Canon v. Retail

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

CANON ELECTRIC LLC,
Plaintiff/CounterDefendant/Appellee,

v.

RETAIL CONTRACTING GROUP, INC.,
Defendant/CounterClaimant/Appellant.

No. 1 CA-CV 24-0935
FILED 12-08-2025

Appeal from the Superior Court in Maricopa County
No. CV2022-052522
The Honorable M. Scott McCoy, Judge (Retired)

AFFIRMED

COUNSEL

Tiffany & Bosco P.A., Phoenix
By Richard C. Gramlich
Counsel for Defendant/CounterClaimant/Appellant

Palecek and Palecek PLLC, Scottsdale
By Karen A. Palecek, James J. Palecek
Counsel for Plaintiff/CounterDefendant/Appellee
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MEMORANDUM DECISION

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

T H U M M A, Judge:

¶1 Defendant Retail Contracting Group, Inc. (Retail) appeals
from the grant of summary judgment for plaintiff Canon Electric, LLC
(Canon) and the denial of Retail’s motion to reconsider. Because Retail has
shown no reversible error, the orders are affirmed.

FACTS AND PROCEDURAL HISTORY

¶2 This case turns on whether Retail was justified in refusing to
pay Canon nearly $100,000 for electrical work. Retail, as the general
contractor, entered into a subcontract with Canon for work at a Lens
Crafters store in Scottsdale. The subcontract had Canon providing electrical
work in exchange for Retail paying $90,950. The parties later agreed to three
written change orders, increasing the total price to $99,162.50. The
subcontract was effective August 18, 2021, but not signed by Canon until
October 11, 2021. The subcontract required quick work, listing an August
30, 2021 start, and completion by December 11, 2021.

¶3 Given the short timeline, the subcontract had several 24-hour
notice provisions. One such provision required Retail to give Canon written
notice of any failure to comply, and 24 hours to cure, before terminating the
subcontract for breach, or otherwise claiming a breach. Specifically, section
4(G) of the subcontract states that Canon had 24 hours to cure any claimed
defect after Retail gave “notice in writing” of any alleged defect (4(g)
notice). Only if Canon failed to cure within 24 hours of such written notice
could Retail “terminate Subcontractor [Canon] and take over this
Subcontract.”

¶4 The subcontract had an express schedule for invoicing and
payment: (1) an invoice for the first 45 percent upon the later of signing the
contract or the start date (the later of those two dates was October 11, 2021);
(2) an invoice for the second 45 percent upon 90 percent completion and (3)
an invoice for the final 10 percent and any approved change orders upon
completion. Payment terms were “net 45 days from the date of a

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PROPERLY RECEIVED INVOICE which includes a notarized requisition
for payment.” The subcontract attached sample requisitions for payment
reflecting these three stages.

¶5 It is undisputed that Canon submitted three invoices to Retail
totaling $99,162.50. Canon’s first invoice was a notarized first requisition
for payment of $40,927.50 (first 45 percent) dated September 20, 2021.
Canon’s notarized second requisition for payment of $40,927.50 (second 45
percent) was dated November 19, 2021. And Retail concedes that it received
the third invoice, with Canon’s invoices totaling $99,162.50 (the subcontract
price plus the three change orders). Retail does not dispute that it timely
received these requisitions for payment. Retail did not, however, pay
Canon anything under the subcontract.

¶6 Retail, as the general contractor, sought and obtained
payment from the property owner (who is not a party here), including for
the electrical work that it claims Canon failed to perform. Specifically, on
September 21, 2021, one day after the first Canon requisition, Retail
submitted to the owner a notarized payment application stating work on
the project (including Canon’s electrical work) was 50 percent complete. On
October 28, 2021, Retail submitted to the owner a second notarized payment
application stating that all work on the project (including the electrical
work) was complete. Although the payment date of the September 21, 2021
application is uncertain, Retail produced documents showing the owner
paid the October 28, 2021 application on December 7, 2021.1 It is undisputed
that the owner paid Retail in full for the project.

¶7 According to Retail, on December 12 or 13, 2021 – a day or
two after the completion date in the subcontract – Canon stopped work
“without cause or prior notice.” On February 1, 2022, Canon sent Retail a
three-day stop work notice under Arizona’s Prompt Payment Act (APPA),
see Ariz. Rev. Stat. (A.R.S.) §§ 32-1181 to -1188 (2025),2 and notice of intent
to lien.

1 These same documents note the September 21, 2021 application,
suggesting (but not stating) that the owner had paid Retail the 50 percent
complete amount, and not listing that amount as outstanding.

