NOTICE: NOT FOR PUBLICATION.

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION DOES NOT CREATE LEGAL 

PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED. 

IN THE

ARIZONA COURT OF APPEALS DIVISION ONE

ABROMOVITZ INVESTMENT PROPERTIES, L.L.C., Plaintiff/Appellee,

v.

RED EYED JACK SPORTS BAR, INC, a Nevada corporation; JACK 

GALARDI and JANE DOE GALARDI, husband and wife; NEVADA 

LAND COMMERCIAL REAL ESTATE, INC., Defendants/Appellants,

and

KEN MARCHIOL and JANE DOE MARCHIOL, husband and wife; 

TANYA MARCHIOL; TEAM INVESTMENTS, LLC, an Arizona limited 

liability company; MARCHIOL FAMILY LIMITED PARTNERSHIP, a 

Colorado limited partnership, Defendants/Appellees.

No. 1 CA-CV 12-0869

Appeal from the Superior Court in Maricopa County

No. CV2008-012200

The Honorable Eileen S. Willett, Judge

AFFIRMED IN PART; REVERSED IN PART

COUNSEL

Moyes Sellers & Hendricks, Phoenix

By Keith L. Hendricks, Stephen Brower, Louis D. Lopez

Counsel for Plaintiff/Appellee
2

Dickinson Wright/Mariscal Weeks PLLC, Phoenix

By Timothy J. Thomason, Michael J. Plati

Counsel for Defendants/Appellants

Bonnett Fairbourn Friedman & Balint PC, Phoenix

By William G. Fairbourn, William F. King

Counsel for Defendants/Appellees

MEMORANDUM DECISION

Judge Patricia K. Norris delivered the decision of the Court, in which 

Presiding Judge Donn Kessler and Judge Maurice Portley joined.

N O R R I S, Judge:

¶1 This appeal arises out of claims that Red Eyed Jack Sports 

Bar, Inc. (“REJ”), through Jack Galardi and real estate broker Nevada 

Land Commercial Real Estate, Inc., (collectively, “REJ defendants”)

attempted to sell commercial real property to Abromovitz Investment 

Properties, L.L.C., even though, as the superior court found, Marchiol 

Family Limited Partnership (“MFLP”), and not REJ, owned it. On appeal, 

the REJ defendants argue the superior court should not have found them 

liable to Abromovitz for breach of contract, fraud, and breach of fiduciary 

duty or liable to MFLP for the attorneys’ fees it incurred in proving that it, 

and not REJ or Abromovitz, owned the property. For the following 

reasons, we affirm the superior court’s judgment except for that portion of 

the judgment finding Galardi personally liable to Abromovitz for REJ’s 

breach of contract.

FACTS AND PROCEDURAL BACKGROUND

¶2 In 2002, Galardi and Ken Marchiol purchased commercial 

real property in downtown Phoenix (“the Property”). Galardi contributed 

$623,000 of the $1.2 million purchase price, and Marchiol contributed 

$577,000. Despite their unequal contributions, Galardi and Marchiol 

agreed the Property would be titled in the name of REJ and they would 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

3

each own 50% of the shares.1 At the time, Galardi was the sole owner of 

REJ.2 Despite repeated requests, Galardi never issued the shares to 

Marchiol because Galardi was “very busy.” 

¶3 In 2004, REJ conveyed the Property by warranty deed (“the 

2004 deed”) to MFLP -- an entity created by Marchiol for his children. The 

county recorder’s office rejected the deed, preventing its recordation.3 

Tanya Marchiol, Marchiol’s sister, then sent the deed to Marchiol’s mother 

to hold for safekeeping. Although Galardi did not remember signing the

2004 deed conveying the Property to MFLP and at various times asserted 

the deed was fraudulent, the superior court found the deed to be a valid 

conveyance and quieted title of the Property in favor of MFLP.4 

¶4 In 2007, despite having previously conveyed the Property to 

MFLP, REJ listed the Property for sale with Nevada Land through its 

owner, Nevada-licensed broker Alberto Jauregui.5 Abromovitz contacted 

Nevada Land in February 2008 and began negotiating a purchase price for 

the Property. From that point forward, Jauregui, on behalf of Nevada 

 1Galardi and Marchiol presented conflicting testimony 

whether they had agreed they would each own 50% of REJ or 50% of the 

Property. This distinction, however, is immaterial to the issues we resolve 

on appeal. 

2Galardi acted for REJ at all relevant times unless otherwise 

noted. 

3The record fails to explain why the county recorder rejected 

the deed, but the parties presented evidence at trial suggesting the 

recorder likely rejected it because it was on the wrong type of paper 

and/or lacked an affidavit of value. See Ariz. Rev. Stat. (“A.R.S.”) § 11-

1133 (Supp. 2013). 

4On appeal, the REJ defendants do not challenge the 

superior court’s ruling as to the validity of the 2004 deed. 

5The Property had been mostly vacant since mid-2005. 

Galardi operated a club on the Property from 2003 through mid-2005; 

Marchiol was not an owner of or otherwise involved in the club. Galardi’s 

club did not make rental payments to REJ, MFLP, Marchiol, or any other 

entity for its use of the Property. 
ABROMOVITZ v. RED EYED, et al.

