Court Opinion

ID: 4095247
Source: CourtListenerOpinion
Date Created: 2016-11-03 15:02:51.731656+00
Date Added: 2024-06-11T14:29:53.891622
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

  JOHN B. CUNDIFF and BARBARA C. CUNDIFF, husband and wife;
    ELIZABETH NASH, a married woman dealing with her separate
  property; KENNETH PAGE and KATHRYN PAGE, as Trustee of the
  Kenneth Page and Catherine Page Trust; JAMES VARILEK, as Joined
              Plaintiff property owner, Plaintiffs/Appellees,

                                         v.

        DONALD COX and CATHERINE COX, husband and wife,
                     Defendants/Appellants.

                              No. 1 CA-CV 15-0371
                               FILED 11-3-2016

            Appeal from the Superior Court in Yavapai County
                         No. P1300CV2003-0399
           The Honorable Jeffrey G. Paupore, Judge Pro Tempore
                 The Honorable Kenton D. Jones, Judge
                The Honorable David L. Mackey, Judge

                                   AFFIRMED

                                    COUNSEL

J. Jeffrey Coughlin, P.L.L.C., Prescott
By J. Jeffrey Coughlin
Counsel for Plaintiffs/Appellees
Favour & Wilhelmsen, P.L.L.C., Prescott
By David K. Wilhelmsen, Lance B. Payette
Counsel for Plaintiff/Appellee James Varilek

Musgrove Drutz Kack & Flack, P.C., Prescott
By Mark W. Drutz, Sharon M. Flack, Jeffrey Gautreaux
Counsel for Defendants/Appellants

                      MEMORANDUM DECISION

Judge Lawrence F. Winthrop delivered the decision of the Court, in which
Presiding Judge Kent E. Cattani and Justice Rebecca White Berch1 joined.

W I N T H R O P, Judge:

¶1            Defendants Donald and Catherine Cox (collectively, “the
Coxes”) appeal the trial court’s summary judgment in favor of Plaintiffs
John B. and Barbara C. Cundiff; Elizabeth Nash; Kenneth and Kathryn
Page, as Trustee of the Kenneth Page and Catherine Page Trust (collectively,
“the Cundiffs”); and James Varilek (collectively, “Appellees”) after a more
than decade-long dispute over the Coxes’ use of their property as a tree and
shrub farm supporting their agricultural business in violation of an
applicable Declaration of Restrictions (“the Declaration”). The trial court
granted summary judgment in favor of Appellees after concluding the
Coxes’ defenses of waiver and/or abandonment of the Declaration failed as
a matter of law. Raising several issues, the Coxes challenge the grant of
summary judgment and the court’s awards of attorneys’ fees to Appellees.
For the following reasons, we affirm.

                FACTS AND PROCEDURAL HISTORY2

¶2          The parties own property in a rural, residential subdivision
known as Coyote Springs Ranch. The Coxes began using their property for
growing and storing inventory for Prescott Valley Nursery and Prescott

1      The Honorable Rebecca White Berch, Retired Justice of the Arizona
Supreme Court, has been authorized to sit in this matter pursuant to Article
VI, Section 3, of the Arizona Constitution.

2     We take a portion of the facts and underlying procedural history
from our previous memorandum decision involving the Cundiffs and
Coxes. See Cundiff v. Cox, 1 CA-CV 06-0165 (Ariz. App. May 24, 2007).

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Valley Growers, the retail and wholesale nursery business they own in
partnership with their two sons. Partnership employees work at the Coxes’
property, but the property is not open to the public, and no sales are
conducted on it. The Coxes also live on the property part-time.

¶3            In 2001, the Coxes applied for an agricultural use exemption
for the property from Yavapai County. As part of the application for the
exemption, Catherine Cox signed a Statement of General Agricultural Use
and Affidavit, acknowledging that the primary use of the property is an
“agricultural use”; “[a]ny residential use of this property is secondary.”

¶4            Properties located in Coyote Springs Ranch are subject to the
aforementioned Declaration. Section one of the Declaration provides that
all included parcels “shall be known and described as residential.” Section
two provides that “[n]o trade, business, profession or any other type of
commercial or industrial activity shall be [initiated] or maintained within
said property or any portion thereof.” Section nineteen contains a non-
waiver clause that provides in part as follows:

      19.     If there shall be a violation or threatened or attempted
      violation of any of said covenants, conditions, stipulations or
      restrictions, it shall be lawful for any person or persons
      owning said premises or any portion thereof to prosecute
      proceedings at law or in equity against all persons violating
      or attempting to, or threatening to violate any such covenants,
      restrictions, conditions or stipulations, and either prevent
      them or him from so doing or to recover damages or other
      dues for such violations. No failure of any other person or party
      to enforce any of the restrictions, rights, reservations, limitations,
      covenants and conditions contained herein shall, in any event, be
      construed or held to be a waiver thereof or consent to any further or
      succeeding breach or violation thereof. . . .

(Emphasis added.)

¶5            In May 2003, the Cundiffs filed a complaint for injunctive
relief against the Coxes, and later added a request for declaratory relief,
alleging in part that the Coxes’ use of the property violated section two of
the Declaration. In response, the Coxes asserted the defenses of
abandonment, waiver, estoppel, laches, and unclean hands.

