Redding v. Southeast Valley

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

CHARLES A. REDDING, et al.,
Plaintiffs/Appellants,

v.

SOUTHEAST VALLEY REGIONAL ASSOCIATION OF REALTORS,
INC., Defendant/Appellee.

No. 1 CA-CV 24-0450
FILED 03-06-2025

Appeal from the Superior Court in Maricopa County
No. CV2019-007621
The Honorable Danielle J. Viola, Judge

AFFIRMED

COUNSEL

Combs Law Group, P.C., Scottsdale
By Cameron A. Combs
Counsel for Plaintiff/Appellant

Zelms Erlich Lenkov & Mack, Phoenix
By Richard V. Mack
Counsel for Defendant/Appellee
 REDDING, et al. v. SOUTHEAST VALLEY
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MEMORANDUM DECISION

Judge Samuel A. Thumma delivered the decision of the Court, in which
Presiding Judge Kent E. Cattani and Judge Cynthia J. Bailey joined.

T H U M M A, Judge:

¶1 Plaintiffs Charles and Jacqueline Redding (the Reddings)
appeal from the grant of summary judgment for defendant Southeast
Valley Regional Association of Realtors® (SEVRAR) and a resulting award
of attorneys’ fees to defendant. Because the Reddings have shown no error,
the superior court’s rulings are affirmed.

FACTS AND PROCEDURAL HISTORY

¶2 This dispute arises out of a June 2018 purchase of a home in
Chandler, where the Reddings (who are real estate agents) represented the
seller. Although the seller requested a contractual right to remain in the
home a few days after closing to avoid the need for a bridge loan, the buyers
did not agree to such a term. After closing, however, the seller remained in
the home, breaching the contract and preventing the buyers from moving
in. The buyers sought help from law enforcement, ultimately obtaining
possession of the home the day after closing.

¶3 In September 2018, the buyers’ real estate agent filed an ethics
complaint with SEVRAR against Charles Redding. The complaint alleged
that Charles Redding failed to educate the seller about post-possession
rights and “slandered” the buyers’ agent. The complaint also alleged
Charles Redding failed to cooperate in the transaction, removing the
lockbox containing the keys to the home, leaving the buyers locked out of
their home after closing. The complaint stated that Jacqueline Redding,
Charles Redding’s managing broker, had also contacted the buyers’ agent
asking about a post-possession agreement before the close of escrow.

¶4 SEVRAR is a private, voluntary association comprised of
licensed Realtors® in the southeast part of the greater Phoenix area. The
Reddings are licensed Realtors® and members of both SEVRAR and the
National Association of Realtors® (NAR). As members, the Reddings
agreed to be bound to SEVRAR’s bylaws, which include the NAR’s Code of
Ethics and Arbitration Manual (Code of Ethics). Complaints alleging

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violations of the Code of Ethics can include a three-level review process: (1)
Grievance Committee screening; (2) Ethics Hearing Panel decision based on
evidence provided and (3) possible appeal for review by the Board of
Directors.

¶5 After a Grievance Committee found the complaint alleged
potential Code of Ethics violations, an evidentiary hearing was scheduled.
Before that hearing, the buyers’ agent ended her SEVRAR membership and
withdrew the complaint. The Grievance Committee, however, determined
the allegations that Charles Redding removed the lockbox from the
property could be a violation of the public trust and decided that the
Grievance Committee would pursue the complaint as the complainant. The
Grievance Committee also added Jacqueline Redding as a respondent for
possible cooperation in Charles Redding’s actions. Ultimately, the
complaint alleged violations of Code of Ethics Articles 1 (obligation to
protect and promote the interest of the client and to treat all participants
honestly), 3 (obligation to cooperate with other brokers) and 15 (duty to not
knowingly or recklessly make false or misleading statements).

