Stromberg v. Heirigs

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

MAXIM STROMBERG, as Personal Representative
of the Estate of DANNY RICH, Plaintiff/Appellee/Cross-Appellant,

v.

TRACY HEIRIGS, an individual, Defendant/Appellant/Cross-Appellee.

No. 1 CA-CV 24-0150
FILED 07-14-2026

Appeal from the Superior Court in Coconino County
No. S0300CV201800576
The Honorable Elaine Fridlund-Horne, Judge, Retired
The Honorable Brent Davidson Harris, Judge Pro Tempore, Retired

AFFIRMED

APPEARANCES

Tracy Heirigs, Flagstaff
Defendant/Appellant/Cross-Appellee

Cheri L. McCracken, Attorney at Law, Phoenix
By Cheri L. McCracken
Counsel for Plaintiff/Appellee/Cross-Appellant
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MEMORANDUM DECISION

Judge Michael J. Brown delivered the decision of the Court, in which
Presiding Judge David B. Gass joined.1 Judge Andrew J. Becke dissented.

B R O W N, Judge:

¶1 Tracy Heirigs appeals the superior court’s denial of her
motion for new trial following a jury’s verdict that no valid contract existed
for the sale of a restaurant. Danny Rich cross-appeals several aspects of the
court’s ultimate judgment entered after post-trial proceedings.2 For the
following reasons, we affirm.

BACKGROUND

¶2 Rich owned and operated Alpine Pizza, a restaurant located
in Flagstaff, as a sole proprietorship starting around 1974. In 2017, he pled
guilty to two felony offenses, which created a problem for the restaurant
because the liquor license was due for renewal in May 2018. 3 In Arizona, a
liquor license cannot be renewed for a person convicted of a felony offense
in the five years preceding their application for such a license. A.R.S.
§ 4-202(D). By early 2018, Rich also began experiencing several health
issues.

1 Judge David B. Gass was a sitting member of this court when the
matter was assigned to this panel. He retired effective June 30, 2026. In
accordance with the authority granted by Article VI, Section 3, of the
Arizona Constitution, and under A.R.S. § 12-145, the Chief Justice of the
Arizona Supreme Court has designated Judge David B. Gass as a judge pro
tempore in the Court of Appeals for the purpose of participating in the
resolution of cases assigned to this panel during his term in office and for
the duration of Administrative Order 2026-87.

2 While this appeal was pending, Rich passed away. For the ease of
reference and consistency, we will continue to refer to him throughout the
decision. Maxim Stromberg, as personal representative of Rich’s estate, is
now the plaintiff/cross-appellant in this matter.

3 The two convictions were set aside in 2020.

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¶3 Heirigs, who owned a business next to Alpine Pizza, met Rich
in March 2018, and the two developed a personal relationship. Heirigs gave
Rich a book regarding natural healing and would accompany him to some
of his medical appointments. Heirigs and Rich later agreed she would
become involved with Alpine Pizza, though each of them seemed to have
different understandings about what her involvement would look like.

¶4 According to Rich, his plan was to establish a limited liability
company that would pass the restaurant on to his family, who would then
become members of the company. He claimed he hired Heirigs to work as
a bookkeeper for 90 days to help transfer the restaurant to the limited
liability company and to manage its books. Rich intended Heirigs to be a
part of the company to establish it but also contemplated they would later
“bring in all the other members.” Yet Heirigs believed that Rich would
transfer his liquor license to a limited liability company she created, and
then he would spend “approximately three months” looking for a buyer for
the restaurant. In the meantime, she would be responsible for managing
and running the restaurant. According to Heirigs, once Rich identified a
buyer for Alpine Pizza that both she and Rich could agree upon, she would
sell the restaurant to that buyer and would receive a portion of the purchase
price or $30,000, whichever was greater.

¶5 In preparing for the agreement and to resolve the impending
issue with the liquor license, on May 18, 2018, Rich and Heirigs met with an
attorney who specializes in liquor licensing law. According to Heirigs, this
attorney discussed the process of setting up a limited liability company and
the process for transferring the license. She also claimed the attorney told
her that Rich could not own more than ten percent of the company.4

¶6 One week later, Heirigs formed Alpine Pizza LLC (“the
LLC”). The articles of organization listed Heirigs as the manager and sole
member of the LLC. That same day, the LLC applied for a transfer of Rich’s
liquor license. The application included a bill of sale, signed by Rich,
transferring the restaurant to the LLC for $10. The application also
contained a section for listing the LLC’s creditors and noted that the LLC
owed Rich $250,000. Heirigs explained that this number reflected the
minimum price Rich would accept for sale of the restaurant. She also
claimed there was a promissory note for this same amount payable to Rich

4 At trial, Rich could not seem to remember details about meeting with
this attorney, and the attorney himself testified he only vaguely recalled
speaking with the parties about a case involving a felony.

