Court Opinion

ID: 5141043
Source: CourtListenerOpinion
Date Created: 2021-12-28 16:01:37.085467+00
Date Added: 2024-06-11T08:24:26.997667
License: Public Domain

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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

 REVIVE CONSTRUCTION AND CLEANING, LLC, Plaintiff/Appellant,

                                        v.

     SHEA-CONNELLY DEVELOPMENT, LLC, Defendant/Appellee.

                             No. 1 CA-CV 21-0133
                              FILED 12-28-2021

           Appeal from the Superior Court in Maricopa County
                          No. CV2018-093863
                The Honorable Daniel G. Martin, Judge

                                  AFFIRMED

                                   COUNSEL

Zazueta Law PLLC, Scottsdale
By Fabian Zazueta, Garrett Respondek
Co-Counsel for Plaintiff/Appellant

Degnan Law PLLC, Phoenix
By Mark W. Horne, David Degnan
Co-Counsel for Plaintiff/Appellant

DKL Law PLLC, Tempe
By David W. Lunn, Kathryn A. Lunn
Counsel for Defendant/Appellee
                      REVIVE v. SHEA-CONNELLY
                         Decision of the Court

                      MEMORANDUM DECISION

Presiding Judge Cynthia J. Bailey delivered the decision of the Court, in
which Judge Jennifer M. Perkins and Judge Maria Elena Cruz joined.

B A I L E Y, Judge:

¶1         Revive Construction and Cleaning, LLC (“Revive”) appeals
the judgment the superior court entered in favor of Shea-Connelly
Development (“SCD”) for breach of contract. For the following reasons, we
affirm.

                FACTS AND PROCEDURAL HISTORY

¶2            SCD contracted with Revive to perform work on two
construction projects, the Morningstar building in Glendale (“Glendale
Project”) and the Park Place apartment complex in Fountain Hills (“Park
Place Project”). After SCD became dissatisfied with Revive’s work on the
Park Place Project, it withheld payment on four invoices and terminated
both contracts.

¶3            Revive filed a complaint with the Registrar of Contractors
(“ROC”) seeking payment of the four invoices. After a hearing, an
Administrative Law Judge (“ALJ”) found that SCD violated the Arizona
Prompt Pay Act, see Ariz. Rev. Stat. (“A.R.S.”) §§ 32-1181 to -1188; see also
A.R.S. § 32-1154(A)(10), (12), by failing to pay the four invoices, which
totaled $68,783.25. The ALJ made no findings on SCD’s allegations of faulty
work. The ALJ recommended the ROC suspend SCD’s license unless SCD
provided documentation that it paid Revive on the four invoices. The ROC
adopted the ALJ’s recommendation, and the superior court and the court
of appeals affirmed the ROC order. See Shea Connelly Dev. LLC v. Ariz.
Registrar of Contractors (“Shea Connelly”), 1 CA-CV 19-0718, 2020 WL
6503616 (Ariz. App. Nov. 3, 2020) (mem. decision).

¶4           Revive then sued SCD seeking further payment on the
Glendale Project. SCD counterclaimed to recover the amounts it paid on
the Glendale Project and for damages it incurred in repairing Revive’s
faulty work on the Park Place Project.

¶5           Revive moved to dismiss SCD’s counterclaim, arguing the
ROC’s decision precluded SCD from litigating whether Revive performed

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                       REVIVE v. SHEA-CONNELLY
                          Decision of the Court

faulty work on the Park Place Project. The superior court denied the
motion, reasoning the ROC did not decide that issue. At a bench trial, the
court denied Revive’s motion for a directed verdict and then found for SCD
on its breach of contract claim related to the Park Place Project, awarding
$57,400 in damages for the amounts SCD paid to repair Revive’s defective
work. The court denied both parties’ claims related to the Glendale Project.
The court awarded SCD its attorneys’ fees and costs as the prevailing party
and denied Revive’s motions for new trial and reconsideration.

¶6            We have jurisdiction over Revive’s timely appeal under
Article 6, Section 9, of the Arizona Constitution and A.R.S. §§ 12-
120.21(A)(1) and 12-2101(A)(1).

                                DISCUSSION

¶7             Revive argues the superior court erred in (1) denying its
motion to dismiss the counterclaim on the Park Place Project based on the
preclusive effect of the ROC’s order; (2) denying its motion for a directed
verdict on SCD’s counterclaim on the Park Place Project; (3) denying its
motions for new trial and reconsideration seeking to reduce the judgment
by setoff or recoupment; and (4) awarding attorneys’ fees to SCD.

I.     Issue Preclusion

¶8             Revive argues the ROC found Revive did not perform faulty
work and thus the ROC order precludes SCD’s counterclaim on the Park
Place Project.