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4

Land as broker for REJ, conducted all discussions and negotiations with 

Abromovitz regarding the Property. And, Jauregui and Nevada Land 

conducted those discussions and negotiations with Abromovitz at the 

direction of Galardi, who in turn was acting as REJ’s agent.

 

¶5 Marchiol learned that Galardi was trying to sell the 

Property, and he, through his attorney in Colorado and Tanya, recorded 

the 2004 deed on March 17, 2008.6 On March 27, 2008, REJ entered into a 

purchase contract to sell the Property to Abromovitz. 

¶6 As discussed in more detail below, REJ did not convey the 

Property to Abromovitz. As relevant here, Abromovitz sued REJ for 

breach of contract and breach of the covenant of good faith and fair 

dealing and the REJ defendants for breach of fiduciary duty, fraud, 

negligent misrepresentation, and consumer fraud. REJ and Galardi crossclaimed against MFLP to quiet title and MFLP cross-claimed against REJ 

and Galardi for declaratory relief, quiet title, indemnification, and 

attorneys’ fees. 

¶7 The superior court awarded Abromovitz $2,924,800 in 

damages against the REJ defendants and $429,038.50 in attorneys’ fees and 

costs against Galardi and REJ. The court quieted title to the Property in 

favor of MFLP and awarded it $518,836.81 in attorneys’ fees, plus costs,

against the REJ defendants. 

DISCUSSION

I. Abromovitz’s Breach of Contract Claims Against REJ

¶8 On appeal, REJ argues it did not breach the purchase 

contract with Abromovitz because the purchase contract did not obligate

it to either convey title to the Property free of MFLP’s claim or tender a 

deed to Abromovitz on or before the close of escrow. Reviewing the issue 

de novo, we disagree. See Andrews v. Blake, 205 Ariz. 236, 240, ¶ 12, 69 

P.3d 7, 11 (2003) (interpretation of contract is question of law reviewed de 

novo). 

 

6Marchiol was able to record the deed because his lawyer in 

Colorado added a statutory reference to the deed under A.R.S. § 11-

1134(B)(1) (Supp. 2013) exempting it from the affidavit of value 

requirement. See A.R.S. § 11-1133. 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

5

 

¶9 REJ and Abromovitz agreed to a choice of law provision, 

and thus, Nevada law governs the validity, construction, and performance 

of the purchase contract. Section 8.1(a) of the purchase contract provided 

that if Abromovitz notified REJ of defects found in the preliminary title 

report: 

Seller shall have until the Close of Escrow in 

which to advise Buyer that:

(i) Seller shall remove any objectionable 

exceptions to title . . . on or before the Closing 

Date; or 

(ii) Seller shall not cause the exceptions 

to be removed.

If Seller advises Buyer that it shall not 

cause the exceptions to be removed, Buyer 

shall have until the Close of Escrow to elect, as 

[its] sole remedy, to: 

(x) proceed with the purchase and 

acquire the Property subject to such exceptions 

without reduction in the Purchase Price; or 

(y) terminate this Agreement by written 

notice to Seller and Escrow Holder, in which 

case the Deposit and any interest thereon shall 

be returned to Buyer and the cancellation costs 

shall be divided equally between the Buyer 

and Seller.

 

¶10 The purchase contract did not define “Close of Escrow,” but 

Jauregui, who drafted the contract, testified he used “Close of Escrow” 

and “Closing Date” synonymously in the contract. The purchase contract 

defined the “Closing Date” as 15 days after the expiration of the due 

diligence period but, in any event, no later than May 15, 2008. Based on 

these provisions, Jauregui testified he believed the closing date should 

have been May 12, 2008. A representative of the title company handling 

the escrow sent an email to Jauregui, however, that identified May 13, 

2008 as the close of escrow. The record contains no evidence the REJ 
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Decision of the Court

6

defendants ever objected to either May 12 or May 13 as the date for the 

close of escrow. For purposes of this appeal, whether escrow was to close 

on May 12 or May 13 is immaterial as it had to close no later than May 15.

 

¶11 On April 4, 2008, after the title company informed 

Abromovitz of the 2004 deed, Mark Abromovitz, Abromovitz’s principal 

(“Mark”), called Jauregui who, according to Mark, told him “it was an expartner of Jack Galardi’s who had gotten wind of the sale and was trying 

to stop it.” Mark testified that Jauregui assured him “it’s a fraudulent 

deed, and we’re going to get it cleared up.” Mark followed up with an 

email to Jauregui on April 8, 2008, and Jauregui again confirmed they 

were “working on trying to resolve the title issue on the fraudulent deed 

recorded.” By providing these assurances, REJ, through Jauregui, thus 

elected to resolve the issue with the 2004 deed by removing it or having it 

removed by May 12 or May 13, 2008.7 Accordingly, pursuant to the 

purchase contract, Abromovitz deposited the remainder of the purchase 

price into escrow on May 9, 2008. 

¶12 REJ was unable to remove the 2004 deed by the close of

escrow. On May 16, 2008, REJ attempted to rescind its election to remove 

the 2004 deed by sending a letter to Abromovitz stating the exception 

would not be removed and advising it that, pursuant to Section 8.1 of the 

purchase contract, it could either terminate the contract or acquire the 

Property subject to the 2004 deed. The superior court found REJ’s letter 

was untimely and had no effect on the obligations between the parties. 

