Global v. Maxim et al

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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 GLOBAL COLLECTIONS CORPORATION, ) a foreign corporation, ) ) Plaintiff/Appellee, ) ) v. ) ) MAXIM LIMOUSINE SERVICES, LLC, ) an Arizona limited liability ) company; HANDEL COMPANIES, LLC, ) an Arizona limited liability ) company dba AZ OUTCALL ESCORTS; ) and SHANE R. HANDEL, as personal) guarantor, ) ) Defendants/Appellants. ) ________________________________) No. 1 CA-CV 10-0426 DIVISION ONE FILED: 05/24/2011 RUTH A. WILLINGHAM, CLERK BY: GH DEPARTMENT D MEMORANDUM DECISION Not for Publication (Rule 28, Arizona Rules of Civil Appellate Procedure) Appeal from the Superior Court in Maricopa County Cause No. CV2007-010512 The Honorable J. Kenneth Mangum, Judge AFFIRMED IN PART, REVERSED IN PART, AND REMANDED Tacker & Associates, PLLC By George A. Tacker Attorneys for Defendants/Appellants Hammerman & Hultgren, P.C. By Jon R. Hultgren Attorneys for Plaintiff/Appellee G E M M I L L, Judge Avondale Phoenix ¶1 Maxim Limousine Services, LLC ( Maxim ), Handel Companies, LLC ( Handel Companies ), and Shane Handel appeal the trial court s summary judgment ruling Collections Corporation ( Global ). in favor of Global Global concedes on appeal that there may be a genuine issue of material fact at issue in relation to Maxim s liability, and we reverse the summary judgment as to Maxim only and remand for further proceedings. We affirm the trial court s judgment regarding Shane Handel and Handel Companies because we find no genuine issue of material fact and Global is entitled to summary judgment against them. BACKGROUND ¶2 In June 2007, Global Collections Corporation filed a complaint against Maxim, Shane Handel, and Handel Companies 1 claiming that they purchased advertising from Global s assignor, Dex Media, Inc., from July 2005 to February 2007 and failed to pay the appropriate charges when due. The complaint alleged that Shane Handel personally guaranteed the debt on behalf of Handel Companies. The complaint further asserted that Maxim and Handel $137,330.93, owed them plus accruing interest at the contract rate of 18% per year. ¶3 Handel In their answer, Handel and Maxim admitted that Shane and Handel Companies entered 1 into the contracts with For ease of reference, we will refer to Shane Handel and Handel Companies collectively and singularly as Handel unless the context requires otherwise. 2 Global but contracts. because asserted that Maxim had never entered into the Handel alleged that they did not make the payments the original misrepresentations holder of regarding the the contracts made effectiveness material of the advertising and that they would generate substantial business. Handel also alleged numerous affirmative defenses including illegality. ¶4 Global moved for summary judgment in August 2008, but the court denied the motion without prejudice to allow Global to renew the motion after the conclusion of discovery. ¶5 Global again moved for summary judgment in December 2009, asserting that Handel refused to pay the balance owed on the contracts and that the amount due then totaled $269,156.14. ¶6 Handel and Maxim responded and again argued that Maxim had never entered into a contract with Global. stated that Handel Companies was in Handel also compliance with local ordinances regulating escort companies at the time the contracts were originally signed in 2002. Shane Handel failed to renew the registration beyond the initial one-year registration with the City of Phoenix, thus resulting in Handel Companies becoming unauthorized to do business as an escort company. Handel argued that any advertising by Handel Companies after the registration expired would in effect illegal businesses. be an illegal contract advertising Relying on case law, Handel asserted the 3 defense of illegality and maintained that the contracts were unenforceable because the terms advertise for illegal services. of the contract were to In addition, Handel alleged that Shane Handel continued his advertisements based upon the representations of a increases in revenue. Dex agent who made statements about Handel argued that the businesses had seen decreases in 2005, and Shane Handel intended to not renew any of his contracts for 2006, but the agent advised Handel about the increase of fifty percent within three months which induced Handel into continuing the contract. ¶7 The trial court granted Global s motion and entered judgment for $137,330.93, plus accruing interest on the principal at a rate of 18% per year, and awarded Global $7393 in attorneys fees and $353 in costs. ¶8 Maxim and Handel timely appeal. pursuant to Arizona Revised Statutes We have jurisdiction ( A.R.S. ) section 12- 2101(B) (2003). DISCUSSION ¶9 Maxim and Handel argue that the trial court erred in granting Global s motion for summary grant of summary judgment de novo. judgment. We review a Andrews v. Blake, 205 Ariz. 236, 240, ¶ 12, 69 P.3d 7, 11 (2003). Summary judgment may be granted when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. 4 Orme School v. (1990); Reeves, Ariz. R. 166 Ariz. Civ. P. 301, 309, 56(c)(1). 802 P.2d Summary 1000, judgment 1008 is appropriate only if the facts produced in support of the [other party s] 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 School, 166 Ariz. at 309, 802 P.2d at 1008. ¶10 Maxim argues that, although Shane Handel owned both Maxim and Handel Companies, he personally signed the guaranty to Dex Media only for Handel Companies, and not for Maxim. Global concedes on appeal that there may be an issue of fact regarding the liability of Maxim given that the guaranty references only Handel Companies. Global, however, maintains that there are no issues of fact which would render the trial court s decision to grant summary Companies. judgment as to [Shane] Handel and Handel On this record and in light of Global s concession regarding Maxim, we conclude the trial court erred in granting summary judgment against Maxim. ¶11 because Handel the argues that advertisements the were argument fails for two reasons. contracts for were illegal unenforceable services. This First, although we recognize that a contract may be unenforceable if the acts to be performed under the contract are illegal or against public policy, Handel 5 admits that the companies were properly registered at the time of the original contracts and that Handel failed to renew the registrations, which then compliance with city codes. 