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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

ALEJANDRO PRECIADO, Plaintiff/Appellee,

v.

YOUNG AMERICA INSURANCE COMPANY, Defendant/Appellant.

No. 1 CA-CV 16-0082

Appeal from the Superior Court in Maricopa County

No. CV2012-097512

The Honorable David K. Udall, Judge

AFFIRMED IN PART; REVERSED IN PART; REMANDED 

COUNSEL

Schneider & Onofry, P.C., Phoenix

By Charles D. Onofry, Luane Rosen

Counsel for Defendant/Appellant

Arnett & Arnett, P.C., Chandler

By Wayne C. Arnett, Mark W. Arnett

Co-Counsel for Plaintiff/Appellee

Randolph G. Bachrach, Attorney at Law, Chandler

By Randolph G. Bachrach

Co-Counsel for Plaintiff/Appellee
PRECIADO v. YOUNG AMERICA

Decision of the Court

2

MEMORANDUM DECISION

Judge Lawrence F. Winthrop delivered the decision of the Court, in which 

Presiding Judge Samuel A. Thumma and Judge James P. Beene joined.

W I N T H R O P, Judge:

¶1 Young America Insurance Company (“Young America”) 

appeals the judgment entered after a jury found Young America liable for 

compensatory and punitive damages stemming from its conduct 

surrounding the handling of Alejandro Preciado’s insurance claim. Young 

America argues the trial court erred in two of its instructional rulings and 

in a ruling on a motion in limine; erred in not granting its motions for 

judgment as a matter of law on Preciado’s breach of contract and punitive 

damages claims; and erred in denying its motion for a new trial. Young 

America also challenges the jury’s breach of contract and punitive damages 

awards and the trial court’s award of attorneys’ fees and costs. For the 

following reasons, we affirm the challenged instructional rulings and the 

ruling on the motion in limine. We reverse the order allowing the issue of 

punitive damages to go to the jury. We vacate the jury’s breach of contract 

award and remand for the entry of a modified award. Finally, we affirm 

the award of attorneys’ fees, but vacate the award of costs and remand for 

the entry of a modified award.

FACTS AND PROCEDURAL HISTORY

¶2 In 2010, Preciado bought a 2000 Ford F-350 from a friend and 

purchased general liability insurance through Young America. In August 

2011, Preciado was having financial problems and borrowed $4,000 from a 

title loan company, which placed a lien on his truck. The loan agreement 

required that Preciado’s truck have comprehensive and collision insurance, 

and Preciado consequently obtained that additional coverage through 

Young America. Young America’s insurance policy stated that, in the event 

of theft, Young America would be liable for the “actual cash value” of the 

vehicle.

¶3 Approximately a month after increasing insurance coverage 

on his truck, Preciado drove his truck to his sister’s house for a family 

gathering. His niece gave him a ride home that night, and he left his truck 

at his sister’s house. The next day, Preciado did not go pick up his truck 
PRECIADO v. YOUNG AMERICA

Decision of the Court

3

because he was using a different vehicle. Two days later, Preciado 

discovered his truck had been stolen from his sister’s house. He 

immediately reported the incident to the police and Young America.

¶4 Young America took a recorded telephonic statement from 

Preciado and sent him a “theft packet,” which included various forms for 

him to complete and return. After researching the value of the truck, 

Preciado completed a sworn statement of loss, claiming $13,800 for the 

truck.

¶5 Young America referred the claim to its special investigations 

unit “for investigation of a questionable theft,” and requested that Preciado 

appear for an examination under oath. An attorney for Young America 

administered the examination under oath and later requested additional 

documents from Preciado, such as phone records, contact information for 

certain individuals, and copies of checks. In an email to Young America’s 

special investigations unit manager, the attorney stated that although 

Preciado was “cooperative and responsive,” he was “not entirely 

forthcoming with his financial information.” Young America’s attorney 

also noted that, due to Preciado’s “abysmal” finances, “there is significant 

financial motive in this claim,” but “[t]he lack of recovery [of the vehicle] 

makes any declination [of the claim] difficult because we are not able to 

eliminate theft as a possible explanation for the vehicle’s disappearance.”

¶6 Preciado gathered the information the attorney requested and 

sent it to Young America in January 2012. In February 2012, the police 

notified Young America that the truck had been located in a remote area of 

Nogales, Mexico, and that it would be difficult, if not impossible, to recover. 

At approximately that same time, Young America’s special investigations 

unit approved payment of Preciado’s claim.

¶7 The following month, a Young America adjuster offered 

Preciado $11,597.17 to settle the claim.1 Preciado told the adjuster that he 

had looked up the value of the truck, and that offer was “very low.” He 

stated that he “would consider the [insurer’s] offer once [Young America] 

provided [him] with [information on] how they came up on that number.” 

 

1 Young America apparently calculated its offer by using a National 

Automobile Dealers’ Association (NADA) valuation. The offer included 

Young America’s determination of the actual cash value of the vehicle, 

$10,712.50, plus approximately $885 to cover tax and the cost of the truck’s 

registration tag.
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For the next several months, Preciado attempted to contact Young America 

to obtain the documentation and support for its offer. Preciado never 

received any documentation from Young America showing how Young 

America calculated its offer.

¶8 In May 2012, the Texas Department of Insurance approved 

the acquisition of Young America by Alfredo Joseph Loya, a Texas resident, 

and the following month the Preciado claim file was transferred from 

Young America’s office in South Carolina to a Fred Loya Insurance (“Fred 

Loya”) claims office in Austin, Texas.

2

¶9 On July 10, 2012, Fred Loya closed the claim file for “lack of 

cooperation” by Preciado. Three weeks later, Preciado contacted Young 

America and was told by an adjuster that his claim number “was no good,” 

his file had been “lost,” and they would assign his case to a new claims 

adjuster.

¶10 Preciado made multiple follow-up calls attempting to “find 

out how they got that number for what they were offering [him]” and to 

resolve the claim. In the fall of 2012, Young America reopened Preciado’s 

claim and assigned it to a Fred Loya adjuster, Arturo Saldana, who sent

Preciado another “theft packet” indicating the carrier was investigating his 

claim again and requesting he complete more forms, including another 

affidavit of theft. Saldana then renewed Young America’s original offer of 

$11,597.17, conditioned on Preciado again providing a copy of the police 

report and the affidavit of theft. When Preciado declined to complete and 

resend the same documents he had previously provided, Saldana sent 

Preciado a letter indicating that any further handling of his claim would be 

under a full reservation of rights because of Preciado’s “failure to submit 

legal notices or papers.”

¶11 In December 2012, Preciado, through counsel, filed a 

complaint against Young America, seeking compensatory damages for 

breach of contract and breach of the duty of good faith and fair dealing. 

