Opinion
No. 1 CA-CV 13-0164
06-30-2015
DALE R. GRABOIS; FIFTY-FOUR, INC.; FIFTY-ONE, INC.; DESERT VENTURES, INC., Plaintiffs/Appellants, v. BMO HARRIS BANK, N.A., a national banking association; GRAND CANYON TITLE AGENCY, INC., Defendants/Appellees.
COUNSEL McGill Law Firm, Scottsdale By Gregory G. McGill Counsel for Plaintiffs/Appellants Stinson Leonard Street LLP, Phoenix By Jeffrey J. Goulder, Stefan M. Palys Co-Counsel for Defendant/Appellee BMO Harris Bank, N.A. Gust Rosenfeld, P.L.C., Phoenix By Scott Malm Co-Counsel for Defendant/Appellee BMO Harris Bank, N.A. Jennings Strouss & Salmon PLC, Phoenix By Michael R. Palumbo, John J. Egbert Counsel for Defendant/Appellee Grand Canyon Title Agency
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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. CV2009-11561, CV2009-15369, CV2009-018110 (Consolidated)
The Honorable Dean M. Fink, Judge
DISMISSED IN PART AND AFFIRMED IN PART
COUNSEL McGill Law Firm, Scottsdale
By Gregory G. McGill
Counsel for Plaintiffs/Appellants
Stinson Leonard Street LLP, Phoenix
By Jeffrey J. Goulder, Stefan M. Palys
Co-Counsel for Defendant/Appellee BMO Harris Bank, N.A.
Gust Rosenfeld, P.L.C., Phoenix
By Scott Malm
Co-Counsel for Defendant/Appellee BMO Harris Bank, N.A.
Jennings Strouss & Salmon PLC, Phoenix
By Michael R. Palumbo, John J. Egbert
Counsel for Defendant/Appellee Grand Canyon Title Agency
MEMORANDUM DECISION
Presiding Judge Samuel A. Thumma delivered the decision of the Court, in which Judge Patricia A. Orozco joined and Chief Judge Diane M. Johnsen specially concurred. THUMMA, Judge:
¶1 This appeal arises out of loans and related activities involving various parcels of Maricopa County real estate in and after 2005. After the onset of "the 2007-2008 financial collapse, which has also been referred to as the Great Recession, which . . . had a negative impact on real-estate values nationwide," United States v. Courtney, 960 F. Supp. 2d 1152, 1196 (D. N.M. 2013), the lender filed two collection actions and other parties filed a third action against the lender, a title company and others. Substantial motion practice in these consolidated actions resolved several of the claims in favor of the lender and the title company. At the close of the evidence at trial of the remaining claims, the superior court granted a motion for judgment as a matter of law in favor of the lender and the title company. After entry of judgment, this appeal followed.
¶2 Appellants Dale R. Grabois, Fifty-One, Inc., Fifty-Four, Inc. and Desert Ventures, Inc., appeal from the entry of judgment in favor of Appellees BMO Harris Bank, N.A. (BMO) and Grand Canyon Title Agency (GCTA). To the extent Appellants purport to challenge the ratification of what is described below as the 2005 Peoria Property Loan, that portion of the appeal is dismissed for lack of jurisdiction. Because Appellants have not shown that the superior court erred in granting summary judgment in favor of Appellees, or in granting Appellees' motion for judgment as a matter of law, the judgment is affirmed.
FACTS AND PROCEDURAL HISTORY
The facts and procedural history of this case are complicated, are well known to the parties and include more than 1600 docket entries. Accordingly, the facts and procedural history are summarized only as relevant to this appeal.
I. Relevant Individuals And Entities.
¶3 Appellant Grabois, along with Ricardo Jimenez and Louay Yacoub, were associated with Fifty-One, Inc. and/or Fifty-Four, Inc. in various capacities. Fifty-One, Inc., and Fifty-Four, Inc., were involved in certain Maricopa County real estate ventures. Fifty-One, Inc., or Fifty-Four, Inc., once held title to the parcels of land giving rise to this litigation: (1) the Peoria Property; (2) Lot 54 in Scottsdale; (3) Lots 55/56 in Scottsdale and (4) the Fountain Hills Lot. BMO made loans secured by guaranties and deeds of trust on the parcels. GCTA was the escrow agent on the loans relating to Lot 54, Lots 55/56 and the Fountain Hills Lot, but not the Peoria Property.
Although the loans were made by BMO's predecessor M&I Marshall and Ilsley Bank, BMO is referenced throughout for consistency.
II. The Properties.
A. The Peoria Property.
¶4 In July 2005, Jimenez and Yacoub, purportedly acting on behalf of Fifty-One, Inc., purchased the Peoria Property with a $240,000 purchase money loan secured by a deed of trust on the Peoria Property. Jimenez and Yacoub personally guaranteed this loan. The Peoria Property was a vacant lot on which Fifty-One, Inc., planned to build "affordable housing."
B. Lot 54.
¶5 In April 2005, Fifty-Four, Inc., with Grabois signing as president, borrowed $566,200 in a construction loan secured by a deed of trust on Lot 54. In 2006, Fifty-Four, Inc., with Jimenez signing as president, refinanced the construction loan and increased the loan amount to $875,000, secured by a deed of trust on Lot 54. Jimenez, Yacoub and allegedly Grabois personally guaranteed this loan.
Although Appellants dispute the authenticity of Grabois' signature on the guaranty for the refinanced $875,000 construction loan, given the analysis below, this court need not address that issue.
C. Lots 55/56.
¶6 In March 2005, Fifty-One, Inc. borrowed $305,500 secured by a deed of trust on Lots 55/56. In 2006, Fifty-One, Inc. refinanced the loan and increased the loan amount to $513,500, secured by a deed of trust on Lots 55/56. Grabois, Jimenez and Yacoub personally guaranteed this refinanced loan.
D. The Fountain Hills Lot.
¶7 In February 2005, Fifty-One, Inc., borrowed $236,000 secured by a deed of trust on the Fountain Hills Lot. Grabois signed for this loan as president of Fifty-One, Inc. and, as applicable here, Grabois and Jimenez personally guaranteed the loan.
III. Subsequent Events.
¶8 In 2007, Jimenez and Yacoub purported to transfer title to Lots 55/56 and the Fountain Hills Lot from Fifty-One, Inc. to their own names. Jimenez and Yacoub also obtained new personal loans to retire the then-outstanding loans to Fifty-One, Inc. on these properties and the corresponding personal guaranties described above.
¶9 In April 2009, BMO sued Fifty-Four, Inc. for default of the loan secured by Lot 54 and sued Grabois, Jimenez, and Yacoub for their guaranties on that loan.
¶10 In May 2009, BMO sued Fifty-One, Inc. for default of the loan secured by the Peoria Property and sued Jimenez and Yacoub for their guaranties on that loan.
¶11 In June 2009, Appellants sued BMO, GCTA, Jimenez and others challenging the transactions signed for by Jimenez and Yacoub as described above. Appellants alleged various contract, tort, statutory and equitable claims and sought money damages, injunctive relief and an award of attorneys' fees. Appellants claimed that Appellees knew or should have known that Jimenez and Yacoub lacked authority to act on behalf of Fifty-One, Inc. and Fifty-Four, Inc.
