IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

THE VORTEX CORPORATION, an Arizona corporation, 

Plaintiff/Counterdefendant/Appellee,

and

CODY RAMSEY and MARGARET RAMSEY, husband and wife; TED 

LAMB and SHERENE LAMB, Third-Party Defendants/Appellees

v.

RAY P. DENKEWICZ and CAROL ANN DENKEWICZ, husband and 

wife; ROLF ENGELHARD and LINDA ENGELHARD, husband and wife, 

Defendants/Counterclaimants/Third-Party Claimants//Appellants.

No. 1 CA-CV 12-0269

Appeal from the Superior Court in Yavapai County

No. P1300CV20080285

The Honorable Kenton D. Jones, Judge

AFFIRMED

COUNSEL

Gammage & Burnham, P.L.C., Phoenix

By Richard K. Mahrle

Counsel for Plaintiff/Counterdefendant/Appellees and Third-Party Defendants

Tiffany & Bosco, P.A., Phoenix

By Robert A. Royal, Aaron T. Lloyd

Counsel for Defendants/Counterclaimants/Third-Party Claimants/Appellants
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

2

OPINION

Judge John C. Gemmill delivered the opinion of the Court, in which 

Presiding Judge Samuel A. Thumma and Judge Randall M. Howe joined.

G E M M I L L, Judge:

¶1 Ray and Carol Ann Denkewicz and Rolf and Linda Engelhard 

(collectively “Appellants”) appeal portions of the judgment entered against 

them in favor of The Vortex Corporation (“Vortex”), Cody and Margaret 

Ramsey, and Ted and Sherene Lamb (collectively “Appellees”). For the 

following reasons, we affirm.

BACKGROUND

¶2 Vortex was formed in 1993 by Appellant Rolf Engelhard. As 

an inventor in the area of water purification technology, Engelhard 

envisioned Vortex as the corporate vehicle by which he could both generate 

income and fund his projects. Appellees Lamb and Ramsey were 

introduced to Engelhard in 2003, and shortly thereafter, the three of them 

entered into business together. Lamb and Ramsey had become majority 

shareholders in Vortex by 2005.

¶3 Appellant Ray Denkewicz was hired in September 2005 to 

serve as Chief Executive Officer of Vortex. Soon after Denkewicz was hired, 

Rolf Engelhard was given the position of Chief Technology Officer of 

Vortex. As part of their employment compensation, Denkewicz and 

Engelhard were to each receive “3% of the company’s outstanding stock, in 

the form of stock grants, each year for 5 years, based on [their]

performance.” After unsuccessful attempts to generate sales and develop 

manufacturing capabilities for their water purification products, 

Denkewicz and Engelhard were terminated as Vortex employees in 

September 2007. 

¶4 Soon thereafter, Lamb and Ramsey formed a new business, 

Vortex Pure Water, LLC, which later changed its name to Zuvo, LLC

(hereinafter “Zuvo”), in the hope of attracting new investors to what was 

previously the Vortex endeavor. Lamb and Ramsey formed Zuvo to pay 

off Vortex’s debt and reinvigorate the possibility of production and sales of 

the products previously in development.
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

3

¶5 Vortex sued Appellants in February 2008 for claims related to 

the return of corporate property and alleged violations by Denkewicz and 

Engelhard of their employment agreements with Vortex. Appellants 

counterclaimed, seeking stock in accordance with their employment 

agreements and alleging a series of other claims related to their terminated 

relationship with Vortex. Appellants’ counterclaims alleging fraud, 

racketeering, and formation of a de facto corporate entity or partnership 

were dismissed on motion, but their remaining claims, along with Vortex’s 

claims, proceeded to trial. The jury returned multiple verdicts, including:

 An award of a three percent stock interest in Vortex to Ray 

Denkewicz.

 An award of a three percent stock interest in Vortex to Rolf 

Engelhard.

 A determination that Appellants were not entitled to additional 

stock on the basis of a three-page document entitled “Proposed 

Vortex Operating Structure” — referred to by Appellants as the “VIP 

Agreement.”

 Damages of $11,482.24 in favor of Vortex for its successful claims.

 Damages of $3,250 each for Ray Denkewicz and Rolf Engelhard for 

their successful claims.

¶6 Because the jury awarded Denkewicz and Engelhard each a 

three percent stock interest in Vortex, Appellants then asserted dissenter’s 

rights regarding the transfer of Vortex’s assets and liabilities to Zuvo. The 

trial court agreed that Appellants were entitled to dissenter’s rights and

instructed the parties to “engage in the statutory process” to determine fair 

value of the Appellants’ stock. Vortex subsequently tendered 

approximately $2,000 to both Denkewicz and Engelhard, representing the 

fair value of a three percent stock holding, including interest. Appellants 

disagreed with Vortex’s valuation, and Vortex requested a valuation 

hearing in accordance with Arizona Revised Statutes (“A.R.S.”) section 10-

1330 to determine the fair value of their shares at the time they were 

transferred from Vortex to Zuvo in August 2008. 

