Finchem v. Fontes

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

MARK FINCHEM, Plaintiff/Appellant,

v.

ADRIAN FONTES, et al., Defendant/Appellee.

No. 1 CA-CV 23-0383
FILED 06-13-2024

Appeal from the Superior Court in Maricopa County
No. CV2022-053927
The Honorable Melissa Iyer Julian, Judge

AFFIRMED

COUNSEL

Wilenchik & Bartness, Phoenix
By Dennis I. Wilenchik
Counsel for Plaintiff/Appellant

Sherman and Howard, LLC, Phoenix
By Craig Alan Morgan, Shayna Stuart, Jake Tyler Rapp
Counsel for Defendant/Appellee Adrian P. Fontes

Arizona Attorney General’s Office, Phoenix
By Kara Karlson, Kyle R. Cummings, Karen J. Hartman-Tellez
Counsel for Defendant/Appellee Secretary of State
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MEMORANDUM DECISION

Presiding Judge Samuel A. Thumma delivered the decision of the Court, in
which Judge Michael J. Brown and Judge Andrew M. Jacobs joined.

T H U M M A, Judge:

¶1 Mark Finchem appeals from two awards of attorneys’ fees as
sanctions totaling $47,706.50 based on his filing of this election challenge
without substantial justification. Because Finchem has shown no error, the
sanctions are affirmed.

FACTS AND PROCEDURAL HISTORY

¶2 Finchem, the Republican Party nominee for Arizona Secretary
of State, lost the November 8, 2022, election by more than 120,000 votes. On
December 9, 2022, while represented by attorney Daniel J. McCauley III,
Finchem filed a Verified Statement of Election Contest (VSEC), challenging
that result and requesting a special election. Finchem’s amended VSEC
asserted (1) misconduct and (2) illegal votes. See Ariz. Rev. Stat. (A.R.S.) §
16-673 (2024).1 The amended VSEC named as contestees/defendants
Adrian Fontes, officeholder-elect, and Katie Hobbs, in her official capacity
as Arizona Secretary of State.

¶3 Defendants moved to dismiss, arguing the amended VSEC
failed to state a claim upon which relief could be granted. Fontes asked the
court to set a briefing schedule on attorneys’ fees and sanctions “or award
them if the Court believes the record already justifies doing so,” while
Hobbs reserved the right to seek attorneys’ fees as sanctions “under Rule
11 . . . and A.R.S. § 12-349.”

¶4 After oral argument, in a thirteen-page Rule 54(b) final
judgment entered in late December 2022, the court granted the motions to
dismiss. The judgment concluded that the amended VSEC “fail[ed] to state
a meritorious challenge,” “cannot sustain an election contest,” and that the
allegations are “not well-pled facts; they are legal conclusions
masquerading as alleged facts.” The judgment dismissed the amended

1 Absent material revisions after the relevant dates, statutes and rules cited

refer to the current version unless otherwise indicated.

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VSEC with prejudice, confirmed Fontes’ election “as Arizona Secretary of
State-Elect,” and allowed defendants 10 days to move for sanctions.

¶5 Finchem timely appealed the December 2022 judgment. That
appeal was stayed by agreement of the parties. In July 2023, Finchem filed
an unopposed motion to dismiss that appeal, noting that “[a]fter a series of
decisions in the Arizona appellate courts related to the 2022 statewide
election” in Arizona, “whose allegations more or less mirror Mr. Finchem’s,
Appellant has decided to forego the appeal of his election contest
dismissal.” This Court dismissed that appeal, making the December 2022
judgment dismissing the amended VSEC with prejudice final. City of
Phoenix v. Sanner, 54 Ariz. 363, 367 (1939) (“It is the universal rule that a
judgment duly rendered, which has become final, is not subject to collateral
attack, but may be questioned only in a direct proceeding of a proper
nature.”).

¶6 Meanwhile, in late December 2022, Fontes (joined by Hobbs)
moved for sanctions against Finchem and McCauley under A.R.S. § 12-349
and Ariz. R. Civ. P. 11. Among other things, defendants argued Finchem
and McCauley filed the case “either knowing the state of the law and
choosing to ignore it, or without having bothered to even minimally review
the applicable law.” They also argued that Finchem and McCauley filed the
case “without any justification, to harass the Defendants, undermine our
democratic processes, and delay the peaceful transition of power after an
otherwise valid and lawful election.”