¶12 The three cases were consolidated and a preliminary injunction was issued in October 2009 enjoining any sale of the properties, with the exception of Lot 54, which had already been sold. After discovery, the parties filed various potentially dispositive motions. As relevant here, the superior court:
• Granted Appellees' motion for partial summary judgment that Grabois and Fifty-One, Inc. had ratified the 2005 Peoria Property Loan by keeping the property and failing to return the loan proceeds after learning of the loan. In February 2011, the court entered a final partial judgment on that ruling. See Ariz. R. Civ. P. 54(b) (2015).
• Granted Appellees' motion for partial summary judgment that Grabois and Fifty-Four, Inc., by using the loan proceeds after acquiring actual or constructive knowledge of the loan, had ratified the 2006 refinancing increasing the construction loan on Lot 54 to $875,000.
• Granted Appellees' motion for partial summary judgment that Appellants' claims based on Arizona Revised Statutes (A.R.S.) section 33-420 (imposing liability for recording false documents regarding real property) were time-barred, establishing a deficiency balance on Lot 54 and finding that Appellants' claims premised on credit reporting were preempted by federal law.
Absent material revisions after the relevant dates, statutes and rules cited refer to the current version unless otherwise indicated. Over Appellants' objection, this court grants Appellees' request to take judicial notice of various publicly recorded documents regarding the properties. See In re Sabino R., 198 Ariz. 424, 425 ¶ 4, 10 P.3d 1211, 1212 (App. 2000). Those documents, however, largely address what happened to the properties at times not applicable to the resolution of this appeal.
¶13 In March 2012, the parties proceeded to a jury trial on the remaining claims. Appellants sought damages for lost profits based on a series of transactions: (1) a transaction whereby some of the properties listed above would be exchanged for another property (the 24th Street Property), owned by Robert McDowell and his company; (2) a transaction whereby McDowell would have built and sold houses on the properties listed above and McDowell and Appellants would have used those proceeds to build condominiums on the 24th Street Property and then (3) a transaction whereby the condominiums to be built on the 24th Street Property would be sold and those proceeds would have been used to develop and sell the Tonopah Project -- described as roughly 65 acres of vacant land approximately 50 miles west of Phoenix, which would be developed into an outlet mall. Appellants contend that, as a result of these transactions, they would have made more than $100 million in profit but for Appellees' improper conduct.
¶14 After nine days of trial, Appellants rested. Appellees moved for judgment as a matter of law on several grounds, including lack of standing by Appellants Grabois and Desert Ventures, Inc., and failure to present sufficient evidence of damages to create a jury issue. The superior court granted Appellees' motion for judgment as a matter of law on these grounds. The court later denied Appellants' motion for new trial and awarded Appellees their attorneys' fees pursuant to the parties' contracts and A.R.S. § 12-341.01.
The superior court also granted judgment as a matter of law on other grounds, which this court does not address given the analysis below.
¶15 This court has jurisdiction over Appellants' timely, amended appeal from the superior court's September 19, 2012 judgment pursuant to the Arizona Constitution, Article 6, Section 9, and A.R.S. §§ 12-2101(A)(1), (A)(5)(a), (A)(5)(b) and -120.21(A)(1).
DISCUSSION
I. Issues Not Adequately Raised By Appellants.
¶16 Appellants' notice of appeal purports to "appeal from all rulings and issues in connection with" the September 19, 2012 judgment and their amended notice of appeal lists additional issues. Many of those issues, however, are not developed in Appellants' opening brief, meaning they are waived and will not be addressed by this court. See Ariz. R. Civ. App. P. (ARCAP) 13(a); State Farm Mut. Auto. Ins. Co. v. Novak, 167 Ariz. 363, 370, 807 P.2d 531, 538 (App. 1990) (declining to consider contentions not stated in opening brief or supported by reasoning or citations).
¶17 Among other things, Appellants do not contest the superior court's ruling that Appellants Grabois and Desert Ventures, Inc. lacked standing to assert any claims in this case and, by implication, prosecute this appeal. As a result, although Grabois and Desert Ventures, Inc. are named as Appellants, the only Appellants with standing to prosecute this appeal are Fifty-One, Inc. and Fifty-Four, Inc. Accordingly, this decision addresses the issues preserved for appeal by Appellants Fifty-One, Inc. and Fifty-Four, Inc. that are expressly and properly developed in the opening brief.
II. This Court Lacks Jurisdiction To Address The Ratification Of The 2005 Peoria Property Loan.
¶18 Appellants argue the superior court erred in granting Appellees' motion for partial summary judgment on the basis that Grabois and Fifty-One, Inc. ratified the 2005 Peoria Property Loan by keeping the property and failing to return the loan proceeds after learning of the loan. In February 2011, however, the superior court entered a final, appealable judgment pursuant to Arizona Rule of Civil Procedure (Rule) 54(b) reflecting its ruling and quieting title of the Peoria Property in favor of BMO. Appellants did not purport to appeal from that judgment until February 2013, long after the time to do so had passed. See ARCAP 9(a). "[W]here the appeal is not timely filed, the appellate court acquires no jurisdiction." Haroutunian v. Valueoptions, Inc., 218 Ariz. 541, 560 ¶ 58, 189 P.3d 1114, 1133 (App. 2008) (citations omitted). Accordingly, the February 2011 Rule 54(b) judgment became final given the passage of time and this court lacks jurisdiction to consider Appellants' challenges to that judgment. See id. Therefore, to the extent Appellants purport to challenge the ratification of the 2005 Peoria Property Loan, that portion of the appeal is dismissed for lack of jurisdiction. III. The Superior Court Did Not Err In Granting Summary Judgment Regarding Ratification Of The $875,000 Lot 54 Construction Loan.
¶19 Appellants challenge the superior court's entry of summary judgment regarding ratification of the 2006 refinancing and increase to $875,000 of the construction loan on Lot 54. On the record presented to it, that court found Appellants ratified the refinancing and increase of the loan given there was "no genuine issue of material fact as to Grabois' use of the loan refinance proceeds." Appellants argue summary judgment was improper because: (1) Grabois did not know he was taking construction draws from the $875,000 loan; (2) Grabois objected to the $875,000 loan and (3) evidence from the preliminary injunction hearing undercuts the summary judgment ruling.
¶20 This court reviews the entry of summary judgment de novo, "viewing the evidence and reasonable inferences in the light most favorable to the party opposing the motion," Andrews v. Blake, 205 Ariz. 236, 240 ¶ 12, 69 P.3d 7, 11 (2003) (citation omitted), to determine "whether any genuine issues of material fact exist," Brookover v. Roberts Enters., Inc., 215 Ariz. 52, 55 ¶ 8, 156 P.3d 1157, 1160 (App. 2007) (citation omitted). This court will affirm the entry of summary judgment if it is correct for any reason. Hawkins v. State, 183 Ariz. 100, 103, 900 P.2d 1236, 1239 (App. 1995). "When a motion for summary judgment is made . . . , an opposing party may not rely merely on allegations or denials of its own pleading; rather, its response must, by affidavits [or other materials that would be admissible in evidence], set forth specific facts showing a genuine issue for trial." Ariz. R. Civ. P. 56(e)(4). Review is based on the record made in the superior court and this court "consider[s] only the evidence presented to the trial court when it addressed the motion." Vig v. Nix Project II P'ship, 221 Ariz. 393, 396 ¶ 10, 212 P.3d 85, 88 (App. 2009) (citations omitted).
