Opinion
1 CA-CV 21-0250
04-05-2022
SEGURIDAD OPORTUNIDAD Y LIDERAZGO LLC, Plaintiff/Appellant/Cross-Appellee, v. WHEELHOUSE PROPERTIES INC., Defendant/Appellee/Cross-Appellant.
Martinet Law, Phoenix By Philippe Martinet Counsel for Plaintiff/Appellant/Cross-Appellee The Kozub Law Group PLC, Scottsdale By Richard W. Hundley Counsel for Defendant/Appellee/Cross-Appellant
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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. CV2017-014342 The Honorable M. Scott McCoy, Judge
Martinet Law, Phoenix By Philippe Martinet Counsel for Plaintiff/Appellant/Cross-Appellee
The Kozub Law Group PLC, Scottsdale By Richard W. Hundley Counsel for Defendant/Appellee/Cross-Appellant
Judge Angela K. Paton delivered the decision of the Court, in which Presiding Judge Paul J. McMurdie and Vice Chief Judge David B. Gass joined. 1
MEMORANDUM DECISION
PATON, JUDGE
¶1 Seguridad Oportunidad Y Liderazgo, LLC ("Seguridad" or "Buyer") appeals the final judgment of the superior court, which ruled in Seguridad's favor but awarded no attorneys' fees or costs. Wheelhouse Properties Inc. ("Wheelhouse" or "Seller") cross-appeals, asking this court to find that Wheelhouse was, in fact, the successful party below and to remand for an award of reasonable attorneys' fees and costs. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 We view the facts in the light most favorable to upholding the superior court's judgment. Berry v. 352 E. Va., L.L.C., 228 Ariz. 9, 13, ¶ 21 (App. 2011) (citation omitted).
¶3 Both parties are in the business of "flipping" houses for resale. Seller purchased a Phoenix, Arizona home in September 2017, intending to refurbish and resell it. Seller closed escrow in October 2017. Seller's principal assumed the home's solar system lease ("the lease") from the previous owner. Approximately $35,000 remained outstanding on the lease.
¶4 Within a month of closing, Seller began to discuss potentially selling the home to Buyer. Buyer was aware of the solar panels but not the lease.
¶5 On October 20, 2017, Seller and Buyer entered a contract with a sale price of $154,950.00 and escrow to close on October 27. On the day escrow was set to close, Seller informed Buyer of the lease for the first time, apparently believing it should have been disclosed on the title report prepared during escrow. Seller was only willing to proceed with the sale if Buyer assumed the lease. Negotiations between the parties ensued, with Buyer requesting a $2,000 concession. Negotiations broke down, and Buyer 2 filed a complaint alleging breach of contract and requesting specific performance without assuming the lease.
¶6 Three years of litigation followed. At various points, Seller represented that it remained willing to perform under the contract if Buyer would assume the lease. Buyer maintained that it was entitled to and would only accept specific performance if Seller or its principal remained responsible for satisfying the lease.
¶7 Buyer initially prevailed on a motion for summary judgment. In the order granting the motion, the superior court invited a motion for reconsideration from Seller if the record indicated specific performance would lead to a particularly harsh, inequitable, or unjust result. See Justus v. Clelland, 133 Ariz. 381, 383 (App. 1982). Seller filed such a motion for reconsideration and argued that since the amount remaining due on the lease was nearly $35,000, it would be harsh, inequitable, and unjust to require it to maintain responsibility for the lease while ordering specific performance. In the interim, Buyer filed a motion for attorneys' fees and costs, as well as the required verified statement of costs and fees affidavit. See Ariz. R. Civ. P. 54. The court granted Seller's motion for reconsideration and denied Buyer's motion as premature.
¶8 The superior court held a two-day bench trial in November 2020. During opening statements, Buyer's counsel declared-for the first time-that Buyer would be willing to assume the lease if specific performance was ordered. Buyer's principal confirmed this new posture when he testified. By the time trial commenced, however, Seller was no longer inclined to offer specific performance with the assumption of the lease to Buyer because the property's value had significantly appreciated, and it would likely garner more money in a present-day sale.
¶9 The superior court found that a valid contract existed and ordered specific performance if Buyer assumed the lease, noting that with the assumption of the lease there was no particularly harsh consequence or inequity towards Seller. The court entered judgment in favor of Buyer and set a deadline for Buyer to file an application for costs and attorneys' fees.
