Court Opinion

ID: 2677254
Source: CourtListenerOpinion
Date Created: 2014-06-05 16:01:39.00274+00
Date Added: 2024-06-11T13:11:32.840306
License: Public Domain

NOTICE: NOT FOR PUBLICATION.
   UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION DOES NOT CREATE
          LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.

                                    IN THE
               ARIZONA COURT OF APPEALS
                                 DIVISION ONE

  APREA II LIMITED PARTNERSHIP, an Arizona limited partnership,
                 Plaintiff/Counterdefendant/Appellee,

                                        v.

     LAW OFFICE OF JACOB HAFTER, P.C., a Nevada corporation,
               Defendant/Counterclaimant/Appellant,

                    JACOB HAFTER; JACLYN HAFTER,
                          Defendants/Appellants.

                             No. 1 CA-CV 12-0714
                              FILED 06-05-2014

           Appeal from the Superior Court in Maricopa County
                          No. CV 2010-052814
            The Honorable Michael R. McVey, Judge (Retired)

      AFFIRMED IN PART; VACATED IN PART; REMANDED

                                   COUNSEL

Law Office of David Cisiewski, P.L.L.C., Phoenix
By David Cisiewski
Counsel for Plaintiff/Counterdefendant/Appellee

Jacob Hafter and Jaclyn Hafter, Las Vegas, Nevada
Defendants/ Appellants in Propria persona
                       APREA II v. HAFTER, et al.
                         Decision of the Court

                      MEMORANDUM DECISION

Judge Margaret H. Downie delivered the decision of the Court, in which
Presiding Judge Kenton D. Jones and Judge Donn Kessler joined.

D O W N I E, Judge:

¶1            Jacob Hafter, Jaclyn Hafter, and the Law Office of Jacob
Hafter, P.C. (“LOJH”) filed a notice of appeal challenging the superior
court’s grant of summary judgment to Aprea II, L.P. (“Aprea”) on Aprea’s
breach of contract claims and on LOJH’s counterclaim. LOJH has not
submitted an opening brief or otherwise participated in this appeal since
filing the notice of appeal through counsel. 1 We therefore deem LOJH’s
appeal abandoned. For the following reasons, we affirm the grant of
summary judgment against the Hafters on Aprea’s breach of contract
claims but vacate the judgment against the Hafters on LOJH’s
counterclaim. We do not disturb or address either grant of summary
judgment against LOJH.

                FACTS AND PROCEDURAL HISTORY

¶2           LOJH entered into a three-year commercial lease with Aprea
in April 2009 for office space. The Hafters signed a Guaranty of Lease
(“Guaranty”). It is undisputed that LOJH failed to pay rent due under the
lease in December 2009.

¶3             In February 2010, Aprea and LOJH entered into a settlement
agreement. When LOJH failed to make payments required by that
agreement, Aprea sued LOJH, alleging breaches of the lease and the
settlement agreement, and the Hafters as guarantors under the lease.
LOJH filed a counterclaim alleging illegal eviction, breach of contract, and
tortious interference.

¶4          Aprea moved for summary judgment on its contract claims.
LOJH and the Hafters opposed the motion and sought additional time to
conduct discovery. The superior court granted summary judgment to

1The Hafters state that “LOJH has not appeared in the appeal because it is
no longer in business and has no assets.”

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                          APREA II v. HAFTER, et al.
                            Decision of the Court

Aprea. It entered judgment on December 27, 2011, awarding Aprea
$137,440 as the “principal sum due under the Lease Agreement and
Settlement Agreement,” attorneys’ fees of $26,912, costs of $766.54, and
interest at the rate of 18% per annum. 2 The court did not certify the
judgment as final under Rule 54(b).

¶5           Aprea later moved for summary judgment on LOJH’s
counterclaim. The superior court granted Aprea’s motion in August 2012,
awarding Aprea an additional $11,123.68, plus interest. The court
included the Hafters individually in the judgment on the counterclaim.

