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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

AZ EUFORA PARTNERS I, LLC, a Delaware limited liability company; 

THEODORE R. HUGHES and ROBERT J. RIZZI derivatively on behalf of 

and for the benefit of EUFORA, LLC, an Arizona limited liability 

company, Plaintiffs/Appellants,

v.

TOMMY CONSTANTINE, fna Tommy Hormovitis; MARK 

D’AMBROSIO; MIA EDROZO and MANNY EDROZO, husband and 

wife; BRENT NERGUIZIAN and JACQUELINE NERGUIZIAN, husband 

and wife; and EUFORA CAPITAL III, LLC, a Delaware limited liability 

company, Defendants/Appellees.

No. 1 CA-CV 11-0467

Appeal from the Superior Court in Maricopa County

No. CV2010-028333

The Honorable J. Richard Gama, Judge

JURISDICTION ACCEPTED; RELIEF GRANTED IN PART AND 

DENIED IN PART

COUNSEL

The Stolper Group, LLP, New York

By Michael Stolper

Co-Counsel for Plaintiffs/Appellants

Tommy Constantine

Appellee
2

James M. Mack, PLC, Phoenix

By James M. Mack

Counsel for Defendant/Appellee Eufora Capital III, LLC

Greenberg Traurig, LLP, Phoenix

By Brian J. Schulman

Counsel for Defendants/Appellees Brent and Jacqueline Nerguizian

Mandel Young PLC, Phoenix

By Taylor C. Young, Robert A. Mandel

Attorneys for Defendants/Appellees Mark D’Ambrosio, Mia Edrozo, Manny 

Edrozo

MEMORANDUM DECISION

Presiding Judge Samuel A. Thumma delivered the decision of the Court, in 

which Judge Patricia A. Orozco and Judge Michael J. Brown joined.

T H U M M A, Judge:

¶1 This case involves attempted derivative claims by Appellants 

that were dismissed by the superior court for failure to comply with 

statutory requirements for such claims. Appellants challenge the dismissal, 

the denial of a motion to amend their complaint and award of attorneys’ 

fees against them. Treating the putative appeals as seeking special action 

relief, the court accepts jurisdiction and grants relief only to the extent that 

it vacates that portion of the order awarding Appellees $24,000 in flat fees. 

In all other respects, because Appellants have shown no error, the court 

denies relief.

FACTS AND PROCEDURAL HISTORY

¶2 Appellants AZ Eufora Partners I, LLC (AZ Eufora), Theodore 

R. Hughes and Robert J. Rizzi brought this action in October 2010 against 

Appellees Eufora Capital III, LLC and Eufora, LLC (Eufora) and officers or 

managers Tommy Constantine, Mark D’Ambrosio, Mia Edrozo and Brent 
AZ EUFORA v. CONSTANTINE et al.

Decision of the Court

3

Nerguizian.1 The complaint alleges that Eufora is “an Arizona limited 

liability company in the pre-paid credit card business,” that AZ Eufora was 

created “as a vehicle through which a group of current and professional 

NHL hockey players could invest in Eufora” and that Hughes and Rizzi are 

Eufora investors.

¶3 Purporting to sue “derivatively on behalf of and for the 

benefit of” Eufora pursuant to Arizona Revised Statutes (A.R.S.) section 29-

831 (2015),2the complaint asserted various claims, including contract 

claims, against combinations of Appellees seeking redress for alleged 

economic harms to Eufora. Appellees moved to dismiss, arguing 

Appellants lacked standing and failed to comply with statutory 

requirements for filing a derivative action as to Eufora pursuant to A.R.S. 

§§ 29-831 to -833, and Arizona Rule of Civil Procedure (Rule) 23.1. After full 

briefing and oral argument, the superior court granted the motions to 

dismiss, stating at oral argument, that Appellants Hughes and Rizzi lacked 

standing and that Appellants failed to meet the statutory requirements of 

A.R.S. § 29-831 for their claims, all of which were derivative. The court 

added that allowing Appellants to file an amended complaint could not 

cure the defects that were fatal to their claims.