¶7 At the valuation hearing, both sides presented expert 

testimony and evidence about Vortex’s value. Appellants sought to 

establish that Vortex was worth somewhere between $15 million and $20 

million. Appellees asserted Vortex was worth $61,682 at the time of the 

action to which Appellants dissented. The trial court ultimately adopted 

Appellees’ valuation and awarded Denkewicz and Engelhard each 
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

4

$2,054.85 for their respective three percent shares including interest. The 

trial court also awarded Appellees costs and attorneys’ fees. Appellants 

timely appealed, and we have jurisdiction pursuant to A.R.S. §§ 12-120.21 

and -2101(A)(1).

ANALYSIS

I. Personal Jurisdiction Over Appellant Carol Ann Denkewicz

¶8 Appellants argue that the trial court abused its discretion by 

denying their Rule 60(c)(1) and (6) motion arguing that Appellant Carol

Ann Denkewicz should not be subject to the judgment in this case because

“her sole contact with [Arizona] is a contract that her husband entered with 

an Arizona corporation.” We review the denial of a motion under Rule 

60(c) for an abuse of discretion. Searchtoppers.com, LLC v. TrustCash LLC, 

231 Ariz. 236, 241, ¶ 20, 293 P.3d 512, 517 (App. 2012).

¶9 Appellants rely on this court’s opinion in Sigmund v. Rea, 226 

Ariz. 373, 248 P.3d 703 (App. 2011), to argue that, because Rhode Island, 

where Carol Ann Denkewicz resides, does not recognize a “marital 

community,” Carol Ann Denkewicz lacks the requisite minimum contacts 

for her to be subject to a judgment in Arizona. Sigmund dealt with whether 

“Arizona courts can exercise personal jurisdiction over residents [of 

another state] who have no contacts with Arizona apart from the unilateral 

business dealings of their spouses.” Id. at 374, ¶ 1, 248 P.3d at 704. 

Ultimately, the Sigmund court held that personal jurisdiction cannot be 

exercised when one spouse’s “unilateral actions cannot be attributed” to the 

other spouse and the couple does not reside in a state that recognizes the 

marital community. Id. at 377, ¶¶ 13–14, 248 P.3d at 706.

¶10 Although Appellants’ legal analysis of Sigmund and Rhode 

Island’s property law may be correct, Carol Ann Denkewicz consented to 

the jurisdiction of the Arizona courts by not asserting her personal 

jurisdiction defense until well after the conclusion of the major events of 

this litigation – the trial and the valuation hearing. In contrast, the spouses 

in Sigmund sought immediate relief from involvement in the Arizona 

proceeding by motions to dismiss. By allowing the claims against her to 

proceed until just before entry of judgment without objecting, Carol Ann 

Denkewicz waived her potential defense that she was merely a bystander 

caught up in her husband’s unilateral actions. See Nat’l Homes Corp. v. Totem 

Mobile Home Sales, Inc., 140 Ariz. 434, 438, 682 P.2d 439, 443 (App. 1984) 

(holding that “[w]e do not need here to determine when a ‘timely’ 
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

5

application for ruling on the jurisdictional defense must be presented. 

Suffice it to say, that after a judgment on the merits has been entered, it is 

too late.”).

¶11 On these facts, the trial court did not abuse its discretion in 

denying Appellants’ Rule 60(c) motion regarding Carol Ann Denkewicz. 

II. Appellants’ Application for a Court-Ordered Advance of 

Litigation Expenses

¶12 Appellants argue the trial court erred in denying their 

application for an advance of litigation expenses pursuant to A.R.S. §§ 10-

851, -853, -854, and -856. We review de novo the trial court’s interpretation 

of these statutes. See Bills v. Ariz. Prop. & Cas. Ins. Guar. Fund, 194 Ariz. 488, 

491, ¶ 6, 984 P.2d 574, 577 (App. 1999).

¶13 These statutes essentially allow a corporation to indemnify a 

corporate director or officer under certain conditions. See A.R.S. § 10-851. 