A. The Undisputed Facts Support Summary Judgment On The Issue Of Ratification.
¶21 Appellants contend that Fifty-Four, Inc. did not ratify the refinanced $875,000 loan because Grabois did not know that the draws came from that specific loan as opposed to the previous $566,200 loan. During the relevant time, Grabois claimed to be the sole officer/director of Fifty-Four, Inc. and, as such, was an agent of Fifty-Four, Inc. Ratification "can occur by acceptance of the benefits of an allegedly unauthorized act when accompanied by knowledge of material facts since such amounts to a subsequent approval of the act by the principal who seeks to avoid liability." Phoenix W. Holding Corp. v. Gleeson, 18 Ariz. App. 60, 66, 500 P.2d 320, 326 (1972). When a person has reason to believe that he does not know all of the facts but affirms "without qualification and without investigation," it may then "be inferred that he is willing to assume the risks of facts of which he has no knowledge." Restatement (Second) of Agency § 91 cmt. e (1958).
¶22 The record includes documents reflecting the refinancing and increase in the loan that appear to contain Grabois' signature but that he alleged were forged. In granting summary judgment based on ratification, the superior court apparently did not rely on those disputed documents but, instead, relied on Grabois' conduct.
For example, Appellants disputed the validity of the personal guaranty, the indemnity agreement, and an instruction letter to the escrow company regarding loan disbursement -- all of which purport to contain Grabois' signature. Similarly, Appellants dispute whether Grabois received the note and deed of trust for the loan.
¶23 Citing the Restatement (Third) of Agency § 4.01 cmt. d (2006), Appellants argue that whether conduct is sufficient to indicate consent for ratification may never be decided on summary judgment. The cited provision, however, does not mean that ratification must always be reserved for the jury. Rather, in the absence of a genuine dispute of material fact, the court may decide the issue on summary judgment.
¶24 In considering the evidence, "the focal point of ratification is an observable indication that the principal has exercised choice and has consented," Restatement (Third) of Agency § 4.01 cmt. d, and "[a] principal may choose to affirm without knowing the material facts," id. at § 4.06 cmt. b. "The fact that the principal had knowledge may be inferred, as may the principal's assumption of risk of lack of knowledge." Id. at § 4.06 cmt. b. "'Knowledge of all material facts is essential to a ratification of the unauthorized acts of an agent unless the principal intentionally and deliberately ratifies knowing he is without knowledge of all such facts.'" Gleeson, 18 Ariz. App. at 68, 500 P.2d at 328 (emphasis added; citation omitted).
¶25 In March 2006, Grabois, acting on behalf of Fifty-Four, Inc., submitted a draw request on the original $566,200 construction loan. That draw request included the original loan number and was undisputedly signed by Grabois. In mid-2006, Grabois and others purporting to act on behalf of Fifty-Four, Inc. were involved with efforts to refinance and increase the construction loan amount to $875,000. Appellants alleged that in June 2006, Jimenez and a bank loan officer asked Grabois to sign refinancing documents increasing the Lot 54 construction loan to $875,000. Appellants further claim Grabois was "repeatedly called" to GCTA's offices in July 2006 to review and sign these $875,000 loan documents. Grabois purportedly objected to the loan increase and refused to sign these documents.
¶26 Despite Grabois' purported objections, it is undisputed that he personally signed six draw requests after the original loan was replaced with the new $875,000 loan and directed that the proceeds of each draw be disbursed to Desert Ventures, Inc., of which Grabois is "the President, shareholder and statutory agent." Of these six draw requests Grabois signed, the first two reference no loan number, but the last four each reference the new $875,000 loan number. The last of these was Grabois' sixth draw request, dated March 26, 2007.
¶27 Fifty-Four, Inc., via Grabois, received monthly statements for the $875,000 loan. These monthly statements reference the new loan number included on the draw requests Grabois signed. By October 2007, these monthly statements show that the loan balance exceeded the limit of the original $566,200 loan by nearly $50,000.
¶28 The 2007 year-end statement confirms the draws that Grabois signed, states the loan balance exceeded the limit of the original $566,200 loan in October 2007 and states that, by the end of 2007, the loan balance was $649,400 - exceeding the $566,200 original loan by more than $80,000. Ultimately, the loan balance totaled more than $780,000, exceeding the limit of the original loan by more than $200,000. Grabois, on behalf of Fifty-Four, Inc., does not dispute that he received the year-end statement, which Grabois produced during discovery, or the monthly statements.
¶29 Apart from the draw requests referencing the new loan number and the statements Fifty-Four, Inc. received via Grabois, Appellants admitted they discovered in October 2007 that BMO made what Appellants assert was an unauthorized draw disbursement to Jimenez in August 2006 on the refinanced loan. They also conceded discovering in January 2008 that the purportedly unauthorized 2007 draws on the loan totaled approximately $150,000. Notwithstanding this knowledge, however, Appellants did not challenge these actions until June 2009, after BMO sued for default on the Lot 54 loan payments.
¶30 Appellants do not cite any controverting evidence but, instead, argue the evidence submitted in briefing summary judgment presented a genuine issue of material fact that could only be resolved by a jury. Viewing the facts in the light most favorable to Appellants, however, the superior court did not err in granting summary judgment on ratification. See Andrews, 205 Ariz. at 240 ¶ 12, 69 P.3d at 11. Unlike the meager record presented in Cook v. Great W. Bank & Trust, the record here is robust. See 141 Ariz. 80, 83, 85, 685 P.2d 145, 148, 150 (App. 1984) (declining to uphold summary judgment where factual record was limited to two affidavits and copies of a check and assignment). Appellants did not genuinely dispute they knew in mid-2006 that the new $875,000 loan was being processed, that Grabois personally signed six draw requests often referencing the new loan number, that they learned in 2007 that Jimenez was receiving draws or that the bank statements in 2007 and early 2008 sent to Grabois showed the loan amount exceeded the original $566,200 loan. Based on these uncontroverted facts, summary judgment on ratification was proper. See United Bank v. Mesa N. O. Nelson Co., 121 Ariz. 438, 440, 590 P.2d 1384, 1386 (1979) (citing with approval proposition that "[r]atification may be express or implied and intent may be inferred from the failure to repudiate an unauthorized act, from inaction, or from conduct on the part of the principal which is inconsistent with any other position than intent to adopt the act") (citations omitted).
B. Grabois' Objection To Refinancing Is Not Dispositive.
¶31 Fifty-Four, Inc. and Grabois argue that because Grabois objected to refinancing the loan in mid-2006, they could not be found to have ratified the new loan. However, under these circumstances, ratification arises from Appellants' acts after the loan was refinanced; any prior objections Grabois may have raised to the refinancing are irrelevant. See Gleeson, 18 Ariz. App. at 68, 500 P.2d at 328 (noting ratification is "'applicable notwithstanding [the principal's] protestations or expressions of disapproval or repudiation of his agent's unauthorized act where the principal continues to retain the benefits which he obtained as a result of such act'") (citation omitted). Appellants do not dispute receiving the loan proceeds or the other actions discussed above. Nor do Appellants argue they attempted to return the draws they received in excess of the original loan amount. Accordingly, notwithstanding any alleged objection to the new loan, Appellants' subsequent conduct ratified the refinanced $875,000 loan.
C. Evidence At The Preliminary Injunction Hearing Did Not Preclude Summary Judgment.
¶32 Fifty-Four, Inc. and Grabois argue the summary judgment ruling was undermined by evidence presented at the preliminary injunction hearing. They provide no record citation supporting this argument and have not shown how the superior court's alleged failure to consider this alleged evidence was error. See Zeagler v. Buckley, 223 Ariz. 37, 40 n.6 ¶ 10, 219 P.3d 247, 250 n.6 (App. 2009) (stating judges have no sua sponte obligation to search for factual support; unsupported arguments are waived). Although Appellants also cite subsequent trial testimony to support their arguments, this court considers only what was before the superior court when it decided the summary judgment motion. See Vig, 221 Ariz. at 396 ¶ 10, 212 P.3d at 88. Accordingly, Appellants have not shown that evidence presented at the preliminary injunction hearing precluded entry of summary judgment.
