Talking Rock v. Inscription Canyon

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

TALKING ROCK LAND, LLC,
Plaintiff/Appellant/Cross-Appellee,

v.

INSCRIPTION CANYON RANCH, LP, et al.,
Defendants/Appellees/Cross-Appellants.

No. 1 CA-CV 22-0712
FILED 4-9-2024

Appeal from the Superior Court in Maricopa County
No. CV2019-056128
The Honorable Sara J. Agne, Judge
The Honorable Danielle J. Viola, Judge

AFFIRMED

COUNSEL

Himmelstein & Adkins, LLC, Scottsdale
By David E. Shein, Erik D. Smith
Counsel for Plaintiff/Appellant/Cross-Appellee

Stinson LLP, Phoenix
By Lonnie J. Williams, Jr., Timothy S. Lauxman
Co-Counsel for Defendant/Appellee/Cross-Appellant

Holdsworth Law Firm, P.C., Prescott
By Lori Marschke
Co-Counsel for Defendant/Appellee/Cross-Appellant
 TALKING ROCK v. INSCRIPTION CANYON, et al.
Decision of the Court

MEMORANDUM DECISION

Judge Samuel A. Thumma delivered the decision of the Court, in which
Presiding Judge D. Steven Williams and Judge Paul J. McMurdie joined.

T H U M M A, Judge:

¶1 In this declaratory judgment action, plaintiff Talking Rock
Land (TRL) appeals from the grant of summary judgment for defendant
Inscription Canyon Ranch (ICR) about the meaning of certain terms of the
parties’ detailed written contracts. ICR cross-appeals, arguing the superior
court erred in reducing the attorneys’ fees it sought under the contracts, an
issue addressed in a separate opinion. For the reasons that follow, the
judgment is affirmed.

FACTS AND PROCEDURAL HISTORY

¶2 TRL and ICR have had a contractual relationship, lasting a
generation, involving the development of homes on land near Prescott. In
1999, TRL entered into a contract with ICR, the original owner of 3,450 acres
(more than five square miles) of undeveloped land. TRL would purchase
land from ICR in phases (subject to annual minimum purchase
requirements) and develop residential lots as part of a master-planned golf
community. TRL would develop the community, including amenities and
infrastructure, and sell homes to consumers.

¶3 The parties amended the underlying contracts many times.
As relevant here, in 2010, they converted a prior contract into two
interconnected contracts: (1) a “2010 Amended and Restated Option
Agreement” (2010 Agreement) and (2) a “2010 Amended and Restated
Trust Agreement” (2010 Master Trust). In the years that followed the 2010
changes, TRL and ICR amended the 2010 Agreement numerous times.
Although the 2010 Master Trust is an important part of the contractual
relationship, the terms of the 2010 Agreement and a subsequent
amendment called the Sixth Addendum provide the primary basis for this
dispute.

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¶4 The parties’ contractual relationship appears to have been
largely uneventful until the mid-2010s. By the end of 2015, given purchase
requirements and a change in demand for homes, TRL claimed it had
acquired a 15-year inventory of lots. This resulted in the parties negotiating
and, in 2015, agreeing to a Sixth Addendum to the 2010 Agreement.

¶5 TRL’s concerns about an oversupply of lots and market
demand persisted. In November 2018, TRL notified ICR of its decision not
to buy more lots. ICR responded that, under Section 7 of the Sixth
Addendum, TRL’s decision did not relieve it of its obligation to acquire all
lots under the 2010 Agreement before the end of 2027, representing more
than 1,500 lots at a total cost to TRL of $10,000,000.

¶6 Unable to resolve their dispute, in August 2019, TRL filed this
declaratory judgment action. TRL sought a judgment that, under the
parties’ contracts, it was “entitled to ‘elect, by written notice to [ICR] . . . not
to proceed with’ further purchases.” ICR counterclaimed, seeking a
declaration that the 2010 Agreement “does not excuse TRL from its
obligation under the Sixth Addendum to continue purchasing lots through
2027.” After the court denied ICR’s motion for judgment on the pleadings,
and after discovery, the parties filed cross-motions for summary judgment.

¶7 After oral argument and taking the matter under advisement,
the court found for ICR in an eight-page minute entry, concluding “[t]he
plain language does not grant TRL an option to stop buying lots” or to stop
“complying with obligations under the parties’ agreement.” The court
rejected TRL’s argument that the Sixth Addendum was not binding because
“there was no meeting of the minds” and TRL “did not receive any
consideration.”

