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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

VR PARTNERS SRS, LLC, an Arizona limited liability company; VELOCITY 

RETAIL GROUP, LLC, a Delaware limited liability company, formerly known as 

STAUBACH RETAIL SERVICES-WEST, LLC, a Delaware limited liability 

company, Plaintiffs/Appellees/Cross-Appellants,

v. 

STAUBACH RETAIL SERVICES, INC., a Texas corporation doing business as 

SRS REAL ESTATE PARTNERS; and SRS REAL ESTATE PARTNERS, LLC, a 

Delaware limited liability company, Defendants/Appellants/Cross-Appellees.

No. 1 CA-CV 13-0504

Appeal from the Superior Court in Maricopa County

No. CV2009-026500

The Honorable Hugh E. Hegyi, Judge

AFFIRMED

COUNSEL

Osborn Maledon, PA, Phoenix

By Colin F. Campbell, John L. Blanchard, Thomas L. Hudson

Counsel for Plaintiffs/Appellees/Cross-Appellants

Dickinson Wright, PLLC, Phoenix

By Robert A. Shull, Anne L. Tiffen

Counsel for Defendants/Appellants/Cross-Appellees
VR et al. v. STAUBACH et al.

Decision of the Court

2

MEMORANDUM DECISION

Presiding Judge Peter B. Swann delivered the decision of the Court, in which Judge 

Kenton D. Jones and Judge Michael J. Brown joined.

S W A N N, Judge:

¶1 This appeal involves the separation of two members of a limited 

liability company operating as a commercial real estate brokerage in Phoenix. 

Staubach Retail Services, Inc. and its assignee SRS Real Estate Partners, LLC,

appeal from an order requiring them to pay Plaintiffs VR Partners SRS, LLC, and 

Velocity Retail Group, LLC, a share of revenues generated from an office located 

in Newport Beach, California. They also appeal the court's finding that Plaintiffs

did not breach an implied covenant of good faith and fair dealing. Plaintiffs crossappeal, arguing the superior court erred by denying their request for attorney's 

fees as the prevailing party at trial. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

¶2 The parties entered into an LLC operating agreement in 2005, 

launching Staubach Retail Services-West, LLC ("SRS-West").

1 SRS-West is a 

Delaware limited liability company that operated as a commercial real estate 

brokerage in Phoenix. Under the LLC agreement, Plaintiffs owned 25 percent of 

SRS-West and Defendants owned 75 percent. The LLC agreement provided that 

SRS-West would have "the exclusive right to operate in the Region as a subsidiary 

of [Staubach Retail Services, Inc.]" The agreement defined "Region" as "the states 

of Arizona, Nevada, New Mexico, and Utah."

¶3 The LLC agreement designated one representative from each party 

as managers of SRS-West. The agreement gave these managers "complete 

authority to make any and all amendments to [the LLC agreement] as they may 

deem appropriate." In accordance with this provision, the parties twice amended 

 

1 Before SRS-West was organized, another limited liability company with the 

same name already existed and operated out of an office in Newport Beach, 

California. That entity's region was initially defined as "the Western region of the 

United States." One week before the formation of the new SRS-West, however, the 

entity changed its name to Staubach Retail Services-Southern California, LLC 

("SRS-SoCal"), and redefined its region as "Southern California."
VR et al. v. STAUBACH et al.

Decision of the Court

3

the LLC agreement in writing. The first amendment expanded SRS-West's region 

to encompass Wyoming and Montana. The second amendment changed the 

ownership structure of the company, increasing Plaintiffs' ownership interest to 

45 percent and decreasing Defendants' interest to 55 percent. 

¶4 In connection with the second amendment, the parties executed an 

assignment of interest that included the following clause: 

This Assignment contains the entire understanding between the 

parties hereto with respect to the subject matter hereof and 

supersedes any prior understandings, agreements or 

representations, written or oral, relating to the subject matter hereof 

. . . . 

¶5 Around this time, Staubach Retail Services, Inc., announced a plan 

to "roll up" its various branches, including SRS-West, into a single national entity.

Plaintiffs decided not to participate, prompting the parties to negotiate a 

separation of SRS-West.

¶6 After months of negotiation, the parties executed a reorganization 

agreement that gave Plaintiffs complete ownership of SRS-West and left 

Defendants free to compete as a separate commercial real estate brokerage. In 

connection with the reorganization, Plaintiffs changed the name of SRS-West to 

Velocity Retail Group, LLC.

