Court Opinion

ID: 4097348
Source: CourtListenerOpinion
Date Created: 2016-11-10 17:02:43.29018+00
Date Added: 2024-06-11T14:33:42.810662
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                ATR, an Arizona limited liability company,
                            Plaintiff/Appellee,

                                        v.

   CEC 141202761, LLC, an Arizona limited liability company; SCOTT
           AYERS and ETSUKO AYERS, husband and wife,
                        Defendants/Appellants.

                             No. 1 CA-CV 15-0285
                               FILED 11-10-2016

           Appeal from the Superior Court in Maricopa County
                          No. CV2012-096617
              The Honorable David M. Talamante, Judge

                          JUDGMENT AFFIRMED

                                   COUNSEL

Nussbaum Gillis & Dinner, P.C., Scottsdale
By Randy Nussbaum, John E. Parzych
Counsel for Defendants/Appellants

David Dick & Associates, Chandler
By David Dick
Counsel for Plaintiff/Appellee
                           ATR v. CEC et al.
                          Decision of the Court

                     MEMORANDUM DECISION

Judge Samuel A. Thumma delivered the decision of the Court, in which
Presiding Judge Patricia K. Norris and Judge Margaret H. Downie joined.

T H U M M A, Judge:

¶1            Defendants Scott and Etsuko Ayers (collectively Ayers) and
CEC 141202761, LLC (CEC) appeal from an adverse judgment entered
after a bench trial on two claims asserted by plaintiff ATR. Defendants
argue the judgment must be set aside because, as a matter of law, CEC did
not breach the contractual implied duty of good faith and fair dealing (one
of ATR’s two claims) and, even if it did, that Ayers cannot be held
personally liable for CEC’s breach. The judgment, however, also is
premised on the superior court’s finding that defendants tortiously
interfered with ATR’s business expectancy (the second of ATR’s two
claims). Because defendants do not challenge on appeal the superior
court’s tortious interference finding, and because the judgment properly
stands on that separate and independent ground on the record presented,
the judgment is affirmed.

                FACTS1 AND PROCEDURAL HISTORY

¶2           Scott Ayers has been CEC’s member and manager at all
times relevant here.

¶3            In May 2008, CEC entered into a five-year written lease
(Master Lease) with New Millennium Auto Repair and Lube, LLC
whereby New Millennium leased retail property CEC owned in Chandler.
A Memorandum of Understanding (MOU), signed and incorporated into
the Master Lease a few days later, specified an annual 4.5 percent increase
for rent on the property. Also in May 2008, DDASVS, LLC, an entity in

1 This court views the evidence in a light most favorable to sustaining the
judgment. Sabino Town & Country Estates Ass’n v. Carr, 186 Ariz. 146, 149
(App. 1996).

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                            ATR v. CEC et al.
                           Decision of the Court

which Scott Ayers was a member and officer, loaned Ian Rayna $6,828 (the
Rayna Loan).

¶4             In October 2009, New Millennium and ATR entered into a
written sublease that assigned the Master Lease to ATR, and New
Millennium sold its assets to ATR. Christopher Schwarz formed ATR at
about that same time, and Schwarz has been member and manager of
ATR at all times relevant here. CEC had notice of the transaction and did
not object at that time.

¶5           From October 2009 until August 2012, ATR paid CEC rent
and other related obligations under the Master Lease without significant
incident.

¶6            In late 2011, ATR decided to sell its assets. Brian Fiori later
expressed an interest in buying ATR’s assets. By September 2012, ATR
informed CEC of its intent to sell its assets to Fiori for $79,000. As a
precursor to the sale, ATR sought CEC’s approval for the assignment to
Fiori of the Master Lease (which would expire in May 2013) as well as a
renewal of the lease with Fiori. Ayers responded that CEC would be
willing to agree to such an assignment and renewal if CEC was paid: (1)
the outstanding Rayna loan and (2) rent Ayers claimed was past-due and
owed under the Master Lease.

¶7             By October 2012, Ayers told Fiori and Schwarz that, based
on the Rayna loan, Ayers had a lien against the assets ATR had purchased
from New Millennium. Ayers told Fiori that he owned ATR’s assets and
offered to sell ATR’s assets to Fiori. Ayers suggested ATR was in default
under the Master Lease and started threatening eviction and to lock ATR
out of the Master Lease property unless the amounts demanded were
paid. Ayers also claimed ATR owed late charges and other payments
under the Master Lease as modified by the MOU. Notwithstanding a
lengthy course of dealing, Ayers represented to ATR that such amounts
remained due and owing and noted a provision in the Master Lease
stating acceptance of payments did not constitute a waiver of his right to
collect those amounts.

