Nunns v. McGovern

Annotate this Case

Download PDF

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 BRANDON NUNNS, ) ) ) Third Party Counterclaimant/ ) Appellant, ) ) v. ) ) MARTIN R. MCGOVERN and EBRA D. ) MCGOVERN, husband and wife, ) ) Third Party Counterdefendants/ ) Appellees. ) ___________________________________) ) NUNNS HOMEBUILDERS, LLC, an ) Arizona limited liability company, ) ) Plaintiff/Appellee, ) ) v. ) ) MARTIN R. MCGOVERN and EBRA D. ) MCGOVERN, husband and wife, ) ) Defendants/Appellants. ) ) ___________________________________) DIVISION ONE FILED: 11-30-2010 RUTH WILLINGHAM, ACTING CLERK BY: GH 1 CA-CV 09-0779 1 CA-CV 10-0185 (Consolidated) DEPARTMENT D MEMORANDUM DECISION Not for Publication (Rule 28, Arizona Rules of Civil Appellate Procedure) Appeal from the Superior Court in Maricopa County Cause No. CV 2006-051190 The Honorable Eddward P. Ballinger, Jr., Judge AFFIRMED Berens, Kozub & Kloberdanz, PLC Scottsdale By Daniel L. Kloberdanz Attorneys for Third Party Plaintiff/Appellee The Butler Law Firm By Everett S. Butler and Matthew D. Williams Attorneys for Third Party Defendants/Appellants Counterclaimant/Appellant and Phoenix Counterdefendants/Appellees and N O R R I S, Judge ¶1 In this consolidated appeal, Brandon Nunns appeals from the superior court s judgment denying him relief in his breach-of-contract suit against Martin and Ebra McGovern because he did not have a contractor s license, and the McGoverns appeal from the superior court s order reinstating an unjust enrichment claim by Nunns Homebuilders, LLC ( Homebuilders ) against them. We refer to Nunns s appeal as Case 2. appeal as Case 1, and the McGoverns For the following reasons, we affirm the superior court s judgment in favor of the McGoverns as well as its order granting Homebuilders leave to reinstate its unjust enrichment claim against the McGoverns. FACTS AND PROCEDURAL BACKGROUND ¶2 Nunns, who was not a licensed contractor, entered into a contract with Homebuilders, a licensed contractor, to build a house in which he planned to live. In April 2005, while the house was under construction, Nunns agreed to sell it to the McGoverns for $788,040.17. 2 ¶3 On November 3, 2005, Nunns and the McGoverns signed an Escrow Holdback Agreement ( holdback agreement ) in which they agreed to hold $65,760 in escrow subject to completion of work on the landscaping, pool, and gazebo. 1 Nunns and the McGoverns then closed escrow on November 4, 2005. ¶4 On April 28, 2006, Homebuilders sued the McGoverns for unjust enrichment, alleging Homebuilders had completed the work listed in the holdback agreement but had not been paid. The McGoverns answered and filed a counterclaim against Homebuilders and a third-party contract, complaint declaratory relief, against and Nunns breach of for breach fiduciary of duty, alleging the holdback work had not been completed and/or was deficient. ¶5 In February 2008, Nunns filed an amended third-party counterclaim against the McGoverns alleging breach of written contract, breach enrichment. of oral contract, and alternatively, unjust In March 2008, the superior court dismissed the McGoverns claims against Homebuilders and Nunns with prejudice. 2 1 Nunns and the McGoverns signed the holdback agreement, but the agreement listed Nunns Land Development Company, LLC as the seller. Nunns purchased the property from this company and did not contest at trial the agreement was between him and the McGoverns as seller and buyers. 2 At trial, the McGoverns acknowledged receiving $8500 in a settlement for construction-defect claims against Homebuilders. 3 On January 29, 2009, the court dismissed Homebuilders s claims without prejudice for failure to be represented by counsel. Thus, by the end of January, only Nunns s breach of contract claim against the McGoverns remained in the case. ¶6 During a two-day bench trial on the breach-of-contract claim, the court sua sponte questioned whether Nunns s claim was barred by Arizona Revised Statutes ( A.R.S. ) section 32-1153 (2007). That statute prohibits an unlicensed contractor from maintaining requiring an a action to recover contractor s compensation license. for After any act considering supplemental briefing, the court determined Nunns was required to have a valid contractor s license to maintain his claims, but the McGoverns had waived the requirement by failing to raise the defense prior to the commencement of trial. The court granted judgment in favor of Nunns for $43,840. 