¶9             We review de novo the superior court’s application of issue
preclusion. Crosby-Garbotz v. Fell, 246 Ariz. 54, 56-57, ¶ 9 (2019) (citation
omitted). Issue preclusion applies when a fact “was actually litigated in a
previous suit, a final judgment was entered, and the party against whom
the doctrine is to be invoked had a full opportunity to litigate the matter
and actually did litigate it, provided such issue or fact was essential to the
prior judgment.” Chaney Bldg. Co. v. City of Tucson, 148 Ariz. 571, 573 (1986)
(citations omitted). Courts may apply issue preclusion to a decision of an
administrative agency when the agency is acting in a judicial capacity and
that decision resolves issues of fact “which the parties have had an adequate
opportunity to litigate.” Campbell v. Superior Court, 18 Ariz. App. 287, 290
(1972) (quoting United States v. Utah Constr. & Mining Co., 384 U.S. 394, 422
(1966), superseded by statute on other grounds as recognized in Essex Electro
Eng’rs, Inc. v. United States, 702 F.2d 998, 1002 n.7 (Fed. Cir. 1983)); see also
J.W. Hancock Enters., Inc. v. Ariz. State Registrar of Contractors, 142 Ariz. 400,
410 (App. 1984) (holding that an ROC finding that the contractor was

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                      REVIVE v. SHEA-CONNELLY
                         Decision of the Court

required to install insulation precluded the contractor from bringing a
declaratory judgment action on that question).

¶10           Here, the ROC did not assess the quality of Revive’s work on
the Park Place Project. It concluded only that SCD violated the Arizona
Prompt Pay Act by withholding payment on the four invoices. In that
proceeding, the ROC did not permit SCD to litigate its allegation that
Revive’s work was faulty. Moreover, the Prompt Pay Act is designed to
ensure subcontractors are paid for the work performed, but the general
contractor “retains all civil remedies for breach of contract and tort claims
against a [sub]contractor” and prompt payment is not “conclusive that the
work was properly performed.” Stonecreek Bldg. Co. v. Shure, 216 Ariz. 36,
40, ¶ 18 (App. 2007) (citation omitted). For this reason, the superior court
properly declined to apply issue preclusion.

II.    Motion for a Directed Verdict

¶11          Revive argues the superior court erred in denying its motion
for a directed verdict on SCD’s counterclaim related to the Park Place
Project.

¶12            A superior court may grant a motion for a directed verdict “if
the facts produced in support of the claim or defense have so little probative
value, given the quantum of evidence required, that reasonable people
could not agree with the conclusion advanced by the proponent of the claim
or defense.” Orme Sch. v. Reeves, 166 Ariz. 301, 309 (1990). We review the
court’s ruling on a motion for directed verdict de novo. Warne Invs., Ltd. v.
Higgins, 219 Ariz. 186, 194, ¶ 33 (App. 2008). We view the evidence and all
reasonable inferences in the light most favorable to the nonmoving party.
Id. (citation omitted).

¶13            Through testimony at trial, SCD presented substantial
evidence to support its claim that Revive’s work on the Park Place Project
was faulty. Steve Shea, the former construction manager for SCD, testified
that Revive did not properly supervise its employees on the Park Place
Project, that SCD had to send in its own supervisors to manage Revive’s
work, and that Revive’s work was not done according to the contract’s
specifications. SCD’s owner, Bart Shea, testified that Revive did not follow
SCD’s instructions for placement of walls and size of cabinets, and that
Revive’s work did not pass inspections. Based on this testimony, the court
properly denied Revive’s motion for a directed verdict.

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                      REVIVE v. SHEA-CONNELLY
                         Decision of the Court

III.   Setoff or Recoupment

¶14          After the trial, Revive moved for a new trial and for
reconsideration, arguing for the first time that the judgment against it
should be reduced by the amount the ROC ordered SCD to pay on the four
invoices.   The superior court denied the motions, reasoning that
recoupment or setoff did not apply because the ROC order was not relevant
to the judgment.

¶15            Revive waived its right to recoupment or setoff by failing to
raise this argument until its motion for a new trial. See Conant v. Whitney,
190 Ariz. 290, 293-94 (App. 1997) (holding that arguments raised for the first
time in a motion for new trial are waived absent extraordinary
circumstances (citations omitted)); Kent v. Carter-Kent, 235 Ariz. 309, 313,
¶ 20 (App. 2014) (holding that a party could not raise a new issue in its
motion for a new trial). Although Revive argued our decision in Shea
Connelly was new evidence that put the recoupment defense at issue, our
decision simply affirmed the ROC order as it existed at the time of trial. If
the party knew about the evidence at the time of trial, the evidence is not
newly discovered. See Black v. Black, 114 Ariz. 282, 285 (1977). Accordingly,
Revive waived its right to seek recoupment or setoff.

IV.    The Superior Court’s Award of Attorneys’ Fees

¶16           Revive argues the court should have considered the ROC
order when it determined the prevailing party and awarded attorneys’ fees.
We review an award of attorneys’ fees for an abuse of discretion and “will
not disturb the trial court’s discretionary award of fees if there is any
reasonable basis for it.” Orfaly v. Tucson Symphony Soc’y, 209 Ariz. 260, 265,
¶ 18 (App. 2004) (citations omitted). Because the superior court found SCD
prevailed on its counterclaim and found that Revive was not entitled to
recover on its Glendale Project claim, the court did not abuse its discretion
in awarding attorneys’ fees to SCD as the prevailing party.

V.     Attorneys’ Fees on Appeal

¶17          We award SCD its reasonable attorneys’ fees under A.R.S. §
12-341.01 and taxable costs on appeal upon compliance with Arizona Rule
of Civil Appellate Procedure 21.

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                    REVIVE v. SHEA-CONNELLY
                       Decision of the Court

                           CONCLUSION

¶18         For the reasons stated above, we affirm the superior court’s
judgment.

                        AMY M. WOOD • Clerk of the Court
                        FILED:    JT

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