SHOW BASEBALL, INC. v. SANTA CRUZ COUNTY, ARIZONA (pdf)

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IN THE ARIZONA COURT OF APPEALS DIVISION TWO SHOW BASEBALL, INC. A 501(C)(3) ARIZONA NOT FOR PROFIT CORPORATION, Plaintiff/Appellant, v. SANTA CRUZ COUNTY, ARIZONA, A BODY POLITIC, Defendant/Appellee. No. 2 CA-CV 2023-0132 Filed November 20, 2023 THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. NOT FOR PUBLICATION See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f). Appeal from the Superior Court in Pima County No. C20221976 The Honorable Cynthia T. Kuhn, Judge AFFIRMED COUNSEL Law Firm of Marc Mauseth, Tubac By Marc Mauseth Counsel for Plaintiff/Appellant Humphrey & Peterson P.C., Tucson By Andrew J. Peterson Counsel for Defendant/Appellee SHOW BASEBALL v. SANTA CRUZ CNTY. Decision of the Court MEMORANDUM DECISION Judge O’Neil authored the decision of the Court, in which Vice Chief Judge Staring and Judge Sklar concurred. O’ N E I L, Judge: ¶1 Show Baseball, Inc. appeals from the trial court’s grant of summary judgment in favor of Santa Cruz County. We affirm. Factual and Procedural Background ¶2 We view the facts in the light most favorable to the party opposing summary judgment. See HCZ Constr., Inc. v. First Franklin Fin. Corp., 199 Ariz. 361, ¶ 7 (App. 2001). In September 2020, Show Baseball purchased land in Santa Cruz County that was zoned B-2, a designation that at that time included medical marijuana dispensary off-site cultivation as a permitted use. Show Baseball subsequently leased the property to a third party to use the land for that purpose. ¶3 In 2021, the county adopted two ordinances providing definitions and use standards for marijuana off-site cultivation facilities. Santa Cruz Cnty. Board of Supervisors Ordinance 2021-03 (Mar. 2, 2021); Santa Cruz Cnty. Board of Supervisor Ordinance 2021-05 (Apr. 4, 2021). Ordinance 2021-03 amended articles 2 and 9 and added article 30 to the Santa Cruz County Zoning and Development Code. Ordinance 2021-05 amended article 30. Section 9920(B)(14) of article 9 previously provided that medical marijuana dispensary off-site cultivation was a permitted use for land zoned B-2. As relevant here, Ordinance 2021-03 amended § 9920(B)(13) and (14) to remove off-site cultivation as a permitted use for land zoned B-2. ¶4 Show Baseball filed a notice of claim alleging the “change in the permitted uses constitute[d] a regulatory taking” that significantly diminished the value of Show Baseball’s property. The county and Show Baseball later resolved the dispute and entered into a “Release and Settlement Agreement.” The agreement granted Show Baseball a “binding waiver of enforcement of Ordinance #2021-03 and #2021-05,” but required Show Baseball to comply with all other “Santa Cruz County codes, regulations, restrictions, ordinances, and other relevant provisions.” In a 2 SHOW BASEBALL v. SANTA CRUZ CNTY. Decision of the Court series of emails exchanged during settlement negotiations, a county representative stated as follows: We believe that the grant would put you in the same position you would have been before the Ordinances were enacted, as you requested. That would mean that you would not be required to apply for a conditional use permit to cultivate marijuana on your parcel, it would be a permitted use. You would also not be required to request any type of rezoning. However, all non-profit medical marijuana dispensaries and marijuana establishments, along with their off-site cultivation locations, must comply with all other state and local laws and regulations for required building, flood, and ROW permits, as well as State licensure requirements, among others, as they may apply in your situation. This would put you in the same situation you would have been in prior to enactment of the Ordinances. Show Baseball replied to this email without expressing any disagreement with the county’s explanation. Show Baseball assured the county it “certainly will do anything that is reasonably required to obtain building permits and approvals.” ¶5 The same day it signed the agreement, Show Baseball applied for a building permit. The county conducted an administrative completeness review of the application and told Show Baseball it could not accept its application due to various deficiencies, including “missing information per” article 15, § 1505.1 of the code in Show Baseball’s development plan. ¶6 Show Baseball filed a second notice of claim alleging the county “materially breached the settlement agreement.” It later filed a complaint against the county for breach of contract. Show Baseball alleged the county had breached the agreement by refusing to consider its building permit “until [it] submits a satisfactory development plan.” Due to this alleged breach, Show Baseball asserted it was “free to pursue” an action for a regulatory taking. 