Opinion
No. 1 CA-CV 17-0430
05-22-2018
VILLA 14 LLC, Plaintiff/Appellee, v. GERMAN OSIO, Defendant/Appellant.
COUNSEL Ballard Spahr, LLP, Phoenix By Craig S. Ganz, Michael Stephen Myers Co-Counsel for Plaintiff/Appellee The Nathanson Law Firm, Scottsdale By Philip J. Nathanson, Richard W. Gilmour Co-Counsel for Defendant/Appellant
NOTICE: 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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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
Nos. CV2015-051396 CV2016-001632 CV2016-002756 (Consolidated)
The Honorable Aimee L. Anderson, Judge APPEAL DISMISSED; SPECIAL ACTION JURISDICTION ACCEPTED, RELIEF DENIED COUNSEL Ballard Spahr, LLP, Phoenix
By Craig S. Ganz, Michael Stephen Myers
Co-Counsel for Plaintiff/Appellee The Nathanson Law Firm, Scottsdale
By Philip J. Nathanson, Richard W. Gilmour
Co-Counsel for Defendant/Appellant
MEMORANDUM DECISION
Judge James P. Beene delivered the decision of the Court, in which Presiding Judge Maria Elena Cruz and Judge Jennifer B. Campbell joined. BEENE, Judge:
¶1 German Osio appeals the superior court's award of attorneys' fees to Villa 14, LLC. We conclude that we lack appellate jurisdiction. In our discretion, we accept special action jurisdiction to address the fee-award issue, but, for the following reasons, we deny relief.
See also discussion supra ¶ 16.
FACTS AND PROCEDURAL HISTORY
¶2 Osio is the manager of Prado Management, LLC, which owns the real property located at 23875 N. 91st Street in Scottsdale (the "Prado home" or "residence"). In November 2015, Villa 14 and Prado Management entered into two contracts whereby Villa 14 would purchase the residence (closing date: February 25, 2016) and lease it from December 1, 2015 through February 25, 2016. Carey Williams (the principal of Villa 14) and his family moved into the residence, and, shortly thereafter, litigation (among these parties and others) ensued.
We view the evidence in the light most favorable to upholding the superior court's ruling. Mahar v. Acuna, 230 Ariz. 530, 532, ¶ 2 (App. 2012) (citing IB Prop. Holdings, LLC v. Rancho Del Mar Apartments Ltd. P'ship, 228 Ariz. 61, 63, ¶ 2 (App. 2011)).
¶3 As relevant here, in March 2016, Villa 14 filed an action for specific performance of the purchase contract and an application for a temporary restraining order ("TRO") against Prado Management and Osio to prevent the (1) sale of the Prado home to anyone other than Villa 14 and (2) eviction of the Williams family pending resolution of the underlying case. The superior court granted the TRO, specifically ordering:
1) Prado Management, LLC is prohibited from evicting Villa 14, LLC, including the Williams family; 2) Prado
Management, LLC is prohibited from disposition of the Prado Home to anyone other than Villa 14, LLC; 3) the current month-to-month lease remains in force, but defendant reserves the right to claim damages for below market rent; and 4) plaintiff may tender the rent payment to the agent.Later, the parties stipulated to extend the TRO until the conclusion of the specific performance action (the "preliminary injunction").
¶4 On August 29, 2016, Villa 14 provided Prado Management with (1) notice that Villa 14 was cancelling the purchase contract and (2) a 30-day termination notice (per the lease agreement) that the Williams family would move out of the residence on September 30, 2016 at 5 p.m. The next day, Villa 14 moved to dismiss the specific performance action. See Ariz. R. Civ. P. ("Rule") 41(a)(2). In connection therewith, Villa 14 requested an order directing the refund of its $50,000 earnest money deposit. In December 2016, the superior court granted the motion to dismiss without prejudice and ordered the earnest money be released by the title company and refunded to Villa 14. Osio appealed this order, and we dismissed the appeal for lack of jurisdiction. Order Dismissing Appeal, Villa 14 LLC v. Osio, 1 CA-CV 17-0090 (Mar. 9, 2017) (citing Garza v. Swift Transp. Co., Inc., 222 Ariz. 281, 284, ¶ 15 (2009) and L.B. Nelson Corp. of Tucson v. W. Am. Fin. Corp., 150 Ariz. 211, 217 (App. 1986)).