3 ¶7 The McGoverns moved for reconsideration, asserting, inter alia, they had raised A.R.S. § 32-1153 before trial. The court granted the McGoverns motion, vacated the judgment in favor of Nunns, and entered judgment in favor of the McGoverns. The McGoverns requested $33,065.82 in attorneys fees, but the court awarded 3 them $5000. Nunns timely appealed, and, In December 2006, Nunns received $21,920 from the escrow company, leaving $43,840 in escrow. The escrow company released the $43,840 to the McGoverns before trial. 4 Homebuilders enrichment granted simultaneously claim against Homebuilders moved the leave to reinstate McGoverns. to The reinstate McGoverns timely appealed that order. its its unjust superior claim, court and the Because both appeals stem from the same set of facts, we consolidated the appeals. 4 We have jurisdiction over both appeals pursuant to A.R.S. § 122101(B), (C) (2003). DISCUSSION Case 1 I. Waiver of Affirmative Defense ¶8 defense Nunns argues because they the did McGoverns not raise waived it in the their licensing answer as required by Arizona Rule of Civil Procedure ( Rule ) 8(c). 5 We disagree. 4 In Case 1, neither party designated the trial transcripts for inclusion in the record on appeal. The McGoverns, however, included the transcripts in the record on appeal in Case 2. Because we have consolidated the appeals, we have considered the transcripts as part of the record on appeal in Case 1. 5 Because the facts concerning waiver are undisputed and the issue involves application of law to facts, our review is de novo. See Paczosa v. Cartwright Elementary Sch. Dist. No. 83, 222 Ariz. 73, 77, ¶ 14, 213 P.3d 222, 226 (App. 2009) (citing Trust v. Cnty. of Yuma, 205 Ariz. 272, 274, ¶ 7, 69 P.3d 510, 512 (App. 2003)). 5 ¶9 Asserting A.R.S. § 32-1153 in an action constitutes an affirmative defense. 6 See, e.g., Reidy v. Blackwell, 140 Ariz. 333, 335, 681 P.2d 916, 918 (App. 1983). Rule 8(c) requires a party to set forth all affirmative defenses [i]n pleading to a preceding pleading. A pleading includes a complaint, an answer, a counterclaim, a cross-claim, a third-party complaint, a third-party motion. answer, and a reply, but does not include a King v. Titsworth, 221 Ariz. 597, 598-99, ¶ 10, 212 P.3d 935, 936-37 (App. 2009) (citing Rule 7(a)). Failure to plead an affirmative defense generally results in waiver of the defense. City of Phoenix v. Fields, 219 Ariz. 568, 574, ¶ 27, 201 P.3d 529, 535 (2009). ¶10 of The McGoverns did not assert the affirmative defense illegality under A.R.S. § 32-1153 Homebuilders s original complaint. 7 exceptions to Rule 8(c). In in their answer to Case law, however, provides Leone v. Precision Plumbing & 6 The parties classify this affirmative defense as illegality but fail to cite supporting authority. See, e.g., Hunt v. Douglas Lumber Co., 41 Ariz. 276, 287, 17 P.2d 815, 819 (1933) (holding a contract with an unlicensed contractor is void ab initio and unenforceable). For purposes of this decision, we accept the parties characterization that noncompliance with the statute constitutes an illegality within the meaning of Rule 8(c). 7 The McGoverns did raise two affirmative defenses and reserved the right to assert any other affirmative defenses or other matters of avoidance including, but not limited to, those set forth in Rule 8. 