¶6         The Cundiffs filed two motions for partial summary
judgment—the first asserting the Coxes’ waiver defense was precluded by

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section nineteen of the Declaration, and the second arguing the Coxes’ use
of their property violated section two of the Declaration and that the Coxes
could not prove their defenses of estoppel, laches, and unclean hands.

¶7             The trial court (Judge David L. Mackey) denied the motion for
partial summary judgment as to the waiver issue after finding “a material
factual issue regarding whether the restrictions . . . have been so thoroughly
disregarded as to result in a change in the area that destroys the
effectiveness of the restrictions, defeats the purposes for which they were
imposed[,] and amounts to an abandonment of the entire Declaration of
Restrictions.” The court reasoned that, if the entire Declaration had been
abandoned, section nineteen, on which the Cundiffs based their anti-waiver
argument, would also have been abandoned.

¶8            As to the Cundiffs’ second motion for partial summary
judgment, the trial court granted the motion as to the Coxes’ defenses of
estoppel, laches, and unclean hands, but denied the motion to the extent it
sought a summary declaration as to the enforceability of the Declaration.
The court scheduled trial for August 2, 2005.

¶9              Before trial, the court denied a motion by the Coxes entitled
“Motion to Join Indispensable Parties Pursuant to Rule 19(A), Ariz. R. Civ.
P., or, in the Alternative, Motion to Dismiss Pursuant to Rule 12(B)(7), Ariz.
R. Civ. P., for Failure to Join Indispensable Parties.” In the motion, the
Coxes had argued that all persons who owned property governed by the
Declaration must be joined because their legal rights could be substantially
affected by the outcome of the case.

¶10            The Coxes also filed a motion for partial summary judgment,
arguing the use of their property was “agricultural” and, therefore, did not
violate section two of the Declaration—the restriction barring trade,
business, professional, or other industrial or commercial activity. The trial
court, after noting that “restrictions are not favored and [] must be strictly
construed,” granted that motion and entered partial judgment in favor of
the Coxes on all counts in the complaint relying on the Coxes’ alleged
violation of section two of the Declaration. The parties agreed this ruling
was critical to the remaining issues and agreed to a form of judgment that
could be immediately reviewed on appeal.

¶11          Both parties appealed, and in a memorandum decision filed
May 24, 2007, this court affirmed in part, reversed in part, and remanded.
See Cundiff v. Cox, 1 CA-CV 06-0165. Noting that the trial court had
interpreted existing Arizona case law to hold that restrictions are not

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favored and must be strictly construed, but further noting that, at the time
of its ruling, the trial court did not have the benefit of our supreme court’s
then-recent pronouncement in this area, Powell v. Washburn, 211 Ariz. 553,
125 P.3d 373 (2006)—which rejected the very rule of construction relied on
by the trial court—we concluded that “[t]he Coxes’ tree farm is clearly an
agricultural business” and “nothing in the Declaration suggests that any
one type of business was intended to be excluded from section two of the
restrictions.” Cundiff, 1 CA-CV 06-0165, at ¶¶ 13, 17. Accordingly,
application of section two to the Coxes’ use of their property was
“consistent with the Declaration as a whole.” Id. at ¶ 18. We further noted
that both parties relied on the affidavit of Robert Conlin, an original grantor
responsible for preparation and recording of the Declaration, and that as
confirmed in Conlin’s affidavit, the intent underlying the Declaration was
to “ensure[] not only a rural setting, but a rural, residential environment.”
Id. at ¶ 20. Given that interpretation, we concluded “the Coxes’ agricultural
business use of the property violates section two of the Declaration,” and
we therefore vacated the judgment against the Cundiffs. Id. at ¶¶ 20-21.

¶12           As to the Coxes’ appeal, we affirmed the trial court’s grant of
summary judgment regarding the defenses of estoppel, laches, and unclean
hands, id. at ¶¶ 20-27, leaving only the defense of abandonment (of the
Declaration and, accordingly, section nineteen’s non-waiver clause) to be
decided. Finally, in addressing the trial court’s denial of the Coxes’ motion
for joinder, we noted that “[a] ruling in this case that the restrictions have
been abandoned and are no longer enforceable against the Coxes’ property
would affect the property rights of all other owners subject to the
Declaration.” Id. at ¶ 32. We concluded “that the absent property owners
are necessary parties given the issue to be decided in this case” and must
be joined, and directed the trial court to “determine on remand whether
these parties are also indispensable under Rule 19(b),” Ariz. R. Civ. P. Id.
at ¶ 36.

