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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

CITY OF TEMPE, Plaintiff/Appellee,

v.

GRAYSTAR INVESTMENTS, LLC, et al., Defendants/Appellants.

No. 1 CA-CV 22-0039 

FILED 4-13-2023

Appeal from the Superior Court in Maricopa County

No. CV2019-005406

The Honorable Daniel G. Martin, Judge

AFFIRMED

COUNSEL

Dickinson Wright PLLC, Phoenix

By D. Samuel Coffman, Bradley A. Burns, Amanda E. Newman

Counsel for Plaintiff/Appellee

Law Office of Dennis A. Sever PLLC, Mesa

By Dennis A. Sever

Counsel for Defendants/Appellants
TEMPE v. GRAYSTAR, et al.

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MEMORANDUM DECISION

Presiding Judge Jennifer M. Perkins delivered the decision of the Court, in 

which Judge Angela K. Paton and Judge D. Steven Williams joined.

P E R K I N S, Judge:

¶1 Graystar Investments, LLC, Graystar Holdings, LLC, Cochise 

Investments, LLC, KL-998 Trust, and Kenneth Losch (collectively, “Losch”) 

appeal the entry of summary judgment for Tempe on multiple claims 

arising from its attempt to collect on a judgment. For the following reasons, 

we affirm.

¶2 While this appeal was pending, Kingston Holdings, LLC, 

Kingston Capital Co., LLC, DCD-998 Trust, David Dewar, and Susan 

Dewar (collectively, “Dewar”) settled with the City of Tempe (“Tempe”) 

and voluntarily dismissed their appeal. Thus, we do not address the issues 

Dewar raised on appeal, or any arguments about joint and several liability 

because they are moot. 

FACTS AND PROCEDURAL BACKGROUND

¶3 In 2007, Riverview Apartments, LLC (“Riverview”) owned an 

apartment complex located on the south side of Washington Street in 

Tempe, Arizona. Mr. Losch and Mr. Dewar operated Riverview through 

various business entities. 

¶4 As part of the Central Phoenix/East Valley Light Rail Project, 

Tempe sought to construct a light rail station adjacent to Riverview. But the 

East Valley Light Rail Project did not have funding to build the station. So, 

Tempe approached the surrounding property owners to contribute funds 

for the station’s construction. In July 2007, Riverview agreed to contribute 

$1.3 million to expedite the construction, which could be paid in either ten 

installments or a lump sum. 

¶5 Later in 2007, Losch sold Riverview and reaped over $16.7 

million in net proceeds. Losch and Dewar ordered the proceeds to be 

equally distributed to their respective entities. Shortly after closing the sale 

of the property, the PFC Corporation, another creditor, sued Riverview to 

collect on an earlier debt. The PFC litigation revealed that after the 
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Riverview sale proceeds were disbursed, Riverview possessed “some 

minor amounts of cash,” but no other assets. 

¶6 In June 2009, Tempe forwarded Riverview a statement 

requesting payment of either the first installment or the lump sum by July 

1, 2009. Riverview made no payment. Four months later, Tempe sent Losch 

a follow-up letter requesting payment no later than December 1, 2009. 

¶7 On December 6, 2010, Riverview entered an “Installment 

Promissory Note,” promising to pay Tempe five annual payments of

$130,000 with the remainder due in the sixth year. These payments were set 

to begin on April 1, 2012, giving Riverview more than a year to make its 

first payment. Riverview failed to make the payments in 2012, 2013, 2014, 

2015, and 2016. 

¶8 On June 28, 2016, Tempe sued Riverview for the $1.3 million 

due under the note. The superior court awarded Tempe a default judgment 

for $1.3 million, with interest to accrue at 1% per month. Shortly after 

receiving the default judgment, Tempe sought to collect the debt. During 

the resulting debtor’s examination, Mr. Losch testified that the proceeds 

were disbursed to the owners shortly after the Riverview sale.

¶9 In 2019, Tempe sued Losch and Dewar alleging liability for 

the $1.3 million judgment under the Uniform Fraudulent Transfer Act 

(“UFTA”) and raising common law unjust enrichment and trust fund 

doctrine claims. The superior court granted Tempe summary judgment. 

Losch timely appealed, and we have jurisdiction. A.R.S. § 12-2101(A)(1).

DISCUSSION

¶10 We review the superior court’s grant of summary judgment 

de novo, affirming if there are no genuine disputes of material fact and the 

moving party is entitled to judgment as a matter of law. See Ariz. R. Civ. P. 

