IN THE

ARIZONA COURT OF APPEALS

DIVISION TWO

MELINDA S. WORKMAN,

Plaintiff/Appellant,

v.

VERDE WELLNESS CENTER, INC.,

AN ARIZONA NONPROFIT CORPORATION,

DBA THE DOWNTOWN DISPENSARY,

Defendant/Appellee.

No. 2 CA-CV 2016-0008

Filed October 18, 2016

Appeal from the Superior Court in Pima County

No. C20153597

The Honorable Leslie Miller, Judge

REVERSED IN PART;

VACATED IN PART AND REMANDED

COUNSEL

Sanders & Parks, P.C., Phoenix

By G. Gregory Eagleburger, Anoop Bhatheja,

and Amanda M. Breemes

Counsel for Plaintiff/Appellant

Loose, Brown, Hobkirk & Callahan, P.C., Tucson

By Donald A. Loose and Jesse R. Callahan

Counsel for Defendant/Appellee
WORKMAN v. VERDE WELLNESS CTR.

Opinion of the Court

2

OPINION

Presiding Judge Vásquez authored the opinion of the Court, in 

which Chief Judge Eckerstrom and Judge Espinosa concurred.

V Á S Q U E Z, Presiding Judge:

¶1 In this action for judicial dissolution of a nonprofit 

corporation, Melinda Workman appeals from the trial court’s order 

granting appellee Verde Wellness Center, Inc.’s motion to dismiss. 

She argues the court erred by considering matters outside the

pleadings and by finding Workman had lost her standing to 

maintain this action when Verde removed her from its board of 

directors. She also argues the court erred when it denied her motion 

to amend the complaint and awarded fees to Verde as a sanction. 

For the following reasons, we reverse the court’s dismissal order, 

vacate its denial of the motion to amend and award of fees, and 

remand for further proceedings.

Factual and Procedural Background1

¶2 Verde, a marijuana dispensary authorized under the 

Arizona Medical Marijuana Act, was incorporated in May 2012. 

Workman joined the board of directors in May 2013. On June 17, 

2015, Workman filed this action requesting a receiver and judicial 

 

1The parties dispute how this court should view the record. 

Generally, on review from an order granting a motion to dismiss, 

“we accept as true all facts asserted in the complaint.” Harris v. 

Cochise Health Sys., 215 Ariz. 344, ¶ 2, 160 P.3d 223, 225 (App. 2007). 

As discussed below, however, the trial court necessarily relied on 

matters outside the pleadings in ruling on Verde’s motion, and for 

that reason, it shall be treated as a motion for summary judgment. 

See Ariz. R. Civ. P. 12(b). We therefore view the facts “in the light 

most favorable to the party opposing the summary judgment motion 

below.” Keonjian v. Olcott, 216 Ariz. 563, ¶ 2, 169 P.3d 927, 928 (App. 

2007).
WORKMAN v. VERDE WELLNESS CTR.

Opinion of the Court

3

dissolution of Verde because “[t]he directors . . . have acted, are 

acting or will act in a manner that is illegal, oppressive or 

fraudulent” and “corporate assets [were] being wasted, misapplied 

or diverted for non-corporate purposes.”

¶3 Verde filed a motion to dismiss pursuant to 

Rule 12(b)(6), Ariz. R. Civ. P., arguing Workman lacked standing 

because, within hours after she had filed her complaint, the board 

held a special meeting and removed her as a director. In her 

response, Workman noted that the exhibits attached to Verde’s

motion did not show the board had voted to remove her during the 

special meeting. Instead, the board purported to adopt resolutions

and amend bylaws after “dispens[ing] with the formality of a 

Special Meeting.” Workman also argued she had standing to bring 

the lawsuit “despite [the] illegal and ineffective removal” because 

her “standing to bring a judicial dissolution action is expressly 

granted by statute” and “[n]o [c]ourt would ever sustain the notion 

that a wrongdoer could eliminate a claim by engaging in yet more 

oppressive conduct to eliminate the suit.” Apparently in response to 

Workman’s arguments, another special meeting was held in August

2015, and the board again voted to remove Workman as a director.

