Pointe 16 v. Gtis-Hov

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

POINTE 16 COMMUNITY ASSOCIATION, Plaintiff/Appellant,

v.

GTIS-HOV POINTE 16, LLC, et al., Defendants/Appellees.

No. 1 CA-CV 23-0747
FILED 07-09-2024

Appeal from the Superior Court in Maricopa County
No. CV2022-009451
The Honorable Jennifer C. Ryan-Touhill, Judge

AFFIRMED

COUNSEL

Israel & Gerity PLLC, Phoenix
By Kyle A. Israel
Counsel for Plaintiff/Appellant

Schern Richardson Finter PLC, Mesa
By Aaron Matthew Finter
Counsel for Defendant/Appellee
 POINTE 16 v. GTIS-HOV, et al.
Decision of the Court

MEMORANDUM DECISION

Presiding Judge Andrew M. Jacobs delivered the decision of the Court, in
which Judge Jennifer M. Perkins and Chief Judge David B. Gass joined.

J A C O B S, Judge:

¶1 Pointe 16 Community Association (“the HOA”) appeals the
superior court’s grant of summary judgment in favor of K. Hovnanian
(“Hovnanian”) on its claim for breach of the implied warranty of
workmanship and habitability. The HOA also appeals the superior court’s
denial of its request for leave to amend its complaint. We affirm, because
the HOA’s: (1) theories it could sue in its own name for breach of the
implied warranty fail, because it is not a condominium association and it
failed to bring a homeowners association dwelling action under A.R.S. § 33-
2001 et seq.; (2) attempt to assert its members’ claims for breach of the
implied warranty fail because those claims were not assignable; and (3)
request for leave to amend its complaint violated Arizona Rule of Civil
Procedure 15.

FACTS AND PROCEDURAL HISTORY

¶2 Pointe 16 Townhomes is a residential community comprising
67 residences owned by individual homeowners located in Phoenix,
Arizona. Hovnanian developed and sold the residences to individual home
buyers. The purchase contracts for the homes in Pointe 16 contain a non-
assignment provision barring homeowners from assigning or transferring
their rights under those contracts without Hovnanian’s written consent.
That provision reads:

B. Successors and Assigns. In view of the credit
qualifications, processing and other personal matters
considered hereunder, this Agreement and the rights of Buyer
hereunder may not be assigned or transferred by Buyer
voluntarily, involuntarily, or by operation of law without first
obtaining Seller's written consent, which may be withheld in
Seller's sole and absolute discretion.

2
 POINTE 16 v. GTIS-HOV, et al.
Decision of the Court

¶3 Hovnanian created the HOA under A.R.S. § 10-3101 to
manage the Pointe 16 community on behalf of the residents. Hovnanian
conveyed ownership of the common areas of the community to the HOA.
The declaration of covenants and restrictions (“the Declaration”)
establishing the HOA require it to maintain the common areas and the
dwelling unit exteriors, which include the walls, stucco, facades, and roofs
of the homes.

¶4 The HOA discovered defects to community structures in 28
of the 67 units as well as the common areas. The HOA filed suit against
Hovnanian in two counts: Count 1 was a purchaser dwelling action under
A.R.S. § 12-1361, while Count 2 was a claim for breach of the implied
warranty of workmanship and habitability. Hovnanian moved to dismiss,
alleging the HOA’s complaint failed to comply with the A.R.S. § 33-2002,
which requires HOAs to get approval from the HOA board of directors and
members, as well as provide notice and opportunity to repair to the seller.
The HOA responded, arguing “A.R.S. § 33-2002 Is Inapplicable” because
the HOA does not own the homes, so that its action was not an HOA
dwelling action under A.R.S. § 33-2001 et seq. Ultimately, the court declined
to consider the motion to dismiss because Hovnanian failed to comply with
Arizona Rule of Civil Procedure 12(j).

¶5 Relevant here, Hovnanian moved for summary judgment,
arguing (1) A.R.S. § 12-1361 does not establish an independent cause of
action, and (2) the HOA had no right to enforce implied warranties with
respect to the common area or portions of the homeowners’ homes. The
HOA claimed it had the right to sue over construction defects in the
common area, relying on A.R.S. § 33-1242(4), which governs condominium
associations. The HOA argued that A.R.S. § 33-2001 illustrated that a
condominium association, which it claimed to be, had the right to sue over
common areas and home exteriors. The HOA also claimed the right to sue
for defects in home exteriors because many (but not all) of Pointe 16’s
homeowners had assigned their implied warranty claims to the HOA.

