McAlister v. Loeb

IN THE

SUPREME COURT OF THE STATE OF ARIZONA

ROY MCALISTER, ET AL.,
Plaintiffs/Appellants,

v.

LOEB & LOEB, LLP,

Defendant/Appellee.

No. CV-24-0048-PR
Filed July 17, 2025

Appeal from the Superior Court in Maricopa County
No. CV2018-012158
The Honorable M. Scott McCoy, Judge
AFFIRMED AND REMANDED

Memorandum Decision of the Court of Appeals, Division One
1 CA-CV 23-0212
Filed Feb. 1, 2024
VACATED IN PART

COUNSEL:

B. Lance Entrekin (argued), The Entrekin Law Firm, Phoenix, Attorney for
Roy McAlister, et al.

Amy Abdo, Jessica L. Post (argued), Brett C. Gilmore, Fennemore Craig,
P.C., Phoenix, Attorneys for Loeb & Loeb, LLP
 MCALISTER, ET AL. V. LOEB
Opinion of the Court

JUSTICE KING authored the Opinion of the Court, in which CHIEF JUSTICE
TIMMER, VICE CHIEF JUSTICE LOPEZ, and JUSTICES BOLICK, BEENE,
MONTGOMERY, and BERCH (RETIRED) joined. *

JUSTICE KING, Opinion of the Court:

¶1 In this case, we must determine whether plaintiffs seeking
lost profit damages in the context of a prospective licensing transaction
have satisfied their burden to prove those damages with reasonable
certainty. We conclude that the plaintiffs have not met their burden, and
the superior court properly granted summary judgment in favor of the
defendant on lost profit damages.

¶2 We also granted review on the issue of whether a defendant’s
alleged electronic interference with patent applications can give rise to a
claim for trespass to chattel. But we need not reach the merits of this issue.
In this case, lost profits are the only form of damages the plaintiffs are
seeking, and judgment was properly entered against them on such
damages. Without any damages, the plaintiffs’ trespass to chattel claim
necessarily fails.

BACKGROUND

A. Factual Background

¶3 Roy McAlister invented and patented certain technologies
relating to the sustainable production and use of clean fuels. In May 2009,
McAlister incorporated McAlister Technologies, L.L.C. (“MT”) to hold his
patents and license the patents to others.

¶4 In October 2009, McAlister and MT entered into a “License
Agreement” with Advanced Green Technologies, L.L.C. (“AGT”). The
License Agreement provided that MT and McAlister would issue a license
to AGT to develop and commercialize certain patents. In return, AGT

* Due to the retirement of Justice Robert Brutinel, pursuant to article 6,
section 3 of the Arizona Constitution, Justice Rebecca White Berch (Ret.) of
the Arizona Supreme Court was designated to sit in this matter.

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would, among other things, issue McAlister a forty-one percent
membership interest in AGT.

¶5 AGT retained a law firm, Loeb & Loeb, L.L.P., to assist with
AGT’s patent law matters. MT and McAlister allege that Loeb & Loeb also
represented them at one time, although Loeb & Loeb disputes this claim.

¶6 Over the years, conflicts arose between McAlister and AGT’s
majority member. McAlister and MT sent letters to AGT claiming that AGT
had materially breached the License Agreement, giving AGT an
opportunity to cure the alleged breaches, and later terminating the License
Agreement because AGT had purportedly not cured the breaches.

¶7 According to McAlister and MT, Loeb & Loeb then filed
paperwork with the United States Patent and Trademark Office and the
World Intellectual Property Organization indicating that AGT had rights in
the patents and patents pending that were held by MT. McAlister and MT
further contend that they entered negotiations with prospective licensees
about licensing patents in various territories, but those prospective
licensees declined to pursue the business opportunities after discovering
that MT’s patents and patents pending were “clouded.”

B. The Superior Court Proceedings

¶8 McAlister, his wife, and MT (collectively “Plaintiffs”) filed
this action against Loeb & Loeb, asserting claims for breach of fiduciary
duty, trespass to chattel, slander of title, aiding and abetting, and negligent
supervision. 1 Plaintiffs claim that Loeb & Loeb engaged in unlawful
conduct that prevented the consummation of several prospective licensing
deals and resulted in lost profits.