¶8 After TRL unsuccessfully moved for reconsideration, the
court entered final judgment declaring that the contract required TRL to
pay for all the lots “prior to the end of 2027” and awarding ICR $ 700,000 in
attorneys’ fees pursuant to the 2010 Agreement and Arizona Revised
Statute (A.R.S.) §12-341.01(2024)1 and $14,262.14 in taxable costs. This court
has jurisdiction over TRL’s timely appeal and ICR’s timely cross-appeal
pursuant to Article 6, Section 9, of the Arizona Constitution and A.R.S.
§§12-120.21(A) and -2101(A)(1).

1 Absent material revisions after the relevant dates, statutes cited refer to

the current version unless otherwise indicated.

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DISCUSSION

¶9 TRL argues the superior court erred by (1) concluding the
plain language of the Sixth Addendum allowed entry of summary
judgment; (2) improperly relying on parol evidence; (3) rendering material
contract provisions ineffective; (4) improperly creating or necessitating new
contract provisions; (5) concluding there was mutual assent between TRL
and ICR for the Sixth Addendum; and (6) finding that there was adequate
consideration supporting the Sixth Addendum.

I. Standard of Review.

¶10 “The court shall grant summary judgment if the moving party
shows that there is no genuine dispute as to any material fact and the
moving party is entitled to judgment as a matter of law.” Ariz. R. Civ. P.
56(a). This court reviews the entry of summary judgment de novo, “viewing
the evidence and reasonable inferences in the light most favorable to the
party opposing the motion,” Andrews v. Blake, 205 Ariz. 236, 240 ¶ 12 (2003),
to determine “whether any genuine issues of material fact exist,” Brookover
v. Roberts Enter., Inc., 215 Ariz. 52, 55 ¶ 8 (App. 2007). An order granting
summary judgment will be affirmed if it is correct for any reason. Hawkins
v. State, 183 Ariz. 100, 103 (App. 1995).

¶11 Under Arizona law, “the interpretation of a contract is a
question of law, which this court reviews de novo.” Grosvenor Holdings, L.C.
v. Figueroa, 222 Ariz. 588, 593 ¶ 9 (App. 2009). In interpreting a contract, the
court “first consider[s] the plain meaning of the words in the context of the
contract as a whole.” Id. at 222 Ariz. at 593 ¶ 9. The court construes a
contract “in its entirety and in such a way that every part is given effect.”
Cardon v. Cotton Lane Holdings, Inc., 173 Ariz. 203, 207 (App. 1992). The court
reads words “in the context in which they are used, and [considering] the
purposes sought . . . by the agreement.” Emp. Sec. Comm’n v. Amalgamated
Meat Cutters & Butcher Workmen of N. Am., 22 Ariz. 54, 58 (1974). The court
applies “a standard of reasonableness” to contract terms, reflecting “the
parties’ intent.” Chandler Med. Bldg. Partners v. Chandler Dental Grp., 175
Ariz. 273, 277 (App. 1993); Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz.
148, 152 (1993). If the text is unambiguous, the court applies the language
as written. Grosvenor, 222 Ariz. at 593 ¶ 9. The parties’ disagreement about
the meaning of contract terms does not, by itself, create an ambiguity. See
United Cal. Bank v. Prudential Ins. Co of Am., 140 Ariz. 238, 259 (App. 1983).
Applying these standards, TRL has shown no error.

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II. The Contractual Relationship.

¶12 The two documents relevant to this appeal are the 2010
Agreement and the Sixth Addendum, created in 2015. These documents are
part of a larger, complex set of contracts that has governed the parties’
relationship over the years. In part, this litigation arises out of changes the
Sixth Addendum made to the 2010 Agreement.

¶13 The 2010 Agreement identifies two distinct but interrelated
trusts (1) the Master Trust and (2) Junior Trusts. All property subject to the
2010 Agreement is first held in the Master Trust in what the parties call “Un-
Converted Phases,” which are phases that remain titled in the Master Trust.
The 2010 Agreement provided that the term “’Phase’ shall mean each phase
identified in the Project/Phasing Map.” The Project/Phasing Map, in turn,
identifies the size, number of lots and location of each phase.