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when they sold the restaurant. Rich, conversely, testified he told Heirigs to
put $500,000, but he did not notice she had written $250,000.

¶7 In the months following transfer of the restaurant and license
to the LLC, the relationship between Rich and Heirigs deteriorated. She
testified that despite their agreement to let her manage the restaurant, Rich
was “continually meddling,” constantly took money without permission,
and was seemingly not searching for a buyer. Rich claimed he tried to fire
Heirigs in September 2018, and then she changed the locks to the restaurant.
That same month, an attorney working on Rich’s behalf prepared a contract
to “solve the problems between [the parties],” but Heirigs did not sign it.

¶8 Several weeks later Rich sued Heirigs and the LLC. He
requested a declaratory judgment that no valid contract for the sale of the
restaurant was formed because there was no consideration or meeting of
the minds, or the contract was void based on illegality. Alternatively, Rich
claimed both defendants breached any valid contract as well as the implied
covenant of good faith and fair dealing (“implied covenant”). Rich also
included claims for intentional and negligent misrepresentation, unjust
enrichment, and violations of the Arizona Wage Act, see A.R.S. § 23-355,
and the Adult Protective Services Act, see § 46-456. Heirigs counterclaimed
for breach of contract, breach of the implied covenant, tortious interference,
and quantum meruit.

¶9 At trial, Heirigs and Rich each testified about the events
surrounding Heirigs’s involvement with Alpine Pizza and their
understandings of the terms of any agreement between them. The liquor
license attorney testified that a person with a felony conviction (1) is
statutorily barred from qualifying for a liquor license if the conviction
occurred within the last five years, and (2) cannot have “10 percent or more
of the outstanding debt of the transaction for the license.”

¶10 In its verdict, the jury found there was no valid contract for
the sale of Alpine Pizza to the LLC. See Appendix. Even so, the jury also
found that both Rich and the LLC had violated the implied covenant. Id.
The verdict form provided a line for the jurors to write the appropriate
amount of damages if they found a breach of the implied covenant. Id.
Rather than listing a number for monetary damages on that line, the jury
wrote “See Reverse.” Id. The jury then wrote a list of items on the reverse
side of the verdict form, which included: (1) transferring ownership of the
LLC and the liquor license to Rich, (2) transferring all of the LLC’s debt “for
restaurant operations & business,” excluding unpaid legal fees, to Rich, and
(3) splitting all LLC cash assets on the books evenly between Rich and

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Heirigs. Id. The jury found the rest of the claims and counterclaims were
not proven. Id. The record does not indicate that any objections to the
verdict were raised before the court dismissed the jury.

¶11 After trial, the parties disputed the proper form of judgment.
Following oral argument addressing how to fashion the judgment, the
court ordered each party to submit an “updated form of order based on the
parties’ discussions” and provide “relevant numbers in regard to attorney’s
fees, debts, accruals[,] etc. within fifteen (15) Court days.” Nothing in the
record suggests either party objected to this procedure and neither party
timely submitted a transcript of the oral argument to this court.

¶12 Heirigs submitted a “debt calculation document” that listed
all the LLC’s creditors, including the Internal Revenue Service, Arizona
Department of Revenue, food vendors, and Heirigs herself. After she
submitted her document, Rich submitted an analysis by a certified public
accountant that analyzed and critiqued Heirigs’s figures on several
grounds, including that Heirigs had double counted certain expenses and
failed to include a $200,000 loan that was later forgiven. That analysis
concluded the LLC had no current debt.

¶13 After the parties submitted these documents, the court issued
a judgment (“First Judgment”). The court ordered the same relief the jury
wrote on the verdict form. The court then listed the LLC’s creditors and
amounts owed, including a total of $199,365 to Heirigs herself, which
reflected the same amounts Heirigs provided in her debt calculation
document. The court awarded costs to Rich as the “prevailing party,” but
declined to award attorney’s fees to either party under A.R.S.
§ 12-341.0l(A), “since the purpose of awarding such fees, pursuant to A.R.S.
§[]12-341.0l(B) is ‘made to mitigate the burden of the expense of litigation
to establish a just claim or a just defense.’”

¶14 Despite the court’s express denial of each party’s claim for
attorneys’ fees, Rich filed an application for attorney’s fees, asserting he was
“entitled” to such award as the prevailing party. Though the court ordered
that the application would be treated as a motion for reconsideration, the
record does not show the court ever ruled on the motion. Instead, and for
reasons that are not evident from the record, a newly assigned superior
court judge signed a different judgment (“Second Judgment”), provided by
Rich, which included several portions of the form of judgment Rich had
initially submitted after trial. The Second Judgment found there was no
contract for sale of the restaurant, ordered the LLC to transfer the liquor
license to Rich, and ordered an audit of the LLC to “ensure that only the

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legal business debt be the responsibility of [] Rich.” Additionally, and
contrary to the First Judgment, the Second Judgment found that Rich was
“entitled to attorney’s fees,” citing A.R.S. § 12-341.01.

