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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

CHRISTIAN NAVA-CRUZ, et al., Plaintiffs/Appellees,

v.

ROBERT WALLACE, Defendant/Appellant.

No. 1 CA-CV 22-0235

Appeal from the Superior Court in Maricopa County

No. CV2020-001923

No. CV2020-092663

The Honorable James D. Smith, Judge (retired)

AFFIRMED

COUNSEL

Zazueta Law, PLLC, Phoenix

By Fabian Zazueta (argued) and Garrett Respondek

Counsel for Plaintiffs/Appellees

Law Offices of Kimberly A. Eckert, Tempe

By Kimberly A. Eckert

Counsel for Defendant/Appellant

FILED 2-14-2023
NAVA-CRUZ, et al. v. WALLACE

Decision of the Court

2

MEMORANDUM DECISION

Presiding Judge Paul J. McMurdie delivered the Court’s decision, in which 

Judge Michael J. Brown and Judge Michael S. Catlett joined.

M c M U R D I E, Judge:

¶1 Robert Wallace appeals from a summary judgment, partial 

judgment as a matter of law, and jury award against him. We affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 In July 2018, Wallace bought a 50% membership interest in 

Impala Enterprises, LLC (“Impala”) from Christian Nava-Cruz. Wallace 

and Nava-Cruz memorialized the transaction by executing a bill of sale and 

an operating agreement. The bill of sale provided that Wallace would pay 

$25,000, but Wallace became uncomfortable with his investment and 

stopped making payments after contributing only $16,000. In December 

2018, Wallace filed articles of amendment to remove himself as a manager 

and member of Impala.

¶3 After Wallace removed himself, Impala acquired a liquor 

license. In November 2019, Wallace filed a financing statement claiming a 

security interest in Impala’s “tangible and intangible” equipment, 

including the liquor license. Impala sent Wallace a letter demanding that he 

terminate the unauthorized filing, but Wallace refused.

¶4 Nava-Cruz and Impala (collectively, “Appellees”) sued 

Wallace, alleging that Wallace was liable under A.R.S. § 47-9527(A) for 

“fil[ing] an unauthorized lien.” Wallace counterclaimed against Impala,

alleging breach of contract and the covenant of good faith and fair dealing. 

The claims relied on a contract he asserted he had with Impala based on his 

purchase of a 50% membership interest in the company. He claimed Impala 

breached the contract by omitting him as a manager, failing to pay him 

profits, disregarding “normal business accounting,” “trespass[ing]” him 

from the business, and breaching the operating agreement. He also alleged

Impala breached the covenant of good faith and fair dealing by failing to 

provide him with accurate information before he purchased his share. He 

also alleged negligent misrepresentation against Nava-Cruz.
NAVA-CRUZ, et al. v. WALLACE

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¶5 The matter was subject to compulsory arbitration, and the 

arbitrator found in Wallace’s favor. Appellees appealed the arbitrator’s 

decision to the superior court.

¶6 Eventually, Appellees moved for summary judgment. The 

superior court first granted summary judgment to Impala on its 

unauthorized lien claim, concluding that Wallace did not hold a valid 

security interest in the liquor license, he knew or should have known that 

he lacked a valid security interest, and he refused to withdraw the lien upon 

demand. As for Wallace’s breach of contract claims, the court agreed with 

Impala that Impala was not a party to the bill of sale, but it noted that 

Wallace could pursue contract claims under the operating agreement. The 

court, however, concluded that Wallace identified no provision of the 

operating agreement that Impala violated and therefore granted summary 

judgment for Impala. Next, the court denied summary judgment for Impala

on the implied covenant of good faith and fair dealing claim but limited

Wallace to the argument that Impala prevented Wallace from accessing the 

premises. Finally, the court denied summary judgment for Nava-Cruz on 

Wallace’s negligent misrepresentation claim. Wallace filed a motion for 

reconsideration, which the court summarily denied. The remaining claims 

proceeded to trial.

¶7 In the joint pretrial statement, Appellees objected to a witness 

Wallace planned to call at the trial because the witness was not timely 

disclosed after the arbitration. The court agreed the disclosure was 

untimely under Arizona Rule of Civil Procedure 77(f) and excluded the 

witness.

¶8 At the trial, Appellees moved for judgment as a matter of law 

on the breach of the implied covenant of good faith and fair dealing claim 

against Impala and the negligent misrepresentation claim against 

Nava-Cruz. The court partly granted the bad faith claim and limited 

Wallace to nominal damages, concluding that Wallace could not prove 

actual damages because he lacked sufficient evidence of lost profits. The 

court otherwise submitted the matter to the jury, which found for Impala 

on the bad faith claim and for Nava-Cruz on the negligent 

misrepresentation claim.

¶9 Appellees then requested attorney’s fees under A.R.S. 

