan was that Buette "would get the property ready for sale, sell it for a substantial profit, get the investors back any amount paid towards the loan, pay off the loan for the land plus interest, and deduct the cost of land suitable for a dental office," and then BDCR and TRP "would split the remaining profit." Pierce Goodman did not tell Buette he disagreed with the profit-splitting proposal, but Robert Brown and Trym Gibbons expressed "surprise" at Buette's request for fifty percent of the sale proceeds. Buette, however, responded that "everything is negotiable." At the end of the meeting, Pierce Goodman told Buette, "Go sell some dirt John." The next day, Buette telephoned Emily Brown to summarize the meeting, and they discussed memorializing the terms of the arrangement in writing. TRP closed on the parcel on August 30, 2013, and BDCR was paid a broker's commission of $11,250 from the transaction.
¶5 After the closing, Buette received contact information from another real estate agent for potential buyers of the Tangerine Parcel once it was developed. Then, in January 2014, Buette telephoned Emily Brown and told her a contract needed to be signed so he could start working on the project as the market was "heating up." That same month, he emailed TRP asking for payment of $7,500 for the "comprehensive due diligence" completed before closing because "[i]n many of the commercial land transactions" Buette had closed previously, a five-percent commission was available to the buy-side broker, compared to the three-percent commission he actually received. Defendants did not pay the additional commission.
¶6 In February 2014, Buette and Appellees met again to discuss Buette's plan. Rick McGee, an insurance agent, attended the meeting to "support" TRP and "to help the discussion move along smoothly." At that meeting, Pierce Goodman admitted that Buette was "the mastermind" of the plan and expressed that the group "want[ed him] to share in it, too." Robert Brown asked what Buette expected his "cut" to be, and Buette responded, "It was . . . already established." Appellees, however, disagreed. Later, when Buette was asked whether there was room for negotiation as to the profit splitting, he responded, "I'll do whatever you guys want to do that's reasonable." McGee then stated,
We have a deal here. It's a very good deal. We have a capable developer here who can do whatever we want to do to move forward. We have a group here that is financially obligated on it who wants to move forward, and this is probably the best option to move forward. We've got to come up with a plan that works for everybody as to what we do, and what is the value of John.In response, Trym Gibbons and Pierce Goodman agreed that they wanted to move forward. McGee asked if Buette could "give TRP a week or two to really mull this over and come back with a proposal of what they can do." Buette responded that he would "do whatever" the group wanted "as long as it makes sense." Toward the end of the meeting, Emily Brown, speaking to Buette, said, "I know we can come to a deal. But please don't just say we already had a deal." Buette responded, "Did someone hear me say that we already had a deal? . . . I never was like ironclad." At the end of the meeting, the parties agreed McGee would work with Buette and TRP to produce a written agreement.
¶7 In early March 2014, McGee met with Buette to let him know that TRP could not agree to a fifty-fifty profit-splitting arrangement. McGee informed Buette that the most TRP was willing to agree to was a thirty percent share for BDCR. Buette responded that he would only agree to a fifty-percent split. Later that month, Buette drafted a letter of intent regarding the development of the Tangerine Parcel between TRP and BDCR. McGee made changes to portions of the letter but sent it back to Buette with the compensation section unchanged. Buette accepted the changes, printed the letter on BDCR letterhead, signed the letter, and sent it back to McGee. The final draft contemplated a "Development [and] Commercial Land Sale Agreement" between BDCR and TRP. According to the section titled "Compensation Plan," the parties would share in the profit equally after TRP recouped costs from obtaining the Tangerine Parcel, but if the adjoining parcel was purchased for TRP's dental office, that cost would not be deducted as a cost for calculating profit. TRP members did not sign the letter, and, on May 22, 2014, TRP's lawyer informed Buette that the group did not intend to proceed with BDCR.
