Court Opinion

ID: 4459088
Source: CourtListenerOpinion
Date Created: 2019-11-26 17:02:05.66099+00
Date Added: 2024-06-11T14:52:27.460552
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                 SHERIDAN EQUITIES HOLDINGS, LLC.,
                          Plaintiff/Appellant,

                                        v.

                     SWARTZ & BROUGH INC., et al.,
                         Defendants/Appellees.

                             No. 1 CA-CV 19-0012
                               FILED 11-26-2019

           Appeal from the Superior Court in Maricopa County
                          No. CV2014-055780
           The Honorable Aimee L. Anderson, Judge (Retired)
                  The Honorable Cynthia Bailey, Judge

                                  AFFIRMED

                                   COUNSEL

William Edward Conner, LLM, Phoenix
Counsel for Plaintiff/Appellant

Gordon Rees Scully Mansukhani, LLP, Phoenix
By John L. Condrey, Annelise M. Dominguez
Counsel for Defendants/Appellees
                SHERIDAN v. SWARTZ & BROUGH, et al.
                       Decision of the Court

                      MEMORANDUM DECISION

Presiding Judge Samuel A. Thumma delivered the decision of the Court, in
which Judge Jennifer M. Perkins and Judge Michael J. Brown joined.

T H U M M A, Judge:

¶1           Plaintiff Sheridan Equities Holding, LLC (Sheridan)
challenges the entry of summary judgment in favor of defendants,
including Swartz & Brough Inc. (collectively S&B). Sheridan also argues the
superior court erred in striking its late-filed notice of discovery, in denying
Sheridan’s motion to reopen discovery and in awarding attorneys’ fees to
S&B. Because Sheridan has shown no error, the judgment is affirmed.

                 FACTS AND PROCEDURAL HISTORY

¶2             In 2009, Sheridan and S&B entered into a written property
management agreement in which Sheridan agreed to manage properties
owned by S&B in Arizona. In November 2014, Sheridan filed this case
against S&B, alleging various contract, tort and equitable claims and
seeking compensatory and punitive damages and other relief. Over time,
Sheridan limited the claims to breach of contract, breach of fiduciary
duty/failure to account and impairment of equitable interest and limited
the relief requested to compensatory damages, attorneys’ fees and costs.

¶3            After resolution of some procedural matters, S&B filed an
answer in April 2015. Accordingly, initial disclosure statements were due
in June 2015. See Ariz. R. Civ. P. 26.1(f)(1) (2019).1

¶4             In February 2016, S&B moved for summary judgment based
on Sheridan’s failure to respond to requests for admission. When Sheridan
failed to timely respond, S&B sought summary adjudication. Ultimately,
the court denied S&B’s motion for summary judgment, finding “material
facts that are clearly in dispute” based on the parties’ answers to requests
for admission. In doing so, the court “admonished and ordered” the parties

1Although the Arizona Rules of Civil Procedure were amended at least
twice during the pendency of this appeal, the parties on appeal cite to the
current version of Rule 26.1, a convention used in this decision (with the
exception of Rule 29 as discussed in footnote 2).
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                SHERIDAN v. SWARTZ & BROUGH, et al.
                       Decision of the Court

“to comply with the rules of procedure specifically as it pertains to
complying with discovery requests, serving discovery requests, as well as
filing of motions, responses and replies thereto.”

¶5            In May 2016, the court set various deadlines: written
discovery to be completed by mid-November 2016; fact depositions to be
completed by February 20, 2017; expert depositions to be completed by
April 20, 2017; mediation to be completed by May 1, 2017 and dispositive
motions to be filed by May 20, 2017. The appellate record shows no court
filings between this May 2016 scheduling order and April 2017, when S&B
filed a request for settlement conference, noting they had “been unable to
get any response from [Sheridan’s] counsel in order to set a mediation.” The
court granted that request days later.

