Ariz. Biltmore Hotel Villas Condos. Ass'n v. The Conlon Grp. Ariz.

Decision Date12 May 2022
Docket Number1 CA-CV 21-0432
PartiesARIZONA BILTMORE HOTEL VILLAS CONDOMINIUMS ASSOCIATION INC, Plaintiff/Appellee, v. THE CONLON GROUP ARIZONA, LLC, et al., Defendants/Appellants.
CourtArizona Court of Appeals

Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court

Appeal from the Superior Court in Maricopa County No. CV2015-013012 The Honorable Roger E. Brodman, Judge (Retired)

Pettit Kohn Ingrassia Lutz & Dolin PC, Los Angeles, CA By Grant D. Waterkotte, Tristan A. Mullis Counsel for Plaintiff/Appellee

Finney Law Office LLC, Clayton, MO By Daniel P. Finney Counsel for Defendant/Appellant Conlon

Ahwatukee Legal Office PC, Phoenix By David L. Abney Counsel for Defendant/Appellant Finney

Judge Randall M. Howe delivered the decision of the court, in which Presiding Judge Jennifer B. Campbell and Judge James B. Morse Jr. joined.

MEMORANDUM DECISION

HOWE Judge

¶1 Mark Finney and The Conlon Group ("TCG") appeal the trial court's judgment awarding $479, 562 in damages to the Arizona Biltmore Hotel Villas Condominiums Association. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

¶2 This is the second appeal resulting from the Association's lawsuit against Finney and TCG for various tort and contract claims-including breach of fiduciary duty and negligent misrepresentation-resulting from Finney's and TCG's actions in a 2013 lawsuit between the Association and the Arizona Biltmore Hotel and Salt River Project ("SRP").[1]Between 2004 and 2015, Finney served as president of the Association's Board of Directors and independently owned and controlled TCG. As president, Finney launched the Association's 2013 litigation, alleging that SRP had breached its contract and wrongfully terminated a joint use agreement that ended the Association's rights to 103 parking spaces ("South Spaces"). Finney and the Association also requested declaratory judgment that it rather than the Hotel, had exclusive rights to 78 different parking spaces ("North Spaces"). The Association accrued over a million dollars in attorney fees during the 2013 litigation and received a $200, 000 settlement from SRP with the Hotel being dismissed at summary judgment.

¶3 The Association sued Finney and TCG for, among other things, the 2013 litigation's attorney fees, claiming that Finney breached his fiduciary duty as president of the Board and negligently misrepresented facts to the Board during the 2013 lawsuit. After a bench trial, the trial court found that Finney as an individual and jointly and severally with TCG breached his fiduciary duty as the Board president for his conduct related to the South Spaces litigation. It found, however, that Finney and TCG were not liable for the North Spaces litigation. In calculating the damages award, the trial court took the amount the Association sought in attorney fees in the 2013 litigation, $1, 049, 562, and subtracted the SRP settlement, $200, 000. It also subtracted the amount the "Association was prepared to spend" for both the "Northern and Southern Spaces" litigation if the facts were "as the non-Finney Board members believed them to be," $350, 000, for a total damage amount of $479, 562.

¶4 Finney appealed. This court affirmed the trial court's judgment in all respects but vacated the $479, 562 damages award, finding the trial court had "never deducted the Association's fees on [the North Spaces] claim from its total damage award." See Arizona Biltmore Hotel Villas Condominiums Ass'n, 249 Ariz. at 333 ¶ 33. We remanded to the trial court to "conduct such proceedings" necessary to deduct the attorney fees incurred in the North Spaces litigation. Id.

¶5 At the evidentiary hearing, the trial court stated it should have been clearer in, or should have clarified, its initial ruling because the $350, 000 deduction had accounted for all the North Spaces' attorney fees. Although the Association never presented either a contemporaneous or a re-created itemized billing statement dividing fees between the North and South Spaces, the trial court determined that the Association proved with "absolute certainty that the North Spaces fees" did not exceed $350, 000, or one-third of the total fees.

¶6 To explain the amount, the trial court identified several items in the record that supported its conclusion. After judgment had been entered in the North Spaces litigation, Finney e-mailed another Board member on October 16, 2014, stating that the $470, 000 in attorney fees incurred by that date had been for both the South and North Spaces litigation. The trial court thus determined that all attorney fees from October 2014 until the litigation's end involved only the South Spaces litigation minus $30, 000 for the North Spaces appeal, a difference totaling nearly $550, 000.

