Opinion
1 CA-CV 11-0780 1 CA-CV 12-0075 1 CA-CV 12-0259
04-09-2013
STATE OF ARIZONA ex rel. VICTOR M. MENDEZ, Director, Department of Transportation, Plaintiff/Appellee, v. STANLEY W. CARSON and ALYCE R. CARSON, husband and wife; CARSON PROPERTIES, L.L.P., an Arizona limited liability partnership; WILLIAM F. STORY and CAROL C. STORY, husband and wife, individually, and as Trustees under Trust dated 02-17-95, Defendants/Appellants. KJN ENTERPRISES, INC., an Arizona corporation; BIG TYME, INC. dba PIT STOP LUBE & OIL, an Arizona corporation; and LNN ENTERPRISES, INC., an Arizona corporation, Cross-Claimants/Appellants, v. STANLEY W. CARSON and ALYCE R. CARSON; CARSON PROPERTIES, L.L.P. , an Arizona limited liability partnership; WILLIAM F. STORY and CAROL C. STORY, husband and wife, individually, and as Trustees under Trust dated 02-17-95, Cross-Defendants/Appellees.
Thomas C. Horne, Arizona Attorney General By Jennifer M. Dorsey, Assistant Attorney General Attorneys for Plaintiff/Appellee Phoenix DeConcini McDonald Yetwin & Lacy PC By Shelton L. Freeman And Matthew J. Mansfield Attorneys for Defendants/Appellants Flagstaff Aspey Watkins & Diesel PLLC By Frederick M. "Fritz" Aspey And Brian Y. Furuya Attorneys for Cross-Claimants/Appellants Flagstaff
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
MEMORANDUM DECISION
(Not for Publication -
Rule 28, Arizona Rules of
Civil Appellate Procedure)
Appeal from the Superior Court in Coconino County
Cause No. CV2005-0518, CV 2005-0576 (Consolidated)
The Honorable Dan R. Slayton, Judge
AFFIRMED IN PART AS MODIFIED; DISMISSED IN PART
Thomas C. Horne, Arizona Attorney General
By Jennifer M. Dorsey, Assistant Attorney General
Attorneys for Plaintiff/Appellee
Phoenix DeConcini McDonald Yetwin & Lacy PC
By Shelton L. Freeman
And Matthew J. Mansfield
Attorneys for Defendants/Appellants
Flagstaff Aspey Watkins & Diesel PLLC
By Frederick M. "Fritz" Aspey
And Brian Y. Furuya
Attorneys for Cross-Claimants/Appellants
Flagstaff KESSLER, Judge ¶1 These appeals arise out of two condemnation actions brought by the State and cross-claims arising out of a lease of property. The superior court entered a final judgment in the condemnation actions and granted summary judgment in the action arising out of the lease. For the reasons stated below, we affirm the superior court's rulings on the cross-claim as modified to reflect that no cross-claim on the basis of the current lease is viable. We also dismiss the appeal from the condemnation action as moot.
FACTUAL AND PROCEDURAL HISTORY
¶2 Carson owns property along State Route 89 ("SR 89") in Flagstaff. In 1997, Carson entered into a ground lease for a portion of its property ("Carson/LNN Lease") with KJN Enterprises, Inc. ("KJN"), which later became LNN Enterprises, Inc. ("LNN"). The other portion of Carson's property was leased to a corporation which later assigned its rights under the lease to Trejo Investments L.P. ("Trejo"). When KJN entered into the lease with Carson, it contemplated using the property to construct and operate a Wendy's fast food restaurant and an auto lube service shop. ¶3 When KJN communicated to the Wendy's corporation the proposed site for the restaurant, Wendy's had concerns about access to the property from SR 89. In response, KJN negotiated with the Arizona Department of Transportation ("ADOT"), Trejo, and Carson to improve access. ADOT agreed to certain construction along SR 89 which included a paved turn lane and traffic signal lights. KJN and Trejo entered into an agreement in which Trejo would permit the ADOT construction and share the expenses, and Trejo would agree to an easement across its property for the purpose of customer access to KJN's parcel. Carson participated in these negotiations and agreed to grant the easement to KJN. As a result, Wendy's approved the franchise, and KJN entered into the lease with Carson. Subsequently, KJN entered into a sublease with Wenzona East Flagstaff, Inc. ("Wenzona"), a corporation formed for the purpose of operating the Wendy's restaurant. Less than one year later, KJN constructed and operated an auto lube shop on the other part of its leased property. ¶4 In June 2000, KJN merged with LNN, which resulted in LNN becoming the surviving entity. The following year, LNN negotiated to buy the auto lube shop located on the property and entered into a second sublease with Big Tyme, Inc. d/b/a Pit Stop Lube & Oil ("Big Tyme"). Both the Wendy's restaurant and the auto lube shop continue to operate on LNN's leased property as of the date of this appeal.
The defendants/appellants in the condemnation action and appeal and defendants/appellees in the cross-claims and appeal are Stanley W. Carson and Alyce R. Carson, William F. Story and Carol C. Story, individually, William F. Story and Carol C. Story as trustees under a Trust Agreement dated February 17, 1995, and Carson Properties L.L.P. The appellate briefs refer to the owners of the property as the Carson Story Parties. We refer to all of them collectively as Carson.
Trejo is not a party to this appeal. Carson's notice of appeal in the condemnation action specifically excludes the portion of the Final Order of Condemnation related to the property leased by Trejo.
Carson argues that it was not aware of KJN's sublease to Wenzona and that it did not consent in writing to the sublease as was required by the Carson/LNN Lease.