6 Heating of illegality Southern defense Arizona, not Inc., asserted this in court a explained, pleading is an waived [u]nless the illegality appears on the face of the contract or from appellees case. 121 Ariz. 514, 516, 591 P.2d 1002, 1004 (App. 1979) (emphasis added). Also, a trial court can raise the issue of illegality sua sponte. Cf. Mitchell v. Am. Sav. & Loan Ass n, 122 Ariz. 138, 139-40, 593 P.2d 692, 693-94 (App. 1979) (appeals court and parties can raise illegality for first time on appeal). ¶11 the In this case, the McGoverns -- the appellees -- raised licensing contractor issue before and trial, Nunns s in their status initial as an and unlicensed supplemental disclosure statements and in two motions for summary judgment, and after trial, in their motion for reconsideration. Additionally, the superior court properly raised the issue sua sponte to explain its very serious concerns about Nunns acting as a contractor. For these reasons, the McGoverns did not waive the illegality defense. 8 8 We are unpersuaded by the out-of-state and federal cases Nunns cited construing rules similar to Rule 8(c) because we have Arizona case law on point as discussed in ¶ 10. See Associated Aviation Underwriters v. Wood, 209 Ariz. 137, 179-80, ¶ 149, 98 P.3d 572, 614-15 (App. 2004) (in absence of controlling Arizona authority, we look to out-of-state authority for guidance ). 7 II. Acting as Contractor ¶12 Next, Nunns argues he was not acting as a contractor. A contractor includes: any person . . . that, for compensation, undertakes to or offers to undertake to, . . . does himself or by or through others, or directly or indirectly supervises others to: (a) Construct, alter, repair . . . [or] improve . . . any building, . . . project, development or improvement, or to do any part thereof, including . . . work in connection with the construction. A.R.S. § 32-1101(A)(3) (2007). was required by A.R.S. Because the court found Nunns § 32-1153 to possess a valid contractor s license, it also implicitly found Nunns was acting as a contractor. 9 Inc., 129 Ariz. See Coronado Co. v. Jacome's Dep t Store, 137, 139, 629 P.2d 553, 555 (App. 1981) ( Implied in every judgment, in addition to express findings made by the court, is any additional finding that is necessary to sustain the judgment, if reasonably supported by the evidence, and not in conflict with the express findings. ). ¶13 The superior court s factual finding is supported by the trial evidence. Nunns testified he had agreed to complete the house for the McGoverns, he had Homebuilders complete the 9 We review a superior court s factual findings for clear error and its legal conclusions de novo. In re Estate of Newman, 219 Ariz. 260, 265, ¶ 13, 196 P.3d 863, 868 (App. 2008). 8 gazebo and the pool decking, and he had agreed to put an epoxy floor in the garage after the McGoverns requested it. Because the evidence demonstrated Nunns was acting individually and was undertaking work in connection with the construction by himself or by or through others, A.R.S. § 32-1101(A)(3), he needed to be licensed, even if Homebuilders had its own license. ¶14 Nunns also argues he did not receive compensation for completion of the holdback work because he was reimbursement of money he paid to Homebuilders. Nunns s pursuit of his breach of contract claim only seeking We disagree; against the McGoverns to recover money he paid Homebuilders does not change the reality services. he was seeking compensation for construction The plain meaning of the word compensation in the statute 10 proves this: 1. The act of compensating or the state of being compensated. 2. Something, such as money, given or received as payment or reparation, as for a service or loss. The American Heritage Dictionary of the English Language 376 (4th ed. 2006). More significantly, compensate is defined as 1. To offset; counterbalance. 2. To make satisfactory payment 10 Unless the legislature clearly expresses an intent to give a term a special meaning, we give the words used in statutes their plain and ordinary meaning. In determining the ordinary meaning of a word, we may refer to an established and widely used dictionary. State v. Mahaney, 193 Ariz. 566, 568, ¶ 12, 975 P.2d 156, 158 (App. 1999) (citations omitted). 