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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

MW2 INVESTMENTS LLC, Plaintiff/Appellant/Cross-Appellee,

v.

IMH SPECIAL ASSET NT 168 LLC, et al., Defendants/Appellees/

Cross-Appellants.

R. STEWART HALSTEAD, et al., Cross-Appellees.

No. 1 CA-CV 18-0271 

Appeal from the Superior Court in Maricopa County

No. CV 2016-051187

The Honorable Christopher T. Whitten, Judge

AFFIRMED

COUNSEL

Jeffrey M. Proper PLLC, Phoenix

By Jeffrey M. Proper

Counsel for Plaintiff/Appellant/Cross-Appellee

Snell & Wilmer LLP, Phoenix

By Benjamin W. Reeves, Christopher H. Bayley, James G. Florentine

Counsel for Defendants/Appellees/Cross-Appellants

Broening, Oberg, Woods & Wilson, Phoenix

By Brian Holohan

Counsel for R. Stewart Halstead and R. Stewart Halstead, P.C.

FILED 12-19-2019
MW2 INVESTMENTS v. IMH SPECIAL, et al. 

Decision of the Court

2

MEMORANDUM DECISION

Presiding Judge Jennifer B. Campbell delivered the decision of the Court, 

in which Judge Maria Elena Cruz and Judge James B. Morse Jr. joined.

C A M P B E L L, Judge:

¶1 MW2 Investments LLC (“Investments”) appeals the superior 

court’s orders dismissing its complaint and denying it leave to amend its 

complaint against IMH Special Asset NT 168, LLC and several other related 

entities (collectively, “IMH”). IMH cross-appeals the court’s denial of its 

request for sanctions pursuant to Arizona Rule of Civil Procedure (“Rule”)

11. For the following reasons, we affirm.

BACKGROUND1

¶2 Investments is a member of Seagoville Investments, LLLP

(“Seagoville”). The present case is predicated on a judgment and 

subsequent receivership entered in a separate lawsuit involving Seagoville

(“Lawsuit 1”). In that case, IMH obtained a judgment (the “Judgment”)

against the then-general partner of Seagoville, David Maniatis, and his 

revocable trust (collectively, “Judgment Debtors”). With that judgment 

secured, IMH asked the court to appoint a receiver to manage all assets 

owned or controlled by the Judgment Debtors and aid IMH in executing on 

the Judgment. As relevant to this case, the court appointed MCA Financial 

Group, Ltd. (“Receiver”) as a receiver pursuant to Rule 66(b)2 (the 

“Receivership Order”). See A.R.S. § 12-1241 (empowering the superior court 

to “appoint a receiver to protect and preserve property or the rights of 

parties”). The court expressly authorized the Receiver to “take immediate 

1 Investments asks to incorporate a brief filed by the former general 

partner of Seagoville, David Maniatis, in a related appeal. Although

ARCAP 13(h) allows parties to join in a single brief or “an appellant or 

appellee [to] adopt by reference any part of the brief of another party,” the 

rule applies only to briefs filed in the same appeal. We thus grant IMH’s 

motion to strike Investments’ incorporation of David P. Maniatis’ opening 

brief. 

2 The Arizona Rules of Civil Procedure were amended during the 

pendency of this case. No material changes affect the outcome of this appeal 

and, therefore, we cite to the current Rules unless noted. 
MW2 INVESTMENTS v. IMH SPECIAL, et al. 

Decision of the Court

3

possession, custody and control of all . . . partnership interests . . . owned 

. . . or controlled in whole or in part by” Maniatis, as the judgment debtor, 

and to “manage and takeover all of [Maniatis’] business affairs.” The court 

also charged the Receiver with the duty to exercise rights in the receivership 

estate “for the benefit of [Maniatis’] creditors.” 

