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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

VERDE VALLEY PLAZA, LLC, a California limited liability company, 

Plaintiff/Appellant,

v.

BRIAN STONEKING and JANE DOE STONEKING, a married couple, 

Defendants/Appellees.

No. 1 CA-CV 14-0160

Appeal from the Superior Court in Maricopa County

CV2013-054033

The Honorable Michael D. Gordon, Judge

VACATED AND REMANDED

COUNSEL

Goldman & Zwillinger PLLC, Scottsdale

By Scott H. Zwillinger, Scott A. Griffiths

Counsel for Plaintiff/Appellant

Trent S. Trueblood, Scottsdale

Counsel for Defendants/Appellees

MEMORANDUM DECISION

Presiding Judge John C. Gemmill delivered the decision of the Court, in 

which Judge Kenton D. Jones and Judge Donn Kessler joined.
VERDE v. STONEKING

Decision of the Court

2

G E M M I L L, Judge:

¶1 Verde Valley Plaza, LLC (“VVP”) appeals the dismissal of its 

action against Brian Stoneking and Jane Doe Stoneking. The primary issue 

on appeal is whether the superior court erred in dismissing VVP’s 

complaint against Stoneking based on judicial estoppel. For the reasons 

that follow, we vacate the judgment of dismissal and remand for further 

proceedings.

BACKGROUND

¶2 In November 2011, VVP filed for Chapter 11 bankruptcy and 

continued to operate, as a debtor in possession, a strip mall property in 

Cottonwood, Arizona. In February 2012, Stoneking, a member of EB 

Enterprise, LLC, doing business as the Noodle Bowl, agreed to lease from 

VVP a suite located on the property. The lease required both parties to 

perform renovations in order for Stoneking to operate a restaurant out of 

the suite. VVP did not notify Stoneking that VVP was in bankruptcy, nor 

was Stoneking initially aware of VVP’s status in bankruptcy. After learning 

that VVP had filed for bankruptcy, Stoneking hired counsel who filed a 

notice of representation in the bankruptcy proceeding in June 2012. VVP 

later alleged that on July 1, 2012, Stoneking abandoned the project and left 

the suite unusable.

¶3 VVP filed an amended plan of reorganization in bankruptcy 

court on July 6, 2012. In Section 8.7 of the plan, VVP indicated that it wished 

to preserve

any and all Causes of Action accruing to the Debtor and 

Debtor in Possession, including, without limitation, actions 

under sections 510, 542, 544 . . . of the Bankruptcy Code . . . 

and the Reorganized Debtor shall have the authority to 

commence and prosecute such Causes of Action for the 

benefit of the Estate of the Debtor.

Specifically, the plan provided that VVP had “conducted a preliminary 

investigation and determined” there might be a basis for a claim against 

Midfirst Bank. VVP did not specifically assert or preserve any claim against 

Stoneking, EB Enterprise LLC, or the Noodle Bowl in the amended plan at 

that time.

¶4 In August 2012, Stoneking filed a motion in bankruptcy court 
VERDE v. STONEKING

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seeking “compensation for damages based on [VVP’s] post [bankruptcy] 

petition torts and breach of contract, as an administrative expense.” 

Stoneking alleged VVP made numerous false representations and failed to 

complete renovations it contracted to provide. Because VVP was in 

bankruptcy and the acts alleged occurred after the filing of the bankruptcy 

petition, Stoneking asserted that it was entitled to compensation as an 

“administrative creditor.”

¶5 In September 2012, VVP opposed Stoneking’s motion for 

administrative expenses, explaining that VVP 

is in the process of compiling documents which will be filed 

as a supplement to this Objection. In the interim, however, 

the Debtor will most likely be filing a counterclaim to the 

Application for Administrative Claim, as Noodle Bowl has 

failed to abide by the terms of the parties’ agreement. 

Accordingly, the Debtor requests the Court set this matter for 

a hearing, and at the conclusion of the hearing, deny the 

Application in its entirety.

According to the record on appeal before us, however, VVP did not file a 

supplement to the objection nor did the bankruptcy court schedule or 

conduct the requested hearing; and Stoneking did not object to the hearing 

not being set or request a hearing on his own. It is not apparent from the 

available record whether the bankruptcy court ever addressed Stoneking’s 

motion. VVP’s next filing, on October 15, 2012, was a proposed order for 

the bankruptcy court to approve VVP’s July 6, 2012 plan of reorganization. 

Accompanying the filing was a “Notice of Lodging Form of Order” 

indicating that a copy of the order had been sent to Midfirst Bank’s counsel

but not specifically indicating a copy had been sent to Stoneking’s counsel. 

