Court Opinion

ID: 9379070
Source: CourtListenerOpinion
Date Created: 2023-03-14 16:02:49.965118+00
Date Added: 2024-06-11T17:16:47.648296
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                 MARIA CARMEN ZUBIA, Plaintiff/Appellee/
                          Cross-Appellant,

                                         v.

               DAVID SHAPIRO, et al., Defendants/Appellants/
                           Cross-Appellees.

                              No. 1 CA-CV 22-0201
                               FILED 3-14-2023

            Appeal from the Superior Court in Maricopa County
                           No. CV2015-002563
               The Honorable Christopher A. Coury, Judge

                                   AFFIRMED

                                    COUNSEL

Law Offices of Kyle A. Kinney PLLC, Scottsdale
By Kyle A. Kinney
Counsel for Plaintiff/Appellee/Cross-Appellant

Fredenberg Beams LLC, Phoenix
By Daniel E. Fredenberg, Christian CM Beams
Counsel for Defendant/Appellant/Cross-Appellee
                         ZUBIA v. SHAPIRO, et al.
                           Decision of the Court

                        MEMORANDUM DECISION

Judge Maurice Portley 1 delivered the decision of the Court, in which Vice
Chief Judge David B. Gass and Brian Y. Furuya joined.

P O R T L E Y, Judge:

¶1             In this civil aiding and abetting fraudulent concealment case,
we are asked to review the superior court’s denial of the defendant’s
motions for judgment as a matter of law under Ariz. R. Civ. P. (“Rule”) 50,
and its partial denial and partial grant of defendant’s motion for a new trial
or remittitur under Rule 59. We affirm the rulings because sufficient
evidence supports the jury’s verdict for the plaintiff and its finding in
support of joint liability, and the superior court properly reduced the jury’s
damages award to excise speculative amounts.

                 FACTS AND PROCEDURAL HISTORY

¶2           Maria Carmen Zubia sued Jose Juan Pena and others after she
discovered that her signature had been forged on loan documents
associated with a loan Pena received. She asserted multiple claims,
including a claim against David Shapiro for aiding and abetting
concealment fraud. The matter proceeded to a jury trial at which the parties
presented evidence of the following facts.

¶3            In 1995, Zubia and her then-husband Pena purchased
residential property in Waddell, Arizona (“the Residential Property”) as
joint tenants with right of survivorship. They also rented a commercial
property in Phoenix (“the Commercial Property”) around the same time.
They moved to Nevada in 2000 or 2001, but they did not sell the Residential
Property.

¶4           Sometime around 2003 or 2004, Pena met Shapiro, a Nevada-
based private lender. Thereafter, Shapiro made many commercial loans to
Pena over the years, but with Pena’s blood relatives appearing to be the
borrowers so Pena could avoid judgment creditors. Zubia was never

1      The Honorable Maurice Portley, Retired Judge of the Court of
Appeals, Division One, has been authorized to sit in this matter pursuant
to Article 6, Section 3, of the Arizona Constitution.

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                        ZUBIA v. SHAPIRO, et al.
                          Decision of the Court

named as a borrower, and she kept her finances separate from Pena
throughout their marriage. Shapiro and Pena became close friends, and
they discussed personal matters.

¶5           Zubia and Pena began living separately in 2006, and by late
2008, Pena had a new partner and children. In January 2008, Shapiro
acknowledged that Pena signed a document with his signature over his
daughter’s typed signature line, by which the daughter purportedly
authorized disbursement of an escrow deposit overage to herself and, in
larger measure, to Pena. According to the daughter, she did not give Pena
permission to sign the document for her, and Pena later told her that he
applied the disbursement to money he owed Shapiro.

¶6           Later in 2008, Pena asked Shapiro for another loan. Before
agreeing to the loan, Shapiro traveled from Nevada to inspect the
Commercial Property. He and Pena also inspected the Residential
Property, where they encountered Zubia’s non-English-speaking parents.
Shapiro then gave Pena $100,000 outside of escrow, and then directed his
longtime loan processor to draft a deed of trust and promissory note for
$150,000. According to Shapiro, he typically reviews such documents.