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

refer to the current version unless otherwise indicated.

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¶8 Canon and Retail present differing versions of Canon’s work.
Canon claims that it completed almost all of the electrical work, did so in a
timely and workmanlike manner and that Retail never provided any
written objections or notice that the work did not comply with the
subcontract. Canon also notes that Retail invoiced the owner, who fully
paid for the work required under the subcontract. Retail counters that (1)
Canon committed the first material breach of the subcontract; (2) Retail sent
Canon a notice to perform, but Canon did not cure; and (3) Canon owes
Retail more than $45,000, representing Retail’s cost to cure (about $145,000)
less the amount of Canon’s invoices. Retail asserts that the owner did not
pay it for that work until after Canon filed this suit.

¶9 In August 2022, Canon filed this case. As to Retail and
American Contractors Indemnity Company (ACIC), a surety, Canon
asserted breach of contract, breach of the covenant of good faith and fair
dealing and discharge of lien bond claims. Retail and ACIC answered and
asserted counterclaims for breach of contract, breach of the covenant of
good faith and fair dealing, breach of the implied warranty of workmanship
and wrongful lien claims.

¶10 In March 2024, at the close of discovery, Canon moved for
summary judgment. The procedure involved in that motion practice was
atypical and is discussed here in some detail.

¶11 Canon’s motion argued that Retail and ACIC could not
genuinely dispute any issue of material fact and that Canon was entitled to
judgment as a matter of law on all claims and counterclaims. Among other
things, Canon argued that Retail committed the first material breach of the
subcontract, that Retail breached the subcontract and that Retail also failed
to comply with the APPA. Canon supported the motion with a declaration
of Ryan Hatcher under Arizona Rule of Civil Procedure 80(c). The Hatcher
declaration, in turn, properly authenticated documents attached to it.

¶12 In early April 2024, Retail and ACIC opposed Canon’s
motion, arguing (among other things) that Canon committed the first
material breach of the subcontract. Retail supported its opposition with a
declaration of Kenneth Pritchard that failed to comply with Rule 80(c).3

3 That declaration was not signed “as true under penalty of perjury;” was

not dated and did not declare “under penalty of perjury” that the
information contained in it “is true and correct,” all of which is required
when a party seeks to use a declaration (rather than an affidavit) to seek or
oppose summary judgment. See Ariz. R. Civ. P. 80(c) & 56(c)(5).

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Although it attached some documents, including an undated
“subcontractor notice to perform,” the Pritchard declaration did not
provide foundation for the documents because it did not comply with Rule
80(c) or reference or authenticate the documents. See Ariz. R. Evid. 902(11).

¶13 Had Canon objected to the Pritchard declaration under Rule
80(c), the superior court could have sustained that objection, Ariz. R. Civ.
P. 56(b)(4), perhaps resulting in Canon’s motion for summary judgment
being granted, Ariz. R. Civ. P. 56(e). Canon did not, however, object on Rule
80(c) grounds, thereby waiving the issue. Instead, in reply, Canon relied on
concessions in the Pritchard declaration, including that Retail invoiced the
owner for all of Canon’s work, and was paid in full by the owner. Canon
also argued that it never received a 24-hour notice of deficiency as required
by section 4(G) of the subcontract, adding that Canon “received no
communication from [Retail] at any time during the project that it had
breached the contract,” and that Retail breached the APPA.

¶14 Arguing the Pritchard declaration had “glaring deficiencies,”
Canon asserted that the documents attached to it “do not present actual
evidence of any legitimate defenses” to Canon’s claims. Canon argued that
Retail presented “zero proof that it complied” with the subcontract’s notice
of breach requirement. Specifically objecting to the “subcontractor notice to
perform” attached to the Pritchard declaration, Canon declared it had never
been disclosed and that the disclosure deadline had passed, adding that the
first time the document had been provided was “in response to summary
judgment.” Canon also stated the notice had no date and no proof of
transmission to, nor receipt by, Canon.

¶15 Given the owner had paid Retail for the work, which Retail
certified was completed, and because Retail did not “prepare and issue [to
Canon] a written statement within fourteen days [of Canon’s invoices] . . .
stating in reasonable detail [Retail’s] . . . reasons for withholding” payment,
A.R.S. § 32-1183(E), Canon argued Retail failed to comply with the APPA.
Thus, Canon asserted it was entitled to summary judgment on all claims.