¶6           We have jurisdiction over the Hafters’ timely appeal
pursuant to Arizona Revised Statutes (“A.R.S.”) sections 12-120.21(A)(1)
and -2101(A)(1).

                                 DISCUSSION

¶7             On appeal from a grant of summary judgment, we view the
facts and reasonable inferences in the light most favorable to the party
against whom judgment was entered. Bothell v. Two Point Acres, Inc., 192
Ariz. 313, 315, ¶ 2, 965 P.2d 47, 49 (App. 1998). Whether a court properly
granted summary judgment is a question of law that we review de novo.
See id. at 316, ¶ 8, 965 P.2d at 50. A court may grant summary judgment
when “there is no genuine dispute as to any material fact and the moving
party is entitled to judgment as a matter of law.” Ariz. R. Civ. P. 56(c)(1).
Summary judgment “should be granted 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, 802 P.2d 1000, 1008 (1990). The moving party
has the initial burden of showing there are no genuine issues of material
fact, whereupon the burden shifts to the opposing party to establish the
existence of factual questions. Nat’l Bank of Ariz. v. Thruston, 218 Ariz. 112,
114-15, ¶ 12, 180 P.3d 977, 979-80 (App. 2008). We will affirm the superior
court’s decision if it is correct for any reason. Ariz. Bd. of Regents v. State ex
rel. State of Ariz. Pub. Safety Ret. Fund Manager Adm’r, 160 Ariz. 150, 154,
771 P.2d 880, 884 (App. 1989).

2   The lease established the 18% interest rate.

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                        APREA II v. HAFTER, et al.
                          Decision of the Court

I.    Summary Judgment on Aprea’s Contract Claims

¶8            “The extent of a guarantor’s liability is governed by the
terms of the guaranty agreement.” Pi'Ikea, LLC v. Williamson, 234 Ariz.
284, 287, ¶ 10, 321 P.3d 449, 452 (App. 2014); accord Tenet Healthsystem
TGH, Inc. v. Silver, 203 Ariz. 217, 219, ¶ 7, 52 P.3d 786, 788 (App. 2002).
The Guaranty at issue here is broad in scope, making the Hafters liable for
any “liability, expense or fee (including reasonable attorneys’ fees)
incurred or sustained as a result of the failure by Tenant to satisfy its
obligations under the Lease.” The Guaranty further provides:

      Guarantors absolutely and unconditionally guarantee[] and
      promise[] to Landlord the due, punctual and full
      performance by Tenant of each and all of the covenants,
      obligations, liabilities and promises of Tenant . . . including
      without limitation, the payment of Annual Basic Rent and
      Additional Rent (as defined in the Lease) and any and all
      other sums payable thereunder.

      ....

      Guarantors waive[] and agree[] not to assert or take
      advantage of any right or defense based on the absence of
      any or all presentments, demands (including demands for
      performance), notices (including . . . notices of non-
      performance . . . ) and protests of each and every kind.

The Hafters also acknowledged in the Guaranty that Aprea had no duty to
provide them with “any information whatsoever regarding Tenant or
Tenant’s financial condition or business affairs.”

¶9            In defending against the breach of contract claims, the
Hafters’ primary contention has been that Aprea failed to give notices
required under the lease. However, the Hafters expressly waived their
right to notices “of each and every kind” and acknowledged in the
Guaranty that Aprea had no duty to communicate with them about LOJH.
Additionally, the Hafters may not collaterally attack the judgment against
LOJH or relitigate issues that LOJH lost below. See Smith Plumbing Co. v.
Aetna Cas. & Sur. Co., 149 Ariz. 524, 527, 720 P.2d 499, 502 (1986) (A surety
may generally raise any defense available to the principal, except personal
defenses.); see also E.H. Schopler, Annotation, Conclusiveness and Effect,
Upon Surety, of Default or Consent Judgment Against Principal, 59 A.L.R. 2d
752 § 6 (1958) (discussing conclusive effect on surety of consent judgment
rendered against principal in litigation to which surety was a party,

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                        APREA II v. HAFTER, et al.
                          Decision of the Court

notwithstanding surety’s failure to sign consent agreement); 38A C.J.S.
Guaranty § 119 (2014) (“A prior judgment against the principal is not
conclusive against the guarantor unless the guarantor had an opportunity
to defend the action or was a party to the judgment or the guaranty
contract so provides . . . .”).