¶3 After the Receiver identified over 150 different partnerships, 

corporations, and trusts that Maniatis created and controlled, the 

receivership court amended the initial Receivership Order, authorizing the 

Receiver to take control of many of the businesses and identify assets to be 

gathered into the receivership estate. This amended order included 

Seagoville, an entity the court determined Maniatis owned and controlled: 

“Seagoville is ultimately owned and controlled by Judgment Debtors David 

P. Maniatis (“Maniatis”) and/or the DPM-TT Trust (the “Trust”), and not 

subject to any applicable exemptions from execution. Accordingly, 

Seagoville is subject to administration under this Court’s MCA 

Receivership Order. “

¶4 Before the Receiver was appointed, Maniatis had executed an 

agreement (the “Seagoville PSA”) on behalf of Seagoville to sell 

approximately 12 acres of property in Texas (“the Seagoville Property”) to 

a buyer (the “Buyer”) for a sum certain. After execution of the Seagoville 

PSA, the court appointed a receiver. When Maniatis failed to timely close 

the sale, the Buyer sued Seagoville and the Receiver seeking specific 

performance. 

¶5 Rather than litigate the specific performance action, the 

Receiver chose to perform under the Seagoville PSA. The Receiver, joined 

by IMH, asked the receivership court to (1) allow the Receiver to exercise 

Seagoville’s rights as seller pursuant to the Seagoville PSA, and (2) approve 

a related agreement between the Buyer and IMH that authorized IMH to 

purchase the Buyer’s interest in the Seagoville PSA. The Receiver notified 

the court that IMH intended to assemble the Seagoville Property with 

several other parcels that could then be sold together for more money than 

if each parcel was sold separately. The receivership court granted the 

motion, finding “Seagoville [was] ultimately owned and controlled by [the 

Judgment Debtors]” and therefore was “subject to administration under 

[the] MCA Receivership Order.” The court also found that all parties who 

claimed an ownership or management interest in Seagoville or the 

Seagoville Property received proper notice of the joint motion. The Receiver

completed the transaction pursuant to the Seagoville PSA, and after IMH

acquired ownership rights, it sold the assembled properties to a third-party. 
MW2 INVESTMENTS v. IMH SPECIAL, et al. 

Decision of the Court

4

All proceeds from the sale of the Seagoville Property went into the 

receivership estate. 

¶6 After IMH completed the purchase of the property, 

Investments attempted to intervene in the receivership proceeding. 

Investments moved to set aside the sale and void the appointment of the 

Receiver. In the alternative, Investments asked the receivership court to 

give it some of the proceeds of the sale of the Seagoville property. The

receivership court denied Investments’ motion, finding that Investments

had not shown a right to intervene because its interests were already 

represented in the case by Maniatis, the court had already addressed the 

relief sought, and “if [Investments] has an interest in a receivership asset, 

[such as the Seagoville Property or its sale proceeds,] there is a process for 

[Investments] to protect that interest by submitting a claim.”

¶7 The receivership court then granted the Receiver’s motion to 

distribute the sale proceeds to IMH, explaining it had previously 

determined the proceeds from the Seagoville sale were to be “made 

available for [IMH’s] execution” on the Judgment. Noting Maniatis’ 

objections to the distribution, the court went on to explain that the 

Seagoville Property is owned and controlled by the Judgment Debtors

[Maniatis and his various business organizations] and subject to the 

Receivership and Receivership Order. The Receiver then filed a motion to 

wind-up the estate and make its final distributions to the creditors.

Investments filed a notice of adverse impact to its interests. The court 

granted the Receiver’s motion and denied and overruled “[a]ny and all 

objections to the Wind-Up Motion.” As provided in that order, the Receiver

distributed the remaining assets of the receivership estate and was 

discharged by the court. 

¶8 Investments then initiated the current lawsuit, on its own 

behalf and derivatively on behalf of Seagoville (“Lawsuit 2”). It alleged a 

17% interest in Seagoville and sued to unwind the sale of the Property, 

claiming the sale occurred only through IMH’s “misrepresentations, 

concealment of facts and other misconduct and fraud on the Court.” 