¶6 At a February 2019 Ethics Hearing, the Hearing Panel
considered the allegations in both the original and the SEVRAR complaints
and heard testimony from the Reddings, the seller and the buyers’ broker.
The Hearing Panel found the Reddings violated Article 1 because they
“failed to protect” their client’s interest “by not adequately educating their
client as to the consequences that can ensue with a simultaneous closing”
and “by not securing a post-possession agreement during negotiations or
some other adequate solution.” The Hearing Panel found the other
allegations of unethical conduct had not been proven.1 As consequences,
the Hearing Panel recommended the Reddings pay a $500 administrative
fee and attend a three-hour contract law class and a three-hour agency class
that would count to satisfy their pre-existing continuing education
obligations.

1 The Reddings had countered with a complaint against the buyers’ agent,

which the Hearing Panel determined lacked merit.

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¶7 Dissatisfied with the Hearing Panel’s decision, the Reddings
appealed to the Board of Directors, which in April 2019 affirmed in a
decision signed by four Directors. The Code of Ethics, however, states five
Directors must resolve an appeal to the Board of Directors, so SEVRAR sent
a letter to the Reddings stating that a new appeal hearing was required.
Neither party, however, took action to schedule a new appeal hearing.

¶8 In May 2019, the Reddings filed this litigation, alleging two
counts: (1) declaratory relief (claiming inadequate notice of the charges) and
(2) breach of contract (alleging inadequate notice, failure to have five
Directors sign the decision of the Board of Directors and improper
testimony at the Ethics Hearing). The Reddings sought, among other things,
damages and an award of attorneys’ fees under Arizona Revised Statutes
(A.R.S.) sections 12-341.01 and 12-349 (2025).2

¶9 Significant litigation then followed. The superior court
initially granted SEVRAR summary judgment because of the Reddings’
failure to schedule a new appeal hearing. After the Reddings appealed that
decision, SEVRAR held a new appeal proceeding. In a decision signed by
five Directors, the Board affirmed the Hearing Panel’s determinations, and
that decision was upheld by the superior court. The Reddings appealed,
and this court remanded for the superior court to address due process,
sufficiency of the evidence and Uniform Arbitration Act claims. On
remand, faced with cross-motions for summary judgment, the superior
court granted SEVRAR’s motion and denied the Reddings’ motion. After
noting extensive undisputed material facts, the superior court determined
there were no due process violations, the evidence supported the findings
that the Reddings violated their ethical obligations, the Reddings had
agreed the Board of Directors’ decision would be binding and they
produced no evidence supporting their challenge to the hearing process.

¶10 Finding the litigation arose out of contract, the court awarded
attorneys’ fees to SEVRAR under A.R.S. § 12-341.01. After discussing the
factors it relied on in reaching that conclusion, the superior court awarded
SEVRAR $94,875 in fees and $4,152.56 in taxable costs, noting the Reddings
failed to challenge the reasonableness of the fees with specificity. The
Reddings timely appealed from the resulting final judgment. This court has
appellate jurisdiction pursuant to Article 6, Section 9, of the Arizona
Constitution and A.R.S. §§ 12- 120.21(A)(1) and - 2101(A)(1).

2 Absent material revisions after the relevant dates, statutes and rules cited

refer to the current version unless otherwise indicated.

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DISCUSSION

¶11 This court reviews an order granting summary judgment de
novo, Andrews v. Blake, 205 Ariz. 236, 240 ¶ 12 (2003), and will affirm if it is
correct for any reason, Hawkins v. State, 183 Ariz. 100, 103 (App. 1995).
Summary judgment is proper “if the moving party shows that there is no
genuine dispute as to any material fact and the moving party is entitled to
judgment as a matter of law.” Ariz. R. Civ. P. 56(a). The court views “the
evidence and reasonable inferences in the light most favorable to the party
opposing the motion.” Andrews, 205 Ariz. at 240 ¶ 12. An award of
attorneys’ fees and costs is reviewed for an abuse of discretion. Tucson Est.
Prop. Owners Ass’n, v. Est. of Jenkins, 247 Ariz. 475, 479 ¶ 8 (App. 2019).