¶9 Plaintiffs proffered Ron Epperson as their expert witness on
damages. Epperson considered testimony from the prospective licensees
in his damages analysis. But Epperson himself acknowledged that MT was
a new business venture and there were various significant risks with each
prospective licensing deal. To account for these risks, he assigned a
discount rate to each potential revenue stream, ultimately concluding that

1 Plaintiffs did not name AGT as a defendant in this lawsuit.

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Plaintiffs sustained over $100 million in lost profit damages in connection
with four prospective licensing deals.

¶10 Loeb & Loeb moved to exclude Epperson’s expert testimony,
arguing that his opinions were speculative, relied on inaccurate
assumptions, and lacked a reliable methodology. Loeb & Loeb also moved
for summary judgment on all Plaintiffs’ claims and their alleged lost profit
damages. As to lost profit damages, Loeb & Loeb alleged that Plaintiffs did
not present sufficient evidence to establish that its alleged conduct on behalf
of AGT caused actual damages.

¶11 In addressing Loeb & Loeb’s motion to exclude Epperson, the
superior court identified various concerns with Epperson’s methodology.
The court noted Epperson’s own acknowledgment of the various
significant risks underlying Plaintiffs’ prospective license deals, including
that they sought to establish a $400 million-plus-per-year revenue business
from scratch without any business plans, market analysis, or pro forma
financials or projections. The court also observed that (1) there was a high
technology risk because Plaintiffs’ technology had not been implemented
at the scale envisioned; (2) the management team needed to execute the
business opportunity was not yet identified; (3) the capital costs of
production facilities using new technology were unknown (although
Epperson ballparked the cost in the hundreds of millions), and it was
unknown if the investors could fund those capital costs; and (4) the
minimum license fee was large and placed significant risk on the licensee,
and it was likely the licensee would seek a reduced or delayed payment in
the event of execution delays.

¶12 The court stated that Epperson’s use of a high discount rate
did not “save the day,” as his methodology “guarantees lost profits to any
new business than can establish any revenue.” For example, Epperson
testified that MT would be responsible in some capacity for assisting with
commercializing the technology, but Epperson “apparently did not
consider MT’s expenses associated with performing its obligations under
the proposed agreements.” Accordingly, the court determined that the
danger of unfair prejudice and misleading the jury substantially
outweighed any probative value of Epperson’s lost profits model. See Ariz.
R. Evid. 403. In addition, the court concluded that Epperson’s model was

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Opinion of the Court

“impermissibly speculative and would not help a jury” and excluded
Epperson’s expert testimony under Arizona Rule of Evidence 702.

¶13 The court also entered judgment in favor of Loeb & Loeb on
Plaintiffs’ alleged lost profit damages. The court explained that a new
business may recover lost profits “if they can be proven with reasonable
certainty.” See Rancho Pescado, Inc. v. Nw. Mut. Life Ins. Co., 140 Ariz. 174,
183 (App. 1984). But the court determined that “no reasonable certainty
exists” in this case because “[e]ach of the four nascent ventures featured: no
signed contracts, no pro formas or other meaningful financial projections,
no market analysis, no business plans, no technology proven beyond the
laboratory, no management team, no production capability, and a $200
million price tag.” Given “these enormous, recognized risks,” the court
found it “speculative both that the parties would have ultimately reached
terms and that any of these entities would be profitable.”

¶14 Finally, the court granted summary judgment in favor of Loeb
& Loeb on Plaintiffs’ claims for trespass to chattel, slander of title, and
aiding and abetting. But the court denied summary judgment on Plaintiffs’
claims for breach of fiduciary duty and negligent supervision.

¶15 After the court’s rulings, Plaintiffs filed a notice stating that
they would “not seek to offer at trial evidence of damages outside of the
lost profits damages.” Plaintiffs further conceded that because “those lost
profits damages have been dismissed, there are no triable damages left in
the case.”