3 No final, appealable 

judgment was entered at that time. 

¶4 The individual Appellees sought attorneys’ fees and costs,

which the court largely granted in a May 2011 appealable order issued

pursuant to Rule 54(b).4 Appellants filed a timely appeal from that May 

2011 appealable order.

 

1 The complaint also listed relevant spouses for Appellees for community 

property purposes. 

2 Absent material revisions after the relevant dates, statutes and rules cited 

refer to the current version unless otherwise indicated.

3 When asked by counsel for Appellants whether the ruling was “without 

prejudice . . . to refile a new complaint,” the court responded “I’m just 

dealing with the complaint as it currently stands, counsel. That’s absolutely 

correct.”

4 Nerguizian appears correct in claiming his request for attorneys’ fees and 

costs incurred in the superior court was not ruled on at that time “or any 

time thereafter.” Because that request was not resolved by the superior 
AZ EUFORA v. CONSTANTINE et al.

Decision of the Court

4

¶5 In June 2011, Appellants moved for leave to amend the

complaint. At that same time, Appellants lodged a proposed form of 

judgment that granted Appellees’ motions to dismiss, denied Appellants’ 

motion for leave to amend the complaint and declared the judgment was 

appealable pursuant to Rule 54(b). The superior court signed and entered 

the judgment as submitted in July 2011 and Appellants then filed a timely 

appeal from that partial judgment.

¶6 Appellees filed a timely motion for relief from the July 2011 

partial judgment, which the superior court denied in a November 2011 

appealable order issued pursuant to Rule 54(b). Appellants filed a timely 

appeal from the November 2011 appealable order and this court 

consolidated the appeals.

DISCUSSION

I. Appellate Jurisdiction.

¶7 This court has an independent duty to determine whether it 

has appellate jurisdiction. Sorensen v. Farmers Ins. Co. of Ariz., 191 Ariz. 464, 

465, 957 P.2d 1007, 1008 (App. 1997). This court “may resolve only those 

appeals authorized by statute.” Kool Radiators, Inc. v. Evans, 229 Ariz. 532, 

534 ¶ 8, 278 P.3d 310, 312 (App. 2012).

¶8 Appellants claim that in granting Appellees’ motions to 

dismiss, the superior court dismissed their claims without prejudice. 

Appellees take various positions on the point, with Nerguizian agreeing 

dismissal was without prejudice; Eufora not addressing the issue;

Constantine adopting the answering briefs of Nerguizian and Eufora; and 

D’Ambrosio and Edroza arguing that it may, or may not, be without 

prejudice.

¶9 As a general rule, a dismissal without prejudice is not 

appealable. Id. (citing cases). Similarly, an award of attorneys’ fees and costs 

in a case dismissed without prejudice generally is not appealable. Id. at 535 

¶¶ 10–11, 278 P.3d at 313 (citing cases). To the extent the dismissal here was 

without prejudice, however, this court can invoke special action jurisdiction 

to review a timely challenge to such an order. See id. at 535 ¶ 11, 278 P.3d at

313. As applied, in exercising the court’s discretion, given that the issues 

presented are ones of law and in the interest of economy of resources, see

 

court, it is not the subject of a judgment under either Rule 54(b) or 54(c) and 

is not a part of this appeal.
AZ EUFORA v. CONSTANTINE et al.