¶13           On remand, the trial court determined that the other property
owners subject to the Declaration were indispensable parties, and ordered
the Cundiffs to serve and join all necessary and indispensable parties. The
Cundiffs took substantial steps to do so, and in April 2011, filed a notice of
compliance with the court’s order.3 The case was reassigned to Judge

3      At a subsequent oral argument on February 13, 2013, counsel for the
Coxes was asked by the court whether “all necessary parties have been
joined as parties to this lawsuit,” and counsel responded affirmatively,
although he expressed concern that “no lis pendens was ever recorded” to

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Kenton D. Jones on June 30, 2011, after Varilek filed a notice of change of
judge pursuant to Rule 42(f), Ariz. R. Civ. P.4

¶14             Although the trial court had previously denied the Cundiffs’
partial motion for summary judgment on the issue of waiver (after
concluding a question regarding abandonment existed), the Cundiffs filed
a new motion for summary judgment and supporting statement of facts
addressing the only two issues remaining in the case: abandonment and
waiver. In their motion, the Cundiffs argued that, at the time the trial court
made its initial rulings, the court not only did not have the benefit of Powell,
it also did not have the benefit of this court’s decision in College Book Centers,
Inc. v. Carefree Foothills Homeowners’ Association, 225 Ariz. 533, 241 P.3d 897
(App. 2010), which the Cundiffs argued was analogous. Relying on College
Book Centers, the Cundiffs maintained that because the Declaration
contained a non-waiver provision in section nineteen, that non-waiver
provision was enforceable, even despite prior violations of the Declaration,
as long as the violations did not constitute a “complete abandonment” of
the Declaration. See 225 Ariz. at 539, ¶ 18, 241 P.3d at 903. The Cundiffs
argued the overall character of the development—which we had
characterized in our 2007 memorandum decision as “a rural, residential
environment”—had not undergone the fundamental change required to
constitute legal abandonment.5

put subsequent property owners on notice of the lawsuit “should they take
ownership of the property.”

4       In 2009, Varilek filed a separate complaint seeking to enforce the
restrictive covenants against another property owner, Robert Veres, and
despite Varilek’s objection, that case was consolidated with the Cundiffs’
case against the Coxes upon motion by Veres after both Varilek and Veres
were served and joined in this case. Varilek’s 2009 case had originally been
assigned to Judge Mackey, but Varilek had timely exercised his right to a
change of judge in that case, and upon consolidation, he again filed a notice
of change of judge. In February 2013, Varilek and Veres filed a stipulation
to dismiss Varilek’s 2009 complaint without prejudice, which the trial court
granted. Varilek, however, continued to actively participate in this case.

5      Section three of the Declaration restricts parcels in Coyote Springs
Ranch to no less than nine acres. The Cundiffs attached to their “Statement
of Facts in Support of Plaintiffs’ Motion for Summary Judgment” an
affidavit from John Cundiff stating that, to the best of his knowledge, lots

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¶15          After responsive briefing by the parties6—including Varilek
and Veres—the trial court heard oral argument on April 16, 2013, and took
the matter under advisement.7 In a detailed minute entry filed June 14,

in the subdivision continued to contain no less than nine acres and that the
three DVDs attached to his affidavit were video recordings that accurately
depicted the appearance of the subdivision. Later, in their reply, the
Cundiffs provided records from the Yavapai County Assessor’s Office that
indicated 280 of the 288 properties subject to the Declaration still consisted
of at least nine acres.

6       In addition to affidavits and other documents they had previously
submitted, the Coxes responded with affidavits from their son and a
licensed private investigator, Sheila Cahill, who they hired to search
through the Coyote Springs Ranch development and document any uses or
activities that arguably violated the deed restrictions. The Coxes’ proof of
abandonment largely consisted of photographs showing properties with
any alleged or speculated violations, including but not limited to properties
with a visible propane or water tank, a trash receptacle in open view, an
“[e]xcessive amount of dogs,” structures or sheds that “may not comply”
with square footage requirements, multiple buildings, trash in the yard
and/or overgrown weeds, and properties on which the residents had
parked business vehicles, mobile homes, or trailers, or placed construction
materials on the lots. The Coxes also presented evidence that some of the
property owners had listed their Coyote Springs Ranch address when
obtaining business and contractor’s licenses, listing corporate addresses,
etc., and asserted that some of the owners were likely operating small
businesses out of their homes. (The Coxes had previously submitted the
affidavit of Curtis Kincheloe, owner of Coyote Curt’s Auto Repair, who
affirmed that he operates his business on his residential property.) None of
the purported or speculated home business uses, however, appeared to
even remotely compare to the scale of the Coxes’ commercial enterprise.

7      Before the April 16 oral argument, the court issued a March 5, 2013
under advisement ruling involving several matters. In its ruling, the court
noted that, at a previous oral argument held February 13, 2013, counsel for
the Coxes had agreed with Varilek’s assertion that the only remaining issue
for trial was the Coxes’ “affirmative defense that Paragraph 2 [of the
Declaration] has been rendered unenforceable through abandonment.”
(Emphasis in original.) The court relied on the parties’ representation in its
subsequent rulings.

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2013, the court granted summary judgment in favor of the Cundiffs, after
concluding as a matter of law that Coyote Springs Ranch continued to be a
rural, residential environment and, accordingly, the Declaration had not
been abandoned.8

¶16           Both Varilek and the Cundiffs sought attorneys’ fees and
costs. In the meantime, the Coxes filed a motion for new trial. In a minute
entry filed August 25, 2014, the court denied the motion for new trial,
ordered the Coxes to pay Varilek attorneys’ fees in the amount of $90,490.00
and costs in the amount of $118.00, and declined to address the Cundiffs’
application for attorneys’ fees and costs at that time.

