Morado v. Bustamante
| Decision Date | 26 July 2022 |
| Docket Number | 1 CA-CV 21-0590 |
| Parties | ALVARO MORADO, Plaintiff/Appellant, v. HECTOR BUSTAMANTE, Defendant/Appellee. |
| Court | Arizona Court of Appeals |
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Maricopa County No. CV 2020-000645 The Honorable Bradley H. Astrowsky, Judge
By David L. Abney
Counsel for Plaintiff/Appellant
Waldron Evans PLC, Scottsdale
Counsel for Defendant/Appellee Presiding Judge Jennifer B. Campbell delivered the decision of the Court, in which Judge Randall M. Howe and Judge James B. Morse Jr. joined.
¶1 Alvaro Morado appeals from the dismissal of his lawsuit, following the grant of summary judgment in favor of Hector Bustamante. Morado sought to enforce an oral lease agreement under which he agreed to rebuild his landlord's rental house in exchange for free rent for 25 years. The superior court concluded that Arizona's contractor licensing statute barred Morado's lawsuit because it prohibits unlicensed contractors from pursuing civil actions "for collection of compensation." A.R.S. § 32-1153.
¶2 The Arizona Residential Landlord and Tenant Act (ARLTA), however, expressly permits the type of rent-and-repair lease Morado sought to enforce.[1] See A.R.S. § 33-1324(C), (D) (). Because expecting residential tenants to be licensed contractors is unreasonable and because ARLTA was intended to protect tenants' rights, we construe A.R.S. § 33-1324 to allow residential tenants to enforce rent-and-repair lease agreements, regardless of their licensure as contractors. Because the statute of frauds nonetheless bars some of Morado's claims, we affirm in part, vacate in part, and remand for further proceedings.
BACKGROUND[2]
¶3 Before his death, Hector Bustamante's father, Henry Bustamante, owned a home in Tolleson.[3] In 2006, Henry rented the home to Morado to use as his residence. At some point during Morado's tenancy, the home's roof collapsed. After the collapse, Henry and Morado orally agreed that, as alleged by Morado, "[Morado] would pay for the construction of a new building on the property in exchange for the right to own the property for a period of twenty-five years after construction was complete, at which point ownership would revert back to Henry."
¶4 Relying on the agreement, Morado stopped paying rent and began work on a new building, paying for both the construction costs and the property taxes. Henry "was faithful to [the agreement]" during construction and even helped obtain building permits. Morado completed the new building in 2018.
¶5 In late 2019, Henry passed away. Around the same time, Morado subleased the property to a restaurateur who intended to open a taco shop. After discovering the restaurateur on the property, Henry's son Hector evicted her, having been unaware of both the oral agreement between Henry and Morado and the sublease between Morado and the restaurateur.
¶6 Morado sued Hector Bustamante. His complaint alleged breach of contract (Count 1), "specific performance/injunctive relief" (Count 2), tortious interference (Count 3), conversion (Count 4), and unjust enrichment (Count 5) Morado sought damages, specific performance, injunctive relief (including an order restoring his control over the building), disgorgement and restitution for any income or other benefits Hector had received by possessing and controlling the new building.
¶7 The parties filed cross motions for summary judgment. Bustamante disputed most of the pertinent facts, including Morado's tenancy, the timing of the roof collapse, and the existence of the oral agreement. Bustamante also argued that the agreement between Henry and Morado was unenforceable under the statute of frauds and Arizona's contractor licensing statutes. Morado conceded he had never been a licensed contractor but argued that because his lawsuit was for breach of a lease, and "not an action for compensation for construction work," he was thus not required to prove licensure.
¶8 After oral argument, the superior court granted summary judgment in favor of Bustamante and denied summary judgment to Morado. The court found that, because Morado was to receive a leasehold in exchange for rebuilding the house, he qualified as a contractor under Arizona's contractor licensing statute. See A.R.S. § 32-1101(A)(3)(a)(i) (). The court further found that Morado was not exempt from the licensing requirements under the statute's exemption for owner-builders because "[his] theory of the case [wa]s that he was not the [building's] 'owner' until he finished construction." See A.R.S. § 32-1121(A)(5) ().