Decision of the Court

5

Rule 1, the court will treat Appellants’ timely putative appeals as a petition 

for special action and exercise special action jurisdiction, see Evans, 229 Ariz. 

at 535 ¶ 11, 278 P.3d at 313; see also A.R.S. § 12-120.21(A)(4) (court may 

assume special action jurisdiction “without regard to its appellate 

jurisdiction”).5

II. The Court Did Not Err In Dismissing The Complaint.

¶10 Appellants argue the superior court erred in dismissing the 

complaint because they had standing and properly alleged the statutory 

requirements of a derivative action—issues this court reviews de novo. See 

Coleman v. City of Mesa, 230 Ariz. 352, 355–56 ¶ 7, 284 P.3d 863, 866–67 

(2012). The record shows that Appellants Hughes and Rizzi lacked standing 

and that Appellants failed to plead and prove that they satisfied the 

statutory conditions for bringing a derivative action on behalf of an Arizona 

LLC set forth in A.R.S. § 29-831.

¶11 To bring a derivative action on behalf of an LLC, one must be

a member: (1) at the time the action is brought and (2) “at the time of the 

transaction of which he complains or his status as a member . . . devolved 

on him pursuant to the terms of an operating agreement from a person who 

was a member at such time.” A.R.S. § 29-831(4). Appellants Hughes and 

Rizzi were not members of the LLC at the time the action was brought or at 

the times of the transactions for which they are seeking relief. Under A.R.S. 

§ 29-731, the members of an LLC must be listed in either the company’s 

articles of organization, or in its operating agreement at the time of 

formation or admitted as an additional member. The superior court 

considered, without objection, Eufora’s articles of organization and 

operating agreement. See Strategic Dev. and Constr., Inc. v. 7th & Roosevelt 

Partners, LLC, 224 Ariz. 60, 63 ¶ 10, 226 P.3d 1046, 1049 (App. 2010). 

Appellants Hughes and Rizzi were not listed in Eufora’s articles of 

organization or in its operating agreement, and do not meet the statutory 

definition of a member under A.R.S. § 29-731. 

¶12 Although Appellants argue they submitted affidavits with 

supporting documentation that established and reaffirmed that Hughes 

and Rizzi were members of Eufora, Hughes and Rizzi were never added to 

Eufora’s operating agreement as members. While the affidavits show that 

 

5 For purposes of special action jurisdiction, the court assumes, without 

deciding, that the superior court’s dismissals were without prejudice, an 

issue that this court need not definitively resolve.
AZ EUFORA v. CONSTANTINE et al.

Decision of the Court

6

Hughes and Rizzi invested in Eufora and may have thought they were 

members, it does not show they were members in a way that complies with 

the requirements of A.R.S. § 29-731. Accordingly, the superior court 

properly concluded Appellants Hughes and Rizzi lacked standing. See 

A.R.S. § 29-831(4).

¶13 As to all Appellants, before a member of an Arizona LLC may 

bring a derivative action, it must show that all of the conditions in A.R.S. § 

29-831 have been met.6 Appellants’ complaint failed to allege that they 

made demands “on the manager or those members with such authority 

requesting that the manager or the members cause the limited liability 

company to sue in its own right.” A.R.S. § 29-831(2). This alone is enough 

to establish that Appellants would not be entitled to relief under any set of 

facts susceptible of proof. See A.R.S. § 29-831 (requiring “all” five conditions 

to be met for a proper derivative action); Ariz. R. Civ. P. 12(b)(6).

¶14 Appellants claim Section E of the Complaint, titled 

“Constantine’s Unlawful Responses,” meets the demand requirement of 

A.R.S. § 29-831(2). However, Section E only alleges efforts aimed at getting 

Constantine and others “to address and remedy their wrongdoings” and 

additional requests for documents regarding loan transactions. Nowhere is 

there any allegation that any demand was made on the manager or 

members with authority that they cause Eufora “to sue in its own right.” 