¶4 At a hearing on the motion in September 2015, 

Workman acknowledged the board had voted in August to remove 

her as a director. However, she asserted that “the motion to dismiss 

should be denied [because] the defendants [were] attempting to . . . 

deprive [her] of standing to hide their misdeeds.” Workman also

filed a motion to amend her complaint on the day of the hearing, 

raising claims for breach of contract, breach of good faith and fair 

dealing, breach of fiduciary duty, civil conspiracy, and alter ego.

¶5 At the conclusion of the hearing, the trial court denied 

Workman’s request for a receiver. And on September 3, 2015, the

court entered an order granting Verde’s motion to dismiss and 

ruling the motion to amend was “moot.” Approximately three

months later, the court granted Verde’s request for attorney fees, 

finding Workman “interposed claims lacking legal or factual basis in 

violation of Rule 11, Ariz. R. Civ. P.” Workman filed a notice of 

appeal from this order. Because the order did not include language 

pursuant to Rule 54(c), Ariz. R. Civ. P., this court revested 
WORKMAN v. VERDE WELLNESS CTR.

Opinion of the Court

4

jurisdiction in the trial court “for an appropriate final judgment,” 

and Workman filed a supplemental notice of appeal.

Jurisdiction

¶6 Verde argues this court lacks jurisdiction to consider 

Workman’s appeal because she did not directly appeal from the trial 

court’s original order granting the motion to dismiss. Because our 

jurisdiction is defined by statute, we have an obligation to examine 

whether we have jurisdiction over an appeal and, if lacking, to 

dismiss. See Grand v. Nacchio, 214 Ariz. 9, ¶ 12, 147 P.3d 763, 769 

(App. 2006); Davis v. Cessna Aircraft Corp., 168 Ariz. 301, 304, 812 

P.2d 1119, 1122 (App. 1991).

¶7 “Generally, this court’s jurisdiction is limited to appeals 

from final judgments which dispose of all claims and parties.” Baker 

v. Bradley, 231 Ariz. 475, ¶ 9, 296 P.3d 1011, 1015 (App. 2013). A final 

judgment dismissing an action with prejudice is appealable

pursuant to A.R.S. § 12-2101(A)(1). See Thiele v. City of Phoenix, 232 

Ariz. 40, ¶¶ 8-9, 301 P.3d 206, 208 (App. 2013). In contrast, an order 

dismissing without prejudice is not a final judgment because the 

plaintiff can refile the action and therefore “ha[s] nothing to appeal.” 

Osuna v. Wal-Mart Stores, Inc., 214 Ariz. 286, ¶ 9, 151 P.3d 1267, 1270 

(App. 2007), quoting Mesa v. United States, 61 F.3d 20, 21 (11th Cir.

1995); see McMurray v. Dream Catcher USA, Inc., 220 Ariz. 71, ¶ 4, 202 

P.3d 536, 539 (App. 2009).

¶8 In this case, the final judgment entered by the trial court 

did not indicate whether the action was dismissed with or without 

prejudice. But because the dismissal was involuntary, we treat it as 

“an adjudication upon the merits.” Ariz. R. Civ. P. 41(b); Phillips v. 

Ariz. Bd. of Regents, 123 Ariz. 596, 597-98, 601 P.2d 596, 597-98 (1979). 

As explained below, the court considered matters outside the 

pleadings, thereby converting the motion into one for summary 

judgment, see Ariz. R. Civ. P. 12(b), and effectively held that Verde 

was entitled to judgment as a matter of law. See Chevron U.S.A. Inc. 

v. Ariz. Dep’t of Revenue, 238 Ariz. 519, ¶ 5, 363 P.3d 136, 137 (App. 

2015) (grant of summary judgment appealable pursuant to § 12-

2101(A)(1)).
WORKMAN v. VERDE WELLNESS CTR.