¶ 9 Because Morado had never held a contractor's license, the superior court concluded A.R.S. § 32-1153 barred his lawsuit. See A.R.S. § 32-1153 (making proof of license a prerequisite to civil action "for collection of compensation for the performance of any act for which a [contractor's] license is required"). Accordingly, without addressing the statute-of-frauds issue with the oral lease, the court dismissed Morado's lawsuit and awarded attorney's fees and costs to Bustamante. Morado timely appealed from the final judgment, challenging the court's decision to grant Bustamante summary judgment.
¶10 Morado argues that he is "not a contractor seeking compensation for renovating a building" and that he is entitled to enforce the terms of his oral lease under ARLTA. This case brings us to the intersection of the regulation of contractors, under Arizona's contractor licensing statute, and the regulation of residential landlords and tenants, which is governed by ARLTA.[4] See A.R.S §§ 32-1101 to -1188; see also A.R.S. §§ 33-1301 to -1381.
¶11 The superior court analyzed this transaction solely in terms of the contractor licensing statute. We agree with the court that, under that statute, Morado acted as a contractor without a license and that he would ordinarily be barred from seeking compensation for his construction activities. See A.R.S. §§ 32-1101(A)(3)(a)(i), -1153. This analysis, however, ignores that the parties were landlord and tenant, their agreement was a residential lease, and that ARLTA expressly authorizes rent-and-repair leases. [5] See A.R.S. § 33-1324(C), (D) (). The real issue here, aside from the statute-of-frauds issue with the oral lease, is whether the contractor licensing statute applies to rent-and-repair leases ARLTA authorizes.
¶12 Summary judgment is appropriate "if the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Ariz. R. Civ. P. Rule 56(a). We review de novo the grant of summary judgment and questions of law, including matters of statutory interpretation. See Price v. City of Mesa, 236 Ariz. 267, 269, ¶ 7 (App. 2014).
¶13 Resolving this question requires us to construe A.R.S. § 33-1324 (). Our goal in interpreting statutes "is to effectuate legislative intent." Ariz. Chapter of the Associated Gen. Contractors of Am. v. City of Phoenix, 247 Ariz. 45, 47, ¶ 7 (2019). To do so," [w]e interpret statutory language in view of the entire text, considering the context and related statutes on the same subject." Molera v. Hobbs, 250 Ariz. 13, 24, ¶ 34 (2020) (internal quotation marks omitted). "If the language is clear and has only one reasonable meaning, we will apply that meaning." Id. If the language is ambiguous, however, we consider other indicators of legislative intent, such as the statute's subject matter, history, purpose, and consequences. Id. "When possible, we seek to harmonize statutory provisions and avoid interpretations that result in contradictory provisions." Premier Physicians Grp., PLLC v. Navarro, 240 Ariz. 193, 195, ¶ 9 (2016). We will not attempt to harmonize conflicting statutes, however, when doing so would produce an "absurd result that could not have been within the scope of legislative intent." State v. Wagstaff, 164 Ariz. 485, 492-93 (1990); see also State v. Green, 248 Ariz. 133, 135, ¶ 8 (2020) .
¶14 Section 33-1324 requires residential landlords to "[m]ake all repairs and do whatever is necessary to put and keep the premises in a fit and habitable condition." A.R.S. § 33-1324(A)(2). That section authorizes a landlord to delegate "specified repairs, maintenance tasks, alterations and remodeling" to the tenant by agreement if certain conditions are met.[6]A.R.S. § 33-1324(C), (D). A.R.S. § 33-1324 does not specify whether a tenant performing such work must be a licensed contractor, nor does it cross reference the contractor licensing statute. Given this silence, the plain language of A.R.S. § 33-1324 does not indicate whether the legislature intended the contractor licensing statute to apply to rent-and-repair leases.
¶15 The...
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