56(a); Williamson v. PVOrbit, Inc., 228 Ariz. 69, 71, ¶ 11 (App. 2011). We may 

affirm the grant of summary judgment on any grounds raised in the 

superior court. See Zuck v. State, 159 Ariz. 37, 42 (App. 1988).

I. Doctrine of Laches and Statute of Repose

¶11 Losch argues that Tempe’s claims are time-barred under the 

doctrine of laches. We disagree. The doctrine of laches does not apply 

against government entities “in matters affecting the public interest absent 

a statute expressly allowing such a defense.” State ex rel. Darwin v. Arnett, 

235 Ariz. 239, 245, ¶ 33 (App. 2014); see also Mohave Cnty. v. Mohave-Kingman 
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Est., Inc., 120 Ariz. 417, 421 (1978) (“In general, equitable defenses . . . will 

not lie against the state, its agencies or subdivisions in matters affecting 

governmental or sovereign functions.”). Because Losch points to no such 

statute, the laches defense is unavailable.

¶12 Losch’s citation to State v. Garcia is unpersuasive. In Garcia, we 

applied laches against the state, noting that while “equitable defenses may 

not be asserted against the state when exercising its governmental or 

sovereign functions” laches was appropriate because the state brought a 

“derivative or third-party claim.” 187 Ariz. 527, 529 (App. 1996). Garcia is 

inapplicable here because Tempe did not assert a “derivative or third-party 

claim,” but sued to recover money due to the general fund. And collecting

money due to the general fund is an exercise of “governmental or sovereign 

functions.” See City of Bisbee v. Cochise Cnty., 52 Ariz. 1, 18 (1938) (allowing 

the city to recover penalties and fees owed on past due taxes). Thus, the 

doctrine of laches does not apply to Tempe’s claims. 

¶13 Losch next argues that Tempe’s claims are time-barred. 

Generally, time bars do not prevent government entities from pursuing 

their claims. Id. at 8; City of Phoenix v. Glenayre Elec., Inc., 242 Ariz. 139, 143, 

¶ 10 (2017). But the legislature can impose a time bar on the government’s 

claims by “expressly and definitely” stating that the limitation applies to 

the government. Glenayre Elec., Inc., 242 Ariz. at 143, ¶ 14. 

¶14 Losch argues that despite being repealed in 2020, Section 29-

706(D) bars Tempe’s claims. Tempe does not dispute that the statute has 

effect despite being repealed, but Tempe argues that Section 29-706(D)

applies only to wrongful distribution claims and Tempe made no claim for 

wrongful distribution. We agree. Under Section 29-706(D), “[a member] is 

liable to the limited liability company for a period of six years thereafter for 

the amount of the wrongful distribution.” A.R.S. § 29-706(D) (repealed 

effective Sep. 1, 2020). Tempe did not bring a “wrongful distribution” claim,

so Section 29-706(D)’s statute of repose does not provide an applicable time 

bar here.

¶15 We are not persuaded by Losch’s argument that Section 

29-706 preempted the common law trust fund doctrine claim, imposing the 

statute of repose on that claim. “We will not interpret a law to deny, 

preempt or abrogate common-law damages actions” when it does not 

contain such text. Hayes v. Cont’l Ins. Co., 178 Ariz. 264, 273 (1994); see also S.

AZ Home Builders Assoc. v. Town of Marana, --- Ariz. ---, ¶ 31, 522 P.3d 671, 

676 (2023) (“Statutory interpretation requires us to determine the meaning 

of the words the legislature chose to use. We do so neither narrowly nor 
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liberally, but rather according to the plain meaning of the words in their 

broader statutory context, unless the legislature directs us to do 

otherwise.”). The statutory text here contains no express preemption of the 

common-law trust fund doctrine.

¶16 Losch also contends the UFTA provides a time bar in its 

statute of repose, which reads, “A claim for relief . . . under this article is 

extinguished unless an action is brought . . . within four years after the 

transfer was made or the obligation was incurred.” A.R.S. § 44-1009. Losch 

argues that the legislature sought to apply this limitation to the government 

because it defines “creditor” as a “person,” and defines “person” to include 

“government or [a] governmental subdivision or agency.” A.R.S. § 44-

1001(7). But “such an attenuated connection” neither “expressly” nor 

“definitively” shows that the limitation statute applies to the state. State 

Dept. of Env’t Prot. v. Caldeira, 794 A.2d 156, 164 (N.J. 2002) (interpreting 

UFTA). And “reliance on the definition of person is problematic because 

that word is not even present in the UFTA limitation clause.” Id. Unlike the 

statute at issue in Glenayre Elec., there is nothing in this statute of repose 

that expressly and definitely shows it applies to government entities. And 

we are unwilling to do by implication what the legislature did not do 

directly. Cf. Hayes, 178 Ariz. at 273. Thus, Tempe’s claims are not barred 

under the doctrine of laches or either statute of repose.