¶16 The parties then filed a stipulation requesting final judgment
against Plaintiffs and in favor of Loeb & Loeb on all claims in the case under
Arizona Rule of Civil Procedure 54(c). Shortly thereafter, the court entered
final judgment under Rule 54(c) against Plaintiffs and in favor of Loeb &
Loeb on all claims asserted in the complaint.

C. The Court Of Appeals

¶17 Plaintiffs appealed the superior court’s exclusion of
Epperson’s testimony and entry of summary judgment in favor of Loeb &
Loeb on lost profits, trespass to chattel, and slander of title. McAlister v.
Loeb & Loeb, LLP, No. 1 CA-CV 23-0212, 2024 WL 372214, at *1 ¶ 1 (Ariz.
App. Feb. 1, 2024) (mem. decision).

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¶18 The court of appeals affirmed the superior court’s exclusion
of Epperson’s expert testimony on lost profit damages because his opinions
“were based on speculation and unreliable methodology.” Id. In addition,
the court largely affirmed the entry of summary judgment on lost profits.
Id. at *1 ¶ 1, *6 ¶¶ 34–35. But the court reversed the superior court’s
judgment on one portion of Plaintiffs’ lost profit damages—that pertaining
to an initial $5 million payment that one prospective licensee, Donal
O’Flynn, testified he “was fine” paying to McAlister. 2 Id. at *7 ¶ 36. The
court noted that “this testimony’s credibility is called into doubt by the fact
that O’Flynn did not consistently affirm this commitment in his multiple
declarations over the course of this litigation,” but “summary judgment
cannot be granted based on credibility determinations.” 3 Id. (citing Orme
Sch. v. Reeves, 166 Ariz. 301, 309–10 (1990)). Plaintiffs, therefore, “were
entitled to have the factfinder assess whether there is credible evidence that
O’Flynn would have made an initial payment of $5 million with no
specified contingencies.” Id. ¶ 37. The court reversed and remanded “the
summary judgment on damages to address the proposed [$5 million]
initial-payment portion” from O’Flynn. Id. at *1 ¶ 2.

¶19 In addition, the court of appeals reversed the entry of
summary judgment in favor of Loeb & Loeb on Plaintiffs’ claims for
trespass to chattel and slander of title. Id. The court remanded for further
proceedings “on the trespass to chattel and slander of title claims, subject
to the limitation on alleged damages.” Id. at *10 ¶ 53.

¶20 We granted review to address lost profit damages in the
context of a prospective business transaction, which is an issue of statewide
importance that is likely to recur. We also granted review on whether
electronic interference with a patent application can give rise to a trespass

2 The court of appeals referred to the prospective licensing payments in
U.S. Dollars. Certain portions of the record refer to the payments in U.S.
Dollars and other portions refer to those payments in Euros. Because the
particular currency is not relevant to the issues before us, we refer to the
prospective licensing payments in U.S. Dollars.
3 O’Flynn stated in one declaration that he was “willing and able . . . to pay

the sum of €5 million as an initial down payment for the license,” but he
did not mention a $5 million or €5 million initial payment in his other
declarations.

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to chattel claim, an issue of first impression. We have jurisdiction under
article 6, section 5(3) of the Arizona Constitution.

DISCUSSION

¶21 “[W]e review a grant of summary judgment de novo, viewing
the evidence in the light most favorable to the party against whom
summary judgment was entered.” Dabush v. Seacret Direct LLC, 250 Ariz.
264, 267 ¶ 10 (2021). Summary judgment is appropriate 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). A motion for summary judgment “should be granted if the facts
produced in support of the claim or defense have so little probative value,
given the quantum of evidence required, that reasonable people could not
agree with the conclusion advanced by the proponent of the claim or
defense.” Orme Sch., 166 Ariz. at 309.

A. Principles Of Lost Profit Damages

¶22 This Court has long held that a plaintiff may recover damages
for the loss of future profits caused by a defendant’s tortious acts: “[W]here
an enterprise or undertaking in which profits were contemplated is
thwarted by tortious misconduct or by reason of a breach of contract, the
loss of anticipated profits, if proved with reasonable certainty, may be an
item of damages occasioned by the tortious misconduct or breach of
contract.” Harris Cattle Co. v. Paradise Motors, Inc., 104 Ariz. 66, 68 (1968)
(quoting Sposari v. Matt Malaspina & Co., 388 P.2d 970, 975 (Wash. 1964)); see
also McNutt Oil & Refin. Co. v. D’Ascoli, 79 Ariz. 28, 33–34 (1955); Gilmore v.
Cohen, 95 Ariz. 34, 35–36 (1963).

