Fleming v. Fripps

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

THERON I. FLEMING, Plaintiff/Appellee/Cross-Appellant,

v.

FRIPPS MOHAVE LAND, LLC, Defendant/Appellant/Cross-Appellee

No. 1 CA-CV 23-0022
FILED 11-2-2023

Appeal from the Superior Court in Mohave County
No. S8015CV202100708
The Honorable Lee Frank Jantzen, Judge

APPEAL DISMISSED IN PART;
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

COUNSEL

Law Offices of Frederick E. Kearns, Kingman
By Frederick E. Kearns
Counsel for Plaintiff/Appellee/Cross-Appellant

The Kozub Law Group, PLC, Scottsdale
By Richard W. Hundley
Counsel for Defendant/Appellant/Cross-Appellee
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MEMORANDUM DECISION

Judge Kent E. Cattani delivered the decision of the Court, in which
Presiding Judge Jennifer B. Campbell and Judge Anni Hill Foster joined.

C A T T A N I, Judge:

¶1 Fripps Mohave Land, LLC (“Land”) appeals the superior
court’s judgment against it on several contract claims brought by Theron I.
Fleming. Fleming cross-appeals from the judgment against him on his
claims for fraud. For reasons that follow, we dismiss the cross-appeal as it
relates to any defendants other than Land. We reverse the judgment
entered against Land, and affirm the superior court’s ruling rejecting
Fleming’s fraud claims.

FACTS AND PROCEDURAL BACKGROUND

¶2 George Ripps is a home builder and land developer in
Mohave County. He is the manager and a member of Fripps Mohave
Construction, LLC (“Construction”), which builds homes; a manager and a
member of Land, which owns land; and a manager of RIPPCO, LLC, which
owns lots in a particular area.

¶3 Fleming loaned $40,000 to Ripps and Construction in 2016,
then another $40,000 in 2018. The parties did not initially execute
promissory notes, but Ripps provided Fleming a series of deeds of trust as
security. None of the deeds of trust were notarized as required by law. And
although the deeds of trust were signed by Ripps and listed Construction
as trustor, they purported to encumber property owned by either Land (the
first three deeds of trust) or RIPPCO (the fourth unreleased deed of trust).

¶4 Additionally, in 2018, Construction and Ripps executed a
promissory note in favor of Fleming for approximately $9,300 for work
performed by Fleming. Later, in 2019, at Fleming’s insistence, Ripps and
Construction executed promissory notes (prepared by Fleming’s counsel
and backdated to the dates of the loans) evidencing the two $40,000 loans.

¶5 When Ripps and Construction failed to pay on the loans,
Fleming sued. Fleming’s operative complaint against Ripps (and his
marital community), Construction, RIPPCO, and Land (collectively,
“Defendants”) alleged ten unjust enrichment-type claims, three breach of

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contract claims (one for each promissory note), and three fraud claims
(premised on defects in the deeds of trust), each asserted against all
Defendants. The Defendants moved for partial summary judgment,
requesting dismissal of (1) all unjust enrichment-type claims as to all
Defendants, (2) all fraud claims as to all Defendants, and (3) all claims
against Land and RIPPCO. At oral argument on the motion, Fleming
agreed to dismiss the unjust enrichment-type claims in their entirety and to
dismiss the contract claims as to Land and RIPPCO. The court ultimately
ruled consistently with Fleming’s concession, dismissing the unjust
enrichment-type claims and limiting the contract claims to those against
Ripps and Construction only (not against Land and RIPPCO, who were not
parties to the contracts). The court denied summary judgment on the fraud
claims. This ruling left only the contract claims on each note (against Ripps
and Construction) and the fraud claims (against all Defendants) for trial.

¶6 Ripps, Fleming, and two other witnesses involved with
Ripps’s business dealings testified at the bench trial that followed.
Although the Defendants contested the fraud claims, they conceded that
Fleming was entitled to judgment on the notes against Ripps and
Construction.

