Court Opinion

ID: 4101033
Source: CourtListenerOpinion
Date Created: 2016-11-22 16:03:38.804349+00
Date Added: 2024-06-11T14:42:23.940590
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NOTICE: NOT FOR PUBLICATION.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

          RALPH THOMAS and CAROLEE THOMAS, husband
                   and wife, Plaintiffs/Appellants,

                                        v.

                 MONTELUCIA VILLAS, LLC, a Delaware
                limited liability company, Defendant/Appellee.

                             No. 1 CA-CV 15-0489
                               FILED 11-22-2016

           Appeal from the Superior Court in Maricopa County
                          No. CV 2009-004659
                  The Honorable Mark H. Brain, Judge

                      REVERSED AND REMANDED

                                   COUNSEL

Beus Gilbert, PLLC, Phoenix
By Franklyn D. Jeans, Cassandra H. Ayres
Counsel for Plaintiffs/Appellants

Udall Shumway, PLC, Mesa
By Joel E. Sannes, Phil David Ortega
Counsel for Defendant/Appellee
                      THOMAS v. MONTELUCIA
                        Decision of the Court

                      MEMORANDUM DECISION

Judge Margaret H. Downie delivered the decision of the Court, in which
Presiding Judge Patricia K. Norris and Judge Samuel A. Thumma joined.

D O W N I E, Judge:

¶1             Ralph and Carolee Thomas appeal the superior court’s grant
of summary judgment to Montelucia Villas, LLC. For the following
reasons, we reverse and remand for further proceedings consistent with
this decision.

                FACTS AND PROCEDURAL HISTORY

¶2             Both this Court and the Arizona Supreme Court have
considered this case previously. See Thomas v. Montelucia Villas, LLC, 229
Ariz. 308, 309, ¶ 1 (App. 2012) (“Thomas I”); Thomas v. Montelucia Villas,
LLC, 232 Ariz. 92, 97, ¶ 17 (2013) (“Thomas II”). We rely on the factual
recitation set forth in Thomas II, adding facts and procedural background
as necessary to provide context for the issues framed by the current
appeal.

¶3            On January 20, 2006, the Thomases signed a contract with
Montelucia for the construction of a custom villa. Thomas II, 232 Ariz. at
94, ¶ 2. The purchase price was $3,295,000, and the contract required the
Thomases to make a 10% “earnest money deposit,” followed by two 5%
deposits payable at specified construction benchmarks. The Thomases
made three payments totaling $659,000, or 20% of the purchase price. Id.
The remaining 80% was due “on or before Closing.” The parties’ contract
provided that closing would occur “at the time specified by [Montelucia]
in an oral or written notice to [the Thomases].”

¶4             On April 25, 2008, Montelucia notified the Thomases by
letter that it had set the closing for May 16, 2008. Id. at ¶ 3. When that
letter was sent, Montelucia did not yet have a certificate of occupancy for
the Thomases’ property, which the contract required as a condition for
closing escrow. Id. The Thomases responded on May 6 with a letter
stating that they would not close on May 16 and that they were
terminating the purchase contract because the agreement was illusory,
Montelucia had not performed, and Montelucia had violated Arizona

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                      THOMAS v. MONTELUCIA
                        Decision of the Court

statutes governing the sale of subdivided land. Id. at ¶ 4. The Thomases
requested return of their deposits. Id. Montelucia did not respond to the
May 6 letter and did not return the deposits.

¶5             In February 2009, the Thomases sued Montelucia to recover
their deposits. Id. at ¶ 5. Montelucia counterclaimed for breach of
contract, alleging the Thomases anticipatorily breached the contract by
“refusing to close on the Property as required under the Purchase
Agreement” and seeking specific performance, including “a late closing
fee of $1,000 per day from May 16, 2008 until closing occurs.”

¶6            On cross-motions for summary judgment, the superior court
ruled that Montelucia had breached the contract by, among other things,
not completing certain resort amenities, access points, and infrastructure
and by not providing a certificate of occupancy by the closing date. Id.
The superior court concluded the Thomases were entitled to a refund of
their deposits. Id. Montelucia appealed.

¶7           This Court reversed and remanded, holding that the
Thomases anticipatorily repudiated the contract. Thomas I, 229 Ariz. at
309–10, ¶¶ 1, 7. We further concluded Montelucia was not required to
demonstrate its ability to perform under the contract. Id. at ¶¶ 8, 10.

¶8            The Thomases petitioned for review, which the Arizona
Supreme Court granted. In June 2013, the court issued an opinion
vacating this Court’s opinion — with the exception of paragraphs six and
seven — and remanding to the superior court for a determination of
whether “Montelucia was ready, willing, and able to perform as required
by the contract.” Thomas II, 232 Ariz. at 97, ¶¶ 17, 19.

