Brown v. Arizona Natures

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

ROBERT BROWN,
Plaintiff/Appellee/Cross-Appellant,

v.

ARIZONA NATURES WELLNESS, et al.,
Defendants/Appellants/Cross-Appellees

No. 1 CA-CV 23-0524

FILED 09-19-2024

Appeal from the Superior Court in Maricopa County
No. CV2016-007874
The Honorable Bradley H. Astrowsky, Judge

AFFIRMED AS MODIFIED

COUNSEL

Barrett & Matura, P.C., Scottsdale
By Jeffrey C. Matura, Melissa J. England, John J. Daller
Counsel for Defendants/Appellants/Cross-Appellees

Jennings Haug Keleher McLeod Waterfall, LLP, Tucson
By Corey B. Larson
Counsel for Plaintiff/Appellee/Cross-Appellant
 BROWN v. ARIZONA NATURES, et al.
Decision of the Court

MEMORANDUM DECISION

Judge Samuel A. Thumma delivered the decision of the Court, in which
Presiding Judge Maria Elena Cruz and Judge Andrew M. Jacobs joined.

T H U M M A, Judge:

¶1 In this fraudulent transfer and unjust enrichment action,
defendant Arizona Natures Wellness (ANW) challenges the superior
court’s denial of its motions for judgment as a matter of law and for new
trial. ANW also challenges an award of attorneys’ fees to plaintiff Robert
Brown. For the reasons below, the judgment is affirmed as modified.

FACTS AND PROCEDURAL HISTORY

¶2 ANW was issued a license to operate a dispensary under
Arizona’s Medical Marijuana Act (AMMA). See Ariz. Rev. Stat. (A.R.S.) §§
36-2801 to -2822 (2024).1 ANW’s license is not transferrable and ANW has
no shares that can be sold or transferred. The AMMA requires a dispensary
to “be operated on a not-for-profit basis,” A.R.S. § 36-2806(A), meaning
ANW’s earnings are not distributed to members, directors or officers. See
Kromko v. Ariz. Bd. of Regents, 149 Ariz. 319, 321 (1986). Given these
limitations, it is common for a dispensary license-holder to enter into a
services agreement with a management company that, for a fee, handles all
aspects of a dispensary’s marijuana business.

¶3 In and after 2013, ANW was operating a retail medical-
marijuana dispensary in Phoenix through a services agreement with Tier
Management, LLC. The ANW services agreement was Tier’s primary asset.
In January 2013, Medpoint Management, LLC, purchased Tier. In that
transaction, “Medpoint essentially purchased management control of
ANW and the revenue stream from ANW’s management fee became
payable to Medpoint.” By August 2013, the ANW dispensary was operated
under the “Bloom” brand name as a fully integrated medical marijuana
business.

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

refer to the current version unless otherwise indicated.

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¶4 In August 2013, Brown loaned Medpoint $100,000. The Brown
Loan was for 12-months, with a 23 percent interest rate. The Brown Loan
agreement stated that Medpoint was providing management services for
ANW. It is undisputed that Brown has not received repayment of any
principal or interest for the Brown Loan,2 which resulted in this litigation.

¶5 In December 2013, Medpoint and ANW entered into a
services agreement, superseding the Tier services agreement. The fee ANW
paid Medpoint under this agreement was “Medpoint’s principal or sole
source of revenue.”

¶6 Other individuals and entities became involved at different
points of time. Among them, Bloom Master Fund I, LLC (BMF) was formed
in 2013. At some point, Future Health Group, LLC, a Nevada limited
liability company, was formed and became the manager of BMF.

¶7 In May 2014, ANW terminated the Medpoint services
agreement. A few days later, BMF acquired some of Medpoint’s assets but
none of its liabilities. Medpoint then transferred something called Infinite
Bloom, which employed Medpoint’s sales and cultivation personnel, to
BMF in exchange for $11,000. Also in June 2014, Medpoint licensed its
intellectual property to Bloom IP Industries, LLC, a wholly owned
subsidiary of BMF, for $8,000 per month.