§ 47-9527(A) for the unauthorized lien claim and A.R.S. § 12-341.01 for the 

contract claims. The court found that Appellees were entitled to fees under 

A.R.S. § 47-9527(A). But because they had not identified which fees arose 

from the wrongful filing claim, the court declined to order an award under 
NAVA-CRUZ, et al. v. WALLACE

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the statute. Applying A.R.S. § 12-341.01, the court found that many fees 

requested arose from duplicative work, so the court awarded half of the 

requested fees.

¶10 Wallace appealed, and we have jurisdiction under A.R.S. 

§§ 12-120.21 and 12-2101(A)(1).

DISCUSSION

A. The Superior Court Did Not Err by Granting Summary Judgment

for Impala and Denying Wallace’s Reconsideration Motion.

¶11 Wallace first argues that the superior court erred by granting 

summary judgment for Impala on several claims. We review the grant of a 

motion for summary judgment de novo, viewing the facts in the light most 

favorable to the non-moving party. Andrews v. Blake, 205 Ariz. 236, 240, ¶ 12 

(2003). Summary judgment is appropriate when “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); Orme Sch. v. Reeves, 166 Ariz. 301, 

309 (1990).

1. The Superior Court Did Not Err by Granting Summary 

Judgment for Impala on Its Claim for an Unauthorized Filing of a 

Financing Statement.

¶12 Wallace argues the superior court erred by granting summary 

judgment against him for wrongfully recording a financing statement. In 

its motion for summary judgment, Impala argued that Wallace filed an 

unauthorized record violating A.R.S. § 47-9527. The statute prohibits a 

person from filing a record that he “knows or has reason to know . . . is 

unauthorized under § 47-9509.” A.R.S. § 47-9527(A). And as relevant here,

A.R.S. § 47-9509 provides that a person may file a financing statement only 

if authorized via an authenticated record or a security agreement. The 

superior court granted summary judgment because Wallace filed the 

financing statement without authorization or a security agreement, and he 

failed to terminate the filing after Impala’s request.

¶13 Wallace asserts on appeal that there was, in fact, an 

authenticated record or a security agreement. He points to the bill of sale, 

which he argues “clearly showed [he] was buying a Membership Interest 

thus the purchase clearly described the collateral.” He then argues that he 

perfected his interest by filing the financing statement, giving him “the 

right to foreclose on the liquor license, an asset of the LLC, based on the 

Operating Agreement.” Wallace, however, relies only on a provision in the 
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operating agreement under the article for dissolution and termination that 

states, “each Member shall look solely to the assets of the Company for the 

return of its Capital Contribution.”

¶14 The cited provision does not contemplate a security 

agreement or authorize filing a financing statement. And Wallace identifies 

no other operating agreement provision that would do so. He also cites no

authority that a purchaser acquires a security interest in an LLC’s assets 

simply by acquiring a membership interest in the LLC. And Wallace 

removed himself as a member nearly a year before claiming a security 

interest in the liquor license.

¶15 Because Wallace held no secured interest and had no 

authorization from Impala to file a financing statement, he was prohibited 

under A.R.S. § 47-9509 from filing a financing statement. And because he 

refused to terminate his unauthorized filing after Impala’s demand pointed

out the deficiency, Wallace is liable under A.R.S. § 47-9527 if he knew, or 

should have known, the filing was prohibited. Wallace does not raise, as a 

substantive claim, that he lacked the knowledge or it was a fact question of 

whether he had the requisite knowledge required under the unauthorized 

lien statute. Without asserting such a claim, we cannot find the court erred

by granting summary judgment.1

2. The Superior Court Did Not Err by Granting Summary 

Judgment for Impala on the Claims for Breach of Contract.

¶16 Wallace also argues that the court erred by granting summary 

judgment against him on his breach of contract claims. Wallace claims 

Impala breached the operating agreement by (1) failing to name Wallace a 

manager, (2) failing to return his investment or distribute profits, and 

(3) denying him access to company records.

¶17 Wallace first argues that the operating agreement required 

Impala to make him a manager and that Impala failed to do so. The 

operating agreement names Wallace as a manager and sets forth the rights 

and duties of a manager. But Wallace concludes, without identifying any 

specifics, that he “set forth more than sufficient facts to show he was shut 

1 Wallace also argues that the court erred by awarding fees under 

A.R.S. § 47-9527, but because Appellees failed to delineate which fees arose 

out of the wrongful filing claim, the court never awarded fees under the

statute.
NAVA-CRUZ, et al. v. WALLACE

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out from managing the business.” Without identifying record evidence that 

Impala wrongfully precluded him from participating as a manager, Wallace 

cannot prevail. In fact, there is record evidence that Wallace removed 

himself as a manager. The superior court did not err on this ground.