The Arizona Rules of Procedure were revised effective January 1, 2017 to reflect comprehensive stylistic and substantive changes. To be consistent with the record below, we cite the former rules unless the context otherwise requires.
¶5 In the meantime, on September 5, 2016, Osio locked the Williams family out of the Prado home. On September 6, Craig Ganz (Villa 14's attorney) emailed Philip Nathanson (Prado Management's attorney) as follows:
Your client's locking out of the Williams family from the Residence constitutes an eviction that is strictly prohibited by the aforementioned provisions of the [preliminary injunction]. In addition, your client's lockout has prevented my client from retrieving personal property that remains in the Residence and otherwise completing its move out obligations.Later that day, Nathanson responded:
Your clients moved without notice. They abandoned, and damaged, the premises.Ganz replied:
Not only that, they left the doors open when they abandoned the premises.
Simply untrue, but not surprising that your client would take this approach.Nathanson again responded:
My client did not abandon[] the property at all and had every right to access the property through the end of the month. My client was in the process of moving out and various items of personal property still remain in the house. The client was also in the process of placing the property in a condition that it could be turned over to the landlord, and during this process they . . . were evicted through your client ['s] self-help. Your client had no business entering the property, converting my client['s] personal property, and had less of a right to change the locks.
What you say is false, pure and simple. Apparently you have not been told the whole story.
There was no eviction. The house is empty and has been empty. The movers confirmed everything is out. Your clients abandoned the property, and damaged it while they were there. Your bravado won't work this time.
Let's have an evidentiary hearing on what happened. I am all for that.
Then we can find out if your clients bought a new home quite a while ago and didn't tell anyone about it while they moved out surreptitiously.
¶6 Thereafter, Villa 14 filed a Notice of Violation of Preliminary Injunction and requested sanctions pursuant to Rule 65(j). Osio responded, requesting the superior court summarily deny relief or, alternatively, set an evidentiary hearing on the following:
(i) whether Villa 14 and the Williams family abandoned any right to possess the Prado home by moving out;
(ii) whether the lease was terminated due to the Williams family purchasing another home at Silverleaf;
(iii) whether the lease was terminated due to the Williams family performing construction at the home without the consent of the landlord and in violation of the lease;
(iv) whether the lease was terminated due to the Williams family violating the lease by not maintaining the home;
(v) whether the Williams family and Villa 14 are guilty of unclean hands and therefore precluded from any equitable relief.
¶7 After considering the briefing, the superior court ruled as follows:
The Court further finds that Villa 14, LLC exercised its right to terminate the Prado Lease upon 30-days' notice.
The Court further finds that German Osio did not wait until the end of the 30-days' notice and instead locked the Williams family out of the Prado Home weeks before the Prado Lease was terminated and before the Williams family had an opportunity to complete the move.
The Court finds that the fact that the Williams Family purchased another property is not relevant to any issues surrounding the Prado Lease and does not excuse German Osio's violation of the Preliminary Injunction.
The Court further finds that Villa 14, LLC and the Williams family did not abandon the Prado Home and German Osio's lockout was a violation of the Preliminary Injunction. Any claim for damages is not an equitable defense but rather a separate legal claim that can be asserted by German Osio in a separate legal action.
Therefore,
IT IS ORDERED awarding Villa 14, LLC its reasonable attorneys' fees in having to correct the Defendants' Violation of the Preliminary Injunction.
¶8 Subsequently, in May 2017, the superior court entered an $8,336.01 attorneys' fees judgment against Osio, see Ariz. R. Civ. P. 54(b), and he appealed.
Prado Management filed for bankruptcy in March 2017.
DISCUSSION
I. Fee Award
A. Jurisdiction
¶9 We have reviewed the record pursuant to our duty to determine whether we have jurisdiction over the appeal. See Sorensen v. Farmers Ins. Co. of Ariz., 191 Ariz. 464, 465 (App. 1997).