Investments alleged six causes of action: (1) accounting and distribution; (2) 

sums owed under a contract; (3) fraud; (4) constructive fraud; (5) negligent 

misrepresentation; and (6) unjust enrichment. 

¶9 IMH filed a motion to dismiss Lawsuit 2. The superior court 

granted IMH’s motion to dismiss and denied Investments’ oral motion for 

leave to amend the complaint, reasoning “there is no legal theory on which 

[it] could prevail.” IMH sought attorney fees, costs, and sanctions against
MW2 INVESTMENTS v. IMH SPECIAL, et al. 

Decision of the Court

5

Investments; its sole member/manager, Robert M. Semple; its attorney, R. 

Stewart Halstead; and his firm, R. Stewart Halstead, P.C. The court denied 

the request for sanctions under Rule 11 but awarded $63,062.12 in attorney 

fees and $1,581.72 in taxable costs under A.R.S. §§ 12-341.01 and 12-341.

Investments timely appealed the superior court’s dismissal of its claim and 

IMH timely cross-appealed the court’s denial of sanctions.

DISCUSSION

I. Investments’ Claims on Appeal

¶10 We review the dismissal of a claim under Rule 12(b)(6) de 

novo. Coleman v. City of Mesa, 230 Ariz. 352, 355, ¶ 7 (2012). In doing so, we 

“assume the truth of all well-pleaded factual allegations and indulge all 

reasonable inferences from those facts.” Id. at 356, ¶ 9 (citation omitted). 

However, we will not “speculate about hypothetical facts that might entitle 

the plaintiff to relief,” Cullen v. Auto-Owners Ins., 218 Ariz. 417, 420, ¶ 14 

(2008), nor will we “accept as true allegations consisting of conclusions of 

law, inferences or deductions that are not necessarily implied by wellpleaded facts, unreasonable inferences or unsupported conclusions from 

such facts, or legal conclusions alleged as facts.” Jeter v. Mayo Clinic Ariz., 

211 Ariz. 386, 389, ¶ 4 (App. 2005) (citation omitted).

¶11 The premise of each of Investments’ claims is that it was 

improperly deprived of a share in the benefits of the sale of the Seagoville 

property when the Receiver executed the sale to IMH and IMH

subsequently packaged the property for sale to a third party. Investments

argues the superior court erred by concluding that the receivership court’s 

rulings, along with the Receiver’s judicial immunity, barred its claims.

Investments contends the receivership court’s orders cannot bar its claims 

in this case because (1) IMH committed fraud on the receivership court, (2) 

the receivership court’s orders and rulings are void because the Judgment 

was partially vacated on appeal, and (3) the receivership court did not have 

subject matter jurisdiction to appoint a receiver.

3

A. New Arguments may not be made on Appeal 

¶12 For the first time on appeal, Investments argues (1) the 

appointment of the receiver over Seagoville’s assets constituted an “‘event 

of withdrawal’ under A.R.S. § 29-323”; (2) Seagoville, rather than Maniatis 

3 Although Investments did not raise its attack on subject matter 

jurisdiction below, in our discretion, we address it here. See Hawkins v. 

Allstate Ins. Co., 152 Ariz. 490, 503 (1987).
MW2 INVESTMENTS v. IMH SPECIAL, et al. 

Decision of the Court

6

and the other Judgment Debtors, owned the partnership assets; (3) it 

“alleged sufficient facts to support liability for conspiracy” between IMH 

and the Receiver amounting to a breach of fiduciary duty; and (4) it “alleged 

sufficient facts to support liability [of IMH] for aiding and abetting” the 

Receiver in breaching its fiduciary duties. Generally, “an appellate court 

will not consider issues not raised in the trial court.” Hawkins v. Allstate Ins. 

Co., 152 Ariz. 490, 503 (1987). Because Investments failed to raise these 

arguments below, we decline to consider them for the first time on appeal.