II. Genuine Disputes of Material Fact

¶17 Losch argues that genuine disputes of material fact remain, 

precluding summary judgment. As an initial matter, we need not address 

whether there is a material dispute over when Tempe discovered the basis 

for its UFTA claim because we already concluded that Section 44-1009 does 

not apply here. 

¶18 We view “the evidence in the light most favorable to the 

nonmoving party,” Comerica Bank v. Mahmoodi, 224 Ariz. 289, 292, ¶ 19

(App. 2010), but Losch must have introduced sufficient evidence to counter

the award of summary judgment. Orme Sch. v. Reeves, 166 Ariz. 301, 307 

(1990). Losch argues three genuine disputes preclude summary judgment.

¶19 First, Losch argues that a material dispute exists about

whether Tempe was a creditor and Riverview was insolvent. We disagree. 

Tempe became a creditor and Riverview became a debtor when they 

entered the memorandum of understanding, and Losch became a debtor

two months later when Mr. Losch transferred all Riverview’s sale proceeds

to his separate business entities. See A.R.S. § 44-1004(A) (“A transfer made 
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or obligation incurred by a debtor is fraudulent as to a creditor, whether the 

creditor’s claim arose before or after the transfer was made or the obligation 

was incurred.”); A.R.S. § 44-1001(2) (defining “Claim” to include “a right to 

payment, whether or not the right is reduced to judgment,” “matured” or 

“unmatured.”). And after payment on the memorandum of understanding 

became due, Mr. Losch negotiated with Tempe to enter the promissory note 

and forgo payment for more than a year, knowing that Riverview was 

insolvent because it had sold its sole asset and distributed all the proceeds 

to its members. Thus, there was no dispute of material fact about whether 

Tempe was a creditor or whether Riverview was insolvent. 

¶20 Second, Losch argues that Tempe failed to introduce evidence 

showing that Mr. Losch, individually, the KL-998 Trust, or Cochise 

Investments, LLC received proceeds from the sale of Riverview. Losch 

misconstrues Tempe’s burden. Tempe need not show that specific funds

from Riverview’s sale were transferred to other entities, only generally that 

the funds were transferred under the criteria outlined in the UFTA. See

A.R.S. § 44-1004; see also Nwokedi v. Unlimited Restoration Specialists, Inc., 428 

S.W.3d 191, 209 (Tex. App. 2014); United States v. Braxtonbrown-Smith, 278 

F.3d 1348, 1353 (D.C. Cir. 2002) (reasoning that strict tracing would be 

impossible given the fungible nature of money, and requiring such tracing 

would amount to no less than “a mathematical impossibility”). Tempe 

introduced evidence showing the funds were transferred from Riverview 

to the other entities. Losch’s evidence merely showing other sources of 

income to the entities is insufficient to create a dispute of material fact 

defeating summary judgment. See Orme Sch., 166 Ariz. at 307; see also United 

States v. Abbell, 271 F.3d 1286, 1295 n.5 (11th Cir. 2001) (reasoning that only 

a small amount of tainted money needed to be commingled to taint even 

the legitimate money).

¶21 Third, Losch argues that Tempe failed to introduce sufficient 

evidence to meet the elements of liability under the alter-ego theory. To 

prove liability under the alter-ego theory, Tempe must show “that unity of 

control exists and that observance of the corporate form would sanction a 

fraud or promote injustice.” Keg Rest. Ariz., Inc. v. Jones, 240 Ariz. 64, 73, ¶ 

31 (App. 2016). “Unity of control exists when the parent corporation 

exercises ‘substantially total control over the management and activities of 

the subsidiary.’” Id. at ¶ 32 (quoting Taeger v. Catholic Fam. & Cmty. Servs., 

196 Ariz. 285, 297, ¶ 45 (App. 1999)). Courts look to factors showing 

“substantial total control,” including “common officers or directors, the 

parent’s financing of the subsidiary, the parent’s payment of the 

subsidiary’s salaries and other expenses, the subsidiary’s failure to 

maintain formalities of separate corporate existence, the similarity of the 
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parent’s and the subsidiary’s logos, and the opposing parties’ lack of 

knowledge of the subsidiary’s separate corporate existence.” Id. at ¶ 32. 