¶8 Nearly two years later, in May 2016, dissatisfied that
Medpoint had paid nothing on the August 2013 Brown Loan, Brown filed
this case. In the 40-page complaint,3 Brown pressed 17 counts against
Medpoint, ANW and more than 30 other defendants. Many of those claims
and defendants are no longer a part of this case and are not addressed here.

¶9 In February 2019, Brown filed a second amended complaint,
the operative pleading here. Although shorter (26 pages) and asserting
fewer counts (10) than the original complaint, the second amended
complaint named more than 30 defendants, including Medpoint and ANW.

2 The trial testimony contradicts this stipulation, indicating Brown received

at least one payment of $5,750 from a Bloom Master Fund I (BMF) account.
That apparent discrepancy is not dispositive in this appeal.

3 Although the original complaint included co-plaintiff 7511 IRA
Investments, LLC, that entity later settled its claims, was dismissed as a
party and is not a part of this appeal.

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Significant motion practice followed, with some counts against some
defendants dismissed by the court before trial.

¶10 In September 2019, Brown settled his claims against Medpoint
and others (the Medpoint Group) in a written settlement agreement
requiring the Medpoint Group to make certain payments to Brown. The
Medpoint Group, however, failed to comply with the terms of that
settlement agreement. At Brown’s request, and without objection, in
November 2021, the court entered a consent judgment in favor of Brown
and against the Medpoint Group for $250,000, with interest at 10 percent
until paid in full.

¶11 Brown’s remaining claims were resolved in a four-day jury
trial starting in late November 2022. The focus here is on the claims against
ANW. Brown testified that Medpoint represented to him that the proceeds
from the Brown Loan would go toward equipment and supplies for use at
ANW. Trial evidence also addressed the May/June 2014 restructuring, in
which ANW terminated its service agreement with Medpoint; almost
immediately entered into a similar service agreement with BMF; and BMF
acquired Medpoint assets and intellectual property for use of the “Bloom”
name. Trial evidence also indicated that ANW’s facilities had the same
equipment and assets before the termination of Medpoint’s service
agreement and during BMF’s subsequent service agreement.

¶12 Brown testified, without objection and on cross-examination,
about the settlement agreement and consent judgment with the Medpoint
Group. Among other things, Brown testified he had not received any
payment in satisfaction of that $250,000 consent judgment. As discussed
below, both attorneys discussed that settlement and consent judgment
during closing, with ANW arguing that evidence supported a defense
verdict and Brown countering nothing had been paid on the consent
judgment.

¶13 The court granted in part, and denied in part, defendants’
timely motions for judgment as a matter of law (JMOL). See Ariz. R. Civ. P.
50(a). As a result, the only claims submitted to the jury were five counts
Brown asserted against ANW.

¶14 While deliberating, the jury submitted a question asking if it
could award damages consistent with the “amount, conditions, and dates”
in the consent judgment: “[i]n essence, can we use the same formula
employed in [the consent judgment] just with a different responsible
party?” Without objection, the court responded that if the jury found for

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Brown on one or more of the counts, it must enter a dollar value on the
verdict form, and the amount entered would be left to their discretion.

¶15 After deliberation, the jury returned defense verdicts for
ANW on Brown’s counts for (1) aiding and abetting breach of fiduciary
duty; (2) fraud and (3) aiding, abetting, and encouraging tortious conduct.
The jury returned verdicts for Brown and against ANW on Brown’s
fraudulent transfer and unjust enrichment counts, awarding Brown
$339,860.48 in damages.

¶16 Brown then sought $154,834.98 in attorneys’ fees under A.R.S.
§ 12-341.01(A); $4,230.89 in taxable costs and $52,972.09 as sanctions under
Ariz. R. Civ. P. 68, given ANW failed to accept offers of judgment. In
February 2023, the court entered a final judgment awarding Brown (1)
$339,860.48 in damages; (2) $69,172.50 in attorneys’ fees; (3) $807 in taxable
costs and (4) $52,972.09 in Rule 68 sanctions, all with interest until paid in
full.

