Court Opinion

ID: 4090409
Source: CourtListenerOpinion
Date Created: 2016-10-18 20:02:41.683723+00
Date Added: 2024-06-11T14:35:23.428521
License: Public Domain

IN THE
             ARIZONA COURT OF APPEALS
                         DIVISION TWO

                     MELINDA S. WORKMAN,
                       Plaintiff/Appellant,

                               v.

                 VERDE WELLNESS CENTER, INC.,
              AN ARIZONA NONPROFIT CORPORATION,
                DBA THE DOWNTOWN DISPENSARY,
                      Defendant/Appellee.

                     No. 2 CA-CV 2016-0008
                     Filed October 18, 2016

         Appeal from the Superior Court in Pima County
                         No. C20153597
              The Honorable Leslie Miller, Judge

                  REVERSED IN PART;
            VACATED IN PART AND REMANDED

                           COUNSEL

Sanders & Parks, P.C., Phoenix
By G. Gregory Eagleburger, Anoop Bhatheja,
and Amanda M. Breemes
Counsel for Plaintiff/Appellant

Loose, Brown, Hobkirk & Callahan, P.C., Tucson
By Donald A. Loose and Jesse R. Callahan
Counsel for Defendant/Appellee
             WORKMAN v. VERDE WELLNESS CTR.
                   Opinion of the Court

                             OPINION

Presiding Judge Vásquez authored the opinion of the Court, in
which Chief Judge Eckerstrom and Judge Espinosa concurred.

V Á S Q U E Z, Presiding Judge:

¶1           In this action for judicial dissolution of a nonprofit
corporation, Melinda Workman appeals from the trial court’s order
granting appellee Verde Wellness Center, Inc.’s motion to dismiss.
She argues the court erred by considering matters outside the
pleadings and by finding Workman had lost her standing to
maintain this action when Verde removed her from its board of
directors. She also argues the court erred when it denied her motion
to amend the complaint and awarded fees to Verde as a sanction.
For the following reasons, we reverse the court’s dismissal order,
vacate its denial of the motion to amend and award of fees, and
remand for further proceedings.

                Factual and Procedural Background1

¶2        Verde, a marijuana dispensary authorized under the
Arizona Medical Marijuana Act, was incorporated in May 2012.
Workman joined the board of directors in May 2013. On June 17,
2015, Workman filed this action requesting a receiver and judicial

      1The  parties dispute how this court should view the record.
Generally, on review from an order granting a motion to dismiss,
“we accept as true all facts asserted in the complaint.” Harris v.
Cochise Health Sys., 215 Ariz. 344, ¶ 2, 160 P.3d 223, 225 (App. 2007).
As discussed below, however, the trial court necessarily relied on
matters outside the pleadings in ruling on Verde’s motion, and for
that reason, it shall be treated as a motion for summary judgment.
See Ariz. R. Civ. P. 12(b). We therefore view the facts “in the light
most favorable to the party opposing the summary judgment motion
below.” Keonjian v. Olcott, 216 Ariz. 563, ¶ 2, 169 P.3d 927, 928 (App.
2007).

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             WORKMAN v. VERDE WELLNESS CTR.
                   Opinion of the Court

dissolution of Verde because “[t]he directors . . . have acted, are
acting or will act in a manner that is illegal, oppressive or
fraudulent” and “corporate assets [were] being wasted, misapplied
or diverted for non-corporate purposes.”

¶3           Verde filed a motion to dismiss pursuant to
Rule 12(b)(6), Ariz. R. Civ. P., arguing Workman lacked standing
because, within hours after she had filed her complaint, the board
held a special meeting and removed her as a director. In her
response, Workman noted that the exhibits attached to Verde’s
motion did not show the board had voted to remove her during the
special meeting. Instead, the board purported to adopt resolutions
and amend bylaws after “dispens[ing] with the formality of a
Special Meeting.” Workman also argued she had standing to bring
the lawsuit “despite [the] illegal and ineffective removal” because
her “standing to bring a judicial dissolution action is expressly
granted by statute” and “[n]o [c]ourt would ever sustain the notion
that a wrongdoer could eliminate a claim by engaging in yet more
oppressive conduct to eliminate the suit.” Apparently in response to
Workman’s arguments, another special meeting was held in August
2015, and the board again voted to remove Workman as a director.