¶10 Both parties filed applications for attorneys' fees and costs. Seller argued it was the successful party because the final judgment reflected its position at the outset of the matter. Buyer filed an application containing three separate attorney fee affidavits and a supplement. Buyer did not, however, provide a separate verified statement of costs -even 3 though its prior counsel had filed one after its summary judgment motion was granted, which the court denied as premature.
¶11 The superior court denied Seller's application, finding that Seller was not successful. The court denied Buyer's fee request after examining the factors listed in Associated Indem. Corp. v. Warner, 143 Ariz. 567 (1985). The court noted that: (1) the matter should have settled nearly three years ago, (2) Seller's claims were meritorious, and (3) Buyer obtained its relief only after "belatedly" agreeing to assume the lease. The court also denied costs, noting it could not find a verified statement of costs "except perhaps to the extent buried in [Buyer's] fee application[, ]" and declined to engage in "further archeological expedition and excavation."
¶12 Buyer appealed the final judgment denying fees and costs to both sides. Seller cross-appealed. We have jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution, and A.R.S. §§ 12-120.21(A)(1) and -2101(A)(1).
DISCUSSION
I. The superior court did not abuse its discretion in finding that Wheelhouse was not a successful party.
¶13 Whether a party is successful in an action under A.R.S. §§ 12-341 and -341.01 falls within the superior court's "sole discretion." Berry, 228 Ariz. at 13, ¶ 21. This court will not disturb the superior court's determination "if any reasonable basis exists for it." Id. We defer to the superior court as it "is better able to evaluate the parties' positions during litigation and to determine which [party] has prevailed." Id. at ¶ 22.
¶14 A court may determine the prevailing party in a case involving "multiple claims and varied success" based upon either a "percentage of success" or a "totality of the litigation test." Id. (quoting Schwartz v. Farmers Ins. Co. of Ariz., 166 Ariz. 33, 38 (App. 1990)). A party need not assert an independent claim to be the successful party under the totality of the litigation test, and a superior court may consider a party's successful or partially successful defense against a claim. Schwartz, 166 Ariz. at 38 (affirming award based on the successful defense of a claim by defendant, despite money judgment being awarded solely to plaintiff).
¶15 The superior court noted Buyer achieved its goal of obtaining specific performance on the lease and implicitly determined that Buyer had prevailed under A.R.S. § 12-341 when it suggested Buyer should file a fee application. This outcome is tantamount to acknowledging Buyer's status 4 as the prevailing party. Murphy Farr ell Dev., LLLP v. Sour ant, 229 Ariz. 124, 134, ¶ 37 (App. 2012) ("Indeed, the trial court acknowledged [defendant's] status in part by awarding him taxable costs due the "successful party" pursuant to A.R.S. § 12-341.") (citation omitted). The court expressly found Seller was unsuccessful in its defense against the specific performance claim. Reasonable minds may differ regarding whether Buyer's "switch in time" on the first day of trial means that it genuinely prevailed but we do not substitute our discretion for that of the superior court. See Tucson Est. Prop. Owners Ass'n v. McGovern, 239 Ariz. 52, 56, ¶ 12 (App. 2016) (citation omitted).
¶16 Buyer successfully procured specific performance-albeit on Seller's initial terms -and could reasonably be the prevailing party. Likewise, Seller opposed specific performance by the time of trial, and the superior court could reasonably find it had unsuccessfully resisted Buyer's claim. The final posture is a sufficient basis for finding Seller to be the unsuccessful party. We find no error.
II. The superior court did not err in declining to award attorneys' fees to Seguridad.
¶17 We review the amount of a fee award for abuse of discretion. Sunland Dairy LLC v. Milky Way Dairy LLC, 251 Ariz. 64, 70, ¶ 28 (App. 2021) (citation omitted). The superior court has broad discretion in awarding attorneys' fees, "and we will not reverse its decision unless there is no reasonable basis for it." Democratic Party of Pima Cnty. v. Ford, 228 Ariz. 545, 548-49, ¶ 12 (App. 2012) (citing Associated Indem. Corp., 143 Ariz. at 570-71). The Arizona Supreme Court has adopted six factors that the superior court should consider when awarding attorneys' fees:
(1) The merits of the claim or defense presented by the unsuccessful party.
