ELDRIDGE v. GORENTER.COM LLC

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NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24 IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE HERNDON EUGENE ELDRIDGE, a single man, ) ) ) Plaintiff/Counterdefendant/ ) Appellee, ) ) v. ) ) GORENTER.COM, L.L.C., an Arizona ) limited liability company, ) ) Defendant/Counterclaimant/ ) Appellant. ) __________________________________) DIVISION ONE FILED: 7/9/2013 RUTH A. WILLINGHAM, CLERK BY: mjt 1 CA-CV 12-0568 DEPARTMENT A MEMORANDUM DECISION (Not for Publication Rule 28, Arizona Rules of Civil Appellate Procedure) Appeal from the Superior Court in Maricopa County Cause No. CV2011-001642 The Honorable Hugh E. Hegyi, Judge AFFIRMED Jennings Strouss & Salmon, PLC By John G. Sestak, Jr. Attorneys for Plaintiff/Appellee Phoenix Mack Watson & Stratman, PLC By Daxton R. Watson Michael H. Orcutt Attorneys for Defendant/Appellant Phoenix C A T T A N I, Judge ¶1 GoRenter.com, L.L.C., appeals from the superior court s judgment awarding damages, attorney s fees, and costs to Herndon Eugene Eldridge. For reasons that follow, we affirm. FACTS AND PROCEDURAL BACKGROUND 1 ¶2 In 2004, Eldridge complex in Phoenix. purchased a four-unit apartment Initially, Eldridge managed the property, but he decided to hire GoRenter to manage the complex in 2010. At an initial meeting Battershaw, Eldridge process with Eldridge s and first month s rent first month s rent, tenants receiving discussed the GoRenter s discussed GoRenter s expectation that a and deposit but keys representative, security never to importance less the not conclusion of leasing obtain equivalent $500, properties. of tenant-screening GoRenter than prior The to Shawnn a to the to the parties tenant the also with a criminal history. ¶3 At GoRenter entered Agreement ) the under into this meeting, Eldridge a property management agreement which GoRenter agreed manage, to and (the lease, secure tenants, maintain, collect rents, and otherwise have full operational control of the apartment units. 1 Paragraph 3 of the In an appeal from a jury verdict, we review the evidence in the light most favorable to upholding the jury verdict. Warrington v. Tempe Elementary Sch. Dist. No. 3, 197 Ariz. 68, 69, ¶ 4, 3 P.3d 988, 989 (App. 1999). 2 Agreement provided in particular as follows: In order to secure a suitable customary tenant, tenant [GoRenter] screening will conduct process which a reasonable and include: (1) will credit report; (2) criminal background report; (3) employment verification; (4) rental database (eviction) search; and (5) current landlord/residence check. ¶4 Within GoRenter leased units. weeks and after secured entering tenants into for the the Agreement, two unoccupied Tenant One leased Unit 101 on July 27, 2010, with the lease commencing on July 28, 2010. Tenant Two leased Unit 102 on August 24, 2010, with the lease commencing that same date. Prior to leasing these two units, GoRenter performed, to some degree, the five tasks mentioned in Paragraph 3 of the Agreement but, according to Eldridge, failed to properly scrutinize the prospective tenants background information before leasing the units. ¶5 had GoRenter s credit search indicated that both tenants negative credit delinquency matters. Tenant One dismissed; had and histories with various collection and GoRenter s background search revealed that civil Tenant traffic violations, Two two had within the previous ten years. which theft-related were later convictions GoRenter s background search regarding Tenant One did not reveal any criminal convictions, 3 although Tenant One admitted a felony drug conviction on her tenant application. ¶6 GoRenter s eviction search did not yield any relevant records, although revealed that a later both public tenants record had search by previous Eldridge forcible detainer/eviction proceedings in Maricopa County. ¶7 GoRenter s first accounting statement did not specify whether GoRenter had obtained the from Tenant One and Tenant Two. required security deposits When asked about the security deposit for Tenant One, Battershaw initially indicated that he was not sure if the security deposit had been collected, but he noted that GoRenter generally required such a deposit. Battershaw subsequently stated that Tenant One had paid a $500 security deposit. Signed addendums to the lease agreements, however, that indicated portions of the required security deposits were not received prior to lease commencement. ¶8 caused Within 60 days, both tenants failed to pay rent and significant damage to the units. Both tenants were evicted. ¶9 Eldridge filed a complaint alleging negligence and breach of contract against GoRenter in Maricopa County Superior Court. GoRenter counterclaimed for breach of contract, breach of implied covenant of good faith and fair dealing, and unjust enrichment. The case proceeded to compulsory arbitration in 4 which Eldridge was awarded damages, attorney s fees, and costs on the breach of contract claim. 