Accord Trucking, Inc. v. Fedex

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

ACCORD TRUCKING, INC., Plaintiff/Appellant,

v.

FEDEX GROUND PACKAGE SYSTEM, INC., Defendant/Appellee.

No. 1 CA-CV 23-0710

FILED 10-29-2024

Appeal from the Superior Court in Maricopa County
No. CV2018-010982
The Honorable Susanna C. Pineda, Judge
The Honorable John C. Rea, Judge (Retired)
The Honorable Joseph P. Mikitish, Judge

AFFIRMED

COUNSEL

McGill Law Firm, Scottsdale
By Gregory G. McGill, Ryan G. McGill
Counsel for Plaintiff/Appellant

Fisher & Phillips LLP, Phoenix
By Lori A. Guner
Counsel for Defendant/Appellee

FedEx Ground Package System, Inc., Moon Township, Pennsylvania
By Gregory M. Monaco, Shanicka L. Kennedy (pro hac vice)
Counsel for Defendant/Appellee
 ACCORD TRUCKING, INC. v. FEDEX
Decision of the Court

MEMORANDUM DECISION

Presiding Judge Michael J. Brown delivered the decision of the Court, in
which Judge D. Steven Williams and Judge Daniel J. Kiley joined.

B R O W N, Judge:

¶1 Plaintiff Accord Trucking, Inc. (“Accord”) appeals from the
superior court’s order granting judgment as a matter of law (“JMOL”) on
several contract and tort claims brought against Defendant FedEx Ground
Package System Inc. (“FedEx”). 1 Each claim stems from Accord’s position
that FedEx improperly classified Accord as an independent contractor
instead of an employee. For the following reasons, we affirm.

BACKGROUND

¶2 We view the evidence in the light most favorable to Accord,
the party against whom JMOL was granted. Warne Investments, Ltd. v.
Higgins, 219 Ariz. 186, 194, ¶ 33 (App. 2008). Hogan spent much of her
professional life working as a truck driver. In 2015, she formed her own
corporation, Accord, so she could provide linehaul trucking services for
FedEx. It was Hogan’s understanding that FedEx would not contract with
individuals, partnerships, or limited liability companies; instead, she had
to form a corporation before she could work with FedEx. At the time,
FedEx’s relationship with such corporations were governed by a Linehaul
Contractor Operating Agreement (“LCOA”), which provided for a
one-year term, with automatic renewal for successive terms unless either
party gave 30 days’ notice of termination.

¶3 The LCOA’s “Background Statement” described the parties’
intentions for the relationship between FedEx and its linehaul service
providers. That portion stated in part as follows:

Contractor wants to make [its] equipment available, together
with a qualified operator for each piece of equipment, to
provide linehaul and other services on behalf of FedEx
Ground. FedEx Ground wants to provide for package pick-

1 Susan Hogan, president of Accord, prevailed on her individual claim
for negligent infliction of emotional distress. Hogan is not a party to this
appeal.

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up and delivery services through a network of nationwide
stations served by independent contractors, and, subject to
the number of packages tendered to FedEx Ground for
shipment, will seek to manage its business so that it can
provide sufficient volume of packages to Contractor to make
full use of Contractor’s equipment.

This section also explained that “[b]oth FedEx Ground and Contractor
inten[d] that Contractor will provide these services strictly as an
independent contractor.”

¶4 Under the LCOA, the linehaul contractors were responsible
for all maintenance and other operating expenses associated with their
trucks. Contractors were not paid a set wage or salary; instead, their
compensation would come through weekly settlements with FedEx, which
were largely based on mileage. The LCOA further provided that “the
Contractor shall be responsible for exercising independent discretion and
judgment to achieve the business objectives” set out in the LCOA, and that
“FedEx Ground shall [not] have the authority to direct Contractor as to the
manner or means employed to achieve such objectives.”

¶5 The LCOA also included a system for assigning runs to
contractors, which was done through a point system that assigned points
to specific tractors the contractors own. 2 Under this system, a tractor gains
a point for each day it was available for service, regardless of whether
FedEx made an offer to handle a run. But a tractor would not gain a point
if the contractor declined to service a run, or the tractor was otherwise
unavailable. A tractor could also lose points in some circumstances, such
as a preventable accident or other service disruptions. Contractors would
then use these points to bid on different run assignments. This system also
required a 90 percent availability threshold, meaning that a tractor needed
to be available for service with FedEx 90 percent of the time on a rolling
12-month basis; otherwise, that tractor would be designated a “spare.” 3
Spare tractors were not given run assignments and did not accrue points.