¶7 The superior court found Ripps (and his marital community)
and Construction liable on the debts evidenced by the three promissory
notes—and the court also held Land liable on the notes. The court noted
that Land was the owner of the three pieces of property that were “subject
to the loans” when Construction issued the deeds of trust. Citing Ripps’s
testimony that, because he owned both companies, his practice was to issue
deeds of trust in Construction’s name even when Land owned the property
to be encumbered, the court reasoned that Land should also be held
responsible for repaying the loans given Ripps’s “unusual process.”

¶8 The court ruled against Fleming on his fraud claims. The
court acknowledged substantial evidence that Ripps routinely issued
unnotarized (and thus technically unenforceable) deeds of trust in the name
of a company that did not own the land to be encumbered, which the court
characterized as “strange and disconcerting.” But the court concluded that
“[f]raud requires more than just doing things wrong, even knowingly” and
specifically flagged the additional elements of “intent to deceive, . . .
reliance on the deception and, ultimately, some loss or damages because of
the deception.” After noting that Ripps did not attempt to use the flaws in
the deeds of trust to avoid the debt when confronted by Fleming, the court
found no fraud “based on the lack of loss of money.”

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¶9 The superior court also awarded Fleming attorney’s fees and
costs against all Defendants found liable on the notes. After the court
entered final judgment, Land appealed and Fleming cross-appealed.

DISCUSSION

I. Appellate Jurisdiction.

¶10 Preliminarily, Land asserts—and Fleming appears to agree—
that we have appellate jurisdiction over Fleming’s cross-appeal only as to
Land, not any other Defendant. By statute, we have appellate jurisdiction
over appeals taken from the superior court’s final judgment. A.R.S. § 12-
2101(A)(1). An appellant must file a notice of appeal “no later than 30 days”
after judgment is entered. ARCAP 9(a). An opposing party may file a
notice of cross-appeal within the later of “20 days after appellant’s filing of
a notice of appeal, or 30 days after entry of the judgment.” ARCAP 9(b).
But a timely cross-appeal filed more than 30 days after judgment may only
be directed against the appellant, not other parties that opted not to appeal.
Maxwell v. Aetna Life Ins. Co., 128 Ariz. 350, 352–53 (App. 1981). We lack
jurisdiction to consider untimely appeals. See ARCAP 9(a); Edwards v.
Young, 107 Ariz. 283, 284 (1971); Focal Point, Inc. v. U-Haul Co. of Ariz., 155
Ariz. 318, 319 n.1 (App. 1986) (untimely cross-appeal).

¶11 Here, Land (but no other Defendant) filed its notice of appeal
27 days after the superior court entered final judgment. Fleming filed his
notice of cross-appeal naming all Defendants (not just Land) 19 days after
Land’s notice, but 46 days after judgment was entered. Land’s appeal was
timely under ARCAP 9(a), and Fleming’s cross-appeal was timely as to
Land under ARCAP 9(b). But because Fleming’s cross-appeal was filed
more than 30 days after judgment, we only have jurisdiction over the cross-
appeal as it relates to Land and not as to the other Defendants. See Maxwell,
128 Ariz. at 352–53. Although Fleming asserts that we should consider his
cross-appeal as to all Defendants because all are necessary parties and all
are represented by the same attorney (and thus received contemporaneous
notice of his cross-appeal), he provides no legal authority authorizing our
jurisdiction despite an untimely appeal.

¶12 Accordingly, we have jurisdiction over Land’s appeal and
Fleming’s cross-appeal as to Land under A.R.S. § 12-2101(A)(1). We lack
jurisdiction over Fleming’s cross-appeal as to the other Defendants and
thus dismiss the cross-appeal to that extent.

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II. Land’s Appeal.

¶13 Land argues that, having dismissed the contract (and all other
non-fraud) claims as against Land and having found no fraud, the superior
court erred by holding Land liable on the promissory notes. On review
after a bench trial, we defer to the superior court’s factual findings unless
clearly erroneous and will affirm provided reasonable evidence supports
the judgment. Spaulding v. Pouliot, 218 Ariz. 196, 199, ¶ 8 (App. 2008). We
review de novo, however, any questions of law, including the court’s legal
conclusions based on its findings of fact. Castro v. Ballesteros-Suarez, 222
Ariz. 48, 52, ¶ 12 (App. 2009).