¶4           At a hearing on the motion in September 2015,
Workman acknowledged the board had voted in August to remove
her as a director. However, she asserted that “the motion to dismiss
should be denied [because] the defendants [were] attempting to . . .
deprive [her] of standing to hide their misdeeds.” Workman also
filed a motion to amend her complaint on the day of the hearing,
raising claims for breach of contract, breach of good faith and fair
dealing, breach of fiduciary duty, civil conspiracy, and alter ego.

¶5           At the conclusion of the hearing, the trial court denied
Workman’s request for a receiver. And on September 3, 2015, the
court entered an order granting Verde’s motion to dismiss and
ruling the motion to amend was “moot.” Approximately three
months later, the court granted Verde’s request for attorney fees,
finding Workman “interposed claims lacking legal or factual basis in
violation of Rule 11, Ariz. R. Civ. P.” Workman filed a notice of
appeal from this order. Because the order did not include language
pursuant to Rule 54(c), Ariz. R. Civ. P., this court revested

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              WORKMAN v. VERDE WELLNESS CTR.
                    Opinion of the Court

jurisdiction in the trial court “for an appropriate final judgment,”
and Workman filed a supplemental notice of appeal.

                              Jurisdiction

¶6            Verde argues this court lacks jurisdiction to consider
Workman’s appeal because she did not directly appeal from the trial
court’s original order granting the motion to dismiss. Because our
jurisdiction is defined by statute, we have an obligation to examine
whether we have jurisdiction over an appeal and, if lacking, to
dismiss. See Grand v. Nacchio, 214 Ariz. 9, ¶ 12, 147 P.3d 763, 769
(App. 2006); Davis v. Cessna Aircraft Corp., 168 Ariz. 301, 304, 812
P.2d 1119, 1122 (App. 1991).

¶7            “Generally, this court’s jurisdiction is limited to appeals
from final judgments which dispose of all claims and parties.” Baker
v. Bradley, 231 Ariz. 475, ¶ 9, 296 P.3d 1011, 1015 (App. 2013). A final
judgment dismissing an action with prejudice is appealable
pursuant to A.R.S. § 12-2101(A)(1). See Thiele v. City of Phoenix, 232
Ariz. 40, ¶¶ 8-9, 301 P.3d 206, 208 (App. 2013). In contrast, an order
dismissing without prejudice is not a final judgment because the
plaintiff can refile the action and therefore “ha[s] nothing to appeal.”
Osuna v. Wal-Mart Stores, Inc., 214 Ariz. 286, ¶ 9, 151 P.3d 1267, 1270
(App. 2007), quoting Mesa v. United States, 61 F.3d 20, 21 (11th Cir.
1995); see McMurray v. Dream Catcher USA, Inc., 220 Ariz. 71, ¶ 4, 202
P.3d 536, 539 (App. 2009).

¶8            In this case, the final judgment entered by the trial court
did not indicate whether the action was dismissed with or without
prejudice. But because the dismissal was involuntary, we treat it as
“an adjudication upon the merits.” Ariz. R. Civ. P. 41(b); Phillips v.
Ariz. Bd. of Regents, 123 Ariz. 596, 597-98, 601 P.2d 596, 597-98 (1979).
As explained below, the court considered matters outside the
pleadings, thereby converting the motion into one for summary
judgment, see Ariz. R. Civ. P. 12(b), and effectively held that Verde
was entitled to judgment as a matter of law. See Chevron U.S.A. Inc.
v. Ariz. Dep’t of Revenue, 238 Ariz. 519, ¶ 5, 363 P.3d 136, 137 (App.
2015) (grant of summary judgment appealable pursuant to § 12-
2101(A)(1)).