¶7 Under the reorganization agreement, the parties agreed that certain 

"house revenues" of the old SRS-West would continue to be split 45 percent to 

Plaintiffs and 55 percent to Defendants for approximately two years. House 

revenues referred to money left over from a sale after paying salesperson and 

broker commissions. 

¶8 The reorganization agreement stated that the LLC agreement 

"represents the full and complete agreement between the managers, members, and 

officers of [SRS-West] and no other instrument, document, or other agreement 

relates to or would otherwise affect the agreements of the mangers and members 

of [SRS-West]." It also provided that the reorganization agreement "supersedes all 

prior agreements, whether written or oral, between the Parties with respect to its 

subject matter . . . and constitutes . . . a complete and exclusive statement of the 

terms of the agreement between the Parties with respect to its subject matter."

¶9 Soon after the parties entered into the reorganization agreement, a 

disagreement arose as to its meaning. Plaintiffs believed the reorganization 

agreement required sharing of house revenues on new deals for only a handful of 
VR et al. v. STAUBACH et al.

Decision of the Court

4

shared clients. Defendants, on the other hand, believed it required sharing of 

house revenues on all new deals on all accounts.

¶10 The parties resolved this issue in favor of Defendants by entering 

into a partial settlement agreement. In it, the parties acknowledged that revenues 

generated on all new deals from the date of the reorganization agreement until 

June 30, 2011, would be shared, except for those generated by new hires, i.e., 

salespeople hired after the date of the reorganization agreement. 

¶11 In August 2009, Plaintiffs filed a complaint in superior court, 

requesting, among other things, that the court declare the parties were free to set 

their own house splits and that it award them a share of house revenues generated 

by the Newport Beach office, either based on the parties' agreements or on the 

theory of promissory estoppel. Defendants counterclaimed, arguing, as relevant 

here, that Plaintiffs had breached the implied covenant of good faith and fair 

dealing by improperly and unilaterally changing how they calculated their house 

revenues. 

¶12 A major issue at the ensuing bench trial was whether the parties 

orally amended the LLC agreement to add the Newport Beach office into SRSWest's "Region." After evaluating the evidence, the court found that the only 

relevant agreement as to Region was the LLC agreement; that the LLC agreement 

permitted oral amendments; and that the parties orally amended the LLC 

agreement to add Newport Beach to SRS-West's region. Therefore, the court 

concluded that Plaintiffs were entitled to an interest in house revenues from the 

Newport Beach office under the parties' agreements.

¶13 The court also concluded Defendants were "promissorily estopped" 

from denying Plaintiffs owned a 45 percent interest in Newport Beach office 

revenues. It found that Defendants had misrepresented to Plaintiffs that they

"would conform the ownership documents to the oral agreement and course of 

conduct the parties had been following" related to Newport Beach, and that 

Plaintiffs detrimentally relied on those misrepresentations.

¶14 Finally, the court concluded Plaintiffs did not breach the implied 

covenant of good faith and fair dealing. In doing so, the court relied heavily on its 

findings that the parties were free to set their own house revenue formulas and 

that they both understood this when they entered into the partial settlement 

agreement.

¶15 Defendants timely filed a notice of appeal and Plaintiffs crossappealed.
VR et al. v. STAUBACH et al.

Decision of the Court

5

DISCUSSION

I. The Judgment

¶16 In its liability ruling, the court found Plaintiffs owned a 45 percent 

interest in house revenues generated from the Newport Beach office, and 

instructed the parties to "submit new findings and conclusions relating to the 

appropriate measure of damages and remedies." In its subsequent damages 

ruling, the court found that "[a]ny house revenues collected on New Deals for . . . 

Newport Beach shall be shared by the parties 45% to [Plaintiffs] and 55% to 

[Defendants]." It also found that "[o]n Newport Beach Existing and New Deals 

that closed after May 11, 2009, 45% of house revenues collected should be paid 

from the closing to [Plaintiffs] under the Reorganization Agreement."

¶17 Defendants argue that the court lacked power to award revenues

generated by the Newport Beach office because those revenues belong to SRSSoCal, "a legally separate entity, which was not a party to the agreements at issue 

or to the action." Defendants contend that a judgment cannot bind one who is not 

a party to the action. 