¶18 Wallace next argues that Impala breached the operating 

agreement by failing to distribute profits and reimburse his $16,000 

contribution. The operating agreement provides that Wallace is entitled to 

50% of Impala’s profits. But Wallace offered no evidence that Impala 

realized profits, arguing only that “evidence was presented showing the 

company was operating.” Without profit evidence, Wallace’s claim fails. He 

also identifies no provision in the operating agreement that would entitle 

him to a reimbursement of his initial investment. The court thus did not err 

by granting summary judgment.

¶19 Finally, Wallace argues that he was denied access to company 

records. Arizona law requires companies to allow members access to 

company records. A.R.S. § 29-3410(B). A member seeking access, however, 

must “make[] a demand in a record received by the company describing 

with reasonable particularity the records sought and the purpose for 

seeking the records.” A.R.S. § 29-3410(B)(2). Likewise, the operating 

agreement required Impala to allow members access to documents “[u]pon 

reasonable request.” Wallace identifies no such demand or request. The 

court did not err by granting summary judgment forImpala on this ground.

3. The Superior Court Did Not Err by Granting Partial 

Summary Judgment for Impala on the Claim for Breach of the 

Implied Covenant of Good Faith and Fair Dealing.

¶20 Wallace argues Impala breached the implied covenant of 

good faith and fair dealing. Wallace based his claim partly on “the failure 

to repay the contribution, profits, and in effect removing Wallace from 

managing the business.” The superior court granted summary judgment on

these grounds, citing several cases from other jurisdictions to conclude that 

“[a] plaintiff cannot stack a good faith covenant claim on a contract claim 

using the same facts, damages, and arguments.”

¶21 Wallace argues on appeal that the court erred by concluding 

that he cannot bring a breach of contract claim and a bad faith claim on the 

same grounds. Generally, “an implied covenant of good faith and fair 

dealing cannot directly contradict an express contract term.” Bike Fashion 

Corp. v. Kramer, 202 Ariz. 420, 423, ¶ 14 (App. 2002). But Wallace is correct 

that in some cases, “Arizona law recognizes that a party can breach the 
NAVA-CRUZ, et al. v. WALLACE

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implied covenant of good faith and fair dealing . . . by exercising express 

discretion in a way inconsistent with a party’s reasonable expectations.” Id. 

at 424, ¶ 14.

¶22 Wallace, however, fails to develop the argument beyond his 

conclusory statement that the court’s conclusion “was error.” He identifies 

no evidence that Impala acted inconsistently with his reasonable 

expectations and provided no other reason for the court to deviate from the 

general rule. Because “we may affirm on any ground supported by the 

record,” see Yauch v. S. Pac. Transp. Co., 198 Ariz. 394, 403, ¶ 25 (App. 2000), 

we conclude that the court did not err by granting summary judgment.

4. The Superior Court Did Not Grant Partial Summary 

Judgment for Nava-Cruz on the Claim for Negligent 

Misrepresentation.

¶23 Wallace argues that the court erred by limiting his negligent 

misrepresentation claim against Nava-Cruz. He claims the court 

wrongfully “limited him to statements made to him by Cruz” even though 

he “made it clear that he was [pursuing] an omission theory.” Wallace’s 

assertion is factually incorrect. The court found that “Wallace [did not] 

identify any affirmative misstatements from Cruz; he asserted only Cruz’s 

failure to disclose the shoddy bookkeeping. It is a close question if Cruz’s 

silence supports the claim and survives summary judgment.” (Emphasis 

added.) The court did not err because it did not limit Wallace or otherwise

grant partial summary judgment on this ground.

5. The Superior Court Did Not Err by Denying Wallace’s 

Motion for Reconsideration.

¶24 Wallace argues that the court erred by denying his motion to 

reconsider the claims decided on summary judgment. We review the denial 

of a motion for reconsideration for an abuse of discretion. Tilley v. Delci, 220 

Ariz. 233, 238, ¶ 16 (App. 2009). Wallace raises the same issues described 

above, and for the same reasons, we conclude the court did not abuse its 

discretion by denying the reconsideration motion.

B. The Superior Court Did Not Err by Excluding a Trial Witness.

¶25 Before the trial, the court excluded one of Wallace’s witnesses 

because Wallace had not timely disclosed him under Rule 77(f). Wallace 

challenges that exclusion.
NAVA-CRUZ, et al. v. WALLACE

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¶26 We review the superior court’s decision to exclude a witness 

for an abuse of discretion. State v. Carlos, 199 Ariz. 273, 277, ¶ 10 (App. 2001). 

Here, the court excluded the witness under Rule 77(f)(3), which requires 

parties to disclose trial witnesses within 20 days from the time a notice of 

appeal from arbitration is served.

¶27 Appellees appealed from arbitration on January 22, 2021. 