2 After arbitration, GoRenter appealed the arbitration award in Eldridge s favor, but not the denial of its counterclaim. ¶10 The case proceeded breach of contract claim. GoRenter moved for to a jury trial on Eldridge s At the close of Eldridge s case, judgment as a matter Arizona Rule of Civil Procedure 50(a). of law pursuant to The trial court denied the motion, and the jury ultimately found GoRenter in breach of contract and awarded Eldridge damages in the sum of $11,100. GoRenter renewed its motion for judgment as a matter of law, which the trial court denied. The trial court entered judgment for Eldridge and awarded him damages, costs, and fees totaling $34,441. ¶11 GoRenter timely appealed. We have jurisdiction under Arizona Revised Statutes ( A.R.S. ) section 12-2101(A)(1). 3 DISCUSSION ¶12 under GoRenter raises three issues on appeal, whether: (1) Arizona law, Eldridge s claim sounds in tort, not contract; (2) the trial court erred by denying GoRenter s motion 2 During claim. arbitration, Eldridge 3 dismissed the negligence Absent material revisions after the relevant date, statutes cited refer to the current version unless otherwise indicated. 5 and renewed motion for judgment as a matter of law; and (3) GoRenter is entitled to recover attorney s fees if successful on appeal. I. Tort or Contract. ¶13 GoRenter asserts that its contract to provide property management services involved professional services by an entity licensed to do so. Relying on Collins v. Miller & Miller, Ltd., GoRenter argues that the only appropriate cause of action for such alleged negligence. 1996) professional is a tort claim for See 189 Ariz. 387, 395, 943 P.2d 747, 755 (App. ( [W]here professional malpractice and there the is an client, express an contract action for between breach of the that contract cannot be maintained if the contract merely requires generally that the professional render services. ). ¶14 Preliminarily, we disagree that the contract at issue necessarily contemplates professional services as referenced in Collins. Unlike the legal services at issue in Collins, property management services can be performed by licensed or unlicensed agents. See A.R.S. § 32-2121(A)(6) (detailing persons who may manage residential rental property without being subject to licensing requirements). Accordingly, the contract between GoRenter and Eldridge can be viewed through the lens of professional or non-professional services. 6 ¶15 Moreover, even assuming the claim at issue involves an allegation claim of professional remains viable. malpractice are nonetheless arise malpractice, Although generally out of tort Eldridge s claims for claims, contract if professional such the contract claims agreement additional duties beyond those implied by law. may imposes Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, 15, ¶ 26, 6 P.3d 315, 320 (App. 2000); see also Collins, 189 Ariz. at 395, 943 P.2d at 755 (noting that an action involving negligence by an attorney can sound in contract if the claim is based on nonperformance of a specific promise contained in the contract). ¶16 The Agreement in the instant case required specific tasks that went beyond a general duty of care. In particular, Paragraph 3 of the Agreement provided that GoRenter would secure a credit report, a criminal background report, and an employment verification, and would conduct a rental database (eviction) search and a current landlord/residence check. These enumerated tasks or go practice beyond required the of general real fiduciary estate Admin. Code R4-28-1101(A), (H). duty standard professionals. See of Ariz. Thus, the nonperformance of those tasks gives rise to a breach of contract claim. See also Sparks v. Republic Nat l Life Ins. Co., 132 Ariz. 529, 543, 647 P.2d 1127, 1141 (1982) (noting that a single act can constitute both a tort and a breach of contract, and holding