Nick Hardy v. Nyberg

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT
PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

NICK HARDY CONSTRUCTION, INC.,
Plaintiff/Counter-Defendant/Appellee,

v.

NORMA J. NYBERG,
Defendant/Counter-Claimant/Appellant.

No. 1 CA-CV 14-0671
FILED 1-14-2016

Appeal from the Superior Court in Mohave County
No. L8015CV20077171
The Honorable Randolph A. Bartlett, Retired Judge

VACATED AND REMANDED

COUNSEL

Law Offices of Phillip G. Krueger, Lake Havasu City
By Phillip G. Krueger

Jones, Skelton & Hochuli, PLC, Phoenix
By Eileen Dennis GilBride
Co-Counsel for Plaintiff/ Counter-Defendant/Appellee

Wachtel, Biehn & Malm, Lake Havasu City
By Jay B. Bidwell
Counsel for Defendant/ Counter-Claimant/Appellant
 NICK HARDY v. NYBERG
Decision of the Court

MEMORANDUM DECISION

Judge Maurice Portley delivered the decision of the Court, in which
Presiding Judge Margaret H. Downie and Judge Patricia A. Orozco joined.

P O R T L E Y, Judge:

¶1 Norma J. Nyberg appeals the partial summary judgment
granted to Nick Hardy Construction, Inc. (“Hardy”) on her counterclaims.
For the following reasons, we vacate the judgment against Nyberg, direct
entry of partial summary judgment in favor of Nyberg on the counterclaim
for breach of contract, and remand for further proceedings relating to
Nyberg’s damages.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 Nyberg hired Hardy to construct a house. Under the contract,
Hardy was required to complete all work “in a workman-like manner and
in compliance with all current building code[]s and other applicable laws.”
During construction, Nyberg saw cracks and heaving in the concrete slab,
and demanded Hardy stop construction.

Registrar of Contractor Proceedings

¶3 Nyberg filed a complaint against Hardy with the Registrar of
Contractors (“ROC”) listing ten complaints—some of which related to the
concrete slab. The matter went to a hearing before an administrative law
judge (“ALJ”) and Nyberg testified that the non-concrete slab items in her
ROC complaint were within standard and no longer issues. The ALJ
subsequently found that the concrete slab “fails to comply with applicable
industry and workmanship standards and requires appropriate correction”
and concluded that Hardy failed to perform work in a professional and
workman-like manner in violation of Arizona Revised Statutes (“A.R.S.”)
section 32-1154(A)(3).1 The ALJ recommended Hardy’s contractor license
be suspended until the concrete slab problems were corrected.

¶4 The ROC adopted the ALJ’s recommended order. Hardy did
not appeal the ROC order, made the repairs, and filed a notice of
compliance with the ROC. There was, at Nyberg’s request, a compliance

1 We cite the current version of applicable statutes unless otherwise stated.

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Decision of the Court

hearing, and the ALJ found that Hardy’s “corrective actions” had been
“completed to within applicable workmanship and industry standards.”
Because the ALJ concluded that Hardy had complied with the terms and
conditions of the ROC’s order, it was recommended the matter be closed.
The ROC adopted the ALJ’s recommended compliance hearing order.
Nyberg appealed the ROC order to the superior court, which affirmed the
ROC’s decision. Nyberg v. Nick Hardy Construction, Inc. et al, CV 2009-4175,
Court Order, dated Oct. 26, 2010.

Superior Court Proceedings in this Case

¶5 During the ROC proceedings, Hardy sued Nyberg for breach
of contract and unjust enrichment for amounts due under the contract.
Nyberg filed a counterclaim alleging breach of contract, negligence, and
false reporting of a lien. She reiterated Hardy’s negligence in pouring the
foundation and concrete slabs and sought incidental and consequential
damages.

