Opinion
No. 1 CA-CV 18-0355
04-23-2019
GOE3 LLC, Plaintiff/Appellant, v. BROADBAND TELCOM POWER INC., Defendant/Appellee.
COUNSEL Horne Slaton PLLC, Scottsdale By Thomas C. Horne Counsel for Plaintiff/Appellant Sanders & Parks, PC, Phoenix By Jeffrey L. Smith Counsel for Defendant/Appellee
NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
Appeal from the Superior Court in Maricopa County
No. CV2016-051074
The Honorable John R. Hannah, Jr., Judge
AFFIRMED
COUNSEL
Horne Slaton PLLC, Scottsdale
By Thomas C. Horne
Counsel for Plaintiff/Appellant
Sanders & Parks, PC, Phoenix
By Jeffrey L. Smith
Counsel for Defendant/Appellee
MEMORANDUM DECISION
Judge Peter B. Swann delivered the decision of the court, in which Presiding Judge James B. Morse Jr. and Judge Jon W. Thompson joined.
SWANN, Judge:
¶1 GoE3 LLC appeals the superior court's entry of summary judgment on its breach of contract claim against Broadband Telecom Power Inc., and the denial of its motion seeking leave to amend the complaint to add a negligence claim. We affirm.
FACTS AND PROCEDURAL HISTORY
¶2 GoE3 installs and sells electric-vehicle charging stations. In late 2013, GoE3 ordered charging units from distributor Advanced Charging Technologies ("ACT"), which ACT then ordered from manufacturer Broadband. According to GoE3, the units either arrived late or were defective.
¶3 GoE3 brought a breach of contract action against ACT and Broadband, but later voluntarily dismissed ACT. Broadband moved for summary judgment on the ground that it had no contract with GoE3. GoE3 argued in response that it was a third-party beneficiary of Broadband's supply agreement with ACT because, among other things, GoE3 worked directly with Broadband regarding equipment specifications. GoE3 alternatively requested leave to amend its complaint to assert a negligence claim against Broadband.
¶4 The superior court granted summary judgment to Broadband, concluding that GoE3 failed to establish that it was a third-party beneficiary of the Broadband-ACT contract. The court denied leave to amend, concluding that Broadband, as a supplier of goods, did not owe GoE3 a duty of care "to deliver the correct goods on time and without defects." The court awarded Broadband $57,680.50 in attorney's fees and $246.50 in taxable costs.
¶5 GoE3 timely appeals.
DISCUSSION
I. THE SUPERIOR COURT DID NOT ERR BY GRANTING BROADBAND'S MOTION FOR SUMMARY JUDGMENT.
¶6 On review of a grant of summary judgment, we determine de novo whether any genuine issues of material fact exist and whether the superior court properly applied the law. Sign Here Petitions LLC v. Chavez, 243 Ariz. 99, 104, ¶ 13 (App. 2017). We view the facts and reasonable inferences therefrom in the light most favorable to the non-prevailing party.
Rasor v. Nw. Hosp., LLC, 243 Ariz. 160, 163, ¶ 11 (2017). Summary judgment should be granted only "if the facts produced in support of [a] claim . . . 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." Orme Sch. v. Reeves, 166 Ariz. 301, 309 (1990).
¶7 On appeal, GoE3 again contends that it was a third-party beneficiary of the contract between Broadband and ACT. Under Arizona law, a party outside of a contract may recover as a third-party beneficiary "only if (1) 'an intention to benefit [the claimant is] indicated in the contract itself'; (2) '[t]he contemplated benefit [is] both intentional and direct'; and (3) 'it . . . definitely appear[s] that the parties intend to recognize the third party as the primary party in interest.'" Ansley v. Banner Health Network, 1 CA-CV 17-0075, 2019 WL 1121374, at *10, ¶ 45 (Ariz. App. March 12, 2019) (citation omitted) (emphasis added). Merely showing that the contract may benefit the claimant is insufficient—"it must appear that the parties intended to recognize [the third party] as the primary party in interest and as privy to the promise." Basurto v. Utah Constr. & Mining Co., 15 Ariz. App. 35, 39 (1971). "The contemplated benefit must be both intentional and direct, and 'it must definitely appear that the parties intent to recognize the third party as the primary party in interest.'" Norton v. First Fed. Sav., 128 Ariz. 176, 178 (1981) (citation omitted). Whether a third party is an intended or incidental beneficiary of a contract is a question of law. Maganas v. Northroup, 135 Ariz. 573, 575 (1983).
¶8 GoE3 first cites Broadband's bid to ACT, labeled a "Proposal For Go E3," which GoE3 contends was part of an "exchange of emails" that formed a contract between Broadband and ACT. But despite its title, none of the bid's terms suggest any intent to recognize GoE3 as the primary party in interest and as privy to the promise. The mere fact that Broadband submitted a bid to ACT does not evince any intent on the part of either Broadband or ACT to give GoE3 the legal right to enforce their agreement. Indeed, the existence of a separate GoE3-ACT agreement covering the same equipment suggests the opposite.
¶9 GoE3 next contends that "[t]he 'privity' barrier protecting manufacturers has undergone a process of slow dismantlement over the past century," citing implied-warranty cases such as Sirrah Enterprises, LLC v. Wunderlich, 242 Ariz. 542 (2017), and Richards v. Powercraft Homes, Inc., 139 Ariz. 242 (1984), as well as Uniform Commercial Code ("UCC") § 2-314 (which is codified in Arizona at A.R.S. § 47-2314). GoE3 did not plead a breach of implied warranty claim and did not raise the issue in its response to Broadband's summary-judgment motion. We do not consider new
theories raised for the first time on appeal from a grant of summary judgment. Napier v. Bertram, 191 Ariz. 238, 239, ¶ 6 (1998).