 

¶13 On appeal, REJ argues it did not breach the purchase 

contract because it acted pursuant to Section 8.1(a) of the contract and 

Abromovitz could only agree to go forward with the purchase subject to 

the 2004 deed or obtain a return of its deposit. We disagree. As the 

superior court found, REJ sent the letter after the May 15 close of escrow,

and thus, its attempt to rescind its election to remove the 2004 deed came 

too late; by then, REJ had already materially breached the purchase 

contract -- which contained a “time is of the essence” clause -- by failing to 

remove the 2004 deed.8 See Bernard v. Rockhill Dev. Co., 734 P.2d 1238, 1240 

 7Abromovitz and Jauregui discussed extending the closing 

date, but they did not reach an agreement to do so. 

 

8The superior court concluded REJ materially breached the 

agreement by “failing to tender a deed in recordable form into escrow 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

7

(Nev. 1987) (breach of contract arises when party materially fails to 

perform duty imposed by agreement (citation omitted)); accord Graham v. 

Asbury, 112 Ariz. 184, 185, 540 P.2d 656, 657 (1975) (party is liable for 

breach of contract when it fails to keep agreement). Thus, the superior 

court properly found REJ breached the purchase contract. 

 

II. Galardi’s Personal Liability for REJ’s Breach of the Purchase

Contract

¶14 On appeal, Galardi argues the superior court should not 

have found him personally liable for REJ’s breach of contract. We accept 

the superior court’s findings of fact unless they are clearly erroneous but 

review its conclusions of law de novo. Powers v. Guaranty RV, Inc., 229 

Ariz. 555, 562, ¶ 26, 278 P.3d 333, 340 (App. 2012) (citation omitted). For 

the following reasons, we agree with Galardi. 

¶15 The superior court did not explain why it found Galardi 

personally liable for REJ’s breach of contract. At trial, Abromovitz argued 

Galardi was personally liable because he was acting for an undisclosed 

principal -- specifically, an alleged partnership between Galardi and 

Marchiol -- in selling the Property. Although the REJ defendants alleged 

in their answer to Abromovitz’s second amended complaint and in the 

joint pretrial statement that if the superior court found a partnership 

between Galardi and Marchiol, then Galardi had entered into the 

purchase contract with either the express or implied permission of 

Marchiol or within the scope of that partnership, Galardi testified at trial 

that he entered into the purchase contract on behalf of REJ and the purchase 

contract reflects that. Further, Galardi’s subjective belief about his 

arrangement with Marchiol does not change the reality of his dealings on 

 

prior to the Closing Date” as required by Section 6.1 of the purchase 

contract. REJ argues its failure to tender the deed was not a breach of 

contract because it would have been a “futile act.” (internal quotation 

marks omitted). Although related, we construe the true nature of the 

breach to be that REJ failed to remove the 2004 deed before the close of 

escrow or timely elect its option to notify Abromovitz it would not 

remove the 2004 deed. 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

8

behalf of REJ with Abromovitz. As between Galardi and Abromovitz, REJ 

was always a fully disclosed principal.9 

¶16 Abromovitz further argues REJ’s corporate form was not 

sufficient to protect Galardi from personal liability. As acknowledged by 

Abromovitz in its omnibus response to the REJ defendants’ four motions 

for judgment as a matter of law, however, “evidence of alter ego or 

piercing the corporate veil . . . was not raised in the Joint Pre-trial or pled 

as a claim. As such, it has not been litigated and no ruling should be 

entered on the issue.” From our review of the record, we agree 

Abromovitz did not raise an alter ego/piercing the corporate veil claim in 

the superior court, and the superior court did not decide such a claim. 

Therefore, the issue is not properly before us. See Sobol v. Marsh, 212 Ariz. 

301, 303, ¶ 7, 130 P.3d 1000, 1002 (App. 2006) (party generally cannot 

argue legal issues on appeal not specifically presented to superior court

(citation omitted)). 

¶17 Finally, Abromovitz argues Galardi should be personally 

liable because he was not an officer, employee, or shareholder of REJ 

when he personally promised to clear the Property’s title. Galardi, 

however, did not directly communicate with Abromovitz. As explained, 

supra ¶ 4, acting as REJ’s broker and at the direction of Galardi in his 

capacity as REJ’s agent, Nevada Land promised Abromovitz that REJ 

would clear the Property’s title. Further, although we agree the record 

reflects Galardi was not an officer of REJ at this time, this argument 

ignores that Galardi was acting as REJ’s agent in the negotiations with 

Abromovitz and the promise to clear title was made on behalf of REJ as 

part of the same transaction. As discussed, supra ¶ 15, Galardi was an 

agent for a disclosed principal and therefore not personally liable for REJ’s 

breach of the purchase contract. See Seigworth v. Nevada, 539 P.2d 464, 466 

(Nev. 1975) (“Unless otherwise agreed, a person making or purporting to 

make a contract with another as agent for a disclosed principal does not 

become a party to the contract.”(citation omitted)); accord Ferrarell v. 

Robinson, 11 Ariz. App. 473, 475, 465 P.2d 610, 612 (1970) (“One who signs 

an agreement as the agent of a fully disclosed principal is not a party to 

 9Abromovitz similarly asserts Galardi was personally liable 

even if a partnership did not exist because an individual is liable for a 

contract he or she enters on behalf of a non-existent entity. We reject this 

argument because, as already discussed, the record reflects Galardi signed 

the purchase contract on behalf of REJ. 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

9

that agreement and thus incurs no personal liability for the principal’s 

breach of that agreement.” (citations omitted)). 