Preciado also alleged Young America’s actions justified an award of 

punitive damages. Two days later, Young America notified Preciado it 

would be sending him a check for $10,712.50, less $3,213.75 for the 

estimated salvage value of the vehicle, for a total of $7,498.75. The letter 

informed Preciado that, if he chose “not to retain the salvage,” Young 

 

2 It appears that Young America continued to operate as an entity 

under the Fred Loya corporate umbrella, with further handling of this claim 

out of the Fred Loya Austin office.
PRECIADO v. YOUNG AMERICA

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America would “issue the remaining amount of $3,213.75” upon Preciado’s 

proper completion of a power of attorney form.3 The check was never 

cashed, and Preciado asserted that he did not receive it, even though Young 

America’s counsel wrote to Preciado’s counsel affirming the amount had 

been tendered and the check had been deposited. Several months later, 

Young America sent a “replacement check” in the amount of $7,498.75, 

acknowledging that “the check previously issued in December 2012 . . . was 

never delivered and has been stale dated by Young America.” Preciado 

rejected the check. Over the next year and a half, the parties were 

unsuccessful in their attempts to negotiate a final settlement.4

¶12 In March 2014, the Arizona Department of Insurance (“DOI”) 

concluded a target market conduct examination of Young America to 

evaluate the company’s compliance with Arizona insurance statutes and 

regulations. The DOI concluded that, among other things, between 2012 

and 2013, Young America “fail[ed] to promptly investigate claims within 

thirty (30) days after receipt of the claim notice” and “fail[ed] to maintain 

all notes and work papers pertaining to claim files in such detail that 

pertinent events and the dates of such events can be reconstructed.” In 

order to resolve the matter without formal proceedings, Young America 

entered a consent order with the DOI in July 2014, admitting 

noncompliance with multiple statutes and regulations, agreeing to pay a 

 

3 Because the now-heavily damaged vehicle was eventually located 

on a mountaintop in Mexico in an area controlled by a drug cartel, both 

parties agreed “the salvage for th[e] vehicle [wa]s not obtainable by 

anyone.” Internal memos in Young America’s file at the time appear to 

concede (1) that the vehicle likely could not be safely recovered and (2) that 

it likely had little to no salvage value. Nevertheless, Young America 

continued to request that Preciado provide a power of attorney to allow

transfer of title to the insurer and, if Preciado did not do so, the total loss 

payment would be reduced by the salvage value of a vehicle the company 

knew had no salvage value and one that Preciado had no reasonable access 

to. At trial, Saldana testified that he sent Preciado the power of attorney 

form, but Preciado never returned it. Preciado testified that he could not 

recall whether he signed and returned the form, but a supplement to the 

original police report indicated that Young America was the “registered 

owner” of the vehicle.

4 Young America also served an offer of judgment on Preciado, which 

Preciado did not accept. In January of 2014, Preciado accepted Young 

America’s check in the amount of $11,597.17 without prejudice to his rights 

to proceed with his bad faith claim.
PRECIADO v. YOUNG AMERICA

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6

civil penalty of $42,000, and agreeing to implement certain corrective 

actions to prevent further violations from occurring. Notwithstanding the 

allegations in Preciado’s pending case of untimely claims handling and 

incomplete claims documentation, Young America did not disclose the 

consent order to Preciado in this case.

¶13 Also in March 2014, Preciado’s counsel deposed Arturo 

Saldana, the Fred Loya insurance adjuster who was involved in the 

handling of Preciado’s reopened claim after Young America was acquired 

by Fred Loya. When asked about the previous settlement offers Young 

America made to Preciado, the following exchange took place between 

Preciado’s counsel and Saldana:

[Preciado’s counsel]: But you know that you owe the retail 

number, the high blue book, right?

Saldana: You will have to clarify that. I’m not too sure.

[Preciado’s counsel]: Well, if he’s going to go out and buy a 

new truck with the money that this insurance company gives 

him, he’s going to go out and buy it retail, isn’t he?

Saldana: Actually, we wouldn’t pay retail.

[Preciado’s counsel]: You wouldn’t?

Saldana: Huh-uh.

[Preciado’s counsel]: Why not?

Saldana: We pay the value of the vehicle. We don’t pay retail.

[Preciado’s counsel]: Well, isn’t that the idea of this, so he can 

go out and by [sic] another truck?

Saldana: No. He insures the value of the vehicle, and we pay 

him out the value of the vehicle.

. . . 

[Preciado’s counsel]: Well, let’s put it in your shoes. You say 

you don’t pay the retail amount. If you had done a report 
PRECIADO v. YOUNG AMERICA

Decision of the Court

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from NADA and gotten a value from them, you would have 

looked for the wholesale value, not the retail one?

. . .

Saldana: If I ran NADA, but I don’t know how a NADA 

works. I don’t ever see wholesale or retail, the difference 

between the two. I take that back. I do see the difference. But 

we go with the value of the vehicle, not the retail, so . . . [.]

[Preciado’s counsel]: So you would be looking at the 

wholesale value, not the retail value?

Saldana: That’s what it would be.

¶14 Later that year, in a pretrial motion, Preciado moved to strike 

Young America’s expert on the basis that the expert improperly calculated 

the value of Preciado’s truck “based on the wholesale auction value,” rather 

than the value an insured would have to pay to replace the vehicle in the 

retail market. In the same motion, Preciado requested the court “issue an 

order giving the proper interpretation of ‘actual cash value’ in this 

insurance policy.” The court denied Preciado’s motion to strike Young 

America’s expert, but did not immediately issue an order interpreting the 

phrase “actual cash value.”

¶15 Trial in this matter was set for May 4, 2015. In November 

2014, Preciado’s trial counsel independently obtained a copy of the DOI 

consent order. Because of “a mistake in routing the documents” between 

the two different law firms representing Preciado, he did not personally 

review the consent order until March 2015.5 On March 10, 2015, Preciado, 

through counsel, produced the consent order in a supplemental disclosure 

statement. Young America moved in limine to exclude it, arguing the 

disclosure was untimely because it was filed “after the discovery deadline 

had expired” and “less than 60 days before [] trial.” In response, Preciado 

argued that, because Young America was a signatory to the consent order, 

it was “a document that should have been disclosed by Young America.” 

Additionally, Preciado contended that the consent order was “relevant to 

 

5 The parties’ joint scheduling order required them to exchange final 

disclosure statements, pursuant to Arizona Rule of Civil Procedure 

(“Rule”) 26.1, by August 29, 2014, and all discovery was to be concluded by 

October 1, 2014.
PRECIADO v. YOUNG AMERICA

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show that the failure to investigate Mr. Preciado’s claim in a reasonable 

time and properly document the claims file was not an inadvertent error, 

but part of a pattern and practice of Young America” and that it was 

“evidence of Young America’s state of mind,” all relevant to the issue of 

bad faith and the potential for an award of punitive damages.

¶16 After hearing oral argument, the trial court denied Young 

America’s motion in limine, finding the consent order “relevant in these 

proceedings” because the DOI’s findings and conclusions of law “are the 

same allegations with respect to this case.” The court also found that Young 

America “would not be surprised by the contents of the Consent Order and 

would not be prejudice[d] by allowing [its use] in this case.”

¶17 At an earlier pretrial conference in January 2015, Preciado’s 

counsel had again requested the court address “what the proper 

interpretation of the words actual cash value are in the insurance policy.” 

