Sandor v. Allied

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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); IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE SANDOR DEVELOPMENT COMPANY, an association; and CROWLEY REALTY, L.L.C., an Indiana limited liability company, ) ) ) ) ) Plaintiffs/Counterdefendants/Appellees, ) ) v. ) ) ALLIED ACOUSTICS, INC., an Arizona ) corporation, ) Defendant/Counterclaimant/Appellant. ) ) ) ) DIVISION ONE FILED: 11/29/2011 RUTH A. WILLINGHAM, CLERK BY: DLL 1 CA-CV 10-0736 1 CA-CV 10-0867 (Consolidated) DEPARTMENT A MEMORANDUM DECISION (Rule 28, Arizona Rules of Civil Appellate Procedure Appeal from the Superior Court in Maricopa County Cause No. CV2008-019208 The Honorable J. Richard Gama, Judge REVERSED AND REMANDED Engleman Berger, P.C. By Thomas R. Nolasco Attorneys for Plaintiff/Counterdefendants/Appellees Phoenix Curtis Ensign, P.L.L.C. By Curtis Ensign Attorneys for Defendant/Counterclaimant/Appellant Phoenix B A R K E R, Judge ¶1 Allied Acoustics, judgment entered in Inc. favor of ( Allied ) plaintiffs appeals Sandor from the Development Company and Crowley Realty, L.L.C. after a bench trial. Allied challenges various rulings and orders made by the trial court, but we need substantively dispositive: address only one, which we find Whether the court erred in effectively granting plaintiffs summary judgment before trial on the issue of whether a lien recorded by Allied on plaintiff s property was invalid. Because we find the court erred on this issue, we reverse the court s order granting plaintiffs summary judgment, we vacate the judgment entered in plaintiffs favor after trial, and we vacate the fee award to plaintiffs. This matter is remanded for further proceedings. Background ¶2 that Sandor Development Company is a real estate company has an Building ) office in in a multi-unit Scottsdale. commercial Sandor building Development (the Company established Crowley Realty, L.L.C., as the single asset entity that owns the Building. Accordingly, we hereinafter refer to plaintiffs collectively as Sandor. ¶3 ceilings. Allied On is March a 7, contractor 2008, that Sandor and installs Allied acoustical executed a contract ( Contract ) requiring Allied to install an acoustical tile ceiling in the Building s east-west corridors (the Work ) 2 for $3840. 1 The parties agree that Allied properly completed the Work on or around March 13, 2008. The parties also agree that Allied provided Sandor with invoices on March 13 and March 20, 2008, stating that the Work was 100% complete to date and payment was due either April 12 or April 19, 2008. Pursuant to another agreement between the parties, Allied installed in May 2008 a ceiling in one of the building s suites. Sandor paid Allied in full for work Allied completed in that suite. ¶4 Sandor, however, did not pay Allied for the Work. Consequently, Allied instructed its agent, RCS Preliminary Lien Service, Inc. ( RCS ), to prepare a mechanic s lien regarding the Work ( Lien ). RCS did so the following day, July 25, 2008. RCS sent Sandor a copy of the Lien on August 1, 2008. ¶5 On August Allied s office 7, with 2008, a Mr. Smith company unconditional lien release form. check of Sandor for arrived $3840 and at an Mr. Smith explained he would give Allied the check if Allied would sign the release. Allied refused unless Sandor also reimbursed Allied for the $300 Allied had paid to have the Lien recorded. 2 Instead, Allied agreed to accept the check in return for a conditional lien release, which 1 The original contract price of $4227 was reduced to $3840 for reasons that are not relevant to this appeal. 2 The Contract requires Sandor to pay Allied for any and all fees, costs, . . . incurred by Allied in connection herewith . . . . 3 would be replaced with an unconditional release after the check cleared and Sandor paid Allied the $300. Sandor refused to pay the $300 because, according to Sandor, the Lien was untimely recorded under Arizona law and was therefore invalid. ¶6 On August 12, 2008, Sandor filed a complaint in superior court seeking to quiet title in the Building and an award of statutory damages. Sandor specifically alleged the Lien was untimely because Arizona law requires a lien to be recorded within 120 days of completion of the improvements, and based on the March 13 invoice indicating the Work was 100% complete to date, the July 25 recording was too late. 3 See Ariz. Rev. Stat. ( A.R.S. ) § 33-993(A) (2007). ¶7 Allied answered and denied the alleged impropriety of the Lien. According to Allied, although the Work was finished on March 13, 4 it was not complet[ed] on that date for purposes of determining the 120-day lien period. In support, Allied referenced the May ceiling installation in the Building s suite 3 Thus, Allied alleged that RCS s avowal in the Lien that not more than One Hundred Twenty days (120) has elapsed since the completion of the improvements on the . . . [P]roperty constituted a material misstatement and a false claim rendering the Lien groundless. 4 The complaint and answer both refer to March 18, 2008 as the date Allied completed the Work; however, the joint pretrial statement indicates the parties subsequently agreed that the date was March 13, 2008. The disparity in dates is not material for our purposes. 