Opinion of the Court

5

¶9 Verde, however, argues that Workman, instead of 

appealing from the final judgment, should have immediately 

appealed from the September 3 order dismissing the action pursuant 

to § 12-2101(A)(3). See Brumett v. MGA Home Healthcare, LLC, No. 1 

CA-CV 15-0047, ¶¶ 18-19, 2016 WL 4045308 (Ariz. Ct. App. July 28, 

2016) (consol. opinion) (order appealable under § 12-2101(A)(3)

immediately appealable without Rule 54(c) language). Section 12-

2101(A)(3) grants jurisdiction over an order that “in effect 

determines the action and prevents judgment from which an appeal 

might be taken,” such as when a claim is dismissed without 

prejudice but refiling is barred by the statute of limitations. See

McMurray, 220 Ariz. 71, ¶ 4, 202 P.3d at 539 (applying § 12-2101

prior to renumbering). But as we have said, here, the court 

ultimately granted summary judgment, thus the dismissal order 

clearly did not “prevent[ a] judgment from which an appeal might 

be taken” so § 12-2101(A)(3) does not apply. Accordingly, we have 

jurisdiction to consider Workman’s arguments on appeal pursuant 

to § 12-2101(A)(1).

Conversion Rule

¶10 The parties dispute whether the trial court improperly 

treated Verde’s motion as one for summary judgment by 

considering matters outside the pleadings and, in turn, what 

standard of review we should apply on appeal. Generally, we 

review a motion to dismiss for an abuse of discretion. See Toy v. 

Katz, 192 Ariz. 73, 83, 961 P.2d 1021, 1031 (App. 1997). However,

Rule 12(b) directs that a motion to dismiss for failure to state a claim 

shall be treated as a motion for summary judgment pursuant to 

Rule 56, Ariz. R. Civ. P., when “matters outside the pleading are 

presented to and not excluded by the court.” Two exceptions may 

apply: First, “[a] complaint’s exhibits, or public records regarding 

matters referenced in a complaint,” are not considered matters 

outside the pleading. Coleman v. City of Mesa, 230 Ariz. 352, ¶ 9, 284 

P.3d 863, 867 (2012); see Moretto v. Samaritan Health Sys., 190 Ariz. 

343, 346, 947 P.2d 917, 920 (App. 1997). Second, it is unnecessary to 

treat the motion as one for summary judgment when “the 

extraneous materials were neither considered in the [trial] court’s 

ruling nor necessary to support its rationale for dismissal.” Belen 
WORKMAN v. VERDE WELLNESS CTR.

Opinion of the Court

6

Loan Inv’rs, LLC v. Bradley, 231 Ariz. 448, ¶ 7, 296 P.3d 984, 988 (App. 

2012).

¶11 In this case, Workman’s complaint included allegations 

of improper corporate governance, poor recordkeeping, and 

diversion of corporate assets. But Verde premised its motion to 

dismiss on events that occurred after Workman filed the complaint, 

including the action taken at the June 17 special meeting and the

other resolutions and amended bylaws adopted after that meeting. 

Verde attached to its motion copies of those documents and, during

the hearing on the motion to dismiss, made arguments based on the 

second board meeting held in August as well. Thus, the trial court 

necessarily considered matters outside the pleadings when it

granted Verde’s motion, and we must review the motion as one for 

summary judgment. See Coleman, 230 Ariz. 352, ¶ 9, 284 P.3d at 867.

¶12 Verde nevertheless argues that “the exhibits to the 

Motion to Dismiss regarding the prior . . . meeting turned out to be 

immaterial” because Workman acknowledged below that the board 

had voted to remove her as a director in August. Thus, Verde

suggests it was not necessary for the trial court to actually consider

the exhibits attached to its motion to dismiss, and the motion did not 

convert to one for summary judgment. But that is not the test. 

Instead, we must ask whether the court considered matters outside 

Workman’s initial pleading. See id. (“If ‘matters outside the 

pleading’ are considered, the motion must be treated as one for 

summary judgment.”); see also Ariz. R. Civ. P. 12(b). And for the 

purposes of this rule, we see no distinction between the factual 

allegations raised in Verde’s motion to dismiss and Workman’s

admission to the same: Both involve a matter outside Workman’s 

initial pleading—the effect of the board’s subsequent vote to remove 

Workman as a director. See Ariz. R. Civ. P. 12(b).

