Court Opinion

ID: 4673702
Source: CourtListenerOpinion
Date Created: 2021-04-01 16:02:39.394658+00
Date Added: 2024-06-11T08:03:15.528788
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                 HARMINDER SAMRA, Plaintiff/Appellant,

                                        v.

                SHASHIKANT PATEL, Defendant/Appellee.

                             No. 1 CA-CV 20-0410

           Appeal from the Superior Court in Coconino County
                         No. S0300CV201600474
                  The Honorable Dan R. Slayton, Judge

               AFFIRMED IN PART, VACATED IN PART

                                   COUNSEL

The Law Offices of Mary T. Hone, PLLC, Scottsdale
By Mary T. Hone
Counsel for Plaintiff/Appellant

Holland Law Firm PLLC, Snowflake
By Joseph E. Holland
Counsel for Defendant/Appellee
                            SAMRA v. PATEL
                           Decision of the Court

                        MEMORANDUM DECISION

Presiding Judge Jennifer M. Perkins delivered the decision of the Court, in
which Judge Randall M. Howe and Judge Maria Elena Cruz joined.

P E R K I N S, Judge:

¶1            Harminder Samra challenges the superior court’s summary
judgment ruling on her civil conspiracy and fraudulent transfer claims
against Shashikant Patel. We affirm summary judgment but vacate the
associated attorneys’ fees award.

           FACTUAL AND PROCEDURAL BACKGROUND

¶2             This case involves the transfer of two LLCs, Holbrook Motel
Investors LLC (“HMI”) and Holbrook Motel Partners LLC (“HMP”), that
owned two hotels in Holbrook. HMI’s members at the beginning of
litigation included Samra, Umrik Singh, Satinder S. Gill, Joga S. Mann,
Gurjit S. Sekhon, Harinder S. Gill, and Hoshiar S. Grewal. HMP’s members
included Samra, Singh, Mann, Sekhon, Harinda Gill, Sukhmander S. Gill,
and Satinder S. Gill.

¶3          On April 27, 2012, all HMI and HMP members except Samra
executed agreements selling both LLCs to Patel. Singh signed the
agreements on Samra’s behalf.

¶4            Samra sued Patel, HMI, HMP, and both LLCs’ members in
November 2015 seeking to set aside the transactions. As relevant to this
appeal, she alleged that Patel and the other members conspired to transfer
the two LLCs, which “wrongfully depriv[ed] [her] of the value of her
respective ownership interests.” She also alleged that the transactions were
fraudulent under Arizona’s Uniform Fraudulent Transfer Act (“UFTA”).

¶5             Patel moved for summary judgment, arguing among other
things that (1) the claims were time-barred; (2) Singh and the other
members had apparent authority to bind Samra; and (3) he was entitled to
protection as a bona fide purchaser of the LLCs. Samra opposed the motion,
contending that the other members did not inform her of the transfers in
2012, that she did not consent to them, and that she did not authorize Singh
to sign the sale agreements on her behalf. She further contended her claims
were not time-barred because she filed within the four-year limitations
period under the UFTA. See A.R.S. § 44-1009.

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                              SAMRA v. PATEL
                             Decision of the Court

¶6            On June 15, 2020, the court granted Patel’s motion in an
unsigned minute entry. It entered a final judgment under Arizona Rule of
Civil Procedure 54(b) on the claims against Patel on July 14, 2020. Two days
later, Samra filed a notice of appeal challenging “the Amended Judgment
entered in this case on June 15, 2020.”

                               JURISDICTION

¶7             Patel contends Samra prematurely filed her notice of appeal
because the June 15, 2020 minute entry “contained no Rule 54 language and
would otherwise not have qualified as an appealable order.” A notice of
appeal is premature if filed in the absence of a final judgment, and we
would lack jurisdiction to consider it. AU Enters. Inc. v. Edwards, 248 Ariz.
109, 112, ¶ 11 (App. 2020); see also McCleary v. Tripodi, 243 Ariz. 197, 199, ¶ 8
(App. 2017). Samra filed her notice of appeal two days after the superior
court entered its final judgment. It was not premature.

¶8             Patel also contends Samra filed a defective notice of appeal. A
notice of appeal must “[d]esignate the judgment or portion of the judgment
from which the party is appealing or cross-appealing.” ARCAP 8(c)(4). But
we will treat a defective notice as sufficient “if it is neither misleading nor
prejudicial to the appellee.” Boydston v. Strole Dev. Co., 193 Ariz. 47, 50, ¶ 12
(1998). Moreover, “where adequate notice has been given an opposing
party, fairness demands that no mere technical error should prevent the
appellate court from reaching the merits of the appeal.” Hill v. City of
Phoenix, 193 Ariz. 570, 572, ¶ 10 (1999) (quoting Hanen v. Willis, 102 Ariz. 6,
9 (1967)).

