Iftiger Family Trust v. Sweet

Decision Date20 October 2016
Docket NumberNo. 1 CA-CV 15-0385,1 CA-CV 15-0385
PartiesIFTIGER FAMILY TRUST, an Arizona Trust; JAMES DUBOIS, III and JEFFREY DUBOIS, co-trustees and personally, Plaintiffs/Appellees, v. ANNE D. SWEET, Defendant/Appellee, W. DAVID WESTON, personally and as Assignee of Anne D. Sweet, Defendant/Appellant.
CourtArizona Court of Appeals

NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

Appeal from the Superior Court in Mohave County

No. S8015CV201200412

The Honorable Charles W. Gurtler Jr., Judge

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

COUNSEL

Sanders & Parks, P.C., Phoenix

By G. Gregory Eagleburger

Counsel for Plaintiffs/Appellees Iftiger Family Trust, James Dubois III, Jeffrey Dubois

W. David Weston, Salt Lake City, Utah

Defendant/Appellant

MEMORANDUM DECISION

Judge Donn Kessler delivered the decision of the Court, in which Presiding Judge Kenton D. Jones and Judge Randall M. Howe joined.

KESSLER, Judge:

¶1 Appellant W. David Weston ("Weston") appeals from the superior court's dismissal of his counterclaims and third party claims. Weston argues on appeal that the court did not provide him with notice that the default judgment hearing would consider issues of liability, that the court incorrectly found against him on issues of damages and liability, and that he should have been awarded punitive damages. For the following reasons, we affirm the dismissal of the third party claims and the judgment for Weston for conversion. We reverse the dismissal of the remaining counterclaims against the Iftiger Family Trust ("Trust") and remand for the court to determine the amount of damages, if any, proven at the default judgment hearing.

FACTUAL AND PROCEDURAL HISTORY

¶2 The Trust owns the Foot Hill Mine ("Mine"), located in Mohave County. Scharlotte Iftiger-Tieman ("Scharlotte") became trustee of the Trust in August 2006. Jeffrey Dubois ("Jeffrey") and James Dubois, III ("James") are the current trustees of the Trust.

¶3 Anne Sweet ("Sweet") and Merton Hamilton ("Hamilton") formed the Gyro Stone partnership ("Gyro Stone").1 In 2006, Gyro Stone and the Trust entered into an agreement providing Gyro Stone with a sixty percent interest and the Trust with a forty percent interest in the Mine. The agreement was signed by Scharlotte as representative of the Trust. The agreement provided that Hamilton was the manager of the venture and therefore had the right to maintain security and to control who was permitted to be at the Mine. Pursuant to the agreement, Gyro Stone would provide all of the startup equipment and pay operating costs until the Minewas producing at a rate of one ounce of gold per ton of raw material. At that point, Gyro Stone and the Trust would share both expenses and profits according to their interests in the Mine.

¶4 Gyro Stone used mining equipment, including a Komatsu backhoe, a mill it had purchased, and a D8 bulldozer, to begin work at the Mine. By early 2007, Gyro Stone had uncovered a gold vein. In June 2007, Hamilton wrote Scharlotte that the Mine had produced 2.3 ounces of gold from two tons of raw material. Hamilton asserted that, pursuant to the above-referenced provision of the partnership agreement, the startup period was now over and Gyro Stone and the Trust would share profits and expenses as outlined in their agreement. Hamilton mailed copies of this letter to James and Jeffrey.

¶5 After Gyro Stone announced the end of the startup period, James authorized changing the lock on the access gate to prevent Gyro Stone from entering the Mine. James and Jeffrey, among others, brandished and discharged firearms at the Mine, intimidating Gyro Stone employees.2

¶6 In April 2008, Scharlotte and Thomas Stevens ("Stevens") formed 4th of July, LLC and were the sole members. Scharlotte, in her capacity as trustee, then purported to transfer the Mine from the Trust to 4th of July via quit claim deed. Stevens then contacted Gyro Stone and demanded they vacate the mine within thirty days.

¶7 Based on the discharge of firearms and Stevens's demand, Gyro Stone ceased operations at the Mine. The mining equipment was then vandalized or stolen while Gyro Stone was absent from the Mine. In addition, James authorized the removal of ore stockpiles from the Mine in Gyro Stone's absence.

¶8 In March 2009, in a separate action, the superior court quieted title of the Mine in favor of the Trust and against 4th of July.3 In that action, the court found that Scharlotte had breached her fiduciary duties to the Trust by breaching the agreement with Gyro Stone, by appointing her son, a convicted felon, as co-trustee, and by transferring the Mine to 4th of July.