Wallace concedes he disclosed the witness on March 1. But he argues that 

Rule 77(f)(5) gives the parties “80 days after the filing of the notice of appeal 

to complete discovery” and that witness disclosures fall under this rule.

¶28 We cannot read the rule to include witness disclosures as part 

of the discovery contemplated in Rule 77(f)(5) because it would eliminate

Rule 77(f)(3). See Nicaise v. Sundaram, 245 Ariz. 566, 568, ¶ 11 (We must give 

meaning to every provision so that no provision is rendered superfluous.). 

Wallace had 20 days to disclose his witness and failed to do so timely. The 

court thus did not abuse its discretion by excluding the witness.

C. The Superior Court Did Not Err by Granting Partial Judgment as 

a Matter of Law in Favor of Impala.

¶29 After the court’s partial grant of summary judgment, 

Wallace’s only remaining claim for breach of the implied covenant of good 

faith and fair dealing was that he was “trespassed” from Impala. After 

Wallace’s case-in-chief, Impala moved for judgment as a matter of law 

under Rule 50(a). The court allowed the claim to proceed to the jury but 

concluded that Wallace had not proven actual damages because he 

produced no evidence of lost profits. Thus, the court limited the claim to 

nominal damages.

¶30 Wallace challenges the nominal damage limitation. We 

review the grant of a motion for judgment as a matter of law de novo. Glazer 

v. State, 237 Ariz. 160, 167, ¶ 29 (2015).

¶31 Wallace argues that uncertainty about the damages amount 

does not preclude recovery. But this is only true after “the right to damages 

is established.” Lewis v. N.J. Riebe Enters., Inc., 170 Ariz. 384, 397 (1992).

Conjecture or speculation does not provide a basis for damages, and there 

must be evidence sufficient to estimate the amount accurately. Felder v. 

Physiotherapy Assocs., 215 Ariz. 154, 162, ¶ 38 (App. 2007) (citing Gilmore v. 

Cohen, 96 Ariz. 34 (1963)).

¶32 As mentioned, Wallace sought damages for lost profits but 

offered no evidence that Impala was profitable. The court, therefore, did 
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not err by limiting his claim to nominal damages. Moreover, even if the 

limitation were error, it would have been harmless because the jury found 

for Impala on the substantive claim and thus would not consider damages.

D. Wallace Waived His Claim that the Jury Verdict Should Be Set 

Aside.

¶33 Wallace’s next argument, in its entirety, is that “[g]iven the 

errors in this case in limiting the evidence and witness, the jury verdict 

cannot be upheld. It is impossible to predict what a jury would have done 

if it had heard the proper evidence and arguments.” Wallace has waived 

this claim because he did not raise it before the superior court and fails to 

develop the argument on appeal. See BMO Harris Bank N.A. v. Espiau, 251 

Ariz. 588, 593–94, ¶ 25 (App. 2021) (Arguments not raised before the 

superior court are waived.); Ritchie v. Krasner, 221 Ariz. 288, 305, ¶ 62 (App. 

2009) (Arguments not developed and supported by authority are waived.).

E. The Superior Court Did Not Err by Awarding Appellees Their 

Reasonable Attorney’s Fees.

¶34 Lastly, the court awarded Appellees half of their requested 

attorney’s fees under A.R.S. § 12-341.01(A), which allows an award of fees 

to the prevailing party in a contract action. Wallace argues that the superior 

court’s award should be vacated or further reduced. We review an award 

of attorney’s fees for an abuse of discretion, and we “will affirm unless there 

is no reasonable basis for the award.” Hawk v. PC Vill. Ass’n, 233 Ariz. 94, 

100, ¶ 19 (App. 2013).

¶35 Wallace argues that policy weighs against an award of fees 

and that the court should have considered that he prevailed on all counts 

in arbitration. But as the superior court noted in its order, Wallace 

ultimately failed on all claims, has not shown extreme hardship, and has 

not specifically identified excessive billing entries. See Associated Indem. 

Corp. v. Warner, 143 Ariz. 567, 570 (1985) (The factors in determining a fee 

award include, among other things, the claim’s merits and whether an 

award would cause extreme hardship.). The court’s award, therefore, is not 

devoid of a reasonable basis, and we affirm it.

ATTORNEY’S FEES

¶36 Appellees request their reasonable attorney’s fees and costs 

on appeal under A.R.S. §§ 12-341, 12-341.01, and 47-9527(A). Recognizing 

that Appellees have prevailed on all issues raised on appeal, we grant 

Appellees’ request upon compliance with ARCAP 21.
NAVA-CRUZ, et al. v. WALLACE

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¶37 Appellees also request sanctions under A.R.S. § 12-349(A) and 

ARCAP 25. Per our discretion, we decline to impose sanctions.

CONCLUSION

¶38 We affirm.