¶6            In mid-June 2017, S&B filed a motion for sanctions, including
seeking termination of the case and precluding evidence, based on
Sheridan’s “absolute lack of prosecution and continuous violation of the
Court’s orders and the Rules of Civil Procedure” throughout the case.
Along with the history summarized above, this motion stated Sheridan had
“fail[ed] to provide any disclosure statement, disclose any documents or
witnesses, notice any depositions or identify any experts.” The motion
recounted S&B’s counsel contacting Sheridan’s counsel “on multiple
occasions requesting responses,” and Sheridan’s counsel providing “no
responses” with one exception, when Sheridan’s counsel sought to provide
responses to November 2016 discovery requests in late April 2017.

¶7             Sheridan’s mid-July 2017 response to the motion for sanctions
was untimely. The response argued S&B’s motion failed to include a
certificate showing good faith consultation, “relie[d] on discovery matters
in the past that have been addressed,” ignored S&B’s own purported
failures and did not show “any prejudice or harm.” Sheridan’s response,
however, conceded S&B had disclosed 14,000 documents as well as
witnesses and also conceded that Sheridan, itself, had never provided a
Rule 26.1 disclosure statement.

¶8            In late July 2017, Sheridan made a couple of relevant filings,
including a notice of providing disclosure statement (on July 25, 2017) and
a motion to re-open discovery to pursue document discovery and
depositions. S&B quickly moved to strike the disclosure statement.
Sheridan failed to respond to that motion to strike.

¶9           In a September 2017 minute entry, the court (1) denied S&B’s
motion for sanctions, noting it “lacked the filing of a certificate of good faith

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                SHERIDAN v. SWARTZ & BROUGH, et al.
                       Decision of the Court

consultation, as required;” (2) granted S&B’s motion to strike Sheridan’s
disclosure statement, noting Sheridan had not opposed the motion and the
disclosure statement (the only Rule 26.1 disclosure Sheridan provided) was
“well over three months after Discovery in this case closed;” and (3) denied
Sheridan’s motion to re-open discovery, finding Sheridan “has failed to
show good cause.” At no time did Sheridan remedy its disclosure and
discovery issues.

¶10            In April 2018, S&B moved for summary judgment, or in the
alternative for summary adjudication, “on the basis that [Sheridan] cannot
prove any of its causes of action,” given it “has failed completely to disclose
support for its claims and has not disclosed documents or witnesses to
support any claim outside of the allegations in the Complaint, which are
insufficient.” After full briefing and oral argument, in October 2018, the
court granted this motion for summary judgment, finding “[i]t is
undisputed that Plaintiff failed to disclose any witnesses, information, legal
theory or documents to support its claims or measure of damages in a Rule
26.1 disclosure. The Court previously found that good cause did not exist
to re-open discovery.”

¶11            After entry of final judgment awarding S&B attorneys’ fees
and costs, see Ariz. R. Civ. P. 54(c), Sheridan timely appealed. This court has
jurisdiction over Sheridan’s appeal pursuant to Article 6, Section 9, of the
Arizona Constitution and Arizona Revised Statutes (A.R.S.) sections 12-
120.21(A)(1) and -2101(A)(1).

                                DISCUSSION

¶12          Sheridan argues the superior court erred in: (1) striking its
disclosure statement and denying its motion to reopen discovery; (2)
granting summary judgment for S&B; and (3) awarding attorneys’ fees to
S&B pursuant to A.R.S. § 12-341.01.

I.     The Court Did Not Err in Striking Sheridan’s Disclosure
       Statement and Denying Its Motion to Reopen Discovery.

¶13            “A trial court has broad discretion in ruling on disclosure and
discovery matters, and this court will not disturb that ruling absent an
abuse of discretion.” Marquez v. Ortega, 231 Ariz. 437, 441 ¶ 14 (App. 2013).
Courts are encouraged “to take firm, active roles in the application and
enforcement of” disclosure and discovery rules “that were specifically
designed to curb discovery abuse, excessive cost, and delay.” Allstate Ins.
Co. v. O'Toole, 182 Ariz. 284, 287 (1995). Superior courts are “better able . . .
to decide if a disclosure [or discovery] violation has occurred in the context
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                SHERIDAN v. SWARTZ & BROUGH, et al.
                       Decision of the Court

of a given case and the practical effect of” such a violation. Solimeno v.
Yonan, 224 Ariz. 74, 77 ¶ 9 (App. 2010). A reviewing court does not
“substitute [its] discretion for that of the trial court,” Marquez, 231 Ariz. at
441 ¶ 14, and the evidence is considered “in the light most favorable to
upholding the superior court’s ruling,” Dowling v. Stapley, 221 Ariz. 251, 266
¶ 45 (App. 2009).