B. Subject Matter Jurisdiction

¶13 Investments challenges the receivership court’s subject matter 

jurisdiction in the underlying matter based on theories of partnership law

in Lawsuit 1. While it does not raise a challenge to the court subject matter 

jurisdiction in the instant case, as a practical matter, the receivership court 

was acting with subject matter jurisdiction. Subject matter jurisdiction is a 

court’s statutory or constitutional authority to hear a certain type of case. 

Sheets v. Mead, 238 Ariz. 55, 57, ¶ 9 (App. 2015). The superior court has 

statutory authority to appoint a receiver. See A.R.S. § 12-1241. Likewise, 

under Rule 66, a court may appoint a receiver as an equitable remedy to 

protect property that is subject to pending litigation. Moreover, if the 

receiver acts within the scope of the court’s appointment order, he is 

entitled to judicial immunity. Mashni v. Foster ex rel. County of Maricopa, 234 

Ariz. 522, 527, ¶¶ 15–16 (App. 2014). This broad protection applies to every 

action taken, “whether good or bad, honest or dishonest, well-intentioned 

or not,” and is not waived unless the receiver acts outside the scope of the 

order appointing him. Id. (quoting B.K. v. Cox, 116 S.W.3d 351, 357 (Tex. 

App. 2003)). Therefore, the receivership court acted with statutory 

authority and had subject matter jurisdiction over the proceeding and 

parties.

C. Converting Rule 12(b)(6) Motion into Motion for Summary 

Judgment

¶14 Investments next argues the superior court erred in denying 

its request to convert the motion to dismiss—brought under Rule 12(b)(6)

—to a motion for summary judgment under Rule 56(A). In support of this 

argument, it notes that IMH relied on matters outside of the pleadings to 

support its motion. Under Rule 12(d), a motion to dismiss for failure to 

state a claim that presents “matters outside the pleading,” which are “not 

excluded by the court . . . must be treated” as a motion for summary 

judgment. The rule, however, does not require conversion when the 

motion refers to documents that are matters of public record or matters 
MW2 INVESTMENTS v. IMH SPECIAL, et al. 

Decision of the Court

7

central to the complaint. Strategic Dev. & Constr., Inc. v. 7th Roosevelt 

Partners, LLC, 224 Ariz. 60, 64, ¶¶ 13–14 (App. 2010). 

¶15 The documents attached to IMH’s motion to dismiss relate 

directly to the appointment and actions of the Receiver, which the 

complaint itself referenced, consisting of records from the receivership 

litigation. Because the court considered only records that were central to the 

complaint, it was not required to treat the motion to dismiss as a motion for 

summary judgment. Id. at 63, 64, ¶¶ 8, 13.

D. Alleged Fraud Upon the Receivership Court

¶16 Investments alleges the Receiver and IMH engaged in “bad 

faith, dishonest and ill-intentioned acts and omissions for the sole benefit 

of the creditor and to the direct prejudice and harm” of Investments. But 

the record illustrates that the challenged actions by the Receiver—

specifically, selling the Seagoville Property pursuant to the Seagoville PSA 

and distributing the proceeds from that sale—were specifically authorized 

in the Receivership Order and were conducted with the express permission 

of the receivership court. 

¶17 As stated, the receivership court ordered the Receiver to act 

“for the benefit of the Judgment Debtors’ creditors.” In the receivership 

action, Maniatis complained that the Receiver was acting in IMH’s interest, 

but the court rejected his objection and explicitly found the Receiver was 

acting pursuant to the Receivership Order, which defines its scope of 

authority.

¶18 To the extent Investments now challenges acts of the Receiver

taken pursuant to the Receivership Order, its claims necessarily fail. As the 

receivership court held in rejecting Investments’ motion to set aside the 

sale, Investments’ remedy was to submit a claim in the receivership. The 

wind-up order entered by the receivership court finally disposed of the 

matter. 

