Court Opinion

ID: 5141763
Source: CourtListenerOpinion
Date Created: 2021-12-30 18:01:47.569123+00
Date Added: 2024-06-11T08:24:30.641344
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                  ANTHONY RICOTTA, Plaintiff/Appellant,

                                         v.

            CHRISTINA M. FORTIN, et al., Defendants/Appellees.

                              No. 1 CA-CV 21-0071
                                FILED 12-30-2021

            Appeal from the Superior Court in Maricopa County
                           No. CV2015-094065
               The Honorable Tracey Westerhausen, Judge

                       REVERSED AND REMANDED

                                    COUNSEL

Harper Law PLC, Gilbert
By Kevin R. Harper
Counsel for Plaintiff/Appellant

Fredenberg Beams LLC, Phoenix
By Daniel E. Fredenberg, Christian CM Beams,
Christopher Spencer Skinner
Counsel for Defendants/Appellees
                         RICOTTA v. FORTIN, et al.
                            Decision of the Court

                       MEMORANDUM DECISION

Judge Brian Y. Furuya delivered the decision of the Court, in which
Presiding Judge Randall M. Howe and Judge Michael J. Brown joined.

F U R U Y A, Judge:

¶1            Anthony Ricotta appeals the superior court’s pretrial grant of
judgment in favor of appellee Dreem Green, Inc. (“Dreem Green”) on his
breach of contract and declaratory relief claims and the court’s denial of his
motions for reconsideration and a new trial. For the following reasons, we
reverse the court’s decision and remand for trial.

                 FACTS AND PROCEDURAL HISTORY

¶2            Following voter approval of the Arizona Medical Marijuana
Act (“AMMA”), Ricotta began preparing the necessary paperwork and
documentation to apply for a license from the Arizona Department of
Health Services (“ADHS”) to operate a dispensary and cultivation site.
Specifically, Ricotta sought to operate within the Community Health
Analysis Area of North Mountain (“CHAA #52”). Before Ricotta applied,
Christina Fortin 1—doing business under the tradename Dreem Green—
approached Ricotta about acquiring his paperwork.

¶3            The parties could not agree on a purchase price for Ricotta’s
paperwork and potential rights to CHAA #52, so they entered into an
alternative agreement. Under the agreement, Ricotta would allow use of its
application materials in exchange for a reservation of the right to sell certain
products within Dreem Green’s operation, should Dreem Green acquire a
license and operate a dispensary in CHAA #52. Dreem Green then received
and used Ricotta’s materials to apply and enter the public lottery for
licensure. Dreem Green successfully acquired a license for CHAA #52 and
opened a dispensary and cultivation site in 2015. However, Dreem Green
refused to honor the parties’ agreement.

¶4           Ricotta sued, contending Dreem Green had breached the
parties’ contract and additionally asserting claims for declaratory

1      While Fortin was a defendant in the underlying matter, she is not a
party to this appeal in her individual capacity.

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                        RICOTTA v. FORTIN, et al.
                           Decision of the Court

judgment, unjust enrichment, and accounting. Both parties moved for
summary judgment. The court denied both parties’ motions concerning the
breach of contract and unjust enrichment claims but found a valid contract
with offer, acceptance, and consideration.

¶5            At a subsequent hearing, the court expressed it could not,
given our decision in State v. Jones, 245 Ariz. 46 (App. 2018), determine as a
matter of law whether the contract was “unenforceable because of illegality
or impracticability of performance.” The case was stayed pending the
Arizona Supreme Court’s review of our State v. Jones decision, which
addressed the legality of certain marijuana-based products under AMMA’s
definitions. State v. Jones, 246 Ariz. 452 (2019). After the supreme court
vacated our opinion and determined that AMMA’s definition of marijuana
includes both its dried-leaf/flower form and resin extracts, id. at 454, 457,
¶¶ 1, 19, Ricotta and Dreem Green proceeded with litigation.