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              WORKMAN v. VERDE WELLNESS CTR.
                    Opinion of the Court

¶9           Verde, however, argues that Workman, instead of
appealing from the final judgment, should have immediately
appealed from the September 3 order dismissing the action pursuant
to § 12-2101(A)(3). See Brumett v. MGA Home Healthcare, LLC, No. 1
CA-CV 15-0047, ¶¶ 18-19, 2016 WL 4045308 (Ariz. Ct. App. July 28,
2016) (consol. opinion) (order appealable under § 12-2101(A)(3)
immediately appealable without Rule 54(c) language). Section 12-
2101(A)(3) grants jurisdiction over an order that “in effect
determines the action and prevents judgment from which an appeal
might be taken,” such as when a claim is dismissed without
prejudice but refiling is barred by the statute of limitations. See
McMurray, 220 Ariz. 71, ¶ 4, 202 P.3d at 539 (applying § 12-2101
prior to renumbering). But as we have said, here, the court
ultimately granted summary judgment, thus the dismissal order
clearly did not “prevent[ a] judgment from which an appeal might
be taken” so § 12-2101(A)(3) does not apply. Accordingly, we have
jurisdiction to consider Workman’s arguments on appeal pursuant
to § 12-2101(A)(1).

                          Conversion Rule

¶10          The parties dispute whether the trial court improperly
treated Verde’s motion as one for summary judgment by
considering matters outside the pleadings and, in turn, what
standard of review we should apply on appeal. Generally, we
review a motion to dismiss for an abuse of discretion. See Toy v.
Katz, 192 Ariz. 73, 83, 961 P.2d 1021, 1031 (App. 1997). However,
Rule 12(b) directs that a motion to dismiss for failure to state a claim
shall be treated as a motion for summary judgment pursuant to
Rule 56, Ariz. R. Civ. P., when “matters outside the pleading are
presented to and not excluded by the court.” Two exceptions may
apply: First, “[a] complaint’s exhibits, or public records regarding
matters referenced in a complaint,” are not considered matters
outside the pleading. Coleman v. City of Mesa, 230 Ariz. 352, ¶ 9, 284
P.3d 863, 867 (2012); see Moretto v. Samaritan Health Sys., 190 Ariz.
343, 346, 947 P.2d 917, 920 (App. 1997). Second, it is unnecessary to
treat the motion as one for summary judgment when “the
extraneous materials were neither considered in the [trial] court’s
ruling nor necessary to support its rationale for dismissal.” Belen

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              WORKMAN v. VERDE WELLNESS CTR.
                    Opinion of the Court

Loan Inv’rs, LLC v. Bradley, 231 Ariz. 448, ¶ 7, 296 P.3d 984, 988 (App.
2012).

¶11         In this case, Workman’s complaint included allegations
of improper corporate governance, poor recordkeeping, and
diversion of corporate assets. But Verde premised its motion to
dismiss on events that occurred after Workman filed the complaint,
including the action taken at the June 17 special meeting and the
other resolutions and amended bylaws adopted after that meeting.
Verde attached to its motion copies of those documents and, during
the hearing on the motion to dismiss, made arguments based on the
second board meeting held in August as well. Thus, the trial court
necessarily considered matters outside the pleadings when it
granted Verde’s motion, and we must review the motion as one for
summary judgment. See Coleman, 230 Ariz. 352, ¶ 9, 284 P.3d at 867.

¶12           Verde nevertheless argues that “the exhibits to the
Motion to Dismiss regarding the prior . . . meeting turned out to be
immaterial” because Workman acknowledged below that the board
had voted to remove her as a director in August. Thus, Verde
suggests it was not necessary for the trial court to actually consider
the exhibits attached to its motion to dismiss, and the motion did not
convert to one for summary judgment. But that is not the test.
Instead, we must ask whether the court considered matters outside
Workman’s initial pleading. See id. (“If ‘matters outside the
pleading’ are considered, the motion must be treated as one for
summary judgment.”); see also Ariz. R. Civ. P. 12(b). And for the
purposes of this rule, we see no distinction between the factual
allegations raised in Verde’s motion to dismiss and Workman’s
admission to the same: Both involve a matter outside Workman’s
initial pleading—the effect of the board’s subsequent vote to remove
Workman as a director. See Ariz. R. Civ. P. 12(b).

