Seguridad v. Wheeler

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

SEGURIDAD OPORUNIDAD Y LIDERAZGO, LLC, Plaintiff/Appellant,

v.

WHEELHOUSE PROPERTIES, INC., Defendant/Appellee.

No. 1 CA-CV 23-0594
FILED 08-06-2024

Appeal from the Superior Court in Maricopa County
No. CV2021-017201
The Honorable Randall H. Warner, Judge

AFFIRMED

COUNSEL

Martinet Law, Scottsdale
By Philippe Martinet
Counsel for Plaintiff/Appellant

The Kozub Law Group, Scottsdale
By Richard W. Hundley
Counsel for Defendant/Appellee
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Decision of the Court

MEMORANDUM DECISION

Judge David D. Weinzweig delivered the decision of the Court, in which
Presiding Judge Andrew M. Jacobs and Judge Jennifer M. Perkins joined.

W E I N Z W E I G, Judge:

¶1 Seguridad Oportunidad Y Liderazgo LLC (“Buyer”) appeals
the superior court’s entry of summary judgment in favor of Wheelhouse
Properties, Inc. (“Seller”) on Buyer’s claim for breach of contract,
negligence, negligent misrepresentation, fraudulent misrepresentation,
fraudulent concealment and conversion. Buyer also appeals the entry of
judgment, after a bench trial, in favor of Seller on Buyer’s claim for breach
of the implied covenant of good faith and fair dealing. For the following
reasons, we affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 Seller sold an investment property (“Property”) to Buyer for
$154,950 under a purchase contract (“Contract”) in 2017. The Contract
allowed Buyer to terminate the sale if the Property was materially damaged
before close of escrow. The Contract also had an “As Is” Clause which read
in part:

AS IS. The CLOSING OF THIS TRANSACTION SHALL
CONSTITUTE BUYER’S ACKNOWLEDGMENT THAT THE
PREMISES WERE ACCEPTED WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND OR
NATURE AND IN ITS PRESENT “AS IS” CONDITION
BASED SOLELY ON BUYER’S OWN INSPECTION.

¶3 Before the ink on the Contract had dried, a dispute arose over
a solar panel lease. Buyer sued for specific performance to force the sale of
the Property (“First Lawsuit”) in 2017. The superior court held a bench trial
in November 2020, nearly three years later. The court granted specific
performance to Buyer and ordered Seller to sell the Property to Buyer.

¶4 Six months later, still during escrow, Buyer did a final walk-
through of the Property (“2021 inspection”). During that walk-through,
Buyer noticed a cactus and a tree had been removed from the front yard

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and the swimming pool looked poorly maintained. Buyer still closed on
the Property and paid the purchase price in April 2021.

¶5 A few months later, Buyer sued Seller for (1) breach of
contract, (2) negligence, (3) negligent misrepresentation, (4) fraudulent
misrepresentation, (5) fraudulent concealment, (6) conversion, and (7)
breach of the implied covenant of good faith and fair dealing.

¶6 Seller moved for summary judgment on all claims. The
superior court entered summary judgment in favor of Seller on all but the
claim for breach of implied covenant of good faith and fair dealing. After a
bench trial in June 2023, the court found Seller did not breach the implied
covenant of good faith and fair dealing. The court found Seller did not
remove the cactus and tree or neglect the pool to prevent Buyer from
receiving the benefits of the Contract.

¶7 Buyer timely appealed. We have jurisdiction. See Ariz. Const.
art VI, § 9; A.R.S. §§ 12-120.21 and -2101.

DISCUSSION

I. Summary Judgment

A. Breach of Contract

¶8 We review de novo the entry of summary judgment, viewing
the facts and reasonable inferences in the light most favorable to the non-
movant. Andrews v. Blake, 205 Ariz. 236, 240, ¶ 12 (2003). Summary
judgment is appropriate when 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). We interpret a contract de novo. Dunn v.
FastMed Urgent Care PC, 245 Ariz. 35, 38, ¶ 10 (App. 2018).