¶10 Rule 65(j) authorizes the superior court to sanction the disobedience of an injunction through a contempt order. Generally, civil contempt actions are not appealable. E.g., Berry v. Super. Ct., 163 Ariz. 507, 508 (App. 1989); Elia v. Pifer, 194 Ariz. 74, 80, ¶ 30 (App. 1998); see United Farm Workers Nat'l Union v. Heggblade-Marguleas-Tenneco, Inc., 21 Ariz. App. 514, 514-15 (1974) (contempt order for violating judgment not appealable, nor was order awarding attorneys' fees as part of contempt judgment); but see Green v. Lisa Frank, Inc., 221 Ariz. 138, 148, ¶ 21 (App. 2009) (explaining that appellate court would have jurisdiction of a judgment that goes beyond a finding of contempt and qualifies as an appealable order under A.R.S. § 12-2101). Such orders must be challenged by way of a petition for special action. E.g., Stoddard v. Donahoe, 224 Ariz. 152, 154, ¶ 7 (App. 2010); Elia, 194 Ariz. at 80, ¶ 30. In our discretion, we treat the appeal as a special action and accept jurisdiction to address the fee-award issue. See Henderson v. Henderson, 241 Ariz. 580, 585, ¶ 7 (App. 2017). We review a contempt finding and the imposition of sanctions for an abuse of discretion, accepting the factual findings unless clearly erroneous. BMO Harris Bank Nat'l Ass'n v. Bluff ex rel. Cty. of Yavapai, 229 Ariz. 511, 513, ¶ 6 (App. 2012) (citing Stoddard, 224 Ariz. at 154-55, ¶ 9).
Villa 14 did not specifically request a finding of contempt, but the parties obliquely agree that Osio was subject to sanctions for contempt pursuant to Rule 65(j) (and current Rule 65(f)). The superior court's inclusion of finality language in accordance with Rule 54(b) is not dispositive. See Eng'rs v. Sharpe, 117 Ariz. 413, 416 (1977) ("[T]he appealability of an order 'turns on the character of the proceedings which resulted in the order appealed from.'") (quoting Kemble v. Porter, 88 Ariz. 417, 419 (1960)); Ruesga v. Kindred Nursing Ctrs., L.L.C., 215 Ariz. 589, 593, ¶ 12 (App. 2007) ("[T]he substance or effect of an order determines its character for appeal purposes."). Tellingly, Osio's opening brief fails to state the basis of our jurisdiction. See ARCAP 13(a)(4) (opening brief must set forth "the basis of the appellate court's jurisdiction").
B. Mootness
¶11 Villa 14 requests that we dismiss the appeal as moot because Villa 14 offered to walk away from the fee award in exchange for Osio dismissing the appeal. We may decline to address an issue if facts show it is or has become moot. In re Henry's Estate, 6 Ariz. App. 183, 188 (1967). "A case becomes moot when an event occurs which would cause the outcome of the appeal to have no practical effect on the parties." Arpaio v. Maricopa Cty. Bd. of Supervisors, 225 Ariz. 358, 361, ¶ 7 (App. 2010) (quoting Sedona Private Prop. Owners Ass'n v. City of Sedona, 192 Ariz. 126, 127, ¶ 5 (App. 1998)). That said, Villa 14 offers no authority (nor have we found any) establishing that a walk-away settlement offer compromises an appeal from the underlying judgment.
The out-of-state cases on which Villa 14 relies are inapposite. See Hoverson v. Hoverson, 859 N.W.2d 390, 398 (N.D. 2015) ("Satisfaction of a judgment extinguishes the claim and the judgment no longer exists."); Spencer v. DiGiacomo, 56 So. 3d 92, 94 (Fla. App. 2011) ("[T]he satisfaction of judgment signaled that the judgment had been satisfied and operated as a complete surrender of the right to appeal[.]"); Wiest v. Wiegele, 868 N.E.2d 1040, 1043 (Ohio App. 2006) ("It is a well-established principle of law that satisfaction of a judgment renders an appeal from that judgment moot."). We note that Arizona law appears to be in accord with these authorities. See Flood Control Dist. of Maricopa Cty. v. Paloma Inv. Ltd. P'ship, 237 Ariz. 322, 326, ¶¶ 13-14 (App. 2015) (explaining that satisfaction of a judgment will preclude an appeal under certain circumstances).
C. Evidentiary Hearing
¶12 Osio argues that disputes of material fact on the issue of abandonment required the superior court to hold an evidentiary hearing prior to deciding whether he violated the preliminary injunction.