¶17            On March 20, 2015, the matter was reassigned to Judge Jeffrey
G. Paupore. In a judgment filed April 7, 2015, the trial court denied the
Coxes’ motion for reconsideration of the August 25, 2014 ruling awarding
attorneys’ fees to Varilek and awarded attorneys’ fees in the amount of
$258,986.52 and costs in the amount of $4,117.74 to the Cundiffs.9 On May
5, 2015, the trial court entered a separate judgment in favor of Varilek,
awarding him the amount of attorneys’ fees and costs previously ordered,
for a total judgment of $90,608.00 in his favor.

¶18            The Coxes filed a motion entitled “Motion for New Trial Re:
Award of Attorneys’ Fees to Cundiff-Plaintiffs Pursuant to Ariz. R. Civ. P.
59(a) and, in the Alternative, Motion to Alter or Amend Judgment Pursuant

8      At the same time, the court denied as moot a motion by Varilek to
“Require Defendants Cox to Serve the Indispensable Parties with
Documents Comporting with Due Process.” Varilek had argued in the
motion that some subdivision property owners might not have been joined
as necessary, and their rights could be affected if the Coxes’ abandonment
defense proved successful, because the Declaration could be deemed to be
abandoned as to all property owners.

9      The court noted that the billing statements from attorney David K.
Wilhelmsen, who originally represented the Cundiffs in this matter,
referenced the Cundiffs as the clients, whereas the billing statements of
attorney J. Jeffrey Coughlin, who substituted in as counsel for the Cundiffs
in April 2009, “identified the client as Alfie Ware, Coyote Springs.” The
court stated that it “could find no reference in this lengthy civil litigation
case where Mr. Ware was identified as a party Plaintiff. Therefore,
Plaintiff’s request for reasonable attorneys’ fees under the Coughlin
affidavit are denied.”

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to Ariz. R. Civ. P. 59(l).” The Cundiffs objected and also moved to amend
the judgment.

¶19         In a minute entry filed June 10, 2015, the trial court granted
the Coxes’ motion to strike the Cundiffs’ motion to amend the judgment,
but also denied the Coxes’ motions for new trial and to amend the
judgment, explaining in part as follows:

             Coxes seek a new trial based upon alleged inconsistent
      findings of fact, namely: awarding the Wilhelmson attorneys’
      fees and costs [to the Cundiffs] but denying Coughlin’s
      attorneys’ fees and costs [incurred by the Cundiffs]. Cundiffs
      oppose a new trial and move the Court to amend the
      Judgment to allow Coughlin’s attorney[‘s] fees and costs
      pursuant to Rule 59(l).

             ....

             Both parties freely acknowledge the awarding of
      attorneys’ fees and costs is within the discretion of the Court.

             On April 7, 2015, the Court awarded Plaintiffs
      attorneys’ fees and costs in the amount of $263,104.26 against
      Defendant Coxes. Plaintiffs were seeking an additional
      $93,944.50 for [] Coughlin’s attorney[‘s] fees and costs. []
      Coughlin’s attorney[‘s] fees and costs were denied in part
      because “the client” was identified as Alfie Ware and because
      the Court determined the amount that was awarded was
      reasonable.

              Defendants Coxes[‘] position that the award was
      inconsistent is unfounded. The Court determined the award
      of attorneys’ fees and costs based upon the totality of the case,
      including but not limited to[] the complexity of issues, the
      length of litigation, the pleadings, rulings, attorney’s billing
      statements, affidavits, and previous awards of attorney fees.
      The fact that Alfie Ware advanced litigation costs was one
      factor in the Court’s decision.

¶20           On June 30, 2015, a judgment submitted by the Cundiffs and
entitled “Final Judgment Nunc Pro Tunc in Accordance with the Court’s
April 7, 2015 Ruling” was filed. The Coxes timely appealed, and we have
jurisdiction pursuant to Arizona Revised Statutes (“A.R.S.”) sections 12-
120.21(A)(1) (2016) and 12-2101(A)(1) (2016).

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                                ANALYSIS

       I.     The Trial Court’s Consideration of the Motion for Summary
              Judgment

¶21            The Coxes argue that, because Judge Mackey had already
ruled on the issue of waiver/abandonment, the Cundiffs’ new motion for
summary judgment violated the doctrine of law of the case and constituted
an impermissible horizontal appeal. Judge Mackey, however, did not have
the benefit of this court’s 2010 opinion in College Book Centers when he
denied the Cundiffs’ motion for summary judgment on the issue in April
2005. Further, after the court’s ruling, the parties continued to gather
evidence they argued either supported or refuted a finding of abandonment
that was not presented to the court in 2005. The doctrine of law of the case
is a rule of procedure, not of substance, and does not prevent a court from
changing a ruling merely because the court ruled on a question at an earlier
stage of the proceedings; “[n]or does it prevent a different judge, sitting on
the same case, from reconsidering the first judge’s prior, nonfinal rulings.”
State v. King, 180 Ariz. 268, 279, 883 P.2d 1024, 1035 (1994) (citations
omitted). The trial court did not err in considering the Cundiffs’ subsequent
motion for summary judgment on the issue of abandonment. See Dessar v.
Bank of Am. Nat’l Tr. & Sav. Ass’n, 353 F.2d 468, 470 (9th Cir. 1965).