3 SHOW BASEBALL v. SANTA CRUZ CNTY. Decision of the Court ¶7 The county filed a motion for summary judgment. The trial court granted the motion. It reasoned that “Show Baseball’s notice of claim and the parties’ email communications . . . establish[ed] that the intent of the Agreement was to place Show Baseball in the same position as existed before passage of the Ordinance,” such that the development plan requirement applied. ¶8 The trial court entered judgment in favor of the county and dismissed the complaint with prejudice. Show Baseball appealed. We have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1). Discussion ¶9 Show Baseball’s appeal challenges the trial court’s ruling on summary judgment. It asserts the plain language of the agreement provides an “exemption from everything contained in” Ordinances 2021-03 and 2021-05. It further argues the court erred by considering parol evidence because, according to Show Baseball, the evidence contradicted the plain language of the agreement. Even if the court properly considered the parol evidence, Show Baseball argues that “factual disputes regarding the meaning and interpretation of the parol evidence” precluded summary judgment.1 We disagree with Show Baseball’s interpretation of the agreement, and we conclude that its unambiguous terms support the court’s entry of summary judgment.2 ¶10 Summary judgment is proper when “the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.” Ariz. R. Civ. P. 56(a). We review 1Show Baseball argues for the first time in its reply brief that this is “a case of contract mistake.” We do not consider new arguments raised in a reply brief. See Phelps v. Firebird Raceway, Inc., 210 Ariz. 403, n.1 (2005). 2Neither party has asked us to address the validity of the agreement, including the required process for a “binding waiver of enforcement of the land use law” under A.R.S. § 12-1134(E), whether a private agreement between a property owner and a county can constitute a valid waiver, or the possible consequences where a purported waiver is invalid. We therefore express no opinion on the issue. See Hart v. Bayless Inv. & Trading Co., 86 Ariz. 379, 383 (1959) (providing that courts do not address zoning ordinance’s validity if “the legal issues presented can be disposed of on some other grounds”). 4 SHOW BASEBALL v. SANTA CRUZ CNTY. Decision of the Court the trial court’s grant of summary judgment de novo. See Dinsmoor v. City of Phoenix, 251 Ariz. 370, ¶ 13 (2021). “On appeal from summary judgment, we must determine whether any material factual disputes exist and, if not, whether the trial court correctly applied the law.” Cliff Findlay Auto., LLC v. Olson, 228 Ariz. 115, ¶ 8 (App. 2011). ¶11 Principles of contract law govern the interpretation of settlement agreements. Emmons v. Superior Court, 192 Ariz. 509, ¶ 14 (App. 1998). “The purpose of contract interpretation is to determine the parties’ intent and enforce that intent.” Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588, ¶ 9 (App. 2009). We first consider the plain meaning of the words. See id. When the terms of a contract are clear and unambiguous, we “give effect to the contract as written.” Id. (quoting Grubb & Ellis Mgmt. Servs., Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, ¶ 12 (App. 2006)). A court may also consider “evidence, other than the writing,” that “illuminate[s] the meaning of the contract language, or demonstrate[s] the parties’ intent.” Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 152-54 (1993) (“[C]ontract ambiguity is not the only linchpin of a court’s decision to admit parol evidence.”). We review a trial court’s interpretation of a settlement agreement de novo, see Burke v. Ariz. State Ret. Sys., 206 Ariz. 269, ¶ 6 (App. 2003), and whether an agreement’s terms are “reasonably susceptible to more than one interpretation is a question of law,” see Grosvenor Holdings, L.C., 222 Ariz. 588, ¶ 9; cf. Leo Eisenberg & Co. v. Payson, 162 Ariz. 529, 532 (1989) (“If the agreement can be reasonably construed in more than one manner, the terms are ambiguous and subject to a determination by the trier of fact about the intent of the parties, based on extrinsic evidence.”). ¶12 Article 15, § 1505 of the code requires a development plan for all property zoned B-2, which includes Show Baseball’s property. The pertinent language in the agreement provides “a binding waiver of enforcement of Ordinance #2021-03 and #2021-05 to Show Baseball, Inc. for Santa Cruz County parcel number 111-07-012.” Ordinance 2021-03 amended language contained in articles 2 and 9 and added article 30 to the code; Ordinance 2021-05 amended article 30. To illustrate the amended language as it would appear in the code, the ordinances included both “clean” and “redline” versions of the affected articles as exhibits. Ordinance 