I. The Reddings Have Not Shown the Superior Court Erred in
Granting Summary Judgment for SEVRAR.

¶12 The Reddings argue the entry of summary judgment against
them was error, asserting the superior court did not address the merits of
each argument made by the Reddings. The record does not support that
assertion.

A. The Reddings Have Not Shown They Were Denied Due
Process Rights.

¶13 The Reddings’ primary argument is their due process rights
were denied because SEVRAR “acted as the judge (the Hearing Panel) and
the complainant,” the $500 administrative fee “raised revenue for
[SEVRAR]” and the Hearing Panel’s decision is binding and not subject to
further review. The Reddings also argue due process requires they “be
afforded the opportunity to confront” witnesses.3

3 At oral argument before this court, the Reddings argued a violation of the

Code of Ethics must be reported to the state real estate licensing board. By
failing to raise such an argument in briefing, it is waived. See MacMillan v.
Schwartz, 226 Ariz. 584, 591 ¶ 33 (App. 2011).

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¶14 The disciplinary process the Reddings seek to challenge was
purely private. It was a contractual part of a voluntary trade association.
The Reddings primarily rely on cases addressing due process under the
United States and Arizona Constitutions, which are a check on government
action and are not applicable to purely private actors like those being
challenged here. See State v. Sharp, 193 Ariz. 414, 421 ¶ 19 (1999) (citations
omitted); U.S. Const. Amend. XIV § 1 (“nor shall any State deprive any
person of life, liberty, or property, without due process of law”); Ariz.
Const. Art. 2 § 4 (similar).4 Given the lack of government involvement here,
the Reddings’ constitutional arguments are unavailing. And for reasons
detailed below, the Reddings have not established they were denied due
process under their contractual agreement with SEVRAR.

B. The Uniform Arbitration Act Does Not Apply to SEVRAR’s
Ethics Hearing.

¶15 The Reddings argue Arizona’s Uniform Arbitration Act
(UAA) is not applicable to the second Board of Directors decision. Although
correct, that conclusion is not dispositive.

¶16 Application of the UAA is premised on “[a] written
agreement to submit” a controversy to arbitration. A.R.S. § 12-1501. There
is no such agreement in the record. Moreover, the Code of Ethics discusses
ethics and arbitration in the disjunctive; it makes a clear distinction between
the procedure applicable for ethics complaints, pages 19 through 124, and
arbitrations, pages 125 through 244. There is no genuine dispute that the
hearing that took place in this case was an ethics proceeding, not an
arbitration proceeding. Accordingly, the UAA does not apply. The
inapplicability of the UAA does not, however, entitle the Reddings to any
relief. Instead, it simply means that the UAA is not relevant to the
applicable analysis.

4 The Reddings have not argued with supporting authority that the due

process protections in Arizona’s Constitution are more extensive than in the
United States Constitution. Accordingly, this court analyzes the due
process claim under the United States Constitution and existing precedent.
See Samiuddin v. Northwehr, 243 Ariz. 204, 209 n.2 (2017) (citation omitted).

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C. The Reddings Have Not Shown the Superior Court Erred in
Granting SEVRAR’s Motion for Summary Judgment
Rejecting Their Challenge to the Ethics Violation Finding.

1. Jacqueline Redding Was Properly Joined as a
Respondent.

¶17 The Code of Ethics authorizes the Grievance Committee to
amend a complaint by adding additional claims or individuals whose
alleged conduct may have violated the Code of Ethics. Article 1 of the Code
of Ethics states:

When representing a buyer, seller, landlord,
tenant, or other client as an agent, Realtors®
pledge themselves to protect and promote the
interests of their client. This obligation to the
client is primary, but it does not relieve
Realtors® of their obligation to treat all parties
honestly.

