Court Opinion

ID: 4660341
Source: CourtListenerOpinion
Date Created: 2021-02-16 15:02:27.194073+00
Date Added: 2024-06-11T08:02:05.993913
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                            SCOTT WEIGELE, et al.,
                             Plaintiffs/Appellees,

                                         v.

                             JAMES OLIVER, et al.,
                            Defendants/Appellants.

                              No. 1 CA-CV 20-0171
                                FILED 2-16-2021

            Appeal from the Superior Court in Maricopa County
                           No. CV2017-096061
                The Honorable Janice K. Crawford, Judge

                                   AFFIRMED

                                    COUNSEL

Berkshire Law Office, PLLC, Tempe
By Keith Berkshire, Erica L. Leavitt
Counsel for Plaintiffs/Appellees

Davis Miles McGuire Gardner, PLLC, Tempe
By Bradley D. Weech, Marshall R. Hunt
Counsel for Defendants/Appellants
                     WEIGELE, et al. v. OLIVER, et al.
                         Decision of the Court

                      MEMORANDUM DECISION

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

M O R S E, Judge:

¶1             James Oliver, H&O Investment, LLC, and ATM 1 AZ, LLC
(collectively, "Appellants") appeal the superior court's directed verdict on a
claim of lost-profit damages, as well as the court's denial of attorneys' fees.
Because Appellants have shown no error, we affirm.

             FACTS AND PROCEDURAL BACKGROUND

¶2             In January 2016, Scott and Cathy Weigele ("the Weigeles")
created ATM 1 AZ, LLC,1 ("ATM 1 AZ") a business which supplied
automated teller machines ("ATMs") to businesses located in and around
the Phoenix area. ATM 1 AZ charged a processing fee whenever customers
withdrew cash from any of their ATMs. In May 2016, James Oliver, through
his solely owned and operated company, H&O Investment, LLC ("H&O"),
purchased a fifty-percent partnership in the "business activities" of ATM 1
AZ. The partnership agreement resulted in H&O and ATM 1 AZ each
owning a fifty-percent interest in the ATMs and a fifty-percent interest in
the "profit, losses and expenses of all the agreed upon business activities."2
At the time of agreement, ATM 1 AZ operated three ATMs at different
locations, including the company's most profitable ATM at a medical
marijuana dispensary called Emerald Palace.

¶3             In August 2016, Oliver and the Weigeles entered a written
agreement wherein H&O agreed to purchase the remaining fifty-percent
interest in the ATMs for $15,000. Appellants took full control of the ATMs
on August 31, 2016. Shortly thereafter, Oliver met with the owner of

1       The business was originally known as ATM Easy Cash, LLC before
being renamed to ATM 1 AZ, LLC. For the sake of clarity, we will simply
refer to the business as "ATM 1 AZ."

2      The contract agreement stipulated that H&O "is not purchasing any
part or shares of [ATM 1 AZ] but is agreeing to conduct business as an
equally invested team/partner."

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                    WEIGELE, et al. v. OLIVER, et al.
                        Decision of the Court

Emerald Palace to pitch the idea of installing a second ATM. The owner
rejected the proposal, said that Emerald Palace would soon begin handling
ATM transactions in-house, and informed Oliver that Emerald Palace
would not be renewing its ATM lease after October 2016. The parties
dispute whether the Weigeles knew at the time of the sale that Emerald
Palace would not renew its lease. Appellants refused to honor the contract
for the purchase of the remaining fifty percent of the business.

¶4           In September 2017, the Weigeles filed a claim against
Appellants seeking $15,000 in damages for breach of contract, breach of the
implied covenant of good faith and fair dealing, and unjust enrichment.
Appellants counterclaimed in August 2018 seeking $150,000 in damages—
$90,000 of which was for "lost income/profits"—for negligent
misrepresentation, fraud, breach of contract, and breach of the covenant of
good faith and fair dealing.

¶5             In October 2018, the superior court placed the case on its
dismissal calendar and ultimately dismissed the case pursuant to Arizona
Rule of Civil Procedure 38.1(d)(2). Appellants moved the superior court for
an extension, and the case was revived.

¶6             The case was tried before a jury. In support of Appellants'
$90,000 lost-profit damages claim, Oliver introduced spreadsheets
displaying the total number of withdrawals made from ATM 1 AZ's three
machines during April 2016. Interpreting data from the spreadsheets,
Oliver testified that ATM 1 AZ made $3,829.50 from the ATM at Emerald
Palace and $410 combined from the ATMs at the other two locations.
Furthermore, Oliver testified that "in 18 months, the two dispensaries3 that
[he] lost would have made $5,000 a month on a growing basis. . . . $5,000
times 18 months is $90,000."

¶7             Following the presentation of evidence, the Weigeles moved
for a directed verdict on Appellants' claim for lost-profit damages. The
superior court granted the motion, finding that Oliver's testimony was "not
sufficient to provide reasonable certainty from what a jury could decide."
Additionally, the superior court granted a directed verdict on the Weigeles'
claim of breach of the covenant of good faith and fair dealing.

3      The second dispensary Oliver references appears to refer to his
rejected plan to install a second ATM machine in Emerald Palace.