A.R.S. § 29-831(2). Appellants have not shown that the superior court erred 

 

6 For a member to bring a derivative action on behalf of an Arizona LLC, 

five requirements must be met: (1) management of the LLC “is vested in a 

manager or managers who have the sole authority to cause” the LLC to sue 

in its own right, or management “is reserved to the members and the 

plaintiff does not have the authority to cause” the LLC to sue in its own 

right; (2) the member has demanded the managers or members with such 

authority cause the LLC to sue in its own right; (3) “the members or 

managers with such authority have wrongfully refused to bring the action,”

or “failed to respond to the demand;” (4) the member is a member at the 

time the action is brought and was a member “at the time of the transaction 

of which he complains,” or his status as a member “devolved on him 

pursuant to the terms of an operating agreement from a person who was a 

member at such time;” and (5) “the member fairly and adequately 

represents the interests of the members” in enforcing the right of the LLC. 

See A.R.S. § 29-831. 
AZ EUFORA v. CONSTANTINE et al.

Decision of the Court

7

in determining that the allegations in the Complaint failed to satisfy this 

statutorily-mandated, express demand requirement. 

¶15 Appellants argue alternatively that Rule 23.1 imports a futility 

exception to the demand requirement. The statutory demand requirement 

in A.R.S. § 29-831(2), however, is clear and unambiguous and contains no 

futility exception. See Albers v. Edelson Tech. Partners, L.P., 201 Ariz. 47, 55 

¶33, 31 P.3d 821, 829 (App. 2001) (noting A.R.S. § 10-742, which contains a 

demand requirement in a different context but no express futility exception, 

“is clear and admits of no exception. It requires a pre-suit demand.”)

(citation omitted); Home Builders Ass’n of Cent. Ariz. v. City of Scottsdale, 187 

Ariz. 479, 483, 930 P.2d 993, 997 (1997) (“Where the language of a statute is 

clear and unambiguous, courts are not warranted in reading into the law 

words the legislature did not choose to include.”) (citation omitted). Nor 

have Appellants shown how Rule 23.1 could be read to support a futility 

exception when A.R.S. § 29-831(2) does not. Because there is no futility 

exception to the demand requirement for LLC derivative suits under 

Arizona law, the superior court did not err in dismissing Appellants’ 

derivative claims.7

III. The Court Did Not Abuse Its Discretion In Denying Appellants’

Motion For Leave To Amend The Complaint.

¶16 Appellants argue the superior court erred in denying their 

motion for leave to amend their complaint, summarily claiming the 

purported amendments “were prompt, offered in good faith and anything 

but futile.” “Leave to amend shall be freely given when justice requires.” 

Ariz. R. Civ. P. 15(a). However, if a proposed amendment would be futile, 

a trial court does not abuse its discretion in denying a motion to amend. 

Bishop v. State Dep’t of Corr., 172 Ariz. 472, 474–75, 837 P.2d 1207, 1209–10 

(App. 1992). This court reviews the denial of leave to amend a complaint 

for an abuse of discretion. Dewey v. Arnold, 159 Ariz. 65, 68, 764 P.2d 1124, 

1127 (App. 1988).

¶17 Although claiming to have made a “prompt” request to 

amend, in fact, Appellants waited more than four months after the superior 

court dismissed their claims until they sought leave to amend. Indeed, by 

the time they sought leave to amend, Appellants had already appealed 

 

7 Given this conclusion, the court need not address Appellees’ argument 

that AZ Eufora, a Delaware LLC, could not maintain the lawsuit because it 

was not registered to transact business in Arizona at the time the lawsuit 

was filed. See A.R.S. § 29-809(A). 
AZ EUFORA v. CONSTANTINE et al.

Decision of the Court

8

from the court’s grant of attorneys’ fees resulting from the order dismissing 

their claims. Accordingly, it is far from clear that the superior court would 

have had jurisdiction to grant their requested amendment. See State v. 

O’Connor, 171 Ariz. 19, 22, 827 P.2d 480, 483 (App. 1992) (“[A] trial court 

retains jurisdiction to act so long as that act cannot negate the decision in a 

pending appeal or frustrate the appeal process.”). But presuming the 

putative appeal did not divest the superior court’s jurisdiction, see supra ¶¶

7–9, the superior court did not abuse its discretion in denying Appellants’ 

motion for leave to amend. 