¶15 Heirigs moved to vacate the Second Judgment, arguing the
court had already entered the First Judgment. Heirigs emphasized that the
First Judgment had denied Rich’s request for fees. Rich filed a “petition”
requesting about $250,000 in attorneys’ fees and sought recovery of taxable
costs. Several months after the parties filed these documents, the court
entered another judgment (“Final Judgment”). The Final Judgment
affirmed “all findings and orders” contained in the First Judgment and
denied Rich’s request for attorneys’ fees but awarded him taxable costs
totaling $14,662.39.

¶16 Heirigs moved for a new trial under Arizona Rule of Civil
Procedure (“Rule”) 59(a), arguing (1) Rich failed to sufficiently disclose the
theory that a contract for sale of the restaurant which involved Rich owning
the LLC’s debt was illegal, (2) the jury’s verdict was contrary to law, and (3)
sufficient evidence existed to support the elements of a contract. The court
denied the motion, stating that the facts in Heirigs’s motion were “facts that
were presented to the jury during the trial” and that the jury “rendered a
decision based on th[at] evidence.” Heirigs appealed and Rich cross-
appealed. We have jurisdiction under A.R.S. § 12-2101(A)(1), (5)(a).

DISCUSSION

¶17 For her appeal, Heirigs challenges the superior court’s denial
of her motion for a new trial and the Final Judgment. For his cross-appeal,
Rich challenges various aspects of the Final Judgment.

A. Heirigs’s Appeal

¶18 Heirigs argues the court erred in denying her motion for new
trial because Rich engaged in misconduct by failing to timely disclose a key
legal theory before trial, and the evidence at trial could not have supported
the jury’s verdict. We review the denial of a motion for a new trial for an
abuse of discretion. Am. Power Prods., Inc. v. CSK Auto, Inc., 239 Ariz. 151,
154, ¶ 10 (2016). “An abuse of discretion occurs when the ruling is
‘manifestly unreasonable, or exercised on untenable grounds, or for
untenable reasons.’” Paz v. City of Tucson, 256 Ariz. 391, 398, ¶ 21 (App.
2023).

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1. Disclosure

¶19 Heirigs argues Rich failed to timely disclose the legal basis on
which he would claim the contract between him and the LLC was void for
illegality. At trial, the liquor license attorney testified that under relevant
liquor license statutes, an entity could not have a “controlling person” who
had a felony conviction, and that a “controlling person” included an
individual with ten percent or more ownership of the entity’s liabilities. See
A.R.S. §§ 4-101(10)–(11), -210(A)(8). Rich argued to the jury that “any
contract to sell Alpine Pizza with [] Rich carrying back the promissory note
of whatever kind or a financial interest of whatever kind, was a void
contract to start with. That it was void as illegal.” Heirigs contends that
Rich never put her on notice he would argue contractual illegality based on
his ownership of the LLC’s debt.

¶20 Heirigs, however, failed to object during trial to the attorney’s
testimony about liquor licensing statutes. Instead, she raised the
nondisclosure issue for the first time in her motion for new trial. Generally,
a party’s failure to raise a timely objection during trial for lack of disclosure,
even when the party includes the issue in a motion for new trial, waives the
right to challenge the issue on appeal. See Ritchie v. Krasner, 221 Ariz. 288,
303, ¶ 51 (App. 2009); Conant v. Whitney, 190 Ariz. 290, 293 (App. 1997). As
a result, Heirigs has waived any argument that the court erred in denying
her motion for new trial based on her lack of disclosure argument.

2. Insufficient Evidence Supporting Jury’s Finding

¶21 Heirigs also argues the evidence at trial did not support the
jury’s finding that no contract existed for the sale of the restaurant to the
LLC. “We view the evidence in the light most favorable to sustaining a jury
verdict and will affirm if there is substantial evidence to support it.”
Benedict v. Total Transit Inc., 252 Ariz. 151, 160, ¶ 26 (App. 2021).

¶22 Primarily, Heirigs relies on the fact that Rich acknowledged
at trial that he and Heirigs had an agreement to sell the business. But the
mere acknowledgment that there was some kind of agreement between him
and Heirigs does not conclusively establish the existence of an enforceable
contract. “It is well-established that before a binding contract is formed, the
parties must mutually consent to all material terms,” and that “[a] distinct
intent common to both parties must exist without doubt or difference, and
until all understand alike there can be no assent.” Hill-Shafer P’ship v.
Chilson Fam. Tr., 165 Ariz. 469, 473 (1990) (emphasis added). Though both
Rich and Heirigs believed there was some type of agreement between them,

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each party’s understanding as to the terms of that agreement differed
sharply. Supra ¶ 4. Contrary to Heirigs’s suggestion, the jury could
reasonably conclude that Rich’s testimony did not reflect that he and
Heirigs had a “meeting of the minds” sufficient to establish a legally
cognizable contract. See Hill-Shafer P’ship, 165 Ariz. at 473 (“If one party
thinks he is buying one thing and the other party thinks he is selling another
thing, no meeting of the minds occurs, and no contract is formed.”).