¶6            After the stay was dissolved, the case was reassigned, and a
pretrial conference was held, where the superior court asked for briefing on
the issues of enforceability and unjust enrichment. After reviewing the
parties’ briefing and prior motions for summary judgment, the court
dismissed Ricotta’s breach of contract claim and declaratory relief claim,
finding that the contract was unenforceable as a matter of law. 2 Ricotta
unsuccessfully moved for new trial and for reconsideration. Ricotta timely
appealed, and we have jurisdiction pursuant Arizona Revised Statutes
(“A.R.S.”) §§ 12-120.21(A)(1), -1201(A)(1), and -1201(5)(a).

                               DISCUSSION

¶7             The parties agree the effect of the court’s order was to grant
Dreem Green summary judgment on the breach of contract and declaratory
relief claims. We review the grant of summary judgment de novo,
determining whether any genuine disputes of material fact exist and
whether the moving party is entitled to judgment as a matter of law. See
United Dairymen of Ariz. v. Schugg, 212 Ariz. 133, 140, ¶ 26 (App. 2006); Ariz.
R. Civ. P. 56(a). We are not bound by the superior court’s determinations as
to matters of law, Landi v. Arkules, 172 Ariz. 126, 130 (App. 1992), and we
review questions of law de novo, Do by Minker v. Farmers Ins. Co. of Ariz.,

2     The court also dismissed Ricotta’s claims for unjust enrichment and
accounting. However, dismissal of these claims is not challenged on appeal.
Thus, appellate relief as to these claims has been waived and we do not
address them. See Sholes v. Fernando, 228 Ariz. 455, 461, ¶ 18 n.5 (App. 2011);
ARCAP 13(a)(7).

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                         RICOTTA v. FORTIN, et al.
                            Decision of the Court

171 Ariz. 113, 115 (App. 1991) (citations omitted); see also Grosvenor Holdings,
L.C. v. Figueroa, 222 Ariz. 588, 593, ¶ 9 (App. 2009) (“[I]nterpretation of a
contract is a question of law, which this court reviews de novo.”). Further,
we view the facts and evidence in the light most favorable to the party
against whom summary judgment was entered. United Dairymen of Ariz.,
212 Ariz. at 140, ¶ 26.

¶8            Ricotta argues the court erred by finding the contract between
the parties was unenforceable as a matter of law, dismissing his breach of
contract and declaratory relief claims, and denying his motion for new trial.

¶9            The court found that the parties’ contract did not contain all
material and unambiguous terms necessary for enforceability. Specifically,
the court identified that the contract lacked prices for goods and services,
and Ricotta was ineligible to receive a Dispensary Agent Registration
Identification Card because he was not a resident of Arizona.

¶10            Beyond the requirements of offer, acceptance, and
consideration, a contract must contain sufficiently clear and specific terms
“so that the obligations involved can be ascertained” by the parties. Savoca
Masonry Co., Inc. v. Homes & Son Const. Co., Inc., 112 Ariz. 392, 394 (1975).
The requirement of certainty, however, “is not so much a contractual
validator as a factor relevant to determining . . . whether the parties
manifested assent or intent to be bound.” Schade v. Diethrich, 158 Ariz. 1, 9
(1988). “[I]n Arizona, a court will attempt to enforce a contract according to
the parties’ intent. The primary and ultimate purpose of interpretation is to
discover that intent and to make it effective.” Taylor v. State Farm Mut. Auto.
Ins. Co., 175 Ariz. 148, 152 (1993) (citations omitted). “In order to determine
what the parties intended, we first consider the plain meaning of the words
in the context of the contract as a whole. Where the intent of the parties is
expressed in clear and unambiguous language, there is no need or room for
construction or interpretation and a court may not resort thereto.”
Grosvenor Holdings, L.C., 222 Ariz. at 593, ¶ 9 (citations omitted).