¶9            On remand, both the Thomases and Montelucia again
moved for summary judgment. The superior court granted Montelucia’s
motion. In its ruling, the court rejected the Thomases’ contention that it
must assume a May 16, 2008 closing date and instead concluded
Montelucia had until January 2, 2009 to perform its obligations under the
contract. The superior court found that “a reasonable jury would be
forced to conclude that [Montelucia] could have performed by the
[January 2, 2009] deadline.”

¶10          After the superior court denied the Thomases’ motion for
reconsideration and entered a final judgment, this timely appeal followed.
We have jurisdiction pursuant to Arizona Revised Statutes (“A.R.S.”)
12-120.21(A)(1) and -2101(A)(1).

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                       THOMAS v. MONTELUCIA
                         Decision of the Court

                               DISCUSSION

¶11            The Thomases contend the superior court was required to
use a May 16, 2008 closing date in determining whether Montelucia “was
ready, willing, and able to perform as required by the contract.” Thomas
II, 232 Ariz. at 97, ¶ 17. We agree.

¶12           Although the phrase “law of the case” is context-dependent,
as applicable here, the doctrine provides “that the decision of an appellate
court in a case is the law of that case on the points presented throughout all
the subsequent proceedings in the case in both the trial and appellate
courts, provided the facts and issues are substantially the same as those on
which the first decision rested.” Ziegler v. Superior Court, 134 Ariz. 390,
393 (App. 1982). “[T]he trial court is absolutely bound by the decision and
mandate of an appellate court and . . . it is not within the jurisdiction of
the trial court to review the appellate court’s determination.” Tovrea v.
Superior Court, 101 Ariz. 295, 297 (1966). The law of the case doctrine does
not apply, though, if the prior appeal did not actually decide the issue, is
ambiguous, or did not address the merits. See Grand v. Nacchio, 214 Ariz.
9, 17, ¶ 19 (App. 2006) (citing cases).

¶13          As relevant here, the following issues were decided in
Thomas I and Thomas II and became the law of the case upon remand to the
superior court:

             “On April 25, 2008, Montelucia notified the Thomases by
              letter that it had set the closing date for May 16.”1 Thomas II,
232 Ariz. at 94, ¶ 3.

             The Thomases’ May 6, 2008 letter “constituted an
              anticipatory repudiation of the purchase agreement.”

1       This factual determination refutes Montelucia’s assertion that the
May 16 date was merely an “estimate.”             Moreover, Montelucia’s
counterclaim alleged the Thomases had refused to close escrow and
sought to recover “a late closing fee of $1,000 per day from May 16, 2008
until closing occurs.” (Emphasis added.) And in its cross-motion for
summary judgment, Montelucia argued that, “On the date of the scheduled
closing, May 16, 2008,” the Town of Paradise Valley had completed its
inspection. (Emphasis added.)

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                        THOMAS v. MONTELUCIA
                          Decision of the Court

               Thomas I, 229 Ariz. at 310, ¶ 7.2

             “At the time of the May 6 letter, Montelucia had not
              breached the purchase agreement; it still had until the May
              16, 2008 closing date to perform its obligations under the
              contract.” Id. (emphasis added).

             The Thomases’ anticipatory repudiation, standing alone, did
              not entitle Montelucia to damages. Thomas II, 232 Ariz. at 96,
              ¶ 12. Montelucia must also prove it could “have closed in
              accordance with the contract.” Id. (emphasis added).

¶14            This Court’s conclusion that Montelucia “had until the May
16, 2008 closing date to perform its obligations under the contract,”
Thomas I, 229 Ariz. at 310, ¶ 7, was undisturbed by Thomas II. And
contrary to Montelucia’s contention, the May 16, 2008 closing date was
central to the issue decided in Thomas I: whether, as Montelucia alleged,
the Thomases breached the purchase contract by refusing to close escrow
on May 16, 2008.           The Thomases’ anticipatory repudiation and
Montelucia’s ability to perform must be measured by the same standard.
See, e.g., Thomas I, 229 Ariz. at 310, ¶ 7 (“Before an anticipatory repudiation
will be found, there must be a positive and unequivocal manifestation on
the part of the repudiating party that he will not render the required
performance when it is due.”) (emphasis added).

¶15             Nor does the record support Montelucia’s contention that
applying the law of the case doctrine to this determination would be
“manifestly unjust.” See Dancing Sunshines Lounge v. Indus. Comm’n of
Ariz., 149 Ariz. 480, 482–83 (1986) (Law of the case doctrine “should not be
strictly applied when it would result in a manifestly unjust decision.”);
Sibley v. Jeffreys, 81 Ariz. 272, 277 (1956) (“We are of the opinion that a
ruling on one appeal if manifestly or palpably erroneous is not to be
treated as conclusive on subsequent appeal of the same case.”). On the
contrary, permitting Montelucia to now rely on a closing date other than
May 16 would be manifestly unjust.