¶17 ANW then filed a renewed motion for JMOL on the two
verdicts for Brown, or in the alternative, a motion for a new trial, arguing
the verdicts and final judgment were “not supported by the evidence or the
law” and that the “damages . . . awarded were excessive.” The court denied
the motions, noting “the jury was properly instructed, and there were facts
presented to support their verdict.” Finding ANW’s renewed JMOL motion
“was made without substantial justification,” the court sanctioned ANW
under A.R.S. § 12-349, awarding Brown additional attorneys’ fees and costs.

¶18 ANW timely appealed, and Brown timely conditionally cross-
appealed. This court has jurisdiction pursuant to Article 6, Section 9, of the
Arizona Constitution and A.R.S. §§ 12-120.21(A)(1) and -2101(A)(1).

DISCUSSION

I. ANW Has Not Shown the Court Erred in Denying ANW’s Rule 50
Motion on Brown’s Fraudulent Transfer and Unjust Enrichment
Claims.

¶19 This court reviews the denial of a motion for JMOL de novo,
Glazer v. State, 237 Ariz. 160, 167 ¶ 29 (2015), drawing all reasonable
inferences and viewing the evidence in favor of the non-moving party,
Dawson v. Withycombe, 216 Ariz. 84, 95 ¶ 25 (App. 2007). A court should
enter JMOL only if it “finds that a reasonable jury would not have a legally
sufficient evidentiary basis to find for the party on that issue.” ARCAP
50(a)(1). Stated differently, a JMOL is proper only if “the facts produced in

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support of the claim . . . have so little probative value, given the quantum
of evidence required, that reasonable people could not agree with the
conclusion advanced by the proponent of the claim.” Warne Invs., Ltd. v.
Higgins, 219 Ariz. 186, 194 ¶ 33 (App. 2008).

¶20 Where, as here, the court submits the matter to the jury after
denying a motion for JMOL, a party may file a post-verdict “motion for
judgment as a matter of law and may include an alternative or joint request
for a new trial under Rule 59.” Ariz. R. Civ. P. 50(b). In considering such a
post-verdict motion, a court will “view the evidence in a light most
favorable to upholding the jury verdict,” McBride v. Kieckhefer Assocs., 228
Ariz. 262, 265 ¶ 10 (App. 2011), recognizing “[i]t is the jury’s burden alone
to weigh the credibility of witnesses and draw inferences from the evidence
presented at trial,” Zuluaga v. Bashas, Inc., 242 Ariz. 205, 212 ¶ 21 (App.
2017). A superior court has broad discretion in resolving a motion for new
trial. See State v. Fischer, 242 Ariz. 44, 50 ¶ 21, 48 ¶ 11 (2017) (“Arizona courts
use essentially the same standard” for new trial motions in civil and
criminal cases.). This court will affirm a ruling on a motion for new trial
“absent a clear abuse of discretion.” Delbridge v. Salt River Project Agric.
Improvement & Power Distrib., 182 Ariz. 46, 53 (App. 1994).

A. Fraudulent Transfer.

¶21 Brown alleged a fraudulent transfer claim under Arizona’s
Uniform Fraudulent Transfer Act (UFTA). See A.R.S. §§ 44-1001 to -1010.
UFTA provides that a transfer made by, or obligation incurred by, a debtor
is fraudulent if the debtor made the transfer or incurred the obligation with
an intent to hinder, delay or defraud any creditor of the debtor. See A.R.S. §
44-1004(A)(1). UFTA also provides that a transfer is fraudulent if made by
the debtor “without receiving a reasonably equivalent value in exchange . .
. and the debtor was insolvent at that time or the debtor became insolvent
as a result of the transfer.” A.R.S. § 44-1005. “The statutes governing
fraudulent transfers focus on the validity of the transfer itself, providing
creditors with remedies not only against the debtor and the property but
also against transferees.” Rogone v. Correia, 236 Ariz. 43, 51 ¶ 27 (App. 2014)
(citations omitted).

