Opinion
No. 1 CA-CV 13-0721
02-26-2015
STATE OF ARIZONA, ex rel. JOHN HALIKOWSKI, Director, Department of Transportation, Plaintiff/Appellee, v. DTD-Devco 7 LLC, an Arizona limited liability company, Defendant/Appellant.
COUNSEL Arizona Attorney General's Office, Phoenix By Adrienne M. Weinkamer and Jennifer M. Dorsey Counsel for Plaintiff/Appellee Bryan Cave LLP, Phoenix By Steven A. Hirsch and Rodney W. Ott Counsel for Defendant/Appellant
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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. CV2011-019019
The Honorable Dean M. Fink, Judge
AFFIRMED
COUNSEL Arizona Attorney General's Office, Phoenix
By Adrienne M. Weinkamer and Jennifer M. Dorsey
Counsel for Plaintiff/Appellee
Bryan Cave LLP, Phoenix
By Steven A. Hirsch and Rodney W. Ott
Counsel for Defendant/Appellant
MEMORANDUM DECISION
Judge Michael J. Brown delivered the decision of the Court, in which Acting Presiding Judge Patricia A. Orozco and Judge Kenton D. Jones joined. BROWN, Judge:
¶1 In this condemnation case, DTD-Devco 7 LLC ("Devco") challenges the trial court's denial of Devco's motion to extend a discovery deadline and the court's entry of summary judgment in favor of the State of Arizona. Because we conclude the court did not abuse its discretion in denying the motion to extend, and Devco failed to establish the existence of any material issue of fact as to the amount of compensation owed by the State, we affirm.
BACKGROUND
¶2 In December 2008, the State (through the Arizona Department of Transportation) adopted a resolution authorizing condemnation of a portion (272,106 square feet) of certain vacant land ("the property") owned by Devco to facilitate construction of highway improvements. In October 2011, the State filed its complaint for condemnation and application for immediate possession of the property. Soon thereafter, the parties stipulated to the State's immediate possession of the property, with the amount of compensation payable to Devco to be determined through the course of litigation.
¶3 In their joint pretrial statement, the parties agreed to a discovery schedule, which required that the identity and opinions of all of the State's expert witnesses be disclosed by October 4, 2012, that all non-expert witnesses be "mutually and simultaneously disclose[d]" by October 19, 2012, and that the identity and opinions of all of Devco's expert witnesses be disclosed by November 2, 2012. The superior court issued a May 15, 2012 scheduling order setting forth these deadlines, adding that the deadlines "are FIRM dates and will not be extended or modified by the Court absent good cause. Lack of preparation will not ordinarily be considered good cause." The order also stated that, absent an additional order by the court, the deadlines "shall not be altered, despite any agreement of the parties."
¶4 In October 2012, the State timely disclosed its expert witness, appraiser Mark Wirth, who valued the property at $1,020,000. Devco, however, did not make the disclosures required by the court's scheduling order. On November 30, 2012, the State filed a motion for summary judgment, asserting "that just compensation due [Devco] is $1,053,706.90 plus statutory interest." The State's figure was based on Wirth's appraisal and a disclosed cost to cure figure (the amount of money necessary to cure the damage to the remaining portion of the property not condemned) in the amount of $33,706.93. The State asserted that Devco failed to timely disclose any evidence to rebut the State's valuation evidence and therefore summary judgment was warranted.
