Lattin v. Shamrock

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

KRISTI LATTIN, Plaintiff/Appellant,

v.

SHAMROCK MATERIALS, LLC, et al., Defendants/Appellees.

No. 1 CA-CV 22-0282
FILED 2-16-2023

Appeal from the Superior Court in Maricopa County
No. CV2020-004276
The Honorable M. Scott McCoy, Judge

AFFIRMED

COUNSEL

Brier Irish & Hubbard, P.L.C., Phoenix
By Teresa H. Foster
Counsel for Plaintiff/Appellant

Sacks Tierney P.A., Scottsdale
By Patrick J. Van Zanen and Michael L. Kitchen
Counsel for Defendants/Appellees
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Decision of the Court

MEMORANDUM DECISION

Chief Judge Kent E. Cattani delivered the decision of the Court, in which
Presiding Judge Maria Elena Cruz and Judge Angela K. Paton joined.

C A T T A N I, Chief Judge:

¶1 Kristi Lattin appeals from the superior court’s summary
judgment in favor of Shamrock Materials, LLC, Diana Gignac, and Gignac’s
husband on Lattin’s claims seeking return of $162,000 she contributed to
Shamrock. For reasons that follow, we affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 This is Lattin’s second related lawsuit against Shamrock and
the Gignacs. See generally Lattin v. Shamrock Materials LLC, No. 1 CA-CV 19-
0761, 2020 WL 6140626 (Ariz. App. Oct. 20, 2020) (mem. decision). In mid-
2005, Lattin, Gignac, and another woman organized Shamrock to procure
and resell concrete and construction materials. Id. at *1, ¶ 2. Lattin was
removed from membership in the LLC soon thereafter at her own request,
and she instead entered a profit participation agreement (“PPA”) with the
others. Id. The PPA gave Lattin a one-third share of Shamrock’s net profits
and granted her a 10-year option to acquire a one-third membership interest
in Shamrock for a nominal payment. Id. Gignac became the sole member
of Shamrock in 2008, and the PPA was amended to provide Lattin a one-
half share of Shamrock’s net profits while leaving the option unchanged.
See id. at ¶ 3.

¶3 Over the years during which she held a profits (but not
membership) interest, Lattin made capital contributions to Shamrock
totaling $162,000. Id. at ¶ 4. Lattin exercised her option to acquire a
membership interest in Shamrock in early 2016. Id. at ¶ 5. Although
Shamrock’s accountant had juggled the classification of Lattin’s
contributions between equity and debt over the years, the $162,000 was
ultimately credited to her capital account as a member of Shamrock. See id.
at ¶ 4.

¶4 Lattin filed her first lawsuit against Shamrock and the
Gignacs in 2017. Id. at ¶ 6. As relevant here, she asserted claims for breach
of contract, unjust enrichment, and conversion, alleging that (1) she was

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entitled to a one-half (not just a one-third) membership interest upon
exercising the option, (2) she was entitled to a share of Shamrock’s losses
(as well as profits) under the PPA, and (3) Shamrock and Gignac had
wrongfully withheld her share of profits (as well as losses). See id. at ¶ 6.
Lattin’s complaint noted her capital contributions over the years but did not
seek reimbursement of those funds.

¶5 In the first lawsuit, the superior court granted Shamrock and
the Gignacs judgment on the pleadings regarding Lattin’s membership
share, ruling that Lattin held a one-third membership interest. Id. The court
later granted Shamrock and the Gignacs partial summary judgment
regarding Lattin’s rights under the PPA, ruling that the PPA granted her a
share of profits only, not losses. See id. at ¶ 7.

¶6 Shamrock and the Gignacs then moved for summary
judgment on all remaining claims on the basis that Shamrock had not
generated any profits over the relevant period and Lattin had no evidence
of unreasonable or improper expenditures diverting funds that should have
been profits. See id. Lattin cited several transactions in response that she
urged showed financial misconduct, including Shamrock’s reclassification
of her $162,000 in capital contributions from equity to debt then back to
equity over the years. The court granted summary judgment on all but one
minor issue not implicated here. See id. at ¶ 7. In so ruling, the court
expressly addressed Shamrock’s classification of Lattin’s $162,000
contributions, determining that “Lattin now is a member of the LLC, so her
contributions properly are treated as equity.”

¶7 Less than three weeks before the date set for trial on the one
remaining issue, Lattin filed two motions to amend the complaint. Id. at *2,
¶ 8. The first motion, which sought to add a claim for breach of fiduciary
duty, was denied as untimely. Id. The second motion asked to amend the
unjust enrichment claim to seek return of Lattin’s $162,000 in capital
contributions while dismissing any other remaining claims with prejudice.
Id. The superior court again denied leave to amend, noting Lattin’s undue
delay in seeking amendment and finding Lattin’s proposed amendment
would be futile, in part, because the amendment “d[id] not point to an
unjustified enrichment to Shamrock or Gignac” given that “[Lattin]
contributed capital to the LLC, which is now booked as a capital
contribution.” See id. Lattin appealed, and we affirmed. See id. at *1, ¶ 1.

¶8 While the appeal from the first lawsuit was pending, Lattin
filed this second lawsuit against Shamrock and the Gignacs seeking return
of the $162,000 in capital contributions, asserting claims of unjust

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enrichment, mutual mistake, and (in the alternative) negligent
misrepresentation. After answering the complaint, Shamrock and the
Gignacs moved for summary judgment based on claim preclusion, issue
preclusion, and lack of evidence to prove at least one element of each count.
Lattin filed a cross-motion for summary judgment, asserting that the ruling
in the first lawsuit that she was not a member when making the capital
contributions entitled her to judgment as a matter of law.