4 and [d]enies that [the Work] was the last work that Allied did in the [B]uilding. Further, Allied raised as an Affirmative Defense its belief that completion of the Building had not occurred on March 13 because there has been no final inspection or written final acceptance of the . . . [B]uilding by the City of Scottsdale . . . . Allied also asserted a counterclaim for breach of contract based on Sandor s failure to pay Allied for the Work. 5 ¶8 Allied subsequently moved for summary judgment on its counterclaim, arguing Sandor had failed to produce evidence that Allied was not entitled to payment for the Work. In response, Sandor argued it had performed on the Contract because Mr. Smith had attempted to tender payment, which Allied refused. 6 the existence of a genuine issue of material fact Finding and that Allied was not entitled to judgment as a matter of law, the 5 Allied has apparently abandoned its additional counterclaim of unjust enrichment. See, e.g., Trustmark Ins. Co. v. Bank One, Arizona, NA, 202 Ariz. 535, 541-43, ¶¶ 30-37, 48 P.3d 485, 491-93 (App. 2002) (noting claim for equitable relief properly dismissed because remedy was available under breach of contract claim); see also Brooks v. Valley Nat. Bank, 113 Ariz. 169, 174, 548 P.2d 1166, 1171 (1976) ( [W]here there is a specific contract which governs the relationship of the parties, the doctrine of unjust enrichment has no application. ). 6 Sandor also argued it was entitled to a right of setoff because its damages resulting from the improper Lien far exceeds Allied s breach of contract damages. 5 superior court, without further explanation, denied Allied s motion. ¶9 In their cross motions for summary judgment on Sandor s claims, the parties reiterated the arguments raised in the complaint and answer. The court denied both motions. However, the court expressly rejected Allied s argument that the Lien was timely recorded because the Work was not completed until May 2008 when Allied finished installing the ceiling in the suite. and Accordingly, the court found the Lien was untimely defective and granted Sandor s request for clear title. Allied moved for reconsideration, pointing out that the court did not address whether the Lien was timely recorded because the Work was not complete on March 13, 2008, due to the absence of a final inspection performed by Scottsdale. 993(C)(1). stated See A.R.S. § 33- in The court denied Allied s motion for the reasons its order denying the parties summary judgment motions. ¶10 Consequently, the remaining issues for trial were the amount of damages Sandor was entitled to recover based on the late-filed Lien and whether failing to pay for the Work. Sandor breached the Contract by Regarding damages, the specific issue was whether Allied knew or should have known that the 120day lien period had expired when the Lien was recorded. A.R.S. § 33-420(A). 6 See ¶11 After a one-day bench trial, the court found Allied and RCS had superior intelligence to infer the untimeliness of the [L]ien. . . . because it is undisputed that the project under this distinct contract was completed on March 12, 2008 and the [L]ien was not filed until July 25, 2008. court awarded judgment to Sandor including attorneys fees and costs. in the Accordingly, the amount of $5000 See A.R.S. § 33-420(A). With respect to Allied s counterclaim, the court did not enter judgment in favor of either party. Instead, the court found that Sandor fully performed [its] contractual obligations by tendering the full invoice amount of $3,840.00 to [Allied]. Consequently, although the court ordered the counterclaim dismissed upon tender by [Sandor] . . . in the principle sum of $3840, together with interest[,] the court determined interest accrued at the contractual rate of 1.5% from April 12, 2008 (the payment due date) before Sandor to and attempted including to August tender 6, 2008 payment). (the day Allied unsuccessfully moved for a new trial, and the court subsequently awarded Sandor $22,500 in attorneys fees. 7 Allied appealed. 7 We Allied s first notice of appeal was filed before it realized the court had awarded Sandor attorneys fees. The superior court granted Allied s motion to extend time to file another notice of appeal, and Allied did so on November 9, 2010. This court consolidated the matters. 7 have jurisdiction pursuant to Arizona Revised Statutes ( A.R.S. ) section 12-2101(B) (2003). Discussion ¶12 The parties agree that the trial court s ruling denying them summary judgment in effect granted Sandor summary judgment on recorded. error the issue as See supra, ¶ 9. because a question to whether the Lien was untimely We find the court s ruling to be in of material fact exists regarding whether a building permit was issued and whether Allied provided uncontroverted evidence that Scottsdale had not inspected or issued a written final acceptance in connection with any such permit. ¶13 We review de novo the grant of a motion for summary judgment. Tierra Ranchos Homeowners Ass'n v. Kitchukov, 216 Ariz. 195, 199, ¶ 15, 165 P.3d 173, 177 (App. 2007). The moving party must establish that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Ariz. R. Civ. P. 