¶14 Before trial, and with Fleming’s agreement, the superior court
granted Land summary judgment on Fleming’s contract claims for the debt
evidenced by the promissory notes because Land was not a party to the
notes, as well as on Fleming’s unjust enrichment-type claims. In its ruling
after trial, however, the court found Land “also responsible for the unpaid
loans” because of Ripps’s “unusual process” of extending deeds of trust in
Construction’s name but applicable to property owned by Land.

¶15 Land, however, is a separate entity. The court acknowledged
as much before trial when granting Land summary judgment on the
contract claims as one of the “nonparties that are not parties to the
Contract.” Although there are legal theories under which one party’s
liability may be attributed to a third party, Fleming never pursued any such
theory in superior court. As Land points out, Fleming never raised theories
such as alter ego, corporate veil-piercing, or successor liability to extend
liability beyond the parties to the notes. See generally Dietel v. Day, 16 Ariz.
App. 206 (1972) (discussing alter ego and corporate veil-piercing); A.R.
Teeters & Assocs., Inc. v. Eastman Kodak Co., 172 Ariz. 324, 329–30 (App. 1992)
(discussing successor liability in Arizona).

¶16 Fleming—for the first time in his cross-reply brief—asserts
that Land may be liable as an intended beneficiary of the contracts. But he
waived any such argument by (1) abandoning any unjust enrichment-type
claim premised on Land receiving the loan proceeds before trial, (2)
presenting no such evidence at trial, and (3) failing to raise the argument
until his reply brief on appeal. See Englert v. Carondelet Health Network, 199
Ariz. 21, 26, ¶ 13 (App. 2000); Dawson v. Withycombe, 216 Ariz. 84, 111, ¶ 91
(App. 2007); see also ARCAP 13(c). And although Fleming urges that
judgment against Land was proper because Construction is judgment-
proof, he offers no legal basis for extending liability to a separate entity
merely because a wrongdoer lacks sufficient assets to satisfy a judgment.

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Ultimately, although Fleming has secured a judgment against Ripps, that
judgment does not extend to other entities Ripps owns.

¶17 At trial, the only claims remaining against Land were for
alleged fraud, and the superior court ruled against Fleming on those claims.
Absent a viable legal basis to extend liability to Land, the superior court
erred by holding Land responsible for repayment of Construction’s and
Ripps’s debts evidenced by Construction’s and Ripps’s promissory notes.
Accordingly, we reverse the judgment as against Land (necessarily
including Land’s liability for the attorney’s fees award as well) and remand
for entry of judgment consistent with this decision.

III. Fleming’s Cross-Appeal.

¶18 Fleming cross-appeals the superior court’s finding that he
failed to prove fraud, asserting that the court erred in evaluating both the
law and the facts. He further argues that the court erred in various
discovery and evidentiary rulings and other matters. As described above,
our review is limited to Fleming’s arguments as to Land only. See supra ¶¶
10–12.

A. Fraud as against Land.

¶19 In ruling on Fleming’s fraud claims after the bench trial, the
superior court found Fleming had proven (and Ripps had acknowledged)
Ripps’s “incorrect practices” in routinely issuing unnotarized deeds of trust
in the name of a company that did not own the land to be encumbered. But
the court found that proof of this wrongful conduct did not suffice to prove
fraud absent “some intent to deceive, some reliance on the deception and,
ultimately, some loss or damages because of the deception.” Noting that
Ripps did not attempt to use the flawed deeds of trust to avoid the debt
when pressed by Fleming, as well as Ripps’s testimony that he did not
know the practices were wrong, the court found no fraud “based on the
lack of loss of money.” In this context, we review de novo the court’s legal
conclusions and any other questions of law. Castro, 222 Ariz. at 52, ¶ 12.
We defer to the superior court’s factual findings provided substantial
evidence supports them, even in the face of substantial conflicting evidence.
Id. at 51–52, ¶ 11.