¶18 For the foregoing reasons, the superior court should not 

have found Galardi personally liable for REJ’s breach of contract.10 

Therefore, we reverse that portion of the judgment finding Galardi 

personally liable for REJ’s breach of contract.11

 

III. Abromovitz’s Claim for Breach of Fiduciary Duty Against Nevada 

Land

¶19 On appeal, Nevada Land argues the superior court 

misapplied the law when it found Nevada Land liable for breach of 

fiduciary duty by failing to disclose to Abromovitz information regarding 

REJ’s inability to perform and failing to deal fairly with other parties to 

the transaction. We disagree. Although Abromovitz entitled its claim 

against Nevada Land “Breach of Fiduciary Duty,” Abromovitz generally 

alleged breach of duties owed by real estate licensees to other parties and 

further clarified the scope of its claim asserting “Breach of Real Estate 

Broker’s Duties” before trial. Indeed, the superior court found Nevada 

Land liable for breach of duty and found Nevada Land had “breached its 

duties as a real estate broker owed to Abromovitz.” The superior court 

based its decision on the duties owed (and here, breached) by an Arizona

real estate licensee12 to third parties under applicable statutes, regulations, 

and case law. See Ariz. Admin. Code (“A.A.C.”) R4-28-1101(A) (licensee 

 10At oral argument, Galardi argued that if we concluded the 

superior court should not have found him personally liable for REJ’s 

breach of contract, then we must also vacate the fee award against him. 

Galardi did not raise this argument in his briefing on appeal and therefore 

prevented Abromovitz from responding to it. Thus, we deem the 

argument waived. See Mitchell v. Gamble, 207 Ariz. 364, 369-70, ¶ 16, 86 

P.3d 944, 949-50 (App. 2004) (arguments raised for first time at oral 

argument are generally untimely and deemed waived (citations omitted)). 

11Our conclusion here applies equally to Galardi’s personal 

liability for REJ’s breach of the covenant of good faith and fair dealing. 

12Although Nevada Land was not licensed in Arizona, its

activities in connection with the sale of the Property required it to be an 

Arizona licensee. See generally A.R.S. § 32-2122 (2012). 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

10

must deal fairly with other parties to transaction); A.A.C. R4-28-1101(B) 

(requiring brokers to disclose, inter alia, “any information that the seller . . . 

is or may be unable to perform”); Lombardo v. Albu, 199 Ariz. 97, 100, ¶¶ 

12-13, 14 P.3d 288, 291 (2000) (ability to close goes to heart of transaction, 

is not confidential information, and requires disclosure to third parties

(citations omitted)).13 Based on the evidence presented, the superior court

properly found Nevada Land had breached the legal duties it owed to 

Abromovitz under Arizona law, regardless of the title Abromovitz gave to 

this claim in its pleadings. 

IV. Abromovitz’s Fraud Claims Against REJ, Galardi, and Nevada 

Land14

¶20 The REJ defendants argue the superior court should not 

have found they defrauded Abromovitz because three of their

representations were not material or relied upon.15 See Enyart v. 

Transamerica Ins. Co., 195 Ariz. 71, 77, ¶ 18, 985 P.2d 556, 562 (App. 1998)

(listing elements of fraud (citation omitted)). We disagree. See supra ¶ 14 

for the applicable standard of review. 

 13These duties are remarkably similar to duties imposed on 

real estate licensees in Nevada. See Nev. Rev. Stat. Ann. § 645.252 (West 

2013). Indeed, Nevada Land had Abromovitz sign an agreement 

acknowledging the duties Nevada Land owed to the parties in the 

transaction under Nevada law. 

14Although Nevada law governs the breach of contract 

claim, supra ¶ 9, the parties do not dispute that Arizona law governs the 

fraud claims. See Winsor v. Glasswerks PHX, L.L.C., 204 Ariz. 303, 306-07, 

¶¶ 9-10, 63 P.3d 1040, 1043-44 (App. 2003) (claims arising out of tort 

usually governed by forum state, although choice of law provision may 

apply if resolution of claims requires interpretation of contract (citations 

omitted)). 

15We only address materiality and reliance because the REJ 

defendants only challenged these two elements. 

 
ABROMOVITZ v. RED EYED, et al.

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11

¶21 The superior court concluded the REJ defendants16

defrauded Abromovitz by making statements they knew were false and 

disclosing some facts while concealing others. See Hill v. Jones, 151 Ariz. 

81, 85, 725 P.2d 1115, 1119 (App. 1986) (nondisclosure given same legal 

effect as fraud and misrepresentation). Although the superior court did 

not specifically state which facts directly supported its conclusion, it made 

factual findings -- all amply supported by the evidence at trial -- that 

supported its conclusion. Specifically, the court found, inter alia, REJ had 

misrepresented it owned the Property, the Property was not encumbered,

and it could convey the Property. The court also found the REJ 

defendants had misrepresented that the 2004 deed was “fraudulent” and 

they were “working on resolving the [issue,]” and had failed to disclose 

they knew Marchiol had not and was not going to consent to selling the 

Property. Additionally, the court found the REJ defendants had failed to 

disclose that Galardi had entered into the contract on behalf of REJ in an 

effort to force Marchiol to buy him out of the Property. 