2021-03; Ordinance 2021-05. Neither ordinance amended any provision of article 15. But Show Baseball asserts the “waiver of enforcement of Ordinance #2021-03 and #2021-05” constitutes an exemption “from anything and everything that is mentioned or required in the two waived ordinances,” apparently including the entirety of each article included as an exhibit and any other sections of the code mentioned 5 SHOW BASEBALL v. SANTA CRUZ CNTY. Decision of the Court in those exhibits. Specifically, Ordinance 2021-03 added § 3005 to the code, which states that “[e]stablishment of . . . Marijuana Off-Site Cultivation Facilities . . . shall require review and approval of a Development Plan in accordance with Article 15, Section 1505.” By this reference, Show Baseball argues it is exempt from the development plan requirement of article 15, § 1505. ¶13 Show Baseball asserts that nothing in the agreement “limits the binding waiver of enforcement to only things that changed in March and April of 2021.” It adds that “[t]here is nothing in the written agreement which makes any mention of restoring [it] to a pre-zoning change position or to simply restoring off-site cannabis cultivation as a permitted use on B2 zoned parcels.” Show Baseball concludes that the agreement must be read as “an unconditional waiver of enforcement (essentially an exemption) from everything contained within the 150 plus pages of zoning rules,” including the development plan requirement. But this result is inconsistent with the plain language of the agreement. ¶14 The agreement provides that the waiver of enforcement “shall apply only to Santa Cruz County Zoning Ordinances 2021-03 and 2021-05. All other Santa Cruz County codes, regulations, restrictions, ordinances, and other relevant provisions shall still apply to the property.” As noted, the development plan requirement is contained in article 15 of the code, which was unaffected by either ordinance and was not included in any exhibit. By its own terms, § 1505 of article 15 requires a development plan for “[a]ll . . . commercial (B1/B2) development projects.” Show Baseball concedes that this requirement applied to its property even before the disputed ordinances amended the code. Section 3005, as adopted by Ordinance 2021-03, simply applies the development plan requirement to certain uses such as off-site cultivation, even in zones not otherwise subject to the development plan requirement under article 15, § 1505. ¶15 The agreement did not exempt Show Baseball from any provision of the code. Instead, it waived enforcement of two ordinances whose sole effect was to amend the code. The waiver, therefore, relieves Show Baseball from enforcement of those amendments. But the county remains free to enforce code provisions that were unaffected by the amendments or that were in effect before the amendments. This necessarily includes the development plan requirement in article 15. It also includes any prior ordinances that adopted, amended, or otherwise defined the provisions of the code in effect before Ordinances 2021-03 and 2021-05 passed. For example, the county is precluded from enforcing the 6 SHOW BASEBALL v. SANTA CRUZ CNTY. Decision of the Court amendments to § 9920(B)(13) and (14) removing off-site cultivation as a permitted use for land zoned B-2. Instead, Show Baseball benefits from the prior, unamended version of § 9920(B)(14) identifying off-site cultivation as a permitted use. The agreement only prohibited the county from enforcing two ordinances that amended the code. The county did not enforce the two ordinances named in the agreement by enforcing the code as it existed apart from those ordinances. ¶16 The meaning of the agreement is unambiguous, leaving “no need or room for construction or interpretation.” Grosvenor Holdings, L.C., 222 Ariz. 588, ¶ 9 (quoting Mining Inv. Grp., L.L.C. v. Roberts, 217 Ariz. 635, ¶ 16 (App. 2008)). The plain language of the agreement waives enforcement of Ordinances 2021-03 and 2021-05, restoring Show Baseball to the position it was in before the ordinances amended the code. ¶17 This interpretation is also consistent with evidence of the parties’ email communications concerning the agreement. Show Baseball suggests the trial court erred by considering this evidence in its ruling on summary judgment. Under the parol evidence rule, extrinsic evidence may not be used “to vary or contradict the terms of the contract.” Roe v. Austin, 246 Ariz. 21, ¶ 17 (App. 2018). Extrinsic evidence is admissible, however, to aid in contract interpretation so long as the contractual language is “‘reasonably susceptible’ to the interpretation asserted by its proponent.” Taylor, 175 Ariz. at 154. Because this evidence supports an interpretation that is consistent with the language of the agreement, the court did not err by considering it. ¶18 Show Baseball