Court Opinion

ID: 4350131
Source: CourtListenerOpinion
Date Created: 2018-12-13 15:03:53.673166+00
Date Added: 2024-06-11T14:29:26.296104
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                              MARTIN OGDEN,
                              Plaintiff/Appellant,

                                        v.

                DIGITAL INTELLIGENCE SYSTEMS LLC,
                          Defendant/Appellee.

                             No. 1 CA-CV 18-0048
                               FILED 12-13-2018

           Appeal from the Superior Court in Maricopa County
                          No. CV2017-053771
            The Honorable Aimee L. Anderson, Judge, Retired

              AFFIRMED IN PART; REVERSED IN PART

                                   COUNSEL

Lewis, Brisbois, Bisgaard & Smith, LLP, Phoenix
By Barrett N. Lindsey
Counsel for Plaintiff/Appellant

Littler Mendelson, PC, Phoenix
By Kristy Peters, Joshua Waltman
Counsel for Defendant/Appellee
                           OGDEN v. DISYS
                          Decision of the Court

                     MEMORANDUM DECISION

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

J O H N S E N, Judge:

¶1            Martin Ogden appeals the superior court's dismissal of his
contract claim against Digital Intelligence Systems, LLC ("DISYS"). For the
following reasons, we affirm in part and reverse in part.

             FACTS AND PROCEDURAL BACKGROUND

¶2            Ogden worked for DISYS from December 2013 until it
terminated him in June 2015. Ogden thereafter asserted several claims
arising from his employment, which the parties ultimately resolved by way
of a Settlement and Release Agreement (the "Settlement Agreement").

¶3           In the Settlement Agreement, Ogden agreed to release all
claims against DISYS, and DISYS agreed to pay him as follows:

      a. Settlement Payment. Within 3 business days of the
      Effective Date of this Agreement, and on condition that
      Ogden comply with the terms of this Agreement, DISYS shall
      pay to Ogden the "Settlement Payment" of $16,296. The
      Settlement Payment shall be paid in two separate amounts as
      follows:

      i. DISYS shall make a lump-sum payment in the amount of
      $8,296 (the "Settlement Payment") to be direct-deposited into
      the bank account on file for Ogden, in compromise for those
      claims asserted by Ogden in the Litigation that do not relate
      to the payment of wages and for amounts attributed as
      consideration for the general release and confidentiality
      provisions contained herein. DISYS will report such payment
      to federal and state tax authorities on an IRS Form 1099 as
      determined by DISYS to be required by law.

      ii. DISYS shall make a payment to be direct-deposited into
      the bank account on file for Ogden in the gross amount of
      $8,000 less requisite payroll deductions, in compromise for his

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        claims in the Litigation for unpaid wages. DISYS will report
        such payment to federal and state tax authorities on an IRS
        Form W-2 as determined by DISYS to be required by law.

¶4             According to Ogden's complaint, several days before the
Settlement Agreement was signed, DISYS sent him an email agreeing to
settle for an amount that would result in him receiving a total "take-home"
of no less than $13,810. Although DISYS made the two payments specified
in the Settlement Agreement, Ogden alleged DISYS breached the
Settlement Agreement because its payments amounted to "a total, 'take-
home' settlement payment amount of $10,341, which made for a 'take-home'
payment amount deficit of $3,469, or 25.1% less than what DISYS was
contractually obligated to pay."

¶5           DISYS moved to dismiss the complaint pursuant to Arizona
Rule of Civil Procedure 12(b), arguing it did not breach the Settlement
Agreement. To its motion, it attached a copy of the Settlement Agreement
and evidence it made two payments to Ogden totaling $16,296.1

¶6            The superior court granted DISYS's motion, granted its
application for attorney's fees and entered final judgment pursuant to
Arizona Rule of Civil Procedure 54(c). Ogden timely appealed. We have
jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution,
and Arizona Revised Statutes ("A.R.S.") sections 12-120.21(A)(1) (2018) and
-2101(A)(1) (2018).2

                                DISCUSSION

A.      Standard of Review.

¶7            We review de novo a superior court's ruling on a motion to
dismiss. Coleman v. City of Mesa, 230 Ariz. 352, 356, ¶ 8 (2012). In
determining whether a complaint states a claim for relief, "Arizona courts
look only to the pleading itself." Cullen v. Auto-Owners Ins. Co., 218 Ariz.

1      Ogden did not argue in the superior court that DISYS's submission
of the Settlement Agreement and the tax statements, which arguably were
documents intrinsic to the complaint, required the court to convert the
motion to dismiss to a motion for summary judgment. See Strategic Dev. &
Constr., Inc. v. 7th & Roosevelt Partners, LLC, 224 Ariz. 60, 63-64, ¶¶ 10, 13-14
(App. 2010).