¶9 Buyer argues the superior court erroneously dismissed its
breach of contract claim at summary judgment because the As Is Clause
meant the Property must be in the same “present as is condition” in 2021
(at close of escrow) as it was in 2017 (when the Contract was signed).

¶10 We are not persuaded for several reasons. First, the As Is
Clause directed that, by closing the sale, Buyer accepted the Property
without representation or warranty to its present condition. And the sale
closed in 2021, not in 2017.

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¶11 Second, Buyer could have terminated the Contract under its
express terms if it was unhappy with the condition of the Property. But
after learning of the Property’s condition, Buyer closed the deal rather than
walk away, likely because, according to Buyer, “the Property’s value
increased dramatically” between 2017 and the 2021 close of escrow.

¶12 Third, by closing the sale, Buyer agreed to release Seller from
any and all claims and liability arising out of the condition of the Property.
We affirm the superior court’s entry of summary judgment on the breach
of contract claim.

B. Negligence

¶13 Buyer next argues the superior court erroneously dismissed
its claim for negligent maintenance at summary judgment. Summary
judgment is generally not appropriate in negligence actions, Tribe v. Shell
Oil Co., 133 Ariz. 517, 518 (1982), but will be granted when the record shows
“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).

¶14 Buyer must show four elements to prove negligence,
including that: (1) Seller had a duty to maintain the Property, (2) Seller
breached that duty, (3) a causal connection exists between Seller’s conduct
and resulting injury, and (4) Buyer suffered actual damages. See Quiroz v.
ALCOA Inc., 243 Ariz. 560, 563–64, ¶ 7 (2018). Whether Seller had a duty to
exercise reasonable care in maintaining the Property is a question of law.
Martin v. Schroeder, 209 Ariz. 531, 533, ¶ 6 (App. 2005).

¶15 Here, the superior court held that Seller did not meet the
threshold duty requirement. It found Seller owed no duty to maintain the
Property because the Contract contained an As Is Clause that expressly
disclaimed such a duty.

¶16 Buyer now argues (for the first time on appeal) that Seller had
a duty to maintain the plants and pool because Buyer was the equitable
owner of the Property from 2017 to 2021, and Seller was akin to a tenant-at-
sufferance. We cannot assess that argument here because it rests on a 2017
unrecorded warranty deed, which is not in the record. Because Buyer did
not raise this argument in superior court and the document is not in the
record on appeal, that argument is waived. Englert v. Carondelet Health
Network, 199 Ariz. 21, 26–27, ¶ 13 (App. 2000). We affirm the entry of
summary judgment in favor of Seller on the negligence claim.

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C. Fraudulent Misrepresentation and Concealment

1. Misrepresentation

¶17 Buyer argues Seller negligently and fraudulently
misrepresented to Buyer that Seller would maintain the Property while the
First Lawsuit was pending. Buyer claims the As Is Clause was a
“representation” that the condition of the Property would be the same in
2021 as it was in 2017. The superior court dismissed these claims because it
interpreted the As Is Clause to disclaim any and all representations. It also
found the Contract barred liability once Buyer had a chance to inspect the
Property and closed the deal.

¶18 We review the interpretation of a contract de novo and seek
to enforce the parties’ intent by discerning the contract’s plain language.
Earle Invs. LLC v. S. Desert Med. Ctr. Partners, 242 Ariz. 252, 255, ¶ 14 (App.
2017). When “the intent of the parties is expressed in clear and
unambiguous language, there is no need or room for construction or
interpretation.” Goodman v. Newzona Inv. Co., 101 Ariz. 470, 472 (1966).

¶19 Here, the Contract’s plain language directs that “closing” on
the sale constitutes Buyer’s acceptance of the Property in its “present as is
condition.” Closing of this transaction happened in April 2021, not in 2017.
Also, the Contract allowed Buyer to terminate the deal if Buyer was
unhappy with the condition of the Property. As the superior court correctly
noted, “[h]aving closed, [Buyer] accepted the premises ‘without
representation.’” Therefore, we affirm the entry of summary judgment on
both the negligent and fraudulent misrepresentation claims.