¶19 Investments argues, however, that the Receivership Order 

does not bar its claims because it was procured by extrinsic fraud. Extrinsic 

fraud includes “deception practiced by the successful party in purposely 

keeping his opponent in ignorance,” Bates v. Bates, 1 Ariz. App. 165, 168 

(1965) (citation omitted), and may justify vacating a prior judgment, see 

Dockery v. Cent. Ariz. Light & Power Co., 45 Ariz. 434, 454 (1935). The party 

seeking relief from a judgment based on extrinsic fraud must establish the 

existence and non-disclosure of the evidence in question. See Northwest Bank 

(Minn.), N.A. v. Symington, 197 Ariz. 181, 185–87, ¶¶ 15–23 (App. 2000). 
MW2 INVESTMENTS v. IMH SPECIAL, et al. 

Decision of the Court

8

Investments does not contend that IMH withheld facts from the court or the 

Receiver about their intention to bundle the parcels to sell in an attempt to 

maximize proceeds from that sale. The court was aware the purpose of the 

subsequent transaction was to increase the funds available to the Receiver 

who was attempting to satisfy the claims of the Judgement Creditors 

without the assets necessary to do so. Simply put, Investments did not 

plead sufficient facts to substantiate a claim for extrinsic fraud. 

¶20 The receivership court was fully aware that the Receiver was 

acting in the interest of IMH as a judgment creditor, and in fact directed it 

to do just that in the Receivership Order. Moreover, the receivership court 

directed the Receiver to complete the Seagoville PSA, which Maniatis had 

negotiated before the Receiver was appointed. 

¶21 Investments also argues that even if the Receiver may be 

immune from a claim for breach of fiduciary duty owed to Seagoville and 

its members, “IMH should be held vicariously liable for the alleged 

wrongful acts and omissions of the [R]eceiver.” But the receivership court’s 

approval of the transactions by the Receiver bar Investments’ current 

claims, independent of any application of receiver immunity. Because 

Investments did not allege facts sufficient to show fraud on the receivership 

court in connection with its entry of the Receivership Order or its approval 

of the Seagoville transaction, Investments’ attack on those transactions 

based on allegations of vicarious liability also fails. 

E. Vacated Judgment from the Court of Appeals 

¶22 Investments next argues that the entirety of the receivership 

court’s rulings are void because this court partially vacated the Judgment

that was the basis for appointing MCA as a receiver. See IMH Special Asset 

NT 168, LLC v. Aperion Communities, LLLP (“Aperion”), No. 1 CA-CV 

13-0131, 2016 WL 7439001 (Ariz. Ct. App. Dec. 27, 2016) (mem. decision). 

¶23 In Aperion, this court held that, although the Judgment 

Debtors’ creditors were entitled to summary judgment with respect to the 

Judgment Debtors’ defaults, questions of fact remained about the precise 

balance owed. Id. at *4, *6, ¶¶ 20, 30. In doing so, this court vacated the 

Judgment and remanded, directing the superior court to determine the 

amount owed. Id. at *6, ¶¶ 30-33. The court noted, however, that “even if 

the [creditors] do not prove their claimed deficiency balances upon remand, 

substantial deficiency balances will still exist even under the [Judgment 

Creditors’] version of the facts.” Id. at *6, ¶ 33. The creditors filed a motion 

for reconsideration with this court, and we ordered that any judgment 
MW2 INVESTMENTS v. IMH SPECIAL, et al. 

Decision of the Court

9

entered on remand be entered nunc pro tunc to the date of the original 

Judgment. 

¶24 Because the creditors were still entitled to a “substantial 

deficiency balance,” this court’s prior ruling did not render the 

appointment of the Receiver and its subsequent actions void. 

F. Investments’ Motion for Leave to Amend

¶25 Investments also argues the superior court erred by denying 

its motion for leave to amend the complaint. We review for an abuse of 

discretion the denial of a motion for leave to amend. Timmons v. Ross Dress 

For Less, Inc., 234 Ariz. 569, 572, ¶ 17 (App. 2014) (explaining a court does 

not abuse its discretion in denying a motion for leave to amend if 

amendment would be futile); ELM Ret. Ctr., LP v. Callaway, 226 Ariz. 287, 

292, ¶ 26 (App. 2010). 

