Ariz. Med. Buildings, LLC v. Chasm Invs., LLC, 2 CA-CV 2012-0093

CourtCourt of Appeals of Arizona
PartiesARIZONA MEDICAL BUILDINGS, LLC, an Arizona limited liability company; JESSE P. TRUITT, an individual, Plaintiffs/Appellees/Cross-Appellants, v. CHASM INVESTMENTS, LLC, an Arizona limited liability company; JOHN S. TRUITT, M.D., and SHIREEN TRUITT, husband and wife, Defendants/Appellants/Cross-Appellees.
Docket Number2 CA-CV 2012-0093
Decision Date12 September 2013



Not for Publication Rule 28, Rules of Civil Appellate Procedure


Cause No. C20071914

Honorable Scott Rash, Judge


Gallagher & Kennedy, P.A.

By Mark Deatherage and Timothy W. Overton


Attorneys for Plaintiffs/Appellees/


Munger Chadwick, P.L.C.

By Mark E. Chadwick


Attorneys for Defendants/Appellants/


HOWARD, Chief Judge.

¶1 Appellants Chasm Investments, LLC, Dr. John Truitt, and Shireen Truitt (collectively "John") appeal from the trial court's judgment in favor of appellees and cross-appellants Arizona Medical Buildings, LLC and Jesse Truitt (collectively "Jesse") in litigation arising from the business relationship between the parties. On appeal, John argues the trial court erred in admitting and evaluating certain evidence, instructing the jury, and fashioning remedies. Jesse cross-appeals from the court's denial of his request for attorney fees. Because we find no reversible error, we affirm.

Factual and Procedural Background

¶2 "We view the facts in the light most favorable to sustaining the trial court's judgment." Sw. Soil Remediation, Inc. v. City of Tucson, 201 Ariz. 438, ¶ 2, 36 P.3d 1208, 1210 (App. 2001). In August 2003, John sold ninety-nine percent of his approximately thirty-nine percent interest in the Sierra Vista Medical Center Partnership (SVMCP) to Jesse, vesting Jesse with a 38.7966 percent interest and leaving John with a .3919 percent interest. After other related litigation in another case involving that transfer, the trial court ruled that the transfer was effective and personal to Jesse as of August 26, 2003. In 2006, the parties entered negotiations concerning some personal property, a number of parcels of real property located in Arizona and New Mexico ("Subject Properties"), and John's remaining interest in SVMCP and the balance of his medical practice. In May 2006, Jesse executed quitclaim deeds to the Subject Properties in favor of John. Jesse believed the deeds were executed solely to allow John to obtainfinancing rather than constituting unconditional transfers. He further believed the negotiations did not result in a final, enforceable contract.

¶3 In 2007, Jesse sued John seeking declaratory, injunctive, and substantive relief in claims sounding in contract, tort, and equity. John filed counterclaims seeking similar relief and damages for the wrongful recording of a lien. After a fifteen-day trial, both parties filed motions for judgment as a matter of law, which the trial court denied. The court submitted both parties' business tort claims and special interrogatories on their quiet title claims to the jury, which rejected the tort claims and gave advisory answers to the special interrogatories. The court ruled Jesse had transferred one of the Subject Properties, the "Corporate Building"1 to John, but could not quiet title in him because the building had been foreclosed on in 2009. The court quieted title to the relevant remaining Subject Properties in Jesse, finding he had no intent to deliver the quitclaim deeds to John and concluding no contract involving John's medical practice had been finalized between the parties. After a hearing on both parties' requests for attorney fees, the court granted costs to Jesse as the prevailing party but denied both parties attorney fees. John appealed and Jesse cross-appealed. We have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).

Quitclaim Deeds
Sufficiency of the Evidence

¶4 John first argues the trial court erred in determining that Jesse had transferred to John only one of the eight Subject Properties—the Corporate Building—because no evidence supported treating the properties separately. He reasons that because the court concluded the transfer of the Corporate Building was effective, it should have concluded the transfer of the other Subject Properties also was effective. We defer to the court's factual findings where they are supported by the record and not clearly erroneous. See John C. Lincoln Hosp. & Health Corp. v. Maricopa Cnty., 208 Ariz. 532, ¶ 10, 96 P.3d 530, 535 (App. 2004).