       II.    The Trial Court’s Grant of Summary Judgment on Abandonment

¶22           The Coxes argue the trial court erred in granting summary
judgment because the court ignored evidence they presented in their
response to the Cundiffs’ motion for summary judgment that showed
multiple violations of the Declaration by other property owners in Coyote
Springs Ranch—violations the Coxes contend are sufficient to create a
genuine issue of material fact on their affirmative defense of abandonment.

¶23            We review de novo a trial court’s grant of summary judgment.
Salib v. City of Mesa, 212 Ariz. 446, 450, ¶ 4, 133 P.3d 756, 760 (App. 2006).
We view the facts and reasonable inferences therefrom in the light most
favorable to the party against whom summary judgment was granted.
Andrews v. Blake, 205 Ariz. 236, 240, ¶ 12, 69 P.3d 7, 11 (2003).

¶24            Summary judgment is proper 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(a). A trial court should grant
summary judgment “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

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proponent of the claim or defense.” Orme Sch. v. Reeves, 166 Ariz. 301, 309,
802 P.2d 1000, 1008 (1990). The mere existence of a scintilla of evidence that
creates the slightest doubt as to whether a dispute of material fact exists is
insufficient to overcome summary judgment. Id. When material facts are
not disputed, a trial court may decide the issue as a matter of law. Ortiz v.
Clinton, 187 Ariz. 294, 298, 928 P.2d 718, 722 (App. 1996).

¶25            Absent an express non-waiver provision, deed restrictions
may be considered abandoned or waived “if frequent violations of those
restrictions have been permitted.” Coll. Book Ctrs., 225 Ariz. at 538-39, ¶ 18,
241 P.3d at 902-03 (quoting Burke v. Voicestream Wireless Corp. II, 207 Ariz.
393, 398, ¶ 21, 87 P.3d 81, 86 (App. 2004)). But when, as here, a Declaration
contains a non-waiver provision, restrictions remain enforceable, despite
prior violations, as long as the violations do not constitute a “complete
abandonment” of the Declaration. Id. at 539, ¶ 18, 241 P.3d at 903 (quoting
Burke, 207 Ariz. at 399, ¶ 26, 87 P.3d at 87). Deed restrictions are considered
completely abandoned when “the restrictions imposed upon the use of lots
in [a] subdivision have been so thoroughly disregarded as to result in such
a change in the area as to destroy the effectiveness of the restrictions [and]
defeat the purposes for which they were imposed.” Condos v. Home Dev.
Co., 77 Ariz. 129, 133, 267 P.2d 1069, 1071 (1954), quoted in Coll. Book Ctrs.,
225 Ariz. at 539, ¶ 18, 241 P.3d at 903.10

¶26           In evaluating the Cundiffs’ motion for summary judgment on
the issue of abandonment/waiver, the trial court applied the standard
adopted by this court in College Book Centers to the intent behind the
Declaration of ensuring “a rural, residential environment.” The court noted
that the Coxes had “based their assertion of the abandonment and waiver
of the [Declaration] on 1) an affidavit of Defendant Cox, and 2) a survey of
the subdivision properties by a private investigator, Sheila Cahill, and
research done by Ms. Cahill through the records of government offices.” In
examining the evidence proffered by the Coxes, the court found the Coxes’
“assessment of the Cahill determinations is troubling as many of the

10     The parties disagree as to the standard of proof for showing
abandonment: Varilek argues the proponent of abandonment has the
burden of proving it by clear and convincing evidence, and the Coxes
maintain the proper burden is a preponderance of the evidence. Neither
side points to controlling Arizona law on this issue, and, as the Coxes
suggest, we simply apply the standards for determining summary
judgment and abandonment as discussed above. In any event, we conclude
that the record fully supports the trial court’s decision to grant summary
judgment.

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notations of Cahill indicate conduct not ‘intended’ to be prohibited under
the [Declaration].” The court also found numerous other claimed violations
were unsupported and/or involved mere speculation. Although the court
also found some observable violations of the Declaration, such as “bottled
gas tanks not below ground and trash receptacles visible; in one instance a
couch sitting outside, and in another some amount of construction
materials located on properties where construction company owners
reside,” the court further found “no real debate that the property remains
rural,” and “the only portion of Coyote Springs [Ranch] that has been
utterly given over to a non-residential use [with the exception of a church]
is that of Defendants Cox; that being their use of their 19 acres for purely
commercial purposes.” In granting the motion for summary judgment, the
court concluded that the items addressed by Cahill and upon which the
Coxes relied “do not illustrate, in any fashion, a complete abandonment and
thorough disregard of the intention of the Declarants that the property
remain rural and residential.”11

¶27            The trial court’s findings and conclusions are
overwhelmingly supported by the record. As the Cundiffs noted in their
motion for summary judgment, the DVDs submitted by the Cundiffs reveal
“acres and acres of land within the subdivision [that] consist of flat, grassy,
fenced, rural, residential properties.” The neighborhood continues to have
narrow, often dirt, roads and the physical appearance of a rural, residential
community. Although a few properties in the Coyote Springs Ranch
subdivision apparently do house a small commercial enterprise, nothing in
the record supports the conclusion that the fundamental character of
Coyote Springs Ranch has changed from that of a rural, residential