¶8 BDCR subsequently sued Appellees alleging constructive trust, fraud, breach of partnership duties, and unjust enrichment. The basis of the claims was that BDCR and TRP had formed "a partnership as contemplated by A.R.S. § 29-1012." Appellees moved pursuant to Rule 17(a), Ariz. R. Civ. P., to join the Buettes as individual real parties in interest. They asserted that the facts established in a bankruptcy action filed by the Buettes showed BDCR "was a shell company and the property of John and Jennifer Buette individually." Appellees argued that because the bankruptcy court permitted the bankruptcy estate to obtain an interest in the outcome of the lawsuit, "[t]he same analysis and application should apply and hold true here." The Buettes responded that the motion was "an overt attempt to 'pierce the corporate veil'" without "any factual allegation that the corporate form was ignored." The trial court granted Appellees' motion, reasoning that the Buettes "asked the bankruptcy court . . . to grant [them] sole and absolute discretion whether to pursue this litigation" and "granted [them] the right to receive any amounts recovered in this litigation that exceed $150,000." BDCR's motion for reconsideration was denied.
The Buettes filed for bankruptcy in July 2013, but John Buette's interest in BDCR, as its sole owner, was not disclosed on the schedule of assets and liabilities, nor was the lawsuit between Appellees and BDCR. The trustee later contended that the ownership interest of BDCR and potential proceeds from the lawsuit were property of the bankruptcy estate and eventually entered into a stipulation with the Buettes to include the TRP lawsuit proceeds in the estate, which the bankruptcy court approved.
¶9 Appellees also filed a motion for summary judgment on the merits of the case, arguing that BDCR's claims failed as a matter of law because no partnership had been formed between BDCR and TRP. Appellees maintained there were "no facts showing an intent to form a partnership" and, further, that Arizona law "expressly prohibits" the formation of a partnership between BDCR, the licensed broker, and TRP. Appellees additionally alleged that BDCR's constructive trust claim was unsupported, BDCR had "failed to establish a prima facie case for fraud," BDCR's claim for "breach of fiduciary duty/good faith and fair dealing" was "fatally flawed," and finally, that BDCR's unjust enrichment claim was "barred by the statute of frauds." BDCR responded that Appellants' summary judgment motion relied "wholly on unsubstantiated declarations," and in turn moved for partial summary judgment on the issue of whether a partnership had been formed.
¶10 The trial court, after finding "[t]here was no agreement," "association," or "partnership," granted summary judgment in favor of Appellees on BDCR's constructive trust, breach of fiduciary duties, and fraud claims, but denied summary judgment on BDCR's unjust enrichment claim and denied BDCR's cross-motion for partial summary judgment on the issue of partnership formation. The parties proceeded to trial on the unjust enrichment claim, and after a three-day bench trial, the court found that Appellants "failed to meet their burden of proof" and entered judgment in favor of Appellees. The latter thereafter sought $126,100 in attorney fees and $13,726.31 in costs, citing A.R.S. § 12-341.01 and asserting the dispute arose out of contract. The court awarded Appellees taxable costs of $12,226.81 and attorney fees of $118,450. We have jurisdiction over this appeal pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1).
Summary Judgment
¶11 Appellants contend the trial court erred in granting summary judgment for Appellees on BDCR's breach of fiduciary duty, fraud, and constructive trust claims. We review a grant of summary judgment de novo, but will affirm "if there is no genuine issue as to any material fact and the party seeking judgment is entitled to judgment as a matter of law." Timmons, 234 Ariz. 569, ¶ 7 (quoting Williamson v. PVOrbit, Inc., 228 Ariz. 69, ¶ 11 (App. 2011)); see Ariz. R. Civ. P. 56(a). Although, as noted earlier, we construe the evidence in the non-movants' favor, Timmons, 234 Ariz. 569, ¶ 2, summary judgment "should be granted if the facts produced in support of the claim or defense have so little probative value, given the quantum of evidence required, that reasonable people could not agree with the conclusion advanced by the proponent of the claim or defense." Orme Sch. v. Reeves, 166 Ariz. 301, 309 (1990).