2 A tractor is the front part of the truck, which pulls the trailer. FedEx
owned and supplied the trailers for the contractors.

3 As FedEx personnel explained at trial, it would normally take several
months of consistent declining of runs to drop below the 90 percent
threshold.

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¶6 In June 2015, Hogan signed the LCOA on behalf of Accord,
though she later claimed she was not given sufficient time to review its
contents. She also asserted the point system was not sufficiently explained
to her when she began driving for FedEx. Nevertheless, Accord grew
steadily, starting with two tractors in 2015 and adding three more over the
next three years. Near the end of 2017, however, Hogan essentially came to
the opinion that despite the language of the LCOA, FedEx did not give
Accord the autonomy and discretion of an independent contractor.
According to Hogan, FedEx exercised significant control over Accord’s
operations and in how it provided services to FedEx. The factors Hogan
identified included, but were not limited to:

(1) FedEx’s requirement until 2017 that Accord put FedEx logos on its
trucks, which Hogan felt made it impossible for Accord to use those
trucks for other companies.

(2) Accord’s trucks using FedEx’s U.S. Department of Transportation
number and being registered and insured in FedEx’s name.

(3) FedEx prohibiting Accord’s drivers from going faster than 65 miles
per hour, regardless of any posted speed limit, and that speed was
monitored through equipment installed on the tractor.

(4) FedEx providing routes that Accord’s drivers were encouraged to
follow.

(5) FedEx required any drivers Accord hired to first be approved
through their vendor, First Advantage.

(6) The point system’s requirement effectively forced Accord to have
constant availability to work with FedEx.

In August 2018, Accord sued FedEx. The 20-page complaint alleged many
ways that FedEx engaged in “calculated and deceitful use of the LCOA,”
resulting in an “egregious misclassification of Accord as an independent
contractor in order to avoid taxes, costs and burdens the employment
relationship requires. . . .” Accord alleged “the subterfuge breached the
duty of good faith and fair dealing” as well as the “express provisions” of
the LCOA. Accord also included claims for negligent and fraudulent
misrepresentation, and violations of the Arizona Consumer Fraud Act.

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Separately, Hogan alleged negligent infliction of emotional distress
(“emotional distress”).4

¶7 One month after Accord filed its suit, FedEx discontinued the
LCOA and instead began using a new contract, the Transportation Service
Provider Agreement (“TSPA”). The TSPA removed the LCOA’s reference
to Accord being an “independent contractor,” instead stating that FedEx
and Accord would enter a “business to business relationship.” The TSPA
also omitted the LCOA’s provision that FedEx intended to make “full use”
of Accord’s equipment; instead, the TSPA explicitly noted that it was a
“requirements contract.” Despite having filed its lawsuit, Accord signed
the TSPA in September 2018. The litigation continued throughout the
remainder of the parties’ contractual relationship.

¶8 Over the next couple of years, the business relationship
between Accord and FedEx deteriorated. Accord believed that both the
quality and quantity of its run assignments were declining. Hogan claimed
that, from late 2018 into 2019, FedEx stopped sending Accord’s trucks on
cross-country runs, which provided more miles and thus more revenue,
and instead assigned Accord shorter runs in the southwest. Hogan also
claimed that Accord had frequent issues with their trucks “sitting” on run
assignments, meaning that Accord’s drivers were experiencing long delays
once they arrived at their assignment location. As a result, Accord’s trucks
were not generating revenue and stayed idle for extended periods. The
issue with “sitting” trucks, according to Hogan, occurred weekly until 2022.
On the other hand, FedEx claimed that starting in 2019, Accord had started
refusing run assignments, resulting in three of Accord’s trailers being
relegated to “spare” status, as their availability had fallen below the 90
percent threshold. FedEx also claimed it eventually “lost all contact” with
Accord, and in June 2022, FedEx gave Accord a notice of non-renewal.