Carson argues that it was not aware of LNN's sublease to Big Tyme and that it did not consent in writing to the sublease as was required by the Carson/LNN Lease.
I. The Condemnation Actions ¶5 In 2005, the State, through ADOT, determined that public safety and convenience required ADOT to condemn two small parcels of Carson's property and to improve a portion of SR 89. These improvements ("the ADOT Improvements") included the installation of a median between the northbound and southbound lanes of traffic on SR 89 in front of Carson's property and the removal of the traffic signal light at the intersection in front of Carson's property. The median and the removal of the traffic signal light prevented vehicles from turning northbound onto SR 89 from the property leased to LNN and eliminated northbound access to the property from SR 89. ¶6 The State filed two complaints in condemnation. The first complaint sought to condemn a 1,688 square foot parcel of land located adjacent to SR 89 and a temporary construction easement ("TCE"). Included among the defendants named in the first complaint were 1) Carson, as owners of the property; 2) KJN, as a grantee in easement for ingress and egress; 3) Trejo as grantee in easement for ingress and egress and as an assignee of a ground lease; 4) Pit Stop Lube & Oil (Big Tyme) as having a possible cross easement interest; 5) and LNN as having a possible cross easement interest. The second complaint sought to condemn a 355 square foot parcel, consisting of four feet along SR 89 and a TCE of approximately 276 square feet. Included among the defendants named in the second complaint were Carson, Pit Stop Lube & Oil (Big Tyme), and LNN.
II. LNN's Cross-Claims ¶7 After the ADOT Improvements were completed, but before title to any portion of the property vested in the State, LNN and Big Tyme filed cross-claims against Carson seeking damages based on Carson's alleged breach of the eminent domain provision of the Carson/LNN Lease. The cross-claims alleged that Carson's failure to abate the rent based on the change in access to the property was a breach of the lease and a violation of Carson's duty to act in good faith. In addition to asking for damages, LNN and Big Tyme asked for declaratory relief that LNN was entitled to a reduction in rent and for specific performance of the rent reduction provisions. ¶8 The relevant provision of the Carson/LNN Lease states in part:
17. Eminent Domain.
a. . . . For the purpose of this paragraph, the term "taking" shall also mean Lessee's access to [SR 89] being materially affected by action of a governmental agency. If any part of the premises shall be so taken, and the portion remaining after such taking will not be adequate, in Lessee's reasonable judgment . . . Lessee shall have the right to elect either to terminate this lease . . . or to remain in possession of the remainder of the premises not so taken.LNN alleged that the ADOT Improvements materially affected LNN's access to and from SR 89, and thus, pursuant to paragraph 17 of the Carson/LNN Lease, LNN was entitled to an equitable abatement or reduction of the rent in proportion to the value of the premises to LNN before and after the ADOT Improvements. ¶9 LNN moved for partial summary judgment on its cross-claims, which the superior court denied. The court held that whether the improvements were a "taking" as defined by the Carson/LNN Lease was an issue of material fact, but that even if there was a "taking," LNN's claim for rent reduction or abatement had not yet ripened pursuant to paragraph 17(d) of the lease, which required title of the condemned property to vest before any rent would be reduced. The court provided that it "will grant leave to refile if it is believed that Carson/Story has breached paragraph 17(d) after title has vested as that claim is not yet ripe for review." ¶10 Carson moved for summary judgment on all LNN's cross-claims, which the superior court granted. The court found that not only had LNN's claims against Carson not yet ripened, but LNN failed to prove it was damaged by the ADOT Improvements. The court specifically stated that LNN "continues to receive rent in an amount consistent with that bargained for under the lease and in an amount that does not support their contention of actual damages. . . . [and] LNN's attempt to value the lease based upon potential future harm is not supported by the evidence presented and is speculative at best." The court again stated that it could not find a breach of paragraph 17(d) as title had not vested in the State. In that same ruling, the court denied LNN's motion to amend its cross-claims to join Wenzona as a necessary party and granted Carson's motion to dismiss Big Tyme.
b. . . . If Lessee elects to remain in possession, all of the terms of this lease shall
continue in effect except that the rent shall be equitably abated in proportion to the value of the premises to Lessee before the taking which bears to the value of the premises after the taking.
. . . .
d. If Lessee does not cancel the lease as hereinabove provided, the rental for the premises shall be reduced as of the date when title shall vest in the appropriate authority, in proportion to the value of the premises to Lessee before the taking which bears to the value of the premises to Lessee after the taking.
III. The State's Motion for Partial Summary Judgment in the Condemnation Actions ¶11 In 2010, the State filed a motion for partial summary judgment seeking a ruling that just compensation for both parcels of the condemned property equaled $47,510.00. Carson opposed the State's motion, arguing that the State failed to value the leasehold interests in the property, including the Carson/LNN Lease. Carson argued that LNN's cross-claims, to the extent they were valid, created genuine issues of material fact precluding summary judgment. The superior court granted summary judgment in favor of the State. The Final Order of Condemnation was entered on December 2, 2011, which ordered the title to the condemned property to be vested in the State. As far as we know, LNN and Big Tyme have not refiled their cross-claims. The court entered an amended Rule 54(b) judgment signed on May 23, 2012, that pursuant to the May 6, 2011 ruling on the cross-claims, it "retains jurisdiction over any dispute arising under Paragraph 17 of the ground leases . . . after the Court enters judgment in favor of the State . . . and title vests." ¶12 LNN and Big Tyme timely appealed the grant of summary judgment on their cross-claims, and Carson timely appealed the summary judgment for the State in the condemnation actions. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101(A)(1) (Supp. 2012).
The Final Order of Condemnation was filed on December 2, 2011, but it had not yet been recorded with the Coconino County Recorder's Office.