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                     WEIGELE, et al. v. OLIVER, et al.
                         Decision of the Court

¶8          The jury returned a verdict against the Weigeles on all their
claims and in favor of Appellants on the counterclaims of negligent
misrepresentation, fraud, breach of contract, and breach of the covenant of
good faith and fair dealing. The jury awarded Appellants $17,870 in
damages.

¶9             Appellants subsequently asked the superior court to exercise
its discretion under A.R.S. § 12-341.01 and award them $152,592.50 in
attorneys' fees. The superior court denied Appellants' request for various
reasons, including: (i) the legal issues "were [not] particularly novel"; (ii)
Appellants actively litigated the case, moved the court to reinstate the case
after it had been administratively dismissed in October 2018, and rejected a
June 2019 settlement offer from the Weigeles; (iii) notwithstanding the jury
verdict finding for Appellants on their breach of contract claims, the
Weigeles' claims "had merit"; (iv) "[m]uch of [Appellants'] efforts were
superfluous in achieving the ultimate result"; (v) the Rules of Civil
Procedure did not place the burden on the Weigeles to make an initial draft
of a joint report or the final joint pretrial statement; (vi) "[a] judgment for
$152,592.50 in attorney fees for bringing a claim of $15,000 and losing on a
[counter]claim worth $17,870 would send a chilling message to litigants
with small meritorious claims"; (vii) Appellants engaged in overbilling; and
(viii) "under a totality of the litigation test," the Weigeles were, arguably,
the "successful party" on Appellants' claim of lost profits because "the court
granted [the Weigeles'] motion for directed verdict on [Appellants'] claim
for lost profits."

¶10          The superior court entered final judgment in January 2020.
Appellants timely appealed. We have jurisdiction under A.R.S. § 12-
2101(A)(1).

                               DISCUSSION

I.     Motion for Directed Verdict.

¶11           Appellants argue the superior court erred by granting a
motion for directed verdict on Appellants' $90,000 lost-profit damages
claim. A trial court should grant a motion for directed verdict "if the facts
produced in support of the claim or defense have so little probative value,
given the quantum of evidence required, that reasonable people could not
agree with the conclusion advanced by the proponent of the claim or
defense." Orme Sch. v. Reeves, 166 Ariz. 301, 309 (1990). We review a trial
court's grant of a directed verdict de novo, "viewing the evidence in the

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                     WEIGELE, et al. v. OLIVER, et al.
                         Decision of the Court

light most favorable to the party opposing the motion." Gemstar Ltd. v. Ernst
& Young, 185 Ariz. 493, 505 (1996).

¶12           Parties alleging lost-profit damages have the burden of
"show[ing] the amount of their damages with reasonable certainty." See
Gilmore v. Cohen, 95 Ariz. 34, 36 (1963). "While mathematical accuracy is not
required in proving loss of future profits[,] such loss cannot be predicated
upon conjecture or speculation." McNutt Oil & Ref. Co. v. D'Ascoli, 79 Ariz.
28, 34 (1955). Moreover, the party seeking lost-profit damages "should
supply some reasonable basis for computing the amount of damage and
must do so with such precision as, from the nature of his claim and the
available evidence, is possible." Gilmore, 95 Ariz. at 36.

¶13            Appellants argue that Oliver presented sufficient evidence of
lost profits to survive the motion for directed verdict. We disagree.
Although Appellants characterize the spreadsheets displaying the monthly
number of withdrawals made from their ATMs as "hard documentary
evidence regarding the revenue/profit history of" ATM 1 AZ, the
spreadsheets only provide ATM transaction data from a single month—
April 2016—which preceded Appellants' purchase of a fifty-percent
partnership in ATM 1 AZ. Appellants fail to point to any evidence in the
record with which to compare the monthly data contained on the
spreadsheets. Moreover, the spreadsheets themselves are merely "the
monthly tallies" of the withdrawals made from ATM 1 AZ's machines and
do not actually provide the business's revenue or profit history. The only
way to determine how the transactions translated into revenue or profits is
to rely on Oliver's testimony interpreting the spreadsheets as indicating that
ATM 1 AZ made $3,829.50 from Emerald Palace and $410 combined from
the other two locations in April 2016.

¶14            We agree with the superior court that Oliver's lost-profits
testimony did not rise above mere "conjecture or speculation," McNutt Oil,
79 Ariz. at 34, and failed to provide "a reasonably certain factual basis for
computation of lost profits," Rancho Pescado, Inc. v. Nw. Mut. Life Ins. Co.,
140 Ariz. 174, 184 (App. 1984). Oliver testified that ATM 1 AZ would have
made $5,000 per month from its lease with Emerald Palace over the course
of 18 months, but that estimate was based on installing a second ATM at
the location. Appellants fail to provide any evidence that a second ATM
could have been installed or that ATM 1 AZ was making $5,000 per month
in profits from the ATM at Emerald Palace. Indeed, Oliver testified that the
spreadsheets showed the ATM at Emerald Palace generated only $3,829.50
in April 2016, and neither the spreadsheets nor testimony clarify whether
the total reflected revenue or profit. Oliver admitted that he did not make

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                      WEIGELE, et al. v. OLIVER, et al.
                          Decision of the Court

a profits/loss statement for ATM 1 AZ and conceded that, aside from the
April 2016 spreadsheets, he had no other evidence that proved Appellants
suffered $90,000 in lost profits.