¶5 John alleged that under the terms of the agreement to sell his medical practice to Jesse and another doctor, Jesse was to pay $2.5 million in cash and transfer to him the Subject Properties, including the Corporate Building, and personal property consisting primarily of vehicles. He alleged this agreement was made at a Starbucks in April 2006 (hereafter the "Starbucks deal").2 In support of his claim, John produced an unsigned contract dated November 2006 and pointed to the fact Jesse had given him quitclaim deeds to the Subject Properties. Jesse countered such an agreement never occurred, alleging John had wanted to purchase the Subject Properties from him and he had given John the quitclaim deeds only because John had told him he needed them in order to secure financing.

¶6 The trial court found the transfer of the Corporate Building was not a part of the alleged Starbucks deal and instead was separate and distinct from that of the other Subject Properties. To reach this finding, it in part relied on the real estate purchase and sale agreement for the Corporate Building signed by Jesse on June 26, 2006, and by John on July 12, 2006. It reasoned that if, as John asserted, the parties had entered into a contract regarding all the Subject Properties in April 2006, the parties would not have needed the subsequent, separate contract regarding the Corporate Building, and concluded the Corporate Building was part of a separate transaction. Furthermore, Jesse and two other witnesses testified that the sale of the Corporate Building was a separate transaction. Based on this evidence, we cannot find clearly erroneous the court's conclusion that the Corporate Building was the subject of a separate transaction.

¶7 Furthermore, as to the other properties, Jesse and others testified the deeds to them had been given to John for his use in obtaining financing. And John sent an email to Jesse reassuring him as of July 11, 2006, that the "properties are not transferred" and the deeds to the Subject Properties "d[id] not exist for all practical purposes" until John recorded them. Again, the evidence supports the trial court's ruling that the other deeds were ineffective. See Health Corp., 208 Ariz. 532, ¶ 10, 96 P.3d at 535.

Parol Evidence

¶8 John next argues the parol evidence rule should have precluded Jesse from testifying about any oral conditions to the quitclaim deeds. Jesse counters that the evidence was admissible to show the deeds were not delivered. We review de novowhether testimony is admissible under the parol evidence rule. See Terry v. Gaslight Square Assocs., 182 Ariz. 365, 368, 897 P.2d 667, 670 (App. 1994).

¶9 In general, when two parties have a written agreement, neither party may present "parol evidence," or extrinsic evidence, that would contradict or vary the terms of the writing. Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 152, 854 P.2d 1134, 1138 (1993). But conveyance of real property is not effective unless the grantor delivers the deed to the grantee. A.R.S. § 33-401(A). Effective delivery of a deed requires that the grantor have a present intention that title should pass to the grantee. Robinson v. Herring, 75 Ariz. 166, 169-70, 253 P.2d 347, 349-50 (1953). Even if a grantor physically hands a deed to a grantee, the deed has not been legally delivered and title to the property does not pass unless the grantor intended to relinquish ownership of the property. Morelos v. Morelos, 129 Ariz. 354, 356, 631 P.2d 136, 138 (App. 1981). Therefore, in the context of deeds, parol evidence is admissible to show "the intention of the parties was that [a deed] was not to become operative immediately." Parker v. Gentry, 62 Ariz. 115, 120, 154 P.2d 517, 519 (1944), approved of by Robinson, 75 Ariz. at 170, 253 P.2d at 349-50; cf. Miller v. Stringfield, 45 Ariz. 458, 462, 45 P.2d 666, 667 (1935) (parol evidence admissible to show deed absolute in form actually intended as equitable mortgage).

¶10 In this case, Jesse testified he had executed the quitclaim deeds to assist John in obtaining financing to purchase the Subject Properties and he had "made it perfectly clear" he did not intend to transfer ownership of the properties. This testimony did not concern how to interpret a written provision of the deed, but instead went towhether Jesse had a present intent to relinquish ownership of the property. Its consideration by the trial court, therefore, did not violate the parol evidence rule. See Robinson, 75 Ariz. at 170, 253 P.2d at 349-50.

¶11 John relies on Schornick v. Schornick for the proposition that parol evidence may not be used to establish a grantor's lack of intent to transfer a property. 25 Ariz. 563, 575, 220 P. 397, 401 (1923). But we do not read that case so broadly. In Schornick, the court held only that parol evidence may not be used to interpret the meaning of an unambiguous provision within the deed; it did not address delivery because in that case the "manual delivery of the deed to [the] grantee was actual and unconditional." Id. Here, the question pertains not to the writing within the deed but to what is necessary to effectively deliver it. Accordingly, the court did not err in permitting parol evidence on the issue of delivery.

Statute of Frauds


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