¶9 FedEx moved for summary judgment. FedEx argued that (1)
Accord could not prove damages arising from the alleged misclassification,
(2) FedEx had violated no contractual provision regarding the assignment
of runs, (3) the misrepresentation and fraud claims were barred by the
economic loss rule and were impermissibly based on promises of future
conduct, and (4) the consumer fraud statute was inapplicable because
Accord was not a “consumer” as the term is statutorily defined. Accord
likewise moved for partial summary judgment, asserting FedEx’s liability
on all claims. The court granted summary judgment for FedEx on the

4 The emotional distress claim centered on events that are not relevant
to the resolution of the claims raised in this appeal.

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consumer fraud claim but found genuine issues of material fact on the
remaining claims.

¶10 Accord’s expert, Donald Bays, drafted three reports for
calculating damages. The first report calculated Accord’s economic
damages from the alleged misclassification and calculated a hypothetical
salary for Hogan if she had been a FedEx employee based on her job duties
along with certain other benefits such as paid leave, insurance, and “legally
required benefits” such as social security and Medicare. The report also
assumed that, as an employee, Hogan would not have been responsible for
paying Accord’s operating expenses. Bays’s second report analyzed
Accord’s damages arising from FedEx’s failure to dispatch Accord’s
tractors, related to Hogan’s claim that FedEx had caused Accord’s trucks to
sit for too long. The third report calculated lost earnings from FedEx
“deliberately not awarding [Accord] delivery routes,” which prevented
Accord from growing the size of its truck fleet. That report assumed that
Accord was an independent contractor, not an employee.

¶11 In a series of motions, FedEx sought to preclude Bays’s
proposed expert testimony on damages. After briefing, the court ruled that
Accord could not establish damages under the first report by “creating a
hypothetical contract based on fair compensation that contradicts the
specific terms of compensation in the contract,” and that at trial Accord
would need to establish the right to recover operating expenses “by statute
or other applicable authority.” The court applied a similar analysis to the
second report. As to the third report, the court determined that the report
was “entirely divorced from [Accord’s] claims” because it did not turn on
whether Accord was misclassified, and thus the court precluded the third
report in its entirety. Even so, at a subsequent pretrial conference, the court
found that Accord’s complaint sufficiently pled an alternative breach of
contract claim. Under this theory, FedEx violated the implied covenant of
good faith and fair dealing (“implied covenant”) by intentionally having
Accord’s tractors sit for too long, which Accord claimed was a form of
retaliation for filing its lawsuit. Because this theory could stand even if
Accord were an independent contractor, the court reversed its ruling that
excluded the third Bays’s report.

¶12 After re-assignment of the case to a different judge as part of
the superior court’s periodic rotation of judicial assignments, the case
proceeded to trial, where Accord claimed that if it was FedEx’s employee,
then Accord was entitled to “all the [operating] expenses that [Accord] had
to pay,” which included the costs of tractor acquisition, fuel, and
maintenance. Accord also argued it was entitled to a payment of minimum

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wage along with a “reasonable amount of benefits.” In a subsequent
discussion with the court, Accord’s counsel clarified that its claim for
wages, benefits, and expenses was rooted in A.R.S. §§ 23-350 to -362,
(“Arizona Wage Act”), which authorizes employees to sue their employers
for failure to pay wages due. A.R.S. § 23-355(A). Accord did not allege a
separate claim under the Wage Act. Hogan testified about the history of
Accord and FedEx, including the circumstances under which she entered
the LCOA and TSPA, along with her belief about why she was not a true
independent contractor. She also detailed the expenses Accord incurred
through its business, and the eventual decrease in runs, which led to
termination of the business relationship. A few of Accord’s previous
drivers also testified. Several FedEx personnel testified about their
understandings as to the LCOA and TSPA, including the function and
procedures in the point system. Bays was Accord’s final witness, and he
testified on the damage calculations in his three reports.

¶13 FedEx moved for JMOL under Arizona Rule of Civil
Procedure 50 on Accord’s claims for (1) breach of the implied covenant due
to misclassification (to the extent it could be considered a “claim”), (2)
alternative breach of the implied covenant based on FedEx’s alleged failure
to properly assign runs,(3) negligent and fraudulent misrepresentation, and
(4) emotional distress. The court granted JMOL in favor of FedEx on each
claim except for emotional distress. As to Accord’s implied covenant claim
that FedEx had misclassified it as an independent contractor (“the
misclassification claim”), the court determined that Accord failed to
establish a basis for its damages claim, finding that the definition of
“employee” in the Arizona Wage Act does not include corporations.