Young America objected to Preciado’s contention that “actual cash value” 

meant “retail market value,” arguing instead that “actual cash value” 

meant “the fair market value.” The court asked counsel for both parties if 

it would be acceptable “if the understanding is . . . it’s retail market value, 

but each side will be allowed the opportunity to present evidence and 

persuade the jury one way or the other . . . what retail market value actually 

consists of[.]” Young America then questioned the need for an order in the 

first place, but ultimately conceded that an insured who is entitled to the 

actual cash value of his total loss vehicle is entitled to the retail value, not 

the wholesale value. The trial court subsequently ordered and later 

instructed the jury that “the proper legal interpretation of ‘actual cash 

value’ in the Young America Insurance policy means its retail market

value.”

¶18 Before trial, Young America moved for partial summary 

judgment on Preciado’s punitive damages claim. The court denied the 

motion, finding that Young America’s handling of Preciado’s claim created 

genuine issues of material fact as to whether punitive damages were 

warranted.

¶19 During the six-day trial, the jury heard testimony from 

Saldana, Preciado, Young America’s valuation expert, and the Young 

America attorney who conducted Preciado’s examination under oath. 
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Preciado’s counsel referenced the consent order multiple times throughout 

trial.6

¶20 After Preciado rested his case, Young America moved for 

judgment as a matter of law, see Ariz. R. Civ. P. 50(a), on the breach of 

contract claim (arguing that, beyond the minimal difference in the amount 

offered and the amount claimed for actual value of the vehicle, there was 

no proof of any contractual damages), and the punitive damages claim 

(again arguing that there was insufficient evidence of “an evil hand” guided 

by “an evil mind”). See Rawlings v. Apodaca, 151 Ariz. 149, 162, 726 P.2d 565, 

578 (1986) (holding that, “to obtain punitive damages, [a] plaintiff must 

prove that [a] defendant’s evil hand was guided by an evil mind”). Young 

America also moved for judgment as a matter of law to preclude any bad 

faith claim extending beyond the takeover of Young America’s claims by 

Fred Loya. The court denied all of these motions. Additionally, the court 

denied Young America’s request to include an instruction and a form of 

verdict to allow the jury to apportion fault to Preciado relative to his bad 

faith claim.

¶21 At the conclusion of trial, the jury found in favor of Preciado, 

awarding $100,000 in compensatory damages and $750,000 in punitive 

damages for his bad faith claim, and $34,500 for his breach of contract claim. 

Additionally, the court awarded Preciado more than $300,000 in attorneys’ 

fees, costs, and interest.

¶22 Young America filed a motion for a new trial, which the court 

denied. Young America timely appealed, and we have jurisdiction 

pursuant to the Arizona Constitution, Article 6, Section 9, and Arizona 

Revised Statutes (“A.R.S.”) sections 12-120.21(A)(1) (2016) and 12-

2101(A)(1), 5(a) (2016).

ANALYSIS

I. Interpretation of “Actual Cash Value” 

¶23 As an initial matter, we address Young America’s argument 

that the trial court erred in its pretrial ruling interpreting the phrase “actual 

cash value” in the insurance policy to mean “retail market value.” 

According to Young America, the trial court should have interpreted the 

 

6 The trial court redacted the consent order before it was produced to 

the jury, such that the DOI’s findings, conclusions of law, and orders only 

pertaining to Young America’s noncompliance with certain statutory and 

regulatory violations were admitted.
PRECIADO v. YOUNG AMERICA

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policy language and instructed the jury that, in this context, “actual cash 

value” means “fair market value.” On appeal, Young America argues that, 

applying a definition of fair market value, it was entitled to adjust for 

depreciation and physical condition of the vehicle, and that the court 

impermissibly “rewrote” the insurance contract. We review de novo a trial 

court’s interpretation of the meaning of terms in an insurance contract. 

Mendota Ins. Co. v. Gallegos, 232 Ariz. 126, 129, ¶ 8, 302 P.3d 651, 654 (App. 

2013).

¶24 Here, the parties agreed that the insurance policy required 

Young America to pay Preciado the “actual cash value” of the insured 

vehicle in the event of theft or a total loss. The meaning of “actual cash 

value” was not defined in the policy, however, and in pretrial proceedings 

the parties agreed the term was ambiguous, but disagreed as to how the 

trial court should interpret it.

¶25 Our review of the record indicates that the purpose of the trial 

court’s order interpreting “actual cash value” to mean “retail market value” 

was to clarify and acknowledge the parties’ explicit agreement that “actual 

cash value,” as it pertained to the policy at issue, did not mean “wholesale 

value.”7 Because Young America confirmed it did not intend to argue 

Preciado was only entitled to the wholesale value of the truck and 

affirmatively conceded that the “retail value” is the appropriate definition 

for determining the actual cash value of a total loss claim, we find no error 

in the trial court’s ruling.8 Moreover, even assuming the meaning of “actual 

 

7 Such agreement and order also seems consistent with the direction 

provided by the DOI in its administrative regulations concerning valuation 

of total loss automobile claims. See Ariz. Admin. Code R20-6-801(H)(1)(b).

8 Young America also asserts that Preciado’s counsel obtained this 

ruling through “trickery and deceit.” At oral argument, counsel for Young 

America stated his belief that the purpose of the pretrial status conference 

was to pick a trial date, and because of a scheduling conflict, he sent another 

lawyer to cover that conference, apparently not expecting that any 

substantive issue would be raised or resolved. We see no indication in the 

record that Preciado’s counsel acted improperly or dishonestly in his 

multiple attempts to obtain a pretrial ruling on the interpretation of “actual 

cash value.” Preciado’s counsel had previously requested the ruling at an 

October 2014 conference, in his motion to strike Young America’s expert, 

and in his reply to Young America’s response to his motion to strike. 

Although the trial court denied Preciado’s motion to strike Young 

America’s expert, it did not rule on or address Preciado’s request for an 
PRECIADO v. YOUNG AMERICA

Decision of the Court

11

cash value” and/or “retail market value” arguably remained unclear, it was 

appropriate for the jury to determine the meaning of such terms. See, e.g.,

Pasco Indus., Inc. v. Talco Recycling, Inc., 195 Ariz. 50, 62, ¶¶ 51-52, 985 P.2d 

535, 547 (App. 1998) (stating that, although the issue of whether a contract 

is ambiguous is a question of law, “[i]f a contract is ambiguous, the parties 

may offer evidence to help interpret it, and the construction thus becomes 

a question for the jury”).

¶26 Indeed, the court specifically advised counsel they could try 

to persuade the jury as to their respective views as to how the jury should 

interpret and apply these terms, and at trial, Young America presented 

evidence and vigorously argued to the jury that “actual cash value” or 

“retail market value,” in the context of this insurance agreement and under 

the facts of this case, meant Young America could take into account the 

physical condition and depreciation of the vehicle in making its offer to 

Preciado.9 Under these circumstances, we see no error in the court’s 

acceptance of Young America’s concession, or in its order and instruction 

to the jury defining “actual cash value.”

