NOTICE: NOT FOR OFFICIAL PUBLICATION.

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

PRECEDENT IAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE

.

IN THE 

## A RIZONA 

## C OURT OF 

## A PPEALS

D IVISION O NE

FRED W. BECK, an unmarried man

, Plaintiff/Appellant

,

v.

ROBERT HEATH and LINDA HEATH, husband and wife;

HIGH RIDGE I NVESTMENTS, INC., an Arizona corporation dba

RED ARROW REAL ESTATE; and MICHELLE WATNE and
JOHN DOE WATNE, husband and wife, Defendant s /Appellee s

.

No. 1 CA

- CV 14

- 0337

Appeal from the Superior Court in Yavapai County

No. P1300CV201300766

The Honorable Patricia A. Trebesch

, Judge

VACATED AND REMANDED2 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/ A ppellant 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 PROCEDUR AL BACKGROUND

¶2 Beck filed a complaint against D efendants/ A ppellees 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 ma ndat ory 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 t his Contract in accordance with theBECK 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 dispute s or claims, the unresolved di s p utes or claims shall be

subm itted for binding arbitration

. . . . Notwithsta n ding 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 even t either party shall have the right to resort to court action.

¶3 Th e 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 u nsuccessful 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

, ar g uing that the first

dismissal was a n 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 dismiss al of Beck’s fir st 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 bar s a subsequent action only if the re 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 resolv e 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 appea l 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

.