Goodman v. Physical Res. Eng'g, Inc.

• Decision Date: 28 December 2011
• Docket Number: No. 2 CA–CV 2011–0053.,2 CA–CV 2011–0053.
• Citation: 229 Ariz. 25,270 P.3d 852
• Parties: Michael A. GOODMAN, a married man, Plaintiff/Appellee, v. PHYSICAL RESOURCE ENGINEERING, INC., an Arizona corporation, Defendant/Appellant.
• Court: Arizona Court of Appeals

229 Ariz. 25

270 P.3d 852

Michael A. GOODMAN, a married man, Plaintiff/Appellee,

v.PHYSICAL RESOURCE ENGINEERING, INC., an Arizona corporation, Defendant/Appellant.

No. 2 CA–CV 2011–0053.

Court of Appeals of Arizona, Division 2, Department B.

Dec. 28, 2011.

Thompson–Krone, P.L.C. By Russell E. Krone, Tucson, Attorneys for Plaintiff/Appellee.

Meagher & Geer, P.L.L.P. By Kurt M. Zitzer and Thomas H. Crouch, Scottsdale, Attorneys for Defendant/Appellant.

OPINION

ESPINOSA, Judge.

¶ 1 Physical Resource Engineering, Inc. (PRE) appeals from a judgment entered after a jury trial in favor of Michael Goodman on his claim for breach of contract. PRE also challenges the trial court's denial of its motion for judgment as a matter of law pursuant to Rule 50, Ariz. R. Civ. P., and motion for a new trial pursuant to Rule 59, asserting there was no evidence a contract between PRE and Goodman had existed, and, in any event, under the circumstances of this case Arizona law limited Goodman to pursuing only a tort claim. Additionally, PRE contends the case should be remanded for a new trial on Goodman's negligence claim. For the reasons set forth below, we reverse and remand.

Factual Background and Procedural History

¶ 2 We view “the evidence in a light most favorable to upholding the jury verdict.” Hutcherson v. City of Phoenix, 192 Ariz. 51, ¶ 13, 961 P.2d 449, 451 (1998). Goodman, a Tucson real estate developer, hired Tortolita Valley Homes (TVH) to construct two luxury duplex buildings on property Goodman owned on Fort Lowell Road. In April 2008, TVH hired PRE, a civil engineering, surveying, and geological engineering firm, to stake the location for Goodman's buildings according to a site plan prepared by Goodman's architect, Scott Isles, and approved by the City of Tucson. Staking each building required PRE to “dimensionally locate the house on the site [and] place four pins where the house went.”

¶ 3 According to the site plan, one of the buildings should have been located twenty feet, three inches south of the north property line, resulting in a twelve-foot-wide rear yard on the building's north side. PRE staked the building approximately six feet north of where it should have been built, and TVH constructed the building according to the stakes, resulting in a yard depth of only six feet and a violation of setback and floodplain requirements. In September 2008, TVH and Isles determined the building location did not conform to the site plan, and Goodman subsequently sued PRE for breach of contract and professional negligence.¹

¶ 4 PRE filed a motion for partial summary judgment in which it argued there was no contract between it and Goodman, and, furthermore, it had not breached its express agreement with TVH. PRE also contended that any claim Goodman might have against it could be based only on the alleged breach of a professional duty, limiting Goodman to a negligence claim. The trial court denied the motion following oral argument.

¶ 5 During trial, PRE moved for judgment as a matter of law pursuant to Rule 50, again arguing there was no contract between the parties and the verbal contract between PRE and TVH had not been breached. As to the negligence claim, PRE contended that Goodman had failed to introduce sufficient evidence establishing PRE had staked the building in the wrong location or, alternatively, that Goodman and Isles should be found comparatively at fault. The court denied PRE's motion. Following the close of evidence, PRE renewed its Rule 50 motion and later moved for a new trial pursuant to Rule 59 on the same grounds, which the court again denied. The jury found that a contract existed between Goodman and PRE, and that PRE had breached it, causing damages of $217,314. The court entered judgment in favor of Goodman in that amount, and awarded him attorney fees and costs under A.R.S. §§ 12–341.01 and 12–322. We have jurisdiction pursuant to A.R.S. §§ 12–120.21(A)(1) and 12–2101(A)(1), (A)(5)(a).