¶18 As noted above, under Arizona law, a member may bring a 

derivative suit against an LLC only if, among other requirements, the 

member “has made demand” on the manager to cause the LLC to sue in its 

own right, A.R.S. § 29-831(2), and the manager has “wrongfully refused” to 

bring suit or has failed to respond to the demand “after adequate time to 

consider the demand,” A.R.S. § 29-831(3). Here, the putative amendment

offered by Appellants was that they had sent Appellees a demand letter 

“after receiving” a motion to dismiss after filing the original complaint. A

demand letter written after the initial filing of the derivative suit could not 

cure the deficiencies in their pleadings. “Because these requirements—

written in the past tense—exist to give the manager the opportunity to 

consider the demand letter and to bring a lawsuit in the LLC’s own right 

before the member may file a derivative suit, a letter written after the 

lawsuit has been filed does not satisfy the statute.” Rose Goodyear Props., LLC 

v. NBA Enters. Ltd. P’ship, 235 Ariz. 339, 345 ¶ 24, 332 P.3d 86, 92 (App. 2014) 

(holding sending letter after suit had been filed could not satisfy A.R.S. §

29-831(2) demand requirement and did not cure failure to present proper 

demand) (citation omitted). Thus, even assuming the superior court had 

jurisdiction to grant Appellants’ motion for leave to amend their complaint, 

the court did not abuse its discretion in denying that motion.
AZ EUFORA v. CONSTANTINE et al.

Decision of the Court

9

IV. The Award Of Attorneys’ Fees.

¶19 Appellants argue the award of attorneys’ fees is without any 

legal basis and violated Arizona law. Appellees (other than Eufora Capital 

III, LLC) requested attorneys’ fees and costs under A.R.S. §§ 29-833(B), 12-

341 and -341.01. Under A.R.S. § 12-341.01, a court may award attorneys’ fees 

to the successful party in an action arising out of contract. Fee awards under 

A.R.S. § 12-341.01(A) are permissive and, for a successful party where the 

statute applies, the superior court has broad discretion in making an award 

of fees. See State Farm Mut. Auto. Ins. Co. v. Arrington, 192 Ariz. 255, 261 ¶ 

27, 963 P.2d 334, 340 (App. 1998). As long as the record reflects a reasonable 

basis for the award, it will be upheld. Orfaly v. Tucson Symphony Soc’y, 209 

Ariz. 260, 267 ¶ 25, 99 P.3d 1030, 1037 (App. 2004). This court reviews the 

fees awarded by a superior court for an abuse of discretion. Cohen v. Frey, 

215 Ariz. 62, 68 ¶ 18, 157 P.3d 482, 488 (App. 2007).

¶20 There is no genuine dispute that this case arises out of contract 

under A.R.S. § 12-341.01. Indeed, Appellants’ complaint asserts breach of 

contract and covenant of good faith and fair dealing claims arising out of 

the operating agreement. Similarly, by successfully moving to dismiss all 

claims against them, Appellees are the successful parties. See, e.g., Britt v. 

Steffen, 220 Ariz. 265, 267 ¶ 9, 205 P.3d 357, 359 (App. 2008) (noting when 

“an action has been dismissed without prejudice, the defendant is still 

considered a ‘successful party’ for purposes of A.R.S. § 12-341.01(A) even 

though such a dismissal does not operate as an adjudication upon the 

merits”) (citations omitted). Thus, the superior court had broad discretion 

to award fees under A.R.S. § 12-341.01. 

¶21 Appellants argue that none of the factors listed in Associated 

Indem. Corp. v. Warner, 143 Ariz. 567, 570, 694 P.2d 1181, 1184 (1985) favor a 

fee award here. In pressing this argument on appeal, however, Appellants 

provide no factual or legal support. Moreover, on the record before it, 

Appellants have not shown that the superior court abused its discretion in 

applying the Warner factors, including assessing Appellants’ claims and the 

need for pre-litigation demand, that Appellees prevailed on all claims and 

that the legal issues that caused Appellants’ claims to fail were not novel 

and had been addressed in published decisions. See 143 Ariz. at 570, 694 

P.2d at 1184. Similarly, Appellants made no factual showing that a fee 

award would cause them “an extreme hardship.” See id.
AZ EUFORA v. CONSTANTINE et al.