¶6 The superior court granted Hovnanian’s motion. The court
rejected the HOA’s theory that it could sue Hovnanian under A.R.S. § 33-
1242(4), reasoning that “Pointe 16 is not a condominium community.” The
court explained that “real estate is not a condominium unless the undivided
interests in the common elements are vested in the unit owners,” A.R.S. §
33-1202(10), while here, the HOA owns the common areas. The court
explained that in some circumstances an HOA could bring a homeowners’
association dwelling action under A.R.S. § 33-2001, but that the HOA had
failed to do so here. Finally, the court ruled that the HOA could not bring

3
 POINTE 16 v. GTIS-HOV, et al.
Decision of the Court

a purchaser dwelling action for defects in homes, and that the homeowners’
contracts barred assignment to the HOA for the homeowners’ claims for
those defects. The HOA moved for reconsideration, asking the court to
conceive of its suit as a homeowners’ association dwelling action under
A.R.S. § 33-2001. The court denied the motion.

¶7 We have jurisdiction over the HOA’s timely appeal under
A.R.S. § 12-2101(A)(1) and Article 6, Section 9 of the Arizona Constitution.

DISCUSSION

¶8 We review grants of summary judgment de novo. Neptune
Swimming Found. v. City of Scottsdale, 256 Ariz. 497, 505 ¶ 23 (2024).
Summary judgment was appropriate if there were no genuine disputes of
material fact. Id.; Ariz. R. Civ. P. 56(a). We review the denial of a motion
for leave to amend a complaint for an abuse of discretion. Swenson v. Cnty.
of Pinal, 243 Ariz. 122, 128 ¶ 21 (App. 2017).

¶9 The HOA appeals the grant of summary judgment as to its
Count Two, for breach of the implied warranty. The HOA argues it has
right to sue in its own name for construction defects in both the unit
exteriors and the common area because: (1) A.R.S. § 33-2002 allows it to
bring a homeowners association dwelling action; and (2) the homeowners
assigned their implied warranty claims to the HOA. The HOA also argues
the court abused its discretion by denying its request for leave to amend its
complaint.

I. The Claims the HOA Brings on its Own Behalf Fail Because the
HOA Is Not a Condominium Association, and the HOA Failed to
Bring a Homeowners Association Dwelling Action Under A.R.S. §
33-2001(5).

A. The Superior Court Correctly Ruled That the HOA Is Not a
Condominium Association.

¶10 The parties agree in this court that the HOA is not a
condominium association. The HOA resisted summary judgment on the
theory that it was a condominium association, stating “[t]he evidence is
undisputed and contrary to [Hovnanian’s] fact-free assertion that the
Project is not a condominium,” and “[h]ere, Defendants created a
condominium . . . .” From those premises, the HOA argued it had the right
to sue under A.R.S. § 33-1242(4), which governs condominium associations.

4
 POINTE 16 v. GTIS-HOV, et al.
Decision of the Court

¶11 On appeal, the HOA abandons its attempt to claim
condominium association status, making only one reference to A.R.S. § 33-
1242(4), while suggesting Hovnanian improperly focused the argument
there. For its part, Hovnanian agrees with the superior court that A.R.S. §
33-1242(4) “does not apply to” the HOA. We agree with both parties’ briefs
in our court and the superior court’s ruling: the HOA’s ownership of the
common areas of Pointe 16 means Pointe 16 is not a condominium
community. The condominium association statute provides no basis upon
which the HOA could recover from Hovnanian for any breach of the
implied warranty in either the common area or the unit exteriors.

B. The HOA Did Not Bring a Homeowners’ Association
Dwelling Action, and Waived Any Argument That It Did.

¶12 The HOA argues it was error to grant Hovnanian summary
judgment because the HOA has a right under A.R.S. § 33-2001(5) and § 33-
2002 to bring a homeowners’ association dwelling action complaining of
construction defects, including those arising from breach of the implied
warranty. Hovnanian argues that no statute authorizes the HOA to bring
such a claim. We do not have to resolve that dispute today, because even
assuming A.R.S. § 33-2001 and its associated statutes work just as the HOA
argues in this court, the HOA failed to litigate such a claim, as several points
illustrate.

¶13 First, the HOA’s complaint never references A.R.S. § 33-2001
et seq., or claims to have complied with the requisites to suit under it.

¶14 Second, the HOA disclaimed in a response to a motion to
dismiss (in an argument heading, no less) that “A.R.S. § 33-2002 Is
Inapplicable.” See First Financial Bank, N.A. v. Claassen, 238 Ariz. 160, 164 ¶
18 (App. 2015) (“Waiver is the intentional relinquishment of a known
right.”). While Hovnanian did not move for summary judgment that the
HOA had not brought a homeowners’ association dwelling action under
A.R.S. § 33-2001 et seq. – a theory the HOA now champions on appeal – that
is understandable, given the HOA’s renunciation of it months earlier.