Additionally, “[a] corporation may pay for or reimburse the reasonable 

expenses incurred by a director who is a party to a proceeding in advance 

of final disposition of the proceeding” if certain conditions exist. A.R.S. § 

10-853. Corporate officers may also be indemnified and advanced litigation 

expenses. A.R.S. § 10-856(A). Appellants primarily rely on § 10-856(A) to 

argue that, notwithstanding their status as former Vortex officers, Vortex 

should have provided an advance of expenses because Appellants 

“complied with all applicable statutory sections . . . as necessary to qualify

for the advance of expenses.”

¶14 Appellants admit that § 10-856(A) merely “permits” them “to 

receive the same protections afforded to directors under A.R.S. § 10-853.” 

No provision of the statutes identified by Appellants requires a corporation 

to indemnify or provide an advance of litigation expenses to current

directors or officers, much less former officers asserting claims against their 

former employer. See A.R.S. § 10-853(A) (“A corporation may pay for or 

reimburse”) (emphasis added); A.R.S. § 10-854 (“On receipt of an 

application [for indemnification], the court after giving any notice the court 

considers necessary may order indemnification”) (emphasis added); A.R.S. 
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

6

§ 10-856 (“A corporation may indemnify and advance expenses”) (emphasis 

added).1 

¶15 The trial court did not err by denying Appellants’ application 

for an advance of litigation expenses.

III. Dismissal of Appellants’ Partnership Claim Under Rule 12(b)(6)

¶16 Appellants argue that the trial court erred in granting the 

Appellees’ Rule 12(b)(6) motion to dismiss their counterclaim that alleged

certain evidence showed the parties formed “a de facto LLC or partnership.” 

On appeal, Appellants abandon arguments that a de facto limited liability 

company was established and focus exclusively on the alleged formation of 

a partnership. As a result, we address only the dismissal of Appellants’ 

partnership claim. See BAC Home Loans Servicing, LP v. Semper Invs., LLC., 

230 Ariz. 587, 589 n.2, ¶ 3, 277 P.3d 784, 786 n.2 (App. 2012) (declining to 

address an issue on appeal that was initially raised but not argued in the 

opening brief). 

¶17 Because dismissal on Rule 12(b)(6) grounds requires a finding 

that claimants are “not entitled to relief under any interpretation of the facts 

susceptible to proof,” we review de novo the trial court’s dismissal. 

Coleman v. City of Mesa, 230 Ariz. 352, 355–56, ¶¶ 7–8, 284 P.3d 863, 866–67 

(2012) (internal citation omitted). A court may only consider the pleading 

itself in adjudicating a Rule 12(b)(6) motion, although it may refer to “[a] 

complaint’s exhibits, or public records regarding matters referenced in a 

complaint” without necessarily converting the Rule 12(b)(6) motion into a 

motion for summary judgment. Coleman, 230 Ariz. at 356, ¶ 9, 284 P.3d at 

867.

¶18 In dismissing the partnership claim, the trial court found that 

Appellants had not pleaded a legally viable claim that a partnership existed 

between the parties. The trial court noted that “every relevant factual 

 

1 Although A.R.S. § 10-852 provides for mandatory indemnification, it only 

applies when a director “was the prevailing party, on the merits or 

otherwise, in the defense of any proceeding to which the director was a 

party because the director is or was a director of the corporation[.]” It may 

also apply if the director was acting as an “outside director” as determined 

by a court of competent jurisdiction in accordance with other well-defined 

statutory provisions. Appellants make no argument, however, that § 10-

852 applies here.
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

7

allegation” within the counterclaim “reflects the apparent intention of the 

principals to create something other than a partnership.” Appellants argue

that they pleaded sufficient facts to properly allege a claim under A.R.S. § 

29-1012(A). They emphasize the final clause of subsection (A), which 

indicates a partnership can be formed “whether or not the persons intend 

to form a partnership,” in arguing that sufficient facts were alleged to 

support allowing the claim to proceed beyond the pleading phase. They 

rely on the three-page VIP Agreement to establish their claim. Because the 

VIP Agreement was included as an exhibit in their counterclaim, the trial 

court was entitled to consider it and the other exhibits included with 

Appellants’ counterclaim. See Coleman, 230 Ariz. at 356, ¶ 9, 284 P.3d at 867. 

At the time the VIP Agreement was drafted, Appellants and Appellees were 

already conducting business together through a corporate association, 

Vortex, and an LLC association, RCT Technologies, LLC. The VIP 

Agreement proposed the formation of VIP Holdings, LLC, which 

ultimately was not formed. 

¶19 Subsections (A) and (B) of A.R.S. § 29-1012 provide:

A. Except as otherwise provided in subsections B and C, the 

association of two or more persons to carry on as co-owners 

of a business for profit forms a partnership, whether or not 

the persons intend to form a partnership.