(2) Whether litigation could have been avoided or settled and the successful party's efforts were completely superfluous in achieving the result.
(3) Whether assessing fees against the unsuccessful party would cause an extreme hardship.
(4) Whether successful party did not prevail with respect to all of the relief sought.
[(5) T]he novelty of the legal question presented.5
. . .
[(6) W]hether the award in [this] case would discourage other parties with tenable claims or defenses from litigating or defending legitimate contract issues.
Associated Indem. Corp., 143 Ariz. at 570. Here, the superior court found Seller's defense to be meritorious, particularly concerning the question of whether specific performance would result in unjust hardship. The court noted that "the case should have settled long ago," and considered Buyer's persistent demand for specific performance without the lease "until the first day of trial." The court found a fee award was not an extreme hardship. It specifically noted that Buyer only prevailed on the question of specific performance after "belatedly agreeing to assume the solar lease" during the trial. The court found that no issues concerning the novelty of claims or discouragement of litigation were present. Based on its findings, the court declined to award fees, and the record supports its conclusion. Buyer's argument that Seller's fee request somehow "confus[ed]" the superior court is meritless. As such, we find no error.
III. Seguridad waived its argument that the superior court erred by finding it had submitted no verified statement of costs.
¶18 Although A.R.S. § 12-341 mandates an award of costs to the prevailing party, "[t]he award is conditioned . . . upon compliance with the requirements of the statute and [Arizona Rule of Civil Procedure 54]." Trimble Cattle Co. v. Henry & Horne, 122 Ariz. 44, 50 (App. 1979). Further, the requirement only arises if the court determines that a party, in fact, succeeded; a court need not award costs if the case results in a wash. See Watson Constr. Co. v. Amfac. Mortg. Corp., 124 Ariz. 570, 584-85 (App. 1979) (citations omitted). If a prevailing party seeks an award of costs, a verified request for taxable costs "must be filed on the same day the party files its motion for attorney's fees under Rule 54(g)." Ariz. R. Civ. P. 54(f)(1). Because the superior court recognized Buyer as the prevailing party, a cost award is mandatory if Buyer complied with the cost statute and rule. See Murphy Farrell Dev., 229 Ariz. at 134, ¶ 37.
¶19 The superior court, however, found that Buyer did not file a "Verified Statement of Costs." See Ariz. R. Civ. P. 54(f)(1). Although Buyer argues in its opening brief that the award of costs is mandatory, that is the extent of its cost discussion. Buyer neither argues in its opening brief that the court erred by finding it had not correctly submitted a verified statement of costs, nor does Buyer cite to a "verified statement of costs" in 6 the record in that brief. See Ritchie v. Krasner, 221 Ariz. 288, 305, ¶ 62 (App. 2009) ("Opening briefs must present and address significant arguments, supported by authority that set forth the appellant's position on the issue in question.") (citing Schabel v. Deer Valley Unified Sch. Dist. No. 97, 186 Ariz. 161, 167 (App. 1996)). Arizona Rule of Civil Appellate Procedure ("ARCAP") 13(a)(7)(A) requires that opening briefs contain "appropriate references to the portions of the record on which the appellant relies." Because Buyer did not cite any item in the record in its opening brief that satisfies Rule 54 and failed to argue that any filing was inappropriately rejected in its opening brief, we exercise our discretion and find the argument has been waived.
IV. Attorneys' fees, costs, and sanctions requests are denied.
¶20 Buyer asks us to award ARCAP 25 sanctions against Seller for filing a frivolous appeal. "Absent an allegation of improper motive" a filing is not frivolous under ARCAP 25 "if the issues raised are supportable by any reasonable legal theory, or if a colorable legal argument is presented about which reasonable attorneys could differ." In re Levine, 174 Ariz. 146, 153 (1993) (citing Ariz. Tax Res. Ass'n v. Dep't of Revenue, 163 Ariz. 255, 258-59 (1989)).
¶21 Although ultimately unsuccessful, Seller raised colorable issues in its cross-appeal. As such, ARCAP 25 sanctions are inappropriate here.
¶22 Both parties request fees and costs on appeal. Because no party prevailed as to its appeal or cross-appeal, we deny both requests. See Watson Constr. Co., 124 Ariz. at 584-85.
CONCLUSION
¶23 We affirm. 7