Court Opinion

ID: 4854760
Source: CourtListenerOpinion
Date Created: 2021-08-24 17:04:25.809009+00
Date Added: 2024-06-11T08:11:48.290496
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                    ZADOK ELI, et al., Plaintiffs/Appellants,

                                         v.

               PROCACCIANTI AZ II LP, Defendant/Appellee.

                              No. 1 CA-CV 20-0476
                               FILED 8-24-2021

            Appeal from the Superior Court in Maricopa County
                           No. CV2018-014021
                           No. CV2018-055021
                              (Consolidated)
              The Honorable Theodore Campagnolo, Judge

                                    AFFIRMED

                                    COUNSEL

Porter Law Firm, Phoenix
By Robert S. Porter
Counsel for Plaintiffs/Appellants

Spencer Fane LLP, Phoenix
By Andrew M. Federhar, Jessica Anne Gale
Counsel for Defendant/Appellee
                      ELI, et al. v. PROCACCIANTI
                           Decision of the Court

                      MEMORANDUM DECISION

Judge Jennifer B. Campbell delivered the decision of the Court, in which
Presiding Judge D. Steven Williams and Judge James B. Morse Jr. joined.

C A M P B E L L, Judge:

¶1            Zadok and Hana Eli (the “Elis”) and Lamar Whitmer and
Colleen London (the “Whitmers”) challenge the entry of a declaratory
judgment and an award of attorneys’ fees in favor of Procaccianti AZ II, LP
(the “Hotel”). Seeing no error, we affirm.

                             BACKGROUND

¶2             The Elis, the Whitmers, and Diana Shaffer (collectively the
“Homeowners”) all currently own or previously owned casitas in the
Scottsdale Hilton Casitas. The Homeowners lease the ground on which
their houses sit from the Hotel. Since at least 2012, the Homeowners, the
homeowners’ association (“HOA”), and the Hotel have been engaged in
litigation over the price of Homeowners’ ground lease, among other issues.
See, e.g., London v. Karatz, 1 CA-CV 15-0070, 2016 WL 5746236 (Ariz. App.
Oct. 4, 2016); Shaffer v. Procaccianti AZ II, L.P, 1 CA-CV 16-0628
(Consolidated), 2018 WL 2306949 (Ariz. App. May 22, 2018); Procaccianti AZ
II LP v. Shaffer, 1 CA-CV 17-0205, 2018 WL 3062109 (Ariz. App. June 21,
2018); Whitmer v. Hilton Casitas Homeowners Ass’n, 245 Ariz. 77 (App. 2018).

¶3            In January 2018, the Hotel asked to meet with Homeowners
to negotiate a global settlement resolving all pending litigation, including
appeals. Homeowners agreed, but demanded no litigation counsel be
present at the meeting.

¶4           The HOA informed the Homeowners that its representative,
Mike Bengson, would attend the settlement meeting. The HOA also stated
it would convey its non-negotiable terms to the Homeowners before the
meeting. The Elis then demanded Bengson not attend the settlement
meeting, asserting he had no real authority, and warned they would walk
out of the meeting if Bengson attended.

¶5            Per the Elis’ demand, Bengson did not attend the meeting.
The HOA did not convey its settlement demands to the Homeowners, but
disclosed its demands to the Hotel before the meeting. Among the HOA’s

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                      ELI, et al. v. PROCACCIANTI
                           Decision of the Court

demands was a global settlement of all pending litigation involving the
Whitmers, the Elis and Mrs. Shaffer.

¶6            The Hotel’s general counsel, Ron Hadar, and its chief financial
officer attended the meeting. After Zadoc Eli, Tim Shaffer (on behalf of
Mrs. Shaffer), and Lamar Whitmer arrived, the Hotel asked Mr. Whitmer to
leave, as the Whitmers’ claims only concerned the HOA, which was not
present. Mr. Whitmer then left the meeting, and the Hotel did not pass
along the HOA’s demands to the remaining Homeowners.

¶7            Mr. Eli and Mr. Shaffer each set out their demands to resolve
the various lawsuits. One of Mr. Shaffer’s demands was that the Hotel agree
to waive all jury verdicts and judgments entered against Mrs. Shaffer in
previous litigations. Mr. Eli demanded the Hotel: (1) pay him $228,829; (2)
set his ground lease at $690 per month until 2036; and (3) waive over
$500,000 in attorneys’ fees awarded against the Homeowners in prior cases.
Hadar, representing the Hotel, wrote down each of the Homeowners
demands and recited them back to the group at the end of the meeting. The
parties did not exchange any draft agreements, nor did they sign any
agreements. Hadar disposed of his notes soon after the meeting.