¶13          Verde also argues this case falls under a third exception
identified in Strategic Development and Construction, Inc. v. 7th &
Roosevelt Partners, LLC, 224 Ariz. 60, ¶¶ 10, 13-14, 226 P.3d 1046,
1049-50 (App. 2010). Under that exception, “matters outside the
pleading,” Ariz. R. Civ. P. 12(b), do not include “matters that,
although not appended to the complaint, are central to the
complaint.” Strategic Dev., 224 Ariz. 60, ¶ 14, 226 P.3d at 1050. Our

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             WORKMAN v. VERDE WELLNESS CTR.
                   Opinion of the Court

supreme court has suggested that it disapproves of this exception by
recognizing this court’s opinion in Strategic Development but omitting
the third exception. Coleman, 230 Ariz. 352, ¶ 9, 284 P.3d at 867.
And in any event, the meeting minutes, bylaws, and resolutions
upon which Verde relied in its motion were not central to
Workman’s claims. Although her complaint made one reference to
the June 16 notice for the special meeting to be held the following
day, it did so to illustrate that, after Workman had joined the board,
the board had failed to hold any meetings at all. Accordingly, we
treat the motion to dismiss as a motion for summary judgment. See
Ariz. R. Civ. P. 12(b).

¶14           Workman contends, however, that the trial court erred
by relying on the extraneous materials. Specifically, she argues that,
because she asserted she was a director of Verde in the complaint,
“this assertion should have been considered true by the trial court.”
Although Workman cites the correct standard for a motion to
dismiss, see Dube v. Likins, 216 Ariz. 406, ¶ 2, 167 P.3d 93, 97 (App.
2007), that standard is inapplicable here. As discussed above, the
court was required to treat Verde’s motion as one for summary
judgment. See Young v. Rose, 230 Ariz. 433, ¶ 28, 286 P.3d 518, 523
(App. 2012). Workman does not provide any authority—and we are
aware of none—that prevents a court, when treating a motion to
dismiss as one for summary judgment, from considering evidence
that contradicts allegations made in a complaint, so long as “all
parties [are] given reasonable opportunity to present all material
made pertinent to such a motion by Rule 56.” Ariz. R. Civ. P. 12(b).

¶15          On that point, Workman suggests the trial court denied
her the opportunity to present more evidence.              But “[t]he
‘reasonable opportunity’ requirement inherent in Rule 12(b) is
satisfied when a party had the opportunity to file a written response
or reply.” Belen Loan Inv’rs, 231 Ariz. 448, n.7, 296 P.3d at 988 n.7.
And in this case, Workman filed a response to the motion to dismiss
but did not request an order for additional discovery. See Best v.
Edwards, 217 Ariz. 497, ¶ 30, 176 P.3d 695, 702 (App. 2008) (no error
when party fails to request opportunity for additional discovery on
motion for summary judgment); see also Ariz. R. Civ. P. 56(f)
(permitting request for additional discovery before ruling on motion

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              WORKMAN v. VERDE WELLNESS CTR.
                    Opinion of the Court

for summary judgment). Moreover, in her proposed amended
complaint, Workman acknowledged that the board had voted to
remove her and she also conceded the issue during the hearing on
the motion to dismiss.2 See Clark Equip. Co. v. Ariz. Prop. & Cas. Ins.
Guar. Fund, 189 Ariz. 433, 439, 943 P.2d 793, 799 (App. 1997)
(describing judicial admissions). Accordingly, the court did not err
by considering matters outside the pleading. See Belen Loan Inv’rs,
231 Ariz. 448, n.7, 296 P.3d at 988 n.7; Young, 230 Ariz. 433, ¶ 28, 286
P.3d at 523.