Breach of Fiduciary Duty/Good Faith and Fair Dealing
¶12 BDCR's claim that TRP breached the fiduciary duty of good faith and fair dealing is premised on the alleged partnership between BDCR and TRP. See A.R.S. § 29-1034(D). Thus, whether a partnership existed controls the viability of this claim.
¶13 Appellants argue summary judgment was inappropriate because "[a] jury could find that the parties were going to work together to sell the land and BDCR was to take a share in profits[, which] is a partnership within the broad definition of Arizona law." In its opposition to Appellees' motion for summary judgment below, BDCR claimed the partnership was formed in August 2013, and its existence was reaffirmed at the February 2014 meeting. In its complaint, however, BDCR claimed the partnership was formed on May 21, 2013. BDCR points to its preparatory work toward reselling the land, not receiving a "buyer's commission," statements made at the February 2014 meeting, and the fact that there was "written acceptance via the dental group's" March 2014 "redline of the contract," in support of its claim that "[a] jury could find a partnership."
The complaint asserts the partnership was formed on May 21, 2015, which appears to have been a typographical error.
¶14 A partnership is formed when "two or more persons" associate "to carry on as co-owners a business for profit," "whether or not the persons intend to form a partnership." A.R.S. § 29-1012(A). Shared profits create a presumption of partnership, unless the shared profits serve as payment for employee or independent-contractor services, debt, rent, annuity or retirement benefits owed to a deceased or retired partner, interest or other charges on a loan, or the sale of goodwill. A.R.S. § 29-1012(C)(3). But the sharing of gross returns does not itself create a partnership, nor does shared property ownership, even if the co-owners share profits made by use of the property, unless a written partnership agreement provides that the property is partnership property. A.R.S. § 29-1012(C)(1)-(2). Similarly, the lack of a written agreement does not mean that no partnership exists. See Myrland v. Myrland, 19 Ariz. App. 498, 502 (1973) (recognizing that under previously applicable Uniform Partnership Act, which defined partnership as "an association of two or more persons to carry on as co-owners a business for profit," a "[l]ack of partnership documentation is not the critical factor as a partnership may be formed by an oral agreement"). On the contrary, A.R.S. § 29-1012 contemplates that a partnership is the default business form when the parties have associated to carry on as co-owners.
¶15 Thus, the critical inquiry is whether BDCR and TRP "carried on" as co-owners. The undisputed evidence demonstrates they did not. Although Pierce Goodman said "[g]o sell some dirt John," this did not operate to form a partnership between the parties, especially where their conduct failed to demonstrate any actions that could be fairly characterized as "carry[ing] on as co-owners." TRP entered into a contract for the purchase of the Tangerine Parcel, and BDCR was paid an $11,250 commission as a broker for that purchase. Thereafter, Buette had a brief discussion with landowners of the adjoining parcel to gather information about their willingness to sell and obtained a phone number of a prospective buyer from a real estate agent. Appellees purchased the Tangerine Parcel and are financially obligated on the property; Buette contributed no capital and was not named on the title to the Tangerine Parcel or the mortgage except as the broker. And while "[t]he fact that one partner owns certain property in the business, or provides the capital, while the other performs certain services, does not preclude a finding that they are co-owners of the business," "[t]here is no partnership" where the parties "intend only that profits are the fund and measure of [a recipient's] payment" rather than that person "acquire an interest in the business, or in the accrued, undivided, and unascertained profits." 59A Am. Jur. 2d Partnership § 141. Buette himself noted his only risk was that if the Tangerine Parcel did not sell at a high price, he would not be compensated for his "time and effort" and his "knowledge and expertise." Rather than supporting Buette's argument that the parties formed a partnership, this indicates that any share in the profits was payment for his work as an independent contractor. See A.R.S. § 29-1012(C)(3)(b); see also Hammond v. Smith, 57 N.Y.S.3d 832, 836 (App. Div. 2017) (rejecting plaintiff's contention that he was a partner and shared in losses because he risked losing the value of services he provided). There is simply no evidence that the parties intended to create a business as co-owners, and Appellants' emphasis on Goodman's "sell some dirt" remark and McGee's "we have a deal" statement could not convince reasonable people otherwise. See Orme Sch., 166 Ariz. at 309.