2. Fraudulent Concealment

¶20 Buyer next argues Seller fraudulently concealed a missing
cactus and tree, along with the poor condition of the pool. But the closing
documents state that “[a]ll inspections, contingencies and/or conditions
have been met, satisfied, or waived.”

¶21 The Contract also allowed Buyer to terminate the sale before
closing if Buyer was dissatisfied with the Property’s condition. Buyer
toured the Property before closing in 2021 and saw the missing plants and
ugly pool, but still closed. See, e.g., S Dev. Co. v. Pima Cap. Mgmt. Co., 201
Ariz. 10, 17, ¶ 13 (App. 2001) (noting that a contract’s “as is” clause transfers
the risk of loss and duty to inspect a property for “obvious or reasonably
discernible defects” to the buyer). We affirm the entry of summary
judgment on this claim.

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D. Conversion

¶22 Buyer contends Seller is liable for conversion because Seller
removed the cactus and tree without Buyer’s permission. This argument,
however, rests on the idea that Buyer was the equitable owner of the
Property during the First Lawsuit. This argument was never raised before
the superior court, and it hinges on a warranty deed that is not in the record
on appeal. Accordingly, that argument is waived. Englert, 199 Ariz. at 26–
27, ¶ 13. We affirm the superior court’s entry of summary judgment on this
claim as well.

II. Bench Trial

A. Implied Covenant of Good Faith and Fair Dealing

¶23 Buyer insists that Seller breached the implied covenant of
good faith and fair dealing. After a bench trial, the superior court found it
did not. Following a bench trial, we view the facts in the light most
favorable to upholding the superior court’s decision. Ariz. Biltmore Hotel
Villas Condos. Ass’n v. Conlon Grp. Ariz., LLC, 249 Ariz. 326, 329, ¶ 3 (App.
2020). We defer to the superior court on issues of witness credibility during
a bench trial. Rogers v. Greer, 70 Ariz. 264, 270 (1950).

¶24 The implied covenant of good faith and fair dealing prohibits
one party to a contract from doing something to prevent another party from
receiving the benefits of that contract. Wells Fargo Bank v. Ariz. Laborers,
Teamsters & Cement Masons, LLC. No. 395 Pension Tr. Fund, 201 Ariz. 474,
490, ¶ 59 (2002).

¶25 We discern no error for two reasons. First, Seller did just what
the Contract said. The As Is Clause clarifies that closing on the sale equals
Buyer’s acceptance of the Property in its present condition without
representation or warranty of any kind, and that Buyer agrees to release
Seller fully and irrevocably from claims relating to the condition of the
Property. And a party who complies with the express terms of a contract
cannot be liable for breach of the covenant. See Bike Fashion Corp. v. Kramer, 202 Ariz. 420, 423–24, ¶ 14 (App. 2002) (the implied covenant of good faith
and fair dealing cannot contradict an express term of the contract).

¶26 Second, the evidence shows Seller did not neglect the pool or
remove the cactus or tree to “sabotage” the Contract. To the contrary, the
landscaper testified that he removed the cactus because it was rotting and
he removed the tree because it had died. Seller also introduced invoices at
trial showing it maintained the pool. The superior court found this

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testimony credible, and we will not reweigh the credibility of witnesses on
appeal. Gutierrez v. Gutierrez, 193 Ariz. 343, 347, ¶ 13 (App. 1998). There is
reasonable evidence in the record to support the court’s judgment, so we
affirm.

CONCLUSION

¶27 We affirm. Seller requested attorney fees under A.R.S. § 12-
341.01. Because Seller prevailed on appeal, we grant Seller its reasonable
attorney fees and costs on appeal, upon compliance with ARCAP 21. We
deny the motion for sanctions.

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

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