¶8           In short order, the Homeowners asserted the parties had
reached an enforceable settlement agreement at the meeting. The Hotel
disagreed and filed a complaint seeking a declaratory judgment to the
contrary (“Declaratory Action”). The Homeowners answered and asserted
counterclaims. The Homeowners also filed a separate complaint (“Tort
Action”) asserting substantially the same claims as their counterclaims in
the Declaratory Action. The Homeowners then moved to consolidate the
two cases, and the court did so.

¶9            The parties filed cross-motions for summary judgment on the
claim for declaratory relief. The Hotel argued that there was no valid
settlement agreement pursuant to Arizona Rule of Civil Procedure (“Rule”)
80(a) and the Statute of Frauds, A.R.S. § 44-101. The Elis argued that the
notes Hadar took at the meeting evidenced a binding agreement. The Hotel
acknowledged that Hadar had written down the Elis’ various demands, but
argued that it had not acquiesced to those demands. Instead, the Hotel
argued that Hadar told Homeowners at the meeting that no agreement
could be made without first meeting certain conditions, including the
approval of the Hotel owner, Procaccianti.

¶10         For the first time in their cross-motion for summary
judgment, the Whitmers argued that they should be dismissed from the

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                       ELI, et al. v. PROCACCIANTI
                            Decision of the Court

Declaratory Action because they had been excluded from the settlement
meeting. Meanwhile, Mrs. Shaffer settled her claims, reducing the
Homeowners’ group to the Elis and the Whitmers.

¶11           After briefing and argument, the court ruled there was no
settlement agreement. The court reserved ruling on the Declaratory Action
counterclaims, noting they will be resolved in the Tort Action. Over the Elis’
and the Whitmers’ objections, the court entered a declaratory judgment in
favor of the Hotel, with Rule 54(b) finality language, and awarded
attorneys’ fees, jointly and severally, against Homeowners, in the amount
of $114,255.70. The court denied the Elis’ and the Whitmers’ motion for a
new trial, and the Elis and the Whitmers timely appealed.

                               DISCUSSION

¶12          On appeal, the Elis and the Whitmers request that we: (1)
vacate the declaratory judgment against them; (2) dismiss the Whitmers
from the declaratory action; (3) vacate the attorneys’ fees award against
them, and (4) direct summary judgment and attorneys’ fees in their favor.
We decline to do so.

       A.     The Declaratory Judgment in the Hotel’s Favor Was
              Appropriate

¶13            Under the Arizona Uniform Declaratory Judgments Act, the
court may declare the rights, status, or legal relationships between parties
with the full force and effect of a final judgment. A.R.S. § 12-1831. Summary
judgment is appropriate when there is no genuine issue as to any material
fact and the moving party is entitled to judgment as a matter of law. Rule
56(a). We review the grant of summary judgment de novo, and we view the
evidence and all reasonable inferences in favor of the non-moving party.
Wells Fargo Bank, N.A. v. Allen, 231 Ariz. 209, 213, ¶ 14 (App. 2012). We
likewise review de novo whether a settlement agreement is enforceable. See
Robertson v. Alling, 237 Ariz. 345, 347, ¶ 8 (2015).

¶14            Rule 80(a) applies when there is a dispute about the existence
of an agreement to resolve pending litigation. “If disputed, no agreement
or consent between parties or attorneys in any matter is binding, unless: (1)
it is in writing; or (2) it is made orally in open court and entered in the
minutes.” Rule 80(a). We review de novo the interpretation and application
of court rules. Haroutunian v. ValueOptions, Inc., 218 Ariz. 541, 549, ¶ 22
(App. 2008). It is undisputed that no agreement was ever pronounced in
open court. Homeowners, therefore, can prevail only if they produce a
writing evidencing an agreement on all of the terms of a settlement.

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                       ELI, et al. v. PROCACCIANTI
                            Decision of the Court

Homeowners bear the burden of proof to show all of the contractual
elements have been met, including mutual assent. See Hill-Shafer P’ship v.
Chilson Family Tr., 165 Ariz. 469, 473–74 (1990); Muchesko v. Muchesko, 191
Ariz. 265, 268 (App. 1997).

¶15            The Elis first argue that Rule 80 does not apply because there
is no dispute that Hadar recorded the list of Homeowners’ demands. But
the Hotel did not agree to those terms and told Homeowners at the time
that no settlement could be reached unless and until Procaccianti agreed.
Acknowledging there is a dispute about whether the Hotel placed
conditions precedent to any agreement, Homeowners ask this court to
remand so the superior court can hold “a trial to determine where there
were any orally added conditions.” But this request would eviscerate the
purpose of Rule 80(a), which is to “prevent fraudulent claims of oral
stipulations, and to prevent disputes as to the existence and terms of
agreements and to relieve the court of the necessity of determining such
disputes.” Robertson, 237 Ariz. at 348, ¶ 13 (internal citations omitted); see
also Lyons Enter., Inc. v. Custer, 168 Ariz. 439, 441 (App. 1991). Because there
is a clear dispute about whether the Hotel placed conditions precedent to
reaching any agreement, Rule 80 applies and precludes enforcement of the
agreement Homeowners allege.

