Durable Investments LLC v. Steve Villarreal

IN THE
ARIZONA COURT OF APPEALS
DIVISION TWO

DURABLE INVESTMENTS LLC, AN OREGON LIMITED LIABILITY COMPANY; AND
TEN BRIDGES LLC, AN OREGON LIMITED LIABILITY COMPANY,
Plaintiffs/Appellants,

v.

STEVE VILLARREAL AND JANE DOE VILLARREAL, HUSBAND AND WIFE;
EQUITY RECOVERY SPECIALISTS, L.L.C., AN ARIZONA LIMITED LIABILITY
COMPANY; HOUSEOPOLY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY;
MARICOPOLY, LLC, AN ARIZONA LIMITED LIABILITY COMPANY,
Defendants/Appellees.

No. 2 CA-CV 2025-0107
Filed March 5, 2026

Appeal from the Superior Court in Maricopa County
No. CV2021003421
The Honorable Christopher Coury, Judge

AFFIRMED

COUNSEL

Zwillinger Wulkan PLC, Phoenix
By Scott H. Zwillinger and Jennifer L. Allen

and

Legal AZ, Tempe
By Morgan Seegmiller
Counsel for Plaintiffs/Appellants

Law Offices of Kyle A. Kinney PLLC, Scottsdale
By Kyle A. Kinney
Counsel for Defendants/Appellees Equity Recovery Specialists, LLC and Steve
Villarreal
 DURABLE INVS. LLC v. VILLARREAL
Opinion of the Court

Spiess & Bell PC, Phoenix
By James O. Bell
Counsel for Defendants/Appellees Maricopoly, LLC and Houseopoly, LLC

OPINION

Judge Eckerstrom authored the opinion of the Court, in which Presiding
Judge Brearcliffe and Chief Judge Staring concurred.

E C K E R S T R O M, Judge:

Durable Investments LLC and Ten Bridges LLC
(“Appellants”) appeal from the superior court’s grant of summary
judgment in favor of Steve Villarreal, Equity Recovery Specialists LLC,
Houseopoly LLC, and Maricopoly LLC (“Appellees”), in which the court
concluded that Appellants’ “claims for tortious interference fail.”
Specifically, Appellants contend that Arizona’s real estate broker licensing
statutes do not apply to their businesses and that, even if they do, the court
lacked the authority to void the contracts with Appellees based on the lack
of a license. For the following reasons, we affirm.

Factual and Procedural Background

The following facts are undisputed. Appellants’ businesses
involve acquiring distressed real estate. Their employees contact
homeowners for the purpose of acquiring distressed properties. No
employees of Appellants’ businesses hold real estate broker licenses.
Appellants had contractual relationships with several customers other than
Appellees. Appellants allege that Appellees contacted these customers and
made false and disparaging statements about Appellants. Appellants filed
suit against Appellees alleging, among other claims, tortious interference
with contracts and tortious interference with business expectancy.
Appellees moved for partial summary judgment. The superior court
granted the motion as to both claims related to tortious interference.
Appellants filed a motion for reconsideration, which the court denied.
Appellants subsequently filed a motion asking the court to dismiss their
remaining claims and enter final judgment under Rule 54(c), Ariz. R. Civ.
P., and such judgment was entered thereafter. This appeal followed. We
have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).

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Discussion

I. Summary Judgment

The superior court concluded that Arizona’s broker licensing
statutes required Appellants’ employees to be licensed. Because the
employees lacked such licenses, the court voided Appellants’ contracts with
the foreclosed homeowners. The court therefore granted summary
judgment in favor of Appellees on Appellants’ claims of tortious
interference with those contracts. Appellants contend the court erred in
concluding that licensing is a requirement for limited liability companies
who engage in real estate transactions.

Summary judgment is proper when 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). We
interpret statutes and review a superior court’s grant of summary judgment
de novo, Wilks v. Manobianco, 237 Ariz. 443, ¶ 8 (2015), viewing the evidence
in the light most favorable to the party against whom summary judgment
was entered, McAlister v. Loeb & Loeb, LLP, ___ Ariz. ___, ¶ 21, 571 P.3d 891,
897 (2025).

As the superior court set forth in its ruling, to establish their
claims for tortious interference, Appellants were required to show: “(1) the
existence of a valid contractual relationship or business expectancy;
(2) knowledge of the relationship on the part of the [Appellees];
(3) intentional interference inducing or causing a breach; (4) resultant
damage to [Appellants’] relationship with its customer or business
expectancy; and (5) that [Appellees] acted improperly.” Wells Fargo Bank v.
Ariz. Laborers, Teamsters & Cement Masons Loc. No. 395 Pension Tr. Fund, 201
Ariz. 474, ¶ 74 (2002). Appellants do not directly address these elements on
appeal, but rather focus their argument on the superior court’s conclusion
that the underlying contracts were void.