The October 15, 2012 order expressly referenced Stoneking and EB 

Enterprise, LLC, explaining that “[t]he Plan is hereby amended to include 

a preservation by [VVP] of all claim(s) it has against (1) EB Enterprise, LLC 

d/b/a The Noodle Bowl; (2) Brian Stoneking; and (3) [Eric] Horn.” The 

bankruptcy court issued the order on October 22, 2012, approving VVP’s 

reorganization and signed the final decree in March 2013.

¶6 In August 2013, VVP filed a complaint in superior court 
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against Stoneking.

1 VVP alleged a lease was executed in February 2012 and 

that Stoneking personally guaranteed full performance of the terms of the 

lease. VVP further alleged that Stoneking failed to open a restaurant in the 

suite because he did not perform according to terms of the lease and 

abandoned the suite, leaving it unusable. VVP asserted Stoneking breached 

the agreement, the implied covenant of good faith and fair dealing, and the 

personal guarantee.

¶7 In September 2013, Stoneking responded to the complaint by 

filing a motion to dismiss pursuant to Arizona Rule of Civil Procedure 

12(b)(6). Stoneking’s Rule 12(b) motion alleged that VVP’s claims were 

barred because they were (1) based on an alleged lease which [VVP] 

rejected in its bankruptcy case and (2) based on the doctrine of judicial 

estoppel, because [VVP] never disclosed such claims in its bankruptcy 

schedule. Along with the motion, Stoneking filed attachments that 

included the bankruptcy court docket and minute entries, the motions and 

responses filed in bankruptcy court, and the October 22, 2012 order. VVP 

opposed the motion to dismiss, contending that its claims against Stoneking 

were preserved in the bankruptcy court’s October 22, 2012 order. VVP also 

attached documents from the bankruptcy proceedings.

¶8 After Stoneking replied to VVP’s response, the superior court 

heard oral argument on the pending motion. The court then ordered both 

parties to file supplemental memoranda addressing:

(1) with respect to judicial estoppel, to whom the prejudice 

must run, the Court or the parties; and (2) whether this Court 

would have subject matter jurisdiction over any 

counterclaims that [Stoneking] should choose to assert; 

specifically, those counterclaims that encompass the claims 

made in the administrative claim before the bankruptcy court.

¶9 After receiving the supplemental briefing, the court granted

Stoneking’s motion to dismiss, stating that VVP was “judicially estopped 

from asserting its claims against [Stoneking] in this state court action.” The 

court explained: 

 

1 Only Brian Stoneking and Jane Doe Stoneking were named as defendants 

in this action. EB Enterprise, LLC was not named as a party nor was Eric 

Horn, who was also a member of the LLC.
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[VVP] was aware of the administrative claim pending and 

took no action to advise the Bankruptcy Court of that filing in 

a manner that would have avoided that court’s oversight of 

[Stoneking’s]

[2] claim.

Instead, without meaningful notice to [Stoneking], it simply 

preserved its own claim in its proposed order of confirmation. 

Thus, if [VVP’s] position prevails here, this Court will 

entertain an action against [Stoneking] but will be deprived of 

subject matter jurisdiction over [Stoneking’s] counterclaims. 

That result arises from [VVP’s] procedural transgression in 

bankruptcy court and prejudices [Stoneking] here. The Court 

will not permit that result.

(Emphasis added.) 

¶10 The superior court entered final judgment and VVP timely 

appealed. This court has jurisdiction in accordance with Arizona Revised 

Statutes (“A.R.S.”) sections 12-120.21(A)(1) and -2101(A)(1).

ANALYSIS

I. The Motion to Dismiss Should Have Been Treated as a Motion for 

Summary Judgment

¶11 Although Stoneking filed a Rule 12(b)(6) motion to dismiss, 

both Stoneking and VVP submitted a number of documents from the 

bankruptcy court proceeding in support of or opposition to the motion. On 

a motion to dismiss, if “matters outside the pleading are presented to and 

not excluded by the court, the motion shall be treated as one for summary 

judgment and disposed of as provided in [Arizona Rule of Civil Procedure]

56, and all parties shall be given reasonable opportunity to present all 

material made pertinent to such a motion by Rule 56.” Ariz. R. Civ. Proc. 

12(b).

¶12 The motion to dismiss should therefore have been treated as 

a motion for summary judgment. See Frey v. Stoneman, 150 Ariz. 106, 108-

09 (1986) (holding that when “evidence extrinsic to the pleadings was 

 

2 The superior court references “Plaintiff’s” claim at this point, but we 

assume from the context that the court meant “Defendant’s” or 

“Stoneking’s” claim.
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offered to and relied on by the trial judge in making [a] decision, the motion 

to dismiss should have been treated as one for summary judgment”). 