¶22 On appeal, ANW argues the fraudulent transfer claim failed
as a matter of law because “Brown was required to” (but failed to) “present
evidence that Medpoint transferred to ANW the $100,000 loan proceeds
received from Brown or an asset Medpoint purchased with those
proceeds.” ANW also argues Brown did not present evidence of
“discussions or written documents regarding how Medpoint used his loan

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proceeds.” Brown, however, was not required to directly trace the specific
proceeds from the Brown Loan to a specific asset that Medpoint transferred
to ANW. He needed only to provide evidence that proceeds of the Brown
Loan were transferred, directly or indirectly, from Medpoint to ANW. The
UFTA broadly defines “transfer” as “every mode, direct or indirect,
absolute or conditional, voluntary or involuntary, of disposing of or parting
with an asset or an interest in an asset and includes payment of money,
release, lease and creation of a lien or other encumbrance.” A.R.S. § 44-
1001(9). “This broad statutory definition clearly includes any transaction in
which a property interest was relinquished.” State ex rel. Indus. Comm’n v.
Wright, 202 Ariz. 255, 257 ¶ 8 (App. 2002).

¶23 Trial testimony indicated that neither Medpoint’s nor ANW’s
financial records were well kept, precluding tracing of the proceeds from
the Brown Loan to a specific asset. Brown, however, testified that he was
told that the proceeds of the Brown Loan would be used by Medpoint for
equipment and supplies for use at ANW. At the time of the Brown Loan,
ANW’s operations “involve[d] the cultivation, growing, marketing and
selling of medical marijuana.” As ANW’s management company,
Medpoint was tasked with managing ANW’s retail dispensary and
cultivation facilities, which included employees, equipment and supplies.

¶24 The trial evidence showed ANW terminated its services
agreement with Medpoint in late May 2014, and almost immediately
entered into a new services agreement with BMF. Various witnesses
testified they visited ANW’s facilities both before and after the termination
of Medpoint’s services agreement and saw the same assets, including the
same employees, the same equipment, computers and tables, and the same
“giant safe” used to hold cash at ANW.

¶25 The owner of BMF testified he purchased BMF in June 2014 to
manage ANW. He admitted that there was a variety of equipment at ANW
when BMF took over management of ANW, immediately after termination
of Medpoint’s service agreement. Although adding the equipment needed
to be replaced, his testimony showed that ANW’s facilities already had
equipment when he took over from Medpoint, including computers, desks
and a safe. Brown and other witnesses confirmed that the equipment at
ANW’s facilities originated with Medpoint and remained at ANW’s
facilities after BMF took over management of ANW.

¶26 On this record, a jury could reasonably conclude a transfer
occurred when Medpoint purchased equipment with proceeds from the
Brown Loan, and then left that equipment at ANW’s facilities after the

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services agreement with Medpoint terminated in late May 2014. See Wright,
202 Ariz. at 257 ¶ 8 (noting the broad definition of “transfer” in the UFTA
“clearly includes any transaction in which a property interest was
relinquished”).

¶27 ANW presented evidence supporting its assertion that the
assets remained from June 2014 and after because “BMF purchased those
assets from Medpoint and then used them in its management of ANW.”
ANW also points to trial evidence that BMF “purchase[d] Medpoint’s
intellectual property with ANW” and “paid Medpoint $11,100 for the
employees Medpoint used to manage ANW.” Brown, however, presented
controverting evidence that “permitted the opposite conclusion.” See
Glazer, 237 Ariz. at 167 ¶ 32. Brown also testified that proceeds from the
Brown Loan were used for equipment needs, not for purchasing intellectual
property.

¶28 The superior court provided the following explanation in
denying ANW’s motions addressing Brown’s UFTA claim:

The jury were instructed, via a stipulated
instruction, that: “To prove his claim for actual
fraudulent transfer, Brown must prove that
Medpoint transferred an asset to [ANW] …”
and “To prove his claim for constructive
fraudulent transfer, Brown must prove that
Medpoint transferred an asset to [ANW] …”
The jury heard ample testimony from several
witnesses who testified that they were present
at the ANW location and saw the assets that
existed and were purchased with their
investment to Medpoint still being present after
Medpoint was ousted. Witnesses for the
Defendants testified in a similar manner. The
jury weighed the admissions by Defendants’
witnesses that ANW kept all of Medpoint’s
assets and, as the decider of fact, determined the
truthfulness of the statements by such
witnesses, including the attempts to downplay
the value of the assets that were soon generating
six-figure monthly profits for ANW without
paying back Brown. As the jury was properly
instructed, and there were facts presented to
support their verdict, the Court will not disturb

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same. In short, the jury found that Medpoint
can’t get away with promising something to
somebody, getting an asset from that person,
and then attempt to later get out of paying back
that person as promised because they engaged
in legal maneuvering [to] avoid their obligation
after having benefitted from (and continue to
benefit from) the asset provided.