 

¶22 Although the REJ defendants argue on appeal their 

representations to Abromovitz -- the 2004 deed was fraudulent and they 

were working on resolving it -- and their failure to disclose REJ lacked 

authority to convey the Property without Marchiol’s approval

(collectively, “the three frauds”) were immaterial, the record demonstrates 

otherwise.17 The three frauds were material because REJ’s ability to 

 16On appeal, the REJ defendants have combined their 

arguments regarding common law fraud, negligent misrepresentation, 

and consumer fraud even though the superior court only found Galardi 

and Nevada Land liable for common law fraud. We only address the 

common law fraud claim because, although these claims incorporate 

certain similar elements, the elements of the common law fraud claim are 

the most rigorous. 

17The REJ defendants only challenge the three frauds, but the 

record amply supports the superior court’s conclusion they had 

defrauded Abromovitz based on their misrepresentation that REJ owned 

the Property and their failure to disclose Galardi had entered the contract 

on behalf of REJ to force Marchiol to buy him out. Indeed, the REJ 

defendants knew they needed Marchiol’s permission to sell the Property, 

and they were aware of a dispute between Galardi and Marchiol about the 

Property before REJ entered into the purchase contract with Abromovitz. 

Moreover, Galardi admitted he entered into the purchase contract with 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

12

convey the Property and the existence of a known superior claim to the 

Property go to the underlying purpose of the purchase contract. 

¶23 Abromovitz also presented ample evidence it relied on the 

three frauds (and others) both before it entered the purchase contract with 

REJ and after. Based on the REJ defendants’ representations and 

omissions, Abromovitz entered into the purchase contract, deposited 

$250,000 of nonrefundable earnest money into escrow, spent time and 

money conducting due diligence, let its earnest money “go[ ] hard,” and 

eventually fully performed under the purchase contract by depositing the 

remainder of the purchase price into escrow.

 

V. Lost Profits Award to Abromovitz

¶24 On appeal, the REJ defendants argue the superior court 

should not have awarded Abromovitz lost profits on either the breach of 

contract or the fraud claims. We disagree. See supra ¶ 14 for the 

applicable standard of review.

A. Lost Profits Causation 

¶25 The REJ defendants first argue Abromovitz failed to prove a 

causal nexus between their conduct and the awarded lost profits. They 

essentially argue it would have been impossible for Abromovitz to earn 

profits from the Property because MFLP owned it and, therefore, the REJ 

defendants did not cause the lost profits. We disagree. 

¶26 REJ, through Galardi and with the assistance of Nevada 

Land, entered into a contract to sell property to Abromovitz that it had 

already conveyed to MFLP. In connection with this transaction, the REJ 

defendants made various misrepresentations to Abromovitz. REJ could 

have resolved its differences with Marchiol and obtained the Property 

 

Abromovitz on behalf of REJ to force Marchiol to buy him out of the 

Property, and Nevada Land tried to negotiate a deal between Galardi and 

Marchiol in which Marchiol would have bought out Galardi after REJ 

entered into the contract with Abromovitz. Although the REJ defendants 

have not addressed these findings on appeal, they are more than sufficient 

to sustain the superior court’s conclusion the REJ defendants defrauded 

Abromovitz. 
ABROMOVITZ v. RED EYED, et al.

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13

from MFLP -- albeit perhaps at an unfavorable price. If it had done so, 

REJ would have been able to fulfill its obligations to Abromovitz.18 We 

therefore reject the REJ defendants’ argument they cannot be liable for lost 

profits. But for REJ’s refusal to clear the title and perform under the 

purchase contract, Abromovitz would have been able to purchase and 

develop the Property. Thus, Abromovitz presented sufficient evidence 

REJ, through Galardi and with the assistance of Nevada Land, caused its 

lost profits. 

B. Reasonable Certainty of Lost Profits

¶27 The REJ defendants also argue the superior court should not 

have awarded Abromovitz lost profits because Abromovitz failed to 

prove lost profits with reasonable certainty. We disagree.

¶28 To recover lost profits, a party must establish “a reasonably 

certain factual basis” for computing lost profits. Rancho Pescado, Inc. v. 

Nw. Mut. Life Ins. Co., 140 Ariz. 174, 184, 680 P.2d 1235, 1245 (App. 1984)

(quoting another source). A party need not establish lost profits with 

absolute certainty, but “the court or jury must be guided by some rational 

standard in making an award.” Id. Once a party has proven the right to 

damages, the amount of damages may be proven to “a lesser degree of 

certainty.” Short v. Riley, 150 Ariz. 583, 585, 724 P.2d 1252, 1254 (App. 

1986) (citation omitted). “The evidence required to prove loss of future 

profits depends on the individual circumstances of each case . . . .” Id. at 

586, 724 P.2d at 1255. 

¶29 In this case, Abromovitz offered expert testimony from a 

forensic economist, who calculated the value of the Property’s earning 

capacity using a discounted cash flow (“DCF”) model. A DCF model is an 

 18The REJ defendants cite Keister v. Talbott, 391 S.E.2d 895 (W. 

Va. 1990), in support of their argument they did not cause Abromovitz’s 

lost profits, but that case is factually distinguishable. In Keister, a jury 

found an attorney liable for malpractice for erroneously advising the 

purchasers of property that the property had mineral rights. Id. at 897-98. 