¶11           Here, we disagree that the agreement lacks sufficiently clear
and specific terms so as to render it unenforceable. First and foremost, the
parties’ intent is unambiguously memorialized within the contract’s
language itself:

       The primary intent of the parties in entering into this
       agreement is to allow Dreem Green to retain all rights to
       operate a Medical Marijuana Dispensary and/or Cultivation
       site that results from the use of Mr. Ricotta’s prior investment,

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                        RICOTTA v. FORTIN, et al.
                           Decision of the Court

       paperwork and documentation; while granting Mr. Ricotta
       the concession of having the sole and exclusive right to make
       use of said Dispensary’s ability to manufacture, sell or
       distribute any and all Marijuana-related preparations,
       including but not limited to Edibles, Infusions, Concentrates,
       Extracts and any other similar types of products.

¶12          The stated intent of the contract, therefore, is to allocate
among the parties the right to sell certain marijuana products should Dreem
Green obtain a license to operate a cultivation site and dispensary by use of
Ricotta’s application materials. More specifically, the contract reserves to
Ricotta the exclusive right to manufacture, sell, and distribute prepared
“infusion” products, while Dreem Green maintains “the exclusive rights to
any raw plants and flowers and the ability to sell all other products but
infusibles.”

¶13             The court’s conclusion that the contract is unenforceable for
want of sufficiently definite terms—for example, because it lacks pricing for
goods and services—ignores the primary intent and purpose of the
contract. The contract does not create any obligation for the parties to
exchange goods or services in any amount. Nor can the absence of such
terms frustrate or otherwise undermine their agreement because those
transactions are not the contract’s stated purpose. Instead, per its express
language, the contract exists primarily to allocate to each party the exclusive
right to sell their respective products at the dispensary location, should the
application for a license be successful.

¶14          Dreem Green points to language in the contract discussing the
parties’ ongoing relationship as indicative of a requirement to exchange
goods and services:

       The Dispensary operated by Dreem Green will either come to
       a negotiated fair-market price for any raw materials made
       available to Mr. Ricotta for use under the terms of this
       contract, or if the two parties are unable to agree to such a
       price, Dreem Green shall allow and facilitate as necessary any
       arrangements Mr. Ricotta chooses to make regarding the
       acquisition of materials from other Dispensaries or
       Cultivation sites.

¶15           Interpreting this provision as establishing a primary
requirement to exchange goods and/or services is contrary to the contract’s
expressly stated intent. Thus, the provision is at most an ancillary—rather

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                         RICOTTA v. FORTIN, et al.
                            Decision of the Court

than primary—function of the contract. As such, even if this provision were
deficiently unspecific, that deficiency could not operate to frustrate the
agreement’s primary purpose, and, therefore, does not render the contract
unenforceable. Moreover, a fair reading of this provision, in context, reveals
that specific pricing is not necessary to enforce this provision because it
seeks only to protect Ricotta’s right to source raw materials outside of
Dreem Green’s operations, and not to establish a buyer-seller relationship.
See Grosvenor Holdings, L.C., 222 Ariz. at 593, ¶ 9 (“[W]e [] consider the plain
meaning of the words in the context of the contract as a whole.”).

¶16            Dreem Green argues for the first time on appeal that the
contract is ambiguous because it does not determine who bears the costs for
additional employees, salaries, or bonus compensation. This argument is
likewise unavailing to the issue of enforceability because it is at most, again,
ancillary to the contract’s primary purpose. In any event, the contract does
define who bears the costs of operations. The contract states
unambiguously that Ricotta will be prorated the cost to operate his infusion
facility, which the contract defines as any space “whether contained inside
the Cultivation area of the Dispensary or elsewhere that processes and
manufactures any products that are . . . intended to be consumed,” and lists
as examples rent, electricity, utilities, and insurance. The contract further
specifies, “Any costs not related to operating the Infusion Facility are
entirely the responsibility of Dreem Green.” (Emphasis added.) Therefore,
any cost not related to the processing and manufacturing of infusion-like
products as defined by the contract would fall to Dreem Green.