IV. The Superior Court's Evidentiary Rulings Based On Appellants' Lack Of Disclosure Were Not Erroneous.
¶33 Appellants argue the superior court erred in excluding Grabois' testimony about Appellants' alleged lost profits based on Appellants' lack of pretrial disclosure under Rule 26.1. The superior court has "broad discretion in determining whether evidence has been properly disclosed and whether it should be admitted at trial." Solimeno v. Yonan, 224 Ariz. 74, 77 ¶ 9, 227 P.3d 481, 484 (App. 2010) (citation omitted). The court abuses its discretion when it gives reasons that are legally incorrect, clearly untenable or otherwise constitute a denial of justice. See Ezell v. Quon, 224 Ariz. 532, 536 ¶ 15, 233 P.3d 645, 649 (App. 2010) (citation omitted).
¶34 "The purpose of the disclosure rules is to provide the parties 'a reasonable opportunity to prepare for trial or settlement.'" Breitbart-Napp v. Napp, 216 Ariz. 74, 80 ¶ 21, 163 P.3d 1024, 1030 (App. 2007) (citation and emphasis omitted). "Factors supporting the exclusion of undisclosed evidence 'gain strength as the trial nears.'" Zimmerman v. Shakman, 204 Ariz. 231, 236 ¶ 14, 62 P.3d 976, 981 (App. 2003) (citation omitted). Here, Appellants' announcement that Grabois was going to testify on lost profit damages came mid-trial, during his testimony about the valuation of the 24th Street and Peoria properties. Although the superior court allowed Grabois to testify to his belief about the value of the 24th Street Exchange, the court added it was "going to instruct the jury that [Grabois'] testimony does not establish an actual value. He's not an expert and you're not to use it for that purpose." The court framed its ruling as "a question of disclosure of a damage theory related to the Peoria property, specifically Exhibit 748 [a document purporting to pertain to alleged damages], and the extent to which those calculations and the foundation for them were disclosed." Appellees argued that, although Exhibit 748 was disclosed, "Grabois was never identified as the person to talk about" calculated damages for the Peoria property.
¶35 The record shows that Appellants disclosed three experts (two of whom were to address damages) and did not identify Grabois as an expert on damages. When asked by the court during trial whether Appellants had disclosed that Grabois would be testifying about lost profit damages, Appellants' counsel responded: "I listed him as a witness." Unlike the other experts Appellants listed, there is no indication in their disclosure that Grabois would be testifying as to future lost profit damages on the Peoria Property. Specifically, the superior court noted, "[t]here's nothing else with regard to Mr. Grabois testifying about damages related to Peoria, especially if he's going to testify as an expert." Citing Rule 26.1(a)(7), the superior court noted that Appellants were required to disclose a computation of the measure of damages alleged, the documents or testimony on which such computation is based and the names, addresses and telephone numbers of all damage witnesses. Without any indication that Grabois would be providing expert testimony on lost profit damages on behalf of Fifty-One, Inc. or Fifty-Four, Inc., Appellees had no reason to conduct expert discovery of him on the issue of damages. Merely disclosing Grabois as a witness did not give notice that he would be testifying as a damages expert. See Ariz. R. Civ. P. 26.1(a)(6), (7).
¶36 Citing Zimmerman, Appellants contend that Rule 26.1 disclosures need not be in the form of a disclosure statement. See 204 Ariz. at 237 ¶ 22, 62 P.3d at 982. Appellants claim that Grabois filed a 20-page declaration on damages in 2011 and that defense counsel deposed Grabois about damages, which should have provided adequate notice that Grabois would testify as to damages, thereby blunting any possible prejudice from their failure to list or disclose him as a damage expert. However, Grabois was subject to deposition because he was a party, not as a disclosed expert. Although Appellants cite a condemnation case to argue that Grabois could testify to the value of the properties as an owner, Appellants cite no case holding that testimony from a property owner is exempt from Rule 26.1 disclosure requirements. Accordingly, the superior court did not abuse its discretion in precluding Grabois from testifying on future lost profit damages when he was not disclosed as an expert witness. See Yonan, 224 Ariz. at 77 ¶ 9, 227 P.3d at 484 (citation omitted).
¶37 The superior court did not admit Exhibit 748, which Appellants offered during Grabois' testimony because he did not prepare it and lacked foundation to testify about the document's substance. The superior court does not err by excluding a hearsay document that also lacks foundation. See Taeger v. Catholic Family & Cmty. Servs., 196 Ariz. 285, 295-97 ¶¶ 35-43, 995 P.2d 721, 731-33 (App. 1999). Appellants have not shown that the ruling precluding Exhibit 748 was error. See Ariz. R. Evid. 901. Thus, the superior court did not abuse its discretion when it precluded Grabois from testifying about Appellants' alleged damages and from "testify[ing] to numbers that somebody else put together."
Moreover, as discussed below in Section V(D), even if Grabois had been permitted to testify in support of Appellants' lost profits claim, there is no indication from his depositions or his declaration on damages that his testimony could have altered the result of Appellants' claims for lost profits.
V. The Superior Court Properly Granted Appellees' Motion For Judgment As A Matter Of Law On Damages.
¶38 After Appellants rested, Appellees moved for judgment as a matter of law (JMOL) under Rule 50 for the fraud, contract and equitable claims on several grounds, including that Appellants failed to present sufficient evidence of damages. After considering the evidence presented, the superior court granted Appellees' motion on this ground, stating "that the damages claimed in this case and the evidence that's been provided in this case" did not "meet Arizona's court standards for showing a lost profits claim" and that "on the evidence that's in this record, I don't believe that a reasonable juror could find reasonable certainty of the damages claims that have been made." Appellants claim this ruling was error for four reasons: (1) the evidence of lost profits was sufficient to withstand such a motion; (2) the court had previously denied a motion for summary judgment on the issue; (3) trial evidence supported a claim for lost equity and (4) the superior court erred in excluding Grabois' testimony about alleged lost profits.
¶39 This court reviews the superior court's grant of a motion for JMOL de novo. Acosta v. Phoenix Indem. Ins. Co., 214 Ariz. 380, 381 ¶ 2, 153 P.3d 401, 402 (App. 2007); Orme Sch. v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990) (JMOL standards same as summary judgment). JMOL is proper where "there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue." Ariz. R. Civ. P. 50(a)(1). Thus, the superior court properly grants a JMOL motion "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., 166 Ariz. at 309, 802 P.2d at 1008. This court will affirm entry of a JMOL if it is correct on any ground presented to the superior court. See Hawkins, 183 Ariz. at 103, 900 P.2d at 1239 (construing Ariz. R. Civ. P. 56) (citing cases).
A. The Evidence Was Not Sufficient To Withstand Appellees' Motion For JMOL.
¶40 Appellants argue they presented evidence sufficient to withstand Appellees' motion for JMOL on lost profits. Specifically, Appellants contend they demonstrated that certain real estate exchanges would have taken place and the anticipated profits from those exchanges were reasonably certain. The evidence required to withstand a motion for JMOL depends "on the individual circumstances of each case and, although absolute certainty is not required, the jury must be guided by some rational standard." Short v. Riley, 150 Ariz. 583, 586, 724 P.2d 1252, 1255 (App. 1986).