¶14 Addressing the claim that FedEx alternatively breached the
implied covenant by failing to assign runs to Accord and having tractors sit
for extended periods of time, the court first determined that Accord did not
present evidence that FedEx breached any term of the LCOA or TSPA in
assigning (or failing to assign) runs to Accord. The court then explained
that Hogan’s testimony about her run assignments decreasing after her
lawsuit began was insufficient evidence that FedEx had “abused its
discretion or acted dishonestly in assigning runs or administering the point
system.”

¶15 On the negligent misrepresentation claim, the court found
that FedEx was not a “supplier of information,” and thus could not be liable
for negligent misrepresentation. Lastly, the court determined that Accord
provided no evidence at trial that FedEx knew that any representation

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made in the contract was false. The court then entered a final judgment and
Accord timely appealed. We have jurisdiction under A.R.S. § 12-2101(A)(1).

DISCUSSION

¶16 Accord argues the superior court’s JMOL ruling was
erroneous. We review such a ruling de novo, Glazer v. State, 237 Ariz. 160,
167, ¶ 29 (2015), viewing the evidence and all reasonable inferences in a
light favorable to the nonmoving party, Warne Investments, Ltd., 219 Ariz. at
194, ¶ 33. A court should grant JMOL only if “a reasonable jury would not
have a legally sufficient evidentiary basis to find for the party” on the issue
judgment is sought. Ariz. R. Civ. P. 50(a)(1).

I. Procedural Issues Affecting JMOL

A. Improper Horizontal Appeal

¶17 Accord argues the court’s grant of JMOL constituted an
improper horizontal appeal of the prior decision denying summary
judgment of the same claims. A horizontal appeal occurs when a party asks
a second judge to reconsider a decision made by a prior judge in the same
matter, even though no new circumstances justify such a request. Quinn v.
Cardenas, 256 Ariz. 77, 85 (App. 2023). Though such appeals are
discouraged, the policy barring them is procedural; “a court does not lack
the power to change a ruling simply because it ruled on the question at an
earlier stage, especially where a substantial change has occurred in the
evidence.” Sholes v. Fernando, 228 Ariz. 455, 458–59, ¶ 8 (App. 2011) (citation
omitted). A motion for summary judgment and a motion for JMOL occur
during substantially different points during the litigation process. Compare
Ariz. R. Civ. P. 50(a) with Ariz. R. Civ. P. 56. A motion for JMOL can be
made only after a party has been “fully heard on an issue during a jury
trial.” Ariz. R. Civ. P. 50(a). Because such a change in procedural posture
offers “new circumstances” that warranted reconsideration, the superior
court’s decision to grant JMOL did not constitute a horizontal appeal.

B. Principle of Party Presentation

¶18 Accord argues the superior court’s JMOL ruling violated the
principle of party presentation because the grounds the superior court
relied on had not been disclosed or argued before trial. Under the party
presentation principle, courts should “rely on the parties to frame the issues
for decision and assign to courts the role of neutral arbiter of matters the
parties present.” Greenlaw v. United States, 554 U.S. 237, 243 (2008). Thus,

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courts should “normally decide only questions presented by the parties.”
United States v. Sineneng-Smith, 590 U.S. 371, 376 (2020).

¶19 The record does not show any violation of this principle.
Primarily, Accord takes issue with the court’s reliance on the definitions in
Arizona’s wage statutes in granting JMOL on the misclassification claim,
alleging that such arguments were not raised during the litigation until the
court’s JMOL ruling. But the following exchange after Accord’s opening
statement shows otherwise:

The Court: [I]n your opening statement you said these are
expenses an employee should not have to pay. There’s got to
be a basis for that. It’s not—and it can’t be Bays’[s] opinion.
It’s got to be a statute or some other form of authority that
says an employer can’t require an employee to pay these
expenses just like the cases say.

[Accord’s counsel]: Yeah, which is what I cited before several
times which is [A.R.S. §] 23-350, which is the statutory scheme
for wages and benefits as a public policy in the state of
Arizona when you’re an employee.