¶7 After full briefing, the superior court issued a lengthy order
summarizing the claims and conduct by Finchem and McCauley,
addressing the factors listed in A.R.S. § 12-350, and concluding that they
filed the case “without substantial justification.” Hobbs sought $7,434 in
attorneys’ fees, while Fontes sought more than $67,000 in attorneys’ fees.
The court later awarded Hobbs $7,434 in fees as a sanction against
McCauley and awarded Fontes $40,272.50 in fees as a sanction against
Finchem, both under A.R.S. § 12-349. After denying Finchem’s motion for
reconsideration, in May 2023, the court entered a final judgment reflecting
those rulings. See Ariz. R. Civ. P. 54(c).

¶8 Finchem, while represented by McCauley, filed a timely
notice of appeal challenging the sanctions awarded in the May 2023
judgment. This court has jurisdiction over Finchem’s appeal pursuant to
Article 6, Section 9, of the Arizona Constitution and A.R.S. § 12-
120.21(A)(1).

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¶9 After this appeal was fully briefed, McCauley applied to
withdraw as counsel for Finchem, citing a conflict of interest based on State
Bar of Arizona disciplinary matters. The court granted McCauley’s
application and gave Finchem additional time to retain new counsel.
Dennis I. Wilenchik then timely filed a notice of appearance as counsel for
Finchem. Although Finchem was afforded an opportunity to withdraw or
amend the prior briefing, he did not do so. As noted below, however, at oral
argument before this court, Wilenchik withdrew many of the arguments
asserted in that prior briefing filed before he appeared as counsel for
Finchem.2

DISCUSSION

I. Finchem Has Waived Arguments He Seeks to Assert on Appeal.

¶10 Finchem’s appellate briefs fail to comply with applicable
procedural requirements. Both his opening and reply briefs fail to provide
“appropriate references to the record” for purported facts. ARCAP 13(a)(5).
Similarly, his opening brief seeks to re-argue whether laches barred his
claims and whether the election was properly managed. But those issues
were decided on the merits in the December 2022 judgment and cannot be
challenged here. City of Phoenix, 54 Ariz. at 367. By failing to properly
present these arguments, Finchem has waived the right to assert them.
Ritchie v. Krasner, 221 Ariz. 288, 305 ¶ 62 (App. 2009). Finchem also failed to
timely raise at least three of the six issues he attempts to argue on appeal.

¶11 Finchem first argues that “sanctions could not have [been]
awarded” had the superior court “taken the facts in the” amended VSEC
“as true” as required “with regard to a motion to dismiss.” This argument,
however, provides no grounds for reversal. This argument is based on the
court dismissing his claims with prejudice in the December 2022 judgment,
which is not subject to challenge here. City of Phoenix, 54 Ariz. at 367. To the
extent he argues the superior court was required to accept as true his
allegations in addressing sanctions, he has failed to provide any authority
supporting such a proposition. Finally, in awarding sanctions, the superior

2 McCauley has not sought to separately challenge the sanction against him

individually in favor of Hobbs. Similarly, there has been no request or
suggestion that a “culprit hearing” -- to determine the relative
responsibility of a party, a party’s attorney or both for sanctionable conduct
-- was required. See Estate of Brady v. Tempe Life Care Village, Inc., 254 Ariz.
122, 127 ¶ 20 n.3 (App. 2022) (citing Marquez v. Ortega, 231 Ariz. 437, 444 ¶¶
25-28 (App. 2013)).

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court noted that “[n]one of” the amended VSEC’s “allegations, even if true,
would have changed the vote count enough to overcome the 120,000 votes
[Finchem] needed to affect the result of this election.” This argument about
how the superior court addressed Finchem’s allegations provides no basis
to conclude the court erred in awarding sanctions.

¶12 Finchem next argues that a candidate has “a free speech right
to object to a chaotic and mismanaged election.” Finchem waived any such
argument in two different respects. Although listing this as an issue
presented on appeal, Finchem fails to develop it in his brief, meaning it is
waived. See MacMillan v. Schwartz, 226 Ariz. 584, 591 ¶ 33 (App. 2011)
(“Merely mentioning an argument in an appellate opening brief is
insufficient.”). Finchem also failed to raise this argument in the superior
court, waiving it there as well. See Louis C. v. Dep’t of Child Safety, 237 Ariz.
484, 489 ¶ 20 (App. 2015) (“[This court] generally [does] not consider issues,
even constitutional issues, raised for the first time on appeal.”) (citations
omitted); accord Orfaly v. Tucson Symphony Soc’y, 209 Ariz. 260, 265 ¶ 15
(App. 2004) (similar). And while Finchem is correct that he has a First
Amendment right to speak out against chaotic and mismanaged elections,
he has no right to file claims without substantial justification. Accord Bill
Johnson’s Restaurants, Inc. v. NLRB, 461 U.S. 731, 743 (1983) (“Just as false
statements are not immunized by the First Amendment right to freedom of
speech, baseless litigation is not immunized by the First Amendment right
to petition.”) (internal citations omitted).