¶23 The burden is on the plaintiff to show the amount of lost
future profits “with reasonable certainty and a reasonable degree of
accuracy.” Harris Cattle Co., 104 Ariz. at 68 (quoting Sposari, 388 P.2d
at 975)); see also McNutt Oil & Refin. Co., 79 Ariz. at 33 (explaining that a
party is “entitled to recover any loss of profits which were capable of being
proved with reasonable certainty which he suffered as a result of such
breach”); Gilmore, 95 Ariz. at 36 (explaining that “[t]he burden was on the
plaintiffs to show the amount of their [lost profit] damages with reasonable
certainty”). “[W]hile mathematical accuracy is not required in proving loss
of future profits such loss cannot be predicated upon conjecture or

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speculation.” McNutt Oil & Refin. Co., 79 Ariz. at 34; see also Harris Cattle
Co., 104 Ariz. at 68 (explaining that “the testimony establishing the loss
must be free of speculation and conjecture” (quoting Sposari, 388 P.2d
at 975)).

¶24 In Gilmore, this Court explained that “‘certainty in amount’ of
damages is not essential to recovery when the fact of damage is proven.” 95
Ariz. at 36. But this rule “is simply a recognition that doubts as to the extent
of the injury should be resolved in favor of the innocent plaintiff and against
the wrongdoer.” Id. It does not dispel the “requirement that the plaintiff’s
evidence provide some basis for estimating his loss.” Id. And in fact, “[t]he
requirement of ‘reasonable certainty’ in establishing the amount of
damages applies with added force where a loss of future profits is alleged.”
Id. This is “because such loss is capable of proof more closely
approximating ‘mathematical precision.’” Id. “In other words, the plaintiff
in every case should supply some reasonable basis for computing the
amount of damage and must do so with such precision as, from the nature
of his claim and the available evidence, is possible.” Id.

¶25 At one time, “the majority rule in this country prohibited a
jury’s verdict of damages for lost profits of a new business.” Rancho Pescado,
140 Ariz. at 183 (collecting cases). But more recent case law has “eroded the
once generally accepted rule against awarding damages for lost profits to a
new business.” Id. at 183–84 (collecting cases). As the court of appeals
explained in Rancho Pescado, “[t]he modern trend is to allow recovery for
such lost profits if they can be proven with reasonable certainty.” Id. We
agree with Rancho Pescado’s pronouncement that “it would be patently
unfair to deny damages to a business where they have been proved with
reasonable certainty merely because the business venture was newly
established.” Id. at 184. Indeed, “[t]he evidence required to prove loss of
future profits depends on the individual circumstances of each case.” Id.

¶26 Accordingly, a plaintiff may recover lost profit damages in
the context of a new business venture or a prospective business transaction
that failed. See id. at 183–84; see also Restatement (Second) of Torts § 912,
cmt. d (Am. L. Inst. 1979) (discussing proof of lost profits where one party
“has tortiously prevented another from entering into or continuing a
business or entering into a particular transaction” and in the context of a
new business); Restatement (Second) of Contracts § 352 cmt. b (Am. L. Inst.

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1981) (discussing proof of lost profits in the context of a new business
venture). “[A]s is the case with an established business, reasonable
certainty may be provided when the plaintiff devises some reasonable
method of computing his net loss.” Rancho Pescado, 140 Ariz. at 184
(internal citation omitted).