¶16 After hearing oral argument, in an August 2024 minute entry,
the court granted Canon’s motion for summary judgment. The court first
concluded that Canon’s motion was properly supported by law and fact,
showing it performed under the subcontract. Turning to whether Retail “set
forth specific facts showing a genuine issue for trial,” Ariz. R. Civ. P. 56(e),

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the court looked to the Pritchard declaration.4 The court concluded the
Pritchard declaration was “deficient,” noting it: (1) failed to show Pritchard
personally observed any of Canon’s work; (2) “attaches numerous
documents but authenticates none of them;” (3) did not authenticate the
“undated document purporting to establish notice” of breach and (4)
“never establishes that Retail transmitted [the purported notice] to Canon,
or when.” The court added that Retail “never disclosed the [notice] before
this motion practice.” At most, the court concluded, the Pritchard
declaration showed that “Retail’s employees told Mr. Pritchard that Canon
failed to perform. This fails to rebut Canon’s prima facie evidence that it
did.” Accordingly, the court granted Canon’s “motion in all respects.”

¶17 In September 2024, Retail moved to reconsider,5 largely
repeating the same legal arguments. Noting evidence used to oppose
summary judgment must be “made on personal knowledge and set[] forth
facts that would be admissible in evidence,” Ariz. R. Civ. P. 56(c)(5), Retail
submitted a revised Pritchard declaration. As before, this revised Pritchard
declaration failed to comply with Rule 80(c), but no objection on that
ground was raised. Retail argued the revised Pritchard declaration cured
the foundational defects of the first Pritchard declaration. The revised
declaration stated Pritchard visited “the job site on several occasions,” had
“personal knowledge” of certain factual statements, considered email
attachments “to be our business records,” and that the undated “notice to
perform letter” first disclosed in the April 2024 opposition to Canon’s
motion for summary judgment “was a business record actually sent to
Canon on 11/22/21.” The revised Pritchard declaration also sought to
attach new materials not attached to the original declaration.

¶18 The superior court allowed Canon to file a response to the
motion to reconsider. Canon’s response argued the motion to reconsider
improperly sought to offer new evidence. Canon also argued the purported

4 In doing so, there is no indication that the court rejected the declaration

under Rule 80(c), an issue Canon had not raised. Retail did not provide a
transcript of the oral argument, which typically would allow this court to
presume that the missing transcript supports the superior court’s ruling.
See Myrick v. Maloney, 235 Ariz. 491, 495 ¶ 11 (App. 2014); Baker v. Baker, 183
Ariz. 70, 73 (App. 1995). But during oral argument before this court,
Canon’s counsel conceded that neither the parties nor the court raised Rule
80(c) at oral argument before the superior court.
5 ACIC did not move to reconsider, did not appeal from the judgment and

is not a party here, meaning the judgment against ACIC is final.

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notice “is a fake, it is manufactured. . . It is undated, not bates-labeled, not
signed, and without proof of being sent to anyone at Canon at any time.”
Canon sought sanctions, claiming the revised declaration was provided in
bad faith. The superior court later denied Retail’s motion to reconsider.

¶19 After further briefing, the court entered final judgment for
Canon and against Retail and ACIC on all claims and counterclaims,
awarding Canon more than $200,000 in damages, interest, attorneys’ fees
and costs. This court has jurisdiction over Retail’s timely appeal pursuant
to Article 6, Section 9, of the Arizona Constitution and Arizona Revised
Statutes (A.R.S.) sections 12-120.21(A)(1) and -2101(A)(1).

DISCUSSION

¶20 This court reviews de novo the superior court’s grant of a
motion for summary judgment, see Tilley v. Delci, 220 Ariz. 233, 236 ¶ 7
(App. 2009), viewing the evidence in the light most favorable to the
nonmoving party, Normandin v. Encanto Adventures, LLC, 246 Ariz. 458, 460
¶ 9 (2019). “The court shall grant summary judgment 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). If an opposing party fails to respond to a properly supported motion
for summary judgment with admissible evidence showing a disputed issue
of material fact, “summary judgment, if appropriate, shall be entered
against that party.” Ariz. R. Civ. P. 56(e).6 The superior court’s rulings on
evidentiary issues are reviewed for an abuse of discretion. See Campion v.
City of Tucson, 256 Ariz. 256, 265 ¶ 26 (App. 2023). Similarly, the denial of a
motion for reconsideration is reviewed for an abuse of discretion. See Tilley,
220 Ariz. at 238 ¶ 16.