¶13 Finally, Finchem argues that the superior court “abuse[d] its
discretion when it validated the certification document despite the fact the
signature did not comply with the requirements of the legislature in Title
16 or the federal election laws.” Again, Finchem’s opportunity to challenge
that determination was in his appeal from the December 2022 judgment.
However, he voluntarily dismissed that appeal, making it final and placing
it beyond challenge here. City of Phoenix, 54 Ariz. at 367. Even if this
argument was not barred, Finchem waived it by failing to raise it in
superior court. See Louis C., 237 Ariz. at ¶ 20; Orfaly, 209 Ariz. at 265 ¶ 15.

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II. A.R.S. § 12-349 Authorizes Sanctions in an Election Contest.

¶14 Briefs filed on behalf of Finchem by McCauley argued that
sanctions can never be imposed in election contests and that “the Arizona
Rules of Civil Procedure do not apply to election contests.” At oral
argument before this court, however, Wilenchik withdrew those
arguments. Accordingly, the court addresses Finchem’s remaining
arguments regarding the sanction award.

¶15 Sanctions in the form of attorneys’ fees were awarded under
A.R.S. § 12-349. Given the sanction award here, in applicable part, that
statute states:

Except as otherwise provided by and not
inconsistent with another statute, in any civil
action commenced or appealed in a court of
record in this state, the court shall assess
reasonable attorney fees, expenses and, at the
court’s discretion, double damages of not to
exceed five thousand dollars against an
attorney or party, including this state and
political subdivisions of this state, if the
attorney or party does any of the following:

1. Brings or defends a claim without
substantial justification.

A.R.S. § 12-349(A)(1) (emphasis added). A.R.S. § 12-349(A) broadly applies,
by its own terms, to “any civil action” filed in superior court, a court of
record, Arizona Constitution Article VI § 30, including election actions.

III. Finchem Has Shown No Error in the Superior Court Imposing
Sanctions Under A.R.S. § 12-349.

¶16 For sanctions to be proper under A.R.S. § 12-349(A)(1),
defendants had to show by a preponderance of the evidence that the
election contest was brought without substantial justification. See Phx.
Newspapers, Inc. v. Dep’t of Corr., 188 Ariz. 237, 244 (App. 1997) (construing
prior version of A.R.S. § 12-349). This court reviews the evidence in a light
most favorable to sustaining the sanction award, affirming unless the
superior court’s findings are clearly erroneous. Id. at 243-44. The superior
court found the election contest was filed “without substantial justification”
by measuring the facts against the requirements of A.R.S. § 12-349 and

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applying the factors in A.R.S. § 12-350. Finchem challenges the court’s
analysis and conclusion on various grounds, addressed separately here.

A. The Superior Court Was Not Required to Find that Finchem
Acted with “Harassing Intent.”

¶17 Finchem argues sanctions were improper absent “a showing
of harassing intent,” adding the superior court did not “find[] that Mr.
Finchem intended to file a meritless lawsuit for the purpose of harassing
Hobbs or Fontes.” Intent, however, is not required for sanctions under
A.R.S. § 12-349 and is not a factor listed in A.R.S. § 12-350. Moreover, a
dozen years ago, “harassment” was removed from the definition of
“without substantial justification” under A.R.S. § 12-349. See 2012 Ariz.
Sess. Laws, ch. 305, § 2. Thus, Finchem’s argument based on a lack of intent
(harassing or otherwise) is misplaced. Instead, by statute, “‘without
substantial justification’ means that the claim or defense is groundless and
is not made in good faith.” A.R.S. § 12-349(F).

B. The Superior Court Did Not Err in Finding Finchem’s
Claims Were Groundless.

¶18 Whether a claim is groundless under A.R.S. § 12-349 is an
objective determination. Rogone v. Correia, 236 Ariz. 43, 50 ¶ 22 (App. 2014).
A claim is groundless if the proponent is unable to present any rational
argument, based on the law or the evidence, supporting the claim. Id.
(quoting Evergreen W., Inc. v. Boyd, 167 Ariz. 614, 621 (App. 1991)).