The trial evidence fully supports these conclusions.

B. Unjust Enrichment.

¶29 For an equitable claim of unjust enrichment, a plaintiff must
show: (1) an enrichment; (2) an impoverishment; (3) a connection between
the two; (4) the absence of justification for the two and (5) the absence of a
remedy of law. See Span v. Maricopa Cnty. Treasurer, 246 Ariz. 222, 227 ¶ 15
(App. 2019). “[U]njust enrichment provides a remedy when a party has
received a benefit at another’s expense and, in good conscience, the
benefitted party should compensate the other.” Wang Elec., Inc. v. Smoke
Tree Resort, LLC, 230 Ariz. 314, 318 ¶ 10 (App. 2012) (citing cases). On
appeal, ANW argues “Brown failed to submit any evidence that ANW was
enriched without justification.”

¶30 As with the UFTA claim, ANW argues that various witnesses
testified that BMF “purchased Medpoint’s assets from Medpoint, and then
used those assets to manage ANW.” ANW also argues that BMF, not ANW,
“received the benefit of these items.” But, again, some witnesses relied upon
by ANW conceded during their testimony that there was equipment at
ANW’s facilities that BMF did not purchase. The superior court provided
the following explanation in denying ANW’s motions addressing unjust
enrichment:

ANW claims there was no evidence of
enrichment to it. However, there was trial
testimony that the same assets that were
purchased using Brown’s loaned funds were
then being used by ANW after the takeover. The
jury was properly instructed on unjust
enrichment, weighed the evidence, and reached
a verdict. There was evidence presented that
there was nary a distinction between Medpoint
and ANW and, in any event, all the same

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equipment and personnel remained with
“Bloom” a/k/a ANW without ANW having
paid for it. Indeed, Defendants’ witnesses
admitted that the goodwill, equipment, and
personnel remained and the jury was fully
entitled to disregard their self-serving
testimony that it had little or no value where it
was very quickly generating six-figure monthly
profits.

The trial record fully supports these conclusions. ANW has not shown a
reasonable jury could not conclude that Medpoint purchased the
equipment using proceeds from the Brown Loan and then left those assets
at ANW’s facilities without receiving payment from ANW.

¶31 On this record, ANW has not shown the superior court erred
in denying its Rule 50 motions or that the court abused its discretion in
denying its alternative motion for new trial under Rule 50(b).

II. ANW Has Not Shown the Superior Court Erred in Denying its
Rule 59 Motion Regarding Damages.

¶32 This court reviews a superior court’s ruling on a Rule 59
motion for new trial for an abuse of discretion. Delbridge, 182 Ariz. at 53.
ANW argues the jury’s damages verdicts are not supported by the
evidence. ANW argues that, at most, the jury could have awarded Brown
$299,753.42 (the present value of the August 2013 Brown Loan as of the date
of the verdict). ANW speculates that, instead, the $339,860.48 verdict
represented the present value (as of the date of the verdict) of the September
2019 settlement agreement where Medpoint agreed to pay Brown $250,000
with 10 percent interest. ANW argues the jury exceeded “the maximum
damages it could have awarded” by $40,107.06.

¶33 This court will affirm a ruling on a motion for new trial
“absent a clear abuse of discretion,” id., recognizing “[i]t is primarily the
province of the jury to determine the credibility of witnesses and to find the
facts,” Fischer, 242 Ariz. at 50 ¶ 19 (citations omitted). As Brown notes, “[t]he
computation of the amount of damages which are not fixed is a matter
within the discretion of the trial court – a factual determination – and unless
clearly erroneous, will not be reversed on appeal.” Elar Invs., Inc. v. Sw.
Culvert Co., Inc., 139 Ariz. 25, 30 (App. 1983).