¶17           The court’s concern for Ricotta’s ability to receive a
Dispensary Agent Registration Identification Card from ADHS is also
nondeterminative. The first term under the obligations section of the
contract states that Ricotta or “any person or entity designated by him or
any entity that Mr. Ricotta assigns this right to, will be made the
Dispensary’s Designated Agent” for the purpose of selling processed
products such as infusions, edibles, concentrates, and extracts.

¶18           Regardless of whether Ricotta chooses personally to obtain a
Dispensary Agent Registration Identification Card—which would
admittedly require a change in his residency—Ricotta agreed “to adhere to
all requirements set forth by the ADHS regarding the establishment and
operation of any facility that intends to make use of the aforementioned
rights.” This would include compliance with Arizona Administrative Code
R9-17-103(C) and -310(A)(8), which outline requirements associated with
Dispensary Agent Registration Identification Cards. The contract further
specifies that Ricotta retains responsibility for “all expenses associated”

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                         RICOTTA v. FORTIN, et al.
                            Decision of the Court

with obtaining and maintaining his compliance with ADHS. The court’s
finding of unenforceability based on Ricotta’s residency—rendered as it
was prior to trial—is erroneous because performance of the contract does
not require unlawful conduct by Ricotta. See Landi, 172 Ariz. at 135.

¶19            Finally, Dreem Green argues the contract is unenforceable
due to Ricotta’s lack of performance. Again, Dreem Green points to
Ricotta’s failure to obtain a Dispensary Agent Registration Identification
Card. However, Dreem Green cites to no authority to support its position.
To the contrary, Dreem Green’s refusal to honor the contract operated to
suspend Ricotta’s performance. Restatement (Second) of Contracts § 242
cmt. a (1981) (explaining that a non-breaching party’s duty to perform is
suspended to allow a breaching party to cure). Further, considering Dreem
Green’s refusal to honor the contract, it is difficult to see why Ricotta would
make additional expenditures, thereby failing to mitigate his losses. See N.
Ariz. Gas Serv., Inc. v. Petrolane Transp., Inc., 145 Ariz. 467, 477 (App. 1984)
(“The party injured by a breach of contract has a duty to take reasonable
steps to avoid the consequences of known injuries.”).

¶20           We conclude as a matter of law that the contract contains
sufficiently specific terms to delineate the rights and obligations of each
party. Therefore, the court’s ruling that the parties’ contract was
unenforceable as a matter of law was erroneous, and summary judgment
was not warranted. As such, we reverse the court’s order dismissing
Ricotta’s complaint as to his claims regarding breach of contract and
declaratory judgment and reinstate the same. We further remand the
remainder of this matter for trial on Ricotta’s breach of contract and
declaratory judgment claims, and for such other, further proceedings as
may be consistent with this decision. Given this decision, the court’s denial
of Ricotta’s motion for new trial is moot.

¶21           Finally, in light of this decision, we vacate the court’s award
of attorney’s fees to Dreem Green. Both parties request an award of costs
and attorneys’ fees incurred on appeal pursuant to A.R.S. §§ 12-341 and -
341.01. In our discretion, we defer to and authorize the superior court to
decide the issue of award of attorney’s fees incurred in the course of this
appeal when the ultimate outcome of the case is determined. See Tierra
Ranchos Homeowners Ass’n v. Kitchukov, 216 Ariz. 195, 204, ¶ 37 (App. 2007)
(deferring party’s request for attorneys’ fees on appeal “to the trial court’s
discretion pending resolution of the matter on the merits”). However, as
the successful party on appeal, we award Ricotta his taxable costs upon
compliance with ARCAP 21.

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                       RICOTTA v. FORTIN, et al.
                          Decision of the Court

                             CONCLUSION

¶22           For the foregoing reasons, we reverse the superior court’s
dismissal of Ricotta’s breach of contract and declaratory relief claims, as
well as its award of attorney’s fees in favor of Dreem Green. We reinstate
Ricotta’s complaint regarding his claims for breach of contract and
declaratory relief. We remand these claims for further proceedings
consistent with this decision.

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

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