The court also removed Scharlotte as trustee and made James and Jeffrey co-trustees of the Trust.

¶9 To help fund the suit against Scharlotte, Gyro Stone loaned James $2100 and Jeffrey $600. Neither loan has been repaid. Gyro Stone had previously made a series of loans totaling $5200 to Scharlotte. In this action, the Trust admitted responsibility for the loans to Scharlotte.

¶10 The Trust filed suit in 2012 against various parties implicated by the mining agreement, including Gyro Stone, Sweet, and Hamilton. Sweet4 filed counterclaims against the Trust and third party claims against James and Jeffrey. In 2013, Sweet assigned all of her interests and rights in the suit to Weston, who was permitted to substitute as a party. The Trust then amended its complaint to include Weston, and Weston filed his own counterclaims against the Trust and third party claims against James and Jeffrey, as well as others associated with the Trust, James, or Jeffrey. Weston filed claims for declaratory relief, breach of contract, unjust enrichment, breach of partnership agreement, breach of fiduciary duty, breach of partnership duty, interference with potential economic opportunity,5 and conversion.

¶11 Weston served requests for admissions on the Trust and, when it failed to respond, the superior court deemed those requests admitted. After the Trust's counsel withdrew and the Trust was given an opportunity to find new counsel but failed to do so, the court struck the Trust's amended complaint and answer. A default was entered against the Trust only. The court then scheduled a hearing on the default, after which it dismissed all of Weston's counterclaims and third party claims except for conversion. The court awarded Weston $20,000 for conversion against the Trust.

¶12 Weston timely appealed. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101(A)(1) (2016).

DISCUSSION
I. Default Proceedings and Third Party Claims

¶13 Weston asserts that the superior court erred by not providing notice that the default hearing would consider issues beyond the amount of damages to be awarded against the Trust, by ruling on liability, and by not granting a jury trial. Weston further argues the third party claims against James and Jeffrey should not have been dismissed as a result of the default hearing.6 As interpretation of a rule involves legal rather than factual questions, we review the rule and its application to the facts de novo. Patterson v. Maricopa Cty. Sheriff's Office, 177 Ariz. 153, 156 (App. 1993) (citations omitted).

¶14 To the extent Weston raises any errors in the procedure of the default hearing resulting in the dismissal of his claims against James and Jeffrey, he has waived these arguments. Absent extraordinary circumstances, errors not raised in the superior court cannot be raised on appeal because the trial court should be afforded the opportunity to correct any asserted defects. Trantor v. Fredrikson, 179 Ariz. 299, 300 (1994) (citations omitted). Procedural defects are usually waived if not raised and preserved in the trial court. Health For Life Brands, Inc. v. Powley, 203 Ariz. 536, 538, ¶ 11 (App. 2002) (citation omitted).

¶15 Before and during the default judgment hearing, the superior court gave no indication that it was expecting Weston to present evidence as to liability or as to any claims against other parties. Thus, the only time Weston could have objected to the superior court's dismissal was after the court issued its judgment. To preserve this argument for appeal, Weston should have made a motion for new trial or for relief from the judgment. Ariz. R. Civ. P. 59(a) and 60(c). By failing to properly raise these errors below, Weston has waived his arguments regarding the default hearing and the resulting dismissal of his third party claims against James and Jeffrey. Supra ¶ 14.

¶16 However, to the extent Weston claims the superior court erred in its determination of liability and damages against the Trust, such argument is not waived. First, Weston expressly reminded the court beforethe default hearing that the Trust had admitted key facts relating to its liability. We consider that portion of the record sufficient to preserve any objection that the hearing was limited to damages as to the Trust. Moreover, a post-trial motion for a new trial on damages is not required to preserve the issue of sufficiency of evidence. See Nat'l Sur. Co. v. Pinal County, 30 Ariz. 383, 386 (1926) (finding predecessor statute to A.R.S. § 12-2102(c) (2016) does not require a motion for new trial to review sufficiency of the evidence when trial was to the court). Accordingly, we turn to each of the court's rulings on Weston's counterclaims against the Trust.

II. Counterclaims

¶17 Weston alleged eight counterclaims against the Trust. The claim for breach of contract for failure to pay a $12,100 promissory note was settled in a separate action, and Weston does not raise the claim on appeal thus waiving the dismissal of that claim. Belen Loan Inv'rs, LLC v. Bradley, 231 Ariz. 448, 457, ¶ 22 (App. 2012) (citation omitted). Of the remaining seven claims, we affirm in part, reverse in part, and remand.

A. Standard of Review

¶18 So long as they are supported by substantial evidence, we defer to ...

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