¶7            The promissory note, dated November 17, 2008, named both
Pena and Zubia as the borrowers, as did the deed of trust. The only
borrower address listed in the documents, however, belonged to Pena’s
parents, which Shapiro knew. And in a further irregularity, the deed of
trust described the security by the Residential Property’s legal description
but the Commercial Property’s address.

¶8             According to Shapiro, the note and deed of trust were sent
only to the title company, with instructions that they be signed there
consistent with normal practices. He testified that he has never seen a title
company permit a borrower to remove a deed of trust from its office for
outside notarization. But here, the deed of trust was not notarized at the
title company’s office. Instead, on November 21, 2008, Pena brought the
document to a private Nevada notary who notarized only his signature. In
fact, the notary crossed off Zubia’s printed name, wrote his initials and the
date beneath the strikethrough, and listed only Pena’s name in his notary
log. The notary acknowledged that nothing would prevent someone from
signing for Zubia after the fact and attaching it to his notarization.

¶9           Shapiro recorded the deed of trust in Arizona in mid-January
2009. The recorded deed of trust bore same-page signatures for both Pena
and Zubia but only the one notary stamp. The promissory note similarly

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                        ZUBIA v. SHAPIRO, et al.
                          Decision of the Court

bore signatures for both Pena and Zubia. Zubia, however, testified that she
had no knowledge of the loan, never would have agreed to it, and never
received any communications regarding it despite Shapiro having her
email and mailing addresses.

¶10           Zubia filed for legal separation from Pena in late 2009. A
notice of default on the November 2008 note was sent to Pena’s parents’
address in October 2013, and a notice of trustee’s sale for the Residential
Property was recorded the next month. Zubia testified that when she
discovered in December 2013 that the Residential Property was
encumbered, she immediately called Shapiro, and set up an in-person
meeting that he failed to attend. Shapiro contrastingly testified that he had
called Zubia to notify her of delinquent payments on the loan much earlier,
in mid-2010, and had met with her in person after she denied knowledge of
the loan.

¶11          Pena quitclaimed his interest in the Residential Property to
Zubia in mid-2014, in what she claimed was a separation settlement. In
January 2015, the Residential Property was sold by trustee’s sale to Shapiro
for approximately $315,000. Zubia filed this litigation soon thereafter,
seeking, among other things, to invalidate the trustee’s sale. Shapiro
eventually sold the Residential Property to a third party for $425,000,
acknowledging that the litigation clouded title at the time of the sale.

¶12           At the close of Zubia’s evidence, Shapiro moved for judgment
as a matter of law on the aiding and abetting fraudulent concealment claim
under Rule 50. The superior court expressed strong reservations about the
sufficiency of the evidence regarding Shapiro’s knowledge but took the
motion under advisement and ultimately denied it after the close of all
evidence.

¶13           By the time the case was submitted to the jury, the sole claim
remaining was the aiding and abetting claim and Shapiro had identified
Pena as a nonparty at fault. The jury was instructed on the elements of the
tort and was asked by special interrogatory to find whether Shapiro and
Pena had acted in concert. The jury was further instructed to determine
whether Pena’s fault would reduce a damages award, but it was not
instructed on how to assess damages.

¶14          The jury returned a verdict for Zubia for damages of $640,000,
with 45% of the fault attributed to Shapiro and 55% to Pena. The jury
further found that Shapiro and Pena had acted in concert. In view of that

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                         ZUBIA v. SHAPIRO, et al.
                           Decision of the Court

finding, the court entered judgment against Shapiro on the full amount of
the verdict.

¶15           Shapiro thereafter filed a renewed motion for judgment as a
matter of law under Rule 50, and a motion for a new trial or remittitur under
Rule 59. After full briefing and oral argument, the superior court issued a
detailed ruling denying the Rule 50 motion and granting the Rule 59 motion
in part by reducing the damages award to $425,000.

¶16          Shapiro appeals from the rulings denying relief, and Zubia
cross-appeals from the remittitur. We have jurisdiction under A.R.S. § 12-
2101(A)(2) and (5)(a).