                               Standing

¶16          Workman argues the trial court erred by dismissing the
action based on its finding that she lacked standing after Verde
removed her from its board of directors. We review the grant of
summary judgment de novo. Pi’Ikea, LLC v. Williamson, 234 Ariz.
284, ¶ 5, 321 P.3d 449, 450 (App. 2014). “[S]ummary judgment is
appropriate where there is no genuine dispute as to any material
fact, only one inference can be drawn from the undisputed material
facts and based on the undisputed material facts the prevailing party
is entitled to judgment as a matter of law.” Haralambie v. Pima
County, 137 Ariz. 207, 209, 669 P.2d 984, 986 (App. 1983).

¶17           To initiate a claim, a party must have standing—that is,
“a personal stake in the controversy’s outcome” caused by “a
distinct and palpable injury.” Strawberry Water Co. v. Paulsen, 220
Ariz. 401, ¶ 8, 207 P.3d 654, 659 (App. 2008); see Friends of the Earth,
Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 190-91 (2000)

      2 Generally,  summary judgment is limited to “the parties’
affidavits[,] . . . verified pleadings, depositions, answers to
interrogatories and admissions.” Nemec v. Rollo, 114 Ariz. 589, 592,
562 P.2d 1087, 1090 (App. 1977); see Moretto, 190 Ariz. at 346, 947
P.2d at 920 (“unsworn and unproven assertion of fact in a
memorandum is insufficient” to support summary judgment).
Verde never offered any evidence showing that Workman had been
removed in August, but as noted above, Workman acknowledged
that fact during the hearing on the motion to dismiss. See Moretto,
190 Ariz. at 346, 947 P.2d at 920.

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              WORKMAN v. VERDE WELLNESS CTR.
                    Opinion of the Court

(standing determined at initiation of suit). As a matter of judicial
restraint, Arizona courts will not “issue advisory opinions, address
moot cases, or deal with issues that have not been fully developed
by true adversaries.” Home Builders Ass’n of Cent. Ariz. v. Kard, 219
Ariz. 374, ¶ 9, 199 P.3d 629, 632 (App. 2008); see City of Tucson v. Pima
County, 199 Ariz. 509, ¶ 11, 19 P.3d 650, 655 (App. 2001) (standing in
Arizona based on judicial restraint, not jurisdictional rule).
Similarly, a case becomes moot if an event occurs that ends the
underlying controversy and transforms the litigation into “an
abstract question which does not arise upon existing facts or rights.”
Contempo-Tempe Mobile Home Owners Ass’n v. Steinert, 144 Ariz. 227,
229, 696 P.2d 1376, 1378 (App. 1985); see Arpaio v. Maricopa Cty. Bd. of
Supervisors, 225 Ariz. 358, ¶ 7, 238 P.3d 626, 629 (App. 2010).
Moreover, “[t]he legislative branch may expand standing by
expressly modifying or abrogating prudential standing rules.” Pawn
1st, L.L.C. v. City of Phoenix, 231 Ariz. 309, n.3, 294 P.3d 147, 151 n.3
(App. 2013), quoting Heffernan v. Missoula City Council, 255 P.3d 80,
¶ 34 (Mont. 2011); see, e.g., Home Builders Ass’n, 219 Ariz. 374, ¶ 26,
199 P.3d at 635 (declaratory-judgment statute, A.R.S. § 49-497,
“eliminated the need to show a distinct and palpable injury”).

¶18            For nonprofit corporations, A.R.S. § 10-11430(B)(2), (4),
provides that “the court may dissolve a corporation in a proceeding
. . . by a director” if the directors “have acted, are acting or will act in
a manner that is illegal, oppressive or fraudulent” or “[t]he
corporate assets are being wasted, misapplied or diverted for
noncorporate purposes.” 3 The plain language of § 10-11430(B)
shows the legislature’s intent to grant individual directors standing
to petition for judicial dissolution by virtue of their status as a
director. See McNamara v. Citizens Protecting Tax Payers, 236 Ariz.
192, ¶¶ 5-6, 337 P.3d 557, 559 (App. 2014) (applying statutory
construction to determine whether statute creates cause of action).
Thus, Workman clearly had standing when she initiated this action.

