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.

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

FRED W. BECK, an unmarried man, Plaintiff/Appellant,

v.

ROBERT HEATH and LINDA HEATH, husband and wife; 

HIGH RIDGE INVESTMENTS, INC., an Arizona corporation dba

RED ARROW REAL ESTATE; and MICHELLE WATNE and

JOHN DOE WATNE, husband and wife, Defendants/Appellees.

No. 1 CA-CV 14-0337

Appeal from the Superior Court in Yavapai County

No. P1300CV201300766

The Honorable Patricia A. Trebesch, Judge

VACATED AND REMANDED
2

COUNSEL

The Adams Law Firm, PLLC, Prescott

By Jeffrey R. Adams

Counsel for Plaintiff/Appellant

Roberts & Carver, PLLC, Prescott

By Paul L. Roberts

Counsel for Defendants/Appellees High Ridge Investments, Inc., dba Red Arrow 

Real Estate, and Michelle Watne

The Vakula Law Firm, PLC, Prescott

By Alex B. Vakula

Counsel for Defendants/Appellees Robert and Linda Heath

MEMORANDUM DECISION

Presiding Judge Andrew W. Gould delivered the decision of the Court, in 

which Judge Maurice Portley and Judge Jon W. Thompson joined.

GOULD, Judge:

¶1 Plaintiff/Appellant Fred W. Beck (“Beck”) appeals the trial

court’s dismissal of his complaint on the basis that his claims are barred by

the doctrine of res judicata. Because there was no adjudication on the merits

resulting from Beck’s first lawsuit, res judicata does not apply. 

Accordingly, we vacate the judgment of dismissal and remand for further 

proceedings. 

FACTUAL AND PROCEDURAL BACKGROUND

¶2 Beck filed a complaint against Defendants/Appellees Robert 

G. Heath, Linda G. Heath, High Ridge Investments, Inc., and Michelle 

Watne (collectively, “Defendants”) asserting breach of contract and other 

claims arising from a residential real estate purchase contract. Defendants 

moved to dismiss the complaint, arguing that the purchase contract 

included a mandatory alternative dispute resolution (“ADR”) provision. 

The relevant contract provision states:

Buyer and Seller agree to mediate any dispute or claim arising 

out of or relating to this Contract in accordance with the 
BECK v. HEATH, et al.

Decision of the Court

3

REALTORS® Dispute Resolution System, or as otherwise 

agreed. . . . In the event that mediation does not resolve all 

disputes or claims, the unresolved disputes or claims shall be 

submitted for binding arbitration. . . . Notwithstanding the 

foregoing, either party may opt out of binding arbitration 

within thirty (30) days after the conclusion of the mediation 

conference by notice to the other and in such event either 

party shall have the right to resort to court action.

¶3 The trial court granted Defendants’ motion and entered

judgment dismissing the complaint. The judgment did not state whether 

the dismissal was with or without prejudice. Beck moved to set aside the 

dismissal and for reconsideration, which the court denied. Beck did not 

appeal. 

¶4 After an unsuccessful attempt to initiate mediation, Beck filed 

a second complaint that was essentially the same as the first. Defendants 

moved to dismiss the complaint based on res judicata, arguing that the first

dismissal was an adjudication on the merits pursuant to Arizona Rule of 

Civil Procedure 41(b). The trial court granted Defendants’ motion and 

dismissed Beck’s second complaint. Beck timely appealed.1 

DISCUSSION

¶5 The application of res judicata is “a question of law that this 

court reviews de novo.” Better Homes Const., Inc. v. Goldwater, 203 Ariz. 295, 

298, ¶ 10 (App. 2002). 

¶6 On appeal, Beck challenges the trial court’s determination 

that dismissal of Beck’s first lawsuit bars his second lawsuit on the grounds 

of res judicata. Beck contends that res judicata does not apply to his second 

lawsuit because his first lawsuit was not dismissed on the merits. We agree.

¶7 Res judicata bars a subsequent action only if there is a final 

judgment on the merits in the previous litigation. In re Gen. Adjudication of 

All Rights to Use Water In Gila River Sys. & Source, 212 Ariz. 64, 69, ¶ 14 (2006)

(emphasis added). When parties enter into a mandatory ADR agreement, 

however, a court lacks jurisdiction to resolve the merits of all claims subject 

to the ADR agreement. DiMercurio v. Sphere Drake Ins., PLC., 202 F.3d 71, 

77 (1st Cir. 2000); cf. Duenas v. Life Care Centers of America, Inc., 236 Ariz. 130, 

 

1 Defendants Heath joined in Watne and Red Arrow’s Answering 

Brief on appeal. 
BECK v. HEATH, et al.

Decision of the Court

4

139, ¶ 29 (App. 2014) (“An agreement to arbitrate relates to the jurisdiction 

of the courts, not to the merits, viability or ownership of a claim.”) 

¶8 In this case, the dismissal of Beck’s first lawsuit based on a 

mandatory ADR agreement did not result in a final judgment on the merits. 

Accordingly, res judicata does not apply to bar his second lawsuit.

¶9 Beck requests an award of attorneys’ fees on appeal 

pursuant to A.R.S. § 12-341.01. In the exercise of our discretion we decline 

to award fees on appeal due to Beck’s failure to initiate mediation as 

required by the purchase contract, which ultimately resulted in this appeal. 

However, we award Beck his taxable costs on appeal upon timely 

compliance with ARCAP 21. 

CONCLUSION

¶10 For the foregoing reasons, we vacate the trial court’s 

judgment of dismissal based on res judicata and remand for further 

proceedings.