further argues, however, that “factual disputes regarding the meaning and interpretation of the parol evidence” precluded summary judgment. Specifically, Show Baseball asserts that it provided affidavits to dispute the county’s assertion that the parties intended to restore Show Baseball to its prior position. Show Baseball’s attorney, Marc Mauseth, avowed in an affidavit that Show Baseball “never understood” the agreement to mean the parties would be restored to the position they were in before enactment of the ordinances. Show Baseball’s president signed another affidavit, avowing that “the settlement offer . . . contained the very material and important to us provisions that we would be exempt from the requirement of a development plan as well as being exempt from several other zoning code restrictions.” These affidavits, however, fail to raise any genuine issue of material fact in light of the plain language of the agreement and the parties’ communications concerning its meaning. “A ‘genuine’ issue is one which requires a trial, i.e., one which a reasonable 7 SHOW BASEBALL v. SANTA CRUZ CNTY. Decision of the Court trier of fact could decide in favor of the party adverse to summary judgment on the available evidentiary record.” United Bank of Ariz. v. Allyn, 167 Ariz. 191, 195 (App. 1990) (quoting Fed. R. Civ. P. 56). ¶19 During settlement negotiations, in answer to Mauseth’s email questioning the meaning of a “waiver of enforcement” as set forth in the proposed agreement, the county explained “that the grant would put you in the same position you would have been before the Ordinances were enacted, as you requested.” The county further explained that although Show Baseball “would not be required to apply for a conditional use permit” or “to request any type of rezoning,” it “must comply with all other state and local laws and regulations.” In reply, Show Baseball indicated it would review “a ‘redline’ early version of the changes to the ordinance” before accepting the agreement. The parties then discussed possible delays that might result from the county’s “permitting” requirements and other issues, and Show Baseball indicated that it “certainly will do anything that is reasonably required to obtain building permits and approvals.” ¶20 “Affidavits that contain inadmissible evidence, are internally inconsistent, or contradict the affiant’s sworn testimony, and similar items of evidence, may create a scintilla or doubt, but ‘still be insufficient to withstand a motion for summary judgment.’” Florez v. Sargeant, 185 Ariz. 521, 527 (1996) (quoting Orme Sch. v. Reeves, 166 Ariz. 301, 309 (1990)). On this record, conclusory affidavits indicating a contrary subjective understanding of the agreement may at best create a scintilla of doubt, but are inadequate to create a genuine issue for trial. Show Baseball’s assertion that the agreement creates an exemption “from everything contained within the 150 plus pages of zoning rules” is irreconcilable with both the plain language of the agreement and the parties’ communications concerning the meaning of its terms. Attorney Fees ¶21 Show Baseball requests attorney fees pursuant to A.R.S. §§ 121135 and 12-341.01(A). The county requests attorney fees pursuant to § 12341.01, which provides that the court may award the prevailing party attorney fees in an action for breach of contract. Show Baseball argues it is not required to pay attorney fees because this lawsuit was brought due to the diminution in value of Show Baseball’s property. See § 12-1135. Section 12-1135(A) provides a property owner is not liable to any political subdivision for attorney fees in a claim for diminution in value, and § 121135(D) awards “[a] prevailing plaintiff in an action for just compensation that is based on diminution in value . . . reasonable attorney fees.” 8 SHOW BASEBALL v. SANTA CRUZ CNTY. Decision of the Court ¶22 The dispute here, however, is not a claim for diminution of value. The issue before us is whether the county breached the agreement, a claim that sounds in contract. Although the complaint contemplates pursuit of the regulatory taking claim that Show Baseball relinquished pursuant to the agreement, that claim is predicated on a successful claim that the county breached the agreement. Absent such a breach, Show Baseball cannot reach its claim for diminution in value. ¶23 Therefore, and because Show Baseball is not the prevailing party, we deny Show Baseball’s request for attorney fees under § 12-1135 and § 12-341.01. Because this action sounds in contract and the county is the prevailing party, we award the county its attorney fees and costs upon compliance with Rule 21, Ariz. R. Civ. App. P. See A.R.S. §§ 12-341, 12341.01. Disposition ¶24 We affirm the trial court’s grant of summary judgment. 9

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