¶13 Verde also argues this case falls under a third exception

identified in Strategic Development and Construction, Inc. v. 7th & 

Roosevelt Partners, LLC, 224 Ariz. 60, ¶¶ 10, 13-14, 226 P.3d 1046, 

1049-50 (App. 2010). Under that exception, “matters outside the 

pleading,” Ariz. R. Civ. P. 12(b), do not include “matters that, 

although not appended to the complaint, are central to the 

complaint.” Strategic Dev., 224 Ariz. 60, ¶ 14, 226 P.3d at 1050. Our 
WORKMAN v. VERDE WELLNESS CTR.

Opinion of the Court

7

supreme court has suggested that it disapproves of this exception by

recognizing this court’s opinion in Strategic Development but omitting

the third exception. Coleman, 230 Ariz. 352, ¶ 9, 284 P.3d at 867. 

And in any event, the meeting minutes, bylaws, and resolutions 

upon which Verde relied in its motion were not central to 

Workman’s claims. Although her complaint made one reference to 

the June 16 notice for the special meeting to be held the following 

day, it did so to illustrate that, after Workman had joined the board, 

the board had failed to hold any meetings at all. Accordingly, we 

treat the motion to dismiss as a motion for summary judgment. See 

Ariz. R. Civ. P. 12(b).

¶14 Workman contends, however, that the trial court erred 

by relying on the extraneous materials. Specifically, she argues that, 

because she asserted she was a director of Verde in the complaint, 

“this assertion should have been considered true by the trial court.” 

Although Workman cites the correct standard for a motion to 

dismiss, see Dube v. Likins, 216 Ariz. 406, ¶ 2, 167 P.3d 93, 97 (App.

2007), that standard is inapplicable here. As discussed above, the 

court was required to treat Verde’s motion as one for summary 

judgment. See Young v. Rose, 230 Ariz. 433, ¶ 28, 286 P.3d 518, 523 

(App. 2012). Workman does not provide any authority—and we are 

aware of none—that prevents a court, when treating a motion to 

dismiss as one for summary judgment, from considering evidence 

that contradicts allegations made in a complaint, so long as “all 

parties [are] given reasonable opportunity to present all material 

made pertinent to such a motion by Rule 56.” Ariz. R. Civ. P. 12(b).

¶15 On that point, Workman suggests the trial court denied 

her the opportunity to present more evidence. But “[t]he 

‘reasonable opportunity’ requirement inherent in Rule 12(b) is 

satisfied when a party had the opportunity to file a written response 

or reply.” Belen Loan Inv’rs, 231 Ariz. 448, n.7, 296 P.3d at 988 n.7. 

And in this case, Workman filed a response to the motion to dismiss

but did not request an order for additional discovery. See Best v. 

Edwards, 217 Ariz. 497, ¶ 30, 176 P.3d 695, 702 (App. 2008) (no error 

when party fails to request opportunity for additional discovery on 

motion for summary judgment); see also Ariz. R. Civ. P. 56(f) 

(permitting request for additional discovery before ruling on motion 
WORKMAN v. VERDE WELLNESS CTR.

Opinion of the Court

8

for summary judgment). Moreover, in her proposed amended 

complaint, Workman acknowledged that the board had voted to 

remove her and she also conceded the issue during the hearing on 

the motion to dismiss.

2 See Clark Equip. Co. v. Ariz. Prop. & Cas. Ins. 

Guar. Fund, 189 Ariz. 433, 439, 943 P.2d 793, 799 (App. 1997)

(describing judicial admissions). Accordingly, the court did not err 

by considering matters outside the pleading. See Belen Loan Inv’rs, 

231 Ariz. 448, n.7, 296 P.3d at 988 n.7; Young, 230 Ariz. 433, ¶ 28, 286 

P.3d at 523.

Standing

¶16 Workman argues the trial court erred by dismissing the 

action based on its finding that she lacked standing after Verde 

removed her from its board of directors. We review the grant of 

summary judgment de novo. Pi’Ikea, LLC v. Williamson, 234 Ariz. 