¶27 We recognize, however, “that it is substantially more difficult
for a new business to establish lost profits damages with reasonable
certainty than it is for an established business to do so.” Schwartz v. Menas,
279 A.3d 436, 438 (N.J. 2022); see Restatement (Second) of Contracts § 352
cmt. b (“[I]f the business is a new one or if it is a speculative one that is
subject to great fluctuations in volume, costs or prices, proof will be more
difficult.”). “Nevertheless, damages may be established with reasonable
certainty with the aid of expert testimony, economic and financial data,
market surveys and analyses, business records of similar enterprises, and
the like.” Restatement (Second) of Contracts § 352 cmt. b. “A trial court
should carefully scrutinize a new business’s claim that a defendant’s
tortious conduct or breach of contract prevented it from profiting from an
enterprise in which it has no experience and should bar that claim unless it
can be proven with reasonable certainty.” Menas, 279 A.3d at 438; see also
Restatement (Second) of Torts § 912, cmt. d (“Because of a justifiable doubt
as to the success of new and untried enterprises, more specific evidence of
their probable profits is required than when the claim is for harm to an
established business.”). 4

B. Plaintiffs’ Evidence Regarding The Reasonable Certainty Of Lost
Profit Damages

¶28 Where, as here, a plaintiff claims a loss of future profits arising
from a failed business transaction, we first evaluate whether the plaintiff
has presented evidence that the parties to the prospective transaction had
agreed on material terms such that the transaction was reasonably certain
to occur. See Great W. Bank v. LJC Dev., LLC, 238 Ariz. 470, 481 ¶ 36 (App.
2015) (“Both the existence and amount of lost profits present questions of
fact which must be proven with reasonable certainty.”); S. Union Co. v. Sw.
Gas Corp., 180 F. Supp. 2d 1021, 1050 (D. Ariz. 2002) (explaining that plaintiff

4 “We generally follow Restatement principles when they reflect sound
legal policy and no contrary controlling authority exists.” Legacy Found.
Action Fund v. Citizen Clean Elections Comm’n, 254 Ariz. 485, 491 ¶ 18 (2023).

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“offers insufficient evidence to establish the terms of a consummated
merger with” defendant, and “[s]uch a showing is an essential starting
point to any reasonable computation of alleged lost profits”).

¶29 Without evidence of agreement on material terms, a claim for
lost profit damages from an unconsummated transaction is too speculative
to support recovery. See McNutt Oil & Refin. Co., 79 Ariz. at 34 (explaining
that a “loss of future profits . . . cannot be predicated upon conjecture or
speculation”); see also S. Union Co., 180 F. Supp. 2d at 1051 (“The
indeterminacy concerning this basic merger term illustrates that [plaintiff’s]
claim for lost profit damages is too speculative to support recovery.”); CGI
Fed. Inc. v. FCi Fed., Inc., 814 S.E.2d 183, 189 (Va. 2018) (“Taken together,
these provisions make clear the parties never agreed to the final terms of a
subcontract and expressly conditioned the formation of a subcontract on
future events and negotiations . . . . At most, the amended teaming
agreement imposed a framework for good faith negotiations of a final
subcontract.”); Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors,
Inc., 960 S.W.2d 41, 50 (Tex. 1998) (denying claim for lost profits “based on
an entirely hypothetical, speculative bargain that was never struck and
would not have been consummated”).

¶30 If the plaintiff establishes that the transaction was reasonably
certain to occur because the parties had agreed on material terms, we next
determine whether the plaintiff has proven the amount of lost profit
damages with reasonable certainty. See Gilmore, 95 Ariz. at 36.

¶31 In this case, Plaintiffs claim that Loeb & Loeb’s unlawful
conduct caused them to suffer $5 million in lost profit damages. In support,
Plaintiffs rely heavily on O’Flynn’s testimony that he was willing to make
a $5 million initial payment in conjunction with a licensing deal.

¶32 In response, Loeb & Loeb contends that O’Flynn and
McAlister were in fundamental disagreement as to various material terms
of the prospective licensing deal. In particular, O’Flynn and McAlister
disagreed about both the size of the initial payment that O’Flynn would
make upon execution and also the amount and timing of subsequent
payments. Therefore, according to Loeb & Loeb, the transaction was not
reasonably certain to occur, and Plaintiffs’ claim for lost profit damages
fails.