B. An association formed under a statute other than this 

chapter, a predecessor statute or a comparable statute of 

another jurisdiction is not a partnership under this chapter.

This statue was enacted as part of Arizona’s adoption in 1996 of the Revised 

Uniform Partnership Act. See A.R.S. §§ 29-1001 to -1111. In interpreting 

this statute, we focus on the statute’s plain language as the most reliable 

indicator of its meaning. See Powers v. Carpenter, 203 Ariz. 116, 118, ¶ 9, 51 

P.3d 338, 340 (2002). We conclude that because the parties were already 

working together through a corporate association and an LLC association, 

A.R.S. § 29-1012(A) does not apply to create a new association – specifically, 

a partnership – when the parties intended or attempted to change their 

business structure but did not express an intent to create a partnership. This 

interpretation is bolstered by comment 2 to section 202 of the Revised 

Uniform Partnership Act:

[B]usiness associations organized under other statutes are not 

partnerships. Those statutory associations include 
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

8

corporations, limited partnerships, and limited liability 

companies. That continues the [Uniform Partnership Act]

concept that general partnership is the residual form of for profit 

business association, existing only if another form does not. 

(Emphasis added.) Section 29-1012(A) may apply to create a partnership 

when the parties do not already have an established form of business entity 

or association. Subsection (B), which confirms essentially that corporations 

and LLCs are not partnerships under Arizona law, further supports our 

interpretation. 

¶20 Appellants’ amended counterclaim alleges that the parties 

“negotiated and entered into [the VIP Agreement]” and that the agreement 

was “executed.” Yet the VIP Agreement does not purport or propose to 

create a partnership. On the alleged facts, coupled with the language of the 

VIP Agreement itself and the interpretation of A.R.S. § 29-1012(A)

explained above, the VIP Agreement did not create a new association in the 

form of a partnership but rather sought to modify the already existing 

business relationships between the parties. We agree with the trial court 

that the pleadings do not allege facts sufficient to find that a partnership 

was formed in accordance with A.R.S. § 29-1012. Accordingly, the 

partnership allegations were properly dismissed under Rule 12(b)(6).

IV. Exercise of Dissenter’s Rights and Corporate Valuation

¶21 Appellants contend that the trial court incorrectly applied the 

fair value standard established in A.R.S. §§ 10-1330(E)(1) and -1301(4). The 

trial court’s application of the dissenter’s rights statutes is an issue of law 

that we review de novo. See Blankenbaker v. Marks, 231 Ariz. 575, 577, ¶ 6, 

299 P.3d 747, 749 (App. 2013). In reviewing the trial court’s valuation 

determination, we will abide by the trial court’s factual findings unless they 

are clearly erroneous. See Standage v. Standage, 147 Ariz. 473, 481, 711 P.2d 

612, 620 (App. 1985).

¶22 After Appellants made a demand for payment pursuant to 

A.R.S. § 10-1328 and rejected an offer of payment based on a fair value 

determination by Vortex, and after the trial court determined that 

Appellants were entitled to exercise dissenter’s rights, Vortex petitioned the 

trial court to hold a valuation hearing. Although Vortex initially argued 

that Appellants were not entitled to exercise dissenter’s rights, on appeal 

neither party challenges the trial court’s determination that the dissenter’s 

rights statutes applied. 
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

9

¶23 At the valuation hearing, Appellees sought to establish that at 

the time Vortex transferred its assets to Zuvo in August 2008 — the action 

to which Appellants dissented — Vortex was worth $61,682. This valuation 

was based on an assessment performed by Bruce Raben, an investment 

banker. Raben testified that he attempted “a variety of valuation methods” 

to determine Vortex’s value. First, he used an “asset value” approach that 

looked exclusively at Vortex’s balance sheet, showing assets and liabilities. 

Using this method, Raben found that Vortex’s liabilities vastly 

outnumbered its assets, noting that the corporation was “insolvent” and 

had “no visible means of honoring its liabilities as they came due.”

¶24 Second, Raben considered a “market value” approach that 

determined corporate value by comparing Vortex with other “comparable” 

corporations, either from the same industry or from comparable merger 

and acquisition activity. This method, according to Raben, was 

“problematic” in establishing value because Vortex had “no comparables . 

. . in public companies” and “no statistics to compare.” When asked why 

Vortex’s asset transfer to Zuvo was not sufficient to establish value under 

this method, Raben replied: 

[W]hat I call the Zuvo transaction involved a new [company] 

being created, capital being raised around a new management 

team, a new plan, and part of proceeds were used to buy 

assets from Vortex. But whatever valuation is implied by that 

transaction valuing Zuvo in my opinion was a bit of an 

artificial construct and not usable. And the reason, again in 

my opinion, is that all the capital that came in, came in from . 