The court concluded the attorney had not caused the purchasers to lose 

the property’s mineral rights because, even if the attorney had correctly 

examined the title, the property had already lost the mineral rights. Id. at 

900. Here, the REJ defendants’ conduct deprived Abromovitz of the 

Property. 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

14

appropriate method for estimating the present value of regular or 

irregular income. See generally Appraisal Inst., The Appraisal of Real Estate

539-58 (13th ed. 2008) (explaining DCF analysis and its application). The 

expert used methodologies to account for risk and uncertainty and 

adjusted for vacancy rates and collection losses. The expert calculated the 

lease for ten years -- a lease period common for that type of property. 

The expert assumed the Property would be leased in one year following 

purchase, and, at the time Abromovitz entered the purchase contract, it

already had a tenant interested in the Property. Further, Abromovitz had 

successfully leased properties in the same geographic area, which 

supported his claim at trial he had the ability to successfully lease the 

Property. Thus, Abromovitz presented sufficient evidence the lost profits 

were reasonably certain. 

C. Lost Profits Awarded for Breach of Contract

¶30 As a general matter, lost profits is a measure of 

compensatory damages (Nevada), Rd. & Highway Builders, LLC v. N. Nev. 

Rebar, Inc., 284 P.3d 377, 382 (Nev. 2012) (citation omitted), or 

consequential damages (Arizona), McAlister v. Citibank (Ariz.), a Subsidiary 

of Citicorp, 171 Ariz. 207, 211, 829 P.2d 1253, 1257 (App. 1992) (citations 

omitted), available for breach of contract. 

 

¶31 REJ argues the superior court should not have awarded 

Abromovitz lost profits on its breach of contract claim for four different 

reasons. As we explain, we disagree with each reason. 

¶32 First, REJ argues it did not willfully breach the contract. 

REJ provides no authority that a breach must be willful in order to 

support a lost profits award. Nevertheless, the record supports REJ 

willfully breached the purchase contract. See discussion supra ¶¶ 21, 26. 

 

¶33 Second, REJ argues Abromovitz did not present evidence the 

Property’s market value exceeded the contract price. Abromovitz, 

however, did not need to present evidence the market value exceeded the 

contract price because it pursued, and the superior court awarded,

damages based on a lost profits theory, rather than market value. 

¶34 Third, REJ argues the Property’s market value encompassed 

potential future rental profits. Although REJ mentioned this point in its 

motion for judgment as a matter of law regarding plaintiff’s damages and 

its renewed motion for judgment as a matter of law, REJ did not present 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

15

any evidence at trial, either through its own valuation expert or through 

cross-examination of Abromovitz’s expert, that the market value of the 

Property encompassed future lost profits. Further, the authority REJ cites 

for this argument merely states “the potential for profit bears on market 

value.” 3 Dan B. Dobbs, Dobbs Law of Remedies § 12.11(1), at 289 (2d ed. 

1993).19 That profit capability might bear on market value does not 

preclude recovery for lost profits here.

 

¶35 Fourth, REJ argues neither it nor Abromovitz contemplated

non-market damages, specifically lost profits. Lost profits are available 

for breach of contract if they are within the contemplation of the parties. 

See Gen. Electric Supply Co. v. Mt. Wheeler Power, Inc., 587 P.2d 1312, 1313

(Nev. 1978) (lost profits sustained as damages reasonably foreseeable and 

within contemplation of parties); accord Short, 150 Ariz. at 585-86, 724 P.2d 

at 1254-55 (lost profits sustained as damages naturally flowing from 

breach of contract and within contemplation of parties). Abromovitz 

presented evidence REJ knew that it was going to use the Property for 

income-producing purposes. First, Nevada Land, on behalf of REJ,

specifically marketed the Property to breweries and business owners 

within two blocks of the Property. Second, Abromovitz requested the 

brewing equipment and fixtures that were in the Property to be part of the 

sale. Further, REJ knew Abromovitz was a “player in the area” and 

owned rental properties in the same geographic area as the Property. 

Thus, based on the use for which REJ marketed the Property and the 

intended use for which Abromovitz entered into the purchase contract, 

Abromovitz presented sufficient evidence lost profits were within the 

contemplation of the parties. Based on the foregoing, the superior court 

properly awarded Abromovitz lost profits on its breach of contract claim. 

 

D. Lost Profits Awarded for Fraud 

¶36 The REJ defendants also argue, as a matter of law, lost 

profits damages are not available for fraud. Because consequential 

 19REJ also cites Dobbs for the proposition that “[i]f . . . lost 

profits are claimed, the plaintiff must further prove that the future profits 

were not encompassed within the determination of the property’s market 

value and were ‘contemplated’ by the parties.” (emphasis added). Dobbs, 

however, only supports the latter assertion. See Dobbs, supra ¶ 34, at 288-

89. 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

16

damages are available for fraud and can include lost profits, we 

disagree.20 See Ulan v. Richtars, 8 Ariz. App. 351, 359, 446 P.2d 255, 263 

(1968) (“A defrauded party is entitled to all out-of-pocket losses[,] . . . 

benefit of his bargain[,] . . . and . . . all consequential damages.” (quoting 

another source)); Restatement (Second) of Torts § 549(1)(b) (1977) 

(recipient of fraud entitled to pecuniary loss suffered as consequence of 

reliance on misrepresentation); 2 Dan B. Dobbs, Dobbs Law of Remedies § 

9.2(3), at 557 (2d ed. 1993) (“Recoverable consequential or special damages 

also include loss of profits resulting from reliance on the representation . . 