¶9             Patel does not contend he did not receive adequate notice or
that he suffered any meaningful prejudice because of any defects in Samra’s
notice of appeal. We therefore reject his contention.

                                DISCUSSION

¶10            To prevail on a motion for summary judgment, the movant
must show no genuine dispute about any material fact and entitlement to
judgment as a matter of law. Ariz. R. Civ. P. 56(a). We review a grant of
summary judgment de novo, viewing the evidence in a light most favorable
to the nonmoving party. Normandin v. Encanto Adventures, LLC, 246 Ariz.
458, 460, ¶ 9 (2019). Summary judgment should be granted for a defendant
only “if the facts produced in support of [a] claim . . . 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.” Orme School v. Reeves, 166 Ariz. 301, 309 (1990).

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                            SAMRA v. PATEL
                           Decision of the Court

¶11           As noted above, Samra alleged that Patel conspired with the
other HMI and HMP members to fraudulently transfer the LLCs. To
establish liability for a conspiracy, a plaintiff must show by clear and
convincing evidence that two or more people (1) agreed to accomplish an
unlawful purpose or a lawful purpose by unlawful means; (2)
accomplished the underlying tort; and (3) caused damages. Dawson v.
Withycombe, 216 Ariz. 84, 103, ¶ 53 (App. 2007).

¶12           Damages for a civil conspiracy do not arise from the
conspiracy itself, but from the acts committed pursuant to it. Tovrea Land &
Cattle Co. v. Linsenmeyer, 100 Ariz. 107, 131 (1966). The underlying act
alleged in this case is fraudulent transfer. A transfer is fraudulent as to a
present or future creditor if made by the debtor:

              1. With actual intent to hinder, delay or defraud
              any creditor of the debtor.

              2. Without receiving a reasonably equivalent
              value in exchange for the transfer or obligation,
              and the debtor either:

              (a) Was engaged or was about to engage in a
              business or a transaction for which the
              remaining assets of the debtor were
              unreasonably small in relation to the business or
              transaction.

              (b) Intended to incur, or believed or reasonably
              should have believed that he would incur, debts
              beyond his ability to pay as they became due.

A.R.S. § 44-1004(A). But a transfer or obligation is not voidable under § 44-
1004(A)(1) against a person who “took in good faith and for a reasonably
equivalent value.” A.R.S. § 44-1008(A). Clear and satisfactory evidence is
required to prove a fraudulent transfer. See Gerow v. Covill, 192 Ariz. 9, 17,
¶ 33 (App. 1998).

¶13            “Clear and satisfactory evidence” is the same as “clear and
convincing evidence” and is a higher burden than preponderance of the
evidence. Tucson Elec. Power Co. v. Ariz. Corp. Comm’n, 132 Ariz. 240, 243
(1982). To meet this burden, the claimant must show that the thing to be
proved is highly probable or reasonably certain. Gila River Indian Cmty. v.
Dep’t of Child Safety, 238 Ariz. 531, 537, ¶ 23 (App. 2015). We consider the

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                            SAMRA v. PATEL
                           Decision of the Court

applicable burden of proof when reviewing a grant of summary judgment.
Comerica Bank v. Mahmoodi, 224 Ariz. 289, 293, ¶ 20 n.5 (App. 2005).

I.           Samra Failed to Present Relevant Evidence to Show Patel
             Did Not Act in Good Faith

¶14           Samra first challenges the court’s conclusion that Patel
purchased the LLCs in good faith, citing her own affidavit testimony that
neither she nor her husband spoke with Singh or knew that he would sign
the sale documents on her behalf. She also argues Patel “never questioned”
the May 1, 2012 members’ meeting minutes he received, noting Singh also
signed for Samra. The record is unclear when Patel obtained these minutes.
Nonetheless, the minutes reflect Samra’s telephonic presence at the
members’ meeting in which they approved “transferring full ownership of
[HMI] to . . . Patel.” As such, while Samra denied any knowledge of the
transactions, she presented no evidence to suggest that Patel knew or
should have known Singh lacked authority to act on her behalf.

¶15            Samra also contends Patel was not a bona fide purchaser
because he “did virtually no due diligence” before purchasing the LLCs.
Specifically, she contends that (1) Patel did not ask for copies of the LLCs’
tax returns, balance sheets, or bank statements before entering the
transactions; (2) Grewal and Gill remained as members of HMI and HMP,
respectively; and (3) the other members did not require Patel to “provide
so much as an approval letter from a bank showing his ability to pay off the
hotels’ debts.” She does not explain, however, how this evidence shows that
Patel knew or should have known the transactions were intended to
defraud her. See Carey v. Soucy, 245 Ariz. 547, 553–54, ¶ 29 (App. 2018) (the
relevant question in determining good faith under § 44-1008(A) is whether
the buyer knew or should have known the purpose of transactions at issue
was to defraud creditors).