¶16          Alternatively, the Elis argue that even if Rule 80 does apply,
Mr. Hadar’s notes satisfy the writing requirement. As already explained,
the Hotel only admits that Hadar’s notes documented the Elis’ demands,
and affirmatively denies that it assented to any agreement. We affirm the
superior court’s order granting of summary judgment in favor of the Hotel
and denying the Homeowners’ cross-motion.

       B.     The Whitmers Were Properly Included in the Judgment

¶17           The Whitmers argue the court erred by entering judgment
against them in the declaratory action and holding them jointly and
severally liable for the Hotel’s attorneys’ fees. The Whitmers claim that
because they did not participate in the settlement meeting, they should not
be held liable for fees the Hotel incurred in litigating the existence of a
settlement agreement. The Hotel counters that the Whitmers were proper
parties to the judgment because they had a justiciable interest in: (1) the
existence of a settlement agreement, (2) the terms of any settlement
agreement, and (3) the actions of the Hotel at the settlement meeting.

¶18       We agree with the Hotel. After the settlement meeting, the
Homeowners’ attorney, Robert Porter, repeatedly asserted that a settlement

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                       ELI, et al. v. PROCACCIANTI
                            Decision of the Court

agreement had been reached. At the time, Porter represented Mrs. Shaffer,
the Elis, and the Whitmers. Although the Whitmers were not present at the
meeting, their interests were interwoven with the Elis’ and Shaffer’s, given
their shared litigation history. See Shaffer, 2018 WL 2306949, at *3, ¶¶ 10–11.
Because of the Homeowners’ joint representation and overlapping
interests, the Hotel brought its Declaratory Action against all of them. Had
the Whitmers wished to be dismissed from the Declaratory Action because
they were not parties to any settlement agreement, they should have filed
a Rule 12(b)(6) motion to dismiss, or at least raised an affirmative defense
in their answer. Instead, the Whitmers joined the other Homeowners in
their answer to the complaint, defending against the Declaratory Action.

¶19            The Whitmers also joined the other Homeowners in asserting
counterclaims against the Hotel that were dependent on the court finding
an enforceable agreement was reached at the meeting. In their
counterclaims, the Whitmers asserted the Hotel had an obligation to
communicate the HOA’s settlement offer to the Homeowners, and alleged
they would have agreed to the HOA’s offer had the Hotel informed them
of the terms. The Whitmers sought benefit-of-the-bargain damages based
on an alleged missed opportunity to settle with the HOA. However, the
record shows that the HOA had no interest in settling anything less than all
of the outstanding cases with Homeowners. Instead, the HOA wanted a
global settlement disposing of all claims and all parties. That being the case,
to be entitled to benefit-of-the-bargain damages, the Whitmers would need
to establish that the Hotel and the HOA would have settled not only with
them, but with all of the Homeowners. In sum, because the Whitmers’ tort
claims were premised on the existence of a contract, namely, the purported
settlement agreement, they had an actual stake in the outcome of the
Declaratory Action. They therefore were proper parties to the judgment.

¶20            It was not until the Homeowners’ cross-motion for summary
judgment that the Whitmers first asked to be dismissed from the
Declaratory Action. The Whitmers cannot actively defend the settlement
agreement, presumably in order to protect their incidental benefits
therefrom, and then seek to avoid an attorneys’ fee award after receiving
an adverse judgment. We affirm the court’s declaratory judgment and
allocation of attorneys’ fees against the Whitmers.

                              CONCLUSION

¶21            The judgment of the superior court is affirmed. The Hotel
requests its attorneys’ fees on appeal under A.R.S. § 12–341.01, § 12-349,
and ARCAP 25. The Elis and the Whitmers request their attorneys’ fees

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                      ELI, et al. v. PROCACCIANTI
                           Decision of the Court

under A.R.S. § 12-341.01. The Hotel successfully defeated the Homeowners’
claim that the parties had reached a settlement agreement. We grant the
Hotel its reasonable attorneys’ fees against the Homeowners (Elis and the
Whitmers), jointly and severally, after the Hotel’s compliance with ARCAP
21. A.R.S. § 12-341.01; see also Rogus v. Lords, 166 Ariz. 600, 603-04 (App.
1991) (a dispute over the existence of a contract is a contract matter).

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

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