¶41 Recovery of lost profits is allowed if "evidence is available to furnish a reasonably certain factual basis for computation of probable losses." See Earle M. Jorgensen Co. v. Tesmer Mfg. Co., 10 Ariz. App. 445, 450, 459 P.2d 533, 538 (1969) (citation omitted). "[R]easonable certainty may be provided when the plaintiff devises some reasonable method of computing his net loss." Rancho Pescado, Inc. v. Nw. Mut. Life Ins. Co., 140 Ariz. 174, 184, 680 P.2d 1235, 1245 (App. 1984). "Proof of the fact of damages must be of a higher order than proof of the amount of damages." Coury Bros. Ranches v. Ellsworth, 103 Ariz. 515, 521, 446 P.2d 458, 464 (1968) (citations omitted). Thus, claims for lost profits are rejected when they are not supported by sufficient evidence. See Rancho Pescado, 140 Ariz. at 186, 680 P.2d at 1247.
¶42 Appellants cite Standard Chartered PLC v. Price Waterhouse for the proposition that tendering expert testimony on damages may be sufficient to prevent a JMOL. 190 Ariz. 6, 37-38, 945 P.2d 317, 348-49 (App. 1996). Although properly supported expert testimony may be enough to withstand a JMOL, Appellants have cited no case stating that the mere fact of an expert testifying, without regard to substance or foundation for such testimony, precludes a successful motion for JMOL. Moreover, although Appellants argue "once the fact of damages is established[,] the amount is left to the jury," the record reveals that Appellants' evidence does not meet the "reasonably certain factual basis" necessary to show the fact of lost profits. See Earle M. Jorgensen Co., 10 Ariz. App. at 450, 459 P.2d at 538; see also Felder v. Physiotherapy Assocs., 215 Ariz. 154, 164 ¶ 46, 158 P.3d 877, 887 (App. 2007) (noting "the line between the fact of damage and the amount of damage may be blurred when lost profits are at issue").
To the extent the superior court's statements can be read as indicating there was no reasonably certain factual basis for the amount of damages (as opposed to the fact of damages), this court may "affirm the trial court's ruling if it is correct for any reason apparent in the record." Forszt v. Rodriguez, 212 Ariz. 263, 265 ¶ 9, 130 P.3d 538, 540 (App. 2006) (citation omitted). The record shows Appellants' evidence does not meet the reasonably certain factual basis necessary to show the fact of lost profits.
¶43 Appellants' theory on lost profits was based on exchanging interests in the property that secured the BMO loans for the 24th Street Property, building houses on those properties and then selling those properties; using those proceeds to build, develop and sell condominiums on the 24th Street Property and then using those proceeds to develop and sell the Tonopah Project. At trial, Appellants offered testimony from two damages experts: J. Michael Powers, who testified as to purported lost profits on the 24th Street Property, and Steven Thomas, who testified as to purported lost profits on the Tonopah Project.
Powers passed away before trial, so excerpts from his deposition were read to the jury.
¶44 Powers' damage analysis assumed houses would be built on the property that secured the BMO loans, and those houses would be sold, with the proceeds used to develop the 24th Street Property. He valued the to-be-built houses according to the market in 2005, although he admitted that house prices declined in subsequent years and he did not know how Appellants would have secured funding to build the houses. Moreover, Powers did not look at plans, renderings or "spec sheets" for the houses and instead relied entirely upon Grabois for his understanding that "[f]our houses between 4800 and 5000 square feet" were to be built on the lots, without regard to quality and value.
¶45 Appellants also introduced into evidence Exhibits 342 and 750. Exhibit 750 is Powers' reports with attachments, including spreadsheets and proposal information on another property. Exhibit 342 consists of three pages of spreadsheets that are substantially similar to spreadsheets included in Exhibit 750, with the added handwritten notes "DAMAGES FOR TONOPAH (REVISED)" and "25" on the first page. Exhibit 750 contains documents marked "Comparative Market Analysis," but Powers testified that he had "never seen those before" and had not done anything to analyze the applicability of that information to the 24th Street Property. Powers also testified that he did not know how Grabois calculated the "cost to build" values on the spreadsheet attached to his report nor could he explain how he got the "build out value" per square foot set forth in his spreadsheets. Notably, Powers acknowledged that the "cost to build" amount in the spreadsheet attached to his report came out to "56 bucks a square foot" and Powers acknowledged that "[y]ou can't build a dog house in North Scottsdale [where the relevant lots are located] for 56 bucks a square foot." Accordingly, Powers did not provide an adequate basis for the numbers contained in Exhibits 342 and 750 and thus gave no "reasonable method of computing [Appellants'] net loss." Rancho Pescado, 140 Ariz. at 184, 680 P.2d at 1245.
¶46 Thomas' trial testimony largely focused on the Tonopah Project, which was the last step in the multi-step transaction upon which Appellants' damage claim was based. Thomas testified that he arrived at an estimated value of $65 per square foot for the 65-acre project in 2007 by looking at comparable prices for malls in Phoenix. Thomas, however, did not name the malls, nor did he provide any supporting documentation for his estimates. Thomas also testified that Appellants never closed on or obtained a deed to the Tonopah Project property, that the Tonopah Project was never zoned and that the concept of developing the Tonopah Project as an outlet mall was the third different design for the property in about five years. Thomas testified that the infrastructure cost in 2007 for the Tonopah Project would have required an investment of a minimum of more than $8,000,000 and that, after 2008, "the market went absolutely zero there was no financing available."
¶47 Unlike the expert in Standard Chartered PLC who read "tens of thousands of pages of documents" in the process of forming his opinion, Appellants' experts appeared to rely almost entirely on what Grabois said were lost profits. See 190 Ariz. at 37, 945 P.2d at 348. The expert in Standard Chartered PLC "described at length the reasons for his opinion" while the experts in this case largely relied upon Grabois' statements as to costs and values that, from the record, were not properly supported. See id. On this record, the superior court could reasonably determine that Appellants' expert testimony, and the two supporting exhibits, amounted to speculation. Although Exhibits 342 and 750 include numbers on a spreadsheet, these documents are akin to the letter in Rancho Pescado from a fish distributor expressing a willingness to buy catfish, without evidence that it would be able to market the numbers contemplated. See 140 Ariz. at 185, 680 P.2d at 1246.
¶48 Although Appellants cite Rhue v. Dawson to support their claim for lost damages, that case undermines their argument. See 173 Ariz. 220, 841 P.2d 215 (App. 1992). Here, unlike in Rhue, there was no testimony from an appraiser as to the validity of an appraisal, no valuation methods presented, no comparable sales numbers offered and, in fact, no appraisals of any kind presented to the jury. See id. at 229, 841 P.2d at 224 (finding appraisal, comparable sales numbers, testimony and valuation methods sufficient to support award for lost profits). "Damages that are speculative, remote or uncertain may not form the basis of a judgment. The speculations, guesses or estimates of witnesses form no better basis of recovery than the speculations of the jury themselves." Coury Bros. Ranches, 103 Ariz. at 521, 446 P.2d at 464 (citation omitted). The speculation of Appellants' experts was not enough to provide the jury with a reasonably certain basis on which to calculate the fact of lost profits.