184, 619 P.2d 9, 12 caused the companies to be out of See White v. Mattox, 127 Ariz. 181, (1980) (noting that recovery under a contract will be denied if the acts to be performed under the contract are themselves illegal or contrary to public policy. ). Handel cannot advertised excuse services, its breach through of contract Handel s own by causing fault, to the become illegal and then claim the contracts are unenforceable on the basis of illegality. ¶12 Second, even if the escort services provided by the advertised companies were illegal because of the absence of proper licenses or registration, it does not follow that performance under the contracts -- advertising by Dex Media for payment by Handel -- is illegal. Handel has not presented any statutory, case law, or other authority establishing that the advertising itself was illegal even assuming that the providing of the escort services was illegal. Accordingly, we do not find Handel s illegality argument to be persuasive. See White, 127 Ariz. at 184, 619 P.2d at 12 (finding that because the act of transferring a liquor license was not per se illegal, recovery of the purchase price for the withheld). 6 license should not have been ¶13 In addition, representative made Handel material argues that misrepresentations Shane Handel to enter into the contracts. a Dex that Media induced Handel relies on Restatement of Contracts § 476(1) (1932), which states: Where a party is induced to enter into a transaction with another party that he was under no duty to enter into by means of the latter s fraud or material misrepresentation, the transaction is voidable as against the latter and all who stand in no better position. See also Horne v. Timbanard, 6 Ariz. App. 518, 520, 434 P.2d 520, 522 (1967) ( We have indicated in two prior decisions that we believe § 476 of the Restatement of Contracts . . . is part of the law of this jurisdiction. ). ¶14 The only evidence Handel puts forth regarding the allegation of misrepresentation is contained within an affidavit by Shane Handel, in which he stated that he did not terminate the contracts because I was promised by the account executive in charge of my accounts that if I continued with the advertisements he recommended I would see a substantial increase in revenues in the next three months after authorizing the advertisements. ¶15 We initially note that the misrepresentation described by Shane Handel may constitute sales puffery but does not constitute a representation of fact. Shane Handel s affidavit, the 7 Dex Assuming the truth of Media account executive recommended that Handel would see a substantial increase in revenues from the advertising. fact but estimate rather or This is not a representation of an expression prediction -- of not a the misrepresentation claim can be built. Ariz. 1, 5, 53 representations P.2d as to 64, the salesman s 66 stuff upon which or a See Law v. Sidney, 47 (1936) future opinion value ( [S]tatements or profitableness or or prospects of a business are mere expressions of opinion, and a representation that something will be done in the future . . . is at most a contract and not a fraudulent representation. ); Ahmed v. Collins, 23 Ariz. App. 54, 56-57, 530 P.2d 900, 902-03 (App. 1975) (fraud claim cannot be based on unfulfilled statements about future events). ¶16 We further note that Handel s asserted facts do not satisfy the elements of fraudulent misrepresentation. for fraudulent misrepresentation requires: A claim 1) a false material representation made with the speaker s knowledge of its falsity or ignorance of its truth and with the intent that it be acted upon by the listener ; 2) the listener s ignorance of its falsity, reliance on its truth, and right to rely on its truth ; and, 3) a resulting and proximate injury. Dillon v. Zeneca Corp., 202 Ariz. 167, 172, ¶ 13, 42 P.3d 598, 603 (App. 2002); see Restatement (Second) of Torts § 526 (1977) ( A misrepresentation is fraudulent if the maker[:] (a) knows or 8 believes that the matter is not as he represents it to be, (b) does not have the confidence in the accuracy of his representation that he states or implies, or (c) knows that he does not have the basis for his representation that he states or implies. ). Handel has failed to provide evidence that the Dex Media agent knew the statement regarding increased revenue was false and intended that falsity to cause Shane Handel to sign the contract for advertisements. ¶17 On provide this record, controverting summary judgment. we conclude evidence to that defeat Handel Global s does not motion for Accordingly, Global s claims against Handel were properly resolved in Global s favor by summary judgment. ¶18 Global, Maxim, and Handel all request attorneys fees be awarded to them on appeal. In any contested action arising out of a contract, express or implied, the court may award the successful party 341.01(A) (2003). Handel. reasonable Global attorney has fees. prevailed on A.R.S. § 12- appeal against Maxim has prevailed on appeal against Global. In our discretion, we decline to award attorneys fees to any party, without prejudice to a future award by the trial court upon resolution of all issues. We do determine, however, that Global is entitled to its taxable costs incurred on appeal, subject to its compliance with Arizona Rule of Civil Appellate Procedure 21. See A.R.S. § 12-341. 9 CONCLUSION ¶19 For the foregoing reasons, we affirm the summary judgment entered in favor of Global against Shane Handel and Handel Companies, but we reverse the summary judgment entered against Maxim and remand for further proceedings. ____/s/__________________________ JOHN C. GEMMILL, Judge CONCURRING: ____/s/____________________________ PATRICK IRVINE, Presiding Judge ____/s/____________________________ ANN A. SCOTT TIMMER, Chief Judge 10

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