¶14 When TRL seeks to develop certain land, it gives written
notice to ICR to move or “convert” land held by the Master Trust as Un-
Converted Phases to Junior Trust(s) and the land becomes a “Converted
Phase.” Once phases are converted, meaning they are moved from the
Master Trust to a Junior Trust, they are “Converted Phases.” TRL then
becomes obligated to purchase the lots within the Converted Phase. Once
ICR receives the required payment, ICR secures the release of all remaining
lots in a particular Junior Trust. In an “Option Extension” provision, the
2010 Agreement extended the duration of an option for TRL to convert
phases through December 31, 2019. Specifically, and as discussed below,
that Option Extension stated that TRL had an “option to purchase the Trust
Property (through exercise of its option to convert all Un-Converted Phases
to Converted Phases).” The exercise of the option by TRL would mean the
property would be moved from an Un-Converted Phase held in the Master
Trust to Converted Phases held in a Junior Trust.

¶15 TRL had an annual obligation to purchase a minimum
number of Lots as stated in Section 4.3 of the 2010 Agreement. The 2010
Agreement defined “Lot” as “each unsold platted residential lot now or
hereafter located in a Converted Phase and titled in a Junior Trust or in
TRL.” Section 4.3 states “TRL shall pay Base Lot Release Payments with
respect to a minimum number of Lots” for an “Accounting Year,” which is
a calendar year.2 Section 4.3 provides TRL’s compliance with this minimum
purchase requirement was based on Lots that were moved to Converted

2 The Base Lot Release Payments varied, ranging from $25,000 per Lot to $0

per Lot, depending upon the number of Lots released.

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Phases held in Junior Trusts. If TRL satisfied the Annual Performance
Covenant, its option to convert phases remained in good standing.

¶16 Section 1.3 of the 2010 Agreement allowed TRL to elect not to
convert more land from the Master Trust to a Junior Trust, thereby ending
TRL’s obligation to purchase Converted Phases. As applicable here, the
2010 Agreement grants “TRL with an option and not an obligation to
convert Un-Converted Phases to Converted Phases . . . . Notwithstanding
anything to the contrary contained in this [2010] Agreement, TRL may at
any time during the [existence of the option] elect, by written notice to ICR
and the Trustee, not to proceed with establishing any further Converted
Phases . . . .”

¶17 With this background, the primary issue in this appeal is
what, if anything, the Sixth Addendum did to change these obligations
contained in the 2010 Agreement.

¶18 The Sixth Addendum was the product of lengthy and
extensive negotiations, including using the defined term “Lots.” In the end,
the 22-page Sixth Addendum, signed in 2015, significantly changed the
parties’ agreement, provided newly defined terms and definitions, and
noted that its terms “shall be controlling with respect to any conflicting or
inconsistent provision in the” 2010 Agreement.

¶19 The Sixth Addendum made six changes to the 2010
Agreement that are particularly important. First, Section 5 removes the
requirement that TRL use Junior Trusts -- therefore making it possible for
TRL to purchase Un-Converted phases directly from the Master Trust.
Second, Section 3 allows TRL to satisfy its Annual Performance Covenant
“by directly purchasing entire Un-Ripe Converted Phases and or Un-
Converted Phases, without utilizing the Junior Trust conversion
mechanism.” Third, the Sixth Addendum adds the concept of a “Density
Unit,” which was not referenced in the 2010 Agreement. Fourth, Section B
clarifies that “’Lots’ and ‘lots’ may be used interchangeably, and ‘Density
Unit’ shall mean a lot or parcel whether planned or platted (unless
otherwise specified).” The change means that the term “Density Unit” is
much broader than Converted Phases and encompasses lots in both the
Master Trust and Junior Trusts. Fifth, Section 6 extended the parties’
agreement to “the earlier of (i) December 31, 2027; or (ii) the date ICR has
received Base Lot Release Payments for all Density Units (platted or
planned) subject to the” 2010 Agreement. Sixth, Section 7 modified Section
4.3 of the 2010 Agreement.