Although VVP does not complain on appeal that the superior court erred 

in not converting Stoneking’s motion to dismiss to a motion for summary 

judgment, the applicable standard of judicial review requires that we 

examine whether summary judgment was appropriate under Arizona Rule 

of Civil Procedure 56(a).

II. Summary Judgment Was Not Appropriate

¶13 Under Arizona Rule of Civil Procedure 56(a), “[t]he court 

shall grant summary judgment if the moving party shows that there is no 

genuine dispute as to any material fact and the moving party is entitled to 

judgment as a matter of law.” We view the facts and the inferences arising 

from those facts in the light most favorable to the nonmoving party. Best 

Choice Fund, LLC v. Low & Childers, P.C., 228 Ariz. 502, 506, ¶ 10 (App. 2011). 

“[W]e determine de novo whether any genuine issues of material fact exist 

and whether the trial court properly applied the law.” Id.

¶14 VVP primarily asserts that Stoneking’s motion and the 

superior court’s ruling constitute an unauthorized collateral attack on the 

bankruptcy court’s final order approving VVP’s reorganization. See 

generally Duncan v. Progressive Preferred Ins. Co. ex rel. Estate of Pop, 228 Ariz. 

3, 7, ¶¶ 13-15 (App. 2011) (discussing collateral attack principles).3 We 

agree with VVP that the bankruptcy court’s order is not subject to collateral 

attack in this state court action. To the extent there were, or may have been, 

procedural irregularities in bankruptcy court, such issues must generally 

be addressed in the bankruptcy court, not in state court. It is not ordinarily 

within the purview of the superior court or this court to examine and 

attempt to rectify any perceived injustices in a bankruptcy court 

proceeding, order, or judgment. See Rackers v. Nicholson, 89 Ariz. 397, 400 

(1961) (bankruptcy court order is judgment and is not subject to collateral 

attack); Duncan, 228 Ariz. at 7, ¶¶ 13-15.

¶15 A defense based upon judicial estoppel, however, does not 

necessarily constitute an inappropriate collateral attack on the bankruptcy 

court’s order. Judicial estoppel may be asserted against VVP without 

setting aside or rendering invalid the bankruptcy order. See Duncan, 228 

 

3 Because we agree with VVP’s assertion that the superior court’s ruling 

was an improper collateral attack on the bankruptcy court’s ruling, we need 

not consider its assertion that res judicata prevents relitigation of issues that 

could have been litigated in bankruptcy court. 
VERDE v. STONEKING

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Ariz. at 7 (explaining that a collateral attack on a judgment “is an effort to 

obtain another and independent judgment which will destroy the effect of 

the former judgment”). If applicable, judicial estoppel would rest upon a 

determination that VVP has changed its position under such circumstances 

that it should be estopped from seeking damages from Stoneking in this 

action. This would not undermine the effect of the bankruptcy court’s 

judgment. Rather, it would protect the integrity of the judicial system and 

prevent VVP from asserting a position to obtain judicial relief in one 

proceeding and then a new, inconsistent position in a second proceeding. 

See State v. Towery, 186 Ariz. 168, 182, 920 P.2d 290, 304 (1996) (“Judicial 

estoppel is not intended to protect individual litigants but is invoked to 

protect the integrity of the judicial process by preventing a litigant from 

using the courts to gain an unfair advantage.”). 

¶16 We note that the parties have primarily cited, in both superior

court and this court, federal cases regarding judicial estoppel. But state law

is controlling on this issue. Regarding judicial estoppel, our supreme court 

has explained “that a party who has assumed a particular position in one 

judicial proceeding will not be allowed to assume an inconsistent position 

in a subsequent proceeding.” Standage Ventures, Inc. v. State, 114 Ariz. 480, 

483 (1977). “For judicial estoppel to apply, three requirements must be met: 

‘(1) the parties must be the same, (2) the question involved must be the 

same, and (3) the party asserting the inconsistent position must have been 

successful in the prior judicial proceeding.’” Bank of Am. Nat. Trust & Sav. 

Ass'n v. Maricopa Cnty, 196 Ariz. 173, 175 (App. 1999) (quoting Towery, 186 

Ariz. at 182).

