Trollope v. Koerner

• Decision Date: 29 May 1970
• Docket Number: No. 9825,9825
• Citation: 470 P.2d 91,106 Ariz. 10
• Parties: , 64 A.L.R.3d 1180 Thomas TROLLOPE and Bernice Trollope, his wife, Richard L. Stenz and Dorothy Stenz, his wife, and Peter Kruidenier, Appellants, v. Ralph L. KOERNER and Bonnie Koerner, his wife, Appellees.
• Court: Arizona Supreme Court

Page 91

470 P.2d 91

106 Ariz. 10, 64 A.L.R.3d 1180

Thomas TROLLOPE and Bernice Trollope, his wife, Richard L. Stenz and Dorothy Stenz, his wife, and Peter Kruidenier, Appellants, v. Ralph L. KOERNER and Bonnie Koerner, his wife, Appellees.

No. 9825.

Supreme Court of Arizona, In Banc.

May 29, 1970.

Rehearing Denied June 30, 1970.

Bentley & Reiss, by Burton Bentley and Barry A. Reiss, Phoenix, for appellants.

Jennings, Strouss & Salmon, by Nicholas Udall and Riney B. Salmon II, Phoenix, for appellees.

EUBANK, Judge of the Court of Appeals.

This is a landlords' suit for damages resulting from a would-be tenant's refusal to sign a five-year lease. We hold that the Statute of Fraud bars recovery for breach of contract and that no sustainable cause of action is stated for alleged fraud, but we remand for trial on quasi-contract principles a claim for expenses of altering the premises in anticipation of the landlord-tenant relationship.

We first consider the posture of the case, since it controls our view of the facts. Unfortunately, a jury trial was commenced without the case having been subjected to a pretrial conference. Judgment was rendered against the plaintiff-appellant landlords on defendants' motion following opening statements. Defendants' counsel stated that the motion for judgment was made pursuant to Rule 12(b)(6) of the Rules of Civil Procedure, 16 A.R.S., which deals with the defense of failure to state a claim upon which relief can be granted. The motion was based upon the plaintiffs' complaint, their opening statement, and the deposition of the plaintiff Thomas Trollope, plaintiffs' principal negotiator in the matter in suit. The motion was immediately argued and orally granted by the court.

We first note that the motion as advanced was improper under the terms of Rule 12(b). By that subrule, as amended, if a Rule 12(b)(6) motion introduces matters outside of the opponent's pleading which are presented to and not excluded by the court, '* * * the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.' This means that the 10-day notice requirement of Rule 56(c) applies. 2A, Moore's Federal Practice (2nd Ed., 1968 recomp.) § 12.09, note 25, page 2303. Here, the matters presented outside of the plaintiffs' pleading were not excluded by the court, and the motion was made without advance notice.

On appeal, defendants have suggested that their motion might more properly be considered as one for a directed verdict. Within the limitations to which we will refer, a motion for a directed verdict is procedurally permissible after an opponent's opening statement. 5, Moore's Federal Practice (2nd Ed., 1966 recomp.), §§ 50.02(1), 50.04. Since there is no claim or indication that plaintiffs were prejudiced by a mislabeling of the motion, and since the substantive issue on appeal is the propriety of granting Any form of dispositive motion at this stage of trial, we will treat defendants' motion as if it had been a motion for a directed verdict.

A federal appellate court has stated that a motion for a directed verdict after an opponent's opening statement is a vestige of past practice, without specific authorization in the modern Rules of Civil Procedure. ¹ It is tolerated, only, as a means of ending quickly a cause that clearly cannot be won. We have no rule or statute which requires that a party make an opening statement, and consequently disposition is justified only when a party has said 'too much,' rather than 'too little,' ² as where a plaintiff makes a fatal admission or unequivocally reveals an absolute defense. ³ Such a motion for directed verdict should never be granted without giving the opposing party an opportunity to amend or supplement his statement, or to make an avowal or an offer of proof. ⁴ In the present case, plaintiffs made a supplemental statement to the court and an offer of proof. We must assume plaintiffs' ability to prove the facts so advanced, ⁵ and we must also view the stated and proffered facts before us in the light most favorable to plaintiffs' position. ⁶ So viewing the facts, the court cannot properly grant the motion unless the admissions of counsel are conclusive upon Every theory of liability presented by the pleadings. ⁷