11      The Coxes argue that the trial court erred in focusing solely on
section two of the Declaration and overlooked their assertions and
documentation of violations of other restrictions contained in the
Declaration. The Coxes’ argument appears to run counter to their previous
concession that the only remaining issue for trial was their affirmative
defense that section two of the Declaration had been rendered
unenforceable through abandonment, and section eighteen of the
Declaration, which provides that “[i]nvalidation of any of the restrictions,
covenants or conditions above by judgment or court order shall in no way
affect any of the other provisions hereof, which shall remain in full force
and effect.” Moreover, the record is clear that the trial court carefully
considered the Coxes’ allegations of other violations of the Declaration
before rejecting their defense of abandonment.

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neighborhood.12 The trial court correctly applied the standards adopted in
College Book Centers and Condos to the intent behind the Declaration of
ensuring “a rural, residential environment,” and did not err in concluding
as a matter of law that the Declaration had not been completely abandoned
and in granting summary judgment in favor of the Cundiffs.13

      III.   Joinder of Indispensable Parties

¶28           The Coxes also argue that the trial court’s entry of summary
judgment should be considered “invalid” because not all Coyote Springs
Ranch property owners had been joined in the litigation when summary
judgment was granted, and pursuant to the trial court’s prior order and
Rule 19, Ariz. R. Civ. P., all necessary and indispensable parties were
required to be included before entry of an order summarily disposing of the
case.14 The Coxes’ argument ignores the record in this case—including the

12     Moreover, as the trial court correctly recognized, many of the
violations of the Declaration as alleged by the Coxes involve speculation
and/or do not appear to be prohibited by a careful reading of the
Declaration. Also, as Conlin noted in his affidavit, “[t]he covenant against
trade, business, commercial or industrial enterprises was not intended to
prohibit against landowners or occupiers from maintaining a home-office
in their residence, from parking or maintaining their business vehicles or
equipment on their property, or from indicating to the public that they had
a home office at their residence.”

13      Relying on section eighteen of the Declaration, the Coxes argue
“complete” abandonment of the Declaration is not required to prove
invalidation of section two of the Declaration. But nearly all of their
evidence of violations consists of purported violations of sections other
than section two, and thus, applying section eighteen would simply mean
that if one of the other sections were found to be invalid through a judgment
or court order, section two would continue to be valid. Moreover, to
invalidate section nineteen of the Declaration—the non-waiver provision,
which applies to all other sections of the Declaration—the Coxes still
needed to show complete abandonment of the Declaration itself.

14     The Coxes assert, without citation to the record, that “[m]any
property owners in Coyote Springs [Ranch] who have an interest in this
matter were never advised of the lawsuit [or] had the opportunity to appear
and state their position”; however, the only property owner the Coxes
identify as an “example” supporting their assertion is Jerry Carver, who

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                           CUNDIFF et al. v. COX
                            Decision of the Court

Cundiffs’ efforts at joining all parties and the Coxes’ subsequent
representation to the court—as well as the court’s correct finding that
summary judgment in favor of the Cundiffs made the Coxes’ argument
moot.

¶29            The indispensability of parties is a question of law, which we
review de novo. Gerow v. Covill, 192 Ariz. 9, 14, ¶ 19, 960 P.2d 55, 60 (App.
1998) (citations omitted).

¶30           In this case, on remand from this court’s May 24, 2007
memorandum decision, the trial court found that all property owners
subject to the Declaration were indispensable parties, and ordered the
Cundiffs to serve those necessary and indispensable parties with a
summons, a copy of the First Amended Complaint, and a notice approved
by the court. As ordered, the Cundiffs filed with the court in both paper
and electronic form the list of Coyote Springs Ranch property owners, sent
requests to the property owners to accept service of the aforementioned
documents, and filed all acceptances received with the court.

¶31            Next, as ordered by the court, the Cundiffs identified the
property owners who refused to accept service, sent them the court-ordered
documents by certified mail, and filed all signed return receipts received
with the court. Then, as ordered, the Cundiffs identified any owners who
had both refused to sign the acceptance of service and refused to claim or
sign their certified receipts, delivered the service packets to a process server
for personal service, and filed with the court the certificates of service for
those property owners the process server was able to serve.

¶32          After exhausting the other methods of service, the Cundiffs
requested permission to serve the remainder of the necessary and
indispensable parties by publication. The court found the Cundiffs had

appeared at the April 16, 2013 oral argument and advised the court he
would not concede the court had jurisdiction over him. Carver was served,
however, had notice of the proceedings, and was provided the opportunity
to state his position at oral argument. The Coxes also rely on Varilek’s
“Motion to Require Defendants Cox to Serve the Indispensable Parties with
Documents Comporting with Due Process,” in which he argued in part that
service on some property owners might be defective because it appeared to
him that, in some instances, only one of two spouses had been served or
property owners who had recently purchased property in the subdivision
might not have been served. Varilek did not, however, specifically identify
any such property owners.