                               DISCUSSION

¶17            A defendant is entitled to judgment as a matter of law or a
new trial if a verdict for the plaintiff was not reasonably supported by
sufficient evidence. Rule 50(a)–(b); Rule 59(a)(1)(H). We review rulings on
motions for judgment as a matter of law de novo and rulings on motions for
new trial for a manifest abuse of discretion, viewing the evidence in the
light most favorable to affirming based on substantial evidence. A
Tumbling-T Ranches v. Flood Control Dist. Of Maricopa Cnty., 222 Ariz. 515,
524, ¶ 14 (App. 2009); Styles v. Ceranski, 185 Ariz. 448, 450 (App. 1996). We
defer to the jury’s determinations regarding witness credibility and the
weight to give conflicting evidence. United Cal. Bank v. Prudential Ins. Co. of
Am., 140 Ariz. 238, 286 (App. 1983). The superior court properly may
reduce the jury’s damages award, however, if there is a “lack of evidence”
to support it. In re Estate of Hanscome, 227 Ariz. 158, 162, ¶ 14 (App. 2011).
We will affirm a reduction to the amount actually proved by non-
speculative evidence. Custom Roofing Co. v. Alling, 146 Ariz. 388, 391 (App.
1985).

   I.     THE SUPERIOR COURT PROPERLY UPHELD THE VERDICT.

¶18           Shapiro does not dispute that Pena committed fraudulent
concealment, which occurs when a party to a transaction conceals or by
other action intentionally prevents the other party from acquiring material
information. Wells Fargo Bank v. Ariz. Laborers, Teamsters & Cement Masons
Local No. 395 Pension Trust Fund, 201 Ariz. 474, 496, ¶ 87 (2002). He
contends, however, that he was entitled to judgment as a matter of law on
the aiding and abetting claim because there was insufficient evidence of his
scienter and participation.

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                         ZUBIA v. SHAPIRO, et al.
                           Decision of the Court

¶19            To establish a defendant’s liability for aiding and abetting a
primary tortfeasor, the plaintiff must show by a preponderance of the
evidence that the defendant knew the primary tortfeasor’s conduct
constituted a tort and substantially assisted or encouraged him or her in
accomplishing the tort. Id. at 485, 490, ¶¶ 34, 58 & n.16. The defendant’s
knowledge “may be inferred from the circumstances” and the evidentiary
burden “may be satisfied by showing [the defendant’s] general awareness
of the primary tortfeasor’s fraudulent scheme.” Dawson v. Withycombe, 216
Ariz. 84, 102, ¶ 50 (App. 2007). Circumstantial evidence is just as probative
as direct evidence. Andrews v. Fry’s Food Stores of Ariz., 160 Ariz. 93, 96
(App. 1989). The defendant’s knowledge cannot, however, be shown by
“pil[ing] inference upon inference” to “stretch[ ] the evidence presented
beyond the bounds of circumstantial evidence.” Dawson, 216 Ariz. at 103,
¶ 52. With respect to the substantial-assistance element, “substantial
assistance . . . can take many forms, but means more than ‘a little aid.’”
Wells Fargo, 201 Ariz. at 488, ¶ 46.

¶20          Shapiro contends that because he did not review the
notarized deed of trust before its recording, he could not have known of
any fraudulent concealment and a finding to the contrary would be based
on impermissible inference-piling. We disagree.

¶21            Sufficient circumstantial evidence supports the verdict. As an
initial matter, the jury reasonably could infer based on the pair’s friendship
and past dealings that Shapiro knew of Pena’s dubious financial situation,
deteriorated marriage, and willingness to defraud family. Moreover, the
jury reasonably could infer based on the evidence that Shapiro knew Pena
planned to fraudulently conceal the particular loan transaction at issue here
and substantially assisted him in doing so. As to this specific transaction,
Shapiro gave Pena a large sum before agreeing to security or drawing up
any legal documents to demonstrate the loan and secure it. The two men
then traveled together from Nevada to Arizona to inspect potential security
properties. Thereafter, it was Shapiro who directed the preparation of loan
documents that contained several irregularities making Zubia’s discovery
of the transaction less probable. Namely, (1) the deed of trust used the legal
description of the Residential Property but recited the Commercial
Property’s physical address, and (2) it listed the borrowers’ address as one
that Shapiro knew belonged to Pena’s parents.