. . friends and associates of the founders of the company . . . 

[T]he new company received the benefit of personal 

guarantees of the founders. Without those guarantees that 

transaction would not have happened, so I just didn’t find it 

to be a third-party canceling transaction.

Raben went on to state that, in his professional opinion, the asset transfer 

between Vortex and Zuvo was not “an arm’s length transaction between 

strangers,” and because Vortex was not a “fundable operation,” Raben 

determined that the market value approach either yielded a “value of zero” 

or that it was “non-applicable.”

¶25 Finally, Raben conducted an “earnings approach” valuation

(also known as a “Discounted Cash Flow” method (“DCF”)), in which he 
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

10

“created a projection that came up with a number for capital to do basically 

. . . a cold restart or relaunch of [Vortex] and then the projected performance 

of that [restart].” Raben’s valuation report noted that, using a DCF method, 

a series of “highly favorable” pro forma projections result in a valuation of 

$61,682, which is “the average between a Discounted Cash Flow Model . . . 

and a Venture Model” that assumed different discount rates Raben 

considered reasonable. Relying on this valuation, Ray Denkewicz and Rolf 

Engelhard were each entitled to $2,054.85 in satisfaction of their respective 

three percent holdings (including accrued interest).

¶26 Appellants countered by presenting the testimony of John 

White, a certified public accountant and business appraisal consultant. In 

his analyses, White testified that he understood “the contribution 

agreement required that all the assets and liabilities of the Vortex 

Corporation be contributed to [Zuvo] and essentially continue to operate 

under the new entity name.” As a result, throughout White’s testimony, he 

repeatedly pointed to the Zuvo private placement memorandum as a 

source for his valuation analysis. White also testified that, among other 

methods, he also used a DCF analysis that: 

[B]egins with management’s forecast of net income and 

discounts that back to the present value using a discount rate

that I develop in my report. And those discounted values that 

are brought back to the present value are used to determine 

the value of invested capital from which I subtract at to arrive 

at equity.

White’s report indicated that, in performing this analysis, he relied on 

“[t]wo sets of forecasts . . . presented in the [Zuvo] Private Placement 

Memorandum,” one of which was “more consistent” with the forecasts that 

Miller Capital performed for Vortex in 2007. Ultimately, White concluded

that “the fair value of a one hundred percent equity interest in the Vortex 

Corporation as of August the 11th, 2008, is $20,303,000.00.”

¶27 The trial court adopted the Raben valuation, expressly finding 

that “the Vortex to Zuvo transfer of assets and liabilities cannot be 

considered an arm’s length[] third-party transaction.” Additionally, the 

court concluded that “[Appellants’] approach to ‘fair value’ does not 

comply with the legal standard for determining fair value in the context of 

dissenter’s rights.” The court further explained that “as between a 

determination that, on August 11, 2008, Vortex was worth $20,303,000.00 or 

$61,682.00, the Court is compelled to find the latter.” The court concluded 
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

11

that Appellees’ payment of $2,054.85, respectively, to Ray Denkewicz and 

Rolf Engelhard represented payment in full of their stock interest in Vortex.

¶28 The question before us is whether the trial court erred in 

accepting the Raben valuation as establishing the fair value of Vortex stock 

at the time immediately before the transfer of assets to the new business. 

The statutes at issue require, in relevant part: “Each dissenter made a party 

to the proceeding is entitled to judgment . . . [f]or the amount, if any, by 

which the court finds the fair value of his shares plus interest exceeds the 

amount paid by the corporation.” A.R.S. § 10-1330(E)(1). “’Fair value’ with 

respect to a dissenter’s shares means the value of the shares immediately 

before the effectuation of the corporate action to which the dissenter objects, 

excluding any appreciation or depreciation in anticipation of the corporate 

action unless exclusion is inequitable.” A.R.S. § 10-1301(4). In interpreting 

statutes, we start with the plain language of the statute. New Sun Bus. Park, 

LLC v. Yuma County, 221 Ariz. 43, 46, ¶ 12, 209 P.3d 179, 182 (App. 2009). 