that fees may 7 be awarded under a breach of contract theory as long as the cause of action in tort could not exist but for the breach of the contract (emphasis added)). ¶17 216 GoRenter further urges that under Keonjian v. Olcott, Ariz. 563, 567, ¶ 17, 169 P.3d 927, 931 (App. 2007), Eldridge can only prevail on a contract-based claim by proving that GoRenter failed entirely to perform a specific contractual obligation. In Keonjian, after rejecting a legal malpractice tort claim on statute of limitation grounds, this court rejected a corresponding breach of contract claim because the essence of [the] claim [wa]s that [the attorney] performed negligently, not that he failed to perform at all. ¶18 We do not read Id. at ¶ 18. Keonjian as holding that mere commencement of performance immunizes a party from liability for nonperformance of contractual obligations. This court in fact found specifically in that case that the underlying facts do not entail the nonperformance of a specific promise necessary to a breach of contract claim. Id. (emphasis added). A promise presumably contemplates completed tasks. ¶19 Here, although Eldridge acknowledged that the five tasks specified in the contract were done to a certain degree, he did not stipulate that GoRenter completed the tasks. In fact, Eldridge presented evidence that GoRenter failed to timely collect the required deposits and failed to conduct the promised 8 tenant-screening process to secure a suitable tenant under the Agreement. The contract contemplated completed tasks, not just steps taken in that direction. Thus, Eldridge s allegations involved nonperformance of [] specific promise[s], id., and the trial court properly rejected GoRenter s assertion that Eldridge s claim sounds only in tort and not in contract. II. Rule 50(a) and (b) Motions. ¶20 granted GoRenter its presented claim. ¶21 at Rule contends 50 trial to that motions, the trial arguing support court that Eldridge s should have no evidence was breach of contract We disagree. We review the grant or denial of a motion for judgment as a matter of law de novo. See Gemstar Ltd. v. Ernst & Young, 185 Ariz. 493, 505, 917 P.2d 222, 234 (1996). A trial court may only grant a Rule 50 motion 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. Acuna v. Kroack, 212 Ariz. 104, 110-11, ¶ 24, 128 P.3d 221, 227-28 (App. 2006) (citation omitted). We will affirm the denial of a Rule 50 motion if, viewing the evidence and reasonable inferences therefrom in the light most favorable to the party opposing the motion, any substantial evidence supports 9 the ruling and the subsequently-rendered verdict. Id. at 111, ¶ 24, 128 P.3d at 228. ¶22 Eldridge presented sufficient evidence such that a reasonable person could find GoRenter failed to timely collect required security deposits promised tenant-screening and to process, conduct which or complete resulted in the GoRenter renting to unsuitable tenants. ¶23 Although Paragraph 3 GoRenter of the obtained Agreement, reports a contemplated reasonable person in could nevertheless conclude that GoRenter failed to complete all of the agreed upon tasks. As Eldridge testified, a public record search both revealed that tenants had forcible detainer proceedings against them, which GoRenter failed to find. a reasonable person tenant-screening reasonable could provision person could find in that the find GoRenter Agreement. that GoRenter Thus, breached Likewise, breached the a the Agreement by leasing the property to individuals with criminal records, significant delinquency, and collections issues. Accordingly, the trial court did not err by denying GoRenter s motion and renewed motion for judgment as a matter of law. III. Attorney s Fees. ¶24 GoRenter seeks an award of its attorney s fees and costs expended at trial and on appeal pursuant to A.R.S. § 12341.01. Because GoRenter did not prevail at trial or on appeal, 10 its request requests for fees attorney s and fees costs denied. appeal on is on Eldridge the same also basis. Exercising our discretion, we award Eldridge attorney s fees on appeal subject to compliance with ARCAP 21. party, Eldridge is entitled to his costs As the prevailing on appeal compliance with ARCAP 21. CONCLUSION ¶25 For the foregoing reasons, we affirm the judgment. /S/ KENT E. CATTANI, Judge CONCURRING: /S/ PATRICIA A. OROZCO, Presiding Judge /S/ PETER B. SWANN, Judge 11 upon

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