From Casetext: Smarter Legal Research

Merrill v. Paradiso

ARIZONA COURT OF APPEALS DIVISION ONE
Jun 26, 2014
No. 1 CA-CV 13-0584 (Ariz. Ct. App. Jun. 26, 2014)

Opinion

No. 1 CA-CV 13-0584

06-26-2014

DAVID MERRILL, Plaintiff/Appellee, v. FRANCESCO A. PARADISO, Defendant/Appellant.

The Entrekin Law Firm, Phoenix By B. Lance Entrekin Counsel for Plaintiff/Appellee By Francesco Paradiso, Phoenix In Propria Persona Defendant/Appellant


NOTICE: NOT FOR PUBLICATION.

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION DOES NOT CREATE

LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.


Appeal from the Superior Court in Maricopa County

No. CV2010-012740

The Honorable John Christian Rea, Judge


AFFIRMED


COUNSEL

The Entrekin Law Firm, Phoenix
By B. Lance Entrekin
Counsel for Plaintiff/Appellee
By Francesco Paradiso, Phoenix
In Propria Persona Defendant/Appellant

MEMORANDUM DECISION

Presiding Judge John C. Gemmill delivered the decision of the Court, in which Judge Peter B. Swann and Judge Diane M. Johnsen joined. GEMMILL, Judge:

¶1 Francesco Paradiso challenges the judgment entered by the trial court in favor of David Merrill on Paradiso's counterclaim for fraud. The court ruled that Paradiso had not proven all nine elements of common law fraud. We affirm.

Facts and Procedural History

¶2 In April 2008, Minnetonka, Inc. agreed to sell its Phoenix-area business, the Hardtailz Bar & Grill (Hardtailz), to Paradiso. After the transaction, Minnetonka, Inc. assigned its rights and security interests to Merrill. By Spring 2010, Paradiso defaulted on his monthly payments and Merrill had requested full payment of the remaining balance. When Paradiso refused to pay, Merrill sued Paradiso for damages, breach of contract, and foreclosure on the property and liquor license. Paradiso counterclaimed for common law fraudulent misrepresentation. Merrill moved for partial summary judgment, seeking to establish that Paradiso had defaulted and that Merrill's liens were senior to other liens. The trial court granted Merrill's motion for partial summary judgment and the property was subsequently foreclosed.

¶3 A bench trial was conducted in September 2012 on Paradiso's counterclaim for common law fraud. Paradiso claimed that Merrill misrepresented the income and revenue generated by Hardtailz and the relationship of the business with its customers and neighboring businesses, thereby inducing Paradiso to pay more for Hardtailz than it was worth. At the close of trial, the court concluded that Paradiso had failed to prove two of the nine elements of fraud and entered judgment in Merrill's favor.

In the September 20, 2012 trial minute entry, the court incorrectly cited the burden of proof as preponderance of the evidence instead of clear and convincing evidence. See Comerica Bank v. Mahmoodi, 224 Ariz. 289, 291-92, ¶ 14, 229 P.3d 1031, 1033-34 (App. 2010) (the burden of proof for fraud is clear and convincing evidence). This is of no consequence, however, because if Paradiso was unable to prove all elements of fraud by a preponderance of the evidence, the evidence would necessarily be insufficient to meet the higher standard of clear and convincing evidence.

¶4 Paradiso filed a premature notice of appeal that this court dismissed. He was afforded relief under Arizona Rule of Civil Procedure 60(c), which permits the trial court in appropriate cases to vacate and reenter a judgment. After judgment in favor of Merrill was reentered, Paradiso timely appealed and we have jurisdiction.

Analysis

¶5 On appeal, Paradiso challenges the trial court's ruling that he failed to prove two of the nine elements of fraud. Specifically, Paradiso contests the trial court's conclusion that insufficient evidence existed to prove that the alleged misrepresentations made by Merrill were false or that Merrill had knowledge of their falsity.

¶6 We review the verdict from a bench trial in a light most favorable to sustaining it, and we will not set aside the court's findings of fact unless they are clearly erroneous. Castro v. Ballesteros-Suarez, 222 Ariz. 48, 51-52, ¶ 11, 213 P.3d 197, 200-01 (App. 2009) (citations omitted). "A finding of fact is not clearly erroneous if substantial evidence supports it, even if substantial conflicting evidence exists." Id.