¶20 Fleming asserts the superior court “recognize[d] the fraud
was there” but erroneously ruled against him based solely on “the lack of
loss of money,” instead of considering loss of expected security as
cognizable damages. As Fleming acknowledges, a fraud claim requires
proof, by clear and convincing evidence, of nine elements:

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(1) a representation; (2) its falsity; (3) its materiality; (4) the
speaker’s knowledge of its falsity or ignorance of its truth; (5)
the speaker’s intent that it be acted upon by the recipient in
the manner reasonably contemplated; (6) the hearer’s
ignorance of its falsity; (7) the hearer’s reliance on its truth; (8)
the right to rely on it; (9) his consequent and proximate injury.

Echols v. Beauty Built Homes, 132 Ariz. 498, 500 (1982); see also Comerica Bank
v. Mahmoodi, 224 Ariz. 289, 291–92, ¶ 14 (App. 2010). The “consequent and
proximate injury” element requires proof of some pecuniary loss. Echols,
132 Ariz. at 501; see also Aaron v. Fromkin, 196 Ariz. 224, 227, ¶ 13 (App.
2000).

¶21 Although Fleming argues the superior court erred by
requiring proof of monetary loss, damages are a required element of a fraud
claim. Echols, 132 Ariz. at 501. Even if a detrimental change in position (like
loss of a security interest) could, in principle, be the basis for the measure
of damages, such harm must nevertheless be proven. And here, Fleming’s
only claim for actual damages due to alleged fraud was the amount owed
under the notes, not some undefined measure of lost priority in collateral.
Fleming’s counsel confirmed as much at trial when asked to describe the
damages sought for fraud: “The damages are simple, because the damage
is he didn’t pay what [Fleming] was owed.”

¶22 Moreover, the superior court’s ruling is not as narrow as
Fleming posits. Although the court concluded that Fleming failed to prove
damages, the court further noted that Fleming had not proved “some intent
to deceive, some reliance on the deception.” The record supports this
assessment. Ripps testified he thought his practice in issuing deeds of trust
was viable, and, when Fleming questioned that practice, Ripps agreed to
retroactively enter promissory notes evidencing the debts and offered to
correct the defective deeds of trust. Although Fleming initially testified that
he relied on Ripps’s experience with deeds of trust, he later admitted he did
not rely on the contents of the notes (entered retroactively in 2019) when
extending the loans in 2016 and 2018.

¶23 Furthermore, none of that evidence implicated Land
specifically (as opposed to Ripps, or Ripps acting on behalf of
Construction), and only Fleming’s claims as to Land are properly before us.
See supra ¶¶ 10–12. Fleming now asserts Ripps was acting in his capacity
as manager of Land, see A.R.S. § 29-3301(B)(2)–(3), or that Land and Ripps
were acting in concert, rendering Land liable for Ripps’s fraud. But Fleming
did not timely appeal the judgment as to Ripps, so the court’s ruling that

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Ripps was not liable for fraud remains in effect. Fleming thus cannot rely
on Ripps’s (non-existent) liability for fraud as a basis to hold Land liable.
And although the parties did not dispute that Ripps was a manager of Land
(as well as several other entities), Fleming did not present evidence that
Ripps acted on behalf of Land—as opposed to on behalf of Construction,
the actual signatory of the notes.

¶24 Fleming further argues that the court erred by declining to
award him punitive damages. But punitive damages may be awarded only
if a plaintiff proves fraud, including actual damages. Echols, 132 Ariz. at
501; Edmond v. Fairfield Sunrise Vill., Inc., 132 Ariz. 142, 144 (App. 1982).
Accordingly, because Fleming did not prove fraud, his claim for punitive
damages likewise fails.