. .”). 

¶37 The REJ defendants also argue the superior court should not 

have awarded lost profits because lost profits are not available as benefitof-the-bargain damages. Benefit-of-the-bargain damages, which here,

would be calculated as “the difference between the value of the land at the 

time of the breach and the contract price,” Kammert Bros. Enters. v. Tanque 

Verde Plaza Co., 102 Ariz. 301, 308, 428 P.2d 678, 685 (1967) (citations 

omitted), however, are not the exclusive measure of damages for fraud. 

Cole v. Gerhart, 5 Ariz. App. 24, 26, 423 P.2d 100, 102 (1967) (in addition to 

“a normal measure of damages,” such as benefit-of-the-bargain damages, 

other consequential damages may be granted that arise from the 

fraudulent conduct); Ashley v. Kramer, 8 Ariz. App. 27, 31, 442 P.2d 564, 

568 (1968) (“We hold that ‘consequential damage’ is a proper measure of 

damages in a fraud action and that the defrauding party may not limit the 

proof of damages to the benefit of the bargain . . . .”). Not only are benefitof-the-bargain damages not the exclusive measure of damages for fraud, 

lost profits resulting from reliance on the representation are recoverable.21 

Dobbs, supra ¶ 36, at 557; cf. McAlister, 171 Ariz. at 211, 829 P.2d at 1257

(“Consequential damages include lost future profits” in breach of contract 

 20The REJ defendants also argue lost profits damages are not 

available for negligent misrepresentation and consumer fraud. Because 

lost profits are available for fraud, we need not address whether lost

profits would likewise be available on these claims. 

21The REJ defendants also argue the superior court should 

not have awarded Abromovitz benefit-of-the-bargain damages because 

the parties did not consummate the bargain and benefit-of-the-bargain 

damages may not be awarded against non-parties to the bargain. We 

need not address these arguments because, as discussed, benefit-of-thebargain damages are not the exclusive measure of damages for fraud. 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

17

action. (citation omitted)). Based on the foregoing, the superior court 

properly awarded Abromovitz lost profits on its fraud claim.

VI. Attorneys’ Fees Award to MFLP

¶38 On appeal, REJ and Galardi argue the superior court should 

not have awarded attorneys’ fees to MFLP. Although we agree with 

certain aspects of their argument, we conclude the superior court properly 

awarded fees to MFLP. 

A. Attorneys’ Fees Under A.R.S. § 33-411.01

¶39 REJ and Galardi first argue the superior court misapplied 

A.R.S. § 33-411.01 (2007) when it awarded attorneys’ fees against Galardi 

personally. We agree. A.R.S. § 33-411.01 provides: 

Any document evidencing the sale, or other 

transfer of real estate . . . shall be recorded by 

the transferor . . . . In lieu thereof, the transferor

shall indemnify the transferee in any action in 

which the transferee’s interest in such property 

is at issue, including costs, attorney’s fees and 

punitive damages.

(emphases added). REJ was the transferor in this case. See Black’s Law 

Dictionary 1875 (9th ed. 2009) (Transferor means: “One who conveys an 

interest in property.”). 

¶40 Nevertheless, MFLP argues that because Galardi acted in 

bad faith and for his own self-interest, he should be deemed the 

transferor. We disagree. REJ owned the Property in 2004 and conveyed 

the Property to MFLP; thus, REJ, not Galardi personally, was the 

transferor under A.R.S. § 33-411.01. The statute only applies to the 

transferor, and therefore, REJ alone is liable for fees under A.R.S. § 33-

411.01. 

¶41 REJ next argues A.R.S. § 33-411.01 is inapplicable here 

because MFLP always possessed the deed. Perhaps recognizing that REJ 

possessed the deed when Galardi signed it, REJ then asserts in its reply 

brief that it satisfied the recording requirement when it relinquished 

possession of the deed to MFLP. REJ provides no authority in support of 

its position, and, in any event, “[w]hen statutory language is clear and 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

18

unambiguous, we give effect to it and do not use other methods of 

statutory interpretation.” Mathews ex rel. Mathews v. Life Care Ctrs. of Am., 

Inc., 217 Ariz. 606, 608, ¶ 6, 177 P.3d 867, 869 (App. 2008) (citation 

omitted). Thus, we decline to infer a relinquishment exception into A.R.S. 

§ 33-411.01. 

¶42 REJ alternatively argues the superior court should not have 

awarded fees under A.R.S. § 33-411.01 at all because only A.R.S. § 12-1103

(2003), which governs fee awards in quiet title actions, entitled MFLP to a 

fee award and MFLP failed to prove it had complied with the tender 

requirements of that statute (the “total bar argument”). REJ did not, 

however, raise the total bar argument in the superior court. 