A. Applicability of Real Estate Broker Licensing Statutes

Appellants contend that the real estate broker licensing
statutes do not apply to their employees’ acts because those employees are
not real estate agents as defined under A.R.S. § 32-2101. “When the plain
text of a statute is clear and unambiguous there is no need to resort to other
methods of statutory interpretation to determine the legislature’s intent
because its intent is readily discernable from the face of the statute.” State
v. Christian, 205 Ariz. 64, ¶ 6 (2003).

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In order to protect the public from “unscrupulous and
unqualified persons,” Arizona law requires that all practicing real estate
brokers and salespersons be licensed. Adams Realty Corp. v. Realty Ctr. Invs.,
Inc., 149 Ariz. 405, 408 (App. 1986) (quoting Pruitt v. Pavelin, 141 Ariz. 195,
202 (App. 1984)); see A.R.S. § 32-2122(B). A license is required for any
person who, “for another and for compensation,” engages in certain acts
related to real estate. § 32-2101(51). These acts include buying, offering to
buy, and negotiating or attempting to negotiate the purchase of real estate.
§ 32-2101(51)(a)–(c). The licensing requirements also apply to a person
who: advertises or holds himself out as being engaged in the business of
real estate, assists in procuring prospects, or negotiates transactions
calculated to result in the sale of real estate. § 32-2101(51)(h)–(j). A license
is also required for anyone who offers and provides such services in
transactions for the sale of “other than real property if a real property
sale . . . is a part of, contingent on or ancillary to the transaction.”
§ 32-2101(51)(n).

Here, the superior court concluded that “[Appellant]s’
employees were acting as real estate brokers” and were thus “required to
be licensed.” In support of that conclusion, the court found that Appellants’
employees’ actions included: (1) “contacting homeowners of distressed
properties on behalf of [Appellants]”; (2) “holding themselves out as being
in the business of real estate”; (3) “soliciting a real estate transaction”;
(4) “negotiating a deal on behalf of [Appellants]”; (5) “using discretion
afforded to them by [Appellants] in the negotiations”; (6) “filling out details
in a form quit claim deed”; and (7) “answering questions from the
homeowner and even offering solutions.” The court therefore held that the
contracts arising from those actions were unlawful under A.R.S.
§ 32-2165(A), which states that “[a] person who acts as a broker or
salesperson within the meaning of this chapter, or who advertises in a
manner that indicates that the person is licensed as a broker or salesperson,
without being licensed as prescribed by this chapter is guilty of a class 6
felony.”

Appellants contend that, notwithstanding the foregoing
activities conducted by their employees, the businesses were statutorily
exempted from licensing requirements pursuant to subsections (1) and (9)
of A.R.S. § 32-2121(A). The former provision exempts limited liability
companies, particularly their “officer’s, partner’s, member’s or manager’s
activities” from licensing requirements. But, here, Appellants’ employees,
rather than its partners or management, conducted the relevant activities.
See § 32-2121(A)(1). The latter subsection, § 32-2121(A)(9), addresses

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licensing exemptions for employees. For that provision to apply, three
requirements must be met. First, the employees may only perform “clerical,
bookkeeping, accounting and other administrative and support duties.”
§ 32-2121(A)(9). Second, the employees may not be “engaged in any other
acts requiring a license under this chapter.” Id. And third, the employees’
employment may not be “conditioned on or designed to perform duties
otherwise requiring a license under this chapter.” Id. As the superior court
correctly found, none of these requirements were satisfied with regard to
the employee activities at issue here.

In a recent parallel appeal, another panel of this court held
that Appellant Durable’s employee was required to have been licensed to
conduct a specific transaction. In re Estate of Francoeur, No. 2 CA-CV
2025-0061, ¶ 12 (Ariz. App. Nov. 19, 2025) (mem. decision). There, the
parties stipulated that the employee in question had “(a) initiated contact
with [homeowner], (b) ‘held himself out to be in the business of real estate,’
(c) negotiated the purchase price for the property, and (d) filled out the
pertinent information on the quit claim deed for [homeowner’s] signature.”
Id. Moreover, although the employee was not paid a bonus in the specific
transactions, the compensation structure of his employment granted him a
bonus after the fifth contract he acquired during any month. Id. We found
that such acts required the employee to possess a real estate broker license
under § 32-2101(51)(a)-(c), (h)-(j), (n). Id.

In the instant appeal, we similarly conclude that the superior
court correctly relied on the stipulated facts and the record in determining
the nature of Appellants’ employees’ conduct more generally. Those facts
establish that, on Appellants’ behalf, their employees contacted
homeowners of distressed properties, held themselves out as engaged in
the business of real estate, and solicited and negotiated real estate
transactions while exercising discretion delegated to them by Appellants.
In so doing, they filled out details on the deeds, answered homeowners’
questions, and proposed potential solutions. They were also paid a salary
and would receive bonuses directly tied to their closing of real estate
transactions.