¶34 In denying ANW’s Rule 59 motion on damages, the superior
court noted that the verdict rendered “was between 10% and 12% greater

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than Brown’s counsel requested in his closing,” but adding that “ANW
cannot point to anyplace in the record to support a claim that the jury award
was the result of passion or prejudice or that it deviates materially from
reasonable compensation.” In challenging that ruling on appeal, ANW
relies on Soto v. Sacco, 242 Ariz. 474 (2017), arguing “[t]he trial court ignored
the direction set forth in Soto.”

¶35 ANW concedes the verdict was not the result of passion or
prejudice. Instead, ANW relies on the Soto directive that remittitur is
indicated when a verdict represents “an exaggerated measurement of
damages not supported by the evidence.” 242 Ariz. at 478 ¶ 10. The superior
court’s conclusion that the verdict did not “deviate[] materially from
reasonable compensation” appears to be a shorthand for this Soto directive.

¶36 ANW’s core argument is based on the thought that the
evidence presented during the trial showed the maximum amount of
Brown’s damages was $299,753.42. If the claim here was against Medpoint
for breach of the Brown Loan, ANW’s argument would have some force.
But that is not the case. The claims are against ANW for fraudulent transfer
and unjust enrichment. In damage instructions that are not challenged on
appeal, the jury was told it would (for the UFTA claim) “determine the
value of the asset or assets fraudulently transferred to” ANW “that should
be made available to satisfy Brown’s claim” and (for the unjust enrichment
claim) determine the value of the benefit conferred upon ANW at Brown’s
expense. Thus, the contract damages model ANW tacitly relies on does not
apply here.

¶37 ANW’s arguments during trial also show the jury verdict
need not be set aside. Without objection, the settlement agreement between
Brown and Medpoint, and the resulting consent judgment for $250,000 plus
10 percent interest, were admitted in evidence. Brown testified about both,
again without objection, and was cross-examined about both. Brown’s
testimony included that he had not been paid anything under the consent
judgment, that he did not expect to get paid twice for what he was owed
and that, if ANW was held liable, he would “sign [the consent judgment]
over to them” and allow ANW to try to collect on it.

¶38 In closing arguments, ANW pointed to the consent judgment
to argue that the jury should return a defense verdict. Spending significant
time on the importance of the consent judgment, ANW argued that “rather
than being paid $100,000 plus interest, [Brown] now has a legal judgment
against the party that owes him the money for $250,000 plus interest.”
ANW then argued that “he’s owed that money from Medpoint. Not from”

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ANW. In response, Brown argued he had not “gotten paid a nickel” under
the consent judgment and that, whatever the verdict, he would not be paid
twice.

¶39 Having received that evidence and heard those arguments,
during deliberations, the jury asked: “[i]f we decide to award damages, can
we simply use the same amount, conditions and dates in the consent”
judgment ($250,000 at 10 percent interest for a September 2019 settlement
agreement as reflected in the consent judgment entered in November 2019)
“rather than setting a dollar amount?” “In essence, can we use the same
formula employed in [the consent judgment], just with a different
responsible party?” Although the parties agreed the jury should specify “a
dollar amount” for damages, not provide a formula, ANW did not object to
the jury using the consent judgment as a basis for computing damages.
Without objection, the court responded to the question by instructing the
jury: “If you find in favor of Plaintiff on one or more counts, you must enter
a dollar amount in Verdict Form 6 for the total damages you deem
appropriate. The exact amount of damages is left to your discretion.”

¶40 On this record, given this evidence and these arguments,
ANW cannot show the jury awarded an “exaggerated measurement of
damages not supported by the evidence.” See Soto, 242 Ariz. at 478 ¶ 10. If
ANW’s speculation about what the verdicts represent is correct, the jury
did use the same formula employed in the consent judgment, “just with a
different responsible party,” an approach to which ANW did not object
when it had an opportunity to object. Accordingly, ANW has not shown
that the superior court abused its discretion by denying the Rule 59 motion
regarding damages.

III. A.R.S. § 12.341.01(A) Does Not Apply to Brown’s Fraudulent
Transfer Claim but Does Apply to Brown’s Unjust Enrichment
Claim.