¶22 There is no dispute that Losch and Dewar managed and 

operated all the other business entities at issue. There is no dispute that 

Losch and Dewar bypassed Riverview’s parent company to distribute 

proceeds to Graystar and Kingston. There is no dispute that the entities 

owned the homes Losch lived in, the planes Losch flew in, or the cars Losch 

drove in. There is no dispute that Riverview’s owners transferred monies

between the entities to pay expenses as they became due, and that they 

retained sole control over the transfer of those monies. There is no dispute 

that observing the corporate form would sanction a fraud or promote an 

injustice by allowing Losch to retain funds that he twice assured Tempe 

would be paid in exchange for building the light rail station. Thus, there are

no genuine disputes of material fact and summary judgment on the 

alter-ego theory was appropriate.

¶23 In addition to Tempe’s declaratory alter ego claim, the 

superior court granted summary judgment on its claims for fraudulent 

transfer, trust fund doctrine, and unjust enrichment. Aside from the factual 

disputes dealt with above, Losch does not argue that genuine disputes of 

material fact preclude summary judgment on these remaining claims. We 

affirm the superior court’s remaining summary judgment conclusions.

III. Attorneys’ Fees and Costs

¶24 We review whether the superior court can award attorneys’ 

fees de novo. ABCDW LLC v. Banning, 241 Ariz. 427, 440, ¶ 60 (App. 2016).

The superior court must award attorneys’ fees under the contract if there is 

a contractual provision requiring a fee award. McDowell Mountain Ranch 

Cmty. Ass’n v. Simons, 216 Ariz. 266, 269, ¶ 14 (App. 2007). 

¶25 The promissory note Mr. Losch signed contained a provision 

agreeing “to pay the holder hereof upon demand any and all costs, 

expenses and fees (including reasonable attorneys[‘] fees) incurred in 

enforcing or attempting to recover payment of the amounts due under this 

Note.” But Losch argues that this language is inapplicable because the 

promissory note was merged into the judgment. We disagree.

¶26 When a “claim is reduced to judgment, the original claim is 

merged in the judgment, and the judgment becomes a new debt.” Nelson v. 

Nelson, 91 Ariz. 215, 218 (1962). But “the doctrine of merger will not be 

carried to an extreme.” Id. And where the agreement “provides special 

rights or exemption[s]” they “will be preserved and recognized.” Id.; see also 
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Accubid Excavation, Inc. v. Kennedy Contractors, Inc., 981 A.3d 727, 740 (Md. 

App. 2009) (“[T]he rights of a party to attorney’s fees pursuant to a contract 

incurred in a claim originating from a breach of that contract may extend 

beyond judgment, despite merger of the contract.”).

¶27 The promissory note’s expansive language contemplated 

recovering attorneys’ fees and costs at any stage of litigation, including 

those “incurred in enforcing or attempting to recover payment of the 

amounts due under this Note.” The merger doctrine does not apply here 

because the parties created this “special right or exemption” permitting the 

recovery of attorneys’ fees and costs, and we must continue to recognize 

and apply this provision of the promissory note. See McDowell Mountain 

Ranch Cmty. Ass’n, 216 Ariz. at 269, ¶ 14; Nelson, 91 Ariz. at 218. 

¶28 Next, Losch argues that the superior court erred by 

compounding interest at the rate of 1% per month. The promissory note 

states, “upon ‘default’ all obligations under this Note (including principal, 

interests, costs and fees) shall bear interest, until paid in full, at the rate of 

1% per month.” This language explicitly includes all “interest, costs and 

fees” as part of the obligations that will bear interest at a monthly rate, see 

Prieve v. Flying Diamond Airpark, LLC, 252 Ariz. 195, 198, ¶ 9 (App. 2021) 

(“When the provisions of the contract are plain and unambiguous upon 

their face, they must be applied as written.”) (quotation omitted), and the 

promissory note does not include any language that would limit the accrual 

of interest. Cf. Simmons & Gottfried, PLLC v. Klarkowski, 1 CA-CV 22-0354, 

2023 WL 1978216 *2, ¶ 10 (Ariz. App. Feb. 14, 2023) (mem. decision). The 

superior court did not err in awarding all of Tempe’s attorneys’ fees and 

costs under the promissory note or compounding the accrued interest on a 

monthly basis. 

¶29 Tempe requests its attorneys’ fees and costs on appeal. As the 

prevailing party, we award Tempe its reasonable attorneys’ fees and costs 

under the promissory note, upon compliance with ARCAP 21. See McDowell 

Mountain Ranch Cmty. Ass’n, 216 Ariz. at 269, ¶ 15.
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CONCLUSION

¶30 For the above reasons, we affirm the grant of summary 

judgment.