284, ¶ 5, 321 P.3d 449, 450 (App. 2014). “[S]ummary judgment is 

appropriate where there is no genuine dispute as to any material 

fact, only one inference can be drawn from the undisputed material 

facts and based on the undisputed material facts the prevailing party 

is entitled to judgment as a matter of law.” Haralambie v. Pima 

County, 137 Ariz. 207, 209, 669 P.2d 984, 986 (App. 1983).

¶17 To initiate a claim, a party must have standing—that is,

“a personal stake in the controversy’s outcome” caused by “a 

distinct and palpable injury.” Strawberry Water Co. v. Paulsen, 220 

Ariz. 401, ¶ 8, 207 P.3d 654, 659 (App. 2008); see Friends of the Earth, 

Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 190-91 (2000)

 

2 Generally, summary judgment is limited to “the parties’ 

affidavits[,] . . . verified pleadings, depositions, answers to 

interrogatories and admissions.” Nemec v. Rollo, 114 Ariz. 589, 592, 

562 P.2d 1087, 1090 (App. 1977); see Moretto, 190 Ariz. at 346, 947 

P.2d at 920 (“unsworn and unproven assertion of fact in a 

memorandum is insufficient” to support summary judgment). 

Verde never offered any evidence showing that Workman had been

removed in August, but as noted above, Workman acknowledged 

that fact during the hearing on the motion to dismiss. See Moretto, 

190 Ariz. at 346, 947 P.2d at 920.
WORKMAN v. VERDE WELLNESS CTR.

Opinion of the Court

9

(standing determined at initiation of suit). As a matter of judicial 

restraint, Arizona courts will not “issue advisory opinions, address 

moot cases, or deal with issues that have not been fully developed 

by true adversaries.” Home Builders Ass’n of Cent. Ariz. v. Kard, 219 

Ariz. 374, ¶ 9, 199 P.3d 629, 632 (App. 2008); see City of Tucson v. Pima 

County, 199 Ariz. 509, ¶ 11, 19 P.3d 650, 655 (App. 2001) (standing in 

Arizona based on judicial restraint, not jurisdictional rule). 

Similarly, a case becomes moot if an event occurs that ends the 

underlying controversy and transforms the litigation into “an 

abstract question which does not arise upon existing facts or rights.” 

Contempo-Tempe Mobile Home Owners Ass’n v. Steinert, 144 Ariz. 227, 

229, 696 P.2d 1376, 1378 (App. 1985); see Arpaio v. Maricopa Cty. Bd. of 

Supervisors, 225 Ariz. 358, ¶ 7, 238 P.3d 626, 629 (App. 2010). 

Moreover, “[t]he legislative branch may expand standing by 

expressly modifying or abrogating prudential standing rules.” Pawn 

1st, L.L.C. v. City of Phoenix, 231 Ariz. 309, n.3, 294 P.3d 147, 151 n.3 

(App. 2013), quoting Heffernan v. Missoula City Council, 255 P.3d 80, 

¶ 34 (Mont. 2011); see, e.g., Home Builders Ass’n, 219 Ariz. 374, ¶ 26, 

199 P.3d at 635 (declaratory-judgment statute, A.R.S. § 49-497, 

“eliminated the need to show a distinct and palpable injury”).

¶18 For nonprofit corporations, A.R.S. § 10-11430(B)(2), (4),

provides that “the court may dissolve a corporation in a proceeding 

. . . by a director” if the directors “have acted, are acting or will act in 

a manner that is illegal, oppressive or fraudulent” or “[t]he 

corporate assets are being wasted, misapplied or diverted for 

noncorporate purposes.” 3 The plain language of § 10-11430(B)

shows the legislature’s intent to grant individual directors standing 

to petition for judicial dissolution by virtue of their status as a 

director. See McNamara v. Citizens Protecting Tax Payers, 236 Ariz. 

192, ¶¶ 5-6, 337 P.3d 557, 559 (App. 2014) (applying statutory 

construction to determine whether statute creates cause of action). 

Thus, Workman clearly had standing when she initiated this action.

 

3 Judicial dissolution is also appropriate if the directors or 

members of a nonprofit are deadlocked “in the management of the 

corporate affairs” or in “elect[ing] successors to directors whose 

terms have or would otherwise have expired.” § 10-11430(B)(1), (3).
WORKMAN v. VERDE WELLNESS CTR.