¶49 Along with these substantial gaps in the testimony provided by Powers and Thomas, the record reveals other deficiencies in Appellants' lost profits claim. Appellants did not properly show that they could finance the development of the lots -- the first required step in the multi-step transactions upon which their claimed damages were based. For example, the architect hired for the Peoria Property testified that he did not continue on the project due to a lack of incoming funding. Similarly, Powers testified he did not know where the money would come from to develop the lots and that loans were increasingly difficult to obtain starting in 2006.
¶50 Although Appellants needed to show that they could have sold these lots, they offered no evidence about sales, by anyone, of similar properties in 2007 or 2008. Nor did they offer any competent appraisals of the properties, or evidence supporting comparable sales for similar properties during the relevant time period. Powers testified the decline in residential house prices in Scottsdale began in 2006 and that it would have taken six to nine months to develop the lots. Powers added that there was no way of knowing how long it would have taken to sell the lots once they were developed, which was necessary before Appellants could have used the proceeds to develop the 24th Street Property. Thomas similarly testified that the real property crash occurred in 2007, making it very difficult in 2007 and 2008 to obtain financing for real estate projects. Appellants' unsupported belief that these lots could have been developed and then sold during the middle of the Great Recession, in the absence of any evidence that similar lots were being sold during this time, is not enough to support a cognizable lost profits claim. The same deficiency exists in the evidence Appellants offered concerning the 24th Street Project. Indeed, real estate development during the Great Recession is akin to the "extremely risky business" of catfish farming in Rancho Pescado. See 140 Ariz. at 185, 680 P.2d at 1246. Given that this first required step in Appellants' damage claim was not adequately supported, the jury had no means to "be guided by some rational standard" in assessing the fact of Appellants' damage claim. See Short, 150 Ariz. at 586, 724 P.2d at 1255.
¶51 Appellants bore the burden of proving their lost profits claim with a reasonably certain factual basis for computation. See Rancho Pescado, 140 Ariz. at 184, 680 P.2d at 1245. Given the type of damages sought, the evidence produced at trial did not meet this standard. As in Rancho Pescado, "[t]he picture which emerges is one of an intelligent and enterprising individual who had an ambitious idea." Id. at 186, 680 P.2d at 1247. However, "the evidence is insufficient to prove [Appellants] would have succeeded in [the] highly risky industry" of developing and selling real estate during the Great Recession. Id. On this record, Appellants have not shown that the superior court erred in "view[ing] the evidence as a whole as amounting to nothing more than conjecture and speculation." Id. Accordingly, the court properly found that the evidence presented could not withstand Appellees' motion for JMOL. See id.
B. The Previous Denial Of Appellees' Motion For Summary Judgment Did Not Preclude Granting A Motion For JMOL.
¶52 Appellants argue that granting the motion for JMOL was improper because the court previously denied a motion for summary judgment on the same issue. The denial of a motion for summary judgment, however, does not preclude granting a motion for JMOL. See Ornelas v. Fry, 151 Ariz. 324, 329, 727 P.2d 819, 824 (App. 1986) ("In our opinion, a prior ruling denying a motion for summary judgment can never become 'the law of the case' with respect to a subsequent motion for a [JMOL]."); see also Orme Sch., 166 Ariz. at 309 n.11, 802 P.2d at 1008 n.11 (noting "traditional rule that although courts have no discretion to grant summary judgment if the standard is not met, they can deny summary judgment even where there is apparently no genuine dispute over any material fact") (citation omitted). Thus, the fact that the superior court denied an earlier motion for summary judgment did not preclude the court from granting a motion for JMOL on the same issue if the evidence presented at trial was insufficient as a matter of law to prove a claim.
C. The Trial Evidence Did Not Support With Reasonable Certainty A Basis For Lost Equity.
¶53 Appellants argue they properly asserted and supported a lost equity claim that should have been decided by the jury. Appellants were required to allege and prove, "with reasonable certainty," a basis for lost equity and "provide some basis for estimating" their loss. Gilmore v. Cohen, 95 Ariz. 34, 36, 386 P.2d 81, 82 (1963) (citations omitted). In opposing the motion for JMOL, Appellants' counsel stated "[t]he damages are what the properties are worth, the equity in the properties," but such a claim was not properly supported at trial.
¶54 Appellants' focus at trial was on lost profits, not lost equity. The damages experts did not mention or discuss lost equity and, as discussed above, they provided no foundation for such evidence. Moreover the factual evidence necessary for a lost equity claim was never provided at trial.
¶55 Although Grabois testified that he "had equity in these properties," he never quantified or explained that statement. Appellants contend that Powers' report shows equity in Grabois' exchange properties. However, Powers conceded, "I did not look at the value of the lots. I looked at the value of the house that was to be built on the lots, including the lot." The superior court also concluded that there was no reasonable basis for the calculations in Powers' report and that Grabois could not provide that basis. Even if there had been a sufficient foundation for the values in the report, the fact that Powers' report discusses an opinion of the value of the lots if the houses had been built in 2005 does not support a claim of lost equity for the lots themselves in 2007, especially given Powers' testimony that the values would have been significantly lower in 2007.
¶56 Appellants also argue that loan-to-value ratios support a lost equity claim. However, there was no trial evidence of the market values of the properties at the relevant time. Nor was there sufficient evidence of the true equity in the properties, meaning the fair value of the properties was offset by encumbrances. As the superior court noted, "I don't think I have good evidence as to what equity was in any of these properties . . . . I haven't heard the case that would support, you know, the lost equity type claim in the property."
¶57 On this record, Appellants provided insufficient evidence to provide a reasonably certain basis for calculating lost equity. See id.; see also Short, 150 Ariz. at 586, 724 P.2d at 1255 (noting jury must be "guided by some rational standard" based on individual circumstances of each case). Accordingly, the superior court did not err in granting Appellees' motion for JMOL on lost equity.
D. The Superior Court Did Not Err In Precluding Grabois From Testifying As An Expert.
¶58 Appellants argue the superior court erred in precluding Grabois' testimony about alleged lost profits. As discussed above, the superior court did not abuse its discretion in its disclosure rulings. See Ezell, 224 Ariz. at 536 ¶ 15, 233 P.3d at 649. However, even if Grabois had been permitted to testify in support of Appellants' lost profits claim, there is no indication from his depositions or his declaration on damages that his testimony could have salvaged Appellants' lost profits claim.
¶59 Appellants argued that Appellees were on notice, from Grabois' declaration on damages and from his deposition testimony, that he would testify at trial in support of damages. But nothing in the declaration or his deposition testimony provides the reasonably certain factual basis necessary to calculate lost profit damages. See Rancho Pescado, 140 Ariz. at 184, 680 P.2d at 1245. In the declaration and during his depositions, Grabois stated various numbers and ranges, but never offered any foundation to support those numbers.
¶60 More fundamentally, the superior court's disclosure rulings did not prevent Grabois from testifying about how Appellants might have completed the first step in the complex multi-step transaction on which their damage theory was based -- the development of the lots and the sale of the houses. Even taking into account Grabois' testimony, Appellants failed to show at trial that they could complete that first step, given the market at the relevant time. Nor did Grabois offer any testimony, beyond speculation, that Appellants could have developed and sold the 24th Street Project and the subsequent Tonopah Project under market conditions that prevailed after 2007. As discussed above, the gap in this chain of events fails to support the fact of lost profits. See id. at 186, 680 P.2d at 1247.
¶61 Accordingly, the superior court properly granted Appellees' motion for JMOL based on the record before it. See Ariz. R. Civ. P. 50(a)(1); Orme Sch., 166 Ariz. at 309, 802 P.2d at 1008.