The superior court's amended judgment of both May 23, 2012 and January 24, 2012 state "the Court retains jurisdiction over any dispute arising under Paragraph 17 of the ground leases between [Carson] . . . and LNN, after the Court enters judgment in favor of the State . . . and title vests pursuant to A.R.S. § 12-1126 [(2003)]." This is consistent with the May 2011 ruling which provided the court would grant leave for LNN and Big Tyme to refile if they claimed damages after title vested in the State. Despite this language, we find the court's order is final and this Court has jurisdiction. Both Carson and LNN clarified at oral argument on appeal that the court's language regarding jurisdiction was in reference to Carson's obligation to share a portion of the just compensation award of $47,510.00 with LNN. The parties explained that the court intended to retain jurisdiction only in the event that Carson failed to pay a portion of that award to LNN. Both parties conceded during oral argument that Carson paid the appropriate share of the just compensation award to LNN. Thus, we find the superior court's amended judgment to be final.
DISCUSSION
I. LNN's Appeal ¶13 "We review a grant of summary judgment de novo," construing "all facts in favor of the nonmoving party and affirm[ing] only if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Simon v. Maricopa Med. Ctr., 225 Ariz. 55, 59, ¶ 9, 234 P.3d 623, 627 (App. 2010). ¶14 On appeal, LNN and Big Tyme argue that the trial court erred by: 1) granting summary judgment when it acknowledged factual disputes existed and failed to consider certain evidence regarding damages; 2) granting Carson summary judgment on the cross-claim for a declaratory judgment, which only requires the existence of a justiciable controversy, not proof of damages; 3) imposing the requirement of a final order of condemnation to consider any of LNN's cross-claims to be ripe; 4) ignoring the terms of the Carson/LNN Lease regarding the definition of "taking"; and 5) dismissing Big Tyme's claims and refusing to join Wenzona as a necessary party. In response, Carson argues the superior court properly granted summary judgment, dismissed Big Tyme, and refused to join Wenzona because: 1) LNN's claims were not yet ripe; 2) LNN's breach of the Carson/LNN Lease precluded it from bringing claims against Carson under the lease; 3) the theories of waiver, estoppel, and unclean hands precluded LNN from pursuing claims against Carson under the lease; 4) no issues of fact existed regarding LNN's alleged damages; and 5) neither Wenzona nor Big Tyme had any viable claims against Carson. Because we agree that the court correctly held that LNN failed to prove it suffered damages from the impairment of access, we need only to address the damages issue, the dismissal of Big Tyme, and the denial of the motion to amend the complaint.
Since LNN does not argue the superior court erred in dismissing its claim for specific performance or its bad faith claim, it has waived those arguments on appeal.
A. LNN's Damages Issue ¶15 LNN argues that the superior court erred by finding that no disputed issues of material fact existed regarding damages and by failing to properly interpret how damages should be calculated under the Carson/LNN Lease. We find that while disputed issues of fact may have existed with respect to whether there was a "taking" as defined by the Carson/LNN Lease, LNN still failed to provide proof of damages to prevent summary judgment. ¶16 In granting summary judgment in favor of Carson, the superior court found that LNN had not presented evidence of damages. First, the court disagreed with LNN's interpretation of the value of the premises as defined by the Carson/LNN Lease. The court held: "The value of the premises (the ground upon which rent was charged) and the 'taking' by the State all refer to real property. The 'value of the premises' cannot be morphed into the 'value of the lease' as argued." Furthermore, the court found that even if the value of the premises is predicated on the rental value of the property to LNN, LNN "continue[d] to receive rent in an amount consistent with that bargained for under the lease and in an amount that does not support their contention of actual damages." ¶17 LNN argues that damages do not relate to the value of the actual ground lost because the "taking" relevant to its claims is the impairment of access to SR 89 due to the ADOT Improvements, not the "taking" of the two small parcels of real property. LNN points to paragraph 17(a) of the lease for this expanded view of "taking" to include impairment of access. In addition, LNN argues that its damages relate to the difference in the "value of the premises to the Lessee" before and after the access to SR 89 was impaired. Paragraph 17(b) of the Carson/LNN Lease states:
If Lessee elects to remain in possession, all of the terms of this lease shall continue in effect except that the rent shall be equitably abated in proportion to the value of the premises to Lessee before the taking which bears to the value of the premises after the taking.(Emphasis added.) LNN argues that the phrase, "to the Lessee" requires damages to be calculated in relation to how LNN values the property, which is dependent upon its subleases to Wenzona and Big Tyme. It is undisputed that LNN subleased all of its interests under the Carson/LNN lease to its subtenants Wenzona and Big Tyme, and LNN's only revenue from the Carson/LNN leased property is in the form of rent from Wenzona and Big Tyme. ¶18 As to proof of damages, LNN admits that its theory of damages is based on lowered rental income from Big Tyme and Wenzona caused by the impaired access. LNN cites a report prepared by its expert ("the Duncan Report"), which purports to show a reduction in profits for Wenzona and Big Tyme solely as a result of the ADOT Improvements. LNN argues that because it included in its subleases a similar provision to that of paragraph 17 of the Carson/LNN lease, and because the ADOT Improvements resulted in a loss of profits to Wenzona and Big Tyme, it is liable to both its subtenants for rent abatement. As proof of such lost rent, LNN points to a letter dated November 15, 2010 as evidence that LNN agreed to accept $1,050.00 less in rent from Big Tyme beginning in December 2010 due to the alleged reduction in value of the sublease as a result of the ADOT Improvements. LNN explicitly argues that the "value of the