       A.     The Court Properly Struck Sheridan’s Late Disclosure
              Statement.

¶14              Sheridan argues the delay in providing its disclosure
statement was harmless and therefore the court erred in granting S&B’s
motion to strike. The rules required Sheridan to provide its initial disclosure
statement soon after the pleadings closed (June 2015), supplement soon
after any new information was discovered and comply with court-ordered
deadlines. Ariz. R. Civ. P. 26.1(f). The purpose of these disclosure
obligations “is to allow the parties ‘a reasonable opportunity to prepare for
trial or settlement—nothing more, nothing less.’” Allstate Ins. Co., 182 Ariz.
at 287 (quoting Bryan v. Riddel, 178 Ariz. 472, 476 n.5 (1994)). Although Rule
26.1 “should be interpreted to maximize the likelihood of a decision on the
merits,” Allstate, 182 Ariz. at 287, if a party fails to make timely disclosure,
that party “may not use the information, witness, or document as evidence
at trial, at a hearing, or with respect to a motion,” unless a court finds there
was no resulting prejudice or good cause is shown, Ariz. R. Civ. P. 37(c)(1);
see also Link v. Pima Cty., 193 Ariz. 336, 338–39 ¶ 4 (App. 1998) (“The trial
court can exclude evidence that is not timely disclosed.”). The superior
court’s decision to strike is reviewed for an abuse of discretion. Dowling, 221
Ariz. at 266 ¶ 45.

¶15           Sheridan’s disclosures were untimely. Sheridan filed this case
in November 2014, S&B answered in April 2015 and discovery closed in
April 2017. Yet Sheridan did not provide any Rule 26.1 disclosure until July
2017. Sheridan then failed to respond to S&B’s motion to strike that July
2017 disclosure. Although Sheridan correctly notes there is a general
preference for courts to resolve actions on their merits (rather than on
procedural deficiencies), see Allstate, 182 Ariz. at 287, Sheridan did not
comply with its duty to make disclosures, including after the deadline for
disclosures passed, and did not request an extension to do so before that
deadline passed.

¶16           Sheridan asserts the lack of any “surprises or new
information” in its July 2017 disclosure statement meant “[t]here was
absolutely no prejudice given a trial date not even [having] been set nor was

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                SHERIDAN v. SWARTZ & BROUGH, et al.
                       Decision of the Court

there any time sensitive period of time.” Sheridan’s disclosure, however,
came 45 days after a June 2017 conference set by the court in May 2016 “for
the purpose of assigning a trial date.” Although that June 2017 conference
was later continued to late July 2017, Sheridan’s failure to engage in setting
a settlement conference apparently caused that delay. And even then,
Sheridan provided the untimely disclosure just three days before the
rescheduled trial setting conference. The superior court could properly
conclude that Sheridan’s delay, resulting in the trial setting being delayed,
should not then be used by Sheridan to prevent the court from striking
tardy disclosures because no trial had been set. Cf. Zimmerman v. Shakman,
204 Ariz. 231, 236 ¶ 16 (App. 2003) (“[W]hen a trial has not been set, or is
many months away, the opposing party is not necessarily prejudiced by
some delay.”).

¶17             In the end, the default rule is that “a party who fails to timely
disclose . . . may not use the information, witness, or documents as evidence
at trial, at a hearing, or with respect to a motion.” Ariz. R. Civ. P. 37(c)(1).
When providing notice of its disclosure in late July 2017, Sheridan provided
no explanation for its late disclosure statement, failed to request an
extension of deadline that had passed, and failed to oppose S&B’s motion
to strike. Moreover, Sheridan’s July 2017 disclosure stated it was “merely a
preliminary, initial disclosure made until further information is obtained
regarding the specifics of the matter,” adding it was done “in the
preliminary stages of discovery and that the parties had limited access to
information at the time this statement was filed.” And all this occurred after
the court had admonished the parties for failing to “comply with the rules
of procedure specifically as it pertains to complying with discovery
requests, serving discovery requests, as well as filing of motions, responses
and replies.” On this record, Sheridan has not shown the court abused its
discretion by striking its untimely disclosure statement.

