Rwi Construction v. Skyz LLC

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

RWI CONSTRUCTION SERVICES INC, Plaintiff/Appellee,

v.

SKYZ LLC, Defendant/Appellant.
_________________________________

MIDFIRST BANK, Defendant/Appellee.

No. 1 CA-CV 23-0737
FILED 08-13-2024

Appeal from the Superior Court in Maricopa County
No. CV2019-056797
The Honorable Daniel G. Martin, Judge

AFFIRMED

COUNSEL

Palecek & Palecek, PLLC, Scottsdale
By Karen A. Palecek
Counsel for Plaintiff/Appellee

Law Office of Kimberly A. Eckert, Tempe
By Kimberly A. Eckert
Counsel for Defendant/Appellant Skyz LLC

Sherman & Howard, LLC, Phoenix
By Craig A. Morgan
Counsel for Defendant/Appellee Midfirst Bank
 RWI CONSTRUCTION v. SKYZ LLC, et al.
Decision of the Court

MEMORANDUM DECISION

Judge David D. Weinzweig delivered the decision of the Court, in which
Presiding Judge Brian Y. Furuya and Judge James B. Morse Jr. joined.

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

¶1 SKYZ, LLC (“Owner”) appeals the superior court’s grant of
summary judgment to RWI Construction Services, Inc. (“Contractor”) on
their contract claims and counterclaims. We affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 This appeal stems from a construction contract between
Owner and Contractor to build a medical center in Gilbert. After
Contractor finished constructing the building, Owner did not pay
Contractor the full amount owed. Owner later explained there were
“numerous problems with the work,” but it never provided a written
objection to the final invoice, which is required under the Prompt Pay Act.
A.R.S § 32-1182(D).

¶3 Eight months after the work was completed, Owner filed a
complaint with the Registrar of Contractors (“ROC”). Contractor made the
repairs raised in the complaint. Owner did not follow up with Contractor
or respond to ROC’s inquiries about the repairs, so ROC informed
Contractor the complaint was closed.

¶4 Contractor sued Owner for breach of contract and other
claims regarding the unpaid final invoice. Owner counterclaimed against
Contractor for breach of contract and breach of good faith and fair dealing.

¶5 Contractor twice moved for summary judgment, first on its
claim for breach of contract and second on Owner’s counterclaims. Owner
responded, offering a supporting affidavit from its manager, Chad
Gammage. Owner also supplied an expert report from a third-party
architect. The superior court granted summary judgment to Contractor.
Owner appealed. This court vacated and remanded for the superior court
to explain why it granted summary judgment.

¶6 On remand, the superior court again granted summary
judgment, finding that Owner failed to produce any admissible evidence.

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Decision of the Court

The court included Rule 54(b) language certifying the decision as a final
judgment with no just reason for delay. Owner timely appealed. We have
jurisdiction. See A.R.S. § 12-2101(A)(1).

DISCUSSION

¶7 We review de novo the entry of summary judgment, viewing
the facts and reasonable inferences in the light most favorable to the non-
moving party. Andrews v. Blake, 205 Ariz. 236, 240, ¶ 12 (2003). The superior
court must enter summary judgment when there are no genuine issues of
material fact and the moving party is entitled to judgment as a matter of
law. Ariz. R. Civ. P. 56(a). Where the moving party “makes a prima facie
showing that no genuine issue of material fact exists, the burden shifts to
the opposing party to produce sufficient” evidence showing there is an
issue of material fact. GM Dev. Corp. v. Cmty. Am. Mortg. Corp., 165 Ariz. 1,
5 (App. 1990); see also Ariz. R. Civ. P. 56(e).

¶8 Owner contends the superior court incorrectly held that
Owner’s affidavit and expert report were inadmissible, and thus
erroneously granted summary judgment in favor of Contractor. We
address each argument in turn.

I. Manager’s Affidavit.

¶9 Owner first argues the superior court erroneously held Mr.
Gammage’s affidavit was inadmissible. To survive summary judgment, an
affidavit “must be made on personal knowledge, set out facts that would
be admissible in evidence, and show that the affiant is competent to testify
on the matters stated.” Ariz. R. Civ. P. 56(c)(5). Mr. Gammage’s affidavit
failed to meet these minimum standards because it was not based on his
personal knowledge. For all but one statement, Mr. Gammage never avows
that he personally observed the alleged problems with workmanship or
payment. Nor does he explain his role on the project or how he obtained
the information. See State v. Johnson, 184 Ariz. 521, 524–25 (App. 1994)
(affidavit not admissible when it fails to lay foundation for the affiant’s
personal knowledge).