3. Costs and Final Judgment

¶23 Heirigs also argues the court erred in determining Rich was
the prevailing party and thus entitled to attorneys’ fees. But the superior
court did not award attorneys’ fees; the court only awarded Rich his taxable
costs. To the extent Heirigs seeks to challenge the award of costs, she has
not persuaded us the court abused its discretion. Under A.R.S. § 12-341, the
“successful party to a civil action shall recover from his adversary all costs
expended or incurred therein,” and the superior court has substantial
discretion in determining who is the “successful party.” Assyia v. State Farm
Mut. Auto. Ins. Co., 229 Ariz. 216, 223, ¶ 32 (App. 2012). Though Rich did
not prevail on all, or even most, of his claims, the jury returned a verdict in
his favor for his claim of declaratory relief and in part for breach of the
implied covenant. Critically, the verdict in this matter resulted in Rich
retaining ownership of the restaurant and obtaining the liquor license,
which was at the center of this dispute. On this record, Heirigs has not
shown the court abused its discretion in awarding costs to Rich.

¶24 Finally, Heirigs argues the court failed to include details
about the “sale of the LLC” in its final judgment. Though she suggests it
“is prudent and necessary in this case to help the [p]arties work through
the particulars surrounding the upcoming sale,” she cites no legal authority
requiring the court to make such provisions. Accordingly, she has failed to
demonstrate an abuse of discretion.

B. Rich’s Cross-Appeal

¶25 Rich cross-appeals several aspects of the Final Judgment he
believes are improper. To the extent we may characterize the court’s
judgment as awarding equitable relief, we review the judgment for an
abuse of discretion. See Loiselle v. Cosas Mgmt. Grp., LLC, 224 Ariz. 207, 210,
¶ 8 (App. 2010) (“Fashioning an equitable remedy is within the trial court’s
discretion, and it will not be disturbed on appeal absent an abuse thereof.”).

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1. Challenges to the Jury’s Verdict

¶26 Rich argues that much of the court’s judgment cannot stand
because the relief ordered arises out of the jury’s finding on the claim for
breach of the implied covenant. According to Rich, that finding is
contradicted by the jury also finding that no contract existed between the
parties. He thus contends that the determination regarding the non-
existence of a contract eliminated any relief stemming from breach of the
implied covenant.

¶27 Rich is correct that the jury’s verdicts are inherently
inconsistent; a party cannot maintain a claim for breach of the implied
covenant when there is no contract. See Norman v. State Farm Mut. Auto. Ins.
Co., 201 Ariz. 196, 198, ¶ 1 (App. 2001) (reiterating “the well-settled
principle that a contract must exist before there can be a breach of the
covenants of good faith and fair dealing implied in every contract”). Thus,
those provisions of the jury’s verdict are contradictory. But Rich waived
his right to challenge this issue on appeal because he failed to timely request
that the court resubmit the verdict to the jury. See Benedict, 252 Ariz. at
161–62, ¶ 35 (“A party who believes a verdict is defective or nonresponsive
must move to have the case resubmitted to the jury to preserve the issue for
appeal.”); Trustmark Ins. Co. v. Bank One, Ariz., NA, 202 Ariz. 535, 543,
¶¶ 38–39 (App. 2002) (explaining that a party must object when the verdict
is rendered if the party believes the verdict is inconsistent). “Requiring the
party to object to defective verdicts at trial provides the court with an
opportunity to correct the error with minimal effort and expense, and aids
the just and efficient operation of the . . . courts.” Trustmark Ins. Co., 202
Ariz. at 543, ¶ 40 (citations and quotations omitted).

¶28 Similarly, Rich takes issue with the portion of the court’s
judgment finding that the debts of the LLC are personal to him. Again, Rich
is correct that members of a limited liability company are not personally
liable for company debts. See A.R.S. § 29-3304(A). But the court’s finding
on that point flows directly from the jury’s verdict, which provided for
transfer of all the LLC debt to Rich. He had the opportunity to raise this
issue before the jury was dismissed but failed to do so. Accordingly, his
argument is waived. See Benedict, 252 Ariz. at 161–62, ¶ 35.