      3 Judicialdissolution is also appropriate if the directors or
members of a nonprofit are deadlocked “in the management of the
corporate affairs” or in “elect[ing] successors to directors whose
terms have or would otherwise have expired.” § 10-11430(B)(1), (3).

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              WORKMAN v. VERDE WELLNESS CTR.
                    Opinion of the Court

¶19         The issue raised by Verde’s motion, however, is
whether Workman’s claim became moot when Verde’s board of
directors removed her from the board shortly after her complaint
had been filed. Workman argues Verde’s board could not render
the case moot by removing her, otherwise “any director . . . bringing
a claim for judicial dissolution . . . could have the claim[]
extinguished by the very persons who did the unlawful acts.”

¶20           “[I]n general, a party ‘cannot by its own voluntary
conduct “moot” a case and deprive a court of jurisdiction.’” Tom
Mulcaire Contracting, LLC v. City of Cottonwood, 227 Ariz. 533, ¶ 13,
260 P.3d 1098, 1101 (App. 2011), quoting Pointe Resorts, Inc. v.
Culbertson, 158 Ariz. 137, 141, 761 P.2d 1041, 1045 (1988). Otherwise,
“the courts would be compelled to leave [t]he defendant . . . free to
return to his old ways.” Friends of the Earth, 528 U.S. at 189, quoting
City of Mesquite v. Aladdin’s Castle, Inc., 455 U.S. 283, 289 n.10 (1982)
(alterations in City of Mesquite). Derivative suits by shareholders
provide a useful analogy. Section 10-741, A.R.S., and Rule 23.1, Ariz.
R. Civ. P., expressly recognize a shareholder’s standing to bring a
derivative suit on behalf of a corporation and its shareholders.
Nonetheless, they require a derivative plaintiff to “[f]airly and
adequately represent[] the interests” of the corporation and
shareholders, § 10-741(A)(2); Ariz. R. Civ. P. 23.1, which courts have
interpreted as creating the requirement that the plaintiff maintain
his or her status as a shareholder throughout the pendency of the
suit, Lewis v. Chiles, 719 F.2d 1044, 1047 (9th Cir. 1983); see Principles
of Corporate Governance: Analysis and Recommendations § 7.02
(Am. Law Inst. 1994) (“Principles”); see also Pro Finish USA, Ltd. v.
Johnson, 204 Ariz. 257, ¶ 13, 63 P.3d 288, 292 (App. 2003) (Principles,
compiled by American Law Institute, qualifies for same deference as
Restatements).

¶21           The reason for the requirement is because the derivative
plaintiff essentially stands in the shoes of the corporation to enforce
the rights of the corporation, and the primary interest the
shareholder has in doing so is by virtue of the related interest in
protecting his or her shares. See Principles § 7.02 cmt. d; see also
Lewis, 719 F.2d at 1047 & n.1 (applying federal corollary to Rule 23.1
and concluding maintaining shareholder status necessary to ensure

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              WORKMAN v. VERDE WELLNESS CTR.
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fair and adequate representation of other shareholders); Dobson v.
State ex rel. Comm’n on Appellate Court Appointments, 233 Ariz. 119,
¶ 9, 309 P.3d 1289, 1292 (2013) (federal standing jurisprudence
persuasive).    A narrow exception exists, however, when the
shareholder-plaintiff’s loss of ownership “is the result of corporate
action in which the holder did not acquiesce,” Principles § 7.02(a)(2),
such as a merger that “was perpetrated to deprive” the plaintiff of
standing, Lewis v. Anderson, 477 A.2d 1040, 1046 n.10 (Del. 1984). See
also Grosset v. Wenaas, 175 P.3d 1184, 1190-91, 1196 (Cal. 2008);
Gabhart v. Gabhart, 370 N.E.2d 345, 356-58 (Ind. 1977).