¶26 Here, the court found there is no legal theory on which 

Investments could prevail, given the absolute immunity of the Receiver. We 

find no abuse of discretion in this finding. The record shows the Receiver

and IMH acted with express authorization of the receivership court. 

Investments’ complaint failed to allege facts to support extrinsic fraud, and 

on appeal, it still fails to identify any additional facts it might have alleged 

to support its claims.4 

II. Superior Court’s Denial of IMH’s Request for Rule 11 Sanctions 

Against Investments

¶27 IMH asks us to “conclude that [Investments’] Complaint 

lacked any good faith basis in either fact or law” and reverse the superior 

court’s Rule 11 order declining to sanction Investments, Robert Semple

(Investments’ principal), R. Stewart Halstead, and R. Stewart Halstead P.C.

(Investments’ counsel). We review the superior court’s denial of Rule 11 

sanctions for an abuse of discretion. See Roberts v. City of Phoenix, 225 Ariz. 

112, 123, ¶ 45 (App. 2010). We will affirm the court’s ruling unless it is 

“clearly untenable, legally incorrect, or amount[s] to a denial of justice.” 

State ex rel. Thomas v. Newell, 221 Ariz. 112, 114, ¶ 6 (App. 2009) (internal 

quotation omitted). 

4 Given our resolution of Investments’ arguments on appeal, we need 

not determine whether its collateral attack on the receivership court’s 

orders is precluded under the doctrine of claim preclusion. 
MW2 INVESTMENTS v. IMH SPECIAL, et al. 

Decision of the Court

10

¶28 “[A]n attorney violates Rule 11 by filing a document that he 

or she knows or should know asserts a position that ‘is insubstantial, 

frivolous, groundless or otherwise unjustified.’” Cal X-Tra v. W.V.S.V. 

Holdings, L.L.C., 229 Ariz. 377, 410, ¶ 113 (App. 2012) (internal quotation 

omitted). “The good faith component of Rule 11 is not based on whether an 

attorney subjectively pursues claims in good faith, but instead is judged on 

an objective standard of what a professional, competent attorney would do 

in similar circumstances . . . .” Standage v. Jaburg & Wilk, P.C., 177 Ariz. 221, 

230 (App. 1993). A violation of this rule permits the court to impose an 

appropriate sanction, which may include expenses and attorney fees 

caused by the filing of the pleading. Rule 11(c)(1). 

¶29 In its request for Rule 11 sanctions, IMH argued that

Investments’ complaint lacked any good faith basis and was barred by the 

receivership court’s orders, and that Semple acted in bad faith in bringing 

the complaint. The superior court denied IMH’s motion, declining to 

sanction Investments, Semple, or Halstead, reasoning that “the record does 

not support a conclusion that it was objectively unreasonable for 

[Investments’] lawyer to pursue IMH.” The court explained that, although 

Halstead’s theory was creative and later turned out to be unsupported by 

facts, based on the record at the time the complaint was filed, Halstead did 

not act in an objectively unreasonable manner. We do not find an abuse of 

discretion in the superior court’s ruling declining to impose sanctions. 

III. Attorney Fees

¶30 Investments argues the superior court erred in awarding 

attorney fees to IMH for three reasons. First, Investments argues the court 

abused its discretion when it found five of their claims “derive from 

contract.” Second, Investments argues the court should not have awarded 

fees that IMH incurred in connection with its unsuccessful Rule 11 motion 

for sanctions. Finally, Investments argues the award of fees is unreasonable 

because IMH did not provide the terms of its fee agreement. 