¶10            Because the Hafters are liable under the Guaranty for
LOJH’s breach of the lease, we need not decide whether they are also
liable under the settlement agreement or whether they may assert
defenses to that agreement (such as duress) that LOJH itself is foreclosed
from raising. 3 Nor is it necessary for us to determine the validity of the
settlement agreement in order to affirm the damages award on the breach
of contract claim. Both the Guaranty and the settlement agreement
establish Aprea’s right to recover damages under the original lease terms,
including the full value of the rent at the time of termination of the lease.
See infra ¶ 14. The damages the superior court awarded are consistent
with those damages. Aprea received the amount due and owing under
the lease, less sums LOJH had paid pursuant to the settlement agreement. 4

¶11         For the reasons stated, we affirm the grant of summary
judgment against the Hafters on Aprea’s breach of contract claim.

II.    Summary Judgment on the Counterclaim

¶12            The counterclaim was brought solely by LOJH. Because the
Hafters were not parties to the counterclaim, the superior court erred by
including them in the August 15, 2012 judgment, which, among other
things, held them jointly and severally liable for attorneys’ fees of $11,078,
costs of $45.68, and interest on those sums. Cf. McDonnell v. S. Pac. Co., 79
Ariz. 10, 12, 281 P.2d 792, 793 (1955) (“Parties cannot be brought into court
and a valid judgment rendered for or against them by merely including

3 LOJH specifically avowed it was entering into the settlement agreement
“voluntarily, in good faith, without duress or undue influence of [Aprea].
[LOJH] has been represented by legal counsel of its own choice regarding
the meaning, interpretation and effect of this Agreement.”

4 The Hafters’ obligations under the Guaranty were not vitiated by the
settlement agreement, which stated that Aprea retained all rights and
remedies under the lease and Guaranty until LOJH fully and completely
satisfied its obligations under the settlement agreement. It is undisputed
that LOJH failed to make payments required by the settlement agreement.

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                        APREA II v. HAFTER, et al.
                          Decision of the Court

them in the judgment.”). On remand, the superior court shall enter an
amended judgment on the counterclaim that omits the Hafters as
judgment debtors.

III.   Damages

¶13           Finally, the Hafters dispute the amount of damages awarded
to Aprea. We decline to address their contention that LOJH’s first
payment under the settlement agreement constituted surrender of the
premises and termination of the lease, such that Aprea was limited to
damages incurred before LOJH’s re-entry and removal of its property.
Neither LOJH nor the Hafters raised this argument in the superior court.
We will not address it for the first time on appeal. See Cahn v. Fisher, 167
Ariz. 219, 221, 805 P.2d 1040, 1042 (App. 1990) (A party cannot raise new
theories on appeal to seek reversal of summary judgment.).

¶14            The Hafters also contend the doctrine of mitigation of
damages should limit Aprea’s damages. Arizona law generally permits a
landlord to recover possession of the premises upon default and to sue for
rent, damages, or breach of the lease, subject to reasonable mitigation
efforts. W. Pinal Family Health Ctr., Inc. v. McBryde, 162 Ariz. 546, 548, 785
P.2d 66, 68 (App. 1989); Roosen v. Schaffer, 127 Ariz. 346, 348, 621 P.2d 33,
35 (App. 1980). However, the breaching party bears the burden of proof
as to mitigation. Fairway Builders, Inc. v. Malouf Towers Rental Co., 124
Ariz. 242, 255-56, 603 P.2d 513, 526-27 (App. 1979). The remedies section
of the lease agreement is consistent with this legal tenet, stating:

       (a) Landlord may terminate Tenant’s right to possession of
       the Premises at any time by written notice to Tenant. . . .
       Upon such termination in writing of Tenant’s right to
       possession of the Premises, as herein provided, this Lease
       shall terminate and Landlord shall be entitled to recover
       damages from Tenant as provided in any applicable existing
       or future Law providing for recovery of damages for such
       breach, including the worth at the time of award of the
       amount by which the rent which would be payable by
       Tenant hereunder for the remainder of the Term after the
       date of the award of damages, including Additional Rent as
       reasonably estimated by Landlord, exceeds the amount of
       such rental loss as Tenant proves could have been reasonably
       avoided.