Decision of the Court

10

¶22 Appellants also have not shown that the superior court 

abused its discretion in the fees it awarded for hourly-based services 

provided by counsel for Appellees. Appellees provided the superior court 

a reasonable basis for the fees requested and appropriate support for their 

request. See generally Schweiger v. China Doll Rest., Inc., 138 Ariz. 183, 673 

P.2d 927 (App. 1983). Contrary to Appellants’ argument that fees could only 

be awarded for the motion on which the Appellees prevailed, the prevailing 

party is “‘entitled to recover a reasonable attorney’s fee for every item of 

service which, at the time rendered, would have been undertaken by a 

reasonable and prudent lawyer to advance or protect his client’s interest in 

the pursuit’” of the litigation. Id. at 188, 673 P.2d at 932 (citation omitted).

Contrary to Appellants’ argument that fees could not be awarded for time 

spent on unsuccessful motion practice, “where a party has accomplished 

the result sought in the litigation, fees should be awarded for time spent 

even on unsuccessful legal theories.” Id. at 189, 673 P.2d at 933.

¶23 Finally, Appellants argue that Appellees failed to provide 

sufficient detail in their affidavit to support the superior court’s award of 

flat-fee retainer fees. Such arrangements are authorized under Arizona law.

See In re Hirschfeld, 192 Ariz. 40, 43 ¶ 17, 960 P.2d 640, 643 (1998). Still, “each 

situation must be carefully examined on its own facts for reasonableness.” 

Id. Appellants are correct that in order to successfully obtain a fee award, 

the party seeking fees must provide a sufficient description or breakdown 

of “the work actually performed by the lawyer.” China Doll, 138 Ariz. at 187, 

673 P.2d at 931. This level of detail enables the court to assess the 

reasonableness of the work performed. The record does not indicate that 

Appellees’ application for attorneys’ fees provided sufficient detail to 

satisfy this requirement. Accordingly, the portion of the order awarding 

Appellees a total of $24,000 in flat fees is vacated. See Geller v. Lesk, 230 Ariz. 

624, 630 ¶¶ 19–20, 285 P.3d 972, 978 (App. 2012) (vacating fee award where 

requesting party failed to make a prima facie showing of reasonableness).

In all other respects, Appellants have not shown that the superior court 

misapplied Arizona law or abused its discretion in awarding Appellees 

attorneys’ fees pursuant to A.R.S. § 12-341.01.

8

 

8 Given this determination, the court does not address the other bases cited 

by Appellees in seeking an award of attorneys’ fees.
AZ EUFORA v. CONSTANTINE et al.

Decision of the Court

11

V. Attorneys’ Fees And Costs On Appeal.

¶24 Appellees Nerguizian, D’Ambrosio and Edrozo request their 

attorneys’ fees on appeal under A.R.S. § 12–341.01(A). Because they are 

successful parties on appeal, in the exercise of the court’s discretion, 

Appellees Nerguizian, D’Ambrosio and Edrozo are awarded their

reasonable attorneys’ fees on appeal pursuant to A.R.S. § 12-341.01 

contingent on their compliance with Arizona Rule of Civil Appellate 

Procedure (ARCAP) 21. In addition, Appellees are awarded their taxable 

costs contingent on their compliance with ARCAP 21.

CONCLUSION

¶25 The court accepts jurisdiction and grants relief only to the 

extent that it vacates that portion of the order awarding Appellees a total of 

$24,000 in flat fees. In all other respects, because Appellants have shown no 

error, the court denies relief.