9 or reparation to; recompense or reimburse. Id. (emphasis added). ¶15 Furthermore, we note that before trial Nunns made no mention of reimbursement and instead stated: The McGoverns owe Brandon Nunns a total of $54,364.38 for the remaining balance due under the purchase contract and Addendum ($43,840.00) plus the costs of the additional work performed after the closing (which adds up to $10,524.38). ¶16 The cases Nunns relies on receiving compensation are inapposite. to argue he was not For instance, in Levitan v. State, Registrar of Contractors, the court determined receipt of rent does not constitute compensation within the meaning of A.R.S. § 32-1101(A)(3). 797 (App. 2001). 201 Ariz. 225, 226, ¶ 7, 33 P.3d 796, Thus, a rental property owner who is statutorily required to repair and maintain rental property and undertakes such work is not a contractor under A.R.S. § 32-1101. See id. at 227, ¶ 12, 33 P.3d at 798. distinguishable. 11 The facts here are Nunns was seeking payment for construction work he was not required by law to do, but that he nonetheless chose to provide himself or by or through others, A.R.S. § 321101(A)(3), to the McGoverns. 11 For these reasons, the record Similarly, City of Phoenix v. Santa Anita Development Corp. is inapposite as the court held none of the compensation the city aimed to tax resulted from contracting activities. 141 Ariz. 179, 182, 685 P.2d 1331, 1334 (App. 1984). 10 supports the superior court s determination Nunns was acting as a contractor. III. Contractor Exceptions ¶17 Nunns contends substantially therefore, claim. 12 complied the may be he the court should was a licensing not have contractor statute rejected he and, his Substantial compliance with the licensing found purpose of the law. if with superior We disagree. statute even if the party s actions satisfied the Aesthetic Prop. Maint., Inc. v. Capitol Indem. Corp., 183 Ariz. 74, 77-78, 900 P.2d 1210, 1213-14 (1995) ( We have repeatedly held that the purpose of § 32-1153 is to protect the financially public from irresponsible unscrupulous, contractors. ). unqualified, and Nevertheless, the substantial compliance test does not apply if a contractor never had a license, id. at 76 n.1, 900 P.2d at 1212 n.1, which is the case here. ¶18 A.R.S. Nunns § also contends 32-1121(A)(6) (Supp. he substantially 2009), which complied exempts with property developers from the licensing statute if they meet the following requirements: Owners of property who are acting as developers and who build structures or appurtenances to structures on their 12 Contrary to the McGoverns assertion, Nunns raised this argument in the superior court. 11 property for the purpose of sale or rent and who contract for such a project with a general contractor licensed pursuant to this chapter and owners of property who are acting as developers, who improve structures or appurtenances to structures on their property for the purpose of sale or rent and who contract for such a project with a general contractor . . . licensed pursuant to this chapter. To qualify for the exemption under this paragraph, the licensed contractors names and license numbers shall be included in all sales documents. (Emphasis added.) On appeal, Nunns acknowledges, however, he was not a developer, and neither the contract nor its addendums Homebuilders or listed a license number. exempt from the licensing requirement referenced Thus, Nunns was not under A.R.S. § 32- 1121(A)(6). IV. Holdback Agreement ¶19 more Next, Nunns argues the holdback agreement is nothing than an agreement to assign funds to pay licensed contractors and enforcement of the agreement does not violate the contractor licensing statutes. of a contract de novo. We review the interpretation Rand v. Porsche Fin. Servs., 216 Ariz. 424, 434, ¶ 37, 167 P.3d 111, 121 (App. 2007) (citing Callan v. Bernini, 213 Ariz. 257, 259, ¶ 9, 141 P.3d 737, 739 2006)). ¶20 The holdback agreement provided in relevant part: Certain work in connection 12 with the above (App. property . . . is incomplete. In order for the Lender to close the loan notwithstanding the incomplete work, the undersigned Sellers (if applicable) and the Borrowers agree with each other and with the Lender, as follows: [The McGoverns] shall deposit the sum of 65,760.00 with Lender which shall hold that sum in escrow and apply the same as provided herein, [The McGoverns] shall be responsible for the completion of required work. All related costs and expenses shall be paid from funds held in escrow. After completion of the work, any excess funds were to be disbursed to the McGoverns. ¶21 Contrary to Nunns s argument, there is nothing in the holdback agreement reflecting it was simply assign funds to pay licensed contractors. 