¶29 Only one Arizona case has previously interpreted these 

statutes. See Pro Finish USA, Ltd. v. Johnson, 204 Ariz. 257, 259–60, ¶¶ 4, 11, 

63 P.3d 288, 290–91 (App. 2003). In Pro Finish, the superior court received

conflicting expert valuations of a corporation. See id. at ¶ 5. The similarities 

to the instant case end there, however, because the competing valuations 

expressly concerned a third-party arm’s length transaction, in which an 

outside buyer agreed to a purchase price for the corporation at issue. See 

id. at ¶ 3. Thus, the Pro Finish court’s conclusions regarding the factors a 

trial court may consider in making a valuation determination for a third 

party transaction provide guidance only to the extent that we rely on some 

of the same secondary sources that informed that decision. See id. at ¶¶ 12-

13. We therefore do not read Pro Finish as broadly as Appellants, who argue

that Pro Finish compels us to view the transfer agreement between Vortex 

and Zuvo as the best evidence of Vortex’s existing value. Instead, we 

conclude that the evidence supports the trial court’s finding that the Vortexto-Zuvo asset transfer was not an arm’s length transaction, which makes 

the instant case significantly different from Pro Finish. 

¶30 Pro Finish favorably cited Principles of Corporate Governance: 

Analysis and Recommendations (1994) (“Principles”). See id. at ¶ 13. Similarly, 

we have considered Principles to assist us in reviewing the trial court’s 

determination of corporate value. See AMERCO v. Shoen, 184 Ariz. 150, 155, 

907 P.2d 536, 541 (App. 1995) (relying on Principles as authoritative in a 

different context). Section 7.22 of Principles provides, in relevant part:
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Opinion of the Court

12

(a) The fair value of shares under [corporate transactions 

giving rise to appraisal rights] should be the value of the 

eligible holder’s proportionate interest in the corporation, 

without any discount for minority status or, absent 

extraordinary circumstances, lack of marketability. 

Subject to Subsections (b) and (c), fair value should be 

determined using the customary valuation concepts and 

techniques generally employed in the relevant securities and 

financial markets for similar businesses in the context of the 

transaction giving rise to appraisal.

(Emphasis added.) See also Weinberger v. UOP, Inc., 457 A.2d 701, 713 (Del. 

1983) (holding that determining corporate value may be done by

“includ[ing] proof of value by any techniques or methods which are 

generally considered acceptable in the financial community and otherwise 

admissible in court”). 

¶31 Both parties here cite a rule of law regarding corporate 

valuation in the exercise of dissenter’s rights, established in other 

jurisdictions, that “fair value be determined by taking ‘into account all 

relevant factors.’” Weinberger, 457 A.2d at 714 (citations omitted); see also 

Matthew G. Norton Co. v. Smyth, 51 P.3d 159, 163 (Wash. Ct. App. 2002) 

(authoritatively citing this rule in Washington); Brown v. Arp & Hammond 

Hardware Co., 141 P.3d 673, 682 n.18 (Wyo. 2006) (applying this rule in 

Wyoming); HMO-W Inc. v. SSM Health Care System, 611 N.W.2d 250, 259 

(Wis. 2000) (applying this rule in Wisconsin). This approach is essentially

what Arizona courts have employed when performing valuations in 

different contexts. See Mitchell v. Mitchell, 152 Ariz. 317, 323, 732 P.2d 208, 

214 (1987) (affirming in a family law context that trial courts must 

determine a business entity’s value based on each case’s facts and 

circumstances); Kelsey v. Kelsey, 186 Ariz. 49, 51, 918 P.2d 1067, 1069 (App. 

1996) (asserting that “[t]he valuation of [business] assets is a factual 

determination that must be based on the facts and circumstances of each 

case.”). We adopt this rule for Arizona in the context of dissenters’ rights: 

fair value must be determined by taking into account all relevant factors. 

¶32 To measure all relevant factors in this case, we note that

Principles comments that fair value is determined by “customary valuation 

concepts.” As one commentator observed about such concepts, “[t]he 

valuation technique used by a court is highly dependent on the valuation 

evidence presented by the parties. ‘The parties, not the court, establish the 

record and the court is limited by the record created.’” Barry M. 
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

13

Wertheimer, The Shareholder's Appraisal Remedy & How Courts Determine Fair 

Value, 47 Duke L.J. 613, 629 (1998) (quoting Cede & Co. v. Technicolor, Inc., 

No. CIV.A.7129, 1990 WL 161084, at *8 (Oct. 19, 1990), reversed on other 

grounds, 684 A.2d 289 (Del. 1996)). Any review by a court of “all relevant 

factors” necessarily depends on the evidence presented at the fair value 

hearing. 

¶33 Although each party’s expert analyzed valuation using 

multiple techniques, each expert’s ultimate value determination was based 

on a form of DCF method (what Raben also called an “earnings approach”). 

It was from these respective DCF analyses that the trial court made its 

determination. Commentators have observed that DCF is “probably the 

most prominent and frequently used post-Weinberger method of appraisal.” 