¶15           Nor did Appellants provide evidence explaining why they
were entitled to 18 months of lost-profit damages. When asked why he was
specifically seeking 18 months of lost profits, Oliver testified that he
"wanted to be nice," and that it "just seems to be a standard in the industry."
When further pressed on how he knew that 18 months was the industry
standard, Oliver said that he had "talked to several people at different
times, and that's how it is," and suggested that he had "learned [it] over the
years of being alive."

¶16             Appellants argue that Oliver's testimony was "based on his
business knowledge and experience." But Oliver admitted he had no
experience in the ATM business prior to April 2016, his prior business
experience consisted of "mess[ing] with" a general contractor's and real
estate license, and ATM 1 AZ was the first business he had purchased.
Appellants argue that Oliver's "relatively shorter experience with the ATM
business must be balanced against the extreme simplicity of the ATM
business" and contend that calculating lost-profit damages did not require
much business experience. However, Appellants failed to provide any
evidence to corroborate Oliver's claim that ATM 1 AZ would make $5,000
per month in profits from its ATM at Emerald Palace, and that such profits
would continue for 18 months. See Rancho Pescado, 140 Ariz. at 184-85
(stating plaintiff "had the burden of proving with reasonable certainty the
fact that it could raise catfish in the canal and . . . thereafter market them at
a profit as well as proving with reasonable certainty how much profit it
would have realized"). The superior court did not err in granting the
motion for directed verdict.

II.    Denial of Attorneys' Fees.

¶17           Appellants argue the superior court abused its discretion by
denying their request for $152,592.50 in attorneys' fees. Trial courts have
discretion under A.R.S. § 12-341.01 to award attorneys' fees to the
prevailing party in a contract dispute. Wheel Estate Corp. v. Webb, 139 Ariz.
506, 508 (App. 1983). Trial courts consider various factors in determining
whether attorneys' fees should be granted under A.R.S. § 12-341.01,
including: (1) "[t]he merits of the claim or defense presented by the
unsuccessful party"; (2) whether "[t]he litigation could have been avoided
or settled and the successful party's efforts were completely superfluous in
achieving the result"; (3) whether "[a]ssessing fees against the unsuccessful

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                      WEIGELE, et al. v. OLIVER, et al.
                          Decision of the Court

party would cause an extreme hardship"; and (4) whether "[t]he successful
party did not prevail with respect to all of the relief sought." Associated
Indem. Corp. v. Warner, 143 Ariz. 567, 570 (1985). Additional factors for trial
courts to consider include "the novelty of the legal question presented," and
"whether the award in any particular case would discourage other parties
with tenable claims or defenses from litigating or defending legitimate
contract issues for fear of incurring liability for substantial amounts of
attorney's fees." Id.

¶18             We review an attorney-fee order under A.R.S. § 12-341.01(A)
for an abuse of discretion. Peterson v. City of Surprise, 244 Ariz. 247, 253, ¶ 25
(App. 2018). We may affirm the attorney-fee order "if it has any reasonable
basis . . . ." Tucson Estates Prop. Owners Ass'n v. McGovern, 239 Ariz. 52, 56,
¶ 12 (App. 2016).

¶19            Appellants take issue with much of the superior court's
reasoning in denying them an attorney-fee award. However, Appellants
do not dispute the superior court's determination that "[a] judgment for
$152,592.50 in attorney fees for bringing a claim of $15,000 and losing on a
[counter]claim worth $17,870 would send a chilling message to litigants
with small meritorious claims." This is not an unreasonable basis for
denying attorneys' fees. See Associated Indem., 143 Ariz. at 570 (approving
the potential chilling effect on legitimate litigation as a proper factor to
consider in determining whether to award attorneys' fees). Appellants
therefore fail to establish that the superior court abused its discretion. See
Tucson Estates, 239 Ariz. at 56, ¶ 14 (affirming denial of attorneys' fees
because "a reasonable basis" supported the ruling, notwithstanding some
"other factors" which "may [have] weigh[ed] in favor of Appellants").

III.   Attorneys' Fees and Costs on Appeal.

¶20           Appellants request their trial and appellate attorneys' fees
and costs under A.R.S. §§ 12-341.01, 12-342, and Arizona Rule of Civil
Procedure ("ARCAP") 21. The Weigeles request their attorneys' fees and
costs on appeal under A.R.S. §§ 12-341.01, -12-349, and ARCAP 21. In the
exercise of our discretion, we deny both parties' requests for attorneys' fees.
As the prevailing party on appeal, the Weigeles are entitled to their costs
on appeal upon compliance with ARCAP 21. We deny Appellants' request
for costs.

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                  WEIGELE, et al. v. OLIVER, et al.
                      Decision of the Court

                           CONCLUSION

¶21          Because Appellants have shown no error, we affirm the
superior court's judgment.

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

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