¶29 Our dissenting colleague believes the verdicts should have
been rectified under Rule 49, and that we should reverse and remand for a
new trial regardless of waiver. Had Rich made this argument in either the
superior court or in his briefing on appeal, it may have been compelling.
But he failed to do so. We likewise disagree that eschewing waiver is

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appropriate here. There is no reason apparent from the record, and Rich
does not offer any explanation on appeal, why he could not have asked the
court to take appropriate steps to address the verdict’s inconsistencies
before the trial concluded. Granting him relief on appeal in spite of that
failure would contravene the rationale for applying waiver when a party
fails to object in a timely manner. See Trustmark Ins. Co., 202 Ariz. at 543, ¶
40.

¶30 Even so, we share the dissent’s frustration with the verdict in
this case. In addition to the obvious contradiction in the jury’s verdict that
a contract did not exist and yet somehow was still breached, there is no
reasonable explanation why the jury was permitted to effectively award
equitable relief for a contract claim. The parties and the court could have,
and should have, attempted to rectify these issues before discharging the
jury. Because that did not occur, we do not believe it is proper to order a
new trial.

2. Accounting of Debts

¶31 Rich next argues the court deprived him of due process
through the method it used to determine the LLC’s debts in the Final
Judgment. He believes the court’s request that the parties submit
documentation showing the LLC’s “attorney’s fees, debts, and accruals”
did not give him a meaningful opportunity to contest Heirigs’s calculation
of the LLC’s debts. Because there was no opportunity to present his own
evidence or attack the credibility of Heirigs’s figures, he argues he never
received a “meaningful opportunity to be heard.”

¶32 As noted, supra ¶ 12, Rich’s accountant was able to review
Heirigs’s filing and point out what the accountant believed was wrong with
Heirigs’s figures. And similar to Rich’s argument on the jury’s verdict, the
record does not show that Rich objected to this procedure before entry of
the First Judgment. It was only after the court adopted Heirigs’s figures
that Rich believed the process was unfair. Though Rich raised various
arguments challenging the court’s procedure in his motion for
reconsideration, it was insufficient to preserve the issue for appeal. See
Levine v. Haralson, Miller, Pitt, Feldman & McAnally, P.L.C., 244 Ariz. 234, 239,
¶ 16 (App. 2018) (“Generally, arguments raised for the first time in a motion
for reconsideration are not preserved for appeal.”). Rich has waived his
due process argument.

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3. Alleged Errors in Calculating LLC Debt

¶33 Rich makes several arguments related to the Final Judgment
regarding alleged errors in Heirigs’s debt calculations which the court
adopted. He contends that Heirigs: (1) failed to include a $200,000 loan
(which was later forgiven) for the LLC in her profit and loss statements, (2)
double counted expenses for rent paid to Rich, and (3) included debts
incurred after Heirigs stopped operating the restaurant and expenses
unrelated to operation of the restaurant. He also claims the judgment
erroneously included Heirigs’s legal fees as part of the LLC’s debt
calculation.

¶34 Rich has not persuaded us that the court abused its discretion
in accepting Heirigs’s debt figures. Though Rich argues that Heirigs
included numerous expenses incurred after he resumed operation of the
restaurant, her debt calculation document does not reflect such an error.
Instead, it includes a list of payments she made on liabilities associated with
the restaurant and ongoing litigation. Similarly, Rich argues that several
expenses, including legal fees, travel expenses, and cell phone bills, fall
outside the jury’s award of debt related to “restaurant business and
operation.” But Rich provides no justification for reversal other than his
own assertion that such expenses went beyond the jury’s verdict and were
unrelated to the business and operation. To the contrary, at least regarding
the LLC’s legal debts, the jury specifically excluded unpaid legal fees. Thus,
the verdict confirms the jury intended for Rich to assume the LLC’s paid
legal expenses. On this record, we cannot say the court abused its discretion
by including these debts in the Final Judgment.

¶35 As to Rich’s argument about the $200,000 loan, he does not
explain with reasonable clarity how the court erred by failing to deduct the
amount from the LLC’s outstanding debt. Rich emphasizes that Heirigs
admitted at trial to receiving the loan and its subsequent forgiveness, but
she also testified she used those funds to cover business expenses. Rich’s
briefing, however, cites only Heirigs’s testimony about receiving the loan,
Heirigs’s debt calculation document, and his accountant’s analysis of the
same. Rich claims the “numbers provided by Heirigs were so deeply
flawed it was clear error to accept them,” but cites only generally to the
documents he and Heirigs filed regarding the LLC’s debts; he provides no
other reference to the evidence regarding the LLC’s financial documents or
anything else in the record to demonstrate why the court’s acceptance of
Heirigs’s debt figures was clearly erroneous or an abuse of discretion. See
Adams v. Valley Nat. Bank of Ariz., 139 Ariz. 340, 343 (App. 1984) (“We are
not required to assume the duties of an advocate and search voluminous

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records and exhibits to substantiate an appellant’s claims.”). Rich’s claim
that Heirigs double counted rent expenses suffers a similar deficiency.