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¶20 In its entirety, Section 7 states (with brackets added to number
the sentences for ease of reference):

[1] The minimum annual Density Unit
takedown requirements under Section 4.3 of the
Existing Option Agreement (“Annual
Performance Covenant”) and the Base Lot
Release Payment schedule under Section 4.1 of
the Existing Option Agreement are hereby
updated as set forth on Exhibit B to this
Addendum (“Amended Takedown & Payment
Schedule”). [2] If the total number of planned
and/or platted Density Units within the
Development Agreement Property ultimately
exceeds 1,653 Density Units (collectively,
“Excess Lots”), then the Base Lot Release
Payment for each Excess Lot acquired by TRL
under the Option Agreement will be $25,000. [3]
Base Lot Release Payments must be paid for all
planned and/or platted Density Units within
the Development Agreement Property
(including Excess Lots, but excluding the
Removed Property) prior to the end of 2027. [4]
The parties acknowledge and agree that
Supplemental Lot Release Payment
requirements (as amended in Section 14 of this
Addendum) shall apply to any and all Density
Units released to or at the direction of TRL,
including Excess Lots, and shall survive
expiration of the extended Option Term.

By amending the Annual Performance Covenant, Section 7 of the Sixth
Addendum allows TRL to meet its annual minimum purchase
requirements by purchasing Density Units, rather than solely through the
purchase of Converted Phases as the 2010 Agreement had required.

III. The Plain Language of the 2010 Agreement and the Sixth
Addendum Impose a Purchase Obligation on TRL.

¶21 TRL’s argument on appeal is premised on a position that
“Section 7 of the Sixth Addendum is not a ‘new’ provision and does not
evidence the creation of a ‘new’ obligation.” Instead, TRL argues, “Section
7 of the Sixth Addendum is expressly an ‘update’ of the ‘Annual

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Performance Covenant’ contained in Section 4.3 of the” 2010 Agreement.
To the extent that TRL suggests the “update” is something different than a
“modification,” TRL’s brief refers to update and modification
synonymously. Moreover, Section 7 expressly updated Section 4.3, but that
fact does not lead to the conclusion TRL asserts here.

¶22 Section 7 of the Sixth Addendum states, “the minimum
annual Density Unit takedown requirement under Section 4.3 of the [2010
Agreement] and the Base Lot Release Payment schedule under Section 4.1
of the [2010 Agreement] are hereby updated.” This express language --
Section 7 modifying the Section 4.3 obligations – negates TRL’s argument
that “Section 4.3 of the [2010 Agreement] and Section 7 of the Sixth
Addendum are functionally identical.” If these two provisions of these two
contracts signed five years apart were “identical,” including Section 7 in the
Sixth Addendum would be superfluous. See Hanson v. Tempe Life Care Vill.,
Inc., 216 Ariz. 26, 27 ¶ 7 (App. 2007) (noting courts “interpret contracts to
give effect to all their parts”). Similarly, TRL’s argument that the parties’
relationship is governed by the 2010 Agreement, and not the Sixth
Addendum, is counter to the provision in the Sixth Addendum that “[i]n
the event of any conflict or inconsistency between the terms of” the Sixth
Addendum and the 2010 Agreement, “the terms of this [Sixth] Addendum
shall control.”

¶23 TRL claims that “the only substantive change between the
Performance Covenant set forth in Section 4.3 of the [2010 Agreement] and
the ’updated’ Performance Covenant set forth in Section 7 of the Sixth
Addendum” is changing “shall” to “must” for the Base Lot Release
Payments due each Accounting Year. But, contrary to TRL’s argument,
Section 7 made other substantive changes as applicable here.

¶24 Section 7 profoundly changed what type of phase --
Converted Phases or Density Unit -- is covered by the Annual Performance
Covenant. Section 4.3 of the 2010 Agreement states: “pay Base Lot Release
Payments with respect to a minimum number of lots (across all Converted
Phases),” while Section 7 of the Sixth Addendum, in sentence [1], begins by
declaring: “The minimum annual Density Unit takedown requirements
under Section 4.3 [of the 2010 Agreement] . . . are hereby updated.”
(Emphasis added.)

¶25 Section 7’s changes to the 2010 Agreement do not end there.
Section 7 added the concept of a “Density Unit,” which is not referenced in
the 2010 Agreement. Although not defined in Section 7, the first page of the
Sixth Addendum declares: “As used in this Addendum, ‘Lots’ and ‘lots’

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may be used interchangeably, and ‘Density Unit’ shall mean a lot or parcel
whether planned or platted (unless otherwise specified).” When reading
Section 7 with the definition of Density Unit in the Sixth Addendum, the
new obligation imposed on TRL in the Sixth Addendum is clear, as
specified in sentence [3] of Section 7: “Base Lot Release Payments must be
paid for all planned and/or platted [Lots or Parcels] within the
Development Agreement Property . . . prior to the end of 2027.” The parties,
by including the new concept of a “Density Unit” and defining the term
broadly, and then including sentence [3] of Section 7, agreed in the Sixth
Addendum that TRL had a new purchase obligation.