I. The Impact of Waiver on this Appeal.

¶21 As noted above, neither of the Pritchard declarations
complied with Rule 80(c). Canon, however, did not object to those
declarations on those grounds, meaning those objections are waived. In
addition, Canon admitted that the oral argument before the superior court
did not include a Rule 80(c) objection, negating the typical presumption that
the missing transcript of the oral argument would support the court’s

6 Amendments in 2016 reorganized Rule 56(e) as Rule 56(c)(5) and (6)
without substantive change. This decision refers to the current version in
Rule 56(c)(5) and (6) for consistency even when citing cases that pre-date
the change.

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ruling. As a result, the record on appeal presents procedural flaws that,
given these various issues and waivers, this court is obligated to ignore.

II. Retail Has Shown No Reversible Error in the Court Granting
Canon’s Motion for Summary Judgment.

¶22 Retail argues that the superior court erred in 16 ways in
granting summary judgment for Canon. Retail, however, does not
challenge the superior court’s rejection of the purported notice to perform
because Retail failed to timely disclose it. In failing to challenge that ground
for the court’s summary judgment ruling on appeal, Retail has waived the
issue. See Robert Schalkenbach Found. v. Lincoln Found., Inc., 208 Ariz. 176, 180
¶ 17 (App. 2004) (this court considers an issue not raised in an appellant’s
opening brief as abandoned or conceded); Schabel v. Deer Valley Unified Sch.
Dist. No. 97, 186 Ariz. 161, 167 (App. 1996) (“Issues not clearly raised and
argued in a party’s appellate brief are waived.”). Moreover, the record
supports the superior court’s conclusion that Retail failed to timely disclose
the notice and that the disclosure deadline had passed before Retail first
disclosed the document. See Ariz. R. Civ. P. 26.1(f) (“Time for Disclosure;
Continuing Duty.”). And no other record evidence supports Retail’s claim
that it gave written section 4(g) notice that Canon failed to perform.7

¶23 Failure to comply with section 4(G) did not require Retail to
accept, without objection, the invoices submitted by Canon. But Retail was
required to comply with the timeliness requirements set forth in the APPA.
See A.R.S. §§ 32-1181 to -1188. Under that Act, Retail was required to either
(1) pay Canon’s invoices received within seven days of being paid by the
owner, A.R.S. § 32-1183(B), or (2) withhold payment and “prepare and issue
a written statement” to Canon detailing the reasons for doing so within 14
days of receiving Canon’s invoices, A.R.S. § 32-1183(E). Retail did neither.
It is undisputed that Retail did not pay Canon’s invoices at any time. And

7 In its reply brief on appeal, Retail suggests that section 5(C) (not section

4(G)) might govern. Section 5(C) states that “[s]ubcontractor shall be
deemed to have received notice of a fact, request, order, or demand when
its supervisor/project manager is notified either orally or in writing, via
facsimile or email.” Retail did not argue that section 5(C) governed in its
opening brief on appeal, meaning the argument is waived. Nelson v. Rice, 198 Ariz. 563, 567 ¶ 11 n.3 (App. 2000) (noting arguments not raised in
opening brief are waived and cannot be raised for first time in reply brief).
Moreover, Retail has not shown how section 5(C), a general notice
provision, would trump the more specific requirements of section 4(G) for
something as serious as termination of the subcontract.

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the record contains no “written statement” from Retail to Canon detailing
its reasons for failing to pay within 14 days of receiving Canon’s invoices.

¶24 For these reasons, the superior court did not err in granting
summary judgment in favor of Canon and against Retail. Retail’s remaining
arguments on appeal do not show otherwise.

¶25 Retail argues the superior court erred in concluding the
Pritchard declaration was not “based on personal knowledge.” But the
superior court made no such conclusion. Instead, it noted the Pritchard
declaration “nowhere establishes that Mr. Pritchard personally observed
any of Canon’s work – at any stage.” That is a fair reading of the original
Pritchard declaration, as acknowledged by the purported changes included
in the revised Pritchard declaration. And regardless, the issue of whether
Pritchard personally observed Canon’s work does not negate the failure to
timely disclose the purported section 4(G) notice, Retail’s failure to provide
such a notice and its failure to comply with Arizona’s Prompt Payment Act.
Similarly, Retail’s argument on appeal that comparing the Hatcher and
Pritchard declarations show that “material facts are clearly disputed” does
not negate Retail’s failure to comply with section 4(G) or the Prompt
Payment Act, which are dispositive.