2       Absent material revision, we cite the current version of a statute or
rule.

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417, 419, ¶ 7 (2008). Courts must "assume the truth of the well-pled factual
allegations" and resolve all reasonable inferences in the plaintiff's favor. Id.
Mere conclusory statements, however, "are insufficient to state a claim
upon which relief can be granted." Id. Dismissal of a complaint for failure
to state a claim is inappropriate unless "the plaintiff would not be entitled
to relief under any interpretation of the facts." Bunker's Glass Co. v.
Pilkington PLC, 202 Ariz. 481, 484, ¶ 9 (App. 2002).

B.     The Settlement Agreement.

¶8             As recited above, the Settlement Agreement stated that DISYS
was to pay Ogden as follows: (1) "a lump-sum payment in the amount of
$8,296," and (2) "a payment . . . in the gross amount of $8,000 less requisite
payroll deductions." With its motion to dismiss, DISYS presented evidence
it made those payments, and, on appeal, Ogden does not dispute that
evidence. He argues, however, that, as his complaint alleged, on April 15,
2016, 11 days before he executed the Settlement Agreement, a
representative of DISYS emailed him "indicating DISYS' intent to meet
Ogden's minimum settlement payment demand of a 'take-home' payment
amount of no lesser [sic] than that of $13,810." Ogden argues DISYS
breached the Settlement Agreement because the payments it made did not
result in the "take-home" amount stated in the email.

¶9             Contract interpretation is a question of law we review de novo.
Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588, 593, ¶ 9 (App. 2009). We
construe a contract to determine and enforce the parties' intent. Taylor v.
State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 152 (1993). We consider the
plain meaning of the words in the context of the contract as a whole. United
Cal. Bank v. Prudential Ins. Co. of Am., 140 Ariz. 238, 259 (App. 1983).

¶10            Ogden's complaint effectively alleged that an email DISYS
sent him 11 days before he signed the Settlement Agreement was parol
evidence that modified the express terms of the Settlement Agreement.
Under Arizona's approach to parol evidence, "the trial court, before
admitting external evidence of the intent of the parties to interpret a written
agreement, must first consider the allegations made by the proponent of the
extrinsic evidence as to the appropriate interpretation of the writing in light
of the extrinsic evidence alleged." Long v. City of Glendale, 208 Ariz. 319, 328,
¶ 28 (App. 2004); accord Taylor, 175 Ariz. at 154. "Next, the court should
consider the language of the writing. If the court finds that the writing is
'reasonably susceptible' to the interpretation suggested by the proponent of
the extrinsic evidence then the court should admit the extrinsic evidence."
Long, 208 Ariz. at 328, ¶ 28 (quoting Taylor, 175 Ariz. at 156). "[I]f the court

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                            OGDEN v. DISYS
                           Decision of the Court

finds that the written language is not 'reasonably susceptible' to the
interpretation asserted by the proponent of the extrinsic evidence then the
court must preclude admission of any extrinsic evidence or argument that
would actually vary or contradict the meaning of the written words." Long,
208 Ariz. at 328, ¶ 29 (quoting Taylor, 175 Ariz. at 156).

¶11             In reviewing the dismissal of Ogden's complaint, we accept
as true his allegation that he received an email from DISYS "indicating
DISYS' intent" to pay Ogden a take-home amount of at least $13,810. See
Long, 208 Ariz. at 328, ¶ 31. The Settlement Agreement, however, is not
reasonably susceptible to Ogden's contention, based on the email, that
DISYS promised in the settlement to make payments that together would
result in a "take-home" payment of $13,810. The Settlement Agreement
does not refer to a "take-home" or net amount; instead, it speaks very
specifically and explicitly of a "lump-sum payment in the amount of $8,296"
and a "gross amount of $8,000 less requisite payroll deductions." The plain
and only meaning of the language of the Settlement Agreement is that,
notwithstanding any email exchange before the parties finalized the
Settlement Agreement, DISYS did not covenant to guarantee Ogden a "take-
home" sum of any particular amount. "It is not within the province . . . of
the court to alter, revise, modify, extend, rewrite or remake an agreement
. . . [w]here the intent of the parties is expressed in clear and unambiguous
language." Goodman v. Newzona Inv. Co., 101 Ariz. 470, 472 (1966) (citation
omitted).

¶12           Although Ogden suggests that additional evidence would
show that DISYS promised to pay more than the sum specified in the
Settlement Agreement, he did not identify that evidence in the superior
court, nor did he do so on appeal. In any event, such evidence would be
barred by the integration clause in the Settlement Agreement. That
provision stated: "There are no other agreements, written or oral, express
or implied, between Ogden and DISYS with respect to the subject matter
hereof." "Arizona has adopted the Restatement (Second) of Contracts § 213
(1981) as the general rule of contract law regarding integration clauses."
Dunn v. FastMed Urgent Care PC, 245 Ariz. 35, __, ¶ 14 (App. 2018)
(quotation omitted). Pursuant to the Restatement, "[w]hether a binding
agreement is completely integrated or partially integrated, it supersedes
inconsistent terms of prior agreements." Restatement (Second) of Contracts
§ 213 cmt. b (1981).