56(c)(1); Accord Nat l Bank of Ariz. v. Thruston, 218 Ariz. 112, 114-15, ¶ 12, 180 P.3d 977, 979-80 (App. 2008). ¶14 Regarding mechanics lien be completion and time limits applicable materialmen s liens, Arizona recorded of a the within building, one hundred structure 8 or to law twenty perfecting requires days improvement, the after or any alteration or repair of such building, structure or improvement . . . . A.R.S. § 33-993(A). For purposes of determining when the 120-day lien period commences, § 33-993 further provides: C. For the purposes of subsection A of this section, completion means the earliest of the following events: 1. Thirty days after final inspection and written final acceptance by the governmental body which issued the building permit for the building, structure or improvement. 2. Cessation of labor for a period of sixty consecutive days, except when such cessation of labor is due to a strike, shortage of materials or act of God. D. If no building permit is issued or if the governmental body that issued the building permit for the building, structure or improvement does not issue final inspections and written final acceptances, then completion for the purposes of subsection A of this section means the last date on which any labor, materials, fixtures or tools were furnished to the property. 8 A.R.S. § 33-993 (emphasis added). ¶15 The parties dispute is essentially over when completion, as defined by § 33-993, occurred; namely, whether (C) or (D) applies. The parties agree that Allied completed 8 Based on Sandor s belief that the completion date occurred on or about March 13, 2008 the last day Allied provided labor or materials - Sandor could have limited the lien period to sixty days after that date by properly recording a notice of completion pursuant to A.R.S. § 33-993(E). See A.R.S. § 33-993(A). Nothing in the record, however, indicates Sandor attempted to do so. 9 work on the east/west corridor of the building by March 13, 2008, that Allied completed work on Suite 105 on May 15, 2008, and that the lien was filed on July 25, 2008. The parties do not agree, however, as to whether a building permit issued for the work was open. ¶16 Allied included with its second summary judgment motion a copy of its credit manager s declaration that, a day or two before the Lien was recorded, she was informed by Scottsdale representatives Scottsdale, the based on Building was the of lack not a complete request for because a final inspection, had not issued a certificate of occupancy regarding the Building. A reasonable inference from these facts is that Scottsdale had issued a permit regarding construction activity at the Building that had not been completed. In response, Sandor included a copy of a Certificate of Occupancy dated May 17, 2006, issued by Scottsdale regarding fire sprinklers in unit 195 of the Building. ¶17 In its response to Sandor s motion for summary judgment, Allied argues that while Sandor assume[s] that no building permit was issued and that Scottsdale does not issue final inspections and written final acceptances, [n]o proof of that has been shown. Rather than offer proof as to a permit, Sandor position maintained its that [b]uilding permits and certificates of occupancies are not relevant for purposes of 10 this case because the completion date is well established by the facts. When the court considered the cross motions for summary judgment it did not address whether the absence of a certificate of occupancy or final inspection in connection with the Building rendered the Work completed pursuant to § 33-993(C)(1). Instead, the court disposed of the issue by focusing on the parties agreement that Allied had completed the Work. ¶18 Because the issuance of a permit is material to whether § 33-993(C)(1), (C)(2), or (D) applies and the record is unclear as to (1) whether a permit was issued by Scottsdale in connection with the work and (2) if so, whether it remained open, the record below summary judgment. is inadequate to support a grant of Accordingly, we vacate the superior court s grant of summary judgment and remand for further proceedings. Further, we vacate the judgment entered against Allied pursuant to A.R.S. § 33-420, and we vacate the award of attorneys fees and costs to Sandor. Based on our resolution of these issues, we need not address other claims of error raised by Allied. ¶19 Finally, Sandor requests its attorneys fees on appeal pursuant to A.R.S. § 12-341.01(A). successful party, we deny its request. As Sandor is not the Allied requests a fee award based on Sandor s agreement set forth in the Contract to pay Allied s legal fees. We agree that Allied is entitled to an award of its reasonable fees incurred on appeal pursuant to the 11 Contract. The superior court is instructed to take into account Allied s reasonable appellate fees at the conclusion of this matter. Conclusion ¶20 This matter is remanded for further proceedings consistent with this decision. /s/ ____________________________ DANIEL A. BARKER, Judge CONCURRING: /s/ ____________________________________ PATRICK IRVINE, Presiding Judge /s/ ____________________________________ PATRICIA K. NORRIS, Judge 12

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