¶10 GoE3 also contends that "the continued dealings directly between GOe3 and Broadband . . . created a contractual relationship between them." But GoE3's chief executive officer stated by declaration only that several Broadband employees had "worked with" GoE3 regarding the equipment. And the series of emails cited by GoE3 were sent between September 2014 and January 2016, well after ACT placed its order with Broadband in March 2014. They do not evince an intent on the part of either Broadband or ACT to make GoE3 a third-party beneficiary of their agreement. We therefore conclude that the superior court did not err by granting summary judgment to Broadband.
II. THE SUPERIOR COURT DID NOT ABUSE ITS DISCRETION BY DENYING GOE3'S MOTION FOR LEAVE TO AMEND ITS COMPLAINT.
¶11 GoE3 next contends that the superior court erred by denying leave to amend the complaint to assert a negligence claim against Broadband. Leave to amend, when sought before trial, should be freely given when justice requires. Ariz. R. Civ. P. 15(a)(2). We review the denial of a motion for leave to amend for an abuse of discretion. Alosi v. Hewitt, 229 Ariz. 449, 452, ¶ 13 (App. 2012). It is not an abuse of discretion to deny a futile amendment. Id.
¶12 GoE3's proposed negligence claim is futile for two reasons. First, GoE3 sued Broadband and ACT based on the allegedly defective equipment and delayed delivery. "[W]hen a defect renders a product substandard or unable to perform the functions for which it was manufactured, the purchaser's remedy for disappointed commercial expectations is through contract law." Flagstaff Affordable Hous. Ltd. P'ship v. Design All., Inc., 223 Ariz. 320, 323, ¶ 14 (2010) (citation omitted). Second, negligence requires that the defendant owe a duty of care. Quiroz v. ALCOA Inc., 243 Ariz. 560, 563-64, ¶ 7 (2018). Arizona law does not impose a general duty to exercise care for the purely economic well-being of others; such a duty arises only if there are special reasons to impose it. Lips v. Scottsdale Healthcare Corp., 224 Ariz. 266, 268, ¶ 11 (2010). GoE3 identifies no such reasons establishing a duty of care owed to it by Broadband. GoE3 instead argues that a duty arose under Alaska's seven-factor duty framework, as set forth in South Peninsula Hospital v. Xerox State Healthcare LLC, 223 F. Supp. 3d 929 (D. Alaska 2016). The first of those seven factors is "the foreseeability of harm to the plaintiff," id. at 939, a consideration that
is not part of the duty analysis under Arizona law, Quiroz, 243 Ariz. at 564-65, ¶¶ 11-12. GoE3's proposed amendment was futile, and the court therefore acted within its discretion to deny leave to amend.
III. THE SUPERIOR COURT DID NOT ABUSE ITS DISCRETION BY AWARDING ATTORNEY'S FEES TO BROADBAND.
¶13 GoE3 finally contends that the superior court awarded excessive attorney's fees to Broadband under A.R.S. § 12-341.01. We review the amount of a fee award for an abuse of discretion. Lee v. ING Inv. Mgmt., LLC, 240 Ariz. 158, 161, ¶ 11 (App. 2016). We review the record in the light most favorable to upholding the award. In re Indenture of Trust Dated Jan. 13, 1964, 235 Ariz. 40, 51, ¶ 41 (App. 2014). We will not disturb the award if there is any reasonable basis for it in the record. Rudinsky v. Harris, 231 Ariz. 95, 101, ¶ 27 (App. 2012).
¶14 GoE3, citing Scott Fetzer Co., Kirby Co. Div. v. Weeks, 786 P.2d 265 (Wash. 1990), contends that the fee award should be substantially reduced because the case was "decided on summary judgment with no depositions." Scott Fetzer (which GoE3 did not cite in any of its three objections to Broadband's fee application) involved a Washington statute authorizing reasonable fee awards to foreign defendants who prevail on jurisdictional grounds. Id. at 266. The court held that a reasonable fee award thereunder would be limited to those fees caused by the exercise of long-arm jurisdiction. Id. at 272. Scott Fetzer is inapposite because it applies a statute substantially different from A.R.S. § 12-341.01.
¶15 While GoE3 contended in its first objection that Broadband's claimed fees were "excessive in the extreme," it identified in its second objection only approximately 40 hours of purportedly excessive billings. "[A]ppellants cannot be heard to complain of the amount awarded by the trial court" when they object to fees as exorbitant but present "no evidence . . . in support of this claim or as to an amount which would have been reasonable under the circumstances." Dillig v. Fisher, 142 Ariz. 47, 51 (App. 1984). Further, GoE3's remaining objections involved Broadband's counterclaims, which the parties agreed to dismiss, and GoE3 does not re-urge those arguments on appeal. We therefore conclude that the superior court acted within its discretion in awarding fees.
CONCLUSION
¶16 We affirm for the reasons set forth above. Broadband requests attorney's fees on appeal under A.R.S. § 12-341.01. We will award Broadband its reasonable attorney's fees and taxable costs incurred in this
appeal upon its compliance with ARCAP 21. See Nolan v. Starlight Pines Homeowners Ass'n, 216 Ariz. 482, 490, ¶ 36 (App. 2007) ("[A] court may award fees to a defendant in a contract action if the defendant prevails on the basis that there is no contract . . . .").