13 an agreement to Further, as the superior court correctly recognized, Nunns s contract was both for the sale construction of unimproved services. While real the property initial and to purchase provide contract included the cost of the unimproved realty, it also reflected Nunns s obligation to complete construction of the home, and the holdback agreement existed solely to pay for construction work Nunns was required to complete. Because Nunns is prohibited by law from receiving funds for construction work, see supra ¶¶ 1213 Accordingly, Nunns s reliance v. Hadid, 825 F.2d 787 (4th Cir. 1987), reliance on Van Waters & Rogers, Inc. v. 14 Ariz. App. 414, 484 P.2d 26 (1971), is 13 on Smithy Braedon Co. is inapposite, and his Interchange Res., Inc., distinguishable. 16, he was not entitled to recover any of the money subject to the holdback agreement. ¶22 Nunns also argues that because licensed contractors did all of the work on the home he was exempt from the licensing statute. We disagree. Western Constructors, Arizona contractor In Topro Services, Inc. v. McCarthy Inc., licensing a federal statutes court construing the expressly rejected this argument, stating [t]he fact that someone who was licensed did the actual work was not sufficient. (D. Colo. 1994). 856 F. Supp. 1461, 1465 The court explained Arizona case law makes it clear that there are now no loopholes to compliance with the licensing scheme - despite the harsh nature of the statue [sic] and the possibility for inequitable results. Id. ¶23 Nunns s concerning For these the reasons, holdback we reject agreement and affirm the argument superior court s resolution of the licensing issue. V. Attorneys Fees in Superior Court ¶24 Nunns argues attorneys fees to prevailing parties the the in superior McGoverns that court incorrectly because action. We they were review the court s order for an abuse of discretion. awarded not the superior Maleki v. Desert Palms Prof l Props., L.L.C., 222 Ariz. 327, 333-34, ¶ 32, 214 P.3d 415, 421-22 (App. 2009). 14 ¶25 The contract here requires an award of attorneys fees to the prevailing party. See Chase Bank of Ariz. v. Acosta, 179 Ariz. 563, 575, 880 P.2d 1109, 1121 (App. 1994) ( [T]he court lacks discretion to refuse to award [reasonable] fees under [a] contractual provision. ). The superior court awarded the McGoverns the $43,840 from the holdback funds and Nunns received nothing on his claim. 14 Under these circumstances, the superior court did not abuse its discretion by awarding the McGoverns attorneys fees. VI. Attorneys Fees on Appeal ¶26 appeal Both parties pursuant to contract. request A.R.S. attorneys § 12-341.01 fees and (2003) costs and/or on the Because the contract requires an award of attorneys fees and costs to the prevailing party, we award the McGoverns their reasonable attorneys fees and costs on appeal in Case 1, subject to compliance with Arizona Rule of Civil Appellate Procedure 21. 14 Nunns received $21,920 from the holdback funds during the litigation, however, that was not pursuant to a court order. The McGoverns have not filed a cross-appeal, nor did they raise this matter in the superior court. 