 

¶43 As relevant here, MFLP sought fees in the superior court 

under A.R.S. § 33-411.01 and did not seek fees under A.R.S. § 12-1103. In 

responding to MFLP’s fee application, REJ and Galardi argued MFLP was 

not entitled to “seek any fees for claims related to its claim to quiet title”

and that the superior court should have apportioned MFLP’s fees. They 

further argued: “Any fee award to MFLP must, at a minimum, be reduced 

to reflect a proper apportionment. A reduction of at least 50% of MFLP’s 

claimed total is in order.” The superior court rejected REJ and Galardi’s 

apportionment argument and awarded MFLP $518,836.81 in attorneys’ 

fees and costs. 

¶44 Thus, only in the context of arguing MFLP was required to

apportion its fees did REJ mention A.R.S. § 12-1103. But, it did not argue 

the statute barred MFLP from recovering any fees under A.R.S. § 33-

411.01. Accordingly, REJ’s total bar argument is not properly before us. 

See Sobol, 212 Ariz. at 303, ¶ 7, 130 P.3d at 1002 (App. 2006) (party 

generally cannot argue legal issues on appeal not specifically presented to 

superior court (citation omitted)).

¶45 Even if we were to assume, however, that MFLP could not 

recover fees for its quiet title claim under A.R.S. § 33-411.01, REJ and 

Galardi did not renew their argument on appeal that MFLP should have 

been required to apportion its fees among its claims. Although they did 

mention it in passing in their reply brief, we will not consider arguments 

presented for the first time on appeal in the reply brief. Anderson v. 

Country Life Ins. Co., 180 Ariz. 625, 636, 886 P.2d 1381, 1392 (App. 1994)

(citation omitted). For the foregoing reasons, the superior court properly 

awarded fees against REJ, but not Galardi, under A.R.S. § 33-411.01. 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

19

B. Attorneys’ Fees Under A.R.S. § 12-341.01

¶46 MFLP argues in its answering brief that even if it was not 

entitled to be awarded fees against Galardi personally under A.R.S. § 33-

411.01, it was nevertheless entitled to a fee award against him under 

A.R.S. § 12-341.01 (Supp. 2013) because the entire dispute arose out of the 

purchase contract with Abromovitz. Although we disagree with MFLP’s 

precise argument, we ultimately agree the dispute between Galardi and 

MFLP arose out of contract.22 

¶47 Although MFLP was not a party to the purchase contract 

between REJ and Abromovitz, a party seeking fees under A.R.S. § 12-

341.01 need not be a party to the contract, Chaurasia v. Gen. Motors Corp., 

212 Ariz. 18, 30, ¶ 47, 126 P.3d 165, 177 (App. 2006) (citations omitted), 

and, in any event, the dispute between Galardi and MFLP arose out of 

various agreements between Galardi and Marchiol/MFLP, rather than 

REJ and Abromovitz.

¶48 As discussed, Galardi and Marchiol agreed to purchase the 

Property and title it in the name of REJ, with each owning 50% of the 

shares of REJ, which Galardi agreed to issue to Marchiol but never did. 

Galardi and Marchiol also agreed that both of them would have to consent 

to selling the Property and would have equal input in the sales price. 

Galardi and Marchiol further agreed Galardi would convey the Property 

to MFLP in 2004 in part to reimburse Marchiol for disparities in operating 

losses from their other, unrelated business ventures. Although these 

agreements were not written and Galardi and Marchiol did business on a 

“handshake basis,” the dispute between Galardi and Marchiol/MFLP, 

and their claims against each other, ultimately arose out of these

agreements. Therefore, MFLP was entitled to a fee award against Galardi 

under A.R.S. § 12-341.01. 

 

 22Galardi argues the superior court should not have awarded 

MFLP fees under A.R.S. § 12-341.01 because only A.R.S. § 12-1103 entitled 

it to a fee award and it failed to prove it had complied with the tender 

requirements of that statute. As discussed above, supra ¶ 44, this 

argument is not properly before us. 
ABROMOVITZ v. RED EYED, et al.

Decision of the Court

20

VII. Attorneys’ Fees on Appeal

¶49 The REJ defendants and Abromovitz each request attorneys’ 

fees and costs on appeal pursuant to Section 20.6 of the purchase contract, 

which authorizes the prevailing party in an action to recover “its costs and 

expenses, including actual reasonable attorneys’ fees.” Although we have 

vacated that portion of the judgment holding Galardi personally liable for 

REJ’s breach of contract, under the “totality of the litigation test,” 

Abromovitz is the prevailing party on appeal. See Murphy Farrell Dev., 

LLLP v. Sourant, 229 Ariz. 124, 134-35, ¶ 38, 272 P.3d 355, 365-66 (App. 

2012). Therefore, we award Abromovitz its reasonable attorneys’ fees and 

costs on appeal against the REJ defendants except for those fees incurred 

by it in arguing Galardi was personally liable for REJ’s breach of contract, 

contingent upon its compliance with Rule 21 of the Arizona Rules of Civil 

Appellate Procedure. 

¶50 MFLP also requests its attorneys’ fees on appeal pursuant to 

A.R.S. §§ 12-341.01 and 33-411.01. Consistent with the foregoing 

discussion and contingent upon its compliance with Rule 21 of the 

Arizona Rules of Civil Appellate Procedure, we award MFLP its 

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

and against REJ pursuant to A.R.S. § 33-411.01 and further find Galardi 

and REJ are jointly liable to MFLP for its costs on appeal. 

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

superior court except for that portion of the judgment holding Galardi 

personally liable to Abromovitz for REJ’s breach of contract.