B. Other Arguments.

¶25 Fleming asserts several other claims of error that lie beyond
the proper scope of the cross-appeal. First, Fleming urges that the superior
court erred by denying his request for production—directed only to Ripps
and Construction, not Land—seeking bank records to trace the loan funds.
Because this argument does not implicate Land, it falls beyond our
jurisdiction over the cross-appeal.

¶26 Second, Fleming contends the superior court erred by
precluding several witnesses he proffered who had personal experience
with Ripps’s practice (issuing unnotarized deeds of trust naming
Construction but purporting to encumber properties owned by a different
entity), testimony that he urges should have been admissible as other-act
evidence. See Ariz. R. Evid. 404(b). But the court permitted Fleming to
present testimony from two of these witnesses, and the court may
permissibly preclude cumulative evidence. See Ariz. R. Evid. 403; see also
Lee v. Hodge, 180 Ariz. 97, 100 (1994) (incorporating Rule 403 balancing in
Rule 404(b) analysis). In any event, the proffered testimony would have
addressed Ripps’s business practices, but not any actions by or for Land.
Accordingly, this argument, too, falls beyond the limited scope of Fleming’s
cross-appeal.

¶27 Finally, in an apparent rejoinder to an argument pressed by
Ripps and Construction before the superior court, Fleming asserts that
Ripps cannot escape his fraudulent conduct by relying on A.R.S. § 33-411(c)
(2019), which cures a deed of trust’s defective acknowledgement after it is
recorded for one year. But again, this argument is directed to Ripps’s
conduct and deeds of trust in Construction’s name. Because it does not

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implicate the claims as against Land, it falls outside the scope of the cross-
appeal.

IV. Attorney’s Fees.

¶28 Land requests attorney’s fees and costs on appeal pursuant to
A.R.S. § 12-341.01. Fleming also requests attorney’s fees and costs on appeal
under A.R.S. §§ 12-341 and -341.01.

¶29 We must award taxable costs to “[t]he successful party to a
civil action” under A.R.S. § 12-341, and we have discretion to award
attorney’s fees to the successful party in a contested matter arising out of
contract. A.R.S. § 12-341.01. Because Land is the successful party on appeal,
we award Land its costs upon compliance with ARCAP 21.

¶30 Fleming contends that Land is not entitled to attorney’s fees
under § 12-341.01 because Land denied being a party to the contract at issue.
Although we may not award fees whenever a case simply involves a
contract, Dooley v. O’Brien, 226 Ariz. 149, 152, ¶ 11 (App. 2010), we “look to
the fundamental nature of the action” to determine whether an action arises
out of contract. Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10,
15, ¶ 27 (App. 2000). And where a breached duty would not exist “but for”
the contract, then breach of express covenants or those implied from them
sounds in contract. Barmat v. John and Jane Doe Partners A–D, 155 Ariz. 519,
523 (1987).

¶31 Fleming cites no authority supporting his assertion that Land
should be precluded from recovering attorney’s fees under A.R.S. § 12-
341.01(A) because it denies being a party to the contracts—here, deeds of
trust and promissory notes. More importantly, this case does not simply
involve a contract. Rather, Fleming asserted that he entered into these
contracts because he relied on defendants’ misrepresentations. Thus,
Fleming’s fraud claims would not exist but for the deeds of trust. See
McAlister v. Citibank, 171 Ariz. 207 (App. 1992) (holding that a case arose
out of contract under § 12-341.01 where a party alleged fraud claims
resulting from a breach of contract to loan money). Therefore, we award
Land attorney’s fees under § 12-341.01(A).

¶32 Finally, Ripps (and his marital community), Construction,
and RIPPCO seek to recover attorney’s fees and costs under A.R.S. §§ 12-
341 and -341.01 for Fleming’s attempt to include them in his cross-appeal.
Because the cross-appeal as to these defendants was untimely, we also grant
their request for attorney’s fees and costs.

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CONCLUSION

¶33 We affirm the superior court’s finding of no fraud. We
reverse, however, the superior court’s judgment against Land and remand
for further proceedings consistent with this decision.

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

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