Focus Point Props., LLC v. Johnson
Decision Date | 19 June 2014 |
Docket Number | No. 1 CA–CV 12–0766.,1 CA–CV 12–0766. |
Citation | 689 Ariz. Adv. Rep. 4,235 Ariz. 170,330 P.3d 360 |
Parties | FOCUS POINT PROPERTIES, LLC; Jeff Kantor, Plaintiffs/Appellees, v. Cleo JOHNSON; Oak Acres Trust, Defendants/Appellants. |
Court | Arizona Court of Appeals |
OPINION TEXT STARTS HERE
Dickinson Wright/Mariscal Weeks, PLLC, By Timothy J. Thomason, Phoenix, for Plaintiffs/Appellee.
Ridenour Hienton & Lewis, PLLC, By Patricia A. Premeau, Phoenix, for Defendants/Appellants.
OPINION
¶ 1 This case involves litigation commenced under Arizona Revised Statutes (“A.R.S.”) § 32–3152(A),1 which authorizes a “qualified” licensed real estate salesperson to file a lawsuit to collect an unpaid real estate commission for services rendered. We are asked to address whether “qualified” in this context means something other than being licensed at the time services are provided, or alternatively, whether a court assessing whether someone is qualified under the statute should consider conduct unrelated to the services rendered but that calls into question whether the salesperson's license should have been suspended or revoked. For reasons that follow, we affirm the trial court's ruling that under § 32–3152(A), the only relevant inquiry is whether the person seeking to collect a commission was licensed at the time services were provided.
¶ 2 We are also asked to address whether an individual who signs a real estate contract on behalf of a trust, without specifying her representative capacity, may be held personally liable for breaching a provision in the contract that requires payment of a real estate commission. We reverse the trial court's ruling on this issue and find that, under the circumstances presented here, a trustee who contracts on behalf of a trust cannot be held personally liable for breaching the contract.
¶ 3 In May 2009, Cleo Johnson, who was the trustee of the Oak Acres Trust, hired Jeff Kantor of Focus Point Properties, LLC to sell commercial real estate in Apache Junction owned by the Trust. In June 2009, Johnson signed a letter authorizing Kantor to speak about the property directly with the City of Apache Junction for planning purposes, and Kantor thereafter worked to assist Johnson with rehabilitating and selling the property.
¶ 4 Kantor prepared and signed a six-month listing agreement, dated October 15, 2009, to sell the property. Kantor reviewed the terms of the agreement with Johnson and gave it to her to sign.3
¶ 5 After discussing the agreement with Johnson, Kantor discovered it would take months to rehabilitate the property because of its blighted condition, including substantial issues with vagrancy, criminal activity, and debris. In several conversations with Johnson, Kantor explained that, given the increased time required to adequately rehabilitate the property, he would need a one-year listing agreement. During those discussions, Johnson requested that Kantor expand the scope of the listing agreement to include leasing the commercial units on the property to generate money to pay property taxes. After multiple conversations with Johnson, Kantor prepared a revised one-year listing agreement to sell or lease the property. Johnson signed the new agreement on October 29, 2009.
¶ 6 Johnson did not read the new agreement before signing it. Although Kantor offered to explain the details of the agreement, Johnson indicated that, based on their previous discussions, she understood the new terms. Kantor gave Johnson a copy of the October 29 agreement at their next meeting, approximately one week after Johnson signed it.
¶ 7 Over the last three months of 2009, Kantor spent at least 25 to 30 hours each week coordinating the rehabilitation of the property. During the listing period, Kantor procured a tenant, and in January 2010, he arranged for the tenant to meet with him and Johnson to discuss lease terms. Johnson failed to attend the meeting, but she nevertheless subsequently signed a lease with the tenant without letting Kantor know she was doing so.
¶ 8 On February 1, 2010, Focus Point sent Johnson/Oak Acres an invoice for a lease commission of $2,720. Johnson canceled the listing agreement three days later. Focus Point then sent Johnson/Oak Acres a letter demanding $140,000, based on a liquidated damages provision in the agreement.4
¶ 9 When Johnson/Oak Acres refused to pay, Focus Point/Kantor filed a complaint in Maricopa County Superior Court alleging breach of contract, fraud, promissory estoppel, and unjust enrichment. Johnson/Oak Acres counterclaimed for fraudulent misrepresentation and inducement into contract, negligent misrepresentation, breach of fiduciary duty, and damages under Arizona's vulnerable adult statute, A.R.S. § 46–456.
¶ 10 Both sides filed motions for summary judgment. After briefing and oral argument, the trial court denied Focus Point/Kantor's motion for summary judgment and granted Johnson/Oak Acres' motion for summary judgment on Focus Point/Kantor's claims for promissory estoppel and unjust enrichment. The ruling left for trial Focus Point/Kantor's claims for breach of contract and fraud, along with Johnson/Oak Acres' counterclaims for fraudulent misrepresentation and inducement into contract, negligent misrepresentation, breach of fiduciary duty, and violations of the vulnerable adult statute.
