Bennett v. Baxter Group, Inc.

• Citation: 224 P.3d 230
• Decision Date: 10 February 2010
• Docket Number: No. 2 CA-CV 2009-0046.,2 CA-CV 2009-0046.
• Parties: James L. BENNETT, individually and as trustee of the James L. Bennett Money Purchase Pension Plan, Plaintiff/Appellee, v. BAXTER GROUP, INC., an Arizona corporation, Defendant/Third-Party Plaintiff/Appellant, v. Arnold Meyerstein, Third-Party Defendant/Appellee.
• Court: Court of Appeals of Arizona

224 P.3d 230 James L. BENNETT, individually and as trustee of the James L. Bennett Money Purchase Pension Plan, Plaintiff/Appellee,
v.
BAXTER GROUP, INC., an Arizona corporation, Defendant/Third-Party Plaintiff/Appellant,
v.
Arnold Meyerstein, Third-Party Defendant/Appellee. No. 2 CA-CV 2009-0046. Court of Appeals of Arizona, Division 2, Department A. February 10, 2010.

[224 P.3d 232]

Borowiec, Borowiec & Russell, P.C., By D. Christopher Russell, Sierra Vista, Attorneys for Plaintiff/Appellee.

The Baxter Law Firm By Judith L. Baxter, Encino, CA, Geoffrey Walker, PLC By Geoffrey Walker, Phoenix, Attorneys for Defendant/Third-Party Plaintiff/Appellant.

Gregory G. McGill, P.C. By Gregory G. McGill, Scottsdale, Attorneys for Third-Party Defendant/Appellee.

OPINION

HOWARD, Chief Judge.

¶ 1 Appellant Baxter Group, Inc. (Baxter) appeals from the trial court's rulings after a bench trial on slander of title and breach of contract claims. Baxter also appeals the court's awards of attorney fees, sanctions, and costs to appellees, James L. Bennett, individually and as trustee of the James L. Bennett Money Purchase Pension Plan (collectively "Bennett") and Arnold Meyerstein (Meyerstein). For the reasons that follow, we affirm in part and vacate and remand in part.

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Facts and Procedural History

¶ 2 When reviewing issues decided following a bench trial, we view the facts in the light most favorable to upholding the court's ruling. Sabino Town & Country Estates Ass'n v. Carr, 186 Ariz. 146, 148, 920 P.2d 26, 28 (App.1996). In early January 2002, Baxter contracted to sell Bennett and Meyerstein a hotel for the sum of $1,700,000. The purchase was conditioned upon Bennett's and Meyerstein's "[a]pproval of available, acceptable and suitable financing" for the property. Under the terms of the contract, Bennett and Meyerstein were also required to deposit $10,000 in an escrow account as a good faith deposit toward the purchase of the property. If Bennett and Meyerstein "default[ed] or otherwise fail[ed] to complete the purchase," the contract stated that Baxter would retain any money deposited in the escrow account as liquidated damages.

¶ 3 Bennett made the required $10,000 deposit into an escrow account. Due to difficulties in obtaining appropriate financing, however, the closing date for the sale was extended several times. The buyers were never able to obtain the required financing. Eventually, Baxter accepted another buyer's offer to purchase the property.

¶ 4 Because Baxter had sold the property to someone else, Bennett requested that the $10,000 security deposit be returned. Baxter refused, claiming it was entitled to the money as liquidated damages under the terms of the sales contract. In an attempt to ensure that Baxter returned the deposit, Bennett had the "Agreement of Purchase and Sale" (Agreement) recorded, before Baxter and the new buyer had closed the hotel's sale under their agreement.

¶ 5 The title company subsequently discovered the recorded Agreement and asked Bennett and Meyerstein to release it, which they agreed to do in exchange for the $10,000 escrow deposit. Baxter refused to return the deposit, and Bennett and Meyerstein refused to release the recorded Agreement.

¶ 6 Bennett sued Baxter for breach of contract for failing to return the deposit, among other acts, and for fraud concerning an alleged extension of time for closing. Baxter filed a counterclaim against Bennett and a third-party complaint against Meyerstein, alleging against both, inter alia, fraud in the inducement and interference with its contract with the new buyer.

¶ 7 The trial court granted summary judgment in favor of Bennett and Meyerstein on the majority of Baxter's counterclaims and cross-claims but denied summary judgment on Baxter's claims of interference with contract and slander of title. After a bench trial on the remaining claims, the court ruled in favor of Bennett on his breach of contract claim against Baxter—awarding him the money held in escrow—but ruled in favor of Baxter on Bennett's fraud claim. The court also ruled against Baxter on its two remaining claims for interference with contract and slander of title. The court awarded Bennett and Meyerstein their attorney fees incurred during the litigation, as well as costs and sanctions. Baxter appeals from these rulings.