¶17 In granting Stoneking’s motion to dismiss, the superior court 

referenced what it perceived to be VVP’s “procedural transgression” in the 

bankruptcy proceeding. See supra ¶ 9. It is not clear, however, that the court 

made the necessary determination of the requisite change of position by

VVP sufficient to support application of judicial estoppel. To apply judicial 

estoppel, it is necessary for a party to show that an inconsistent factual 

position was taken. See State Farm Auto Ins. v. Civil Service Emp. Ins. Co., 19 

Ariz. App. 594, 600 (1973) (noting that the litigants, in a claim against an 

insurance company, took an inconsistent position when they first argued 

that they purchased a vehicle to replace an insured vehicle, and then later 

argued that a different vehicle they borrowed was the replacement); Colonia 

Verde Homeowners Ass'n v. Kaufman, 122 Ariz. 574, 578 (App. 1979) (holding 

that the appellants took an inconsistent position when they obtained relief 

under the enforcement provision of a restrictive covenant attached to their 

property and in a subsequent proceeding denied the restrictions applied). 
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¶18 Even the United States Supreme Court case cited by 

Stoneking involved an inconsistent factual position taken from one 

proceeding to the next. In New Hampshire v. Maine, the states litigated the 

boundary between them, in the vicinity of the Piscataqua River. 532 U.S. 

742, 751 (2001). In earlier litigation, New Hampshire claimed the boundary 

between the states was in the “middle of the river,” which meant the middle 

of the main channel of navigation. Id. In the subsequent proceeding, New 

Hampshire asserted that the same boundary was along Maine’s shoreline

of the Piscataqua River, which the Supreme Court held was inconsistent 

with New Hampshire’s earlier position. Id. 

¶19 Stoneking contends VVP’s inconsistent position began with 

the failure to timely disclose in bankruptcy court its claim against Stoneking

for damages for alleged breach of the lease. At the heart of Stoneking’s 

argument that VVP played “fast and loose” with the bankruptcy rules is a 

contention that VVP failed to follow the procedural and notice 

requirements of bankruptcy court. The superior court labelled VVP’s 

conduct in bankruptcy court a “procedural transgression” and indicated 

that VVP provided no “meaningful notice” that would have allowed 

Stoneking to litigate his administrative claim prior to VVP preserving its 

claims. 

¶20 The perceived procedural transgression is not analogous to 

taking a factually inconsistent position as detailed in the Arizona judicial 

estoppel cases or the New Hampshire case. VVP did not assert one set of 

facts to the bankruptcy court and a different, inconsistent set of facts in the 

superior court. VVP specified in its proposed final order approving the 

plan that it had a claim against Stoneking. In the superior court, it asserts 

the same argument. Stoneking asks this court to affirm the superior court’s 

finding that the alleged failure to timely attempt to preserve a claim, or 

failure to provide appropriate notice in bankruptcy court, is an act that 

should preclude VVP’s claim in state court. Even assuming VVP was tardy 

in disclosing its claim against Stoneking in bankruptcy court, or failed to 

provide proper notice of that claim to Stoneking, such omission or 

omissions do not constitute the taking of an inconsistent position as 

required for application of judicial estoppel. 

¶21 Stoneking has not established as a matter of law that VVP 

took an inconsistent position in the bankruptcy proceeding and obtained 

judicial relief resulting from that position. See Bank of Am. Nat. Trust & Sav. 

Ass'n v. Maricopa Cty, 196 Ariz. 173, 176 ¶ 8 (App. 1999) (“For purposes of 
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judicial estoppel, a party is not considered to have been successful in a prior 

judicial proceeding unless (a) the court in that proceeding granted the party 

relief or accepted the party's earlier inconsistent position either as a 

preliminary matter or as part of a final disposition, and (b) the party's 

inconsistent position was a significant factor in the relief granted.”). The 

inconsistent position must have been a factor in the relief obtained.

¶22 Accordingly, we must vacate the dismissal and remand for 

further proceedings. A defense such as judicial estoppel may be available 

to Stoneking and may be further addressed on remand if supported by the 

facts. On the record before us, however, it cannot be said that Stoneking is

entitled to judgment as a matter of law on the basis of judicial estoppel. 

¶23 We also recognize that the superior court expressed a concern 

regarding the possibility of a counterclaim being asserted by Stoneking. 

But there is no issue before us in this appeal regarding such a counterclaim,

and we will not speculate as to what theories might support a counterclaim 

by Stoneking or what defenses might be raised in response to a potential 

counterclaim.

ATTORNEY FEES

¶24 Both parties have requested awards of attorney fees under 

A.R.S. § 12-341.01. Stoneking has not succeeded on appeal and we therefore 

deny his request. Although VVP is the successful party on appeal, in our 

discretion we deny its request for attorney fees but VVP is awarded its 

statutory, taxable costs on appeal, contingent upon its compliance with 

Arizona Rule of Civil Appellate Procedure 21.

CONCLUSION

¶25 For these reasons, we vacate the judgment of dismissal and 

remand to the superior court for further proceedings.