 

interpretation of “actual cash value.” Therefore, it was not improper for 

Preciado’s counsel to again request that the court address the issue at the 

January 2015 pretrial conference. Further, the transcript from the January 

2015 pretrial conference shows that Preciado’s counsel attempted to clarify 

Young America’s position on the interpretation of “actual cash value,” and 

Young America ultimately conceded that the proper interpretation was 

retail value, not wholesale value. The trial court was in the best position to 

evaluate the motivations and actions of counsel relative to this issue and, 

notwithstanding Young America’s subsequent attempts to disavow its 

agreement on the use of “retail value,” the court did not alter its ruling. 

Thus, the record does not support Young America’s assertion that 

Preciado’s counsel acted improperly.

9 At trial, Young America presented evidence that, at the time of the 

loss, the subject vehicle was a 2000 Ford F-350 truck that had gone through 

several different owners, had over 180,000 miles of use, and had been in an 

accident. Counsel for Young America argued to the jury in closing that 

these factors all significantly affected the retail market value of the vehicle, 

even assuming with that history it had any retail market value.
PRECIADO v. YOUNG AMERICA

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II. Comparative Bad Faith

¶27 Young America also challenges the trial court’s refusal to 

instruct the jury on Preciado’s alleged comparative bad faith, and to allow 

the jury to apportion fault to Preciado on the verdict form. The record does 

not reflect that the court actually ruled on Young America’s request in this 

regard, other than to make a general ruling denying the parties’ objections 

pertaining to specific jury instructions; however, motions that are not ruled 

on are deemed denied. See State v. Hill, 174 Ariz. 313, 323, 848 P.2d 1375, 

1385 (1993) (“A motion that is not ruled on is deemed denied by operation 

of law.”). We review a trial court’s denial of a requested jury instruction or 

form of verdict for an abuse of discretion. Ritchie v. Krasner, 221 Ariz. 288, 

299, ¶ 30, 211 P.3d 1272, 1283 (App. 2009).

¶28 In support of its request for a comparative bad faith 

instruction, Young America contended “there is evidence that Plaintiff 

intentionally delayed himself in providing certain documentation and 

ultimately refused to provide certain documents which he knew or should 

have known would have aided the claim being processed and resolved.”10

¶29 The Uniform Contribution Among Tortfeasors Act 

(“UCATA”) applies the principles of comparative fault in personal injury, 

property damage, and wrongful death actions. A.R.S. § 12-2506(A) (2016). 

Young America contends that although the statute “does not specifically 

refer to bad-faith [claims],” it reasons that bad faith is a tort, and therefore 

“the jury should have been given the opportunity to apportion fault to 

Preciado.” Putting aside the fact that Young America “lost” the completed 

forms and other documents previously provided by Preciado, and that it 

had already internally acknowledged its acceptance of his total loss claim, 

Young America has cited no authority to support its proposition that 

UCATA mandates the application of comparative fault principles in bad 

faith cases, and we find none. Insurance bad faith is an intentional tort, see 

Nardelli v. Metro. Grp. Prop. & Cas. Ins. Co., 230 Ariz. 592, 613, ¶ 106, 277 P.3d 

789, 810 (App. 2012), and the principles of comparative fault do not apply 

to intentional torts. See A.R.S. § 12-2505(A) (2016) (stating “[t]here is no 

right to comparative negligence in favor of any claimant who has 

intentionally, willfully or wantonly caused or contributed to the injury”). 

The trial court therefore did not abuse its discretion in denying Young 

 

10 As reflected in its closing argument, Young America believed that 

after Preciado retained counsel, those lawyers “secretly” helped direct 

Preciado in manufacturing a bad faith claim to increase the likelihood of a 

significant settlement or verdict.
PRECIADO v. YOUNG AMERICA

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America’s request to instruct or allow the jury to apportion fault to Preciado 

based on his alleged comparative bad faith.

III. Punitive Damages Award

¶30 Young America argues the trial court erred in denying its 

motion for judgment as a matter of law on Preciado’s punitive damages 

claim and that the jury’s punitive damages award was both 

unconstitutional and unsupported by the evidence. We review de novo a

trial court’s ruling on a motion for judgment as a matter of law, and we 

view the evidence in the light most favorable to the nonmoving party. 

Sobieski v. Am. Standard Ins. Co. of Wis., 240 Ariz. 531, 534, ¶ 8, 382 P.3d 89, 

92 (App. 2016) (citation omitted).

¶31 Proof of an insurer’s liability for the tort of bad faith does not 

automatically entitle a plaintiff to punitive damages. Rawlings, 151 Ariz. at 

161, 726 P.2d at 577 (rejecting the contention that, “since bad faith is a 

species of intentional tort, punitive damages are automatically recoverable 

in every case in which the plaintiff proves that the tort was committed”). 

To obtain punitive damages, a plaintiff must show by clear and convincing 

evidence that “the defendant’s wrongful conduct was guided by evil 

motives.” Id. at 162, 726 P.2d at 578; Linthicum v. Nationwide Life Ins. Co., 150 

Ariz. 326, 332, 723 P.2d 675, 681 (1986). An evil motive may be found (1) 

where the defendant insurer “intended to injure the plaintiff” or (2) where,

“although not intending to cause injury, [the] defendant consciously 

pursued a course of conduct knowing that it created a substantial risk of 

significant harm to others.” Rawlings, 151 Ariz. at 162, 726 P.2d at 578

(citation omitted). In this second category, punitive damages may be 

warranted where the insurance company had and followed an established 

policy or practice that, in effect, placed its own financial interest over that 

of its insureds. See Nardelli, 230 Ariz. at 604-09, 277 P.3d at 801-06. But 

because punitive damages are restricted “to only the most egregious of 

wrongs,” Linthicum, 150 Ariz. at 331, 723 P.2d at 680, such damages are 

recoverable in bad faith actions “when, and only when, the facts establish 

that the defendant’s conduct was aggravated, outrageous, malicious or 

fraudulent.” Rawlings, 151 Ariz. at 162, 726 P.2d at 578 (citation omitted).

¶32 Young America argues the evidence presented in this case 

was insufficient to warrant an award of punitive damages because although 

there may have been “missteps in the claims handling process,” such 

evidence was not proof of “an evil mind.” Our independent review of the 

evidence submitted at trial compels the conclusion that the evidence of 

these “missteps” was sufficient to justify the jury’s finding of liability in the 
PRECIADO v. YOUNG AMERICA

Decision of the Court

14

bad faith action, but we agree with Young America that the trial court erred 

in denying its motion for judgment as a matter of law on Preciado’s 

punitive damages claim.