¶5 By agreement and court order, Devco responded to the motion for summary judgment on February 26, 2013, asserting that granting summary judgment would be tantamount to a sanction and requested that the court enter a revised scheduling order "to accommodate changed circumstances." Devco explained the parties had participated in "fruitful settlement discussions" and, because of those negotiations, Devco had chosen not to "engage an appraiser, hoping that continued good faith communications between the parties would allow for a resolution of the question of just compensation[.]" In its separate statement of facts, Devco stated that "the owner's opinion of just compensation is $1,895,073.90," with a land value of $1,632,636, costs to cure reimbursement in the amount of $160,572.91, and reproduction costs in the amount of $101,865. However, the only document submitted with the statement of facts was Devco's initial Rule 26.1 disclosure statement, dated February 26, 2013, which listed Gary S. Elbogen as a witness and indicated he was the authorized agent of Devco and would testify, among other things, as to the owner's opinion of the property's value. In the section addressing expert witnesses, Devco noted it had "not yet retained [its] expert appraiser in this action, but intend[s] to do so shortly since it now appears the matter will not be settled." The disclosure statement was verified by Elbogen, as the authorized agent. Following further negotiations, the parties settled the costs to cure and reproduction costs, leaving the property's value as the only remaining issue.
¶6 After oral argument on the motion for summary judgment and request for revision of the scheduling order, the trial court ruled in favor of the State, finding that Elbogen's opinion was not timely disclosed and explaining that "hope for a settlement" did not excuse Devco from complying with court-ordered deadlines. The court also explained that it treated Devco's request for revision of the scheduling order as a Rule 56(f) request, and reasoned as follows:
At oral argument, [Devco] argued that summary judgment is improper because, although they have no expert appraiser's testimony, they have the owner's (presumably referring to Mr. Elbogen) opinion of value. Mr. Elbogen's opinion, however, is not adequately presented. For one thing, Mr. Elbogen is described, and later describes himself, as the "authorized agent" of [Devco] (though authorized to do what is not specified). The case law is silent as to what qualifications are necessary for a witness to be competent to assert a corporate owner's opinion of value. But the Court is given no basis to conclude that he is the person in a position to possess the owner's "knowledge of the components of value that are useful in ascertaining value.". . . A showing that the affiant is competent to testify on the matters stated is required. Rule 56(e)(1).
. . . .
Summary judgment is not a discovery sanction; rather, it is a final judgment on the merits based on the evidence in the record before the Court. . . . The Court is not excluding [Devco]'s expert opinions of value. There is nothing to exclude, for Devco ha[s] submitted no such opinions. The State has presented competent evidence of value sufficient to support a judgment in its favor. [Devco], by [its] own choice, ha[s] presented no competent evidence to demonstrate a genuine issue of material fact, let alone adequate to support the burden of proof [it] bear[s] to establish the amount of damages.
¶7 The trial court then entered a final judgment, awarding damages to Devco in the amount of $1,020,000 plus interest. Devco moved for a new trial, which the court denied, explaining that Devco had still not identified the scope of Elbogen's authority as the owner's agent or what familiarity he had with the components of the property's value. The court also rejected Devco's assertion that cross-examination of the State's expert at trial would create fact issues because it was Devco's responsibility to place in the record evidence demonstrating a genuine issue of material fact, "not merely to speculate that such an issue might be developed in the future." Finally, the court emphasized that summary judgment was not granted as a sanction but was based on the evidence in the record, which did not include any "admissible evidence" supporting Devco's position. This timely appeal followed.
DISCUSSION
A. Denial of Request to Revise Discovery Schedule
¶8 Devco argues the trial court erred by denying its request to revise the discovery schedule. Noting that a judgment on the merits is generally preferred, Devco contends that such a request should be liberally granted absent resulting prejudice, and the State would have suffered no prejudice from such a delay here given it was already in possession of the property.
¶9 The trial court has broad discretion in ruling on discovery and disclosure matters. Reid v. Reid, 222 Ariz. 204, 206, ¶ 8 (App. 2009). We will not disturb the court's ruling absent an abuse of discretion. Id.