Wertheimer, 47 Duke L.J. at 628. In different legal contexts, Arizona courts 

have long recognized DCF as a viable valuation method. See, e.g., Pima 

County v. American Smelting & Refining Co., 115 Ariz. 175, 177, 564 P.2d 398, 

400 (App. 1977); Crystal Point Joint Venture v. Ariz. Dep’t of Revenue, 188 

Ariz. 96, 101, 932 P.2d 1367, 1372 (App. 1997). Although the DCF method 

is by no means the only appropriate corporate valuation method, the trial 

court did not err by relying on the DCF method evidence presented at the 

valuation hearing on the record presented by the parties in this case. See 

Maricopa County v. Barkley, 168 Ariz. 234, 239, 812 P.2d 1052, 1057 (App. 

1990) (holding that a trial court has discretion to qualify experts and rely on 

various methods in making a valuation determination).

¶34 Appellants do not so much contest Raben’s use of the DCF 

valuation method as they do the data he used to produce his fair value 

determination. Indeed, Appellants’ own expert acknowledged that Raben 

had performed a DCF analysis with different data and projections. 

Appellants assert that the trial court erred in accepting the Raben DCF 

valuation because they believe Raben “failed to consider all factors [that] 

might reasonably factor into the fair value valuation.” Appellants also 

contend that the trial court mistakenly “focused on the value of Vortex as a 

stand-alone entity” while “ignoring the value of the Vortex [a]ssets relied 

upon by Miller Capital and Mr. White.” “Everyone knew,” Appellants 

surmise, “that the fair value of Vortex was far greater than $61,682.00 prior 

to August 12, 2008.” Thus, Appellants conclude that the investment of 

capital into Zuvo establishes that Vortex’s assets, which were transferred 

into Zuvo, must have been worth more than indicated by the Raben 

valuation.
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

14

¶35 The inference that Appellants’ seek to establish – that the 

projected value of Zuvo indicates greater value for Vortex – is undermined, 

however, because the action they believe illustrates Vortex’s true value is 

the action to which they dissented. Appellants’ expert testified that his DCF 

calculations relied upon the Zuvo private placement memorandum, which, 

in turn, had partially relied on the 2007 Miller Capital assessments. 

Appellants ask this court to view the transfer of assets from Vortex to Zuvo 

as nothing more than a continuation of Vortex under a new name. But this 

conclusion is unwarranted in light of the factual distinctions between the 

two entities. Zuvo was created with a new management team and new 

investors, wholly apart from Vortex. Zuvo’s receipt of Vortex’s assets and 

liabilities, though integral to Zuvo’s potential future success, was only a 

component part of creating Zuvo and sustaining it.

¶36 Appellants emphasize the terms of the transfer between Zuvo 

and Vortex to argue that Vortex’s value was clearly higher than Raben’s

valuation. In this sense, they seek to frame the transfer as an arm’s length, 

third-party transaction. In such transactions, this court has observed that 

“[t]he common-sense answer to the question of an asset’s value is what a 

third-party is willing to pay for it.” Pro Finish, 204 Ariz. at 261, 63 P.3d at 

292. But here, the trial court specifically found that the transfer of assets 

from Vortex to Zuvo was not an arm’s length transaction, and this finding 

is fully supported by the evidence. See Standage, 147 Ariz. at 481, 711 P.2d 

at 620 (noting that a trial court’s factual findings will not be set aside unless 

clearly erroneous). Thus, the concept of what a willing buyer would pay a 

willing seller is not applicable to the Vortex-to-Zuvo transfer. 

¶37 The approach taken by the Supreme Court of Delaware in a 

slightly different context is helpful here:

“The underlying assumption in an appraisal valuation is that 

the dissenting shareholders would be willing to maintain 

their investment position had the merger not occurred.”

Accordingly, the corporation must be valued as a going 

concern based upon the “operative reality” of the company as 

of the time of the merger.

M.G. Bancorporation, Inc. v. Le Beau, 737 A.2d 513, 525 (Del. 1999) (citations 

omitted); see also In re Marriage of Malloy, 181 Ariz. 146, 151, 888 P.2d 1333, 

1338 (App. 1994) (asserting that in determining the value of a partnership’s 

assets, “valuation must be based on realizable benefits.”). The “operative 

reality” of Vortex was wholly distinct and significantly less valuable apart 

from the impending transfer with Zuvo. Whatever value or benefit Zuvo
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

15

ultimately receives from the infusion of Vortex’s assets and liabilities, the 

plain language of A.R.S § 10-1301(4) does not require the trial court to 

superimpose Zuvo’s value after the transfer onto Vortex’s value before the 

transfer. Indeed, A.R.S. § 10-1301(4) requires that a fair value determination 

focus on the value that exists “immediately before the effectuation” of the 

dissented-to corporate action, and therefore the value of Vortex as of 

August 11, 2008 had to be separated from whatever Zuvo would be worth 

on August 12, 2008, once the transfer of assets from Vortex had occurred.