¶33 At oral argument, Preciado agreed that his punitive damages 

claim is not premised on evidence of intentional harm. He does argue, 

however, that punitive damages are warranted in this case because Young 

America had and followed a policy of always offering “wholesale” price 

value for theft or total loss of insured property rather than “retail market 

value,” which, in Preciado’s view, violated Young America’s contractual 

promise to pay “actual cash value” for an insured loss. Preciado further 

argues that this practice was intended to enhance Young America’s 

financial position over that of its insureds. But the evidentiary proof—as 

opposed to counsel’s argument—offered at trial falls short of the level of 

clear and convincing evidence that is required to allow a jury to consider 

the issue. See Linthicum, 150 Ariz. at 332, 723 P.2d at 681.

¶34 Preciado’s argument is premised upon answers to deposition 

questions posed to Saldana, concerning the subject vehicle’s NADA 

valuation, which was apparently the basis for Young America’s settlement 

offer to Preciado.11 During the deposition, Preciado’s counsel attempted to 

get Saldana—who was not involved in the initial settlement offers to 

Preciado and had never seen the NADA report—to agree that the value 

assigned in the report was a “wholesale” value. Preciado was, in effect, 

arguing that “actual cash value” means “replacement value” in a “retail 

market” as reflected, for example, in the Kelley Blue Book. Saldana 

disagreed, pointing out that Preciado had insured the value of the vehicle, 

not its replacement cost. When pushed on the value most likely listed in 

the NADA report, Saldana replied that he did not have the report and could 

not say what was in it or the nature of the value assigned in the report. 

When further pushed on the issue, Saldana again stated that “we” (meaning 

Fred Loya) “pay the value of the vehicle. We don’t pay retail.” When 

 

11 During litigation, it was discovered that the NADA valuation report 

was not in the insurance claims file. Preciado argued that the report was 

intentionally removed from the insurance file and sent to a Young America 

lawyer, and notwithstanding formal discovery requests, it has never been 

produced. There is nothing in the record to indicate Preciado asked the 

court to intervene and compel the production of the report, or compel a 

satisfactory explanation as to why it could not be produced, or request an 

instruction to the jury concerning Young America’s failure to produce the 

report.
PRECIADO v. YOUNG AMERICA

Decision of the Court

15

pushed further, Saldana agreed that this meant Fred Loya’s practice was to 

offer a wholesale value.

¶35 From this testimony, Preciado extrapolated and argued that 

Young America had a company-wide policy that, in theft or total loss 

property claims, the insured would never be offered retail replacement 

value, but would instead always be offered the wholesale value of the 

vehicle. Putting aside the fact that Saldana was not a Young America 

executive, claim manager, supervisor, or any other employee or 

representative who could speak knowledgeably about Young America’s 

policies and practices,12 this extrapolation was not even a fair 

representation of Saldana’s testimony. Saldana testified, both in his 

deposition and at trial, that Fred Loya’s claims adjusting practice for this 

type of coverage and loss was to pay the market value of the vehicle, 

considering its history, cosmetic appearance, and mechanical condition. 

Even if Fred Loya had a company-wide adjusting policy of “shortchanging” its insureds by arbitrarily offering a wholesale value for these 

types of losses, there was no evidence produced that established that the 

named defendant in this case, Young America, had any similar policy or 

practice.13

¶36 At trial, the respective values the parties placed on the vehicle

were substantially similar. Young America presented evidence explaining 

how it calculated the amounts of its various offers to Preciado. Although 

the jury ultimately did not agree with those explanations, that disagreement

 

12 In his testimony at trial, in response to questions about Saldana’s 

knowledge concerning how Young America did or did not process the 

claim, Saldana indicated, “I don’t know how Young America would work.” 

Further, when asked by Preciado’s counsel, “You can tell this jury, though, 

that Young America doesn’t pay retail?”, Saldana responded, “The Young 

America before we obtained it, I don’t know what they paid.”

13 When urged by Preciado’s counsel to “tell this jury the truth about 

what Young America pays on total loss claims,” Saldana answered, “We 

pay the actual cash value of the vehicle, considering the condition of the 

vehicle, the year, make and model. Take into consideration mileage on the 

vehicle. That’s not going to match what you would see out on a car lot a lot 

[of] times because a car lot’s prices are going to be bigger. So when 

[Preciado’s counsel] asked me on retail, I was confused. But we pay the 

actual cash value. Whether you call that wholesale or not, that was the part 

that confused me.”
PRECIADO v. YOUNG AMERICA

Decision of the Court

16

does not establish that Young America acted with the requisite “evil mind” 

to support an award of punitive damages.

¶37 Preciado compares Young America’s conduct in this case to 

the conduct of the insurer in Hawkins v. Allstate Insurance Company. There, 

the supreme court affirmed the jury’s punitive damages award where 

Allstate had a “policy of routine, automatic deductions, regardless of their 

validity, in valuing an insured’s loss.” 152 Ariz. 490, 498, 733 P.2d 1073, 

1081 (1987). But in Hawkins, three former Allstate employees testified in 

detail about the company’s claims handling procedures. Id. at 494, 733 P.2d 

at 1077. One of the former employees stated that she was taught to “always

deduct a $35 cleaning fee, regardless of the car’s cleanliness.” Id. at 495, 733 

P.2d at 1078. She also testified that her supervisor explained the small 

deductions “wouldn’t mean much to an insured or claimant, but $5 on 

every claim would mean a lot to the company.” Id. (internal quotations 

omitted). Another former employee testified that he was told that, because 

the insureds were typically concerned with getting their vehicles back, they 

“would not perhaps object to some of these small deductions.” Id. The 

same employee testified, “The statement was frequently made that if you 

could save one dollar on a million claims, you would save the company as 

much as a million dollars.” Id. Thus, because “[t]he jury could have 

rationally concluded that Allstate’s conduct . . . resulted in harm to 

countless insureds” and that Allstate “took advantage of its insureds’ 

predicaments to settle claims at lesser amounts by deducting relatively 

small, innocuous amounts from each total loss claim under the guise of cost 

saving,” the evidence was sufficient to support the punitive damage award. 

Id. at 502, 733 P.2d at 1085. But here, Preciado presented no testimony from 

any current or former Young America employees. Instead, he relied on a 

portion of the deposition testimony of a Fred Loya adjuster who, in context, 

appears to have been confused by Preciado’s attorney’s line of questioning. 

Saldana’s deposition testimony alone is insufficient to constitute clear and 

convincing evidence of an “evil mind.” See Sobieski, 240 Ariz. at 542, ¶ 43, 

382 P.3d at 100 (concluding that “isolated phrases” are “wholly insufficient 

to constitute clear and convincing evidence required to support [a] claim 

for punitive damages”). Other than this arguably inconclusive testimony, 

which Saldana later clarified at trial,

14 Preciado presented no other evidence 

 

14 Saldana testified at trial that Fred Loya “would not pay the retail 

price of a new vehicle,” but the “actual cash value” of the vehicle being 

replaced. He also stated, “I don’t know what you would define as 

wholesale. That’s the part that confused me.”
PRECIADO v. YOUNG AMERICA

Decision of the Court

17

showing that Young America had a “routine policy” of arbitrarily paying 

the wholesale value on total loss claims.