¶26 For the first time on appeal, Retail argues that the superior
court “made a credibility determination that [it] did not believe Kenneth
Pritchard and what he stated in his Declaration.” Not so. The superior court
found, instead, that the Pritchard declaration was deficient and that Retail
had failed to timely disclose the notice, resulting in Retail’s failure to “set
forth specific facts showing a genuine issue for trial.” Ariz. R. Civ. P. 56(e).
That conclusion does not amount to a credibility determination.

¶27 Retail next challenges the superior court’s conclusion that the
Pritchard declaration did not authenticate the documents attached to it. The
superior court’s conclusion, however, was correct: the Pritchard declaration
did not authenticate (or even reference) the documents attached to it. Nor
does Retail support its argument that a party offering evidence in briefing
a motion for summary judgment need not show that evidence is admissible.
Rule 56 is to the contrary. See Ariz. R. Civ. P. 56(c)(4) (providing procedure
“govern[ing] objections to the admissibility of evidence on summary
judgment motions”) & 56(c)(5) (“If an affidavit refers to a document or part
of a document, a properly authenticated copy must be attached to or served
with the affidavit.”). Other than the dispositive failure to timely disclose
discussed above, Retail is correct that Canon did not object – concisely or
otherwise – to the admissibility of the documents attached to the Pritchard

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declaration. See Ariz. R. Civ. P. 54(c)(4). But, again, that issue does not alter
Retail’s failure to provide a section 4(G) notice or failure to comply with the
APPA.

¶28 Retail’s arguments about which party first materially
breached the subcontract and the covenant of good faith and fair dealing,
the bond discharge and damage offsets are based on the premise that Retail
properly provided a section 4(G) notice. Because the record shows Retail
failed to do so, those arguments fail. Moreover, Retail’s claim that “Canon
first materially breached and walked off the job before it was even entitled
to payment in full under the Subcontract” misses the mark. Retail never
provided a section 4(G) notice to Canon and did not properly provide
objections to Canon’s invoices. By the time Retail alleges Canon stopped
work on December 12 or 13, 2021, Retail had not paid Canon anything and
had not provided notice specifying its objections to Canon’s invoices. In
doing so, Retail had materially breached the subcontract before Canon
stopped work. A material breach by one party to a contract allows the other
party to suspend performance. See Zancanaro v. Cross, 85 Ariz. 394, 399
(1959) (“One of the remedies available at common law upon a material
breach of contract is the right to cease performance and recover the profits
which would have been made had the entire contract been performed.”);
accord Murphy Farrell Dev., LLLP, v. Sourant, 229 Ariz. 124, 133 ¶ 33 (App.
2012). Moreover, on February 1, 2022, Canon provided Retail with a written
stop-work notice pursuant to the APPA, with no timely response from
Retail appearing in the record.

¶29 Retail offers reasons why it might have rejected the invoices
Canon submitted. But, again, the record contains no written objections on
those grounds that Retail timely sent to Canon in compliance with the
APPA. Given Retail’s failure to comply with section 4(G) and the APPA, it
has shown no error in the grant of summary judgment for Canon on Retail’s
counterclaims. For these reasons, Retail has shown no reversible error in the
grant of Canon’s motion for summary judgment.8

8 Retail argues in passing that the court erred in entering summary
judgment on Canon’s lien bond claim. Although the court granted Canon’s
summary judgment motion “in all respects,” the judgment reflects no relief
on Canon’s discharge of lien bond claim. Accordingly, it does not appear
that Retail was an aggrieved party in that respect. Moreover, ACIC has not
appealed, to the extent it was an aggrieved party on that claim.
Accordingly, Retail has shown no reversible error in the superior court’s
treatment of Canon’s lien bond claim.

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III. Retail Has Shown No Abuse of Discretion in the Court Denying
Its Motion for Reconsideration.

¶30 Retail argues the superior court abused its discretion in
denying its motion to reconsider. But the deficiencies noted in the Pritchard
declarations persisted in the revised Pritchard declaration. Those same
deficiencies meant that Retail had not shown a valid reason for the superior
court to reconsider its original ruling when faced with the motion to
reconsider. Retail has thus shown no error in the court denying the motion
to reconsider.

IV. Canon is Awarded Its Reasonable Attorneys’ Fees and Costs on
Appeal.

¶31 Canon requests attorneys’ fees and costs incurred on appeal
pursuant to ARCAP 21 and A.R.S. §§ 12-341.01 and 32-1182(S). Because the
superior court’s grant of summary judgment for Canon is affirmed, Canon
is granted its reasonable attorneys’ fees and taxable costs on appeal under
A.R.S. § 32-1182(S) contingent upon its compliance with ARCAP 21.

CONCLUSION

¶32 The judgment is affirmed.

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

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