Given that Accord expressly relied on that statute to support its theory of
damages, the court was obligated to apply that statute correctly. See Cook
v. Cook, 209 Ariz. 487, 496, ¶ 32 n.9 (App. 2005) (“Parties cannot stipulate as
to the law applicable to a given state of facts and bind the court.”) (citation
omitted). Though Accord likely did not anticipate that citing this statute
would justify judgment against it later, it cannot reasonably contend the
court’s JMOL ruling on this issue was an unfair surprise at trial. Accord
has not shown there was a violation of the party presentation principle or
disclosure requirements.5

II. Substantive Merits of Judgment

A. Misclassification – Alleged Breach of Implied Covenant

¶20 Accord argues the court incorrectly determined it could not
establish damages for its misclassification claim based on violation of the

5 Accord asserts that “[t]he defense violated the party presentation
principle” but does not explain how a “party” could violate the principle.
What Accord seems to argue in substance is that FedEx violated Rule 26.1’s
disclosure requirements. Because Accord introduced this statute into the
case, there was no such violation.

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implied covenant because Accord was not an “employee” under the
Arizona statutes governing the payment of wages. See A.R.S. §§ 23-350, -
355 (“Arizona Wage Act”). At trial, Accord’s theory of damages centered
on Arizona wage statutes. Accord argued that had FedEx properly
classified it as an employee, it would have been entitled to payment of
minimum wage, reimbursement for operating expenses, as well as other
incidental benefits such as vacation and sick time. Whether Arizona wage
statutes afford these benefits to Accord is a question of statutory
interpretation we review de novo. S. Ariz. Home Builders Ass’n v. Town of
Marana, 254 Ariz. 281, 284, ¶ 16 (2023). We interpret statutes “neither
narrowly nor liberally, but rather according to the plain meaning of the
words [of the statutes] in their broader statutory context.” Id. at 286, ¶ 31.

¶21 Under the Arizona Wage Act, an “employee” is defined as
“any person who performs services for an employer under a contract of
employment either made in this state or to be performed wholly or partly
within this state.” A.R.S. § 23-350(2). Conversely, an “employer” can be
“any individual, partnership, association, joint stock company, trust or
corporation, the administrator or executor of the estate of a deceased
individual or the receiver, trustee or successor of any of such persons
employing any person.” A.R.S. § 23-350(3). Section 23-362, which provides
the definitions for statutes governing payment of minimum wage, likewise
defines “employee” as “any person who is or was employed by an
employer,” and “employer” as “any corporation, proprietorship,
partnership, joint venture, limited liability company, trust, association,
political subdivision of the state, individual or other entity acting directly
or indirectly in the interest of an employer in relation to an employee.”
A.R.S. § 23-362(A), (B). The superior court found that the definition of
employee included only a “person,” and not a corporation, which is
specifically used in the definition of “employer.” Thus, the court
determined the statutes that provided the basis for Accord’s theory of
damages did not contemplate that a corporation could be an employee.

¶22 In determining whether Accord could be an employee under
these statutes, we recognize that “[w]here the legislature has specifically
used a term in certain places within a statute and excluded it in another
place, courts will not read that term into the section from which it was
excluded.” Ariz. Bd. of Regents for & on Behalf of Univ. of Ariz. v. State, 160
Ariz. 150, 157 (App. 1989). The wage statutes Accord relies on include
“corporation” in the definition of “employer,” but not in the definition of
“employee.” “Employee” is defined simply as a “person.” A.R.S.
§ 23-350(2). To conclude that a corporation can be an “employee” would
require us to read, into the statutory definition, a term that was omitted

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there, but explicitly used elsewhere in the same statute. See id.; see also Jessey
Sports, LLC v. Intercollegiate Men’s Lacrosse Coaches Ass’n, Inc., 888 S.E.2d 677,
681 (N.C. Ct. App. 2023) (reasoning that a limited liability company was not
an employee under North Carolina’s Wage and Hour Act because the
definition of “employer” included individuals as well as different kinds of
legal entities, while the term “employee” referred only to individuals).