¶16 Moreover, despite Appellants' contention to the contrary, the undisputed evidence shows the parties had not come to an agreement on profit sharing. While Appellants claim the fifty-percent split was settled, the February 2014 discussion belies this contention. At that time, Buette conceded he would be willing to "do whatever" TRP wanted that was "reasonable" with regard to the share of profits and later admitted the group had not agreed to a deal and that he was never "ironclad."
¶17 Appellants also put great weight on the trial court's failure to take the redlined letter of intent into account. Specifically they contend,
When one reveals a plan to ultimately sell land at a substantial profit and the potential partner states, "let's go sell some dirt[,]" a jury may find an agreement was entered into. Additionally, where a written agreement is created and the partner redlines corrections, which are all accepted by the drafter, a jury may also find an agreement was entered into. When a person states, "We have a deal here. It is very good deal[,]" does that not mean there is a deal?In so arguing, they conflate the potential existence of a brokerage contract with the existence of a partnership. Absent an agreement to conduct business as co-owners, a contract alone does not create a partnership between the parties. See A.R.S. § 29-1012(A) (partnership requires association to carry on as co-owners); see also, e.g., Holeman v. Neils, 803 F. Supp. 237, 241-42 (D. Ariz. 1992) (despite signed agreement that parties would share in proceeds of investment, no partnership existed where they did not contemplate partnership arrangement). Additionally, even if all parties had signed the letter of intent, rather than only John Buette on behalf of BDCR, the letter still would not operate to create a partnership because it contemplated a development agreement, not a partnership. The court took the facts in the light most favorable to BDCR and the Buettes, see Timmons, 234 Ariz. 569, ¶ 2, but concluded, as do we, that there was no partnership under Arizona law. And without the existence of a partnership, BDCR's claim that Appellees breached partnership duties fails. Fraud
On appeal, Appellants argue summary judgment was inappropriate because a jury could find Appellees "liable for both constructive and common law fraud." However, Appellants did not address constructive fraud below, focusing solely on common law fraud. Accordingly, the constructive fraud issue is waived in this appeal. Sobol v. Marsh, 212 Ariz. 301, ¶ 7 (App. 2006) ("[A] party cannot argue on appeal legal issues and arguments that have not been specifically presented to the trial court.").
¶18 To establish fraud, a plaintiff must show with clear and convincing evidence that the defendant knowingly "made a false, material representation," intending the hearer act on it, and that the hearer "rightfully rel[ying] on the truth of the representation," does so and is damaged thereby. Haisch v. Allstate Ins. Co., 197 Ariz. 606, ¶ 14 (App. 2000); Enyart v. Transamerica Ins. Co., 195 Ariz. 71, ¶ 18 (App. 1998). If one element is not established, the plaintiff may not recover. Sarwark Motor Sales, Inc. v. Husband, 5 Ariz. App. 304, 309 (1967). BDCR failed to establish the Appellants made any knowingly false representation or misrepresentation causing damage.
¶19 Below, BDCR argued the misrepresentation was that TRP and BDCR would "develop the property together" and that defendants "never raised an objection" to the fifty-fifty profit split. On appeal, however, Appellants assert the dental group misrepresented that they would be "investors in the development of the Tangerine Parcel and that they would do the deal with no one else." Notwithstanding either characterization, this claim clearly fails. Although Appellants insist that Appellees intended to "string . . . Buette along" and "obtain as many details of his plan as possible," before moving forward with a different investor, there was no false representation because Appellees never represented to BDCR that they had come to an agreement. While "[u]nfulfilled promises may form the basis for actionable fraud where made with the present intention not to perform," Sun Lodge, Inc. v. Ramada Dev. Co., 124 Ariz. 540, 542 (App. 1979), the evidence does not support that here. Emails between McGee, Emily Brown, and Barbara Goodman reflect that Brown and Goodman wanted to move forward on the development plan but had not agreed to the "terms [Buette] laid out" or the profit-splitting arrangement. There is no evidence that any appellee made a false representation to BDCR, intended to deceive BDCR, or intended that BDCR rely on false statements.