¶22          Moreover, Shapiro acknowledged that he has never known a
title company to permit borrowers to remove loan documents from the
company’s office for notarization. But Pena somehow obtained the deed of
trust and had it privately notarized. It was reasonable for the jury to infer

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                         ZUBIA v. SHAPIRO, et al.
                           Decision of the Court

that Shapiro knowingly included the deed of trust’s irregularities and
provided the document to Pena so that Pena could defraud Zubia. The
months-long interlude between the notarization and the recording also
supports an inference that Shapiro knew Zubia had not signed the deed of
trust. And the evidence that Shapiro never contacted Zubia regarding
defaults and failed to meet with her after she discovered the encumbrance
further suggests his culpability.

¶23           Shapiro emphasizes that the superior court strongly
questioned the sufficiency of the evidence when he first moved for
judgment as a matter of law and characterized the issue as “an extremely
close call” when denying the renewed motion. We recognize the only
evidence of Shapiro’s scienter and participation was circumstantial and the
jury could have drawn different inferences. But that does not mean Shapiro
was entitled to judgment as a matter of law.

   II.    THE SUPERIOR COURT PROPERLY UPHELD THE ACTING-
          IN-CONCERT FINDING.

¶24             Shapiro next contends that the evidence was insufficient to
support the jury’s finding that he acted in concert with Pena, as necessary
to support joint liability under A.R.S. § 12-2506(D)(1). Acting in concert
requires more than offering substantial assistance; it requires “entering into
a conscious agreement to pursue a common plan or design to commit an
intentional tort.” A.R.S. § 12-2506(F)(1). The totality of the evidence
described above was sufficient to support the finding that Shapiro did not
merely assist Pena in his unlawful scheme, but instead consciously agreed
to help him commit fraudulent concealment. Notably, the tortious conduct
benefited Shapiro because it purportedly gave him a valuable security
interest far in excess of the value of the loan he previously disbursed to Pena
outside of escrow.

   III.   THE SUPERIOR COURT PROPERLY ORDERED REMITTITUR.

¶25            The parties finally dispute the reduction of the jury’s damages
award. Shapiro contends that the award should have been reduced to
reflect that the community was enriched by the loan proceeds under A.R.S.
§ 25-211 because Pena received them while still married to Zubia. He
waived that argument by not raising it until the motion for new trial. See,
e.g., Conant v. Whitney, 190 Ariz. 290, 293–94 (App. 1997).

¶26         On cross-appeal, Zubia argues that the reduction of the award
from $640,000 to $425,000 was improper. She contends that because
Shapiro acknowledged that the sale of the Residential Property for $425,000

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                         ZUBIA v. SHAPIRO, et al.
                           Decision of the Court

was under clouded title, the jury could properly determine that Zubia’s
damages exceeded the sale price. However, on this record, the jury’s award
of damages beyond the sale price was speculative—the jury was not
instructed on calculating damages and received no evidence regarding the
Residential Property’s fair market value, the financial impact of a cloud on
the title, or any evidence of damages beyond the loss of the Residential
Property. Consequently, the superior court did not err by reducing the
award.

                               CONCLUSION

¶27           We affirm the superior court’s Rule 50 and Rule 59 rulings for
the reasons set forth above. We deny the parties’ competing requests for
attorney’s fees under A.R.S. § 12-341.01 and the deed of trust because this
was a tort case merely incidental to a contract to which Zubia was never a
party. See Ramsey Air Meds., L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, 15–
16, ¶ 27 (App. 2000). As the substantially prevailing party, Zubia may
recover her costs on appeal upon compliance with ARCAP 21. See A.R.S. §
12-341; Montano v. Luff, 250 Ariz. 401, 407, ¶ 18 (App. 2020).

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

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