¶23 On appeal, Accord does not address this statutory language,
and instead cites to several provisions in Arizona’s workers compensation
statutes to argue that “public policy pronouncements” prohibit
“misclassification of independent contractors through ‘misrepresentation,
false statements, fraud, intimidation, coercion, or duress.” See A.R.S.
§ 23-902(F); see also § 23-902(B) (noting that an employer who contracts with
an independent contractor may be treated as an employer of the
contractor’s employees if the employer “retains supervision or control”
over the contractor’s work); § 23-902(D)(1) (noting a written agreement
shall state that the business “[d]oes not require the independent contractor
to perform work exclusively for the business”). None of these provisions
imply, much less specify, that a corporation like Accord should be
considered an employee under Arizona’s wage statutes.

¶24 Both at trial and on appeal, Accord has sporadically invoked
the federal Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201, et seq., to
argue that federal law also required reimbursement of expenses. But
neither in the superior court nor on appeal has Accord cited a specific
provision of the FLSA requiring such reimbursement. And even assuming
that Accord properly raised this argument, the FLSA defines “employee”
as “any individual employed by an employer,” 29 U.S.C. § 203(e)(1)
(emphasis added), and an employer as a “person,” which is further defined
as “an individual, partnership, association, corporation, business trust, legal
representative, or any organized group of persons,” 29 U.S.C. § 203(a), (d)
(emphasis added). Thus, for the same reasons explained regarding
Arizona’s statutes, supra ¶¶ 21–22, it seems apparent that Accord would not
be an “employee” under the FLSA.

¶25 Accord also points to several decisions from other
jurisdictions holding that FedEx had misclassified the plaintiff employees
as independent contractors. See Estrada v. FedEx Ground Package Sys. Inc., 64
Cal.Rptr.3d 327 (Cal. App. 2007); Alexander v. FedEx Ground Package Sys.,
Inc., 765 F.3d 981 (9th Cir. 2014); Slayman v. FedEx Ground Package Sys., Inc.,
765 F.3d 1033 (9th Cir. 2014). But these cases are distinguishable. All were
class action cases in which individuals asserted FedEx hired them as drivers
but then denied them benefits guaranteed to employees under applicable

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state and federal law. Estrada, 64 Cal.Rptr.3d at 335 (citing Cal. Lab. Code
§ 2802); Alexander, 765 F.3d at 987 (noting the plaintiff drivers brought
claims under the California Labor Code and federal Family and Medical
Leave Act); Slayman, 765 F.3d at 1042 (citing Or. Rev. Stat §§ 652.610,
653.621). None of these cases involve a claim by a corporation seeking to
be treated as an employee. Accord has cited no relevant authority
supporting its claimed damages relating to its misclassification claim, and
thus Accord has shown no error.

B. Alternate Implied Covenant Claim

¶26 Accord also contends the court incorrectly granted JMOL on
its claim that FedEx breached the implied covenant by failing to assign runs
to Accord after Accord filed this lawsuit. Both the LCOA and TSPA identify
Pennsylvania law as governing the contracts, and we analyze the contracts
accordingly. See Ciena Cap. Funding, LLC v. Krieg’s Inc., 242 Ariz. 212, 216,
¶ 11 (App. 2017). Despite those provisions, Accord does not cite any
Pennsylvania law in its briefing. Even so, because our review is de novo,
we decide this issue based on our own review of the pertinent legal
authority as well as the arguments that were fairly presented to the superior
court and raised in parties’ briefs.

¶27 Pennsylvania law implies a covenant of good faith and fair
dealing in every contract, John B. Conomos, Inc. v. Sun Co., Inc. (R&M), 831
A.2d 696, 706, ¶ 16 (Pa. Super. Ct. 2003), which requires “honesty in fact in
the conduct or transaction concerned,” Donahue v. Fed. Ex. Corp., 753 A.2d
238, 242, ¶ 11 (Pa. Super. Ct. 2000) (citation omitted). This obligation allows
enforcement of a contract’s terms “in a manner that is consistent with the
parties’ reasonable expectations.” Agrecycle, Inc. v. City of Pittsburgh, 783
A.2d 863, 867 (Pa. Commw. Ct. 2001). However, this implied covenant is
specifically tied to the express terms of the contract, and the implied
covenant cannot and will not contradict the express terms of the contract.
Conomos, 831 A.2d at 706–07, ¶ 17.