¶20 Additionally, the fraud claim fails because BDCR did not show that any alleged misrepresentation caused damage. Appellants argue that BDCR "lost [its] plan, control over the development of the property[,] and any potential share of profits," but these damages were not caused by a misrepresentation. Rather, the loss of the plan and any profit to be derived therefrom was caused by the discussions between the parties not culminating in an agreement. Because the fraud claim could not be supported by sufficient evidence and there were no questions of material fact, the trial court properly granted Appellees' motion for summary judgment on this claim.
Constructive Trust
¶21 A court may impose a constructive trust "whenever title to property has been obtained through actual fraud, misrepresentation, concealment, undue influence, duress or through any other means which render it unconscionable for the holder of legal title to continue to retain and enjoy its beneficial interest," Turley v. Ethington, 213 Ariz. 640, ¶ 9 (App. 2006) (quoting Harmon v. Harmon, 126 Ariz. 242, 244 (App. 1980)), or "if there has been a breach of fiduciary duty," id. As noted above, there is no evidence of fraud or misrepresentation, and BDCR did not allege any other conduct making it "unconscionable" for TRP to hold title to the Tangerine Parcel. And, also noted above, there was no partnership or other basis for fiduciary duties owed among BDCR and TRP. Accordingly, there is no legal basis for BDCR's constructive trust claim, and the trial court properly granted summary judgment for Appellees on this issue as well.
Attorney Fees
¶22 Appellants next challenge the trial court's award of attorney fees to Appellees pursuant to A.R.S. § 12-341.01, arguing the court erred because the claims did not "arise out of contract" but rather arose from "breach of legal duties." Appellees respond that BDCR's breach of fiduciary duty, constructive trust, and fraud claims arose because BDCR argued that "the parties agreed to form a partnership" and that the unjust enrichment claim is "firmly rooted in contract law."
¶23 Section 12-341.01(A), A.R.S., provides that "[i]n any contested action arising out of contract, express or implied, the court may award the successful party reasonable attorney fees." When a party challenges whether an action "aris[es] out of contract," the question may be one of statutory interpretation, which we review de novo. Zeagler v. Buckley, 223 Ariz. 37, ¶ 5 (App. 2009). The meaning of that language is construed broadly and, when tort claims are alleged, they arise out of contract when they "could not exist 'but for' the breach or avoidance of contract." ML Servicing Co. v. Coles, 235 Ariz. 562, ¶¶ 30-31 (App. 2014) (quoting Ramsey Air Meds, LLC v. Cutter Aviation, Inc., 198 Ariz. 10, ¶ 27 (App. 2000)); see also Modular Mining Sys., Inc. v. Jigsaw Techs., Inc., 221 Ariz. 515, ¶¶ 22-23 (App. 2009) (attorney fees recoverable for "litigating interwoven and overlapping contract and tort claims"). Moreover, in determining whether the action arises out of contract, we are not "bound by the form of the pleadings" but may look "to the nature of the action and the surrounding circumstances." Hiatt v. Shah, 238 Ariz. 579, ¶ 18 (App. 2015).