¶36 We also note that nothing in the record suggests Rich
requested an evidentiary hearing on the question of the LLC’s debts before
the court’s First Judgment. Moreover, Rich presented these arguments to
the court in his response to Heirigs’s debt calculation document. To the
extent his arguments ask us to re-evaluate his documentation of the LLC’s
finances against Heirigs’s submittal, without sufficiently demonstrating
how her calculations were clearly erroneous, we decline to do so. See
Godwin v. Farmers Ins. Co. of Am., 129 Ariz. 416, 419 (App. 1981).

4. Additional Equitable Relief

¶37 Rich contends the Final Judgment fails to appropriately
facilitate the transfer of the LLC, specifically regarding the LLC’s tangible
and intangible assets. But Rich shows nothing from the record indicating
the LLC has such assets, nor any authority requiring the court to issue such
orders. Similarly, Rich argues the court should have granted him
additional equitable relief, including restitution and disgorgement. Since
we have rejected his arguments on that issue, we likewise reject the notion
he is entitled to other equitable relief.

5. Attorneys’ Fees

¶38 Lastly, Rich argues the superior court erred by not awarding
him attorneys’ fees as part of the Final Judgment.5 He first argues the First
Judgment on this matter was “premature and unripe” because the
judgment did not provide him with 20 days to file his motion for attorneys’
fees under Rule 54(g)(2). Not so. Rule 54(g)(2) applies only “[i]f a decision
adjudicates all claims and liabilities of all of the parties, except a claim for
attorney’s fees, and judgment is to be entered under Rule 54(c).” (Emphasis

5 Rich asserts that the Second Judgment, which awarded him fees,
“has never been removed or rescinded,” and we should order that the
Second Judgment be reinstated. But the Final Judgment superseded the
Second Judgment by adopting “all findings and orders” issued in the First
Judgment. The court retained the inherent authority to modify the non-
final judgment, Preston v. Denkins, 94 Ariz. 214, 219 (1963), and Rich cites
nothing to the contrary. The Second Judgment was not final because it had
not resolved the issue of attorneys’ fees. See Rule 54(h)(1)(A) (noting that
“claims for attorney’s fees and costs must be resolved before any judgment
may be entered under Rule 54(b) or (c)”).

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added.) The First Judgment made it clear that neither party was entitled to
attorneys’ fees so there was no remaining claim of attorney’s fees. And Rich
cites no authority, or any reasonable argument, suggesting that a party may
properly submit a fee application after a court expressly declines to award
attorneys’ fees to any party under § 12-341.01(A).

¶39 Substantively, Rich also contends that under § 12-341.01(A),
“[a]s a prevailing party, [he] is entitled to an award of fees.” Not so. Section
12-341.01(A) states, “[i]n any contested action arising out of a contract,
express or implied, the court may award the successful party reasonable
attorney fees.” (Emphasis added). The legislature’s use of the “may award”
language demonstrates that an award of fees under this statute is
discretionary. See Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570
(1985). Accordingly, we will affirm a court’s decision under § 12-341.01 if
any reasonable basis supports the court’s determination. City of Cottonwood
v. James L. Fann Contracting, Inc., 179 Ariz. 185, 195 (App. 1994).

¶40 The factors used to determine whether to award fees under
§ 12-341.01 include whether “[t]he successful party did not prevail with
respect to all of the relief sought.” Associated Indem. Corp., 143 Ariz. at 570.
Rich prevailed on his claims for declaratory judgment and breach of the
implied covenant. But the jury rejected his remaining claims. Regardless
of whether other factors weighed in Rich’s favor, the court had a reasonable
basis to deny his request for attorneys’ fees. See Tucson Ests. Prop. Owners
Ass’n, Inc. v. McGovern, 239 Ariz. 52, 56, ¶ 14 (App. 2016).

CONCLUSION

¶41 We affirm. Given that Rich has not prevailed on any issue
raised in his cross-appeal, in our discretion we deny his request for
attorneys’ fees incurred on appeal under A.R.S. § 12-341.01. Likewise,
because neither party prevailed on their respective arguments presented in
the appeal and cross-appeal, we decline to award taxable costs to either
party.

B E C K E, Judge, dissenting:

¶42 Admirably, the majority makes every effort to respect and
uphold the jury’s verdicts in this case. But because the verdict on Rich’s
claim for the breach of the covenant of good faith and fair dealing (“Breach

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Becke, J., dissenting

of the Covenant”) was simply too defective to justly implement, I believe
the judgment entered is unsalvageable and must be set aside. I respectfully
dissent.