¶26 This obligation is supported by other language in the Sixth
Addendum. Section 8(a) of the Sixth Addendum uses parallel language,
stating that “[i]f the maximum allowable density under the Development
Agreement is less than 1,653, then . . . [it] shall have no effect on the
obligation of TRL to pay Base Lot Release Payments (and if applicable,
Catch Up Payments) for a minimum of 1,636 Density Units on or before the
expiration of the Option Term.” (Emphasis added.) Section 6 of the Sixth
Addendum extends the “Option Term” to “the earlier of (i) December 31,
2027; or (ii) the date ICR has received Base Lot Release Payments for all
Density Units (platted or planned) subject to the Option Agreement
(‘Extended Option Term’).” Thus, Adopting TRL’s argument that Section
7 does not impose any obligation would require the court to ignore the
express requirements in sentence [3] of Section 7 as well as Section 8(a),
something this court will not do. See Chandler Med. Bldg. Partners, 175 Ariz.
at 277 (“the court will not construe one provision in a contract so as to
render another provision meaningless”).

¶27 TRL, in seeking summary judgment and now on appeal,
mischaracterizes its “option” under the 2010 Agreement as having been
modified by the Sixth Addendum. TRL argues it has “the ‘option’ but not
the ‘obligation’ to purchase portions of the Master Trust Property.” Given
this “option,” TRL asserts, the superior court’s conclusion that “the Sixth
Addendum imposed an ‘obligation’ on TRL to pay Base Lot Release
Payments for all Density Units prior to 2027” is “irreconcilably at odds”
with the provisions of the 2010 Agreement and the Sixth Addendum. Not
so.

¶28 As the express language of the 2010 Agreement and the Sixth
Addendum show, however, TRL’s “option” is not an option to purchase
property but rather an option to convert phases. In the 2010 Agreement,
Section 1.2 references “TRL’s option to purchase the Trust Property
(through exercise of its option to convert all Un-Converted Phases to

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Converted Phases).” Section 1.3, in discussing TRL’s election not to
proceed, states that the 2010 Agreement “provides TRL with an option [but]
not an obligation to convert Un-Converted Phases to Converted Phases.”
Section 4.3 of the 2010 Agreement, by contrast, specified TRL’s purchase
obligations until modified by the Sixth Addendum.

¶29 Contrary to TRL’s argument, its option to convert phases has
been distinct from its purchase obligation for more than a dozen years. The
2010 Agreement separates Section 1.3, TRL’s option to not proceed with
establishing more Converted phases, from Section 4.3, the minimum
number of lots that TRL is obligated to purchase. TRL is correct that the
Sixth Addendum does not delete or terminate the 2010 Agreement’s
“longstanding [o]ption structure” and the provisions “confirming the
‘option’ relationship survived the Sixth Addendum.” While the Sixth
Addendum removes the requirement that TRL use the Junior Trust
Mechanism (i.e., Convert Un-converted Phases in the Master Trust to
Converted Phases in the Junior Trust), it allows TRL the option to convert
phases if it chooses to do so. Section 5 of the Sixth Addendum states “TRL
may, but shall not be required to, utilize the Junior Trust conversion
mechanism to acquire Un-Ripe Converted Phases or Un-Converted
Phases.” That continuing option structure, however, does not modify TRL’s
purchase obligations under the 2010 Agreement as modified by the Sixth
Addendum.

¶30 As the superior court concluded, the Sixth Addendum: (1)
maintained TRL’s “option” to convert phases as reflected in the 2010
Agreement; (2) expressly updated Section 4.3 of the 2010 Agreement; and
(3) added the concept of “Density Units,” which imposed a broader
purchase obligation. For all these reasons, the superior court correctly
granted summary judgment in favor of ICR.

IV. The Superior Court Did Not Rely on Parol Evidence.

¶31 TRL asserts that the superior court improperly “looked to
extrinsic or parol evidence” when granting summary judgment for ICR.
TRL contends that the parol evidence the superior court relied on was ICR’s
draft Term Sheet that the parties exchanged while negotiating the Sixth
Addendum. TRL argues that, in doing so, the court failed to consider all
parol evidence, which it asserts was reversible error.