¶15 Third, in resisting Hovnanian’s summary judgment motion,
the HOA unmistakably claimed to be a condominium association, not a
homeowners’ association, thus renouncing this legal theory again. See First
Financial Bank, 238 Ariz. at 164 ¶ 18.

¶16 Fourth, while the HOA’s motion for reconsideration
abandoned its theory that it was a condominium association and claimed
to exercise a HOA’s right to bring a homeowners association dwelling

5
 POINTE 16 v. GTIS-HOV, et al.
Decision of the Court

action under A.R.S. § 33-2001 et seq., the change of position failed as a matter
of law because the motion for reconsideration (a) did not claim that the
HOA pleaded such a theory, and (b) was not a chance to offer new or
inconsistent legal theories the HOA could have, but failed to, raise. See Fay
Corp. v. Bat Holdings I, Inc., 651 F. Supp. 307, 309 (W.D. Wash. 1987).

¶17 Fifth, because the HOA failed to argue that it was litigating a
homeowners association dwelling action under A.R.S. § 33-2001 et seq. until
after the entry of summary judgment against it, that argument is waived.
See Odom v. Farmers Ins. Co. of Arizona, 216 Ariz. 530, 535 ¶ 18 (App. 2007)
(explaining that arguments raised for the first time on appeal are waived).
The superior court correctly granted summary judgment for Hovnanian on
the claims it asserted on its own behalf.

II. The Homeowners Cannot Assign to the HOA Implied Warranty
Claims for the Parts of Their Homes the HOA Maintains.

¶18 The HOA argues it can enforce the implied warranty on
behalf of the homeowners because most of the homeowners assigned to the
HOA (albeit during the pendency of the HOA’s suit) their rights to sue.
According to the HOA, the non-assignment provision of the purchase
contracts does not apply because implied warranty rights originate in
common law, not contracts. Hovnanian argues implied warranty rights are
assignable under Highland Vill. Partners, L.L.C. v. Bradbury & Stamm Constr.
Co., 219 Ariz. 147, 150 ¶ 12 (App. 2008), and thus, by implication, may also
be subject to non-assignment provisions, like other contract rights.

¶19 Hovnanian is correct. While the implied warranty is
judge-made, as the HOA points out, the implied warranty is nonetheless
incorporated into a contract as an implied term. Zambrano v. M & RC II
L.L.C., 254 Ariz. 53, 59 ¶ 14 (2022) (explaining we “impute the implied
warranty . . . into all contracts between builder-vendors and homebuyers as
a matter of common law.”). Because they are part of the contract, “a party’s
rights under an implied warranty of workmanship and habitability” may
be assigned unless the assignment itself is “validly precluded by contract.”
Highland, 219 Ariz. at 150 ¶¶ 11, 12. The HOA does not suggest the
non-assignment provision is invalid. As such, the homeowners were

6
 POINTE 16 v. GTIS-HOV, et al.
Decision of the Court

precluded from assigning to the HOA their rights to enforce the implied
warranty.1

III. The Superior Court Did Not Abuse its Discretion by Denying the
HOA’s Request for Leave to Amend its Complaint.

¶20 The HOA claims the superior court erred by not granting it
leave to amend its complaint. The HOA’s request to amend was not made
by a separate motion, but was raised on pages 9 and 10 of its response to
Hovnanian’s motion for summary judgment. There, the HOA
conditionally requested leave to amend, so that if it did not survive
summary judgment, it sought “leave to add express warranty claims
against [Hovnanian’s] subcontractors.”

¶21 The HOA’s request did not comply with Arizona Rule of Civil
Procedure 15. Under that rule, “[a] party moving for leave to amend a
pleading must attach a copy of the proposed amended pleading as an
exhibit to the motion.” Ariz. R. Civ. P. 15(a)(4). Also, “[t]he exhibit must
show the respects in which the proposed pleading differs from the existing
pleading by bracketing or striking through the text to be deleted and
underlining the text to be added.” Id. The HOA did not attach a proposed
pleading, much less one containing brackets and strike-throughs, nor did it
file a motion seeking leave. The superior court did not abuse its discretion
by following the mandatory language of Rule 15 and denying the HOA
leave to amend. See Swenson, 243 Ariz. at 128 ¶ 21.

1 This result is entirely consistent with Richards v. Powercraft Homes, Inc.,
139 Ariz. 242, 245 (1984), which explained that the implied warranty passes
from a home’s original purchaser to later owners of homes. Here, the
homeowners retain both their ownership interests and their own rights to
enforce the implied warranty, and the right to enforce the implied warranty
will pass to each of successive owner of their homes.

7
 POINTE 16 v. GTIS-HOV, et al.
Decision of the Court

CONCLUSION

¶22 For the foregoing reasons, we affirm. We award Hovnanian
its costs on appeal, subject to its compliance with ARCAP 21.

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

8