¶41 “In any contested action arising out of a contract, express or
implied, the court may award the successful party reasonable attorney
fees.” A.R.S. § 12-341.01(A). ANW argues the superior court erred in
shifting fees because Brown’s claims do not arise out of contract, a legal
issue this court reviews de novo. See Schwab Sales, Inc. v. GN Constr. Co., Inc.,
196 Ariz. 33, 36 ¶ 9 (App. 1998). To determine whether a claim arises out of
contract, this court will consider “the fundamental nature of the action
rather than the mere form of the pleadings.” Ramsey Air Meds, L.L.C. v.
Cutter Aviation, Inc., 198 Ariz. 10, 15 ¶ 27 (App. 2000). A claim does not
fundamentally arise out of contract “[w]hen the duty breached is one

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implied by law based on the relationship of the parties.” Id. Thus, the
dispositive issue “is whether the defendant would have a duty of care
under the circumstances even in the absence of a contract.” Id.

¶42 This court has held a fraudulent transfer claim is statutory,
under the UFTA, meaning the “fundamental nature of the claim is one that
does not arise out of contract.” Dooley v. O’Brien, 226 Ariz. 149, 154 ¶ 20
(App. 2010); accord Kennedy v. Linda Brock Auto. Plaza, Inc., 175 Ariz. 323,
325-26 (App. 1993) (holding statutory claim under Arizona’s “Lemon Law,”
A.R.S. §§ 44-1261 to -1265, did not arise out of contract). Other than noting
the verdict for Brown on the unjust enrichment claim, and that the common
law recognized a fraudulent conveyance claim before the UFTA was
enacted in Arizona in 1918, Brown has no real response for this proposition.
Accordingly, to the extent the superior court awarded fees under A.R.S. §
12-341.01 for the UFTA claim, it erred.

¶43 The same is not true for the unjust enrichment claim. An
unjust enrichment claim is equitable (not statutory) and can, in appropriate
circumstances, be subject to a fee award under A.R.S. § 12-341.01. Whether
such a claim is eligible for a fee award focuses on “the fundamental nature
of the action,” whether the specific claim asserted would not exist “but for”
a contract and the relationship of the parties. See Ramsey Air Meds, 198 Ariz.
at 15-16 ¶ 27. Here, the unjust enrichment claim arose out of the Brown
Loan and would not have existed but for that transaction. The parties
involved had related and at times ongoing involvement, contractually and
otherwise, in operating ANW. The Brown Loan facilitated services and
goods being provided for the benefit of ANW that Brown alleged (and the
jury found) ANW retained to its enrichment. Stated differently, ANW could
not have been unjustly enriched but for the breach of the Brown Loan. Thus,
Brown was eligible for an award for his unjust enrichment claim.

¶44 Because one basis for an award of fees was valid and one was
not, the parties may file supplemental briefs addressing a proper modified
fee award as directed below.

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IV. This Court Does Not Address Brown’s Conditional Cross-Appeal.

¶45 Brown filed and briefed a conditional cross-appeal
challenging the grant of judgment as a matter of law on various claims
against other defendants as well as claims against ANW other than those
addressed above. In his briefing on appeal, however, Brown stated his
cross-appeal need only be addressed “[i]f this Court were to reverse or
remand any decision of the trial Court.” Because the judgment is affirmed,
this court need not address the issues raised by Brown’s conditional cross-
appeal.

V. Attorneys’ Fees and Costs.

¶46 Brown requests attorneys’ fees incurred on appeal pursuant
to A.R.S. § 12-341.01 and his taxable costs, while ANW requests its taxable
costs incurred on appeal. Because it is not the successful party, ANW’s
request for costs is denied. Because Brown is the successful party, in the
discretion of the court, he is awarded his reasonable attorneys’ fees incurred
on appeal regarding his unjust enrichment claim as well as his taxable costs
incurred on appeal, contingent upon his compliance with ARCAP 21 as set
forth in the separate order issued along with this memorandum decision.

CONCLUSION

¶47 The judgment is affirmed as modified to reflect the
reallocation of attorneys’ fees to be addressed in supplemental briefing, the
deadlines for which are set forth in a separate order issued along with this
memorandum decision.

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

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