¶7 A claim for fraud requires proof of nine elements by clear and convincing evidence:

(1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) the speaker's intent that it be acted upon by the recipient in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity; (7) the hearer's reliance on its truth; (8) the hearer's right to rely on it; (9) the hearer's consequent and proximate injury.
Mahmoodi, 224 Ariz. at 291-92, ¶ 14, 229 P.3d at 1033-34. Each element must be supported by sufficient evidence and cannot be shown by "doubtful, vague, speculative, or inconclusive evidence." Enyart v. Transamerica Ins. Co., 195 Ariz. 71, 77, ¶ 18, 985 P.2d 556, 562 (App. 1998) (citations omitted).

¶8 During trial, Paradiso contended that Merrill committed fraud by misrepresenting Hardtailz's gross revenues and net income, failing to disclose the strained relationship between Hardtailz and the neighboring businesses, and misrepresenting Hardtailz's relationship with certain bar patrons, specifically Hell's Angels motorcycle club members. The record on appeal, however, does not include official, complete trial transcripts of testimony provided by Paradiso and other witnesses. Where the record is incomplete, a reviewing court must assume any evidence not available on appeal supports the trial court's decision. Bliss v. Treece, 134 Ariz. 516, 519, 658 P.2d 169, 172 (1983). It is the appellant's obligation - here, Paradiso's - to provide a complete record. See Winters v. Arizona Bd. of Educ., 207 Ariz. 173, 177 n. 3, ¶ 13, 83 P.3d 1114, 1118 n.3 (App. 2004); ARCAP 11(b)(1).

¶9 This court has reviewed the unofficial, partial transcripts available in this record. Paradiso testified that Merrill told him Hardtailz was making around $2,000 to $3,000 a week in revenue "off the books," meaning in addition to the revenue he reported on its tax returns. According to Paradiso, Merrill told him this additional income warranted a higher sale price for Hardtailz. When asked at trial for evidence of the statements' falsity or evidence Merrill knew they were false, Paradiso responded by explaining he did not make the same profits from the business as Merrill when he owned the business. In response, Merrill testified that he was "honest with Frank about everything." And the trial court noted that Merrill testified that the disparity in income existed because of Paradiso's management style, which included less advertising, less live music, less security, and higher drink prices.

¶10 The trial court also considered testimony by Paradiso regarding the Hell's Angels motorcycle club members. Paradiso testified that Merrill assured him that the club members who frequented Hardtailz mostly "kept to themselves" and did not cause problems. Because Paradiso had to ban a club member for assaulting another patron after he took ownership of Hardtailz, he claims Merrill fraudulently misrepresented the relationship between Hardtailz and the members of the club. According to Paradiso, Merrill also told Paradiso that Hardtailz had a good relationship with the surrounding businesses. But soon after Paradiso took ownership, the relationships turned sour. Paradiso therefore claimed that Merrill had misrepresented the facts about those relationships. But, again, Paradiso was unable to point to any evidence that established Merrill knew the statements about Hardtailz's relationships with Hell's Angels members or the surrounding businesses were false.

Conclusion

¶11 Although the trial court found that Paradiso presented sufficient evidence to support his claim that Merrill actually made the allegedly fraudulent statements, the court concluded that Paradiso failed to establish that the statements were false and that Merrill knew of their falsity. Based on both the available record and the presumption of sufficiency of the evidence arising from the missing portions of the record, we conclude that the evidence at trial supports the trial court's findings and conclusions. We therefore affirm the trial court's judgment in favor of Merrill.


Summaries of

Merrill v. Paradiso

ARIZONA COURT OF APPEALS DIVISION ONE
Jun 26, 2014
No. 1 CA-CV 13-0584 (Ariz. Ct. App. Jun. 26, 2014)
Case details for

Merrill v. Paradiso

Case Details

Full title:DAVID MERRILL, Plaintiff/Appellee, v. FRANCESCO A. PARADISO…

Court:ARIZONA COURT OF APPEALS DIVISION ONE

Date published: Jun 26, 2014

Citations

No. 1 CA-CV 13-0584 (Ariz. Ct. App. Jun. 26, 2014)