All parties agree a failure to properly educate a client can constitute a
violation of Article 1.

¶18 The Reddings argue nothing in the original complaint alleged
Jacqueline Redding violated Article 1. The original complaint, however,
alleged Jacqueline Redding, as Charles Redding’s managing broker, called
the buyers’ agent to ask why the buyer needed a large amount of money as
concession for the holdover, and told the buyers’ agent that her client (the
seller) needed two extra days to move after close of escrow. The original
complaint also alleged the seller failed to move out after close of escrow
despite signing a contract that required her to move out by that time that
same day. From these allegations, the Grievance Committee properly could
conclude Jacqueline Redding may have violated the Code of Ethics.

¶19 The Reddings argue, if the decision stands, “any Realtor’s
sincere efforts to secure a post-possession agreement could be considered
an Article 1 violation if no agreement could be reached with the buyer.”
That argument, however, misunderstands the process. The Grievance
Committee did not find Jaqueline Redding violated Article 1 based on the
allegations in the complaint. Instead, the Grievance Committee found the
allegations were sufficient as to the Reddings to warrant an Ethics Hearing
to determine if there was such a violation. The record supports that
conclusion. Moreover, the Reddings’ own expert admitted that the
evidence presented at the Ethics Hearing was sufficient to support a finding

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of a violation of Article 1, and the Reddings do not challenge the sufficiency
of the evidence supporting the Board of Directors’ ultimate finding after the
evidentiary hearing.5

2. The Board of Directors Did Not Err by Affirming the
Reddings Committed a Public Trust Violation.

¶20 The Code of Ethics permits the Grievance Committee to
proceed as the complainant when it determines a potential violation of the
public trust may have occurred. In this context, a “public trust” violation
“refers to misappropriation of client or customer funds or property, willful
discrimination, or fraud resulting in substantial economic harm.”

¶21 The Reddings argue the Grievance Committee may “bring its
own complaint against a Realtor only if there is ‘clear, strong, and
convincing’ evidence of an articles violation for the Hearing panel to
consider.” They argue the original complaint (which was then withdrawn)
stating the lockbox containing the keys was removed by the time the buyers
tried to take possession of the home “should not suffice as ‘clear, strong,
and convincing’ evidence of ‘demonstrated misappropriation of . . .
customer property.’” But the Grievance Committee was not required to find
“clear, strong, and convincing” evidence of a violation before bringing its
own complaint.

¶22 The Code of Ethics states that if a Realtor® complainant fails
to appear or is excused from appearing at a hearing, the hearing shall not
take place, the complaint is referred back to the Grievance Committee and
“[i]f the Grievance Committee determines that there is sufficient
information for a Hearing Panel to consider (i.e., that there is clear, strong,
and convincing proof), the complaint shall be amended to name the
Grievance Committee as complainant and the hearing shall be continued to
a new date.”

5 The Reddings’ Statement of the Issues asks if SEVRAR presented “clear,

strong, and convincing evidence” necessary to support a finding that the
Reddings failed to educate their client and protect their client’s interests.
But “[m]erely mentioning an argument in an appellate opening brief is
insufficient.” MacMillan, 226 Ariz. at 591 ¶ 33 (citation omitted). The
Reddings’ failure to meaningfully develop this point constitutes waiver. See
id.; see also Ace Auto. Prods., Inc. v. Van Duyne, 156 Ariz. 140, 143 (App. 1987)
(“It is not incumbent upon the court to develop an argument for a party.”).

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¶23 But that is not what happened here. The buyers’ agent
withdrew the original complaint after the Grievance Committee
determined the complaint required a hearing. As provided by the Code of
Ethics:

If a complaint is withdrawn by the complainant
after the Grievance Committee determines the
complaint requires a hearing, it will be referred
back to the Grievance Committee to determine
whether a potential violation of the public trust
. . . may have occurred. Only where the
Grievance Committee determines a potential
violation of the public trust may have occurred
may the Grievance Committee proceed as the
complainant.