15 Case 2 I. Futility of Unjust Enrichment Claim ¶27 Relying on trial testimony and statements by Nunns s attorney, 15 the McGoverns argue the superior court should not have granted enrichment Homebuilders s claim impoverishment because and its motion to Homebuilders claim was, reinstate had not therefore, its unjust suffered futile an as a matter of law. We disagree; accordingly, the superior court did not discretion abuse its reinstate the claim. in granting Homebuilders leave to Zimmerman v. W. Builders' & Salvage Co., 38 Ariz. 91, 95, 297 P. 449, 450 (1931) (court s reinstatement of a claim reviewed for an abuse of discretion). ¶28 Unjust enrichment occurs when one party has and retains money or benefits that in justice and equity belong to another. Trustmark Ins. Co. v. Bank One, Ariz., NA, 202 Ariz. 535, 541, ¶ 31, 48 P.3d 485, 491 (App. 2002). 15 To prove unjust At trial, Nunns testified that he reimbursed Homebuilders for all of the expenses it incurred for holdback work on the McGoverns home and that all subcontractors were paid. Travis Nunns, the qualifying party for Homebuilders s contractor s license, testified every subcontractor who worked on the home was paid. Additionally, Nunns s counsel said Homebuilders s unjust enrichment claim is a moot point because Brandon Nunns has paid Nunns Homebuilders for the expenses that Nunns Homebuilders incurred ; Homebuilders did not have the appropriate claim anyway because they had been paid by Brandon Nunns. They didn t have any damages ; and [he] felt that it didn t make any difference whether or not [Homebuilders s] claim was dismissed because Brandon Nunns had paid the monies back to Nunns Homebuilders. 16 enrichment, a plaintiff must show (1) an enrichment, (2) an impoverishment, (3) absence justification of a connection between for the the two, (4) enrichment the and impoverishment[,] and (5) the absence of any remedy at law. Mousa v. Saba, 222 Ariz. 581, 588, ¶ 29, 218 P.3d 1038, 1045 (App. 2009). ¶29 Although futility of recovery can defeat a motion to amend, see Yes on Prop 200 v. Napolitano, 215 Ariz. 458, 471, ¶ 40, 160 P.3d 1216, 1229 (App. 2007), on this record we cannot say as a matter of law Homebuilders s unjust enrichment claim is futile. Homebuilders was not a party to the case when Nunns testified, and although Travis Nunns testified the subcontractors had been paid, he did not testify Homebuilders had been fully compensated for its construction work. Moreover, Nunns s counsel was not counsel for Homebuilders when he told the court Homebuilders therefore, be given had an been paid. opportunity to Homebuilders prove it should, suffered an impoverishment Nunns failed to cure or otherwise discharge on behalf of Homebuilders. ¶30 his The McGoverns further argue statements by Nunns and counsel judicial that Homebuilders admissions enrichment claim. that ensure had the no damages futility of are the binding unjust The McGoverns cite State v. Fulminante, which 17 quotes Wigmore s definition of a judicial admission as: An express waiver made in court or preparatory to trial by the party or his attorney conceding for the purposes of the trial the truth of some alleged fact . . . . 193 Ariz. 485, 492, ¶ 17, 975 P.2d 75, 82 (1999) (emphasis added). a member of represented behalf, in Homebuilders Homebuilders, his individual and Nunns s Nunns was capacity, Although Nunns was counsel had testifying and previously on Nunns s his own counsel was counsel of record for Nunns only. ¶31 Even if we presume Nunns and his counsel were speaking for Homebuilders, their statements would not bind Homebuilders. The words of a party, like the words of any other witness, are rarely conclusive. either. They may be disputed as inaccurate by Black v. Perkins, 163 Ariz. 292, 293, 787 P.2d 1088, 1089 (App. 1989). The court in Perkins stated the only two exceptions to the rule that the words of a party are not binding are, one, when a party agrees to facts in a pleading or stipulation or, two, when a party has received judicial relief by asserting neither. a set of facts. Id. Here, Homebuilders did Thus, the statements by Nunns and his counsel are not binding judicial admissions of Homebuilders. ¶32 It may be, as the McGoverns argue, Homebuilders will be unable to prove an impoverishment. 