¶19 In finding Finchem’s claims were groundless, the superior
court properly noted sanctions in election cases are, and should be, rare,
given “the potential chilling effect a sanctions award may have on
legitimate challenges in the future.” With that starting point, however, the
court then looked at the record and concluded Finchem’s claims were
groundless.

¶20 After summarizing the allegations in the amended VSEC, the
superior court concluded that none of the alleged “misconduct presented a
‘fairly debatable’ election challenge as Finchem did not and could not allege
that any of these acts rendered uncertain the outcome of an election he lost
by over 120,000 votes.” Finchem has not shown that was wrong. Instead,
for the first time in his reply brief on appeal, Finchem argues that the
amended VSEC “specifically called into question more than 261,000 votes.”
By first pressing that argument in his reply brief on appeal, it is waived. See
State v. Guytan, 192 Ariz. 514, 519 ¶ 15 (App. 1998). Waiver aside, the
argument is not supported. Nowhere does the amended VSEC assert that

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261,000 votes were missing or cast illegally, instead addressing 60,000 votes
in Maricopa County and 20,000 votes in Pima County – a total of 80,000.
That number is still 40,000 votes less than what Finchem would have
needed to challenge the results of an election he lost by more than 120,000
votes.

¶21 At oral argument before this court, Finchem continued to
assert that “he did not just allege, as the court held, . . . that there were 80,000
votes [] he was contesting,” arguing that post-filing “newly discovered
evidence was presented at the time of the sanction.” Finchem also argued
that his motion to reconsider “brought forth evidence” that the court did
not properly consider showing “for the purposes of sanctions another . . .
290,000 [votes] through a failure to follow the chain of custody . . . and
another 300,000 signature verification issues.” Claimed post-filing
evidence, however, is not dispositive; the question is whether Finchem
brought his claim without substantial justification. See A.R.S. § 12-349(A)(1)
(authorizing, as applicable here, sanctions “if the attorney or party . . .
[b]rings . . . a claim without substantial justification.”). Nor was the superior
court required to consider evidence first presented in a motion to
reconsider. See Brookover v. Roberts Enters., Inc., 215 Ariz. 52, 57 ¶ 17 n.2
(App. 2007). Finchem has not cited, nor has this court found, any authority
requiring the superior court, when applying A.R.S. § 12-349, to accept as
true factual allegations in a pleading, which would appear to be antithetical
to A.R.S. § 12-349. Thus, the superior court did not err in failing to consider
or analyze new evidence attached to Finchem’s motion for reconsideration.

¶22 The superior court also found that Finchem failed to articulate
“how voting software caused illegal votes to be cast.” He alleged no specific
evidence as to how the machines malfunctioned or how the malfunctions
changed the outcome. Specifically, the court found, Finchem “offered no
tether” between the alleged voting “machine malfunctions and the outcome
of the election he challenged here.” On this record, Finchem has not shown
that the superior court erred in finding his claims were groundless.

C. The Superior Court Did Not Err in Finding Finchem’s
Election Contest Was Not Filed in Good Faith.

¶23 The superior court found that Finchem filed this case
“without substantial justification” under A.R.S. § 12-349(A)(1). As
applicable here, that statute declares that “’without substantial justification’
means that the claim . . . is groundless and is not made in good faith.” A.R.S.
§ 12-349(F). The Arizona Supreme Court recently clarified that assessing
whether a claim is not made in good faith under this statute is an objective

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inquiry. See Arizona Republican Party v. Richer, 547 P.3d 356, 368 ¶ 40 (Ariz.
2024) (“Courts should evaluate the absence of good faith under § 12-
349(A)(1) objectively – consistent with the Arizona Rule of Civil Procedure
11 standard – which ‘is not based on whether an attorney subjectively
pursues claims in good faith, but instead is judged on an objective standard
of what a professional, competent attorney would do in similar
circumstances.’”) (citation omitted). “A claim is ‘not made in good faith’ if
(1) it is groundless and (2) the party or attorney knows or should know that
it is groundless, or is indifferent to its groundlessness, but pursues it
anyway.” Id. at 367 ¶ 38.