premises to the Lessee" is not equivalent to the fair market value of the property, and as such, it does not cite the Duncan Report as evidence that the fair market value of the property has diminished, but only that its rental income will decrease. ¶19 We need not decide if the superior court's interpretation of the value of the premises was correct because we agree with the court that LNN and Big Tyme failed to prove any damages to LNN from the ADOT Improvements. Carson agrees with LNN that "[t]he value of the premises can be analyzed in terms of the premises' rental value to LNN, as reflected by the rent it collects from [its subtenants]." ¶20 Based on LNN's disclosure, Carson alleged in its statement of facts that LNN received at least as much rent from its subtenants during 2008 and 2009 after the ADOT Improvements as it did before the ADOT Improvements in 2005, 2006, and 2007.LNN did not dispute this fact in its motion for partial summary judgment. While LNN and Carson clarified that the increase in amount of rental income that LNN disclosed was inflated because it included income from other rental properties owned by LNN, LNN did not dispute that it had received as much rental income from the property after the ADOT Improvements as it did before the ADOT Improvements. Instead, LNN argued that its anticipation of less rental income in the future was based on its having to pass on rent reductions from Carson to its subtenants. ¶21 Importantly, neither sublease provides that the rent to LNN is increased or decreased based on revenue of the subtenants. Rather, the Wenzona sublease provides that the rent due LNN is based on a percentage of the rent LNN has to pay Carson, and the Big Tyme rent is a fixed amount adjusted for inflation. Both subleases only provide for a rent reduction if LNN is entitled to a rent reduction from Carson. ¶22 We agree with the superior court that LNN cannot show that it has been damaged because it has continued and will continue to collect the bargained-for rent under the subleases from its subtenants. "It is well established that, in an action based on breach of contract, the plaintiff has the burden of proving the existence of a contract, breach of the contract, and resulting damages." Chartone, Inc. v. Bernini, 207 Ariz. 162, 170, ¶ 30, 83 P.3d 1103, 1111 (App. 2004). "[C]ertainty in amount of damages is not essential to recovery when the fact of damage is proven." Gilmore v. Cohen, 95 Ariz. 34, 36, 386 P.2d 81, 82 (1963) (citation and internal quotation marks omitted). However, the basis for a damage claim cannot be "conjecture or speculation," and the estimate of damages must be as accurate as possible. Id. ¶23 LNN's argument about future damages cannot withstand analysis for two reasons. First, the rents under the two subleases are not tied to increased or decreased revenues for the subtenants, which is the focus of the Duncan Report. Second, any rent reduction possibly owed on the subleases is merely a pass-through if any reduction is due on the Carson/LNN Lease. If there is no rent reduction owed on the Carson/LNN Lease, no rent reduction is due on the subleases. LNN confirmed at oral argument on appeal that the relevant provisions in the subleases are pass-through provisions, which guarantee the subtenants a rent reduction in the event LNN receives a rent reduction. This means that if LNN does not receive a rent reduction, LNN's subtenants have no basis on which to demand their rent reductions. ¶24 LNN's alternative argument is based on the LNN letter to Big Tyme. LNN cites to the letter as evidence that LNN accepted less rental income from Big Tyme beginning December 2010 and that it is possibly liable for additional lost rental income in the future due to the loss of access to SR 89. ¶25 LNN's letter states:
I am in receipt of your letter . . . requesting an immediate reduction of rent. As you know, LNN is involved in a court action pursuing a rent reduction from the land owners. . . . any rent reduction that LNN receives will be passed on to both [Big Tyme] and [Wenzona].¶26 LNN's reliance on the letter is misplaced for several reasons. First, LNN assumed it was entitled to a rent reduction from Carson and, on that assumption, voluntarily granted Big Tyme a temporary rent reduction based on the Duncan Report's finding of lost profits to Big Tyme caused by the ADOT Improvements. However, as discussed above, LNN's rental income from the subtenants is not tied to the subtenants' income stream from the property. Thus, even if the ADOT Improvements had a provable effect on Big Tyme's and Wenzona's revenue, it would not affect LNN's rent from the subtenants. Second, LNN's premise and letter are circular. The letter is premised on a court ultimately finding that LNN is entitled to a rent reduction on the property because of the ADOT Improvements, but LNN argues that proof of its damages and right to a rent reduction is that it granted the subtenants a rent reduction. LNN's decision to grant a rent reduction to the subtenants if LNN had a right to a rent reduction from Carson cannot also logically be the cause of its right to a rent reduction from Carson. Third, the fact that LNN incorporated a rent reduction provision in the subleases is irrelevant for purposes of whether it had a right to a rent reduction from Carson. Carson's duty, if any, to reduce rent to LNN arises from the Carson/LNN Lease, not the pass-through provisions under the subleases. ¶27 To the extent LNN bases its damage claim on the assumption that the provisions of LNN's subleases provide Big Tyme and Wenzona a legal right to rent abatement based on the ADOT Improvements, that right has not been established. If either of LNN's subtenants had alleged and proven that it had a contractual right to rent abatement based on the ADOT Improvements, and as such, LNN was required to reduce its subtenants' rent, LNN might have then been able to show it was damaged based on the diminished value of the property under the terms of the Carson/LNN Lease. However, neither Big Tyme nor Wenzona has ever pursued claims against LNN for rent abatement and cannot successfully pursue such claims because their rents are not based on an income stream from the property. LNN's decision, over two years after the ADOT Improvements, to voluntarily accept less rent from Big Tyme based on an assumption of a legal right, which does not exist, cannot provide a basis for a damage claim.
. . . .