Plaintiffs contend that we should not consider the depositions on file in the case. We take this to refer to the deposition of the plaintiff Thomas Trollope, since plaintiffs quoted certain portions of one of the defendants' deposition as a part of their offer of proof. As to the deposition of Trollope, we agree with plaintiffs. It is true that from the standpoint of an adverse party, the deposition of a party is independent, or original, evidence, ⁸ which may be used '* * * upon the hearing of a motion * * *' for 'any purpose.' Rule 26(d) and 26(d)(2), Rules of Civil Procedure. This is broad language, but use of an opponent's deposition in support of the kind of motion made here would subvert either the notice and opportunity-to-defend provisions of Rules 12(b) and 56, ⁹ referred to above, or the orderly presentation of a case at trial. We will accordingly only consider those portions of the deposition of one of the defendants which was made a part of plaintiffs' offer of proof. ¹⁰

We proceed to the facts. The plaintiffs are the owners of a commercial office building in Phoenix. The defendant-appellee Ralph L. Koerner is a dentist. The defendant-appellee Bonnie Koerner is his spouse, and since she has no active role in the matter in suit, we shall hereafter refer to defendants in the singular, as 'Koerner', or 'defendant.' Koerner and the plaintiff Thomas Trollope had been friends for some time prior to July, 1965, when Koerner asked Trollope if there was any empty space in the office building into which Koerner could move his dental practice. Trollope showed Koerner an unpartitioned area of some 950 square feet, later called 'Suite 112.' Koerner liked the space, and he and Trollope proceeded to negotiate orally the basic terms of a lease. The parties agreed on many things, including, among others, the term of the lease (five years, with renewal options), the monthly rent and the amount of a security deposit ($356.50 each), and a formula for determining rent during the optional renewal periods. There was a general agreement that the owners would make all of the improvements necessary to prepare the premises for a dental office, except for certain decorating and electrical and plumbing installation costs. The term of the lease was to commence on October 1, 1965, or whenever occupancy took place. Other provisions were agreed on, and it is plaintiffs' position that Koerner and Trollope reached an essentially complete agreement on the terms of the proposed lease.

The parties also agreed, in the language of plaintiffs' opening statement, that the oral agreement 'be committed to a writing * * *' The parties each retained separate counsel for this purpose. Several drafts of the proposed lease were prepared. None of these were signed by Koerner. A final draft meeting all objections was prepared, signed by all of the plaintiffs, and forwarded to Koerner's attorneys for Koerner's execution. The precise dates of these events are not clear, but the final draft must have been forwarded to Koerner's attorneys by the first of October, 1965.

In the meantime, and commencing about the end of July, 1965, Koerner frequently visited Suite 112. On one such occasion, he paid a carpenter who was an employee of plaintiffs $60 and told him to commence the construction necessary to adapt the space to a dental suite. At another time he gave plaintiffs the sum of $500, either for plaintiffs to disburse for his account (as plaintiffs assert and as we assume), or as 'good faith' money (as is contended by defendant in a counterclaim to recover the sum). Koerner also hired a local dental supply company to prepare plans for the new suite, incurred expense in ordering special carpeting, purchased and installed lead in a wall for an X-ray machine, helped pay for the installation of a shower and made his own arrangements for special decorating. During this period, according to that portion of plaintiffs' complaint which charges fraud, Koerner

'* * * represented to plaintiffs that a lease arrangement existed between plaintiffs and defendants and that there was no question about the existence or formalization of such a lease; defendants represented to plaintiffs that they would execute the lease agreement forthwith and that the lease arrangement was acceptable to defendants in all respects.'

Allegedly acting on the strength of these representations, now alleged to be false, and upon the long friendship between Koerner and Trollope, plaintiffs began adapting the empty space to a dental suite. During August and September, 1965, plaintiffs allegedly spent $6,362.13 for this purpose.

Plaintiffs completed the necessary alterations by the end of September, 1965. The record indicates that a number of disputes had arisen between the parties over the amount and allocation of construction expenditures. Plaintiffs interpreted Koerner's failure to sign the lease at this time as a 'stall.' The situation remained static until an evening in October, 1965, when a telephone conversation between Trollope and Koerner in which Trollope demanded that Koerner pay rent for the month of November, 1965, ended in acrimony. Koerner stated, in a portion of his deposition made a part of plaintiffs' offer of proof, that at the time of this conversation the parties were in essential agreement on everything except the date of commencing occupancy and paying rent. Koerner felt himself impugned by Trollope's remarks during the telephone conversation, and his attorneys advised plaintiffs the next day that he would not execute the lease.

Plaintiffs' ...