Riley v. Carpe Diem

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

JIMMY RILEY, Plaintiff/Appellant,

v.

CARPE DIEM COLLEGIATE HIGH SCHOOL, an Arizona non-profit
corporation, Defendant/Appellee.

No. 1 CA-CV 20-0234
FILED 6-8-2021

Appeal from the Superior Court in Yuma County
No. S1400CV201801018
The Honorable Levi Gunderson, Judge Pro Tempore

AFFIRMED

COUNSEL

Jimmy Riley, Yuma
Plaintiff/Appellant

Grasso Law Firm, PC, Chandler
By Robert Grasso, Jr., N. Patrick Hall
Counsel for Defendant/Appellee
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Decision of the Court

MEMORANDUM DECISION

Chief Judge Peter B. Swann delivered the decision of the court, in which
Presiding Judge Jennifer B. Campbell and Judge Lawrence F. Winthrop
joined.

S W A N N, Chief Judge:

¶1 Jimmy Riley brought an action against Carpe Diem Collegiate
High School (“the School”) under A.R.S. § 33-420(C) after the School
declined to release a voluntary lien it held on Riley’s residence. We affirm
the superior court’s entry of summary judgment for the School. The
punitive damages authorized by A.R.S. § 33-420(C) are available only when
the defendant refuses to release an encumbrance knowing that the
encumbrance is invalid. Here, the undisputed evidence established good-
faith grounds for the School’s conduct.

FACTS AND PROCEDURAL HISTORY

¶2 In 2010, the School loaned Riley $150,000, and Riley executed
and recorded a Notice of Voluntary Lien on his residence as security. Riley
did not repay the entire loan. In June 2017, the School agreed to accept
certain construction work from Riley as payment in full. Riley performed
at least some of the work. But despite Riley’s written request that the School
release the lien, the School refused because it believed Riley had not fully
performed his contractual obligations.

¶3 Riley brought a single-claim action against the School for
violation of A.R.S. § 33-420. The parties filed competing motions for
summary judgment. The superior court granted summary judgment for
the School on the damages claim but ordered the lien to be released because
Riley had cured any deficient performance during the pendency of the case.
The court made the judgment appealable under Ariz. R. Civ. P. (“Rule”)
54(b) and authorized the School to apply for attorney’s fees (which were
ultimately awarded). Riley appeals from the Rule 54(b) judgment.

DISCUSSION

¶4 We review summary judgment rulings de novo. Andrews v.
Blake, 205 Ariz. 236, 240, ¶ 12 (2003). Summary judgment is appropriate
when “there is no genuine dispute as to any material fact and the moving

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Decision of the Court

party is entitled to judgment as a matter of law.” Ariz. R. Civ. P. 56(a). We
apply clear and unambiguous statutory language according to its plain
meaning. Butler Law Firm v. Higgins, 243 Ariz. 456, 459, ¶ 7 (2018).

¶5 As an initial matter, we note that Riley pursued only one
cause of action: violation of § 33-420. Further, he does not assert on appeal
that he was entitled to relief on any theory. We therefore examine § 33-420
only, and express no opinion regarding other claims that Riley might have
brought.

¶6 Section 33-420 serves to “protect property owners from
actions clouding title to their property.” Stauffer v. U.S. Bank Nat’l Ass’n.,
233 Ariz. 22, 28, ¶ 25 (App. 2013) (quotation omitted). The statute provides,
as relevant here, that

[a] person who is named in a document which purports to
create an interest in, or a lien or encumbrance against, real
property and who knows that the document is forged,
groundless, contains a material misstatement or false claim or
is otherwise invalid shall be liable to the owner or title holder
for the sum of not less than one thousand dollars, or for treble
actual damages, whichever is greater, and reasonable
attorney fees and costs as provided in this section, if he
wilfully refuses to release or correct such document of record
within twenty days from the date of a written request from
the owner or beneficial title holder of the real property.

A.R.S. § 33-420(C).

¶7 We need not decide today whether § 33-420(C) applies to
encumbrances that, though not void ab initio, become invalid because they
have expired or otherwise should be released. Riley’s claim fails even
assuming that § 33-420(C) applies to his voluntary lien. The damages
authorized by the statute are punitive, and therefore require scienter on the
part of the defendant. Wyatt v. Wehmueller, 167 Ariz. 281, 286 (1991); Fagerlie
v. Markham Contracting Co., 227 Ariz. 367, 376, ¶ 49 (App. 2011). Section 33-
420(C) plainly provides that recovery can be had only when the defendant
“knows” of a lien’s invalidity and “wilfully refuses” to release or correct it.
Damages are unavailable when the defendant has a good-faith basis for its
conduct. Fagerlie, 227 Ariz. at 376, ¶¶ 51–52. Here, the undisputed evidence
established that the School had a good-faith basis for not releasing the lien:
Riley admitted that he did not provide an invoice as promised; Riley agreed
that the School would bear no construction costs yet an unpaid

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Decision of the Court

subcontractor threatened litigation against the School; and the parties
disputed the sufficiency of Riley’s work with respect to baseboards. The
superior court therefore did not err by entering summary judgment for the
School with respect to Riley’s § 33-420(C) claim.

CONCLUSION

¶8 We affirm the Rule 54(b) judgment. We deny the School’s
requests for sanctions under ARCAP 25 and attorney’s fees under A.R.S.
§ 12-341.01. As the prevailing party, the School is entitled to recover its
costs upon compliance with ARCAP 21.

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

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