(Emphasis added.) No section of the Code of Ethics specifies the standard
required for the Grievance Committee to bring a withdrawn claim as the
complainant, other than a determination that a potential violation may have
occurred. There was no requirement that the Grievance Committee find
evidence of a violation by “clear, strong, and convincing” evidence before
proceeding with a complaint.

¶24 The original complaint states Charles Redding removed the
lockbox containing the keys to the home. The complaint also included a text
from Charles Redding stating the lockbox was removed at his client’s
request. Accordingly, the Reddings have not shown SEVRAR breached any
contract, or the superior court erred, by acknowledging the Grievance
Committee’s preliminary determination that there may have been a
potential violation of public trust in the form of misappropriation of
customer property.

D. The Superior Court Did Not Abuse Its Discretion by
Awarding SEVRAR Attorneys’ Fees.

¶25 The Reddings argue SEVRAR was not entitled to the
attorneys’ fees award it received. The superior court granted SEVRAR’s
request for fees pursuant to A.R.S. § 12-341.01(A), which provides: “[i]n
any contested action arising out of a contract, express or implied, the court
may award the successful party reasonable attorney fees.” After
determining SEVRAR was the successful party eligible for an award of fees,
the superior court considered the following factors detailed in Associated
Indem. Corp. v. Warner, 143 Ariz. 567, 570 (1985): (1) “[t]he merits of the claim

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or defense presented by the unsuccessful party,” (2) whether “[t]he
litigation could have been avoided or settled and [whether] the successful
party’s efforts were completely superfluous in achieving the result,” (3)
whether “[a]ssessing fees against the unsuccessful party would cause an
extreme hardship,” (4) whether “[t]he successful party did not prevail with
respect to all of the relief sought,” (5) “the novelty of the legal question
presented,” (6) “whether such claim had previously been adjudicated in
this jurisdiction” and (7) “whether the award . . . would discourage other
parties with tenable claims or defenses from litigating or defending
legitimate contract issues.”

¶26 The Reddings argue the court erred in granting SEVRAR
attorneys’ fees and costs because SEVRAR failed to engage in any effort
toward resolution. They also suggest awarding SEVRAR attorneys’ fees
will discourage other parties with tenable claims or defenses from litigating
or defending legitimate contract issues. The Reddings fail to show,
however, how the superior court erred in weighing the Warner factors.
Among other things, the superior court addressed the information
provided by the parties in concluding “[b]oth parties engaged in some
effort toward resolution” and “an award of fees in general is not likely to
discourage parties with tenable claims or defenses from litigating or
defending legitimate contract issues.” The court also noted no information
provided would “support a conclusion that assessing fees against the
Reddings would cause an extreme hardship.” On this record, the Reddings
have failed to show the superior court abused its discretion in awarding
SEVRAR $94,875 in fees.

ATTORNEYS’ FEES AND COSTS ON APPEAL

¶27 The Reddings request attorneys’ fees and costs incurred on
appeal pursuant to ARCAP 21(a) and A.R.S. §§ 12-341.01 and -341. Because
the Reddings are not the successful parties, their request for fees and costs
is denied.

¶28 SEVRAR requests its attorneys’ fees and costs incurred on
appeal pursuant to ARCAP 21(a). ARCAP 21(a) “only establishes the
procedure for claiming attorneys’ fees and does not create any substantive
right to them.” ARCAP 21(a)(2). The court has the discretion to decline to
award attorneys’ fees if the requesting party does not “specifically state the
statute, rule, decisional law, contract, or other authority for an award of
attorneys’ fees.” Id. Because SEVRAR failed to specifically state their basis
for an award of attorneys’ fees on appeal, their request is denied. SEVRAR

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may recover their taxable costs incurred on appeal contingent upon their
compliance with ARCAP 21(b).

CONCLUSION

¶29 The judgment is affirmed.

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

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