¶8           Following these actions by Ayers, Fiori did not go through
with the purchase of ATR’s assets.

¶9           In late October 2012, ATR filed this case against CEC and
Scott Ayers, naming Etsuko Ayers as a defendant solely for community
property purposes. As relevant here, ATR asserted a tortious interference
with business expectancy claim and a breach of the contractual implied

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                             ATR v. CEC et al.
                            Decision of the Court

covenant of good faith and fair dealing claim. After CEC answered, and
asserted and then withdrew counterclaims, and after substantial motion
practice, the court held a three-day bench trial.

¶10            At trial, it was undisputed that there was never a lien on
ATR’s assets recorded by CEC or Ayers. After trial, the superior court
found for ATR on both counts and awarded ATR $75,000, representing the
$79,000 purchase price Fiori would have paid for the ATR assets less a
$4,000 credit not challenged on appeal. After additional briefing, the court
entered final judgment against both CEC and Ayers, awarding ATR
$75,000 in damages; $24,500 in attorneys’ fees and $939 in taxable costs.2
This court has jurisdiction over defendants’ timely appeal pursuant to the
Arizona Constitution, Article 6, Section 9, and Arizona Revised Statutes
(A.R.S.) sections 12–120.21(A)(1) and –2101(A)(1) (2016).3

                               DISCUSSION

¶11           Defendants argue the judgment was erroneous because the
superior court erred in finding they breached the contractual implied duty
of good faith and fair dealing and by finding Ayers liable for that contract
breach. Defendants, however, do not challenge the superior court’s
decision for ATR on the tortious interference with business expectancy
claim, which adequately and independently supports the judgment.

¶12            Opening briefs must present and address arguments,
supported by authority, that set forth the appellant’s position on the issues
raised. Ritchie v. Krasner, 221 Ariz. 288, 305 ¶ 62 (App. 2009); accord Ariz. R.
Civ. App. P. 13(a)(7)(A). The failure to do so constitutes waiver. Ritchie,
221 Ariz. at 305 ¶ 62. By making no argument challenging the decision on
the tortious interference claim, defendants have abandoned and waived

2Although the final portion of the judgment mentions only the good faith
and fair dealing claim, the body of the judgment concludes evidence
supported both claims, specifically mentioning the “interfer[ence] with
[ATR’s] business expectations by preventing the sale from [ATR] to Brian
Fiori,” a finding that mirrors the court’s ruling after trial.

3Absent material revisions after the relevant dates, statutes and rules cited
refer to the current version unless otherwise indicated.

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                            ATR v. CEC et al.
                           Decision of the Court

any such challenge. MacMillan v. Schwartz, 226 Ariz. 584, 591 ¶ 33 (App.
2011); see also Ace Auto. Products, Inc. v. Van Duyne, 156 Ariz. 140, 143
(App. 1987) (“It is not incumbent upon the court to develop an argument
for a party.”).4 Moreover, waiver aside, the evidence relied upon by the
superior court supports the tortious interference finding.

¶13            The elements required to establish the tortious interference
claim asserted here are well-established under Arizona law. See, e.g.,
Antwerp Diamond Exch. of Am., Inc. v. Better Bus. Bureau of Maricopa County,
Inc., 130 Ariz. 523, 529–30 (1981) (citing cases); Dube v. Likins, 216 Ariz.
406, 411 ¶ 8 (App. 2008) (citing cases). Because the superior court is in the
best position to judge the credibility of witnesses and weigh evidence, this
court will affirm the factual findings unless they are clearly erroneous.
Castro v. Ballesteros-Suarez, 222 Ariz. 48, 51 ¶ 11 (App. 2009). The record on
appeal, including those facts summarized above, adequately supports the
superior court’s findings that ATR proved each of these elements as to
CEC and Ayers.

¶14          The superior court found defendants tortiously interfered
with ATR’s business expectancy by: (1) conditioning approval of an
assignment of the Master Lease to Fiori (or to renew the lease) upon
repayment of the Rayna loan that ATR “had no obligation to assume;” (2)
attempting to collect back rent under the Master Lease that CEC had
waived its right to collect; (3) improperly asserting a lien on ATR’s
property and (4) threatening to evict or lock ATR out of the Master Lease
property. These facts of record adequately support these findings as well
as the superior court’s finding for ATR on its tortious interference with
business expectancy claim.

