North v. Ubiquity

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

GERALD D.W. NORTH,
Plaintiff/Appellant,

v.

UBIQUITY INC.,
Defendant/Appellee.

No. 1 CA-CV 19-0229
FILED 2-20-2020

Appeal from the Superior Court in Maricopa County
No. CV2014-093859
The Honorable Joshua D. Rogers, Judge
The Honorable David J. Palmer, Judge

AFFIRMED

COUNSEL

Keith M. Knowlton, LLC, Tempe
By Keith M. Knowlton
Counsel for Plaintiff/Appellant

Andersen PLLC, Scottsdale
By Mark E. Andersen, Samantha Garber Stirling, Frederic G. Lemberg
Counsel for Defendant/Appellee
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Decision of the Court

MEMORANDUM DECISION

Judge Diane M. Johnsen delivered the decision of the Court, in which
Presiding Judge Samuel A. Thumma and Judge Randall M. Howe joined.

J O H N S E N, Judge:

¶1 Plaintiff Gerald D.W. North appeals the superior court's entry
of summary judgment in favor of defendant Ubiquity, Inc. For the reasons
set forth below, we affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 At issue is a contract executed in mid-December 2006 by
which North agreed to provide services for Ubiquity. The contract required
Ubiquity to pay North a "Commencement Fee" as follows:

For undertaking this engagement and for other good and
valuable consideration, [Ubiquity] agrees to issue to North a
common stock purchase warrant (the "Warrant") to purchase
up to the greater of 250,000 shares of [Ubiquity's] Common
Stock ("Common Stock") or one and one half percent (1.5%) of
the largest aggregate number of shares of Common Stock
issued and outstanding on any date within ninety (90) days
of the date this Agreement is executed by [Ubiquity], at a price
per share of $1.00. . . . The Commencement Fee . . . constitutes
payment for North's agreement to consult with [Ubiquity]
and is a non-refundable, non-apportionable, and non-rateable
retainer, not a prepayment of future services. If [Ubiquity]
decides to terminate this Agreement prior to the end of the
term for any reason whatsoever, North will not be requested
or required to return any part of the Commencement Fee.

The contract specified it was to be governed by California law and was to
end after 18 months unless either party terminated it before then.

¶3 By letter dated February 28, 2007, Ubiquity terminated the
contract. On March 3, 2007, North responded by email. In his email, North
quoted from the Commencement Fee provision in the contract and stated:
"The Company is in breach of its obligation to issue the Warrant. Please
advise when we may expect to receive it." In a letter dated March 16, 2007,

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responding to North's email, Ubiquity's lawyer wrote that the company
would issue the warrant "provided that" North execute a mutual release.
North did not execute the release, nor does he contend he offered or was
willing to do so, and Ubiquity did not issue the warrant.

¶4 On June 13, 2014, North sued Ubiquity, alleging the company
breached the contract by failing to issue the warrant and also was liable for
"promissory fraud." The complaint sought damages and specific
performance. In due course the parties filed cross-motions for summary
judgment. The superior court ruled North's claims for breach of contract
and specific performance were time-barred and entered judgment in favor
of Ubiquity on those claims pursuant to Arizona Rule of Civil Procedure
54(b). North timely appealed. We have jurisdiction pursuant to Article 6,
Section 9, of the Arizona Constitution, and Arizona Revised Statutes
("A.R.S.") sections 12-120.21(A)(1) (2020) and -2101(A)(1) (2020).1

DISCUSSION

¶5 "We review de novo the grant of a motion for summary
judgment." Kopacz v. Banner Health, 245 Ariz. 97, 99, ¶ 8 (App. 2018).
"Summary judgment is appropriate when 'there is no genuine dispute as to
any material fact and the moving party is entitled to judgment as a matter
of law.'" Id. at 99-100, ¶ 8 (quoting Ariz. R. Civ. P. 56(a)). In general, an
Arizona court will recognize a contractual agreement to be bound by
another state's law. See Cardon v. Cotton Lane Holdings, 173 Ariz. 203, 207
(1992); Restatement (Second) of Conflict of Laws § 187 (1971). Under A.R.S.
§ 12-548(B) (2020), however, "if there is a conflict between another
jurisdiction and this state relating to the statute of limitations for a debt
action," the Arizona provision will apply.

¶6 The superior court concluded after considerable review of the
authorities that, pursuant to § 12-548(A) and (B), the Arizona six-year
limitations period applied to North's contract claim. Assuming, without
deciding, that the six-year Arizona limitations period applies rather than
the California four-year limitation period, Cal. Civ. Proc. Code § 337 (West
2020), we agree with the superior court that North's contract claim was
barred by limitations.

¶7 Limitations begins to run on a contract claim when the claim
accrues. Angeles Chem. Co. v. Spencer & Jones, 51 Cal. Rptr. 2d 594, 597 (App.

1 Absent material revision after the relevant date, we cite the current
version of a statute or rule.

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1996); see also A.R.S. § 12-548(A); Gust, Rosenfeld & Henderson v. Prudential
Ins. Co. of Am., 182 Ariz. 586, 588 (1995).