[The Duncan Report] findings were that the damage to [Big Tyme] should equate to a rent reduction of approximately ONE THOUSAND AND FIFTY DOLLARS $1,050.00). Of course, ultimately, the Court will determine what the rent shall be.
Since that decision will be some time in the future LNN is willing to abate [Big Tyme's] rent by the amount Mr. Duncan reported. . . . This reduction will stay in place until a final adjudication of the court.
Although Carson claims LNN is attempting to cite the Duncan Report's calculation of lost profits as evidence of its own damages, LNN clearly states that its damages are not based on the loss of profits to Wenzona and Big Tyme, but on the reduction in rent it is receiving from Wenzona and Big Tyme due to LNN's obligation to abate their rent. LNN cites to the Duncan Report, not as evidence of its damages, but as the determinative factor in calculating the amount of the rent abatement owed to its subtenants.
Carson alleged in its statement of facts in support of its cross-motion for summary judgment that, based on disclosed but confidential tax returns, LNN received in rental income $85,000.00 in 2005, $85,000.00 in 2006, $126,686.00 in 2007, $211,410.00 in 2008, and $189,096.00 in 2009.
The Wenzona sublease states that "[t]he rental for the premises shall be 60% of all obligations of [LNN] to [Carson] pursuant to the [Carson/LNN Lease] as they become due," plus a portion of the property taxes, insurance, and utilities. The Big Tyme sublease provides: "[Big Tyme] agrees to pay as rent to [LNN] during the initial term the sum of [$85,000.00] plus applicable rental taxes and all cost of living increases . . . ." During the option periods, the rental payments "shall be the initial monthly amount . . . increased (but not decreased) by the Consumer Price Index (CPI) from April, 2001, the base period, to the first month of the respective option period."
The Wenzona sublease provides: "In the event of condemnation of the property . . . the rights of [Wenzona] shall be those of the Lessee under the [Carson/LNN Lease] as they relate to the premises." The Wenzona sublease further provides: "This sublease agreement is expressly made subject to all of the terms, conditions, and limitations contained in the [Carson/LNN Lease]." The Big Tyme sublease provides: "In the event any part of the leased premises shall be condemned or taken for any public purpose . . . any moneys received as compensation for such taking and condemnation shall be divided between [LNN] and [Big Tyme] as their interest shall appear." The Big Tyme sublease further states: "To the extent [] [Carson] under the [Carson/LNN Lease] fails to perform its duties thereunder, [LNN] herein agrees to perform the same at no cost to [Big Tyme]."
B. LNN's Declaratory Judgment Claim ¶28 LNN argues that the superior court improperly granted summary judgment as to LNN's declaratory judgment claim. Pursuant to A.R.S. § 12-1832 (2003), "[a]ny person interested under . . . written contract . . . may have determined any question of construction or validity arising under the instrument . . . and obtain a declaration of rights, status or other legal relations thereunder." LNN sought from the court a declaratory judgment that "the [Carson/LNN Lease] entitles [LNN] to an equitable abatement of rent, due to [the State's impairment of access to SR 89] . . . and also declaring the amount thereof as determined at trial." ¶29 "[D]eclaratory judgment jurisdiction will not ordinarily be entertained where another equally or more appropriate remedy is available. . . . The declaratory judgment procedure is not designed to furnish an additional remedy where an adequate one exists." Land Dep't v. O'Toole, 154 Ariz. 43, 47, 739 P.2d 1360, 1364 (App. 1987). But see Trico Elec. Coop. v. Ralston, 67 Ariz. 358, 365, 196 P.2d 470, 474 (1948) (stating that the existence of another adequate remedy does not bar declaratory judgment relief in cases where it is appropriate). In O'Toole, we held that declaratory relief was not appropriate for claimants because there was another adequate remedy at law: "claimants desiring to quiet title to land against the State can bring a quiet title action." 154 Ariz. at 47, 739 P.2d at 1364. Similarly, here, LNN had an adequate remedy at law in the form of a breach of contract action, which it pursued and for which it failed to establish a prima facie case. Thus, LNN was not entitled to declaratory relief.