18 If so, the McGoverns may well be entitled to summary judgment. However, on the record before us, we cannot make that determination as a matter of law. enrichment We caution Homebuilders it may not use its unjust claim as an end run around A.R.S. § 32-1153, thereby allowing Nunns to indirectly receive compensation for construction work even though he did not have a contractor s license. Reinstatement is only to give Homebuilders an opportunity to demonstrate it has suffered an impoverishment, not to allow Nunns an opportunity to obtain money to which he is not statutorily entitled. II. Statute of Limitations ¶33 The McGoverns argue the unjust enrichment claim is futile because it is time-barred; however, the parties dispute the accrual of the limitations period. Thus, whether the claim is time-barred must be addressed in the superior court. III. Superior Court Lacked Jurisdiction ¶34 The McGoverns argue the superior court lost jurisdiction over the unjust enrichment claim 30 days after the claim was dismissed. ¶35 We disagree. Homebuilders s claim was dismissed without prejudice; thus, it could be reinstated. Union Interchange, Inc. v. Van Aalsburg, 102 432 Ariz. 461, 464, P.2d 589, 592 (1967) ( A dismissal without prejudice does not go to the merits of the 19 plaintiff's cause and does not bar plaintiff from later filing on the same cause of action. ). minute entry dismissing the claim Further, the superior court without prejudice did not contain an express determination that there is no just reason for delay and an express direction for the entry of judgment, which is required for a final judgment under Rule 54(b). When a court does not certify finality under Rule 54(b), the order is subject to [the court s] own modification at any time before the final adjudication of all the claims. Stevens v. Mehagian s Home Furnishings, Inc., 90 Ariz. 42, 45, 365 P.2d 208, 210 (1961) (citations omitted). For these reasons, the superior court retained jurisdiction to reinstate the claim. IV. Poor Policy ¶36 The McGoverns argue allowing Homebuilders to reinstate the claim is an invitation to endless, inefficient, and unfair tactics. We disagree; Homebuilders s claim was dismissed not because it was without merit but because Homebuilders did not have counsel. the merits. Reinstatement allows the claim to be addressed on See Adams v. Valley Nat l Bank of Ariz., 139 Ariz. 340, 342, 678 P.2d 525, 527 (App. 1984) (courts prefer to decide cases on the merits rather than dismiss on procedural grounds). 20 V. Sanctions ¶37 The McGoverns argue the superior court should have sanctioned Homebuilders and its counsel under Rule 11 or A.R.S. § 12-349(A) frivolous (2003) and because lacks justification. the motion substantial to reinstate legal and was factual We review a court s orders involving Rule 11 sanctions for an abuse of discretion, James, Cooke & Hobson, Inc. v. Lake Havasu Plumbing & Fire Prot., 177 Ariz. 316, 319, 868 P.2d 329, 332 (App. 1993), and its application of § 12349(A) de novo. City of Casa Grande v. Ariz. Water Co., 199 Ariz. 547, 555, ¶ 27, 20 P.3d 590, 598 (App. 2001). superior court did not abuse its Because the discretion in allowing reinstatement of the claim, and the claim was not futile as a matter of law, the superior court did not abuse its discretion in refusing to sanction Homebuilders under Rule 11 or A.R.S. § 12-349(A). VI. Attorneys Fees ¶38 Both appeal. Case 2 parties request attorneys fees and costs on Because neither party has yet to prevail or succeed in under respectively, either we deny the contract both or parties A.R.S. requests § 12-341.01(A), for fees. On remand, the court may consider a request from the prevailing or successful party for fees incurred in the appeal in Case 2. 21 CONCLUSION ¶39 For the foregoing reasons, we affirm the judgment of the superior court in the appeal in Case 1 and Case 2. /s/ __________________________________ PATRICIA K. NORRIS, Judge CONCURRING: /s/ _____________________________________ LAWRENCE F. WINTHROP, Presiding Judge /s/ _____________________________________ PATRICK IRVINE, Judge 22

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.