¶24 BDCR alleged that TRP breached fiduciary duties of good faith and fair dealing implied by Arizona law based on the claimed partnership between the parties. As they concede, however, the existence of the partnership was predicated on the alleged oral agreement between BDCR and TRP. BDCR's fraud claim was similarly based on the oral agreement because the alleged misrepresentation related to the development of the property and the terms of the agreement, including the fact that TRP "would do the deal with no one else." BDCR's constructive trust claim, as noted above, was based either on the existence of a fiduciary duty or fraud. As such, these claims are intertwined. In arguing that a partnership existed, BDCR did not point to statutory requirements but instead argued that the "partnership" was the "agreement between a developer and the landowner to develop the land and share in the profits." While it is true that the specific claim alleges a breach of statutorily imposed duties rather than duties under a contract, we look at the "nature of the action and the surrounding circumstances" to determine whether the action arose out of contract. Keystone Floor & More, LLC v. Ariz. Registrar of Contractors, 223 Ariz. 27, ¶ 10 (App. 2009) (quoting Ramsey Air Meds, LLC, 198 Ariz. 10, ¶ 21).
¶25 Here, the dispute arose after discussions about the potential development of the Tangerine Parcel did not ultimately culminate in an agreement. Contrary to Appellants' argument, the dispute was not over only the peripheral existence of a contract, with the underlying claims sounding in tort. Rather, but for the parties' attempt to form a contractual arrangement, these claims would not exist. And, to adequately defend the case in response to BDCR's claims, Appellees successfully proved there was no contract between the parties. See ML Servicing Co., 235 Ariz. 562, ¶ 30 (permitting an award of attorney fees where defendant proved absence of contract). We accordingly conclude the breach of fiduciary duty, fraud, and constructive trust claims arose out of contract.
¶26 Appellees also argue that because unjust enrichment is "firmly rooted in contract law," the trial court correctly awarded attorney fees on that claim as well. Although we reject Appellants' threshold claim, see Schwab Sales, Inc. v. GN Const. Co., Inc., 196 Ariz. 33, ¶ 13 (App. 1998) ("not all unjust enrichment claims necessarily arise out of contract under § 12-341.01"), we nevertheless agree BDCR's unjust enrichment claim arose from contract in this case. BDCR alleged it "conferred a benefit" "consisting of physical and intellectual labor and expert advice" and Appellees "failed to pay" the value of those benefits. Applying Ramsey's but-for test, absent the alleged oral agreement between the parties, BDCR's claim for payment for Buette's purported physical and intellectual labor and expert advice would not exist because, according to Buette, his actions were in furtherance of the partnership relationship that was agreed upon by the parties. See Ramsey Air Meds, LLC, 198 Ariz. 10, ¶ 27; Sparks v. Republic Nat'l Life Ins. Co., 132 Ariz. 529, 543 (1982); cf. Schwab Sales, Inc., 196 Ariz. 33, ¶¶ 10-13. Moreover, as the trial court noted when entering judgment in favor of Appellees on the unjust enrichment claim, BDCR's "physical and intellectual labor and expert advice" could readily be attributed to the purchase contract for the Tangerine Parcel under which Buette provided "due diligence" services as a broker. See Schwab Sales, Inc., 196 Ariz. 33, ¶ 13. Accordingly, this claim also arose out of contract.
Joinder of Buettes as Plaintiffs
¶27 We last address Appellants' claim that the trial court erred in joining the Buettes as plaintiffs in their individual capacities pursuant to Rule 17(a), Ariz. R. Civ. P., because the rule is not "a method to pierce the corporate veil." In response, Appellees assert that by joining the Buettes, "the trial court simply held [them] to the same standard in this case as in the [b]ankruptcy [a]ction." Rule 17(a), provides, "An action must be prosecuted in the name of the real party in interest." The purpose of the rule "is to enable the defendant to avail himself of the evidence and defenses that he has against the real party in interest and to assure the finality of the results in the application of res judicata." Colo. Cas. Ins. Co. v. Safety Control Co., 230 Ariz. 560, ¶ 11 (App. 2012) (quoting Cruz v. Lusk Collection Agency, 119 Ariz. 356, 358 (App. 1978)).