¶43 As the Appendix to this decision shows, the jury entered
verdicts in the Defendants’ favor on Rich’s claims for fraud/intentional
misrepresentation (#4 on the verdict form), unjust enrichment 6 (#5),
exploitation of a vulnerable adult 7 (#6), and punitive damages (#7). The
jury entered a verdict in Rich’s favor on Defendants’ counterclaim for
tortious interference with contractual relations (#8). The problems arise
with the first three entries on the verdict form pertaining to Rich’s claims
for breach of contract and for Breach of the Covenant. Because the only
justification for the jury’s “action items” was the jury’s purported verdict
on the fatally flawed Breach of the Covenant claim, the judgment must be
set aside.

¶44 As the majority acknowledges, the responses from the jury
are inconsistent. The jury found that there was no valid contract for sale of
the restaurant (#1) and that the nonexistent contract was not breached (#2),
but also found that Rich and Alpine Pizza LLC breached the implied
covenant of good faith and fair dealing contained within that nonexistent
contract (#3). That contradiction violates “the well-settled principle that a
contract must exist before there can be a breach of the covenants of good
faith and fair dealing implied in every contract.” Norman v. State Farm Mut.
Auto. Ins. Co., 201 Ariz. 196, 198, ¶ 1 (App. 2001). The question is what we
do with that contradiction. Arizona Rule of Civil Procedure 49 provides the
answer. And under the facts of this case, the answer can only be to order a
new trial.

I. Rule 49 Requires a New Trial on These Facts.

¶45 Rule 49 governs verdicts and provides different instructions
to the court depending on the type of verdict rendered by the jury. The Sixth
Circuit Court of Appeals recently grappled with a similar issue in applying

6 Unjust enrichment is an equitable claim, Span v. Maricopa Cnty. Treasurer,

246 Ariz. 222, 227, ¶ 15 (App. 2019), so—absent the parties’ consent, which
was not given here—the jury’s verdict on that claim is advisory only. See
Ariz. R. Civ. P. 39(d), 49(c).

7 Like the unjust enrichment claim, this was an advisory verdict; claims

under the Adult Protective Services Act are decided by the court, not the
jury. In re Estate of Newman, 219 Ariz. 260, 272–73, ¶¶ 45-47 (App. 2008).

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Becke, J., dissenting

Federal Rule of Civil Procedure 49. Debity v. Monroe Cnty. Bd. of Educ., 134
F.4th 389, 398 (6th Cir. 2025). The relevant parts of the federal Rule 49 are
identical to the Arizona rule, and so we treat interpretations of the federal
rule as persuasive in interpreting the Arizona rule. See Flynn v. Campbell, 243 Ariz. 76, 80, ¶ 9 (2017).

¶46 “The Federal Rules of Civil Procedure intuit three types of
verdicts: general verdicts, special verdicts, and general verdicts with
interrogatories. Each iteration gives the judge distinct responsibilities.”
Debity, 134 F.4th at 398. “General verdicts ‘simply ask the jury’ to say who
wins, and if it’s the plaintiff, to say how much she gets.” Id. (quoting Turyna
v. Martam Constr. Co., Inc., 83 F.3d 178, 181 (7th Cir. 1996)). In contrast,
“[s]pecial verdicts ask the jury for ‘special written finding[s] on each issue
of fact’ submitted to it.” Id. at 399 (quoting Fed. R. Civ. P. 49(a)). “If the court
asks the jury for special verdicts, then it becomes the role of the court to
decide whether there is liability, which it does by applying the law to the
jury’s factual findings.” Id. And finally, a “general verdict with
interrogatories combines a general verdict with factual questions that
would, standing alone, be special verdicts.” Id. at 400.

¶47 “In sum, a court asks for a general verdict when it asks the
jury to declare the ultimate result of a claim.” Id. “A court asks a jury to find
a special verdict or interrogatory in scenarios short of that, like when the
court poses questions of evidentiary or ultimate fact. And when a judge
asks for a general verdict and answers to questions, we call these questions
interrogatories.” Id.

¶48 Although not a model of clarity, I believe the verdict form
asked the jurors to render general verdicts with a single answer to a factual
question on Rich’s claims for breach of contract and for Breach of the
Covenant. Questions #2 and #3 on the verdict form were general verdicts;
they asked the jury to “say who wins” and what damages were to be
awarded. See id. at 400-01 (finding a general verdict where the jury was
asked “to award damages, ‘[i]f your verdict is for the Plaintiff on either her
discrimination or her retaliation claim’”).

¶49 Question #1, on the other hand, was a factual question on an
“ultimate fact”: was there a valid contract to begin with? And the answer
to that question compelled a result in Rich’s favor on the general verdicts
set forth in questions #2 and #3. As such, this verdict should be analyzed
under Rule 49(b), Ariz. R. Civ. P., which states in relevant part:

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Becke, J., dissenting

(b) General Verdict with Answers to Written Questions.

(1) Generally. The court may submit to the jury forms for a
general verdict, together with written questions on one or
more issues of fact that the jury must decide. The court must
give the instructions and explanations necessary to enable the
jury to render a general verdict and answer the questions in
writing, and must direct the jury to do both.