Discussion

¶ 6 PRE contends the trial court erred in denying its motions for judgment as a matter of law on Goodman's breach of contract claim because there was no evidence a contract existed between PRE and Goodman under either of two theories Goodman advanced at trial. We review de novo the denial of a motion for judgment as a matter of law under Rule 50. A Tumbling–T Ranches v. Flood Control Dist. of Maricopa Cnty., 222 Ariz. 515, ¶ 14, 217 P.3d 1220, 1229 (App.2009); Shoen v. Shoen, 191 Ariz. 64, 65–66, 952 P.2d 302, 303–04 (App.1997). We will uphold the ruling unless “ ‘the facts produced in support of the claim or defense have so little probative value, given the quantum of evidence required, that reasonable people could not agree with the conclusion advanced by the proponent of the claim or defense.’ ” A Tumbling–T Ranches, 222 Ariz. 515, ¶ 14, 217 P.3d at 1229, quoting Orme Sch. v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990). Similarly, it is for the trial court to determine, in the exercise of its discretion, whether to grant a motion for a new trial on the ground that the verdict is against the weight of the evidence; absent an abuse of discretion, we will not disturb the court's ruling. Ogden v. J.M. Steel Erecting, Inc., 201 Ariz. 32, ¶ 15, 31 P.3d 806, 810 (App.2001). Both rulings will be affirmed “[i]f any substantial evidence could lead reasonable persons to find the ultimate facts to support a verdict.” Id. (motion for new trial); Hutcherson, 192 Ariz. 51, ¶ 13, 961 P.2d at 451 (motion for judgment as a matter of law).

Implied Contract between PRE and Goodman

¶ 7 To prevail on a breach of contract claim, Goodman was required to prove a contract existed between him and PRE, PRE breached the contract, and Goodman suffered damages as a result. See Graham v. Asbury, 112 Ariz. 184, 185, 540 P.2d 656, 657 (1975), citing Clark v. Compania Ganadera de Cananea, S.A., 95 Ariz. 90, 94, 387 P.2d 235, 238 (1963). For a valid contract to have been formed between them, there must have been an offer, acceptance of the offer, and consideration, K–Line Builders, Inc. v. First Fed. Sav. & Loan Ass'n, 139 Ariz. 209, 212, 677 P.2d 1317, 1320 (App.1983), and they must have intended to be bound by the agreement, see Schade v. Diethrich, 158 Ariz. 1, 9, 760 P.2d 1050, 1058 (1988). An offer has no binding effect unless and until accepted by the offeree to whom the offer was directed. AROK Constr. Co. v. Indian Constr. Servs., 174 Ariz. 291, 294, 848 P.2d 870, 873 (App.1993) (subcontractor's bid to contractor and owner). An agreement can be implied and is enforceable where there is a valid offer and acceptance, and the only term missing is the final price. Schade, 158 Ariz. at 5–11, 760 P.2d at 1054–60.

¶ 8 The parties agree there was no written or express contract between them for the staking job. Goodman contends, however, that based on evidence of their prior course of dealing and other circumstances, the jury reasonably could infer PRE had intended to enter into a contract with him. ² See Carroll v. Lee, 148 Ariz. 10, 13, 712 P.2d 923, 926 (1986) (implied contract, with same legal effect as express contract, may be inferred as matter of reason and justice from acts and conduct of parties and circumstances surrounding their transaction). Goodman argues that PRE was aware he was the owner of the property to be staked, he knew PRE was working on the job, and PRE had worked on a number of his construction projects in the past. But that does not establish that either Goodman or PRE intended to enter into a contract with one another on this particular project. See Keith Equip. Co. v. Casa Grande Cotton Fin. Co., 187 Ariz. 259, 262, 928 P.2d 683, 686 (App.1996) (course of dealing does not create contract, and conduct of businesses to be interpreted in commercial context of interactions); cf. Johnson Int'l, Inc. v. City of Phoenix, 192 Ariz. 466, ¶ 26, 967 P.2d 607, 611–12 (App.1998) (parties may be contractually bound if intent to do so clear from surrounding circumstances and parties' conduct, and there has been mutual assent).

¶ 9 Although Goodman repeatedly points to evidence PRE had knowledge, from a variety of sources, that he was the owner of the property, he provides no authority for the proposition that such knowledge established the existence of a contract with him rather than TVH. It is undisputed that PRE was hired by TVH and dealt exclusively with TVH throughout the course of the project. Thus, other than possibly through TVH, acting as Goodman's agent as we address infra, there was no evidence Goodman made an offer to PRE, much less that PRE accepted an offer from Goodman, to perform the staking on this project.

¶ 10 Goodman nevertheless contends that a contract with PRE was implied because PRE president Dan White had met with him personally to discuss possible solutions after it was learned the property had been staked in the wrong place. But we agree with PRE that such conduct occurring after the fact cannot serve as the basis for finding an implied contract existed given that there was an express contract between PRE and TVH. See Brown v. Beck, 68 Ariz. 139, 143, 202 P.2d 528, 530 (1949) (no implied agreement where express contract existed for labor performed); cf. Miller Cattle Co. v. Mattice, 38 Ariz. 180, 189, 298 P. 640, 643 (1931) (conversations following formation of express contract could not establish new contract, absent new consideration). Accordingly, we conclude there was insufficient evidence from which reasonable jurors could find any type of direct contract existed between PRE and Goodman. We therefore turn to the question whether TVH was acting as Goodman's agent when it hired PRE, thereby creating a contract between Goodman and PRE.

Contract Formed through Agency

¶ 11 PRE argues there was no evidence that TVH was acting as Goodman's agent when it employed PRE to stake the property; rather, the record shows PRE entered into an express oral agreement only with...