¶6 The parties filed competing motions for summary judgment
on Nyberg’s counterclaims. Hardy argued that the doctrines of collateral
estoppel and res judicata barred Nyberg’s counterclaims because she had
litigated the workmanship of the concrete slab in the ROC proceeding.
Hardy also argued that Nyberg testified before the ALJ that the other items
were within standard and were no longer issues.

¶7 Nyberg argued she was entitled to summary judgment
because “Hardy’s breach of contract was clearly established in prior
litigation.” She also argued that her ROC testimony that she “had no
workmanship issue” with the non-concrete slab related items did not
preclude her from raising those issues because they related to her
consequential damages. At oral argument on the competing motions,
Hardy added that Nyberg did not request a civil penalty during the ROC
proceedings.

¶8 The superior court denied Nyberg’s motion and granted
Hardy summary judgment. The court found that the legal doctrines of res
judicata and collateral estoppel applied and precluded Nyberg’s
counterclaims based on the ruling affirming the ROC’s decision, Nyberg’s
testimony at the ROC hearing that the only remaining construction issues
were related to the concrete slab, and her failure to disclose or assert a claim
for money damages or seek restitution during the ROC proceeding.

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¶9 The superior court then entered judgment in Hardy’s favor
on Nyberg’s counterclaims, which Nyberg timely appealed.2 We have
jurisdiction pursuant to A.R.S. § 12-2101(A)(1).

DISCUSSION

¶10 Nyberg argues the trial court erred in applying the equitable
doctrines of res judicata and collateral estoppel to preclude her
counterclaim for breach of contract and associated damages.3 She asks us
to vacate the order granting summary judgment to Hardy and to enter
summary judgment as to her claim that Hardy is liable on her breach of
contract claim.

¶11 We review the grant of summary judgment de novo and view
all facts and reasonable inferences drawn therefrom in the light most
favorable to Nyberg, against whom the judgment was granted. Lowe v.
Pima Cty., 217 Ariz. 642, 646, ¶ 14, 177 P.3d 1214, 1218 (App. 2008) (citations
omitted). Although we generally do not review the denial of a motion for
summary judgment, we may do so if the denial is based on a point of law.
Hourani v. Benson Hosp., 211 Ariz. 427, 430, ¶ 4, 122 P.3d 6, 9 (App. 2005)
(citations omitted). Further, we may direct entry of summary judgment in

2 We dismissed Nyberg’s first appeal because the judgment lacked Rule
54(b) language and Hardy’s claims were pending. After the superior court
granted Hardy judgment on its claims, Nyberg filed a second notice of
appeal. Because that judgment did not contain language indicating that “no
further matters remain[ed] pending,” we suspended the appeal and
remanded the matter for an order complying with Rule 54(c). After the
order was entered, we reinstated the appeal. And Nyberg’s second notice
of appeal was timely. ARCAP 9(c).
3 Although Nyberg’s notice of appeal includes the judgment on Hardy’s
claims, her opening brief only contests the judgment in Hardy’s favor on
her breach of contract counterclaim. She has, as a result, waived any
argument challenging the judgment on Hardy’s claims and the judgment
on her negligence and false reporting of a lien counterclaims. See ARCAP
13(a)(6)–(7) (opening brief shall include “‘statement of the issues’ presented
for review” and “contentions concerning each issue presented for review”);
MacMillan v. Schwartz, 226 Ariz. 584, 591, ¶ 33, 250 P.3d 1213, 1220 (App.
2011) (noting that the failure to argue a claim in the opening brief
constitutes abandonment and waiver). Accordingly, we affirm the
judgment on Hardy’s claims.

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Nyberg’s favor if she is entitled to judgment as a matter of law and there
are no genuine issues of material fact. Ariz. R. Civ. P. 56(a); Bothell v. Two
Point Acres, Inc., 192 Ariz. 313, 316, ¶ 7, 965 P.2d 47, 50 (App. 1998); Anderson
v. Country Life Ins. Co., 180 Ariz. 625, 628, 886 P.2d 1381, 1384 (App. 1994).