Slander of Title Claim

¶ 8 Baxter first argues the trial court erred in granting Bennett and Meyerstein judgment after trial on Baxter's slander of title claim, contending that "[n]o specific legal authority, statute or judgment permits the recording of a real estate sales agreement" and therefore the recorded Agreement was groundless and invalid pursuant to A.R.S. § 33-420(A) and (D). No facts relevant to our resolution of this claim are in dispute, and we review the issue de novo as a matter of law. McMurray v. Dream Catcher USA, Inc., 220 Ariz. 71, ¶ 6, 202 P.3d 536, 539 (App.2009).

¶ 9 Section 33-420(A) subjects a person to financial penalties for recording a document with the county recorder knowing or having reason to know "the document" is groundless or invalid. Section 33-420(D) provides that "[a] document purporting to create an interest in, or a lien or encumbrance against, real property not authorized by statute, judgment or other specific legal authority is presumed to be groundless and invalid." Baxter's argument focuses solely on whether the recording of the Agreement was groundless, not on the validity of the recorded document and

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underlying real property interest itself. And § 33-420(D) pertains only to the validity of the document; it does not govern its recording. Therefore, Baxter has not shown that Bennett violated § 33-420.

¶ 10 Baxter further contends that the trial court erred in ruling in favor of Bennett and Meyerstein because they violated § 33-420(C) by "refusing to release a groundless and invalid document within twenty days of a written request." But because Baxter has not shown the document Bennett and Meyerstein recorded was groundless, it has not shown Bennett and Meyerstein violated § 33-420(C) by failing to release the interest. Additionally, because Bennett and Meyerstein did not violate any subsection of § 33-420, we also reject Baxter's additional argument that Bennett's and Meyerstein's purported violations entitled Baxter to damages. The trial court did not err in rejecting Baxter's slander of title claims.

Breach of Contract Claims

¶ 11 Baxter next contends that the trial court erred in its ruling in favor of Bennett on his breach of contract claim. Baxter initially states that the grant of summary judgment on its breach of contract claim in favor of Bennett and Meyerstein should be reversed because the court "misconstrued the terms of the contract." But this claim is "wholly without supporting argument or citation to authority," so it is waived. Brown v. U.S. Fid. & Guar. Co., 194 Ariz. 85, ¶ 50, 977 P.2d 807, 815 (App.1998); see also Ariz. R. Civ.App. P. 13(a)(6).

¶ 12 Baxter further argues that, in ruling on Bennett's breach of contract claim after trial, the trial court misinterpreted the relevant provisions of the Agreement in concluding that Baxter was in breach by refusing to release the $10,000 earnest money. In the absence of any relevant factual dispute, we review matters of contract interpretation de novo. See Rand v. Porsche Fin. Servs., 216 Ariz. 424, ¶ 37, 167 P.3d 111, 121 (App. 2007).

¶ 13 "[W]e will give effect to a contract as written where the terms of the contract are clear and unambiguous." Mining Inv. Group, LLC v. Roberts, 217 Ariz. 635, ¶ 16, 177 P.3d 1207, 1211 (App.2008). The liquidated damages clause of the Agreement states:

In the event Buyers default or otherwise fail to complete the purchase in accordance with this agreement, Seller shall be released from all obligations to sell the real property to Buyers and may proceed against Buyers upon any claims or remedy which Sellers may have in law or equity; provided, however that by placing their initials below[,] Buyer and Seller agree that it would be impractical or extremely difficult to fix actual damages in the event of Buyers' default or failure to complete the purchase, and that the amounts actually deposited by Buyers in escrow shall be paid to Seller as liquidated damages and as Sellers' sole and complete remedy, except that Buyer[s] will also be responsible to pay any and all costs incurred by Buyer[s] in the course of Buyer[s'] investigation.

¶ 14 Baxter argues that only the second clause of that provision specifically addresses liquidated damages and that, because this clause does not include the words "in accordance with this agreement," Baxter would be entitled to collect damages for a "failure to complete the purchase" even if the conditions required of the buyers had not been met. Moreover, Baxter contends that the use of the word "or" in the clause "default or failure to complete the purchase" means that, even in situations where Bennett and Meyerstein had not defaulted on the contract but had failed to complete the purchase, they still would have forfeited their earnest money. The trial court found the clause unambiguous and concluded that the language "in accordance with this Agreement" incorporates the provision of the Agreement outlining the conditions to the buyers' obligations.

¶ 15 We reject Baxter's attempt to parse the various clauses and instead read the provision as a whole. See State ex rel. Goddard v. R.J. Reynolds Tobacco Co., 206 Ariz. 117, ¶ 12, 75 P.3d 1075, 1078 (App.2003) (we construe contract in its entirety). The phrase "in accordance with this Agreement" is implied in the second clause. Additionally, as the trial court found, sections seven and

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twelve are unambiguous when read together. The liquidated damages clause of the Agreement states that the forfeiture of the earnest money would be in lieu of damages, which would be...