¶10 Pursuant to the parties' stipulated discovery schedule, Devco was required to disclose its expert witnesses and their opinions by November 2, 2012. Noting the superior court construed the request as one for relief under Arizona Rule of Civil Procedure 56(f), Devco contends the trial court erred by failing to hold a hearing on its request to revise the discovery schedule as "required" by that rule. Rule 56(f)(1) provides, however, that the party opposing summary judgment and seeking relief must file, along with its request for relief, "a supporting affidavit showing that, for specified reasons, it cannot present evidence essential to justify its opposition[.]" Rule 56(f)(3) contains the additional requirement that
[n]o request for relief will be considered and no hearing will be scheduled unless the request for relief is accompanied by a separate statement of counsel seeking the relief certifying that, after personal consultation and good-faith efforts to do so, the parties have been unable to satisfactorily resolve the matter.Devco failed to attach the requisite affidavit and certification statement with its request for relief. Accordingly, to the extent Devco's request to revise the discovery schedule relied on Rule 56(f), the trial court properly denied that request.
¶11 Nor did the superior court abuse its discretion in denying Devco's request to revise the discovery schedule under Rule 6(b). The request was made after the expiration of the deadlines imposed by court order, meaning Devco was required to show good cause for the extension and that the failure to comply with the scheduling order was the result of excusable neglect. Ariz. R. Civ. P. 6(b). Devco's filing, however, made nearly three months after the State filed its motion for summary judgment, stated that it had chosen not to employ an appraiser because the parties had previously held some "fruitful" settlement discussions. Thus, by Devco's own admission, its failure to disclose an expert was not the result of excusable neglect, but a tactical decision. Moreover, the record reflects that the State inquired whether Devco would disclose any expert witnesses, both before and after the November 2, 2012 deadline, and received no response. At no point in the trial court proceedings, even in connection with the motion for new trial, did Devco seek to disclose an expert or an appraisal of the property. Under these circumstances, we cannot say the court abused its discretion by denying Devco's request to revise the parties' stipulated discovery schedule.
Relying on Allstate Ins. Co. v. O'Toole, 182 Ariz. 284, 287 (1995), and DeLong v. Merrill, 233 Ariz. 163, 168-69, ¶ 18 (App. 2013), Devco argues that the court should have granted the extension because the State would not have been prejudiced as a result. Both cases are distinguishable, however, because the dilatory parties in those cases made the requisite disclosures, albeit untimely. Devco has made no corresponding disclosure here and is essentially arguing that the State can never be prejudiced no matter how untimely the eventual disclosure. We reject this argument. Because Devco never provided the requisite disclosure, a prejudice analysis is simply inapplicable.
B. Entry of Summary Judgment in Favor of the State
¶12 Devco contends the trial court erred by entering summary judgment, asserting that it presented evidence of the owner's valuation of the property, which standing alone, was sufficient to overcome the State's motion for summary judgment.
¶13 A trial court "shall grant summary judgment if the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Ariz. R. Civ. P. 56(a). "We review a trial court's grant of summary judgment de novo, viewing the facts and reasonable inferences therefrom in the light most favorable to the nonmoving party." Tilley v. Delci, 220 Ariz. 233, 236, ¶ 7 (App. 2009) (internal quotation omitted). "It is a fundamental and well-established rule of law that the burden of proof as to the amount of damages in condemnation proceedings is upon the property owner." Town of Williams v. Perrin, 70 Ariz. 157, 159 (1950). We review a trial court's ruling on the admissibility of evidence in summary judgment proceedings for an abuse of discretion and resulting prejudice. Mohave Elec. Co-op., Inc., v. Byers, 189 Ariz. 292, 301 (App. 1997)
¶14 The State provided the only admissible evidence in the trial court as to the amount of damages Devco sustained. Attached to its motion for summary judgment, the State submitted Wirth's appraisal, valuing the property at $1,020,000. The State also submitted Wirth's affidavit in which he avowed that he is a certified real estate appraiser and that the appraisal was based on his personal knowledge and analysis. In response to the motion for summary judgment, Devco asserted "the owner's opinion of just compensation" for the property was $1,632,636. In response to the motion for summary judgment, Devco disclosed for the first time that Elbogen would be called as a witness at trial and that he would testify regarding the owner's opinion of value. The verification included with the disclosure statement stated: "I, Gary S. Elbogen, am the authorized agent of [Devco], am authorized to make this Verification, and having read the foregoing Initial Rule 26.1 Disclosure Statement, I verify under penalty of perjury that the foregoing is true and correct."