       B.     The Court Properly Denied Sheridan’s Motion to Reopen
              Discovery.

¶18          Sheridan challenges the September 2017 order denying its
motion to reopen discovery. “A party may move to modify any procedure
governing or limiting discovery or disclosure,” by “(1) set[ting] forth the
modification sought; (2) show[ing] good cause for the modification; and (3)

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                SHERIDAN v. SWARTZ & BROUGH, et al.
                       Decision of the Court

comply[ing] with Rule 26(g).” Ariz. R. Civ. P. 29(b) (2017);2 see also Marquez,
231 Ariz. at 443 ¶ 23 (listing factors used to determine good cause).

¶19           Sheridan argues3 good cause existed to reopen discovery
because S&B disclosed thousands of documents, failed to include certain e-
mail attachments, and disclosed an expert shortly before the close of
discovery. Even though these actions occurred before the close of discovery,
Sheridan did not seek to extend discovery before that deadline had passed.
Instead, Sheridan filed its motion to reopen discovery three months after
the close of discovery, and more than a month after S&B moved for
sanctions. The superior court then denied Sheridan’s motion to reopen
discovery, concluding S&B’s “disclosure of previous documents was
proper and adequate” and “disclosure of their expert witness was timely”
and Sheridan had “failed to show good cause.” Sheridan has not shown the
court abused its discretion in denying the motion.

¶20            Sheridan complains its counsel is a sole practitioner burdened
by a “data dump” of documents lacking essential e-mail attachments and
the disclosure of an expert witness eight days before the close of discovery
was “late.” Sheridan’s arguments, however, are contrary to the superior
court’s findings on the point and lack evidentiary support. Moreover,
Sheridan’s failure to engage in disclosure or discovery as required by the
rules, or to avail itself of any procedural tools before the deadlines passed,
undermines this argument. Sheridan never filed any requests for an
extension of the discovery deadline, never attempted to notice S&B’s expert
for deposition and never complained about any missing documents in any
motion practice until long after the discovery deadline had passed.
Furthermore, the purported “data dump” by S&B took place in November
2016. Discovery, however, did not close until April 2017, and Sheridan has
not shown it could not analyze, follow up on and engage in disclosure and
discovery during that six-month period. Because S&B’s disclosures were

2 Although later amended effective July 1, 2018, see Ariz. R. Civ. P.
Application Provisions of Order No. R-17-0010, 60 (2017),
https://www.azcourts.gov/Portals/20/2017%20Rules/17-0010.pdf, the
text quoted is from Rule 29 as it existed in 2017.

3  In pressing these arguments on appeal, Sheridan repeats, virtually
verbatim, arguments the superior court rejected, and also seeks to raise a
Rule 56(d) argument that it did not raise with the superior court, meaning
it is waived. See Odom v. Farmer’s Ins. Co. of Ariz., 216 Ariz. 530, 535 ¶ (App.
2007) (“[A]rguments raised for the first time on appeal are untimely and
deemed waived.”).
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                SHERIDAN v. SWARTZ & BROUGH, et al.
                       Decision of the Court

proper and Sheridan failed to engage in disclosure and discovery or use the
procedural tools at its disposal, Sheridan has not shown the superior court
erred in denying its motion to reopen discovery.

II.    The Court Properly Granted Summary Judgment in Favor of S&B
       and Against Sheridan.

¶21             Sheridan argues the superior court erred in granting
summary judgment by ignoring relevant evidence. This court reviews the
grant of summary judgment de novo. Ochser v. Funk, 228 Ariz. 365, 369 ¶ 11
(2011). A “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.” Ariz. R. Civ. P. 56(a).