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                          CUNDIFF et al. v. COX
                           Decision of the Court

taken substantial steps to join all of the necessary and indispensable parties
in a timely manner, noted that there was a discrepancy between the clerk
of the court’s records and the number of owners the Cundiffs had served,
ordered the Cundiffs’ counsel to meet with the clerk to reconcile the
differences, and granted the Cundiffs permission to serve the remaining
property owners by publication. Counsel for the Cundiffs met with the
clerk of the court, reconciled the differences, filed a revised property list,
and ultimately filed a proof of service by publication on all remaining
property owners with the court. The Cundiffs then filed a notice of
compliance with the court’s service order.

¶33           Later, when asked by the court if all necessary parties had
been joined as parties to the lawsuit, counsel for the Coxes responded
affirmatively. See supra note 3. Although counsel did express concern that
no lis pendens had been recorded to warn subsequent purchasers of the
lawsuit, the Coxes point to no subsequent purchasers who were not joined
or otherwise put on notice. The record as provided this court does not
support the Coxes’ argument.

¶34             Moreover, even if some property owners were not joined, the
court did not err in deciding the motion for summary judgment and
concluding Varilek’s motion was moot. Varilek had argued that property
owners who had not been joined could have their property rights
negatively affected if the Coxes’ abandonment defense proved successful,
because the Declaration could be deemed to be abandoned as to all property
owners. Varilek’s argument essentially echoed the concerns we identified
in our previous memorandum decision. See Cundiff, 1 CA-CV 06-0165, at
¶¶ 32 (“A ruling in this case that the restrictions have been abandoned and
are no longer enforceable against the Coxes’ property would affect the
property rights of all other owners subject to the Declaration.”), 35 (“[E]ven
if a ruling in favor of the Coxes on their affirmative defense of abandonment
were to apply only to the Coxes’ property, all property owners[‘] rights
would still be affected simply by the Coxes’ continued use of their property,
or by any future use adverse to the restrictions.”). In this case, however,
any concern about the erosion or loss of property rights is not implicated
because the trial court concluded the Declaration had not been abandoned.
Thus, the Coxes’ reliance on Karner v. Roy White Flowers, Inc., 527 S.E.2d 40

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                           CUNDIFF et al. v. COX
                            Decision of the Court

(N.C. 2000), is misplaced.15 The elimination of the Coxes’ abandonment
defense rendered any argument regarding joinder moot.16

       IV.    The Trial Court’s Awards of Attorneys’ Fees

              A.     Award of Attorneys’ Fees to the Cundiffs

¶35            The Coxes next argue that the trial court abused its discretion
in awarding attorneys’ fees to the Cundiffs for the legal services of
Wilhelmsen because a nonparty, Alfie Ware, helped fund the Cundiffs’
litigation, and the Cundiffs have no enforceable obligation to repay Ware.

¶36           A court has discretion in determining whether to award
attorneys’ fees pursuant to A.R.S. § 12-341.01. Wang Elec., Inc. v. Smoke Tree
Resort, LLC, 230 Ariz. 314, 327, ¶ 48, 283 P.3d 45, 58 (App. 2012). In general,
we review an award of attorneys’ fees under § 12-341.01 for an abuse of that
discretion, and will affirm unless no reasonable basis exists for the award.
Hawk v. PC Vill. Ass’n, 233 Ariz. 94, 100, ¶ 19, 309 P.3d 918, 924 (App. 2013).
For a party to recover attorneys’ fees, two specific requirements must be
met: (1) an attorney-client relationship between the party and counsel, and
(2) a genuine financial obligation on the part of the party to pay such fees.
Moedt v. Gen. Motors Corp., 204 Ariz. 100, 103, ¶ 11, 60 P.3d 240, 243 (App.
2002) (citing Lisa v. Strom, 183 Ariz. 415, 419, 904 P.2d 1239, 1243 (App.
1995)).

¶37          The Coxes do not dispute that the Cundiffs have maintained
the necessary attorney-client relationship with their attorneys. Moreover,

15      Karner held that “[a]n adjudication that extinguishes property rights
without giving the property owner an opportunity to be heard cannot yield
a ‘valid judgment.’” 527 S.E.2d at 44 (emphasis added).

16      Further, contrary to the Coxes’ suggestion, the ruling does not
prevent any other property owners from attempting to show abandonment
of the Declaration in the future. Also, we reject the Coxes’ suggestion that
property owners who wish to or currently use their property in ways that
violate the language of the Declaration should be insulated from future
lawsuits. We additionally reject the Coxes’ argument that the doctrine of
law of the case should have prevented the court from finding the issue of
joinder moot. See generally King, 180 Ariz. at 279, 883 P.2d at 1035; Dessar,
353 F.2d at 470; see also Powell-Cerkoney v. TCR-Montana Ranch Joint Venture,
II, 176 Ariz. 275, 279, 860 P.2d 1328, 1332 (App. 1993) (providing exceptions
to law of the case doctrine).