¶9 After full briefing, the superior court granted Shamrock and
the Gignacs’ motion and denied Lattin’s cross-motion, stating that “[t]his
case is obviously barred under collateral estoppel, res judicata, or perhaps
both.” The court entered judgment awarding Shamrock and the Gignacs
over $55,000 in attorney’s fees, and Lattin timely appealed. We have
jurisdiction under A.R.S. § 12-2101(A)(1).

DISCUSSION

¶10 Lattin challenges the superior court’s assessment of both issue
and claim preclusion, urging that her request for return of capital
contributions was not and could not have been litigated in the first suit. We
review the superior court’s preclusion rulings de novo as questions of law.
Banner Univ. Med. Ctr. Tucson Campus, LLC v. Gordon, 252 Ariz. 264, 266, ¶ 8
(2022). Issue preclusion is dispositive here.

¶11 “[I]ssue preclusion[] applies when a fact ‘was actually
litigated in a previous suit, a final judgment was entered, and the party
against whom the doctrine is to be invoked had a full opportunity to litigate
the matter and actually did litigate it’ and the fact ‘was essential to the prior
judgment.’” Crosby-Garbotz v. Fell, 246 Ariz. 54, 57, ¶ 11 (2019) (quoting
Chaney Bldg. Co. v. City of Tucson, 148 Ariz. 571, 573 (1986)). “[A]ctually
litigated” means that the fact was “properly raised by the pleadings or
otherwise, and is submitted for determination, and is determined.” Chaney
Bldg. Co., 148 Ariz. at 573.

¶12 Here, each of Lattin’s claims in the current suit seeks return of
her $162,000 in capital contributions and thus necessarily depends on
Shamrock’s allegedly wrongful retention of the $162,000. But as an issue of
fact, the appropriate disposition of Lattin’s capital contributions—that
“[Lattin] now is a member of the LLC, so her contributions properly are
treated as equity” booked in her capital account—was actually litigated and
determined in the first lawsuit.

¶13 Lattin’s capital contributions were not originally core to her
claims in the first case. Her complaint merely noted the capital

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contributions totaling $162,000 without seeking reimbursement of those
funds, instead suggesting that the contributions showed Lattin had always
acted, and Shamrock had always treated her, as a member of the LLC. The
capital contributions remained collateral to the first motion for summary
judgment (regarding Lattin’s asserted right to share in Shamrock’s losses).
During oral argument on that motion, Lattin’s counsel relied on the capital
contributions to argue (unsuccessfully) that, because Lattin acted like a
member in contributing funds, she should likewise be entitled to a share of
Shamrock’s losses.

¶14 But the nature and disposition of Lattin’s capital
contributions was actually litigated as a then-minor but essential fact in the
context of Shamrock and the Gignacs’ second motion for summary
judgment (addressing whether any unreasonable or improper expenditures
diverted funds that should have been profits). Responding to the motion,
Lattin raised Shamrock’s reclassification of her $162,000 in capital
contributions from equity to debt then back to equity as one factual basis to
conclude that Shamrock had engaged in financial misconduct diverting
potential profits. The court’s ruling (which granted summary judgment
except as to one now-irrelevant issue) expressly addressed Shamrock’s
classification of Lattin’s $162,000 contributions and determined that
“[Lattin] now is a member of the LLC, so her contributions properly are
treated as equity.”

¶15 The superior court reaffirmed this determination when ruling
on Lattin’s motion for leave to amend her unjust enrichment claim in the
first suit to seek return of the capital contributions. There, the court
observed that Lattin’s proposed amendment would be futile, in part,
because the amendment “d[id] not point to an unjustified enrichment to
Shamrock or Gignac” given that “[Lattin] contributed capital to the LLC,
which is now booked as a capital contribution.” Although the fact only
became essential to a ruling late in the case, it was nevertheless ultimately
raised, submitted, and determined in the first lawsuit. See id.

¶16 Lattin argues that issue preclusion cannot apply because
denial of leave to amend meant her claim for return of the capital
contributions was never actually litigated. But issue preclusion turns not
on adjudication of the overarching claim but rather on determination of a
fact in issue. See Circle K Corp. v. Indus. Comm’n, 179 Ariz. 422, 425 (App.
1993); Hawkins v. State, 183 Ariz. 100, 103 (App. 1995). And Lattin does not
dispute the court’s finding that her $162,000 in capital contributions were
properly credited to her capital account as a member of Shamrock. Rather,
she highlights that, as a non-member at the time, she was not obligated to

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make those contributions in the first instance. But because her claims seek
return of those funds, the now-determined fact that she received proper
equity credit for those contributions as a member of Shamrock is
dispositive.

¶17 Accordingly, we affirm the superior court’s summary
judgment ruling in favor of Shamrock and the Gignacs. Because Lattin’s
only challenge to the superior court’s award of attorney’s fees depends on
reversal of the summary judgment ruling, we affirm that award as well.

¶18 Shamrock and the Gignacs request an award of attorney’s fees
on appeal under the PPA and A.R.S. §§ 12-341.01 and -349, and Lattin seeks
an award of fees on appeal under A.R.S. § 12-341.01(A). Given the nature
of Lattin’s claims and arguments, and in an exercise of our discretion, we
deny both requests. As the prevailing parties, Shamrock and the Gignacs
are entitled to an award of costs on appeal upon compliance with ARCAP
21. See A.R.S. §§ 12-341, -342(A).

CONCLUSION

¶19 The judgment is affirmed.

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

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