¶38 We also note that, since Hawkins, this court has had occasion 

to analyze and apply the standard of proof necessary for punitive damages 

awards in bad faith actions. In 2012, we affirmed the entitlement to punitive 

damages where the plaintiffs presented evidence of the insurer’s 

“aggressive company-wide profit goal” and the corporate policy behind 

that goal that was communicated to every associate, “emphasiz[ing] they 

should keep the $155 million target in mind when evaluating every aspect 

of every claim.” See Nardelli, 230 Ariz. at 605-06, ¶¶ 62, 68, 277 P.3d at 802-

03 (App. 2012). And more recently, in Sobieski, we reversed a jury’s punitive 

damages verdict where the record “reveal[ed] nothing resembling the 

Nardelli-like profit-driven atmosphere.” 240 Ariz. at 542, ¶ 43, 382 P.3d at 

100. There, in comparing the facts to those in Nardelli, we concluded the 

Sobieski record lacked “any evidence that, as in Nardelli, company officers 

directed adjusters to reduce claims payouts to enhance the company’s 

bottom line.” Id. at 538, ¶ 17, 382 P.3d at 96. Further lacking in Sobieski was

evidence of “compensation or evaluation policies that favored company 

profits over the interests of insureds.” Id. at 542, ¶ 43, 382 P.3d at 100. 

Similarly, in this case, Preciado has presented no evidence that Young 

America directed claims adjusters to reduce claims payouts. See Nardelli, 

230 Ariz. at 605-06, 277 P.3d at 802-03. And, as discussed above, Saldana’s 

deposition testimony alone is insufficient to show that Young America had 

a corporate policy of denying their insureds the actual cash value of their 

property.15 See Hawkins, 152 Ariz. at 498, 733 P.2d at 1081.

¶39 In addition to Preciado’s claim that Young America had a 

“policy” of paying wholesale on total loss claims and that policy supported 

an award of punitive damages, Preciado also argues that Young America 

took other actions in this case that constitute clear and convincing evidence 

of an “evil mind.” He contends that Young America’s attempt to reduce its 

payment by the salvage value of the vehicle was an attempt to “minimize 

the payment” and to “put pressure on [Preciado].” He also asserts that 

Young America’s placement of the phrase “full and final settlement” on the 

check sent to Preciado in 2013 was an attempt “to extract a release of all 

claims,” and is evidence of “overt dishonesty.” Additionally, he argues that 

Young America was “specifically aware” of Preciado’s financial 

 

15 Preciado’s counsel conceded at oral argument that the DOI consent 

order did not indicate that Young America devalued total loss claims by 

paying “wholesale” values instead of “actual cash value.”
PRECIADO v. YOUNG AMERICA

Decision of the Court

18

vulnerability, and “played upon it while recklessly failing to process or pay 

the claim.” Although we agree with Preciado that Young America’s actions 

in this case show less-than-exemplary claims handling practices, on this 

record, we cannot conclude this constitutes clear and convincing evidence 

that Young America acted “with the intent to injure, or with conscious 

disregard of [Preciado’s] rights and the injury that might result.” Thompson 

v. Better-Bilt Aluminum Prods. Co., Inc., 171 Ariz. 550, 557, 832 P.2d 203, 210 

(1992).

¶40 There is no doubt that the evidence produced at trial in this 

case was more than sufficient for the jury to find that the claims handling 

by Young America, and its treatment of Preciado, constituted a tortious 

breach of the covenant of good faith and fair dealing. But, for the reasons 

discussed above, that evidence falls short of the degree of proof required to 

support referral of the issue of punitive damages to the jury, and the court 

should have granted Young America’s motion for judgment as a matter of 

law on that issue. Cf. Rawlings, 151 Ariz. at 162, 726 P.2d at 578 

(“Indifference to facts or failure to investigate are sufficient to establish the 

tort of bad faith but may not rise to the level required by the punitive 

damage rule.”). Accordingly, we reverse the trial court’s denial of that 

motion and vacate the jury’s award of punitive damages.

16

IV. Consent Order

¶41 Young America contends the trial court abused its discretion 

in denying its motion in limine and permitting Preciado to introduce the 

DOI consent order as evidence at trial. In the presentation of his case to the 

jury, Preciado’s counsel referred to the consent order during his opening 

and closing arguments and questioned a witness about his knowledge of it. 

Young America argues that Preciado’s counsel used the consent order to 

“inflame” the jury to the point where it awarded significant punitive 

damages.

¶42 We review a trial court’s evidentiary rulings for an abuse of 

discretion, and will not reverse unless the court incorrectly applied the law 

or unfair prejudice resulted. Larsen v. Decker, 196 Ariz. 239, 241, ¶ 6, 995 

P.2d 281, 283 (App. 2000). In reviewing the trial court’s exercise of its 

discretion, “[t]he question is not whether the judges of this court would 

have made an original like ruling, but whether a judicial mind, in view of 

 

16 Because we vacate the punitive damages award, we need not 

address Young America’s argument that the award violated constitutional 

principles.
PRECIADO v. YOUNG AMERICA

Decision of the Court

19

the law and circumstances, could have made the ruling without exceeding 

the bounds of reason.” Associated Indem. Corp. v. Warner, 143 Ariz. 567, 571, 

694 P.2d 1181, 1185 (1985) (citation omitted). We review de novo the 

application and interpretation of procedural rules. See Xavier R. v. Joseph R., 

230 Ariz. 96, 98, ¶ 3, 280 P.3d 640, 642 (App. 2012) (citation and internal 

quotations omitted).

¶43 Young America asserts the trial court erred in denying its 

motion in limine to exclude the consent order because Preciado failed to 

comply with Rule 37(c). Rule 37(c)(1) provides that “[u]nless the court 

orders otherwise for good cause, a party who fails to timely disclose . . . a 

document . . . may not, unless such failure is harmless, use the . . . document 

as evidence at trial.” Rule 37(c)(4) further provides that, where a party 

seeks to use a document “that it first disclosed later than the deadline set in 

a Scheduling Order, or—in the absence of such a deadline—60 days before 

trial,” that party “must obtain leave of court by motion.” (emphasis added). 

Additionally, “[t]he motion must be supported by affidavit and must show 

that: (A) the . . . document would be allowed under the standards of Rule 

37(c)(1); and (B) the party disclosed the information, witness, or document 

as soon as practicable after its discovery.” Ariz. R. Civ. P. 37(c)(4) (emphasis 

added).

¶44 In this case, the parties’ joint scheduling order required the 

parties to “exchange[] up-to-date final Rule 26.1 Supplemental Disclosure 

Statements by 5:00 p.m. on August 29, 2014.” In January 2015, the court set 

the case for trial to commence on May 4, 2015. On March 10, 2015, fifty-five 

days before trial, Preciado, through counsel, filed a fourth supplemental 

disclosure statement, in which he produced the consent order. As conceded 

at oral argument, Preciado did not request leave of the court by motion for 

the untimely disclosure of the consent order and did not submit an affidavit 

showing that the consent order “would be allowed under the standards of 

Rule 37(c)(1)” and that he had disclosed the consent order “as soon as 

practicable after its discovery.” See Ariz. R. Civ. P. 37(c)(4).