See (current) Rule 65(f)(5) ("The court need not hold an evidentiary hearing unless there is a genuine dispute of material fact"). Osio contends an evidentiary hearing is also contemplated by (former) Rule 65(j). Because Villa 14 does not challenge Osio's interpretation of Rule 65(j), we need not address the issue further. --------
¶13 "Abandonment occurs when the lessee vacates the premises 'with intent to relinquish all rights therein.'" Gangadean v. Erickson, 17 Ariz. App. 131, 133 (1972) (quoting 51C C.J.S. Landlord & Tenant § 125(2) (1968)). An intent to abandon can be shown by words or conduct, and the question is one of fact "unless reasonable men could not differ." Id. at 133 (citations omitted). In this case, the termination notice set forth Villa 14's intent to retain its rights in the residence until September 30, 2016. See Riggs v. Murdock, 10 Ariz. App. 248, 251-52 (1969) (explaining that tenant's direction to landlord to apply rent obtained from subtenant toward amount due under the lease negated intent to abandon the premises). Osio suggests the Williams family's conduct vis-à-vis the residence was inconsistent with their previously-stated intent, but, on September 6, attorney Ganz twice reaffirmed that the Williams family had not vacated the residence nor did they intend to relinquish their rights therein prior to September 30. Because reasonable persons could not differ on this issue, we find no error.
¶14 Osio also argues there were factual disputes regarding whether Villa 14 created an emergency that justified Osio's actions to enter and secure the residence. But entering and securing is a far cry from evicting the Williams family, which is precisely what Osio did no later than September 6, 2016.
D. Defenses: Equitable and Contractual
¶15 Osio argues the superior court erred by allowing Villa 14 to "invoke equity" when it did not "do equity." See Belfer v. Lewis, 79 Ariz. 13, 17 (1955). "The application of the 'clean hands' doctrine rests in the sound discretion of the trial court[.]" Manning v. Reilly, 2 Ariz. App. 310, 314 (1965) (citation omitted). The general principle that equity follows law applies when the rights of the parties are clearly defined. See ML Servicing Co., Inc. v. Coles, 235 Ariz. 562, 569, ¶ 24 (App. 2014) (citing Sult v. O'Brien, 15 Ariz. App. 384, 388 (1971) and Loiselle v. Cosas Mgmt. Grp., LLC, 224 Ariz. 207, 211, ¶ 14 (App. 2010)). Osio does not challenge the court's conclusion that he has a remedy at law against Villa 14 for breach of the lease and/or purchase contract. On this basis, we find no error.
¶16 Osio also argues he was permitted to enter and secure the residence pursuant to the lease, which provided:
Access: Tenant shall not unreasonably withhold consent to Landlord or Landlord's representative(s) to enter into the Premises to inspect; make necessary or agreed repairs, decorations, alterations or improvements; supply necessary or agreed services; or exhibit the Premises to prospective or actual purchasers, mortgagees, tenants, workmen or contractors. Landlord may enter the Premises without consent of Tenant in case of emergency. Landlord shall not abuse the right to access or use it to harass Tenant. Except in case of emergency, Tenant's written request for repairs, or if it is impracticable to do so, Landlord shall give Tenant at least two days' notice in writing of the intent to enter and enter only at reasonable times.(Emphasis added.) Again, the provision permitting entry in an emergency does not sanction a concomitant eviction that is otherwise proscribed by the preliminary injunction.
II. Earnest Money Deposit
¶17 Osio asks us to review the superior court's order directing the $50,000 in earnest money to be returned to Villa 14. Again, we have no jurisdiction to do so. Osio previously appealed this order, and we dismissed for lack of jurisdiction. See generally Garza, 222 Ariz. at 284, ¶ 15 (a dismissal without prejudice generally is not appealable); L.B. Nelson Corp., 150 Ariz. at 217 (same). To the extent Osio invites us to reconsider our prior ruling, we decline the invitation. Osio also suggests the order "was appealable on return of the deposit," but he cites no authority to support this suggestion. Finally, even if we had appellate jurisdiction over the underlying attorneys' fees judgment, the earnest-money issue is not related to that judgment; thus, we would not have jurisdiction to consider the issue. See Ariz. R. Civ. P. 54(b); see also Wyckoff v. Mogollon Health Alliance, 232 Ariz. 588, 590, ¶ 4 (App. 2013) (citing A.R.S. § 12-2102(A) and Miller v. Ariz. Bank, 45 Ariz. 297, 303 (1935)).
CONCLUSION
¶18 For the foregoing reasons, we dismiss the appeal for lack of jurisdiction. We accept special action jurisdiction to address the fee-award issue, but we deny relief. In the exercise of our discretion, we grant Villa 14's request for an award of attorneys' fees and costs, see A.R.S. §§ 12-341 and -341.01, upon compliance with ARCAP 21.