¶32 “‘When interpreting an agreement, the court may always
consider the surrounding circumstances’ and ‘the context in which it was
made.’” Miller v. Hehlen, 209 Ariz. 462, 466 ¶ 12 (App. 2005). However,

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“[w]hen two parties have made a contract and have expressed it in writing
to which they have both assented as the complete and accurate integration
of that contract, evidence, whether parol or otherwise, of antecedent
understandings and negotiations will not be admitted for the purpose of
varying or contradicting the writing.” 3 Arthur L. Corbin, CORBIN ON
CONTRACTS § 573 at 357 (1960). As reflected in the 2010 Agreement, the
parties’ written contracts were integrated agreements, representing “the
entire agreement between the parties.” That provision, along with the
express terms, suggests there would be no occasion to consider parol
evidence in interpreting the terms of the parties’ contractual agreements.
Contrary to TRL’s argument, however, the superior court did not rely on
the Term Sheet as parol evidence.

¶33 The minute entry granting ICR summary judgment
mentioned the Term Sheet in addressing TRL’s claim that it was unaware
of the required payment obligation. In doing so, the court noted TRL’s
argument that Section 7 of the Sixth Addendum “imposed a new [payment]
obligation on TRL” as discussed above. The court noted that the Term
Sheet, in which TRL proposed a change to its payment obligations that ICR
did not accept, “supports ICR’s position that TRL was aware of the required
payment obligation.” The court made no more mention of the Term Sheet,
and there is no suggestion that it relied on its provisions in interpreting the
contractual terms. In recognizing that a party was seeking to take a position
during litigation that was contrary to its position before the dispute arose,
the superior court did not use the Term Sheet as parol evidence to interpret
the contract. Cf. Terry v. United Parcel Service, Inc., 253 Ariz. 55, 50 ¶ 24 (App.
2022) (in different context, noting the doctrine of judicial estoppel prevents
a party from taking different factual positions at different times).

¶34 TRL also argues the court relied on parol evidence because, in
denying ICR’s motion for judgment on the pleadings early in the case, it
determined “that Section 7 of the Sixth Addendum was reasonably
susceptible to more than one interpretation.” In denying that motion, the
court observed that TRL’s “interpretation is plausible.” Where a court finds
contract language reasonably susceptible to different interpretations, parol
evidence may be admissible. See, e.g., Taylor, 175 Ariz. at 152-55; Town of
Marana v. Pima Cnty., 230 Ariz. 142, 147 (App. 2012). But TRL cites no
authority for the proposition that an observation in denying a motion for
judgment on the pleadings is binding when, after discovery, a court finds
no disputed issues of material fact and that one party is entitled to summary
judgment. Under TRL’s position, denial of a Rule 12(c) motion would
preclude entry of summary judgment under Rule 56. TRL cites no authority
for that novel proposition, and the court is aware of none.

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¶35 Because the record does not show that the superior court
relied on parol evidence in granting summary judgment for ICR, TRL’s
arguments to the contrary fail.

V. Other Issues TRL Seeks to Raise Do Not Show the Superior Court
Erred.

¶36 TRL argues the superior court: (1) improperly rendered
material contract provisions ineffective; (2) “created or require[d] the
creation of” new contract provisions; (3) erred by concluding there was
mutual assent between TRL and ICR for the Sixth Addendum and (4) failed
to recognize the Sixth Addendum was not supported by adequate
consideration. The court addresses each issue in turn.

A. The Superior Court’s Ruling Did Not Render Material
Contract Provisions Ineffective.

¶37 “A contract should be construed to give effect to all its
provisions.” Scholten v. Blackhawk Partners, 184 Ariz. 326, 329 (App. 1995).
TRL argues the superior court erred because the court’s interpretation of
the 2010 Agreement (ruling that Section 1.3 was still in effect) and the Sixth
Addendum (ruling that Section 7 imposed a purchase obligation) renders
various provisions of the Sixth Addendum, the 2010 Agreement and the
2010 Master Trust Agreement meaningless. In doing so, TRL’s brief bullet
points twenty contract provisions without any substantive discussion or
explanation. This failure to develop the argument, with any supporting
authority, constitutes waiver. See MacMillan v. Schwartz, 226 Ariz. 584, 591
¶ 33 (App. 2011) (“Opening briefs must present significant arguments,
supported by authority, setting forth the appellant’s position on the issues
raised;” a failure to do so “constitutes abandonment and a waiver”)
(citations omitted); Schabel v. Deer Valley Unified Sch. Dist. No. 97, 186 Ariz.
161, 167 (App. 1996) (issues not clearly raised and argued in a party’s
appellate brief are waived).