¶45 Without question, Young America should have itself 

affirmatively disclosed/produced the subject consent order and, whether

by intent or neglect, failed to do so. Preciado fortuitously obtained and 

disclosed the order, but failed to timely do so, or to comply with the rules 

of procedure in that regard. Although the issue was presented to the court 

by motion, it was raised by Young America’s motion in limine, not by a Rule 

37(c)(4) motion filed by Preciado. As noted by the trial court, Young 

America, as a signatory to the consent order, could hardly claim surprise or 
PRECIADO v. YOUNG AMERICA

Decision of the Court

20

other meaningful prejudice arising out of the use of the consent order at 

trial.

¶46 Were we allowed to simply apply equitable principles, we 

would, on this record, simply affirm the trial court’s ruling; however, 

neither the parties nor this court should ignore the explicit dictates of Rule 

37(c)(4). But, as noted above, Young America does not argue on appeal that 

the consent order played any role in the jury’s assessment and award of bad 

faith compensatory damages; instead, it argues only that the admission and 

use of this document affected the punitive damages claim and award. With

no briefing or argument that the use of the consent order affected the jury’s 

award of compensatory damages on the bad faith claim, we affirm the 

court’s order denying the motion in limine, notwithstanding the court’s 

failure to follow the specific dictates of Rule 37(c)(4). See ARCAP 13(a)(7) 

(stating that, on appeal, an argument “must contain . . . Appellant’s 

contentions concerning each issue presented for review, with supporting 

reasons for each contention, and with citations of legal authorities and 

appropriate references to the portions of the record on which the appellant 

relies”); Polanco v. Indus. Comm’n, 214 Ariz. 489, 491 n.2, ¶ 6, 154 P.3d 391, 

393-94 n.2 (App. 2007) (stating that an appellant’s failure to develop and 

support an argument waives that issue on appeal); Nelson v. Rice, 198 Ariz. 

563, 567 n.3, ¶ 11, 12 P.3d 238, 242 n.3 (App. 2000) (stating that a party 

waives an argument by failing to raise it in the opening brief on appeal).

V. Breach of Contract Damages Award

¶47 Young America asserts that the trial court erred in denying its 

motion for judgment as a matter of law on Preciado’s breach of contract 

claim and that the jury’s breach of contract award is unsupported by the 

evidence. We review de novo a trial court’s ruling on a motion for judgment 

as a matter of law. Felder v. Physiotherapy Assocs., 215 Ariz. 154, 162, ¶ 36, 

158 P.3d 877, 885 (App. 2007). Judgment as a matter of law is proper “only 

if the facts presented in support of a claim have so little probative value that 

reasonable people could not find for the claimant.” Shoen v. Shoen, 191 Ariz. 

64, 65, 952 P.2d 302, 303 (App. 1997). In making that determination, “we 

view the evidence in a light most favorable to upholding the jury verdict 

and will affirm if any substantial evidence exists permitting reasonable 

persons to reach such a result.” Coll. Book Ctrs., Inc. v. Carefree Foothills 

Homeowners’ Ass’n, 225 Ariz. 533, 536, ¶ 9, 241 P.3d 897, 900 (App. 2010) 

(citation and internal quotations omitted).

¶48 Here, the record does not support Young America’s claim that 

the trial court erred in denying its motion for judgment as a matter of law 
PRECIADO v. YOUNG AMERICA

Decision of the Court

21

on Preciado’s breach of contract claim. Preciado presented evidence that 

his vehicle was insured by Young America, that the insurance policy 

required Young America to pay Preciado the “actual cash value” of the 

vehicle in the event of a theft, that a theft occurred, and that the offer and 

final payment made by Young America to resolve the claim was lower than 

the “actual cash value” of the vehicle. The evidence presented, although 

contested by Young America, was sufficient for a reasonable juror to have 

found that Young America breached its contract with Preciado by failing to 

abide by the terms of the insurance policy, and therefore was liable for 

direct and consequential damages arising out that breach.

¶49 Nonetheless, we conclude that the amount of the jury’s award 

for breach of contract was against the weight of the evidence provided at 

trial. See Styles v. Ceranski, 185 Ariz. 448, 450, 916 P.2d 1164, 1166 (App. 

1996) (stating that this court must set aside a verdict “if there is no evidence 

in the record to justify it”). The jury’s $34,500 breach of contract award is 

considerably more than the difference between what Preciado requested for 

the truck, $14,435.69,17 and what Young America ultimately gave him, 

$11,597.17. The difference amounts to $2,838.52. Young America contends 

that, after subtracting the difference from the $34,500 award, the remaining 

$31,661.48 “was presumably for ‘loss-of-use’ damages,” and that, 

notwithstanding the court’s instruction on consequential damages,

Preciado neither claimed those damages in his complaint nor disclosed the 

required computation for the measure of those damages, as required by 

Rule 26.1.18

¶50 Despite Preciado’s argument to the contrary, he failed to 

plead loss-of-use consequential damages for breach of contract in his 

complaint.19 Although certain issues, including consequential damages,

 

17 Preciado requested $13,800 for the vehicle, plus $1,121.94 in tax and 

$13.75 for the truck’s registration tags, minus the $500 deductible.

18 Preciado argues Young America waived this argument by not 

raising it below. We conclude, however, that Young America preserved the 

issue on appeal by objecting to the proposed jury instruction on 

consequential damages for loss of use.

19 Preciado cites a “catch-all” damages paragraph in his complaint 

corresponding to his bad faith claim as support for his argument that he 

claimed consequential damages for his breach of contract claim. However, 

that language merely references “other consequential damages,” without 

providing any specifics.
PRECIADO v. YOUNG AMERICA

Decision of the Court

22

that are not raised in the pleadings may be tried in certain circumstances, 

see Home Indem. Co. v. Bush, 20 Ariz. App. 355, 359, 513 P.2d 145, 149 (App. 

1973), Rule 26.1(a)(7) nevertheless requires a party to disclose “a 

computation and measure of each category of damages alleged.” In this 

case, we find no evidence in the record that Preciado disclosed a 

computation and measure concerning the loss of use of his vehicle for 

approximately four years, or of any other consequential damages 

pertaining to his breach of contract claim, as required by Rule 26.1(a)(7), nor 

does Preciado’s answering brief respond to Young America’s argument in 

this regard.20

¶51 Finally, in addition to the pleading and disclosure defects, we 

note the evidence at trial does not support the contract damages. 

Accordingly, we vacate the jury’s $34,500 breach of contract award and 

remand this issue to the trial court to enter a modified verdict for breach of 

contract in the amount of $2,838.52 plus interest to reflect the contractual 

damages supported by the evidence.

VI. Trial Court’s Award of Attorneys’ Fees and Costs

¶52 Young America contends the trial court abused its discretion 

in its award of attorneys’ fees. Under A.R.S. § 12-341.01(A) (2016), a court 

may award reasonable attorneys’ fees to the successful party in a contested 

action arising out of contract. Here, Preciado requested the trial court 

award forty-five percent of the total recovery, for a total of $401,730.06 in 

fees. Instead, the trial court awarded $302,170 in fees.