¶31 We review the superior court’s award of attorney fees and 

costs for an abuse of discretion. Charles I. Friedman, P.C. v. Microsoft Corp., 

213 Ariz. 344, 350, ¶ 17 (App. 2006). We will affirm the court’s award of 

attorney fees and costs if it has “any reasonable basis.” State Farm Mut. Auto 

Ins. Co. v. Arrington, 192 Ariz. 255, 261, ¶ 27 (App. 1998). Whether the basis 

for awarding fees is proper is an issue of law we review de novo. Barrow v. 

Ariz. Bd. of Regents, 158 Ariz. 71, 80 (App. 1988). 
MW2 INVESTMENTS v. IMH SPECIAL, et al. 

Decision of the Court

11

¶32 The superior court did not err in awarding attorney fees 

pursuant to A.R.S. § 12-341.01. Section 12-341.01 provides for recovery of 

fees to the successful party in any contested action arising out of a contract. 

The phrase “arising out of a contract” in § 12-341.01 must be read broadly, 

and “an action is considered to have arisen out of contract” if the claim 

would not exist absent the contract. ML Servicing Co. v. Coles, 235 Ariz. 562, 

570, ¶ 30 (App. 2014). The superior court found IMH was entitled to 

attorney fees under § 12-341.01 for every count in the complaint, except the 

count for accounting and distribution, explaining the remaining counts 

were derived from the contract for the sale and purchase of the Seagoville 

Property. The court further explained that Seagoville’s claims were based 

on the contract, that the contract was “the direct result of fraud, constructive 

fraud, or negligent misrepresentation, and that it resulted in unjust 

enrichment.” We agree. Absent the contract IMH entered into for the 

purchase of the Seagoville Property, after the Seagoville PSA was entered 

into, Investments’ claims would not exist. 

¶33 The superior court likewise did not err in awarding IMH 

attorney fees that were incurred in pursuing IMH’s unsuccessful Rule 11 

motion for sanctions. When “a party has accomplished the result sought in 

the litigation, fees should be awarded for time spent even on unsuccessful 

legal theories.” Schweiger v. China Doll Rest., Inc., 138 Ariz. 183, 189 (App. 

1983). The court has discretion to award fees when “a successful claim is 

intertwined with one for which fees are not awardable.” City of Cottonwood 

v. James L. Fann Contracting, Inc., 179 Ariz. 185, 194 (App. 1994). Here, the 

court treated the research done in IMH’s Rule 11 motion as research done 

for its case in chief. IMH sought to dismiss Investments’ complaint, and it 

was successful in doing so. Moreover, its arguments for sanctions are 

directly related to its arguments for why Investments’ complaint should be 

dismissed as a matter of law.

¶34 Finally, the fee award to IMH is not unreasonable.

Investments argues that IMH’s failure to “provide by affidavit or otherwise 

its fee agreement with its attorneys” is fatal to its request for attorney fees. 

We disagree. We have held an affidavit submitted in connection with an 

application for fees must identify the agreed-upon hourly billing rate 

between the lawyer and the client. China Doll, 137 Ariz. at 188. Here, IMH 

submitted affidavits of its counsel to support its request for a fee award, 

which contained the billable rate of IMH’s counsel and the amount of time 

billed. The superior court reasoned “[Investments] has offered no . . . 

reason” to disbelieve IMH’s counsel’s sworn China Doll affidavit, and in the 

absence of such a reason, courts generally accept sworn affidavits as true. 
MW2 INVESTMENTS v. IMH SPECIAL, et al. 

Decision of the Court

12

We agree and presume the hourly billing rate in the affidavit is the amount 

agreed upon by IMH and its counsel. 

¶35 Both parties request attorney fees on appeal. Because IMH is 

largely the prevailing party, see China Doll, 138 Ariz. at 189, and a majority 

of the claims arose out of contract, we grant its request for attorney fees on 

appeal under A.R.S. § 12-341.01, and also award costs to IMH upon 

compliance with ARCAP 21. See A.R.S. § 12-341.

CONCLUSION

¶36 For the foregoing reasons, we affirm the judgment of the 

superior court dismissing Investments’ complaint. We also affirm the 

court’s denial of sanctions.