¶22           The same reasoning is no less persuasive in the context
of a director’s standing to pursue a judicial dissolution of a nonprofit
corporation, and applies here.          Section 10-11430 authorized
Workman to bring this action as a director of a nonprofit
corporation, despite the fact that nonprofit directors likely have only
an indirect interest in the outcome of such litigation.4 See Strawberry
Water Co., 220 Ariz. 401, ¶ 8, 207 P.3d at 659. But unlike a derivative
suit brought under § 10-741, there is no requirement that a director
of a nonprofit corporation “[f]airly and adequately represent[] the
interests” of the corporation, see § 10-11430, by maintaining his or
her status throughout the action, see City of Tucson v. Clear Channel
Outdoor, Inc., 218 Ariz. 172, ¶ 11, 181 P.3d 219, 226 (App. 2008) (“We
presume that if the legislature had meant for a . . . standard to apply
. . . , it would have included such language in the text of the
statute.”). Presumably, this distinction bears some relationship to
the public policy considerations involved in the statutory grounds
for seeking judicial dissolution of a nonprofit corporation. See § 10-
11430(B)(2), (4) (authorizing director to file action where directors
“have acted, are acting or will act in a manner that is illegal,

      4 Presumably, any interest in the corporation, such as
compensation or potential new liability for the director, would end
regardless of whether the director was removed or the nonprofit
corporation was dissolved.      See A.R.S. §§ 10-3812 (director
compensation), 10-3830 (director duties), 10-3833 (liability for
unlawful distributions).

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oppressive or fraudulent” or “[t]he corporate assets are being
wasted, misapplied or diverted for noncorporate purposes”).

¶23           Here, Workman’s standing to maintain this action came
into question only after she initiated it, at the point when Verde’s
board removed her as a director. And it is reasonable to infer that
the board removed Workman in response to her claims, particularly
in light of the allegations of wrongdoing she made against the other
directors.5 See Braillard v. Maricopa County, 224 Ariz. 481, n.11, 232
P.3d 1263, 1276 n.11 (App. 2010) (we view facts and reasonable
inferences in light most favorable to party opposing summary
judgment motion); see also Friends of the Earth, 528 U.S. at 170 (“[A]
defendant claiming that its voluntary compliance moots a case bears
a formidable burden.”). Under such circumstances, Verde’s conduct
cannot render the action moot. See Tom Mulcaire Contracting, 227
Ariz. 533, ¶ 13, 260 P.3d at 1101. Accordingly, we conclude the trial
court erred by granting Verde’s motion on the basis Workman
lacked standing after the board removed her as a director. See
Pi’Ikea, 234 Ariz. 284, ¶ 5, 321 P.3d at 450.

¶24         Workman also challenges the trial court’s denial of her
motion to amend the complaint and the award of attorney fees as a
Rule 11 sanction. The court apparently denied the motion to amend
on the same grounds it granted Verde’s motion to dismiss, finding
that the motion was “moot.” Similarly, the court’s award of fees
necessarily was intertwined with its dismissal of Workman’s claims.
We therefore vacate those orders as well.

      5Verde   argues that Workman filed her complaint on June 17
because she knew the board intended to remove her later that day.
But even if so and she rushed to file this action, it is still reasonable
to conclude the board planned to remove Workman because she
disapproved of their allegedly illegal conduct. “The burden of
persuasion on [a] summary judgment motion is heavy” and
“‘[w]here the evidence or inferences would permit a jury to resolve a
material issue in favor of either party, summary judgment is
improper.’” Nat’l Bank of Ariz. v. Thruston, 218 Ariz. 112, ¶ 17, 180
P.3d 977, 981 (App. 2008), quoting United Bank of Ariz. v. Allyn, 167
Ariz. 191, 195, 805 P.2d 1012, 1016 (App. 1990).

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              WORKMAN v. VERDE WELLNESS CTR.
                    Opinion of the Court

                             Disposition

¶25         For the foregoing reasons, we reverse the trial court’s
order dismissing the action, vacate the denial of the motion to
amend Workman’s complaint and the award of attorney fees, and
remand for further proceedings. We also deny Workman’s request
for fees on appeal, deferring her request to the trial court as the
action proceeds. See Nelson v. Phx. Resort Corp., 181 Ariz. 188, 200-01,
888 P.2d 1375, 1387-88 (App. 1994).

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