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                           CUNDIFF et al. v. COX
                            Decision of the Court

the Cundiffs submitted an affidavit in support of their attorneys’ fees
request stating that, although Ware had helped to fund the litigation, the
Cundiffs had entered an agreement in 2003 “to repay Alfie Ware for all of
the attorney’s fees and costs that he would pay for the litigation,” and that
they had in fact paid Ware a portion of the amount owed. Although the
Coxes rely on Lisa for their argument that the Cundiffs’ agreement with
Ware renders the Cundiffs’ obligation illusory, Lisa is distinguishable. In
Lisa, the court noted that “the Lisas candidly admit that, although there was
an oral fee agreement, neither Mrs. Lisa nor the community would
reimburse either Mr. Lisa [an attorney] or Lisa & Associates for any time
expended, absent an award of fees by the court.” 183 Ariz. at 420, 904 P.2d
at 1244. On this record, we are not presented with the same set of facts, and
find no error in the trial court’s decision to award attorneys’ fees to the
Cundiffs.

              B.     Reasonableness of the Fees Award

¶38          The Coxes also argue the amount of fees awarded to the
Cundiffs was unreasonable because some of the work was unnecessary,
duplicative, or for issues on which the Cundiffs did not prevail. We
disagree.

¶39           Any attorneys’ fees award must be reasonable. Schweiger v.
China Doll Rest., Inc., 138 Ariz. 183, 185-86, 673 P.2d 927, 929-30 (App. 1983).
In considering the reasonableness of a fee award, the court must determine
whether the hourly rate is reasonable and whether the hours expended on
the case are reasonable. Id. at 187-88, 673 P.2d at 931-32. “[W]here a party
has accomplished the result sought in the litigation, fees should be awarded
for time spent even on unsuccessful legal theories.” Id. at 189, 673 P.2d at
933.

¶40           The record indicates the trial court fully and carefully
considered the reasonableness of the Cundiffs’ attorneys’ fees request and,
after such consideration, awarded only a portion of the amount requested.
Further, the Cundiffs fully achieved the result they sought in the litigation.
On this record, we find no abuse of the trial court’s discretion.

              C.     Award of Attorneys’ Fees to Varilek

¶41           The Coxes also argue the trial court erred in awarding
attorneys’ fees to Varilek because he asserted he was not a party to the case.

¶42            The record is clear, however, that after being served and
joined in this case in 2010, Varilek specifically requested alignment with the

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                           CUNDIFF et al. v. COX
                            Decision of the Court

Cundiffs, and he actively participated throughout the remainder of the
case, even after his lawsuit against Veres—which was consolidated into this
case17—was dismissed without prejudice. Moreover, although the Coxes
point out that Varilek argued at the February 13, 2013 oral argument that
“it’s our position that we are not a party” and “have simply aligned with
the plaintiffs,” the trial court rejected that position in granting dismissal of
the consolidated case; instead, the court made clear in its March 5, 2013
under advisement ruling that it considered Varilek to be an active party to
the litigation:

               WHILE THE COURT has received the[] “Stipulation to
       Dismiss Without Prejudice,” filed by the Parties in Varilek v
       Veres[] (P1300 CV 2009 0822); that being separately filed
       litigation previously consolidated with Cundiff v Cox (P1300
       CV 2003 0399), the Court does not interpret the dismissal of
       Varilek, [id.], as making moot Varilek’s Response in regard to
       this immediate issue [allowing Conlin to testify as a witness
       for the purpose of interpreting the Declaration] or allowing
       Varilek and/or Veres to extricate themselves from this case,
       as Varilek and Veres remain necessary Parties to the Cundiff v
       Cox[] litigation.

¶43           The Coxes further argue Varilek was not eligible for an award
of attorneys’ fees because he never requested attorneys’ fees in a pleading
pursuant to Rule 54(g)(1), Ariz. R. Civ. P.18 However, after Varilek filed his
July 1, 2013 motion for an award of attorneys’ fees, the Coxes did not assert
in their response that Varilek had failed to comply with Rule 54(g). Instead,
as they acknowledge, they raised this argument for the first time in their
“Motion for Reconsideration Re: August 25, 2014 Ruling Re: Attorneys’
Fees Awarded in Favor of Varilek.” We generally do not consider
arguments on appeal that were first raised in the trial court in a motion for
reconsideration, Evans Withycombe, Inc. v. W. Innovations, Inc., 215 Ariz. 237,
240-41 n.5, ¶¶ 15-16, 159 P.3d 547, 550-51 n.5 (App. 2006), and we decline to
do so here.

17     Without record support, Varilek asserts that he requested attorneys’
fees in his complaint against Veres. The Coxes do not dispute Varilek’s
assertion.

18    Varilek first made a claim for attorneys’ fees in his joinder to the
motion for summary judgment filed by the Cundiffs.

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                         CUNDIFF et al. v. COX
                          Decision of the Court

      V.     Costs and Attorneys’ Fees on Appeal

¶44           The parties request costs and attorneys’ fees on appeal
pursuant to A.R.S. § 12-341.01. The Coxes are not the prevailing parties,
and their request is denied. Appellees are the prevailing parties;
accordingly, in our discretion, we award taxable costs and an amount of
reasonable attorneys’ fees on appeal to Appellees, contingent upon their
compliance with Rule 21, ARCAP.

                             CONCLUSION

¶45            The trial court’s summary judgment and awards of attorneys’
fees are affirmed.

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

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