¶53 Although A.R.S. § 12-341.01(A) provides that a court may 

award attorneys’ fees to the prevailing party in a breach of contract action, 

the statute does not expressly provide for an award of fees specifically 

incurred relative to a bad faith tort claim. See A.R.S. § 12-341.01(A) (“In any 

contested action arising out of a contract, express or implied, the court may 

award the successful party reasonable attorney fees.”) (emphasis added). 

See also Smith v. Am. Exp. Travel Related Servs. Co., 179 Ariz. 131, 141, 876 

P.2d 1166, 1176 (App. 1994) (concluding the trial court erred in awarding 

attorneys’ fees pursuant to A.R.S. § 12-341.01 for claims that were “solely 

 

20 In closing argument, Preciado’s counsel suggested a methodology 

for the jury to consider in calculating a loss-of-use component to a 

compensatory damages award. Counsel’s argument is not a substitute for 

evidence or proof sufficient to sustain such an award. See Quine v. Godwin, 

132 Ariz. 409, 412, 646 P.2d 294, 297 (App. 1982).
PRECIADO v. YOUNG AMERICA

Decision of the Court

23

tort claims”). But cf. Sparks v. Republic Nat’l Life Ins. Co., 132 Ariz. 529, 544, 

647 P.2d 1127, 1142 (1982) (stating that because “the tort of bad faith cannot 

be committed absent the existence of an insurance contract and a breach 

thereof,” the tort of bad faith is “intrinsically related to the contract,” such 

that attorneys’ fees may be awarded under A.R.S. § 12-341.01).

¶54 Here, because Preciado was the prevailing party in a breach 

of contract action, the trial court had discretion to award him reasonable 

attorneys’ fees. Because the fee award does not allocate separate amounts 

for each of Preciado’s claims,21 we conclude that implicit in the trial court’s 

fee award was the determination that Preciado’s bad faith claim was 

“intrinsically related” to his breach of contract claim. Accordingly, as the 

prevailing party on a breach of contract claim and an “intrinsically related” 

bad faith tort claim, Preciado is entitled to reasonable attorneys’ fees, and 

the trial court’s fee award was not an abuse of discretion.

¶55 Young America also objects to the trial court’s award of 

taxable costs to Preciado in the amount of $4,477.91. We review a trial 

court’s award of costs for an abuse of discretion, Maleki v. Desert Palms Prof’l 

Props., L.L.C., 222 Ariz. 327, 333-34, ¶ 32, 214 P.3d 415, 421-22 (App. 2009), 

but the issue of whether a particular expenditure qualifies as a taxable cost 

is a question of law that we review de novo. Foster v. Weir, 212 Ariz. 193, 195, 

¶ 5, 129 P.3d 482, 484 (App. 2006).

¶56 Pursuant to A.R.S. § 12-332(A) (2016), taxable costs in the 

superior court include the cost of taking depositions. Young America 

argues Preciado is not entitled to the costs incurred for both of his attorneys 

to travel from Arizona to Texas to take the deposition of Arturo Saldana. 

Because “[t]ravel costs related to the taking of depositions outside Arizona 

. . . have been determined to be taxable costs,” Bennett v. Baxter Group, Inc., 

223 Ariz. 414, 423, ¶ 37, 224 P.3d 230, 239 (App. 2010), and it was not 

unreasonable for both of Preciado’s attorneys to be present for the 

deposition of a key witness, the trial court did not abuse its discretion in 

awarding the challenged travel expenses.

 

21 The court did not specify how it calculated the amount awarded; 

however, the number is consistent with the lodestar figure claimed in 

Preciado’s application for fees. See Charles I. Friedman, P.C. v. Microsoft 

Corp., 213 Ariz. 344, 347 n.2, ¶ 1, 141 P.3d 824, 827 n.2 (App. 2006) (stating 

that “[a] lodestar figure is ‘the product of reasonable hours times a 

reasonable rate.’”) (citation omitted).
PRECIADO v. YOUNG AMERICA

Decision of the Court

24

¶57 A.R.S. § 12-332(A) also provides that taxable costs include 

witness fees. Young America claims that Preciado should not have been 

awarded costs for the defense expert’s witness fee because such fees 

generally “do not extend to fees paid for an expert witness to appear at 

trial.” However, the witness fee Preciado requested as a taxable cost was 

not related to the expert’s testimony at trial, but rather the fee Preciado 

incurred in taking the deposition of the expert. Because taxable costs 

include those incurred where a party “is required to pay an opponent’s

witness an expert fee or incurs other expenses necessarily and reasonably 

incurred to obtain an adverse witness’s testimony before trial,” Rabe v. Cut & 

Curl of Plaza 75, Inc., 148 Ariz. 552, 555, 715 P.2d 1240, 1243 (App. 1986), the 

trial court did not abuse its discretion in awarding Preciado the defense 

expert witness fee as a taxable cost.

¶58 Finally, Young America challenges the trial court’s award of 

$108 for the cost incurred in obtaining the transcript of a status conference. 

Although A.R.S. § 12-332(A) provides that taxable costs in the superior 

court include the cost of “certified copies of papers or records,” this court 

has held that the cost of the transcript of a hearing is not a recoverable 

expense. See Cyprus Bagdad Copper Corp. v. Ariz. Dep’t of Revenue, 188 Ariz. 

345, 347, 935 P.2d 923, 925 (App. 1997). Therefore, the trial court abused its 

discretion in awarding Preciado the cost associated with obtaining the 

hearing transcript. Accordingly, we vacate the trial court’s award of 

$4,477.91 in taxable costs, and remand for a modified award of costs in the 

amount of $4,369.91.

VII. Attorneys’ Fees and Costs on Appeal

¶59 Both parties request attorneys’ fees on appeal pursuant to 

A.R.S. § 12-341.01. In the exercise of our discretion, we deny both requests. 

As the substantially prevailing party on appeal, Young America is entitled 

to its taxable costs on appeal upon compliance with ARCAP 21.

CONCLUSION

¶60 We affirm the trial court’s ruling interpreting the meaning of 

“actual cash value” as it pertains to this case. We affirm the trial court’s 

ruling denying Young America’s request to instruct the jury on Preciado’s 

alleged comparative bad faith and the trial court’s ruling on the consent 

order.

¶61 We reverse the trial court’s denial of Young America’s motion 

for judgment as a matter of law on Preciado’s punitive damages claim and 

vacate the jury’s award of punitive damages. We also vacate the jury’s 
PRECIADO v. YOUNG AMERICA

Decision of the Court

25

breach of contract award and remand for the entry of a modified award in 

the amount of $2,838.52 plus interest. We affirm the jury’s award pertaining 

to Preciado’s bad faith claim.

¶62 Finally, we affirm the trial court’s award of attorneys’ fees, 

but vacate the award of costs and remand for the entry of a modified award 

in the amount of $4,369.91.