¶38 Waiver aside, the superior court’s ruling did not render any
contract provisions meaningless. The grant of summary judgment declared
the meaning of the parties’ contracts. As for the 2010 Agreement and the
2010 Master Trust Agreement, the Sixth Addendum either (1) did not
change the prior provisions; (2) supplemented or augmented the prior
provisions without changing them or (3) changed the prior provisions. The
first two options could not make the 2010 Agreement ineffective or
meaningless; the third option is squarely addressed in the Sixth

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Addendum, in which the parties agreed that its terms “shall control” to the
extent it conflicts with the prior agreements.

¶39 The Sixth Addendum’s provisions also did not lose meaning.
By way of example, TRL points to Section 8(d), which states “[a]t the end of
the Extended Option Term or upon a TRL Default Event, any unused
available density in the Project (for which TRL has not paid Base Lot Release
Payments) will revert to the exclusive use of ICR within the Development
Agreement Property.” Section 8(d), however, is not inconsistent with
Section 1.3 of the 2010 Agreement and Section 7 of the Sixth Addendum.
Under Section 8(d), density will only be returned to ICR when TRL commits
a Default Event. As outlined in Section 12.3 of the 2010 Agreement, a
Default Event occurs when TRL abandons the project (i.e., fails to market
the lots or provide financial support to the Talking Rock club facilities),
breaches its obligations under Article 5, files a petition in a bankruptcy,
reorganization, winding up or liquidation proceeding, or defaults under
any project financing. Section 1.3 of the 2010 Agreement, however, concerns
elections to no longer acquire property, not any specified Default Events.
Thus, the superior court’s ruling that Section 1.3 was still in effect and that
Section 7 imposed a purchase obligation on TRL had no effect on the utility
of Section 8(d).

¶40 TRL has failed to show that the superior court’s rulings
improperly rendered material contract provisions ineffective or
meaningless.

B. The Superior Court Did Not Create or Require the Creation
of New Contract Provisions.

¶41 TRL asserts that “[n]either the 2010 Option Agreement nor the
Sixth Addendum contain or include any structure or mechanism that
contemplates or supports an ongoing obligation to purchase Lots from the
Master Trust (or directly from ICR) following a TRL Default Event or an
Article 3 Termination.” TRL’s assertion, however, is not supported by the
record or the text of the 2010 Agreement read in conjunction with the Sixth
Addendum, as discussed above.

¶42 The superior court’s conclusions about the Sixth Addendum’s
purchase obligations and Sections 1.2 and 1.3 of the 2010 Agreement did
not create new contract provisions that the parties had not agreed to
previously. On appeal, TRL rhetorically asks if “’TRL’s obligations
remained after an election by TRL not to proceed or an Article 3
Termination’, by what mechanism is this purported purchase ‘obligation’

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conducted or enforced?” The answer is Section 1.3 of the 2010 Agreement,
which states:

Any such election by TRL not to proceed or any
such Article 3 Termination (i) shall have no
effect on, and shall not relieve TRL, the
Guarantors, or the Accommodation Parties of
their obligations under this Agreement, the
Corporate Guaranty, or any Junior Trust
Agreements, all of which shall remain in full
force and effect.

The Sixth Addendum states, in Section 1.3 as well as Sections 12.2.(a) and
12.4(a), that TRL’s termination or election not to proceed with acquiring
more property does not affect its other obligations. As discussed above, the
Sixth Addendum added a new obligation under Section 7, not previously
included in the 2010 Agreement, requiring TRL to purchase all Density
Units before the end of 2027. And because the Sixth Addendum’s terms are
controlling, the “obligations” that Sections 1.3, 12.2(a), and 12.4(a)
encompass include this new obligation to purchase Density Units. Thus,
given the plain contractual language, TRL has failed to show the superior
court’s rulings created or required the creation of new contract provisions.