....

(3) Answers Inconsistent with the Verdict. If the answers are
consistent with each other but one or more is inconsistent
with the general verdict, the court may:

(A) approve, for entry under Rule 58, an appropriate
judgment according to the answers, notwithstanding the
general verdict;

(B) direct the jury to further consider its answers and verdict;
or

(C) order a new trial.

¶50 The sole “answer” the jury provided was that there was no
valid contract, so there are no other answers with which this answer could
be inconsistent. That answer is consistent with the general verdict in favor
of Defendants on the breach of contract claim. But that answer is
inconsistent with the jury’s general verdict finding that Defendant Alpine
Pizza LLC had breached the covenant of good faith and fair dealing. Under
Rule 49(b)(3), the superior court had only three options: (1) entry of
judgment according to the answer (which would negate the Breach of the
Covenant verdict), (2) directing the jury to further consider (obviously, no
longer an option), or (3) ordering a new trial.

¶51 The court chose none of these three options. Instead, it did
something Rule 49(b)(3) does not permit: it upheld the general verdict and
disregarded the inconsistent answer. And because the court entered a
judgment contrary to the jury’s answer to the factual question, and because
the jury’s “action items” were beyond its power to award on that claim, I
do not believe the failure to object waives this issue.

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Becke, J., dissenting

II. We Can—and on These Facts, Should—Decline to Apply Waiver.

¶52 The Majority correctly notes that a failure to object to a
defective verdict before the jury is discharged typically waives that issue on
appeal. See Benedict v. Total Transit Inc., 252 Ariz. 151, 161–62, ¶ 35 (App.
2021); Trustmark Ins. Co. v. Bank One, Ariz., NA, 202 Ariz. 535, 543, ¶¶ 38–39
(App. 2002). “Arizona appellate courts have the discretion to hear
arguments first raised on appeal, [but] we rarely exercise that discretion.”
Harris v. Cochise Health Sys., 215 Ariz. 344, 349, ¶ 17 (App. 2007). This is one
of those rare cases where we should do so.

¶53 The first reason is set forth above. The superior court had
three options in response to the verdict rendered, but the court instead
chose an unavailable option: to disregard the jury’s factual finding and
render a verdict in direct opposition to that finding. “Although it may be
true as a general proposition that trial courts have inherent authority to
enter orders that facilitate the orderly and efficient execution of their
jurisdiction,” Bergeron ex rel. Perez v. O'Neil, 205 Ariz. 640, 649, ¶ 27 (App.
2003), “the supreme court has been given the exclusive power to make rules
relative to all procedural matters in any court.” Id. Our supreme court has
done so here by promulgating Rule 49. The superior court is without the
power to simply disregard the commands of Rule 49 and fashion “remedial
orders of its own creation.” Id. at 650, ¶ 29; accord State v. Superior Court, 102
Ariz. 388, 392 (1967) (“The lower courts of this state are bound by law to
follow the rules promulgated by the Supreme Court.”)

¶54 The second reason is that the verdict rendered by the jury was
simply beyond its power to order. The “action items” written by the jury on
the back of the verdict form are not damages; they are equitable remedies.
And equitable remedies are ordered by the court, not by the jury. Caruthers
v. Underhill, 235 Ariz. 1, 8, ¶ 31 (App. 2014) (“[E]quitable remedies are for
the court to decide.”); see also In re Estate of Newman, 219 Ariz. 260, 273, ¶ 53
(App. 2008) (“[N]o constitutional right to a jury trial exists for actions that
were considered equitable at or near the time Arizona’s constitution was
adopted.”); Henry v. Mayer, 6 Ariz. 103, 114 (Ariz. Terr. 1898) (“[T]he cause
being one of equitable jurisdiction, the court below was not bound to
submit any issue of fact to a jury.”).

¶55 “Ordinarily, a party claiming breach of an implied covenant
of good faith and fair dealing is limited to contract damages.” Enyart v.
Transamerica Ins. Co., 195 Ariz. 71, 76, ¶ 14 (App. 1998) (emphasis added);
see Restatement (Second) of Contracts § 347 (1981) (setting forth the
measure of contract damages). Transfers of ownership interests in LLCs

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Becke, J., dissenting

and shifting responsibility for paying debts are not “contract damages”
within any meaning of those terms.

¶56 The jury here purported to award equitable remedies it had
no power to award, giving remedies that were unavailable on a claim that
itself was foreclosed by the jury’s factual findings. The verdict here is not
merely defective or inconsistent, it is so flawed as to be a nullity. Because I
believe there is no legally supportable mechanism to implement the jury’s
verdict, I would vacate the judgment and remand for a new trial. For that
reason, I respectfully dissent.

MATTHEW J. MARTIN • Clerk of the Court
FILED: JR

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APPENDIX

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