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                        APREA II v. HAFTER, et al.
                          Decision of the Court

 (emphasis added). The lease thus permits a reduction in Aprea’s
damages should the “Tenant” (LOJH) establish a failure to mitigate.
LOJH and the Hafters, though, offered no evidence of a failure to mitigate.
They instead requested additional time to conduct discovery, which the
superior court denied.

¶15           The superior court has broad discretion in managing
discovery deadlines, and we review its denial of an extension request for
an abuse of discretion. See Maricopa County v. Kinko’s Inc., 203 Ariz. 496,
501, ¶ 19, 56 P.3d 70, 75 (App. 2002). Rule 56(f) permits the court to grant
a continuance for additional discovery when a party opposing summary
judgment cannot “present by affidavit facts essential to justify the party’s
opposition.” Birth Hope Adoption Agency, Inc. v. Doe, 190 Ariz. 285, 287-88,
947 P.2d 859, 861-62 (App. 1997). Rule 56(f) requires the requesting party
to submit an affidavit addressing: (1) the particular evidence beyond the
party's control; (2) the location of the evidence; (3) what the party believes
the evidence will reveal; (4) the methods to be used to obtain it; and (5) an
estimate of the amount of time the additional discovery will require. Lewis
v. Oliver, 178 Ariz. 330, 338, 873 P.2d 668, 676 (App. 1993). Jacob Hafter
submitted the requisite affidavit, which addressed the need for discovery
regarding mitigation of damages.

¶16            The major objective of Rule 56(f) is to insure that a diligent
party is given a reasonable opportunity to prepare his or her case. Simon
v. Safeway, Inc., 217 Ariz. 330, 333, ¶ 6, 173 P.3d 1031, 1034 (App. 2007). In
the case at bar, however, the superior court could have reasonably
determined that the Hafters were not diligent in pursuing discovery. The
answer and counterclaim were filed in December 2010. The court
imposed a discovery deadline of May 13, 2011. Aprea’s first motion for
summary judgment was filed after the discovery deadline expired. The
Hafters did not come forward with evidence or argument that they had
been diligent by, for example, pursuing damages-related discovery before
the court-imposed deadline or by seeking to extend that deadline before it
expired. Under these circumstances, we cannot say the court clearly
abused its discretion by denying the Rule 56(f) request. See, e.g., Torres v.
N. Am. Van Lines, Inc., 135 Ariz. 35, 40, 658 P.2d 835, 840 (App. 1982)
(“Abuse of discretion” is discretion manifestly unreasonable or exercised
on untenable grounds, or for untenable reasons.).

¶17            Based on the evidence before it, the superior court did not
err in its damage calculations. See Brookover v. Roberts Enters., Inc., 215
Ariz. 52, 55, ¶ 8, 156 P.3d 1157, 1160 (App. 2007) (“We review the decision

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                      APREA II v. HAFTER, et al.
                        Decision of the Court

on the record made in the trial court, considering only the evidence
presented to the trial court when it addressed the motion.”).

                            CONCLUSION

¶18            We affirm the December 27, 2011 judgment against the
Hafters on Aprea’s breach of contract claim. We vacate and remand the
August 15, 2012 judgment on LOJH’s counterclaim with instructions for
the superior court to enter an amended judgment that omits the Hafters as
judgment debtors. We decline to award attorneys’ fees to either Aprea or
the Hafters. Although the Guaranty contemplates an award of fees and
costs to the prevailing party, both Aprea and the Hafters have partially
prevailed on appeal. For this same reason, we do not award appellate
costs to either party.

                              :gsh

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