¶10 Mr. Gammage made one statement based on his personal
knowledge—the “drywall was not properly attached to the studs requiring
me to do it myself with another person”—but that statement was not
enough to withstand summary judgment. See Orme School v. Reeves, 166
Ariz. 301, 309 (1990) (explaining the “mere existence of a scintilla of
evidence is insufficient” to withstand a motion of summary judgment, and
that “there must be evidence on which the jury could reasonably find for

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Decision of the Court

plaintiff.”). At most, this statement describes a “minor or partial breach,”
which did not excuse Owner’s performance. See, e.g., Zancanaro v. Cross, 85
Ariz. 394, 400 (1959) (“Ordinarily the victim of a minor or partial breach
must continue his own performance, while collecting damages for
whatever loss the minor breach has caused him; the victim of a material or
total breach is excused from further performance”).

II. Architect Report.

¶11 Owner next argues that summary judgment was
inappropriate because he offered an expert witness report with captioned
photographs, which created questions of fact. Owner retained a third-party
architect to craft a report, which contained the architect’s “professional
opinion” on Contractor’s workmanship, along with captioned photographs
of the medical facility. The superior court found the expert report and
photographs were inadmissible and thus entered summary judgment
against Owner. We affirm because the expert report was inadmissible
hearsay.

¶12 Hearsay is an out of court statement which “a party offers in
evidence to prove the truth of the matter asserted.” Ariz. R. Evid. 801(c).
Written expert reports are inadmissible hearsay unless they fall under a
designated exception to the hearsay rule. Zier v. Shamrock Dairy of Phx., Inc.,
4 Ariz.App. 382, 383 (1966); see also Ariz. R. Evid. 802–804 (hearsay
exceptions). Owner offers no argument or reason why the written expert
report qualified for an exception, and we find none.

¶13 The captioned photographs were also inadmissible because
Owner never laid the required foundation. Photographs are admissible
only if verified by a witness who avows they represent “a reasonably
faithful representation” of the subject. Lohmeier v. Hammer, 214 Ariz. 57, 61,
¶ 8 (App. 2006). A witness need not have been present when the photos
were taken, so long as he can attest that they “accurately portray the scene
or object depicted.” Id.

¶14 Owner contends it established foundation with Mr.
Gammage’s affidavit. Not so. Mr. Gammage did not attest to the
photographs or to seeing the problems they depict. Nor do the
photographs “speak for themselves.” They contain superimposed arrows
and labels, and the affidavit does not attest to or explain any of these
markings.

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 RWI CONSTRUCTION v. SKYZ LLC, et al.
Decision of the Court

III. Damages.

¶15 Owner argues the superior court erroneously calculated
damages owed to Contractor at summary judgment, pointing to an invoice
from Contractor, which identified a lesser charge. The record shows no
error. Owner relies on an incorrect invoice for his argument, which stated
that Owner paid more than it did.

IV. Attorney Fees and Costs.

¶16 Lastly, Owner contests the amount of attorney fees and costs
awarded to Contractor. We review fee awards for an abuse of discretion
and “will affirm unless there is no reasonable basis for the award.” Hawk
v. PC Vill. Ass’n, Inc., 233 Ariz. 94, 100, ¶ 19 (App. 2013). “The trial court
has broad discretion in determining whether to award attorneys’ fees under
A.R.S. § 12-341.01(A).” State Farm Mut. Auto. Ins. v. Arrington, 192 Ariz. 255,
261, ¶ 27 (App. 1998) (cleaned up).

¶17 An award of attorney fees was appropriate here under two
statutes. The Prompt Pay Act directs the court to award “costs and attorney
fees in a reasonable amount” to the successful party in an action to collect
payments under that statute. A.R.S. § 32-1182(S). On top of that, this action
arose out of a contract. A.R.S. §§ 12-341, -341.01.

¶18 We discern no error. Owner contests only a $5,000 entry for
drafting a second motion for summary judgment because it duplicated the
first motion for summary judgment. But the two motions differ in length
and content; they are not duplicates. We find no abuse of discretion.

V. Attorney Fees and Costs on Appeal.

¶19 Contractor requests attorney fees and costs on appeal under
ARCAP 21, A.R.S. §§ 32-1182(S) and 12-341.01, which we award upon
compliance with ARCAP 21.

CONCLUSION

¶20 Affirmed.

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