C. Dismissal of Big Tyme and Failure to Join Wenzona ¶30 LNN also appeals the superior court's dismissal of Big Tyme as a cross-claimant and the court's refusal to join Wenzona as a necessary party. Carson filed a motion to dismiss all claims asserted by Big Tyme arguing that Big Tyme was not a party to the Carson/LNN Lease, nor was it in any privity of contract with Carson, and thus, it was not entitled to any of the relief sought by the cross-claims asserted. In response, LNN argued that Big Tyme had an interest in the litigation, the resolution of which would determine Big Tyme's rights against other parties; therefore, Big Tyme was a necessary party. LNN also argued it was asserting claims on behalf of and for the benefit of Big Tyme, and thus, Big Tyme was a proper party to the litigation. For the same reasons, LNN moved the court to allow LNN to amend its cross-claims to join Wenzona as a necessary party. ¶31 The court heard oral argument on Carson's motion to dismiss and on LNN's motion to amend. During oral argument, LNN conceded that Big Tyme did not have any direct breach of contract claims against Carson, and that if given the opportunity to amend its cross-claims, LNN would make clear the positions of both Big Tyme and Wenzona as necessary parties who have an interest in the litigation. The court provisionally denied Carson's motion to dismiss and allowed LNN to file an amended answer that would clarify the subtenants' positions. Later, after reviewing the transcripts, the trial court vacated its earlier decision, granted Carson's motion to dismiss Big Tyme's cross-claims, and denied LNN an opportunity to amend its cross-claims to join Wenzona. ¶32 This Court reviews a superior court's grant of a motion to dismiss de novo. Coleman v. City of Mesa, 230 Ariz. 352, 356, ¶ 8, 284 P.3d 863, 867 (2012). "Dismissal is appropriate . . . only if as a matter of law plaintiffs would not be entitled to relief under any interpretation of the facts susceptible of proof." Id. (citation and internal punctuation omitted). ¶33 Big Tyme, along with LNN, asserted four cross-claims against Carson: breach of contract, breach of covenant of good faith and fair dealing, specific performance, and declaratory relief. However, it is undisputed that Big Tyme is not a party to the contract that gave rise to any of these claims. LNN concedes that Big Tyme has no direct claims against Carson. Thus, dismissal of Big Tyme's cross-claims was appropriate. ¶34 LNN argues that the court erred by refusing to allow LNN to amend its cross-claim to join Wenzona and to clarify Big Tyme's and Wenzona's positions as necessary parties pursuant to Arizona Rule of Civil Procedure 19(a). "A motion for leave to amend the pleadings is within the sound discretion of the trial court, and we will not overturn that decision absent a clear abuse of discretion." Hall v. Romero, 141 Ariz. 120, 124, 685 P.2d 757, 761 (App. 1984). At oral argument, LNN argued that the superior court should grant LNN leave to amend because it could "easily" amend the cross -claims to "realign[] the parties" and make clear the positions of Big Tyme and Wenzona as necessary parties. We find the trial court did not abuse its discretion in denying LNN's motion to amend. ¶35 Rule 19(a) states:
A person . . . shall be joined as a party in the action if . . . the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede the person'sLNN bears the burden of establishing that Big Tyme and Wenzona are necessary parties. See S. Union Co. v. Sw. Gas Corp., 165 F.Supp.2d 1010, 1036 (D. Ariz. 2001) (interpreting Federal Rule of Civil Procedure 19(a), which is substantially the same as the corresponding Arizona rule). "The second prong [of Rule 19(a)] cannot be met unless the party has a legally protected interest in the suit." Id. (citation and internal quotation marks omitted). ¶36 Neither Wenzona nor Big Tyme has a legally protected interest in LNN's breach of contract claim against Carson, nor did their absence in the litigation put LNN at risk of incurring inconsistent obligations. During oral argument on its motion to amend, LNN argued:
ability to protect that interest (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.
[If Carson] [is] successful in [its] argument and . . . no rent abatement is given to LNN, but then Big Tyme and Wenzona sue LNN for rent abatement, and a jury awards them substantial damages, but that agreement in that covenant about who is to assume the risk of damages for the loss of access to [SR] 89 is clearly formed by [Carson] . . . . LNN there is subject to conflicting results in two different cases.LNN reiterates this argument on appeal, stating "[i]f Big Tyme and Wenzona are not permitted to participate in this case, their absence puts LNN at risk of incurring inconsistent obligations to its subtenants if they are not made parties." ¶37 However, the subleases between LNN and its subtenants provide that LNN, not Carson, is to assume the risk of damages for the loss of access to SR 89, and thus, Carson cannot be held responsible for a damage claim Wenzona or Big Tyme might have against LNN. Moreover, as we point out above, the current subleases do not provide for a rent reduction for the subtenants based on decreased income stream. Rather, the pass-through provisions provide a rent reduction for the subtenants in the event LNN is entitled to a rent reduction. Thus, LNN is not in the position of suffering inconsistent judgments based on rent reductions under different leases, and neither Wenzona's nor Big Tyme's interests were impaired by their absence from the litigation.
"Because Arizona has substantially adopted the Federal Rules of Civil Procedure, we give great weight to the federal interpretations of the rules." Edwards v. Young, 107 Ariz. 283, 284, 486 P.2d 181, 182 (1971).
II. Carson's Appeal of Summary Judgment in Favor of the State ¶38 Carson appeals the superior court's grant of summary judgment in favor of the State in the condemnation actions because it claims the court erred by: 1) failing to value all of the leasehold interests in the property to be condemned; 2) failing to comply with A.R.S. § 12-1117 (2003) with respect to naming all of the claimants of the property in the condemnation actions; and 3) finding that the State met its burden of production and that no disputed issues of material fact existed regarding just compensation. ¶39 Carson clarifies that absent LNN's appeal in its breach of contract action against Carson, Carson would not have been inclined file this appeal against the State because its potential liability under the Carson/LNN Lease was limited by the court's ruling. In its motion to consolidate the appeals, Carson conceded that "[i]f the trial court's rulings in favor of [Carson] are affirmed by this Court, [Carson] will have no legal basis to seek additional compensation from the State for the taking, which is the main issue in the [Carson] Appeal. The [Carson] Appeal will be effectively rendered moot." Carson further clarified this position during oral argument on appeal, conceding that if we affirmed summary judgment on the cross-claims and found that any division of the $47,510.00 in just compensation had been properly distributed to LNN, Carson's appeal was moot. Thus, the crux of Carson's appeal is that if this Court reverses the superior court's grant of summary judgment against LNN, Carson would be potentially liable to LNN, thereby reducing the value of its property interest and necessitating Carson's appeal of the trial court's failure to value the Carson/LNN Lease in its award of just compensation. ¶40 Since we are affirming the summary judgment on the cross-claims so that Carson cannot be liable for any rent reduction under the terms of its lease based on the ADOT Improvements, and the parties conceded the $47,510.00 just compensation is no longer at issue, Carson's appeal on the condemnation is moot. All of the issues Carson raises on appeal center on the value of the Carson/LNN Lease. Since our ruling precludes any liability for Carson for rent reduction on the current leases, there is no justiciable controversy between Carson and the State.