This conduct was similar in all material respects to that
addressed in Estate of Francoeur, No. 2 CA-CV 2025-0061, ¶ 12. We see no
basis to apply a different legal analysis here. Therefore, we affirm the
superior court’s interpretation and application of the statutes in finding that
Appellants’ employees were required to hold real estate broker licenses
under § 32-2101 for their activities.

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B. Validity of Superior Court’s Authority to Void
Contracts

Appellants further contend the superior court exceeded its
judicial authority by determining the contracts at issue were “illegal and
void” because they were formed in violation of the licensing statutes.
Arizona law presumes that a contract made in violation of a statute is illegal
and void unless the legislature clearly intended a different remedy. Yank v.
Juhrend, 151 Ariz. 587, 590 (App. 1986).

Mere technical violations of the licensing statutes are
generally not grounds to void an underlying real estate transaction. See
A.R.S. §§ 32-2153, 32-2154, 32-2160, 32-2165; see also Mousa v. Saba, 222 Ariz.
581, ¶¶ 1, 4, 9, 20-21, 30 (App. 2009). Here, however, Appellants’
employees—without any official confirmation of their having secured the
proper training or otherwise obtained necessary legal authorizations—
were integrally involved in every step of persuading distressed
homeowners to sell their properties and completing the transactions. In
particular, they initiated contact with homeowners, represented themselves
as engaged in the real estate business, and negotiated and facilitated the
execution of deeds that conveyed real property to Appellants in exchange
for money. They also received transaction-contingent bonuses. See A.R.S.
§ 32-2155 (forbidding payment or receipt of compensation for unlicensed
brokerage acts); see also § 32-2101(17) (“‘Compensation’ means any fee,
commission, salary, monies or other valuable consideration for services
rendered or to be rendered as well as the promise of consideration whether
contingent or not.”).

On this record, Appellants’ conduct cannot be categorized as
a “technical violation” of the licensing statutes. Rather, the record
establishes that Appellants regularly engaged employees whose job
descriptions required them to perform the services of real estate brokers
without being licensed to do so. See Adams Realty Corp., 149 Ariz. at 408.
The superior court therefore did not err in concluding that the contracts in
question were entered into in violation of § 32-2165(A) and were therefore
void. Cf. Landi v. Arkules, 172 Ariz. 126, 131-35 (App. 1992) (voiding
agreement that operated as payment for unlicensed private investigator
services). As a result, Appellants have not shown the court erred in
concluding that their claims for tortious interference failed. See Wells Fargo
Bank, 201 Ariz. 474, ¶ 74 (requiring existence of valid contract for claim of
tortious interference).

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II. Attorney Fees and Costs

Appellees request their attorney fees and costs on appeal
pursuant to A.R.S. § 12-349(A)(1) and Rule 25, Ariz. R. Civ. App. P. Under
§ 12-349(A)(1), we must award attorney fees as a sanction if we find that a
claim was brought “without substantial justification,” meaning the claim is
both groundless and not made in good faith. § 12-349(F). “[A] claim is ‘not
made in good faith’ if (1) it is groundless and (2) the party or attorney knows
or should know that it is groundless, or is indifferent to its groundlessness,
but pursues it anyway.” Ariz. Republican Party v. Richer, 257 Ariz. 237, ¶ 38
(2024).

We do not agree Appellants brought this appeal without
substantial justification. Although their arguments ultimately do not
prevail, Appellants presented two questions on which Arizona law offers
limited guidance. First, they challenged whether the statutory exemptions
in A.R.S. §§ 32-2121(A)(1) and (9) apply to limited liability companies and
their employees such that no real estate broker’s license was required.
Those exemptions are neither well-litigated nor clearly resolved by existing
precedent. Second, Appellants questioned whether the superior court
possessed authority to void the underlying contracts based on the alleged
statutory violation. Our case law addressing when illegality permits or
requires voiding a contract based on these statutes is sparse. In light of
these circumstances, we cannot conclude that the appeal was groundless or
pursued in bad faith. See Richer, 257 Ariz. 237, ¶ 38.

For the same reasons, we do not conclude that Appellants
violated Rule 25, Ariz. R. Civ. App. P. Although Appellants have not
prevailed, we cannot say that the appeal was frivolous or pursued solely
for purposes of delay. See Ariz. R. Civ. App. P. 25. However, as the
successful party, Appellees are entitled to their costs on appeal, A.R.S.
§ 12-341, upon their compliance with Rule 21(b), Ariz. R. Civ. App. P.

Disposition

For the foregoing reasons, we affirm the judgment of the
superior court.

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