¶7 Although the trial court said it did not know exactly how the pre-October 16 attorney fees were allocated, it determined that "it [wa]s not remotely possible" that the North Spaces fees were substantially greater than the South Spaces fees because (1) the Hotel's fees for the North Spaces litigation were only $136, 356 while SRP's fees four months later were $570, 000; (2) the Association prepared a $13 million claim against SRP in the South Spaces litigation with an expert charging more than $126, 000; and (3) the Association had litigated and prevailed on various motions to dismiss, including four dispositive motions, and needed to litigate multiple discovery motions by October 31, 2014. Indeed, the trial court found that the South Spaces litigation had "spun out of control" because SRP employed a "scorched earth" strategy to the litigation. Id.

¶8 Thus, it concluded that "well under half" of the $470, 000 in attorney fees were incurred on the North Spaces litigation. While it recognized that finding that the Association had incurred $700, 000 in the South Spaces litigation was "favorable to defendants and probably significantly underestimate[d] the Association's damages," it concluded that $350, 000 of the total fees for the 2013 litigation were for the North Spaces. It signed a new final judgment awarding the Association $479, 562 in damages. Finney and TCG timely appealed.

DISCUSSION

¶9 Finney and TCG argue that the trial court improperly deviated from this court's mandate and that insufficient evidence supported the trial court's conclusion that $350, 000 was spent on the North Spaces litigation. We review whether a trial court follows an appellate court's mandate de novo In re Marriage of Molloy, 181 Ariz. 146, 149 (App. 1994), and review the trial court's damages award for an abuse of discretion, Arizona Biltmore Hotel Villas Condominiums Ass'n, 249 Ariz. at 333 ¶ 31.

I. The trial court did not improperly deviate from the mandate.

¶10 An appellate mandate, along with the decision it seeks to implement, is binding on the trial court and enforceable according to its "true intent and meaning[, ]" Raimey v. Ditsworth, 227 Ariz. 552, 555 ¶ 6 (App. 2011), as the "law of the case[, ]" Dancing Sunshines Lounge v. Indus. Comm'n of Ariz., 149 Ariz. 480, 482 (1986). In construing a mandate's true intent and meaning, a trial court is limited to the "specific direction of the mandate" as interpreted "in light of the opinion." 5 Am. Jur. 2d App. Rev. § 685 (emphasis added). Although a trial court is generally required to adhere to this court's "direction," it may deviate from that direction if doing so is not "contrary to the spirit of the appellate court's decision." United States v. Perez, 475 F.3d 1110, 1113 (9th Cir. 2007) ("[A]n order issued after remand may deviate from the mandate if it is not counter to the spirit of the circuit court's decision.").

¶11 Contrary to Finney and TCG's contention otherwise, the trial court's new judgment did not violate the "true intent and meaning" of this court's mandate and opinion. See Raimey, 227 Ariz. at 555 ¶ 6. The intent and spirit of this court's first opinion required a damages award free from the North Spaces litigation's attorney fees, expressed by its requirement that the trial court deduct those fees from the damages award. See Arizona Biltmore Hotel Villas Condominiums Ass'n, 249 Ariz. at 333 ¶¶ 33-36; see also Harbel Oil Co. v. Superior Ct. of Maricopa Cnty., 86 Ariz. 303, 306 (1959) (resolving whether trial court violated the mandate required analysis of the appellate court's decision); 5 Am. Jur. 2d App. Rev. § 684. But as the trial court made clear in its judgment on remand, attorney fees for the North Spaces litigation had not been included in the original $479, 562 damages award. Thus, any deviation from the mandate's direction to deduct additional fees for the North Spaces litigation was consistent with the mandate's intent and spirit, assuming evidence supports the trial court's judgment on remand. See Raimey, 227 Ariz. at 555 ¶ 6; Perez, 475 F.3d at 1113; see also Sibley v. Jeffreys, 81 Ariz. 272, 277 (1956) (noting that trial courts may deviate from a remand if the previous ruling on appeal is "manifestly or palpably erroneous").

II. Sufficient evidence supports the trial court's damages award.

¶12 Considering the trial court's clarification and the reasoning on remand, the trial court did not err because sufficient evidence supports the trial court's conclusion that the North Spaces attorney fees did not exceed $350, 000. Once the fact of damages has been established, the amount of the damages may be established with less certainty than is needed to establish the fact of damage. Earle M Jorgensen Co. v. Tesmer Mfg. Co., 10 Ariz.App. 445, 450 (1969). The award cannot hinge on conjecture or speculation, however, and must be supported by some reasonable basis for computing the amount of damages with such precision as, "from the...

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