¶18 We agree with Defendants that a judgment cannot bind one who is 

not a party to the action, see, e.g., Zenith Radio Corp. v. Hazeltine Research, 395 U.S. 

100 (1969); Parada v. Parada, 196 Ariz. 428, 999 P.2d 184 (2000), but that is not what 

happened here. The judgment did not "bind" SRS-SoCal, nor did it require SRSSoCal to hand over its own revenues to Plaintiffs. Instead, the parties stipulated 

that SRS Real Estate Partners, LLC, one of the named defendants and appellants, 

"would be the entity responsible for funding any judgment entered in this matter 

against [Defendants] and in favor of [Plaintiffs]."2 Because a party, not SRS-SoCal, 

is bound by the judgment, we conclude that Defendants' argument is unavailing.

¶19 Defendants next argue the court erred in awarding these revenues 

because a judgment cannot require Defendants to pay money belonging to SRSSoCal, which Defendants do not own or have. Although the language found in 

the liability and damages rulings could casually be read to mean that Defendants

 

2 Although Zenith Radio Corp. held that a stipulation was not "an adequate 

substitute for the normal methods of obtaining jurisdiction over a person or 

corporation," 395 U.S. at 110, that case is readily distinguishable from the case 

before us. There a non-party stipulated to be "bound by and liable for" a judgment, 

and the court found several defects with the stipulation. See id. Here, on the other 

hand, a named party stipulated to be responsible for the judgment, and the parties 

do not argue any defect with this stipulation.
VR et al. v. STAUBACH et al.

Decision of the Court

6

are required to pay a percentage of actual house revenues generated by the 

Newport Beach office, the stipulation of the parties indicates otherwise. As the 

stipulation provides, SRS Real Estate Partners, LLC, is responsible for funding the 

judgment. Thus, the court's damages ruling merely refers to SRS-SoCal's revenues 

as the measure of damages rather than the source.

¶20 Finally, Defendants argue that if this court upholds the damages

award, then at the very least it should require Plaintiffs to share in "the normal 

burdens of being an owner (operating expenses and other obligations of that 

entity)." We reject this argument because the court did not find Plaintiffs had an 

ownership interest in the Newport Beach office; it only concluded that Plaintiffs

were entitled to share in house revenues. Absent an ownership interest, Plaintiffs

have no ownership responsibilities. 

II. Parol Evidence

¶21 Defendants argue that the superior court erred by considering an 

oral amendment to the LLC agreement, which purportedly modified the 

reorganization agreement. Delaware law governs this issue and our standard of 

review is de novo. See Town of Marana v. Pima County, 230 Ariz. 142, 147, ¶ 21, 281 

P.3d 1010, 1015 (App. 2012) (interpretation of contract, including application of 

parol evidence rule, reviewed de novo).

¶22 In Delaware, the parol evidence rule prohibits a court from 

considering evidence of a prior oral agreement to supplement or contradict the 

terms of a fully integrated writing. See Scott v. Land Lords, Inc., 1992 WL 276429, at

*3 (Del. Sept. 22, 1992).

3 This is because a fully integrated writing represents the 

complete and final expression of the parties and, as such, finally determines the 

subject. See Taylor v. Jones, 2002 WL 31926612, at *3 (Del. Ch. Dec. 17, 2002);

Cunningham v. Esso Standard Oil Co., 118 A.2d 611, 613 (Del. 1955). If an oral 

agreement does not modify the writing, however, the parol evidence rule does not 

operate to bar evidence of it. See Restatement (Second) of Contracts § 213(2) (2014) 

 

3 Unpublished decisions have precedential value in Delaware. See 

Aprahamian v. HBO & Co., 531 A.2d 1204, 1207 (Del. Ch. 1987) (unreported 

decisions are "entitled to great deference"); Case Fin., Inc. v. Alden, 2009 WL 

2581873, at *6 n.39 (Del. Ch. Aug. 21, 2009) ("unpublished opinions have

precedential value"); see also Wisdom Imp. Sales Co. v. Labatt Brewing Co., 339 F.3d 

101, 115 n.14 (2d Cir. 2003) (recognizing Delaware Rules of Court do not restrict 

citation to unpublished decisions for precedential value).
VR et al. v. STAUBACH et al.

Decision of the Court

7

("A binding completely integrated agreement discharges prior agreements to the 

extent that they are within its scope.") (emphasis added).