II.          Samra Failed to Present Relevant Evidence to Show Patel
             Did Not Pay Reasonably Equivalent Value

¶16           Samra also contends issues of material fact remain as to
whether Patel is a bona fide purchaser, citing Mann’s testimony that Patel
failed to pay the members the amount owed under the purchase
agreements. See id. at 554, ¶ 30 n.5 (party claiming defense under § 44-
1008(A) “must have taken . . . for a reasonably equivalent value.”). The
purchase agreements are not in the record. As such, what Patel agreed to
pay is unclear.

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                             SAMRA v. PATEL
                            Decision of the Court

¶17            Undisputed record evidence shows, however, both hotels
were in foreclosure at the time of the sale and that Patel agreed to “take on
all [LLCs’] liabilities, bring the notes current (saving the properties from
foreclosure), and pay all of the back franchising fees.” See A.R.S. § 44-
1003(A) (“Value is given for a transfer or an obligation if, in exchange for
the transfer or obligation, . . . an antecedent debt is secured or satisfied”).
Taking as true Samra’s contention that Patel later failed to pay some
amount due to the members, that would not by itself suggest Patel acted
fraudulently under the UFTA. See A.R.S. § 44-1004(B) (listing non-exclusive
factors to consider in determining actual intent to hinder, delay, or
defraud).

¶18           Samra also presented evidence that Patel sold one of the
hotels in January 2014 for $2.1 million and “profited . . . to the tune of
$832,000.” That figure represented the approximate net proceeds of the sale,
not Patel’s profits. Nonetheless, the terms of that sale have no bearing on
whether Patel paid reasonably equivalent value for the LLCs that owned
both hotels two years earlier.

¶19            Samra therefore failed to present sufficient evidence from
which a reasonable jury could find it was highly probable or reasonably
certain that Patel knew or should have known the LLC sales were
fraudulent. See Carey, 245 Ariz. at 553–54, ¶ 29. Nor did she present
sufficient evidence to suggest that it was highly likely or reasonably certain
that Patel agreed with some or all of the other HMI and HMP members to
accomplish an unlawful purpose through the LLC sales. See Dawson, 216
Ariz. at 103, ¶ 53. The superior court did not err in granting summary
judgment to Patel.

III.          The Court Did Not Enter Judgment on Samra’s Claims
              Against the Other Members

¶20           Samra also contends the court should not have granted
summary judgment to any other defendants on Counts Five and Eight.
While the judgment refers to “Defendants” once, it appears to be a
typographical error, as all the supporting findings refer to Patel alone. The
court certified the judgment under Rule 54(b) because it “disposes of all
claims brought against . . . Patel.” We therefore conclude the judgment
before us only resolves the claims against Patel.

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                             SAMRA v. PATEL
                            Decision of the Court

IV.           The Superior Court Erred in Awarding Fees under A.R.S.
              § 12-341.01(A)

¶21          Samra also challenges the superior court’s attorneys’ fees
award under § 12-341.01(A), which permits a discretionary award to the
successful party in an action arising out of a contract. We review de novo
whether the statute applies. Chaurasia v. Gen. Motors Corp., 212 Ariz. 18, 26,
¶ 24 (App. 2006).

¶22            An action arises in contract if the duty breached is created by
the contractual relationship and would not exist but for the contract. Assyia
v. State Farm Mut. Auto. Ins. Co., 229 Ariz. 216, 220–21, ¶ 12 (App. 2012)
(quoting Barmat v. John & Jane Doe Partners A–D, 155 Ariz. 519, 523 (1987)).
Claims based on duties established in statute or implied by law are
ineligible for fee recovery. Caruthers v. Underhill, 230 Ariz. 513, 526, ¶ 57
(App. 2012).

¶23           Fraudulent transfer claims, which arise under the UFTA,
typically do not qualify for a § 12-341.01(A) fee award. See Dooley v. O’Brien,
226 Ariz. 149, 154, ¶ 20 (App. 2010). And civil conspiracy is “a device to
impose vicarious liability for the underlying tort on all who commonly
plan, take part in, or cooperate in the wrongdoers’ acts.” Baker ex rel. Hall
Brake Supply, Inc. v. Stewart Title & Tr. of Phx., Inc., 197 Ariz. 535, 545, ¶ 42
(App. 2000). Patel broadly contends fees are appropriate in civil conspiracy
cases because an agreement is an essential element of the claim. But the
duty not to enter such agreements does not arise from contract.

¶24           In short, while Patel’s purchase of the LLCs is a factual
predicate for Samra’s claims against him, it is not the essential basis of the
action. See Chaurasia, 212 Ariz. at 26, ¶ 25. We therefore vacate the fee
award. We also deny Patel’s request for attorneys’ fees on appeal.

                               CONCLUSION

¶25           We affirm summary judgment in favor of Patel but vacate the
associated attorneys’ fees award. Patel may recover his taxable costs
incurred in this appeal upon compliance with ARCAP 21.

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