VI. Appellants' A.R.S. § 33-420 Claims.
A. Appellants' A.R.S. § 33-420 Claims Are Barred If Governed By A One-Year Limitations Period.
¶62 In their June 5, 2009 original complaint and their August 27, 2009 first amended complaint, Appellants claimed BMO and GCTA improperly recorded certain false documents regarding real property in violation of A.R.S. § 33-420(A) and sought declaratory and other relief. In 2011, noting that Grabois "concedes that he knew in March 2007 of the falsely recorded documents," the superior court granted Appellees' motion for summary judgment, finding the claims were time-barred by a one-year limitations period. See A.R.S. § 12-541(5).
¶63 On September 5, 2013, after entry of judgment but before briefing on appeal, this court held that A.R.S. § 33-420 claims are subject to a four-year limitations period. Sitton v. Deutsche Bank Nat'l Trust Co., 233 Ariz. 215, 219 ¶ 19, 311 P.3d 237, 241 (App. 2013) (citing A.R.S. § 12-550). Appellants filed their initial opening brief on December 24, 2013 -- more than three months later -- but did not cite Sitton and did not dispute the application of the one-year limitations period. After that initial opening brief was struck for failing to comply with this court's rules, Appellants filed an amended opening brief on April 16, 2014 -- more than six months after Sitton was decided -- but again did not cite Sitton and did not dispute the application of the one-year limitations period.
¶64 Appellants did not argue that a four-year limitations period applied until their reply on appeal, filed nearly a year after Sitton was decided and too late to preserve the issue on appeal. See Dawson v. Withycombe, 216 Ariz. 84, 111-12 ¶ 91, 163 P.3d 1034, 1061-62 (App. 2007) ("We will not consider arguments made for the first time in a reply brief.") (citation omitted); Ness v. W. Sec. Life Ins. Co., 174 Ariz. 497, 502, 851 P.2d 122, 127 (App. 1992). Although Appellants attempt to justify this omission by noting that Sitton was published after the filing of their notice of appeal, that does not excuse their failure to cite Sitton until their reply brief on appeal. See Miller v. Boeger, 1 Ariz. App. 554, 559-60, 405 P.2d 573, 578-79 (1965) ("There is no assignment of error nor proposition of law in the opening brief which asserts this premise to establish error. It was not raised before the trial court in any way. This court holds that it is too late to raise it on appeal for the first time in a reply brief.") (citation omitted). Accordingly, Appellants have waived any argument that Sitton should apply here. See id. at 559, 405 P.2d at 578 (declining to apply what "appears to be good law" where "it has not been raised properly").
¶65 The statute of limitations begins to run when Appellants knew or should have known of the alleged injurious act and its cause. See Lawhon v. L.B.J. Inst. Supply, Inc., 159 Ariz. 179, 181, 183, 765 P.2d 1003, 1005, 1007 (App. 1988). Here, Appellants' verified complaint conceded that "on August 20, 2007, [they] learned about the new loans and title transfers." Appellants did not file suit until June 2009, more than one year after the A.R.S. § 33-420 claims accrued. And Appellants have not factually supported their claim that equitable tolling delayed the accrual of their claims. See Porter v. Spader, 225 Ariz. 424, 428 ¶ 11, 239 P.3d 743, 747 (App. 2010). Accordingly, using a one-year limitations period, Appellants' A.R.S. § 33-420 claims are time-barred.
B. Appellants' A.R.S. § 33-420 Claims Fail On The Merits.
¶66 Even if Appellants' A.R.S. § 33-420 claims were timely, this court may "affirm the trial court's ruling if it is correct for any reason apparent in the record" and it will not remand for consideration of a futile claim. Forszt v. Rodriguez, 212 Ariz. 263, 265 ¶ 9, 130 P.3d 538, 540 (App. 2006) (citation omitted). Appellants' A.R.S. § 33-420 claims fail on the merits.
1. Appellants' A.R.S. § 33-420 Claims Fail As To BMO.
¶67 Liability under A.R.S. § 33-420 arises when a groundless document purporting to claim an interest in real property is filed in the county recorder's office. See A.R.S. § 33-420; Richey v. W. Pac. Dev. Corp., 140 Ariz. 597, 600, 684 P.2d 169, 172 (App. 1984). Appellants claim BMO is liable under A.R.S. § 33-420(A) for recording documents relating to the 2005 loan secured by the Peoria Property, the 2006 loan secured by Lot 54, the recording of the joint tenancy deeds transferring Lots 55/56 and the Fountain Hills Lot from Fifty-One, Inc. to Jimenez and Yacoub personally and the deeds of trust recorded following that transfer. However, the summary judgment rulings regarding the Peoria Property and the Lot 54 loans, discussed above, undermine these statutory claims. Appellants cannot simultaneously have ratified the transactions and also assert that it was wrong to record the transaction documents. Thus, on the merits, Appellants' A.R.S. § 33-420 claims fail with respect to the Peoria Property and 2006 loan secured by Lot 54.
¶68 Appellants lack standing to assert an A.R.S. § 33-420 claim for the 2007 deeds of trust recorded on Lots 55/56 and the Fountain Hills Lot. See A.R.S. § 33-420(A) (authorizing only an "owner or beneficial title holder" to sue); see also Hatch Cos. Contracting, Inc. v. Ariz. Bank, 170 Ariz. 553, 555-56, 826 P.2d 1179, 1181-82 (App. 1991). At the time of the relevant recordings, Jimenez and Yacoub -- not Appellants -- were the owners of these properties. See Richey, 140 Ariz. at 601, 684 P.2d at 173 (noting person must be owner when document is recorded to press A.R.S. § 33-420 claim). The JMOL ruling against Appellants on their quiet title claim, which sought to recover those properties, is not challenged on appeal, meaning Appellants lack standing to assert these claims. See In re Estate of Olson, 223 Ariz. 441, 446 ¶ 23, 224 P.3d 938, 943 (App. 2010) (rejecting award under A.R.S. § 33-420 where another party may have acted wrongfully but "there ha[d] been no determination of fraudulent activity by any of the parties"). Moreover, it was Jimenez and Yacoub (not BMO) who recorded the joint tenancy deeds that transferred Lots 55/56 and Fountain Hills to Jimenez and Yacoub in 2007. Accordingly, Appellants' A.R.S. § 33-420 claims fail as to BMO.
2. Appellants' A.R.S. § 33-420 Claims Fail As To GCTA.
¶69 Appellants' claim against GCTA was based on A.R.S. § 33-420(C), which provides for liability if a party "wilfully refuses to release or correct such document of record within twenty days from the date of a written request from the owner or beneficial title holder of the real property." In seeking summary judgment, GCTA presented evidence that Appellants never sent a written request to GCTA, as required by A.R.S. § 33-420(C). Although Appellants apparently denied this fact, they presented no conflicting evidence. Instead, Appellants relied on a letter written by GCTA's counsel, which could not satisfy Appellants' statutory obligation to make a demand. See A.R.S. § 33-420(C) (requiring "a written request from the owner") (emphasis added). "When a motion for summary judgment is made . . . , an opposing party may not rely merely on allegations or denials of its own pleading; rather, its response must, by affidavits [or other admissible evidence], set forth specific facts showing a genuine issue for trial." Ariz. R. Civ. P. 56(e)(4). Because Appellants failed to make such a showing, their A.R.S. § 33-420 claims fail as to GCTA.