¶15 As noted by the State and found by the trial court, Devco's February 26, 2013 disclosure of Elbogen as a fact witness was untimely, as all disclosures of fact witnesses were due by October 19, 2012. Moreover, Devco failed to provide any foundation explaining how Elbogen was competent to testify as to the "owner's opinion of value."
¶16 When all else is set aside, the issue is simply whether the State's motion for summary judgment was of sufficient merit and substance for the trial court to grant. We find it was. As provided by Rule 56(e)(4), "[w]hen 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." Rule 56(e)(1) explains that "[a]n affidavit used to support or oppose a motion shall be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated."
¶17 Devco did not submit an affidavit from Elbogen, but gave a brief explanation of the valuation he would provide and a cursory verification. Although this verification is equivalent to an affidavit pursuant to Rule 80(i), it is nonetheless substantively insufficient under Rule 56(e)(1). Devco identified Elbogen as the "authorized agent," but without explanation as to how Elbogen is competent to testify, this designation is meaningless. See 32 C.J.S. Evidence § 902 (2014) (collecting cases for the general proposition that "certain persons are competent to testify as to the value of land owned by a corporation . . . such as an officer, director and shareholder," but explaining such persons are not qualified to do so unless they have "some special knowledge as to value," and the "presumption that an owner of property is qualified to give his or her opinion as to its value does not exten[d]" to corporate officers). The trial court did not abuse its discretion by disregarding Devco's claims regarding the owner's opinion of value. See Ulibarri v. Gerstenberger, 178 Ariz. 151, 161 (App. 1993) ("If a party fails to lay adequate foundation for an expert's affidavit in response to a motion for summary judgment, that testimony is not considered."); Chess v. Pima County, 126 Ariz. 233, 235 (App. 1980) (concluding affidavit was insufficient for summary judgment purposes because "it contain[ed] conclusions and fail[ed] to show that the affiant [was] competent to testify to the matters stated therein"). Accordingly, because Devco's claims regarding valuation were in the nature of unsubstantiated argument rather than admissible controverting evidence attacking the merits of the motion the State had filed, the court properly entered summary judgment in favor of the State.
Devco's reliance on DeLong, 233 Ariz. 163, is misplaced. In that case, this court concluded that appellant's untimely disclosures created genuine disputes of material fact precluding entry of summary judgment. Id. at 170, ¶ 24. By way of contrast, here, no admissible evidence was disclosed, timely or untimely, that created a genuine dispute of material fact. We also are not persuaded by Devco's argument that the trial court erred by granting summary judgment because Devco presented evidence that would create factual issues through cross-examination of the State's valuation expert. See Comerica Bank v. Mahmoodi, 224 Ariz. 289, 292 n.3, ¶ 16 (App. 2010) ("A party opposing a motion for summary judgment is not entitled to proceed to trial on the mere hope that the jury will disbelieve uncontroverted testimony."). We also reject Devco's assertion that its failure to comply with procedural requirements should be excused because this case involves the government's taking of private property, and is therefore a matter of constitutional magnitude. Devco cites no authority supporting this proposition and thus we do not consider it. See ARCAP 13(a)(7)(A) (explaining that a party must cite "legal authorities" to support "each issue presented for review"); Ritchie v. Krasner, 221 Ariz. 288, 305, ¶ 62 (App. 2009) (noting former rule ARCAP 13(a)(6) requires opening briefs to present arguments "supported by authority" and the failure to do so "can constitute abandonment and waiver of that claim").
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C. Summary Judgment as a Sanction
¶18 Relying on Zimmerman v. Shakman, 204 Ariz. 231, 235, ¶ 8 (App. 2003), and Wayne Cook Enterprises, Inc. v. Fain Properties Limited Partnership, 196 Ariz. 146, 148, ¶ 6 (App. 1999), Devco argues that the trial court's grant of summary judgment in favor of the State was, in effect, a dismissal sanction for an untimely disclosure.