¶23 Defendants argue the reorganization agreement is fully integrated 

and thus the court could not consider evidence of a prior oral agreement 

expanding SRS-West's region to encompass Newport Beach. We hold that the 

court properly considered this evidence because the oral agreement did not 

modify the terms of the reorganization agreement. See id.

¶24 By its own terms, the reorganization agreement limited its scope to 

its "subject matter." As the court found, Plaintiffs' region or territory "is not the 

subject matter of the Reorganization Agreement." "The relevant agreement as to 

the region owned by [Plaintiffs] is the LLC Agreement." 

¶25 Thus, while the oral agreement undoubtedly modified the LLC

agreement by redefining "Region" to include Newport Beach, it did not modify the 

subsequent reorganization agreement. Because the extent of Plaintiffs' region was 

a topic beyond the scope of the reorganization agreement, and was exclusively 

determined by the LLC agreement, the court did not err by considering evidence 

of an oral agreement that redefined Plaintiffs' region. 

III. Promissory Estoppel

¶26 Defendants argue the court erred by relying on promissory estoppel 

to enforce their oral promise to convey an interest in Newport Beach revenues to 

Plaintiffs. They contend the doctrine was precluded here by an express agreement

-- the reorganization agreement -- which already governed how the parties would 

divide their house revenues. See In re U.S. West, Inc. Secs. Litig., 201 F. Supp. 2d 

302, 308 (D. Del. 2002), aff'd, 65 F. App'x 856 (3d Cir. 2003) ("[P]romissory estoppel 

is precluded by an express contract governing the relationship out of which the 

contract emerged . . . .") (internal quotations omitted). We review questions of 

contract interpretation de novo. Town of Marana, 230 Ariz. at 147, ¶ 21, 281 P.3d at

1015. 

¶27 For the reasons set forth above, Defendants' argument fails. The

reorganization agreement did not govern whether Plaintiffs had an interest in 

Newport Beach revenues because that agreement did not discuss the concept of 

"Region" at all. To resolve whether Plaintiffs had an interest in Newport Beach 

revenues, the court examined evidence of an oral agreement expanding SRSWest's Region to encompass Newport Beach, as well as the parties' course of 
VR et al. v. STAUBACH et al.

Decision of the Court

8

dealing. Consequently, the reorganization agreement did not preclude the 

doctrine of promissory estoppel here.

4

IV. Implied Covenant of Good Faith and Fair Dealing

¶28 After the parties entered into the partial settlement agreement, 

Plaintiffs modified the method by which they calculated their house revenues. The 

change resulted in an overall decrease in the amount of revenues Defendants

previously had been receiving under the reorganization agreement. At trial, 

Defendants argued this change amounted to a violation of the implied covenant 

of good faith and fair dealing, but the court disagreed. Defendants now contend

the court erred because the change deprived them of revenues they reasonably 

expected to receive under the agreements.

¶29 "Whether a party has breached the covenant of good faith and fair 

dealing is a question of fact." Maleki v. Desert Palms Prof'l Props., L.L.C., 222 Ariz. 

327, 333, ¶ 28, 214 P.3d 415, 421 (App. 2009). We will not disturb factual findings 

unless they are clearly erroneous. Id.5 

¶30 "The covenant of good faith and fair dealing is implied in every 

agreement in Delaware." HSMY, Inc. v. Getty Petroleum Mktg., Inc., 417 F. Supp. 2d 

617, 621 (D. Del. 2006). It "requires a party in a contractual relationship to refrain 

from arbitrary or unreasonable conduct which has the effect of preventing the 

other party to the contract from receiving the fruits of the bargain." Dunlap v. State 

Farm Fire & Casualty Co., 878 A.2d 434, 442 (Del. 2005) (citation omitted). The 

purpose of the covenant is "to ensure the parties' reasonable expectations are 

fulfilled." Id. 

 

4 Defendants argue only that the doctrine of promissory estoppel was 

precluded by the reorganization. They do not challenge the court's factual 

findings, nor do they challenge the court's application of those factual findings to 

the legal standard. We therefore limit our review to that challenge.