Opinion of the Court

10

¶19 The issue raised by Verde’s motion, however, is

whether Workman’s claim became moot when Verde’s board of 

directors removed her from the board shortly after her complaint 

had been filed. Workman argues Verde’s board could not render 

the case moot by removing her, otherwise “any director . . . bringing 

a claim for judicial dissolution . . . could have the claim[] 

extinguished by the very persons who did the unlawful acts.”

¶20 “[I]n general, a party ‘cannot by its own voluntary 

conduct “moot” a case and deprive a court of jurisdiction.’” Tom 

Mulcaire Contracting, LLC v. City of Cottonwood, 227 Ariz. 533, ¶ 13, 

260 P.3d 1098, 1101 (App. 2011), quoting Pointe Resorts, Inc. v. 

Culbertson, 158 Ariz. 137, 141, 761 P.2d 1041, 1045 (1988). Otherwise, 

“the courts would be compelled to leave [t]he defendant . . . free to 

return to his old ways.” Friends of the Earth, 528 U.S. at 189, quoting

City of Mesquite v. Aladdin’s Castle, Inc., 455 U.S. 283, 289 n.10 (1982)

(alterations in City of Mesquite). Derivative suits by shareholders 

provide a useful analogy. Section 10-741, A.R.S., and Rule 23.1, Ariz. 

R. Civ. P., expressly recognize a shareholder’s standing to bring a 

derivative suit on behalf of a corporation and its shareholders. 

Nonetheless, they require a derivative plaintiff to “[f]airly and 

adequately represent[] the interests” of the corporation and 

shareholders, § 10-741(A)(2); Ariz. R. Civ. P. 23.1, which courts have 

interpreted as creating the requirement that the plaintiff maintain 

his or her status as a shareholder throughout the pendency of the 

suit, Lewis v. Chiles, 719 F.2d 1044, 1047 (9th Cir. 1983); see Principles 

of Corporate Governance: Analysis and Recommendations § 7.02 

(Am. Law Inst. 1994) (“Principles”); see also Pro Finish USA, Ltd. v. 

Johnson, 204 Ariz. 257, ¶ 13, 63 P.3d 288, 292 (App. 2003) (Principles, 

compiled by American Law Institute, qualifies for same deference as 

Restatements).

¶21 The reason for the requirement is because the derivative 

plaintiff essentially stands in the shoes of the corporation to enforce

the rights of the corporation, and the primary interest the 

shareholder has in doing so is by virtue of the related interest in 

protecting his or her shares. See Principles § 7.02 cmt. d; see also 

Lewis, 719 F.2d at 1047 & n.1 (applying federal corollary to Rule 23.1

and concluding maintaining shareholder status necessary to ensure 
WORKMAN v. VERDE WELLNESS CTR.

Opinion of the Court

11

fair and adequate representation of other shareholders); Dobson v. 

State ex rel. Comm’n on Appellate Court Appointments, 233 Ariz. 119, 

¶ 9, 309 P.3d 1289, 1292 (2013) (federal standing jurisprudence 

persuasive). A narrow exception exists, however, when the 

shareholder-plaintiff’s loss of ownership “is the result of corporate 

action in which the holder did not acquiesce,” Principles § 7.02(a)(2), 

such as a merger that “was perpetrated to deprive” the plaintiff of 

standing, Lewis v. Anderson, 477 A.2d 1040, 1046 n.10 (Del. 1984). See 

also Grosset v. Wenaas, 175 P.3d 1184, 1190-91, 1196 (Cal. 2008); 

Gabhart v. Gabhart, 370 N.E.2d 345, 356-58 (Ind. 1977).