C. The Superior Court Properly Rejected TRL’s Argument
That There Was No Mutual Assent Between TRL and ICR.

¶43 “[B]efore there can be a binding contract there must be
mutual consent of the parties to the terms hereof. There must be a distinct
intention common to both and without doubt or difference and until all
understand alike there can be no assent.” Gifford v. Makaus, 112 Ariz. 232,
236 (1975). “[W]hat is operative is the objective manifestations of assent by
the parties.” Hill-Shafer P’ship v. Chilson Fam. Tr., 165 Ariz. 469, 474 (1990)
(citation omitted). A misunderstanding must be reasonable before a court
may properly find a lack of mutual assent. Id. at 475. “Relief is proper if the
writing evidencing the purported agreement is uncertain or ambiguous.”
Id. at 474.

¶44 Here, the superior court noted mutual assent between TRL
and ICR based on “the plain language of the 2010 Option Agreement and
the Sixth Addendum.” On appeal, TRL argues that both TRL and ICR have
declared that “they would not have entered into the Sixth Addendum had
they known how the other party would interpret that document.” Mutual
assent, however, is based on objective evidence, not the hidden intent of the

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parties. Johnson v. Earnhardt’s Gilbert Dodge, Inc., 212 Ariz. 381, 384 ¶ 11
(2006) (citation omitted).

¶45 TRL agreed during a deposition that Section 7, specifically the
sentence that states “Base Lot Release payments must be paid for all
planned and/or platted Density Units within the Development Agreement
Property . . . prior to the end of 2027,” was “objective.” TRL also agreed
during deposition that (1) the definition of “Base Lot Release payments”
was not altered by the Sixth Addendum and was defined in the 2010
Agreement, (2) “all planned and/or platted Density units” “catches all”
remaining property within the project and (3) “prior to the end of 2027” is
an objective time period.

¶46 Based on the record, TRL has shown no error in the superior
court rejecting its lack of mutual understanding argument.

D. The Superior Court Properly Rejected TRL’s Argument
That It Did Not Receive Adequate Consideration.

¶47 To be enforceable, a contract must be supported by
consideration. See Stevens/Leinweber/Sullens, Inc. v. Holm Dev. & Mgmt., Inc.,
165 Ariz. 25, 29 (App. 1990). Mutual promises are sufficient consideration;
they need not be of equal value, and a court does not inquire into their
adequacy on appeal. Nickerson v. Green Valley Recreation, Inc., 228 Ariz. 309,
321 ¶ 29 (App. 2011). “A written contract imports a consideration. The
burden of showing a lack or failure of consideration is upon the party
attacking it.” Dunlap v. Fort Mohave Farms, Inc. 89 Ariz. 387, 393 (1961)
(citations omitted).

¶48 In claiming there was inadequate consideration for the Sixth
Addendum, TRL argues that: (1) “[the] updated Junior Trust provisions
primarily benefited ICR,” (2) by creating changes to the Junior Trust
provisions, ICR gained a $4,500,000 incremental benefit and (3) the Sixth
Addendum’s revisions “did not constitute appropriate or separate
‘consideration’ for imposing an incremental $10,000,000 purchase
‘obligation’ on TRL.” TRL then concedes, however, that “[t]he Sixth
Addendum’s Junior Trust revisions benefited both parties.”

¶49 TRL cites no authority showing that consideration between
parties must be equal. Consideration is “a benefit to the promisor or a loss
or detriment to the promisee.” Fed. Rubber Co. v. Pruett, 55 Ariz. 76, 79
(1940). Along with TRL’s concession that both parties received benefits,
under the Sixth Addendum, TRL received (1) an extension of the option to
convert phases from 2019 to 2027 (§ 6); (2) the ability to satisfy its Annual

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 TALKING ROCK v. INSCRIPTION CANYON, et al.
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Performance Covenant by purchasing Un-Converted Phases (§ 3); and (3)
the ability to substitute guarantors (§ 7). On this record, TRL has failed to
show the superior court erred in concluding that adequate consideration
supported the Sixth Addendum.

VI. Attorneys’ Fees.

¶50 TRL and ICR each request their attorneys’ fees on appeal,
citing the 2010 Agreement, A.R.S. § 12-341.01, and ARCAP 21. Because TRL
is not a successful party, its request is denied. ICR, however, is the
successful party in this “contested action arising out of a contract.” A.R.S. §
12-341.01(A). ICR is therefore awarded its reasonable attorneys’ fees
incurred on appeal, as well as its taxable costs on appeal, contingent upon
its compliance with ARCAP 21.

CONCLUSION

¶51 The judgement is affirmed.

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

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