VII. The Superior Court Did Not Err In Finding Grabois Liable For A Deficiency Judgment On Lot 54.
¶70 After the superior court entered summary judgment in 2011 concerning the Lot 54 deficiency, this court issued M&I Marshall & Ilsley Bank v. Mueller, which distinguished Mid Kan. Fed. Sav. & Loan Ass'n of Wichita v. Dynamic Dev. Corp., 167 Ariz. 122, 804 P.2d 1310 (1991), and found a deficiency judgment was not proper under A.R.S. § 33-814(G) when property owners "never actually occupied" a dwelling but "intended to personally occupy it upon its completion." 228 Ariz. 478, 479 ¶¶ 1, 4, 268 P.3d 1135, 1136 (App. 2011), overruled by BMO Harris Bank, N.A. v. Wildwood Creek Ranch, LLC, 236 Ariz. 363, 366-67 ¶¶ 19-22, 340 P.3d 1071, 1074-75 (2015).
¶71 After the September 19, 2012 judgment held Grabois liable for the deficiency on Lot 54, Appellants moved for a new trial, claiming in part Grabois intended to occupy the house on Lot 54 when construction was completed. The superior court denied the motion for a new trial. Grabois challenges the order holding him liable for the deficiency on Lot 54 based on Mueller.
¶72 In January 2015, the Arizona Supreme Court held that to be eligible for protection from a deficiency, A.R.S. § 33-814(G) "requires that a residential structure have been completed. Vacant property is not being utilized for a dwelling even if the borrower intends someday to construct and occupy a home there." Wildwood, 236 Ariz. at 366 ¶ 17, 340 P.3d at 1074. The parties, in supplemental filings, have addressed the applicability of Wildwood. Although Appellants object to Appellees' characterization of Wildwood, this court is bound by that decision. Accordingly, the validity of the judgment holding Grabois liable for the deficiency on Lot 54 turns on whether a residential structure on that property had been completed. See id.
¶73 Appellants initially conceded that the residential structure on Lot 54 was "incomplete." After Wildwood, however, and without record citation, Appellants allege trial evidence was "that the dwelling on Lot 54 was 85% complete, only needed some trim and punch list type work, and they [Grabois and another individual] stayed overnight in separate closed bedrooms." Contrary to Appellants' assertion, the evidence in support of summary judgment and at trial showed that the residential structure on Lot 54 was not completed, due in part to a mistake that left the foundation straddling two lots. In Grabois' 2011 declaration on damages, Appellants conceded that "[t]he house on [Lot] 54 was a mess."
¶74 In granting summary judgment, the superior court stated "it is undisputed that the house was far from completion at the time of the trustee's sale." Furthermore, the court noted "Grabois's affidavit at least twice states that he resided at the relevant time" at his Scottsdale address and "not on Lot 54." Trial testimony confirmed this showing. One of Appellants' trial witnesses testified that construction of the house on Lot 54 had started, but went on to testify:
In its reply regarding summary judgment on the issue, BMO stated "the Lot 54 house was still under construction and only 55%-60% complete at the time the trustee's sale occurred" and "the house had never been lived in." Appellants did not controvert this showing with admissible evidence. --------
Q. That construction [on Lot 54] was never completed while you were involved in the project; correct?Although the same witness testified that he intended to live at the house being built on Lot 54, he never said that he had done so. Powers' deposition testimony also reflects an understanding that the house on Lot 54 was never completed.
A. That's correct.
¶75 On this record, the superior court's ruling was consistent with Wildwood, even though that decision was not issued until years later. See 236 Ariz. at 366 ¶ 17, 340 P.3d at 1074. Accordingly, the superior court did not err in granting summary judgment on the deficiency issue or in denying the motion for a new trial on the point.
VIII. The Superior Court Properly Awarded BMO Attorneys' Fees.
¶76 Appellants argue the attorneys' fees awarded to BMO were contrary to A.R.S. § 12-341.01 because this case "centered on claims in tort and equity," not contract. The application of A.R.S. § 12-341.01(A) is an issue of statutory interpretation, which this court reviews de novo. Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, 13 ¶ 12, 6 P.3d 315, 318 (App. 2000). This court reviews the amount of an attorneys' fees award for an abuse of discretion. Id.
¶77 The superior court awarded BMO, but not GCTA, attorneys' fees. The record shows the court granted BMO's request for an award of attorneys' fees based on the terms of the parties' contracts and A.R.S. § 12-341.01. On appeal, Appellants do not challenge the award of fees based on the parties' contracts and instead limit their challenge to the award of fees under A.R.S. § 12-341.01.
¶78 When a contract requires recovery of fees, a fee award is mandatory. Chase Bank of Ariz. v. Acosta, 179 Ariz. 563, 575, 880 P.2d 1109, 1121 (App. 1994); see also Pioneer Roofing Co. v. Mardian Constr. Co., 152 Ariz. 455, 471, 733 P.2d 652, 668 (App. 1986) ("Where a contract has a unilateral provision permitting one party to recover attorneys' fees under certain circumstances, [A.R.S.] § 12-341.01(A) requires that the contract provision be applied when the party seeking recovery of fees is the one allowed recovery under the unilateral contract provision."). Because Appellants do not challenge the award of attorneys' fees based on the parties' contracts, any such challenge is waived. See ARCAP 13(a), (c); Novak, 167 Ariz. at 370, 807 P.2d at 538 (declining to consider contentions that were not stated in opening brief or supported by reasoning or citations). Accordingly, the superior court's award of fees based on the parties' contracts is affirmed, meaning this court need not address Appellants' challenge to the award of fees to the extent it was based on A.R.S. § 12-341.01.
IX. Attorneys' Fees On Appeal.
¶79 Because Appellants are not the prevailing parties, their request for attorneys' fees on appeal is denied. BMO requests attorneys' fees on appeal pursuant to the parties' contracts and A.R.S. § 12-341.01. Because the parties' contracts direct an award of attorneys' fees, and because BMO is a successful party on appeal, BMO is awarded its reasonable attorneys' fees contingent upon compliance with ARCAP 21. See Chase Bank, 179 Ariz. at 575, 880 P.2d at 1121. To the extent that Appellees' request includes attorneys' fees for GCTA, that request is denied; this court has been provided no citation to any contract that authorizes an award of attorneys' fees to GCTA nor has GCTA addressed specifically how it is entitled to attorneys' fees under A.R.S. § 12-341.01. Finally, Appellees BMO and GCTA are awarded taxable costs contingent upon compliance with ARCAP 21.
CONCLUSION
¶80 To the extent Appellants purport to challenge the ratification of the 2005 Peoria Property Loan, that portion of the appeal is dismissed for lack of jurisdiction. Because Appellants have not shown that the superior court erred in granting summary judgment in favor of Appellees, or in granting Appellees' motion for judgment as a matter of law, the September 19, 2012 final judgment is affirmed. JOHNSEN, Chief Judge, specially concurring:
¶81 Given Grabois' pretrial declaration and deposition testimony, I do not join the majority in affirming the superior court's decision to preclude Grabois from testifying as an expert in support of his lost-profits damage theory. In my view, however, we do not need to reach that issue because Grabois has provided us with no reason to conclude that his testimony could have remedied the utter speculative nature of his lost-profits claim. See ¶¶ 43-51, 60 supra.
¶82 Further, given that it is now settled that a four-year limitations period applies to Appellants' claims under A.R.S. § 33-420, I likewise do not join the majority's conclusion that Appellants waived the argument that their claims were timely because they were filed within four years. I would not reach the waiver issue, however, because Appellants' statutory claims fail on the merits. See ¶¶ 66-69 supra.
¶83 I join the majority's decision in all other respects.