I

¶12 We need not examine the judgment because Hardy concedes
that res judicata and collateral estoppel should not have been applied to
Nyberg’s breach of contract counterclaim. Nyberg complained to the ROC
and, after a hearing, the ALJ found that the cracks in the interior concrete
slab were not completed in a workman-like manner. Although the ALJ’s
findings that were not appealed have preclusive effect, see J.W. Hancock
Enters., Inc. v. Ariz. State Registrar of Contractors, 142 Ariz. 400, 409-10, 690
P.2d 119, 128–29 (App. 1984) (noting that Arizona courts give preclusive
effect to decisions made by administrative agencies in adjudicative
capacities), Hardy also concedes that the ROC could not award
compensatory damages to Nyberg. Citing to Bentivegna v. Powers Steel &
Wire Prods., Inc., 206 Ariz. 581, 81 P.3d 1040 (App. 2003), Hardy
acknowledges that:

[a]lthough the ROC may order restitution as a condition of
license reinstatement, it cannot issue an enforceable order or
judgment for money damages against a contractor. If a
contractor subject to an ROC restitution order were to choose
not to have his license reinstated, the restitution order would
be ineffective. To fully protect a plaintiff’s rights, he must be
allowed to seek money damages in the courts in addition to any
remedies available through the ROC complaint procedure.

Id. at 585, ¶ 15, 81 P.3d at 1044 (internal citations omitted) (emphasis added).
As a result, the ROC proceeding did not resolve Nyberg’s alleged damages
claim. Consequently, because the equitable doctrines do not apply to
Nyberg’s breach of contract counterclaim, we vacate the summary
judgment.

¶13 Hardy’s concession also suggests that a remand is
appropriate to allow the superior court to specifically determine if Hardy is
liable to Nyberg on her breach of contract counterclaim as a matter of law
because the ROC resolved the concrete slab issue against Hardy. See J.W.
Hancock, 142 Ariz. at 409–10, 690 P.2d at 128–29. And Hardy recognizes
that on remand Nyberg can attempt to prove any damages she may have
suffered stemming from the workman defects related to the concrete slab.

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II

¶14 Nyberg also contends that the superior court erred by
precluding any evidence of her non-concrete slab related issues. She
suggests she did not pursue those issues before the ROC and can now do
so, especially as an element of damages encompassed within her breach of
contract counterclaim. Hardy, however, argues the court correctly barred
her from using those items and she should be judicially estopped from
relying on them because she testified at the ROC hearing that they were not
at issue. See KCI Rest. Mgmt. LLC v. Holm Wright Hyde & Hays PLC, 236 Ariz.
485, 488, ¶ 11, 341 P.3d 1156, 1159 (App. 2014).

¶15 The ROC proceeding was one between Hardy and the ROC
to determine whether Hardy violated its statutory obligations. See J.W.
Hancock, 142 Ariz. at 408, 690 P.2d at 127. And Nyberg, the complaining
witness, was not a party to the action. Twin Peaks Constr. Inc. of Nev. v.
Weatherguard Metal Constr., Inc., 214 Ariz. 476, 478, ¶ 9, 154 P.3d 378, 380
(App. 2007). As a result, Nyberg is not precluded from presenting evidence
of the non-slab issues as part of her claim for damages. Likewise, Hardy is
free to present her testimony at the ROC hearing. Consequently, on
remand, the superior court may consider the non-concrete slab related
issues listed in her ROC complaint in resolving Nyberg’s damages claims.

¶16 Nyberg also requests attorney’s fees and costs on appeal.
Because we are remanding this matter, we will allow the superior court to
consider any request for fees on appeal as it resolves the damages claim.
We, however, award Nyberg her costs on appeal upon compliance with
ARCAP 21.

CONCLUSION

¶17 For the foregoing reasons, we vacate the summary judgment
for Hardy on Nyberg’s breach of contract counterclaim filed on March 29,
2012, including the claim for attorney’s fees and costs. We also remand the
case for further proceedings consistent with this decision.

:ama

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