¶22            In the context of a defendant’s motion for summary
judgment, if the “plaintiff cannot establish a prima facie case worthy of
submission to a jury,” then the “defendant is necessarily entitled to
judgment as a matter of law.” Comerica Bank v. Mahmoodi, 224 Ariz. 289, 292
¶ 18 (App. 2010); accord Wells Fargo Bank, N.A. v. Allen, 231 Ariz. 209, 213 ¶
16 (App. 2012) (plaintiff has burden of establishing claims with admissible
evidence). “[A] party opposing a motion for summary judgment may not
rest on the pleadings; it must respond with specific facts showing a genuine
issue for trial.” Kelly v. NationsBanc Mortg. Corp., 199 Ariz. 284, 287 ¶ 15
(App. 2000); accord Ariz. R. Civ. P. 56(e). If Sheridan did not present
admissible evidence to contradict the facts supported in S&B’s motion,
those facts may be accepted as true. See GM Dev. Corp. v. Cmty. Am. Mortg.
Corp., 165 Ariz. 1, 5 (App. 1990); accord Ariz. R. Civ. P. 56(c).

¶23            S&B supported its motion for summary judgment with a
separate statement of facts, containing 15 paragraphs, in compliance with
the applicable rules. See Ariz. R. Civ. P. 56(c). Sheridan’s response did not
object to the admissibility of any evidence relied upon by S&B in its motion.
See Ariz. R. Civ. P. 56(c)(4). Accordingly, the superior court properly could
consider the facts provided by S&B.

¶24           Sheridan’s response included a separate statement of facts,
both addressing the 15 paragraphs provided by S&B as well as offering 16
additional paragraphs. For the facts shown by S&B, Sheridan only
attempted to materially dispute paragraphs 2 and 3. That attempt, however,
was based on a July 2018 affidavit of Sheridan’s manager, containing
various facts and assertions not previously disclosed by Sheridan pursuant
to Rule 26.1 or in any other timely disclosure. Because this information was
not previously disclosed, the superior court properly refused to consider it

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                SHERIDAN v. SWARTZ & BROUGH, et al.
                       Decision of the Court

in addressing S&B’s motion. Indeed, even if the superior court had not
struck Sheridan’s untimely disclosure in 2017, it properly could have
refused to consider this affidavit disclosed nearly a year later.

¶25           The remainder of Sheridan’s separate statement of facts,
although citing documents disclosed by S&B, does so for factual and legal
propositions not previously disclosed. To support its claims, Sheridan was
required to disclose the factual basis of its claims as well as exhibits it
intended to rely upon, even if those documents were disclosed by S&B. See
Ariz. R. Civ. P. 26.1(a)(1) & (8). Sheridan, however, failed to do so.

¶26           Sheridan also claimed that it could “rely on the evidence
disclosed by” S&B, adding that S&B had “failed to depose the
representative of the entity.” However, Sheridan (not S&B) was the plaintiff
with the burden of proof. Sheridan has cited no authority for the
proposition that summary judgment should be denied because a defendant
does not depose any witnesses. Sheridan relied on S&B’s disclosure to
support the following statement of fact: “As a result of Defendants ceasing
to make payments and making slow payments to Plaintiff to cover normal
occurring operating expenses as contemplated by their contract, Plaintiff
was forced to pay expenses rightfully incurred by Defendant in order to
sustain the business relationship.” The portion of S&B’s disclosure offered
to support this statement lists Sheridan’s manager as a person believed to
have knowledge relevant to the dispute and that “[i]t is anticipated that his
testimony will be in alliance with the claims against the defendants in this
matter.” Even if Sheridan could rely on S&B’s disclosure, Sheridan has not
shown how this proposition would defeat entry of summary judgment
against it.

¶27            On this record, S&B adequately “point[ed] out by specific
reference to the relevant discovery that no evidence existed to support [the]
essential element[s]” of Sheridan’s claims. Orme Sch. v. Reeves, 166 Ariz. 301,
310 (1990) (discussing Celotex Corp. v. Catrett, 477 U.S. 317, 328 (1986)).
Because there were no disputed issues of material fact, entry of summary
judgment against Sheridan was proper.