¶19 In Zimmerman, this court held that the exclusion of evidence based on an untimely disclosure and the resulting dismissal of the case for lack of proof caused by the exclusion of otherwise admissible but untimely evidence is "the equivalent of a dismissal for nondisclosure and must be accompanied by an evidentiary hearing to determine whether the party or his attorney was at fault." 204 Ariz. at 234, ¶ 2. In Wayne Cook Enterprises, we similarly held that dismissal is warranted only when the party (rather than counsel) is at least partially at fault for the untimely disclosure and further held the trial court should not impose "the ultimate sanction of dismissal" without holding an evidentiary hearing. 196 Ariz. at 147, ¶ 1.
¶20 Seeking to apply these cases here, Devco asserts the trial court erred by not holding a "culprit" hearing to determine fault and by not imposing a "lesser sanction." Zimmerman and Wayne Cook Enterprises are, however, distinguishable. Unlike the facts here, in those cases, otherwise admissible evidence was excluded solely because it was not timely disclosed. In this case, Devco failed to disclose any admissible evidence regarding valuation. As the trial court properly concluded, Devco's disclosure of the "owner's opinion of value" was untimely but, more importantly, it was also procedurally inadequate and defective and therefore inadmissible. Moreover, although Devco did not file its response to the State's motion for summary judgment for nearly three months after its filing, even by then Devco had still not hired an appraiser to provide an expert opinion of valuation. Thus, the trial court did not exclude Devco's evidence of valuation; instead, it found Devco had no admissible evidence of valuation. Furthermore, unlike the parties who appealed in Zimmerman and Wayne Cook Enterprises, Devco's claim for damages was not dismissed; the trial court awarded Devco the only amount put before it by admissible and competent evidence: $1,020,000 plus interest. We therefore disagree with Devco's assertion that the trial court erroneously entered a dismissal sanction. Instead, and in the absence of competent, admissible, controverting evidence, the court properly entered summary judgment in favor of the State.
D. Denial of Motion for New Trial
¶21 Devco asserts the trial court erred by denying its motion for new trial. In its motion, Devco argued it should have been permitted to proceed to trial based on its evidence of the owner's opinion of value and its ability to create disputes of material fact at trial through its cross-examination of the State's expert. Devco also maintained that the trial court's grant of summary judgment in favor of the State operated as a sanction. Finally, Devco argued newly discovered evidence in a related case precluded entry of summary judgment.
¶22 We review a trial court's denial of a motion for new trial for an abuse of discretion. Hutcherson v. City of Phoenix, 192 Ariz. 51, 53, ¶ 12 (1998). A court abuses its discretion if, in reaching its decision, it applies an erroneous rule of law. Pullen v. Pullen, 223 Ariz. 293, 296, ¶ 10 (App. 2009).
¶23 Consistent with our analysis above, we conclude that Devco's arguments regarding the owner's opinion of value, its ability to create disputes of material fact solely through cross-examination, and the court's entry of summary judgment as an imposition of sanctions are not compelling. Nor do we find persuasive Devco's assertion that newly discovered evidence barred the entry of summary judgment. As explained in Devco's motion for new trial, in a separate but related case, a different judge entered a signed judgment awarding an adjacent property owner compensation at the rate of $4.41 per square foot. Devco asserts that the judgment in that case is evidence that the State's expert undervalued Devco's property at $3.50 per square foot. Contrary to Devco's argument, however, the disparity between valuations of adjoining property is not, alone, sufficient to create a genuine dispute of material fact. To properly place this evidence before the court, it was incumbent on Devco to show that the factors underlying the valuation of the adjacent property are substantially the same in all material respects. The record is devoid of any such evidence. Therefore, the trial court did not abuse its discretion by denying Devco's motion for new trial.
CONCLUSION
¶24 For the foregoing reasons, we affirm the trial court's grant of summary judgment.