¶28 Accord contends that FedEx engaged in “manipulative
conduct” by removing the “full use” verbiage found in the LCOA when it
transferred to the TSPA. Accord believes this language provided a
reasonable expectation as to the amount of freight FedEx would provide,
and that FedEx “used its disparate bargaining power” to remove the “full

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use” language from the TSPA.6 In effect, Accord believes that FedEx
violated the implied covenant by the language it used in drafting the TSPA,
before it was even signed. But Accord cites no authority for its position that
a party can breach the implied covenant by choosing to include or omit
certain contractual provisions before the contract is signed. Moreover,
under Pennsylvania law, the implied covenant is tethered to the express
terms of the contract. Id. The conduct giving rise to this claim—that FedEx
retaliated against Accord by cutting its run assignments—occurred under
the TSPA, which made no representations about any volume expectations.

¶29 Also, under Pennsylvania law the implied covenant does not
permit adding terms to a contract that are not present or are disclaimed
expressly in the contract itself. In Agrecycle, a composting company claimed
a city breached the implied covenant by failing to deliver a certain volume
of compostable material represented in the city’s bid for composting
services. Agrecycle, 783 A.2d at 866. Rejecting the company’s argument that
the trial court erred in refusing to instruct the jury on that alleged breach,
the appellate court held that even though the bid specifications estimated a
certain amount of compostable material, the parties’ agreement stated that
the city “did not warrant or guarantee the quantity or quality of the
compostable materials to be delivered.” Id. at 868. Similarly, in Kaplan v.
Cablevision of PA, Inc., 671 A.2d 716, 722 (Pa. Super. Ct. 1996), a customer
filed a class action complaint against a cable company, alleging it violated
the implied covenant by failing to “provide continuous service or
voluntarily rebate fees paid in advance by the cable subscribers when an
outage occurs.” Affirming dismissal, the appellate court concluded that
nothing in the agreement guaranteed such service or required rebates for

6 It is not clear that the “full use” language would have given Accord
any reasonable expectation as to a certain volume of freight even under the
LCOA. The full sentence in which that wording is found states:

FedEx Ground wants to provide for package pick-up and
delivery services through a network of nationwide stations
served by independent contractors, and, subject to the number
of packages tendered to FedEx Ground for shipment, will seek to
manage its business so that it can provide sufficient volume
of packages to Contractor to make full use of Contractor’s
equipment.

(Emphasis added). Under the terms of the LCOA, any vague guarantee as
to the amount of work available for Accord would necessarily be restricted
by FedEx’s needs.

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interrupted service, and thus there was no lack of good faith or fair dealing.
Id. Here, nothing in the TSPA shows that FedEx made any warranties or
guarantees as to the volume of work Accord would receive or that Accord’s
run schedules would be optimized to generate the maximum revenue
possible. Accord has shown no error.

C. Negligent Misrepresentation

¶30 Accord alleged that FedEx negligently misrepresented that
Accord would be an independent contractor, despite numerous provisions
of the contractual agreements that gave FedEx control over Accord’s
operations. Because these terms “failed to facilitate an [independent
contractor] relationship” as the contract stated, Accord believed FedEx
“supplied false or incorrect information.”

¶31 The superior court granted judgment for FedEx on that claim
because nothing showed that FedEx was a “supplier of information,”
meaning it could not be liable for negligent misrepresentation. Arizona has
adopted the Restatement (Second) of Torts, § 552 (1977) to delineate the tort
of negligent misrepresentation. St. Joseph’s Hosp. & Med. Ctr. v. Rsrv. Life
Ins. Co., 154 Ariz. 307, 312 (1987). Section 552(1) states that:

One who, in the course of his business, profession or
employment, or in any other transaction in which he has a
pecuniary interest, supplies false information for the guidance
of others in their business transactions, is subject to liability
for pecuniary loss caused to them by their justifiable reliance
upon the information, if he fails to exercise reasonable care or
competence in obtaining or communicating the information.

Restatement (Second) of Torts, § 552(1) (1977) (emphasis added).