III.   The Superior Court Properly Awarded S&B Attorneys’ Fees.

¶28           After briefing from both parties, the superior court granted
S&B’s request for attorneys’ fees pursuant to A.R.S. § 12-341.01(A), which
provides that “[i]n any contested action arising out of a contract, express or
implied, the court may award the successful party reasonable attorney
fees.” Sheridan argues the superior court erred in awarding fees under

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                SHERIDAN v. SWARTZ & BROUGH, et al.
                       Decision of the Court

A.R.S. § 12-341.01 because the parties’ contract has an express attorneys’ fee
provision.

¶29            The parties’ contract provides, “[s]hould either party bring
any action to enforce any of the terms of this Agreement, the prevailing
party shall be entitled to recover court costs and reasonable attorney fees
and costs.” Contrary to Sheridan’s argument, even where there is a
contractual provision governing attorneys’ fees, A.R.S. § 12-341.01
continues to apply as long as it does not “effectively conflict[] with an
express contractual provision governing recovery of attorney’s fees.” Am.
Power Products, Inc. v. CSK Auto, Inc., 242 Ariz. 364, 368 ¶ 14 (2017) (quoting
Jordan v. Burgbacher, 180 Ariz. 221, 229 (App. 1994)). Indeed, “rather than
being completely supplanted by any attorney fee provision in the parties’
contract, the statute—consistent with its plain language—applies to ‘any
contested action arising out of contract’ to the extent it does not conflict with
the contract.” CSK Auto, 242 Ariz. at 368 ¶ 14. Therefore, the express
contractual provision here does not categorically preclude an award of
attorneys’ fees pursuant to A.R.S. § 12-341.01. Only where the two conflict
is the statute displaced by contract; otherwise the statute is incorporated
into the contract. See id.

¶30            Sheridan does not identify a material difference in the
standard for an award of fees when comparing A.R.S. § 12-341.01 with the
parties’ contract. The one arguable textual difference is that a fee award
under the statute is discretionary and the award under the parties’ contract
is mandatory. Compare A.R.S. § 12-341.01(A) (“the court may”) with the
Contract (“the prevailing party shall be entitled to recover”).4 However,
awarding S&B’s request under the statute afforded the superior court
discretion and, as such, favored Sheridan or placed it in the same situation
as if the contract provision was applied. Therefore, any conflict between the
statute’s discretionary award and the contract’s mandatory award was not
prejudicial to Sheridan.

4 Another difference is that the parties’ contract uses the term “prevailing
party,” while A.R.S. § 12-341.01 uses the term “successful party.” On the
record presented, this difference does not alter the analysis. See CSK Auto,
242 Ariz. at 368 ¶ 15 (“Because the [contract] did not define ‘prevailing
party’ and expressly provided that Arizona law shall apply . . . and because
. . . § 12–341.01(A) does not directly conflict with the [contract’s] attorney
fee provision, that statutory provision is ‘incorporated by operation of law’
into the [contract] for the limited purpose of defining ‘successful party’
under the circumstances presented here.”).
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                SHERIDAN v. SWARTZ & BROUGH, et al.
                       Decision of the Court

¶31            Sheridan argues S&B failed to properly plead a request for
fees. Sheridan admits, however, that S&B’s answer sought an award of fees
“pursuant to A.R.S. § 12-341.01 and/or any applicable contractual or
statutory provision.” And, in its fee request subsequent to the court’s ruling
on summary judgment, S&B sought reasonable attorneys’ fees “pursuant to
A.R.S. § 12-341.01.” Given the interplay between the contractual provision
and the statute, and the lack of any material conflict in the standards, S&B
properly sought attorneys’ fees pursuant to A.R.S. § 12-341.01. See CSK
Auto, 242 Ariz. at 368 ¶ 14. Accordingly, Sheridan’s challenge to the award
of attorneys’ fees to S&B by the superior court fails.

¶32           Both Sheridan and S&B seek an award of attorneys’ fees and
taxable costs on appeal pursuant to A.R.S. §§ 12-341 and -341.01; Sheridan
also seeks attorneys’ fees pursuant to the terms of the parties’ contract.
Sheridan’s request is denied; S&B’s request for reasonable attorneys’ fees
and taxable costs on appeal is granted contingent upon S&B’s compliance
with Ariz. R. Civ. App. P. 21.

                               CONCLUSION

¶33           The judgment is affirmed.

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

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