¶24 The superior court found that Finchem’s claim was not made
in good faith because: (1) the amended VSEC challenged 80,000 votes, far
less than the than 120,000 margin of the election; (2) the amended VSEC
made demonstrably false assertions; (3) “the decision to pursue his claims
without regard to contrary evidence strongly suggests that this election
contest was not motivated by a sincere belief that the error alleged affected
the election result;” (4) McCauley failed to “conduct a reasonable
investigation to determine whether and to what extent viable challenges to
the election could be asserted on Finchem’s behalf;” (5) the amended VSEC
ignored “Arizona cases establishing that an election contest requires not
only alleged acts of misconduct, but also evidence that the misconduct or
irregularities complained of rendered the outcome of the election
uncertain;” and (6) McCauley personally told the superior court during oral
argument that he knew the filing lacked merit, stating he was “less at risk
of being disbarred as a result of the filing given his impending retirement.”3

¶25 Although Finchem broadly argues his challenge was not filed
in bad faith, he does not challenge any of the specific findings supporting a
conclusion that he failed to act in good faith. Nor does he claim that any
finding was clearly erroneous, based on the record presented. Finchem has
not shown that the superior court erred in finding his claims were not filed
in good faith.

D. The Superior Court Did Not Err in Imposing the Specific
Sanctions Finchem Challenges.

¶26 The superior court made detailed findings addressing the
A.R.S. § 12-350 factors and Finchem does not argue that the court failed to

3 Given that the parties did not provide a transcript of that oral argument,

this court presumes the transcript would support the superior court’s
ruling. See Cullison v. City of Peoria, 120 Ariz. 165, 168 n.2 (1978).

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properly apply that statute. Nor does Finchem claim that the amount of
sanctions imposed was excessive. In imposing sanctions, the superior court
significantly reduced the fees requested by Fontes. On this record, the
superior court did not err in awarding Hobbs $7,434 in attorneys’ fees as a
sanction against McCauley and awarding Fontes $40,272.50 as a sanction
against Finchem, both pursuant to A.R.S. § 12-349, with interest accruing at
9.25 percent until paid. See Bennett v. Baxter Group, Inc., 223 Ariz. 414, 422
¶¶ 31-32, 35 (App. 2010) (finding that, after viewing the evidence in a
manner most favorable to sustaining the award, the superior court
reasonably could have found record-supported sanctions under A.R.S. § 12-
349).

IV. Sanctions on Appeal.

¶27 Fontes’ answering brief seeks sanctions on appeal against
Finchem and McCauley under ARCAP 25 and A.R.S. § 12-349. Finchem’s
reply brief does not address, or dispute, the request. Setting aside the
standards for sanctions under ARCAP 25, the record shows that Finchem’s
appeal was “without substantial justification” and “unreasonably expands
or delays the proceeding.” A.R.S. § 12-349(A)(1) & (3). While the “statute
refers only to the bringing of a claim, thus implying that a party’s conduct
in maintaining the action is immune from sanction . . . the statute is most
reasonably construed to also apply to attorneys or parties who maintain
sanctionable claims.” Richer, 547 P.3d at 368 ¶ 41.

¶28 Looking at the factors specified in A.R.S. § 12-350, Finchem’s
appeal: (1) sought to challenge the December 2022 judgment, which was
final and beyond challenge long before this appeal was taken; (2) miscited
authority for propositions that were never supported or have changed
given statutory amendment; (3) sought to extend (and expand) the
arguments being asserted and failed to account for arguments that were not
valid, not factually supported or reasonably applicable; and (4) did not
prevail and resulted in the superior court’s sanction decision being affirmed
in its entirety. See A.R.S. § 12-350 (1), (2), (3), (6), (7) & (8). To be sure, the
relevant financial positions of the parties and whether this appeal was taken
in bad faith (contrast to whether this case was not filed in good faith) are
unclear based on the record presented. See A.R.S. § 12-350(4) & (5). Having
considered all these factors, however, the court concludes that sanctions, in
the form of a portion of Fontes’ reasonable fees incurred on appeal, are

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appropriate under A.R.S. § 12-349(A)(3).4 Accordingly, Fontes is awarded a
portion of his reasonable attorneys’ fees incurred on appeal, as well as any
taxable costs incurred on appeal, contingent on compliance with ARCAP
21.

CONCLUSION

¶29 The judgment is affirmed.

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

4 Because this court has determined that sanctions are appropriate under

A.R.S. § 12-349(A)(3), it need not address whether sanctions would be
appropriate under A.R.S. § 12-349(A)(1) or ARCAP 25.

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