¶32 FedEx maintains that liability for negligent misrepresentation
is limited to “suppliers of information,” which, it argues, includes entities
that are typically “in the profession or business of supplying information
for the guidance of others in business transactions.” See id. cmt. (A)
(limiting “the liability for negligence of a supplier of information to be used
in commercial transactions”). But we do not read this section of the
Restatement to limit liability for negligent misrepresentation only to those
who are in a regular business of supplying information; instead, the tort
applies to anyone who supplies false information for the guidance of others
“in any other transaction in which he has a pecuniary interest.”
Restatement (Second) of Torts, § 552(1) (1977); see also Sain v. Cedar Rapids
Comm. Sch. Dist., 626 N.W.2d 115, 124–25 (Iowa 2001) (recognizing that the

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Restatement offers a broader view of potential liability for negligent
misrepresentation than Iowa’s rule, which limits any duty only to those
“persons in the business or profession of supplying information to others”).
We therefore do not agree that Accord could not, as a matter of law, be a
supplier of information for purposes of a negligent misrepresentation
claim. Nonetheless, we will affirm the entry of JMOL “if it is correct for any
reason.” See Spooner v. City of Phoenix, 246 Ariz. 119, 123, ¶ 7 (App. 2018).

¶33 A claim for negligent misrepresentation cannot be based on
promises for future conduct. McAlister v. Citibank (Arizona), 171 Ariz. 207,
216 (App. 1992). Instead, a negligent misrepresentation claim requires “a
misrepresentation or omission of a fact,” and “[a] promise of future conduct
is not a statement of fact capable of supporting a claim of negligent
misrepresentation.” Id. Even if the contractual relationship ended up
resembling an employment relationship more than an independent
contractor, the provisions that Accord relied on are promises of future
conduct between the parties. See Manon v. Solis, 142 S.W.3d 380, 388 (Tex.
Ct. App. 2004) (finding that a party’s representations about the future
conditions of the other party’s employment were promises of future
conduct, not existing statements of fact, precluding a claim of negligent
misrepresentation). Accord has cited no authority showing that a party can
be liable for negligent misrepresentation based on the legal ramifications of
the terms in the contract. And nothing presented at trial indicates FedEx
misrepresented any existing fact to induce Accord to sign the LCOA or
TSPA. See McAlister, 171 Ariz. at 216. Thus, JMOL was appropriate for
Accord’s negligent misrepresentation claim.

D. Common Law Fraud

¶34 Finally, Accord claims the court incorrectly found there was
insufficient evidence of fraud. “A claim for fraud requires proof of nine
elements by clear and convincing evidence: (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 hearer’s right to rely
on it; (9) the hearer’s consequent and proximate injury.” Comerica Bank v.
Mahmoodi, 224 Ariz. 289, 291–92, ¶ 14 (App. 2010)

¶35 Accord argues that “fraud can be proven by circumstantial
evidence,” and that it presented such evidence at trial. Accord is correct
that knowledge of a statement or representation’s falsity can be inferred
from circumstantial evidence. See Dawson v. Withycombe, 216 Ariz. 84, 98,

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¶32 (App. 2007). But some evidence on which that inference is based is still
required; fraud is never presumed, and requires more than “doubtful,
vague, speculative, or inconclusive evidence.” Honk v. Karlsson, 80 Ariz. 30,
37 (1956) (quotation omitted). Accord claims that it presented “substantial
evidence at trial that when FedEx executed the LCOA and TSPA contract
with Accord . . . [FedEx] knew the independent contractor representations
in the [] agreements were false,” but Accord does not identify any such
evidence in the record. Even assuming, as Accord argues, that “the
relationship under the contracts bore no relationship to the reality on the
ground,” evidence that the contracts inaccurately characterized Accord’s
status as that of an independent contractor does not mean that the contracts’
characterization of Accord’s employment status was a “fact” that FedEx
knew to be false. See De May v. Moore & Bruce, LLP, 584 F. Supp. 2d 170, 185
(D.D.C. 2008) (dismissing plaintiffs’ claim against former attorneys for
constructive fraud based on inaccurate legal advice because plaintiffs failed
to offer “any support for the proposition that erroneous legal advice can
constitute a factual misrepresentation, nor has the Court’s research
unearthed such a case”). Accord has shown no error, and we affirm the
court’s ruling.

CONCLUSION

¶36 We affirm the superior court’s judgment. Both parties have
requested attorneys’ fees incurred on appeal under A.R.S. § 12-341.01,
which authorizes a discretionary fee award when a dispute arises out of
contract. As FedEx is the prevailing party, we award reasonable attorneys’
fees to FedEx relating to the claims for breach of contract and breach of the
implied covenant. As the successful party on appeal, FedEx is entitled to
recovery of taxable costs. The award of fees and costs is subject to
compliance with ARCAP 21.

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

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