¶13          Ogden argues the integration clause does not prevent the
admission of parol evidence to resolve contract ambiguity. As we have
concluded, however, the Settlement Agreement is not ambiguous. And, as

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                            OGDEN v. DISYS
                           Decision of the Court

DISYS contends, the email evidence Ogden relies on is plainly inconsistent
with the Settlement Agreement.

¶14           More generally, Ogden argues the superior court erred by
dismissing his complaint before discovery could be taken on whether he
and DISYS had a "meeting of the minds" regarding the material terms of the
Settlement Agreement.       Whether "written language is reasonably
susceptible to the meaning asserted is a matter of law, not of fact." Long,
208 Ariz. at 328, ¶ 31 (quotation omitted). Because the plainly written
Settlement Agreement is not reasonably susceptible to the interpretation
Ogden offers, the court did not err by dismissing his complaint. See Long,
208 Ariz. at 328, ¶ 29.3

C.    Award of Attorney's Fees.

¶15          In dismissing Ogden's complaint, the superior court awarded
DISYS attorney's fees and costs totaling $19,874 pursuant to A.R.S. §§ 12-
341 and 12-341.01 (2018). On appeal, Ogden argues the court lacked the
power under the Settlement Agreement and § 12-341.01 to award attorney's
fees to DISYS.

¶16            Section 12-341.01 allows the court to award fees to the
successful party in an action arising out of contract. But the statute "is
inapplicable by its terms if it effectively conflicts with an express
contractual provision governing recovery of attorney's fees." Am. Power
Prods., Inc. v. CSK Auto, Inc., 242 Ariz. 364, 368, ¶ 14 (2017) (quotation
omitted). We review de novo whether the applicable contract allows for
attorney's fees. Grosvenor, 222 Ariz. at 593, ¶ 9.

¶17         Here, Ogden argues the superior court erred by awarding fees
under Paragraph Six of the Settlement Agreement, which provides:

      The prevailing Party in a proceeding to enforce this
      Agreement shall be entitled to recover . . . its reasonable and
      necessary court costs and litigation expenses incurred in the

3      Ogden also argues a prior lawsuit that he filed abated this action
because both have a substantial identity of parties and subject matter. He
contends that for that reason, the superior court should have consolidated
this action with the prior or stayed the current action. Ogden, however,
waived this argument by failing to raise it before the superior court granted
the motion to dismiss. See Conant v. Whitney, 190 Ariz. 290, 293 (1997).

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                             OGDEN v. DISYS
                            Decision of the Court

       successful prosecution of such litigation; however, each Party
       shall incur its own costs for attorneys' fees.

Although this provision states that "each Party" shall bear its own attorney's
fees, DISYS argues it does not apply because Ogden's claim for breach of
the Settlement Agreement was not an action to enforce the Settlement
Agreement.

¶18            Ogden's complaint alleged DISYS "was contractually
obligated to pay Plaintiff a 'take-home' settlement payment amount of no
lesser [sic] than that of $13,810 [and] [DISYS] failed to fulfill its contractual
obligation . . . , which constituted a breach of the Settlement Agreement."
In other words, Ogden sued to enforce the Settlement Agreement by
compelling DISYS to pay an amount he alleged DISYS "was contractually
obligated to pay." Further, his complaint sought damages for the alleged
breach.

¶19           DISYS does not explain how an action Ogden might bring to
"enforce" the Settlement Agreement would be any different from the
complaint he filed seeking damages for DISYS's alleged breach of contract.
To the contrary, a complaint alleging breach and seeking resulting damages
is (along with an action for specific performance) among the quintessential
actions to "enforce" a contract. See Kammert Bros. Enters. v. Tanque Verde
Plaza Co., 102 Ariz. 301, 308 (1967) (suit seeking damages for breach of
contract was "buyer's means of enforcing its rights under the contract"
under provision allowing fees for suit "to enforce or cancel" contract).

¶20           DISYS also contends Paragraph Six did not bar its fee claim
because Ogden, not DISYS, commenced the case. DISYS argues that the
reference to the "successful prosecution" of an enforcement action implies
that the provision precludes a fee award to the plaintiff in such a case but
not the defendant. We do not agree that the provision distinguishes
between the litigants in that fashion. Instead, it states that "each Party shall
incur its own costs for attorneys' fees."

¶21           Because the Settlement Agreement barred recovery of fees by
the prevailing party in an action to enforce the agreement, the superior
court lacked the power under § 12-341.01 to award fees.

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                            OGDEN v. DISYS
                           Decision of the Court

                              CONCLUSION

¶22          For the reasons set forth above, we affirm the superior court's
judgment, except we reverse its award of attorney's fees in favor of DISYS.
Because both parties partially prevailed on appeal, we award costs to
neither.

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

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