2     The Thomases did not seek review of this Court’s anticipatory
repudiation determination. See Thomas II, 232 Ariz. at 95, ¶ 8. As a result,
the supreme court left intact paragraphs six and seven of Thomas I
addressing anticipatory repudiation. See id. at 97, ¶ 19.

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                       THOMAS v. MONTELUCIA
                         Decision of the Court

¶16           Montelucia selected the May 16 date. And the counterclaim
makes clear that May 16, 2008 was the operative date for Montelucia’s
anticipatory repudiation claim. The counterclaim alleged that the
Thomases repudiated the purchase contract by refusing to close escrow on
May 16 and asserted Montelucia was entitled to a “late closing fee” of
$1,000 per day “from May 16, 2008 until closing occurs.” There would, of
course, be no “late” closing fee commencing on May 16 if May 16 were not
the closing date.

¶17           Montelucia argues that, even assuming a May 16, 2008
closing date, summary judgment in its favor was appropriate because it
could have performed its contractual obligations as of that date or within
the purchase contract’s 60-day cure period. Although we may affirm the
superior court’s judgment if it is correct for any reason, Wertheim v. Pima
Cty., 211 Ariz. 422, 424, ¶ 10 (App. 2005), the record reveals disputed
issues of material fact regarding Montelucia’s ability to perform as of May
16.

¶18            The purchase contract required a certificate of occupancy for
the Thomases’ property as a condition for closing escrow. Thomas II, 223
Ariz. at 94, ¶ 3. The contract also included other requirements, stating:

             BUYER ACKNOWLEDGES THAT ESCROW WILL
             NOT CLOSE UNTIL THE TOWN OF PARADISE
             VALLEY   HAS   ISSUED AN   OCCUPANCY
             CLEARANCE       AND    THE     “VILLAS
             INFRASTRUCTURE” AND “VILLAS AMENITIES”
             HAVE BEEN COMPLETED. IN ADDITION, IN
             ACCORDANCE WITH THE TOWN DOCUMENTS,
             AN OCCUPANCY CLEARANCE WILL NOT BE
             ISSUED AND ESCROW WILL NOT CLOSE UNTIL
             CERTAIN PORTIONS OF THE MONTELUCIA
             HOTEL HAVE BEEN COMPLETED AND/OR
             FINANCED.

¶19          Montelucia obtained a certificate of occupancy for the
Thomases’ property on August 27, 2008. Id. at ¶ 4. Even assuming
(without deciding) that Montelucia was entitled to avail itself of the
60-day cure period included in the purchase contract, August 27 is 103
days after May 16.

¶20        Montelucia contends the Town of Paradise Valley (“the
Town”) would have issued a certificate of occupancy for the Thomases’

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                       THOMAS v. MONTELUCIA
                         Decision of the Court

villa as of May 16, 2008. But the record suggests that, at that point in time,
the Town would issue the certificate only if the Thomases signed a
“waiver” letter, acknowledging the ongoing “active construction site” and
uncompleted improvements that the Town required in the Special Use
Permit (“SUP”), including “life safety and building code requirements.”

¶21           The parties dispute whether the Thomases had any
obligation to sign such a waiver and whether it materially altered the
benefit of their bargain. Additionally, factual questions exist regarding
whether Montelucia had completed the “Villas Infrastructure” and “Villas
Amenities” as of May 16, 2008 and whether the contractually
contemplated “portions of the Montelucia Hotel [had] been completed
and/or financed” — all of which the purchase contract required before the
close of escrow, notwithstanding the Town’s waiver of other requirements
in the SUP.3

                              CONCLUSION

¶22           The superior court erred by not adopting a May 16, 2008
closing date in determining whether Montelucia had the ability to perform
its contractual obligations. Because genuine issues of material fact exist
regarding Montelucia’s ability to perform as of that date, we reverse the
judgment of the superior court and remand for resolution of that issue.
We express no opinion about whether, on remand, that question is
susceptible to resolution by further motion practice or whether it must be
submitted to a trier of fact.

¶23          The Thomases request an award of attorneys’ fees incurred
on appeal pursuant to A.R.S. § 12-341.01. We deny this request without

3       Montelucia relies on deposition testimony by a Town official, who
testified the Town would not have issued certificates of occupancy if
infrastructure and amenities remained incomplete.           Although this
evidence tends to support Montelucia’s position on this point, it is not
irrefutable proof that the obligations imposed by the purchase contract (as
opposed to the SUP) were in fact complete. Montelucia argued before this
Court that the requirements contained in paragraph four of the purchase
contract were somehow vitiated by a subsequent clause in the contract.
Whether that interpretation is factually and legally correct is an issue the
superior court can address on remand, after both sides have had an
opportunity to litigate the issue.

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                      THOMAS v. MONTELUCIA
                        Decision of the Court

prejudice to the superior court awarding appellate fees to the party
ultimately prevailing on the substantive merits. The Thomases, however,
are entitled to recover their taxable costs on appeal upon compliance with
Arizona Rule of Civil Appellate Procedure 21.

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

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