¶ 11 Two days before trial was scheduled to begin, Johnson/Oak Acres filed an emergency motion to dismiss the complaint and vacate the trial based on information regarding Kantor's real estate license history. Johnson/Oak Acres' motion stated that in September 2006, Kantor had entered into a consent order with the Arizona Department of Real Estate (“ADRE”) for failing to timely disclose two DUI convictions. Pursuant to the consent order, ADRE placed Kantor under a two-year provisional license from September 2006 until September 2008 and required that he abstain from alcohol and illegal drugs, and that he submit to random testing. In May 2008, Kantor was convicted of another DUI offense, but he did not report the conviction to ADRE until September 28, 2011. In March 2012, while ADRE's investigation into that report remained pending, Kantor voluntarily surrendered his real estate license.
¶ 12 Johnson/Oak Acres' motion to dismiss asserted that if Kantor had properly disclosed his DUI conviction, he would not have held a real estate license when he provided services to Johnson/Oak Acres, and, therefore, he was not entitled to a commission. The trial court denied the motion, reasoning that because Kantor was licensed at the time he provided the services at issue, the fact that he had committed an act that might have, or even should have, resulted in the loss of his license was not relevant.
¶ 13 The case proceeded to trial, and the jury found in favor of Focus Point/Kantor on their breach of contract and punitive damages claims, but against them on their fraud claim. The jury ruled against Johnson/Oak Acres on all of their counterclaims.
¶ 14 In June 2012, Johnson/Oak Acres filed a motion for judgment as a matter of law and a motion for new trial. Among other arguments, Johnson/Oak Acres asserted that Kantor should not have been permitted to maintain his lawsuit for a real estate commission because of his failure to disclose his violation of the ADRE consent order; the jury's verdict awarding punitive damages arising from a breach of contract claim was not permitted by law; and the jury's verdict awarding damages against Johnson in her individual capacity was not factually or legally supported. The trial court vacated the award of punitive damages but affirmed the remaining verdicts. The court entered judgment against Johnson/Oak Acres for compensatory damages in the aggregate sum of $140,000 plus interest, and awarded Focus Point/Kantor their attorney's fees in the amount of $39,000 plus interest, and costs in the amount of $2,511.26 plus interest.5
¶ 15 Johnson/Oak Acres timely appealed. We have jurisdiction under Article 6, Section 9, of the Arizona Constitution and A.R.S. §§ 12–120.21(A)(1) and –2101(A)(1).
¶ 16 Johnson/Oak Acres raises three arguments on appeal, asserting that (1) Kantor did not have standing under § 32–2152(A) to maintain a lawsuit for a real estate commission, (2) the trial court improperly denied Johnson/Oak Acres' motion for summary judgment on their breach of fiduciary duty claim, and (3) Johnson should not have been found to be personally liable for the real estate commission. We address each argument in turn.
¶ 17 Johnson/Oak Acres contend the trial court erred under A.R.S. § 32–2152(A) by ruling that Kantor could initiate and maintain a lawsuit for a real estate commission notwithstanding evidence that he violated Arizona law by not timely disclosing to ADRE that he had violated a prior consent order. Johnson/Oak Acres' argument fails, however, because Kantor held an active Arizona real estate license at the time he earned the commission, and questions regarding whether Kantor's license should have been revoked were collateral to the dispute in this case.
¶ 18 We review de novo issues of statutory interpretation. Keenen v. Biles, 199 Ariz. 266, 267, ¶ 4, 17 P.3d 111, 112 (App.2001). Here, we address the interplay between § 32–2152(A), which imposes qualifications for filing an action to collect a disputed real estate commission, and A.R.S. § 32–2153(B), which details the Arizona Real Estate Commissioner's duties regarding disciplining real estate licensees. Section 32–2152(A) provides:
An action for the collection of compensation earned may be maintained in the courts of the state by any broker or salesperson. To commence the action the complaint shall allege that the plaintiff was a qualified licensed broker or salesperson at the time the...
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§ 3.3.1.5 Appeals Relating To Summary Judgments.
...See Grain Dealers Mut. Ins. Co. v. James, 118 Ariz. 116, 117 n.1, 575 P.2d 315, 316 n.1 (1978); Focus Point Properties, LLC v. Johnson, 235 Ariz. 170, 175, ¶ 25, 330 P.3d 360, 365 (App. 2014); State ex rel. Horne v. AutoZone, Inc., 227 Ariz. 471, 479 n.10, ¶ 24, 258 P.3d 289, 297 n.10 (App.......
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§ 3.3.1.5 Appeals Relating To Summary Judgments.
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