¶22 The same reasoning is no less persuasive in the context 

of a director’s standing to pursue a judicial dissolution of a nonprofit 

corporation, and applies here. Section 10-11430 authorized 

Workman to bring this action as a director of a nonprofit 

corporation, despite the fact that nonprofit directors likely have only 

an indirect interest in the outcome of such litigation.4 See Strawberry 

Water Co., 220 Ariz. 401, ¶ 8, 207 P.3d at 659. But unlike a derivative 

suit brought under § 10-741, there is no requirement that a director

of a nonprofit corporation “[f]airly and adequately represent[] the 

interests” of the corporation, see § 10-11430, by maintaining his or 

her status throughout the action, see City of Tucson v. Clear Channel 

Outdoor, Inc., 218 Ariz. 172, ¶ 11, 181 P.3d 219, 226 (App. 2008) (“We 

presume that if the legislature had meant for a . . . standard to apply 

. . . , it would have included such language in the text of the 

statute.”). Presumably, this distinction bears some relationship to 

the public policy considerations involved in the statutory grounds 

for seeking judicial dissolution of a nonprofit corporation. See § 10-

11430(B)(2), (4) (authorizing director to file action where directors 

“have acted, are acting or will act in a manner that is illegal, 

 

4 Presumably, any interest in the corporation, such as 

compensation or potential new liability for the director, would end 

regardless of whether the director was removed or the nonprofit 

corporation was dissolved. See A.R.S. §§ 10-3812 (director 

compensation), 10-3830 (director duties), 10-3833 (liability for 

unlawful distributions).
WORKMAN v. VERDE WELLNESS CTR.

Opinion of the Court

12

oppressive or fraudulent” or “[t]he corporate assets are being 

wasted, misapplied or diverted for noncorporate purposes”). 

¶23 Here, Workman’s standing to maintain this action came 

into question only after she initiated it, at the point when Verde’s 

board removed her as a director. And it is reasonable to infer that 

the board removed Workman in response to her claims, particularly 

in light of the allegations of wrongdoing she made against the other 

directors.

5 See Braillard v. Maricopa County, 224 Ariz. 481, n.11, 232 

P.3d 1263, 1276 n.11 (App. 2010) (we view facts and reasonable 

inferences in light most favorable to party opposing summary 

judgment motion); see also Friends of the Earth, 528 U.S. at 170 (“[A] 

defendant claiming that its voluntary compliance moots a case bears 

a formidable burden.”). Under such circumstances, Verde’s conduct 

cannot render the action moot. See Tom Mulcaire Contracting, 227 

Ariz. 533, ¶ 13, 260 P.3d at 1101. Accordingly, we conclude the trial 

court erred by granting Verde’s motion on the basis Workman 

lacked standing after the board removed her as a director. See

Pi’Ikea, 234 Ariz. 284, ¶ 5, 321 P.3d at 450.

¶24 Workman also challenges the trial court’s denial of her 

motion to amend the complaint and the award of attorney fees as a 

Rule 11 sanction. The court apparently denied the motion to amend 

on the same grounds it granted Verde’s motion to dismiss, finding 

that the motion was “moot.” Similarly, the court’s award of fees 

necessarily was intertwined with its dismissal of Workman’s claims. 

We therefore vacate those orders as well.

 

5Verde argues that Workman filed her complaint on June 17 

because she knew the board intended to remove her later that day. 

But even if so and she rushed to file this action, it is still reasonable 

to conclude the board planned to remove Workman because she

disapproved of their allegedly illegal conduct. “The burden of 

persuasion on [a] summary judgment motion is heavy” and 

“‘[w]here the evidence or inferences would permit a jury to resolve a 

material issue in favor of either party, summary judgment is 

improper.’” Nat’l Bank of Ariz. v. Thruston, 218 Ariz. 112, ¶ 17, 180 

P.3d 977, 981 (App. 2008), quoting United Bank of Ariz. v. Allyn, 167 

Ariz. 191, 195, 805 P.2d 1012, 1016 (App. 1990).
WORKMAN v. VERDE WELLNESS CTR.

Opinion of the Court

13

Disposition

¶25 For the foregoing reasons, we reverse the trial court’s 

order dismissing the action, vacate the denial of the motion to 

amend Workman’s complaint and the award of attorney fees, and 

remand for further proceedings. We also deny Workman’s request 

for fees on appeal, deferring her request to the trial court as the 

action proceeds. See Nelson v. Phx. Resort Corp., 181 Ariz. 188, 200-01, 

888 P.2d 1375, 1387-88 (App. 1994).