5 Defendants argue the standard of review is de novo because the superior 

court incorrectly applied the law to "undisputed facts" in resolving the issue. See 

Brink Elec. Constr. Co. v. Ariz. Dep't of Revenue, 184 Ariz. 354, 358, 909 P.2d 421, 425 

(App. 1995) ("When the material facts are undisputed, the role of this Court is to 

determine whether the trial court correctly applied the substantive law to those 

facts.") (citation omitted). To the contrary, the facts here were disputed. For 

example, the parties offered competing testimony as to what they reasonably 

expected to receive under the reorganization agreement. We therefore review for 

clear error. See Maleki, 222 Ariz. at 333, ¶ 28, 214 P.3d at 421.
VR et al. v. STAUBACH et al.

Decision of the Court

9

¶31 In this case, there are sufficient facts to support the court's finding 

that Plaintiffs did not breach the covenant of good faith and fair dealing. For 

example, at trial Defendants' chief operating officer and negotiator testified that at 

the time the parties entered into the partial settlement agreement, he understood 

Plaintiffs' position was that the parties were free to calculate their own house split 

formulas on new deals. He also testified that in his view neither the reorganization 

agreement nor the partial settlement agreement restricted the parties' ability to 

change their house split formulas. Additionally, the court found that both parties 

"changed their house revenue formulas without notifying the other on at least one 

occasion." These facts, taken together, are more than enough to support the court's 

conclusion that Plaintiffs "did not violate their duty of good faith and fair dealing 

by modifying their house revenue formula." While such modifications might not 

always be to the benefit of both sides of the transaction, there was adequate 

evidence that the parties both intended and availed themselves of the right to 

change their formulas. 

V. Attorney's Fees at Trial

¶32 Plaintiffs cross-appealed the superior court's denial of their request 

for attorney's fees as the prevailing party at trial. Both parties agree Delaware law 

governs this issue. When we evaluate a fee-shifting provision, we generally 

enforce it according to its terms, so long as the provision is permitted by law and 

the award is reasonable. See Geller v. Lesk, 230 Ariz. 624, 627, ¶ 10, 285 P.3d 972, 

975 (App. 2012). Under Delaware law, fee shifting is permitted only when 

provided by the parties in their agreement. See J.J. White, Inc. v. Metro. Merch. Mart, 

107 A.2d 892, 894 (Del. Super. Ct. 1954).

¶33 The parties dispute whether the litigation arose under the LLC 

agreement, which provides for fee shifting in certain circumstances, or the 

reorganization agreement, which does not. Even if the litigation arose under the 

LLC agreement, however, the fee-shifting provision in that agreement does not 

authorize an award of attorney's fees in this case.

¶34 Section 8.12(d) of the LLC agreement only authorizes an award of 

attorney's fees in arbitration proceedings. The parties labeled section 8.12(d) 

"Costs of Arbitration" and placed it within the "Arbitration" section of the 

agreement. The language of section 8.12(d) similarly limits its scope by giving 

"exclusive authority" to an arbitrator to award "costs of arbitration." Thus, because 

there was no arbitration in this case, section 8.12(d) does not authorize an award 

of attorney's fees. 

¶35 Plaintiffs' efforts to sever a stand-alone "fee-shifting provision" from 

the arbitration provision of section 8.12(d) fall short. Plaintiffs argue that "[w]hile 
VR et al. v. STAUBACH et al.

Decision of the Court

10

the Parties certainly waived the arbitration procedures, no one waived the fee 

shifting agreement that the costs of the dispute, including the 'costs incurred by any 

party for their attorneys, advisors and consultants, if any' would be available to the 

prevailing party." (Emphasis added). But the clause quoted by Plaintiffs is not a 

stand-alone fee-shifting provision. That clause is an integral part of Section 

8.12(d), indivisible from the arbitrator who was given exclusive authority to 

determine and award costs of arbitration, including attorney's fees. Simply reading 

section 8.12(d) in its entirety is enough to defeat Plaintiffs' argument: "Costs of 

Arbitration. The arbitrator will have exclusive authority to determine and award 

costs of arbitration, if any, and the costs incurred by any party for their attorneys, 

advisors and consultants, if any."

CONCLUSION

¶36 For the foregoing reasons, the superior court properly awarded a 

share of Newport Beach revenues to Plaintiffs, did not clearly err by finding 

Plaintiffs comported with the implied covenant of good faith and fair dealing, and 

correctly denied Plaintiffs' request for attorney's fees. Plaintiffs request an award 

for attorney's fees incurred on appeal as the prevailing party pursuant to ARCAP

21(c), and A.R.S. § 12-341.01(A). We deny this request because Delaware law 

governs this appeal and does not authorize such an award. We affirm.