¶8 As the superior court noted, the contract did not specify a date
by which Ubiquity was obligated to issue the warrant. The court continued:

"Where no time is specified within which a promise must be
performed, a reasonable time is implied." Zancanaro v. Cross, 85 Ariz. 394, 398, 339 P.2d 746, 749 (1959); see also Cal. Civ.
Code § 1657 (explaining that "[i]f no time is specified for the
performance of an act required to be performed, a reasonable
time is allowed"). As it pertains to the statute of limitations,
"where no time is fixed for performance under a contract, the
promisor must perform within a reasonable time, and the
statute of limitations begins to run at the expiration of such
time.["] 54 C.J.S. Limitations of Actions § 191.

¶9 Although the date a claim accrues sometimes may present an
issue of fact, we agree with the superior court that North offered no
evidence on summary judgment that "would plausibly suggest a reasonable
time for issuance of the Warrant" within the six-year limitations period.
North does not dispute that the contract was terminated as of March 13,
2007, and he plainly understood that the company was obligated to issue
him the warrant at that time. That is the significance of the email he sent
on March 3, 2007, just after receiving notice of the termination, in which he
declared the company was "in breach of its obligation to issue the Warrant."
When Ubiquity did not issue the warrant but instead conditioned the
warrant on North's execution of a release, North knew all he needed to
know about the company's intentions.

¶10 North argues that under applicable California law, a cause of
action for breach of contract does not accrue until the plaintiff incurs
damage as a result of the breach. See, e.g., Walker v. Pac. Indem. Co., 6 Cal.
Rptr. 924, 925 (App. 1960). Applying that rule here, he contends his claim
did not accrue before Ubiquity's shares began to be publicly traded in 2013,
because before that, any warrant the company would have given him
would have been worthless.

¶11 North relies primarily on Walker, a case against an insurance
broker that negligently sold a $15,000 policy to a buyer who had asked for
a $50,000 policy. Id. at 924-25. Once the policy was in force, a jury rendered
a $100,000 verdict on a covered claim. Id. at 925. The California Court of
Appeal held the insured's negligence claim against the broker did not

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accrue when the broker procured the wrong policy, but instead accrued
when the excess verdict was rendered. Id. Before the verdict, the court
observed, "it is difficult to conceive what action" the insured could have
filed against the broker because, until then, the insured had suffered no
injury. Id.

¶12 But North cites no California cases outside of the insurance-
coverage context for his argument that he could not have stated a valid
claim against Ubiquity when it refused his demand for the warrant in 2007.
North's argument that the warrant had no value at that time is simply
incorrect: The warrant Ubiquity had promised him would have granted
him the power to purchase Ubiquity stock at a fixed price in the future, and
the fact that North negotiated for the warrant as his "Commencement Fee"
proves that it had some value to him at the time. North's real argument is
that it would have been difficult to place a dollar value on the warrant
before Ubiquity stock began trading. But it does not matter that no one
could know in 2007 precisely what the warrant might ultimately be worth.
See Jordache Enters., Inc. v. Brobeck, Phleger & Harrison, 958 P.2d 1062, 1066
(Cal. 1998) ("The loss or diminution of a right or remedy constitutes injury
or damage. Neither uncertainty of amount nor difficulty of proof renders
that injury speculative or inchoate." (citation omitted)). As with a contract
to convey a lottery ticket or a painting by a novice artist, the value of the
"Commencement Fee" lay in the possibility that it would someday be worth
a considerable sum. That the value could not be known at the time of the
conveyance is beside the point. Moreover, although it would have been
difficult to place a dollar value on the warrant in 2007, North could have
sued then for specific performance to compel the company to issue the
warrant.

¶13 North cites no authority for his contention that one may wait
any number of years after a contract breach to sue under circumstances
such as these. Indeed, California case authority is to the contrary. In Davies
v. Krasna, 535 P.2d 1161 (Cal. 1975), after a writer disclosed his story to the
defendant in confidence, the defendant shared the story with others and
then, seven years later, turned the "core" of the story into a successful
Broadway production. Id. at 1162, 1164. The writer learned well within the
limitations period that the defendant had shared his story with others, but
waited to sue until after the defendant successfully exploited the
confidence. Id. at 1162-63. The California Supreme Court held the writer's
claim was barred by limitations, rejecting the argument that the claim did
not accrue until the defendant exploited the confidence. Id. at 1163-64, 1169-
70. "Under present authority, neither uncertainty as to the amount of
damages nor difficulty in proving damages tolls the period of limitations."

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Id. at 1169. The court distinguished Walker by noting that the writer could
have sued to enjoin additional disclosures as soon as he learned within the
limitations period that the defendant had first disclosed his story to others.
Id. at 1168-69. Here, North had the same option to sue for specific
performance to compel Ubiquity to issue him the warrant, but he did not
do so.

CONCLUSION

¶14 For the reasons stated above, we affirm the summary
judgment in favor of Ubiquity. Citing A.R.S. § 12-341.01 (2020), Ubiquity
asks for its attorney's fees on appeal. North argues we should deny the
company's request because the parties agreed that their contract would be
subject to California law and that state has no similar fees statute. The
superior court denied Ubiquity's request for fees for that reason, a ruling
from which Ubiquity did not cross-appeal. Nor does Ubiquity offer any
analysis of that issue in support of its request. Accordingly, we deny the
request. Ubiquity is entitled to its costs on appeal, contingent on
compliance with Arizona Rule of Civil Appellate Procedure 21.2

AMY M. WOOD • Clerk of the Court
FILED: AA

2 North argues the lawyer who filed Ubiquity's answering brief lacked
the authority to do so. We do not address that issue because it is not
relevant to the merits of North's appeal of the summary judgment.

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