¶28 Notably, Appellees did not file a motion to dismiss on the basis of BDCR's lack of capacity due to BDCR not being the real party in interest. It is well established that a limited liability company has the capacity to sue in its own name. A.R.S. § 29-3109. Rather, Appellees moved to join the Buettes as plaintiffs, alongside BDCR, asserting they are the real parties in interest. But BDCR was the proper real party in interest, alleging Appellees had caused it damage. The Buettes had no individual claim against Appellees and, although they may have been incidental beneficiaries of the litigation as a result of John Buette's ownership interest in the LLC, their joinder does not appear justified under Rule 17(a). See A.R.S. § 29-656 (member of an LLC, solely by reason of being a member, is not a proper party to proceedings by or against an LLC unless the object is to enforce a member's right against or liability to the LLC).
See Ariz. R. Civ. P. 9(a); Lake Havasu Cmty. Hosp. v. Ariz. Title Ins. & Tr. Co., 141 Ariz. 363, 370 (App. 1984), disapproved of on other grounds by Barmat v. John and Jane Doe Partners A-D, 155 Ariz. 519 (1987) (issue of capacity to sue must be raised by motion before the answer is filed or by way of an affirmative defense).
¶29 Appellees and the trial court gave great weight to the bankruptcy court's recognition that John Buette, as the sole member of BDCR, controlled the direction of the litigation. To the extent the court and Appellees relied on the fact that Buette had discretion over the direction of the litigation, we note that the management of an LLC "is vested in the members," and Buette, as the sole member of BDCR, clearly had the right to control the litigation on behalf of the LLC. A.R.S. § 29-681(A). Appellees cite no authority, and we find none, suggesting that an individual who is the sole member of an LLC is automatically subject to personal liability in an action against the LLC.
¶30 Appellees also raised res judicata concerns, noting they would be "unduly prejudiced" if they were "subject to a new lawsuit by the real parties in interest—the Buettes" "after this lawsuit comes to its conclusion." But it is well settled that a member cannot litigate a case in the name of the LLC and then file a separate lawsuit in his or her own name. See Indus. Park Corp. v. U.S.I.F. Palo Verde Corp., 26 Ariz. App. 204, 208 (1976); San Manuel Copper Corp. v. Redmond, 8 Ariz. App. 214, 219 (1968) ("A corporate officer who has control over the litigation in the corporate name would be subject to collateral estoppel or res judicata if the same action for facts determined were to be used by him personally."). Because John Buette is the sole member of BDCR, res judicata would prohibit him from bringing a separate lawsuit arising from the same facts. Indus. Park Corp., 26 Ariz. App. at 208.
From this record, we are unable to determine whether Jennifer Buette has any interest in BDCR notwithstanding the interest claimed in the bankruptcy action. Nevertheless, she would likely be unable to file suit against Appellees for lack of standing, as she was wholly unconnected to the transactions and occurrences giving rise to this lawsuit. See Alliance Marana v. Groseclose, 191 Ariz. 287, 289 (App. 1997) ("A party has standing to sue in Arizona if, under all circumstances, the party possesses an interest in the outcome of the litigation."); 59 Am. Jur. 2d Parties § 28 ("A court may and properly should refuse to entertain an action at the instance of one whose rights have not been invaded or infringed."). --------
¶31 Finally, Appellees' motion sought to join the Buettes on the basis of BDCR being an "insolvent, undercapitalized, sham limited liability company" that is "an alter ego of the Buettes." If required to seek an award of attorney fees and costs from BDCR, Appellees claim they "would be unduly prejudiced." Appellees, however, essentially sought to pierce the corporate veil and hold the Buettes individually responsible for a judgment of attorney fees against BDCR. But the trial court made no findings that BDCR was the alter ego of the Buettes, merely stating "the standards of Rule 17(a) have been met." On this record, we cannot say the court properly joined the Buettes; we therefore vacate the order joining them as parties.
Disposition
¶32 The trial court's grant of summary judgment and award of attorney fees to Appellees is affirmed. However, because we vacate the court's order joining John and Jennifer Buette individually as plaintiffs, we remand for any further proceedings consistent with this decision.