Carson argues that both the State and the superior court failed to value the Carson/LNN leasehold interest when determining the amount of just compensation for the condemned property. More specifically, Carson contends: 1) the State's expert appraiser erroneously assumed the Carson/LNN Lease did not exist and failed to value it in the appraisal of the property; 2) the court made no effort to determine the value of the Carson/LNN Lease or the subleases as is required by statute, despite evidence of the existing leasehold interests; 3) the State failed to name Wenzona in the condemnation action, as is required by statute, and therefore, the court failed to consider Wenzona's leasehold interest; and 4) genuine issues of material fact existed regarding the amount of just compensation awarded to Carson based on a potential reduction in rental income Carson might receive from LNN. Carson also claims that the State failed to properly value the Trejo lease, which included a similar provision regarding rent abatement in the event of the reduced value of the premises after a "taking." Carson's notice of appeal specifically excludes the portion of the Final Order of Condemnation related to the property leased by Trejo.
Even if LNN entered into new leases which would be affected by the ADOT Improvements, or after termination of the current subleases found that the value of the property was lowered by those improvements, summary judgment on the condemnation would not be affected. The amount of compensation for a condemnation is determined as of the date of the condemenation, not based on future events. State v. Superior Court (Stephens), 189 Ariz. 228, 231 n.5, 941 P.2d 240, 243 n.5 (App. 1997) (citing A.R.S. § 12-1123(A) (2003)) ("Compensation and damages accrue as of the date of the summons and the land's actual value on that date is the measure of compensation and damages."); see also City of Phoenix v. Consol. Water Co., 101 Ariz. 43, 48, 415 P.2d 866, 871 (1966) (stating that when determining just compensation, "generally, projections of future productiveness [of condemned property] must be excluded").
III. Attorneys' Fees ¶41 LNN requests that in the event the superior court's grant of summary judgment is upheld, this Court reduce the award of attorneys' fees to Carson. LNN argues that it should not be compelled to pay the fees awarded against Carson relating to Carson's litigation with City of Flagstaff ("the City") or to its litigation in the condemnation actions. LNN argues that Carson was not the prevailing party in its litigation with the City nor was the litigation with the City related to any of LNN's cross-claims, and as such, Carson cannot recover those fees from LNN. LNN also argues that because a property owner is generally not entitled to receive attorneys' fees in a condemnation action, Carson cannot recover fees from LNN related to the condemnation. In response, Carson argues it is entitled to recover all reasonable attorneys' fees, including those fees related to the City, pursuant to the Carson/LNN Lease. Carson asserts that the fees to which LNN objects were all incurred as a result of LNN's cross-claims. ¶42 We review a court's award of attorneys' fees for an abuse of discretion. Charles I. Friedman, P.C. v. Microsoft Corp., 213 Ariz. 344, 350, ¶ 17, 141 P.3d 824, 830 (App. 2006). "To find an abuse of discretion, there must either be no evidence to support the superior court's conclusion or the reasons given by the court must be clearly untenable, legally incorrect, or amount to a denial of justice." Id. (citation and internal quotation marks omitted). We find the superior court did not abuse its discretion in its award of attorneys' fees to Carson. ¶43 Carson initially sought a fee award in the amount of $254,481.88 against LNN, Big Tyme, and Trejo. Carson noted that it had subtracted over $14,000.00 in fees dealing with defending its own interests in the condemnation actions unrelated to the cross-claims. ¶44 In response, LNN argued that although Carson's application purported to exclude the fees related solely to the condemnation actions, the billing entries suggested otherwise. During oral argument, LNN pointed to several entries it identified as being only related to the condemnation, not LNN's cross-claims. Additionally, LNN argued that Carson was not entitled to recover fees related to the City because Carson did not prevail on those claims. ¶45 The superior court requested Carson supplement its request for fees, apportioning fees specifically to LNN and Big Tyme. Carson submitted a supplemental brief seeking $101,474.09 against LNN and $55,097.09 against Big Tyme. In its supplemental brief, Carson created categories of fees and summarized the allocation of fees per category. These categories included: "Annexation," "Access," "ADOT-MSJ," "Condemnation," "City of Flagstaff," and "Mediation." After reviewing the parties' briefs, the court found, "in its discretion that the attorney fees associated with condemnation and annexation claims, City of Flagstaff claims, and mediation should be apportioned in fourths ([Carson]-LNN-Trejo-Big Tyme) and should not be incurred by LNN and Big Tyme solely." The court further held that "fees are not awarded for [Carson's] argument that 'LNN, Trejo, and Big Tyme forced [Carson] to oppose ADOT's motion for summary judgment.'" Thus, the court reduced both LNN's and Big Tyme's fee award by $20,175.67 and imposed an award of $81,298.42 against LNN and $34,922.09 against Big Tyme. Later, Carson requested an additional $32,600.34 for the fees Carson incurred during post-ruling proceedings, which the court awarded. On appeal, LNN objects only to the portions of the fee awards related to the condemnation and to the City. ¶46 Paragraph 30 of the Carson/LNN Lease provides: "The prevailing party in any litigation under this lease, as determined by the Court, shall be entitled to the recovery of its reasonable attorneys' fees, as determined by the Court, and court costs, from the other party." The basis of any fee award to Carson arises out of the terms of the Carson/LNN Lease. Pursuant to the terms of the lease, Carson, as the prevailing party, is entitled to recover all reasonable fees related to "any litigation under this lease." (Emphasis added.) ¶47 "[I]n Arizona, a court will attempt to enforce a contract according to the parties' intent." Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 152, 854 P.2d 1134, 1138 (1993), vacated in part on other grounds, 185 Ariz. 174, 179, 913 P.2d 1092, 1097 (1996). A party's "subsequent conduct may shed light on its understanding of what was covered by the agreement." Id. at 157, 854 P.2d at 1143. Carson interprets paragraph 30 of the Carson/LNN Lease to extend to litigation with other parties to the extent the litigation was a result of LNN's cross-claims under the lease. Carson argues the awarded fees associated with the City and with the condemnation "are recoverable against LNN and Big Tyme because they were incurred as a direct result of LNN and Big Tyme's claims . . . and [Carson] prevailed on every claim asserted by these parties." LNN does not argue the lease provision precludes recovery of any fees. Moreover, LNN and Big Tyme do not appeal from the fee award allocating fees related to mediation with the City. Those fees did not arise from the cross-claims, but rather dealt with trying to preserve access to the property. Therefore, we can infer that LNN intended the phrase "any litigation under this lease" to include all other litigation related to claims arising under the lease. See id. (determining the Appellee's subsequent conduct may "shed light" on the Appellee's understanding of what was meant by the parties' agreement). Thus, we agree with Carson that to the extent they are a result of LNN's cross-claims under the lease, the fees associated with condemnation actions and the City are recoverable against LNN. ¶48 Carson's claims against the City involved issues of access from LNN's leased property to SR 89 via Cummings Street. Carson alleged that it stipulated to a judgment with the State on the condemnation actions based on an appraisal that indicated a curb cut, which existed on Carson's property, would allow access from the property to Cummings Street, the title to which was going to be transferred to the City. Carson claimed that after the judgment was entered, the curb cut was removed at the City's direction, and access to Cummings Street was eliminated. Carson alleged that its subtenants, LNN and Trejo, were demanding alternate access to SR 89, and that the State could only allow for access via Cummings Street upon the City's approval. Carson claimed the City refused to consider approving access unless Carson was willing to annex its property to the City and pay all related costs. Thus, Carson demanded: 1) an injunction to restore the curb cut; 2) a declaratory judgment that it was an ultra vires act for the City to require that Carson's property be annexed as a condition of allowing access to Cummings Street and that the City be required to allow Carson access to Cummings Street from all parts of its property; and 3) an injunction enjoining the City from preventing access to Cummings Street and an order allowing Carson access to Cummings Street without requiring annexation. Carson voluntarily dismissed its claim for an injunction to restore the curb cut after discovering that the curb cut was reinstalled shortly before Carson filed its claim. ¶49 Although the superior court ultimately dismissed the rest of Carson's claims against the City, it is clear that Carson made those claims in an attempt to gain alternate access to SR 89 as a direct result of LNN's and Trejo's demands: "In connection with the ADOT Improvements, the tenants under the [Carson/LNN] Lease and the Trejo Lease, which are defendants and cross-claimants in this case, asserted that [Carson] [was] required to ensure appropriate alternative access would be provided in connection with the ADOT Improvements." Carson's litigation against the City regarding the access LNN demanded under the Carson/LNN Lease is "litigation under this lease," and for which the fees are recoverable against LNN. ¶50 LNN next argues that because a property owner is not generally entitled to receive attorneys' fees in a condemnation action, it should not be compelled to pay fees related to the State's condemnation actions. As discussed above, the basis of Carson's fee award arises out of the terms of the Carson/LNN Lease, not condemnation law. Carson already claimed to have excluded $14,012.50 in fees that "related more directly to defending their own interests in the State's condemnation action, not claims by the cross-claimants." LNN did not dispute this assertion. During oral argument on Carson's initial fee application, LNN pointed to several billing entries in Carson's exhibit that appeared to relate solely to condemnation, not LNN's cross-claims. In response, Carson argued that the fees listed in the category "Condemnation," were not purely related to condemnation, but were related to LNN's demands and Carson's attempt to find a solution to those demands. Carson argued that "[h]ad [LNN] not said [it] [was] entitled to great damages under our lease[] for the condemnation provision in our lease, we wouldn't have done that. We would not have had to incur those fees." In its supplemental fee application, Carson argued that the "inclusion of the word condemnation in a time entry does not preclude recovery." With the exception of LNN pointing to four billing entries it believed were related solely to the condemnation actions, LNN has not disputed Carson's claim that the "Condemnation" entries related to LNN's and Big Tyme's cross-claims, nor has it provided any evidence to the contrary. Thus, it was within the court's discretion to find that the fees in that category were recoverable against LNN. Moreover, the court already reduced those fees by one-fourth. ¶51 Thus, the court's award of attorneys' fees is supported by the Carson/LNN Lease and not an abuse of discretion.
LNN also argues that the superior court's award of attorneys' fees related to LNN's cross-claims should be reversed. Because we affirm the court's grant of summary judgment in favor of Carson, we will not disturb the award of attorneys' fees related to LNN's cross-claims. We need only address the portions of the fee award related to Carson's third-party claims against the City and Carson's litigation in the condemnation actions.
--------
CONCLUSION
¶52 For the foregoing reasons, we affirm the superior court's grant of summary judgment in favor of Carson on the cross-claims, as modified to reflect that LNN has no claim for rent reductions under the Carson/LNN Lease related to the ADOT Improvements. We dismiss Carson's appeal from the summary judgment on the condemnation as moot. Carson is entitled to costs on appeal pursuant to A.R.S. § 12-341 (2003) and to reasonable attorneys' fees on appeal pursuant to the Carson/LNN Lease upon timely compliance with ARCAP 21(a).
_____________
DONN KESSLER, Judge
CONCURRING: _____________
JOHN C. GEMMILL, Presiding Judge
_____________
JON W. THOMPSON, Judge