¶38 Although we review the trial court’s legal conclusions de 

novo, once the trial court accepts the qualifications of any experts proffered 

by the parties and finds their valuation methods are supported by the 

evidence, the “ultimate selection of a valuation framework is within the 

[trial court’s] discretion.” M.G. Bancorporation, Inc., 737 A.2d at 524; see also

Kelsey, 186 Ariz. at 51, 918 P.2d at 1069 (“The valuation of [business] assets 

is a factual determination that must be based on the facts and circumstances 

of each case.”). We conclude the trial court considered all the relevant 

factors based on the evidence presented; and we also conclude the evidence 

in this record sufficiently supports the trial court’s reliance on the Raben 

valuation. We therefore affirm the trial court’s findings and conclusions 

regarding the stock’s fair value.

V. Attorneys’ Fees

¶39 Appellants also argue that the trial court erred in awarding 

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

of this statute to Appellees’ claims is a question of statutory interpretation 

that we review de novo. Ramsey Air Meds, LLC v. Cutter Aviation, Inc., 198 

Ariz. 10, 13, ¶ 12, 6 P.3d 315, 318 (App. 2000). Appellants do not question 

the applicability of this statute, but they instead challenge the trial court’s 

decision that Appellees were the “successful parties” and therefore eligible 

for an award of fees. Determining the prevailing party for the purposes of 

attorneys’ fees is within the trial court’s discretion and “will not be 

disturbed on appeal if any reasonable basis exists for it.” Berry v. 352 E. 

Virginia, LLC, 228 Ariz. 9, 13, ¶ 21, 261 P.3d 784, 788 (App. 2011) (quoting 

Sanborn v. Brooker & Wake Prop. Mgmt., Inc., 178 Ariz. 425, 430, 874 P.2d 982, 

987 (App. 1994)). Likewise, the trial court has “broad discretion” to award 

and determine the amount of attorneys’ fees under A.R.S. § 12-341.01(A). 

Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570, 694 P.2d 1181, 1184 

(1985). We will not disturb an award of attorneys’ fees absent an abuse of 

discretion. State Farm Mut. Auto. Ins. Co. v. Arrington, 192 Ariz. 255, 261, ¶ 

28, 963 P.2d 334, 340 (App. 1998). 
VORTEX v. DENKEWICZ/ENGELHARD

Opinion of the Court

16

¶40 Both sides in this litigation brought claims arising from their 

contractual relationships, and both prevailed on some of their claims, with 

damages awarded. In fact, both sides sought large sums of money from the 

other and both fell significantly short of their financial goals in the 

litigation. For cases involving claims and counterclaims in which both sides 

receive a favorable judgment in part, our supreme court has applied the 

“net judgment” approach, by which the “prevailing party” for attorneys’ 

fees purposes is the party that, when both sides are awarded judgments, is 

awarded a greater amount than the other party. Ocean West Contractors, Inc. 

v. Halec Const. Co. Inc., 123 Ariz. 470, 473, 600 P.2d 1102, 1105 (1979); but see 

Murphy Farrell Development, LLLP v. Sourant, 229 Ariz. 124, 134, ¶ 36, 272 

P.3d 355, 365 (App. 2012) (noting that trial courts “may use a ‘percentage of 

success’ factor or a ‘totality of the litigation’ rubric to determine which party 

prevailed” when the “net judgment rule” is inapplicable). Because each 

side recovered less than the amounts sought, we conclude the net judgment 

rule is applicable. See Ocean West Contractors, 123 Ariz. at 473, 600 P.2d at 

1105. Appellants received awards in their favor for a cumulative amount 

of $10,609.70 while Appellees received cumulative awards for $11,482.24, 

resulting in a “net judgment” in Appellees’ favor of $872.54. After 

reviewing this record and the arguments of the parties, we discern no abuse 

of discretion by the trial court in awarding attorneys’ fees to Appellees.

CONCLUSION

¶41 We affirm the trial court’s judgment. We deny Appellants’

request for attorneys’ fees on appeal. Appellees request an award of 

attorneys’ fees on appeal pursuant to A.R.S. § 12-341.01 and Arizona Rule 

of Civil Appellate Procedure (“ARCAP”) 21. In our discretion, we decline 

to award attorneys’ fees to Appellees. As the prevailing party on appeal,

however, Appellees are entitled to an award of taxable costs on appeal upon 

compliance with ARCAP 21.