4 During oral argument before this court, defendants asserted their
arguments challenging the good faith and fair dealing finding constituted
a challenge to the tortious interference finding. The briefs, however, do
not support that assertion, meaning the issue was waived when it was not
asserted in the opening brief. See Skydive Arizona, Inc. v. Hogue, 238 Ariz.
357, 364 n.2 (App. 2015) (“During oral argument, the parties raised
arguments not in their briefs. Those arguments are therefore waived, and
we decline to address them. ‘Arguments raised for the first time at oral
argument are waived.’”) (citations omitted).

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                            ATR v. CEC et al.
                           Decision of the Court

¶15            Defendants argue on appeal that Ayers could not be
personally liable without first determining Scott Ayers served as an alter
ego of CEC or by piercing CEC’s corporate veil. Defendants failed to
assert these arguments in the superior court, meaning they are waived on
appeal. See Continental Lighting & Contracting, Inc. v. Premier Grading &
Utilities, LLC, 227 Ariz. 382, 386 ¶ 12 (App. 2011); Schurgin v. Amfac Elec.
Distribution Corp., 182 Ariz. 187, 190 (App. 1995). And on appeal, these
arguments are directed solely to the contractual good faith and fair
dealing claim, meaning to the extent they could have applied to the
tortious interference claim, they have been waived. See Schabel v. Deer
Valley Unified Sch. Dist. No. 97, 186 Ariz. 161, 167 (App. 1996) (noting
issues not clearly raised and argued in appellate brief are waived).

¶16            Finally, the record supports the superior court’s tacit finding
that Scott Ayers’ individual conduct was sufficient to impose direct tort
liability against him, along with tort liability on CEC, without regard to
concepts of alter ego or piercing the corporate veil. See Warner v. Sw.
Desert Images, LLC, 218 Ariz. 121, 127 ¶ 9 (App. 2008) (noting “[a]n agent
will not be excused from responsibility for tortious conduct [merely]
because he is acting for his principal”) (citation omitted). This is
particularly true given that the record reflects the beneficiary of the Rayna
loan (which was not a CEC loan) was Ayers or another entity he
controlled and not CEC. Nor have defendants shown error in entering
judgment against Etsuko Ayers for community property purposes on this
tort claim. See Alosi v. Hewitt, 229 Ariz. 449, 454 (App. 2012) (“The Arizona
rule is that the community is liable for the intentional torts of either
spouse if the tortious act was committed with the intent to benefit the
community, regardless of whether in fact the community receives any
benefit.”) (citation omitted).

¶17           For these reasons, the superior court’s finding that
defendants tortiously interfered with ATR’s business expectancy is
affirmed. Because the judgment stands on that separate and independent
ground, the judgment is affirmed.5

5 On this unique record, where the judgment stands on this separate and
independent ground, and the relief requested by defendants regarding the
good faith and fair dealing claim would not result in the judgment being
vacated, this court need not address the arguments pressed by the parties

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                            ATR v. CEC et al.
                           Decision of the Court

¶18           Both sides seek an award of attorneys’ fees on appeal, ATR
pursuant to the Master Lease and A.R.S. § 12-341.01 and defendants
pursuant to A.R.S. § 12-341.01. Because defendants are not the successful
parties on appeal, their request is denied. Because ATR is the prevailing
party under section 11 of the Master Lease (as to CEC), and the successful
party under A.R.S. § 12-341.01 (as to Ayers, given this is a case “arising
out of contract”), ATR’s request for reasonable attorneys’ fees on appeal is
granted as to defendants. ATR also is awarded its taxable costs on appeal
pursuant to A.R.S. § 12-341. These awards are contingent upon ATR’s
compliance with Arizona Rule of Civil Appellate Procedure 21.

                              CONCLUSION

¶19           The judgment is affirmed.

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

regarding the contractual good faith and fair dealing claim. See, e.g., Ariz.
Const. art. 6, § 27 (“No cause shall be reversed for technical error in
pleadings or proceedings when upon the whole case it shall appear that
substantial justice has been done.”); Ariz. R. Civ. P. 61 (“The court at every
stage of the proceeding must disregard any error or defect in the
proceeding which does not affect the substantial rights of the parties.”);
Minderman v. Perry, 103 Ariz. 91, 93 (1968) (noting, when judgment
entered after bench trial “did not rest solely” on challenged conclusion of
law, “[i]n keeping with our established rules, if the ultimate judgment was
correct as a matter of law it will be sustained”) (citations omitted).

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