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¶33 At O’Flynn’s deposition, he described the status of his
negotiations with McAlister regarding payments under the prospective
licensing deal. O’Flynn testified that he was engaged in “back and forth”
negotiations with McAlister. They had an “oral outline” and “a rough
figure,” but “couldn’t come to [a] final number on it” as McAlister was still
negotiating for a higher number and O’Flynn for a lower number.
O’Flynn’s testimony continued as follows:

Q. Okay. So as far as you got, it was when you put the pens
down or pencils down, that was when Roy was negotiating
for a higher number and you were negotiating for a lower
number?
A. Yeah. I think it was initially 5 million upfront, and then
maybe 15—15 to 20 or somewhere in the middle for a yearly
—yearly royalty fee. But there was a lot of back and forth on
phone calls saying—obviously, I was looking for the under,
and Roy was looking for the over. But we would have settled
probably somewhere in the middle.

Q. But you never settled on a number; right?
A. No. But there was a range. There was a range.

Q. Right. And was the range—but I’m saying is you never got
past the range and agreed upon the final number; correct?
A. Yeah. We didn’t—we didn’t sign off on a number. We
didn’t sign off on a number.

Q. My question was: You never agreed on a final number?
When you said pencils down, you were still discussing a
range; correct?
A. We were still discussing a tighter range, I suppose, yeah.

Q. And was that range—what was that range at that time?
A. I think it was—as I said, I think it was between—whether
it was five for the initial upfront and between 15 and—and 20
for ongoing royalty fee post-construction I think it was. So the
facility obviously had to be built, revenue generated instead
of paying ongoing royalty fee in the construction phase,

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which would have been—would have been, obviously,
unattainable, from my perspective.

Q. Okay. And when you say five upfront, was that 5 million
upfront to Roy McAlister?
A. To McAlister Technologies, yeah.

Q. Okay. And was that a number that you were still
negotiating or was that the highest you were willing to
consider?
A. No, that was fine. It was more the—it was more the—the
post-construction royalty fee that—that we were negotiating
on.

Q. And so in your mind, it would have been 5 million upfront,
and then any further fees would come once the business was
revenue-generating; correct?
A. Post-construction, yeah.

Q. And when you say “post-construction,” does that also
mean post-commercialization?
A. Operating.

Q. The business would be operating?
A. Correct.

Q. And when you say the business would be operating, does
it also mean revenues coming in?
A. That’s correct.

1. Amount Of Initial Payment

¶34 O’Flynn testified “that was fine” when referring to him
making an initial payment of $5 million under the licensing deal. But this
testimony stands in stark contrast with McAlister’s testimony about what
he demanded for an initial payment. McAlister did not testify that he
expected an initial payment of $5 million from O’Flynn or any other
prospective licensee. Instead, McAlister testified that his “universal
agreement always required the licensee to pay $20 million at the beginning

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of the agreement,” which meant “essentially a[t] signing.” Indeed, when
questioned about a draft licensing agreement that Plaintiffs produced in
this case, McAlister reiterated that he required a $20 million payment upon
signing and he “wouldn’t give a license without them paying at the
beginning of the license.” Notably, this draft licensing agreement does not
reference a $5 million initial payment.

¶35 Moreover, the record contains emails from O’Flynn indicating
that he had “begun the process of developing a business plan” and
providing “an outline of a plan to move forward.” But these emails do not
reference a $5 million initial payment, much less reflect any sort of
agreement between O’Flynn and McAlister on the payment terms of a
licensing deal.

¶36 At bottom, McAlister’s universal expectation was that he
would receive a $20 million payment immediately upon the signing of a
license agreement and before a product was commercialized. Plaintiffs
have not cited any contemporaneous documents or testimony from
McAlister demonstrating that he was willing to accept or expected a $5
million initial payment. Accordingly, on this record, McAlister and
O’Flynn were not close to an agreement on a $5 million initial payment.

2. Amount Of Annual Payments

¶37 In addition, the evidence demonstrates that O’Flynn and
McAlister were still negotiating the amount of the annual payments under
the licensing deal, and this material term was still unsettled at the time of
Loeb & Loeb’s alleged misconduct.

¶38 McAlister testified that he has “always required the licensee
to pay $20 million at the beginning of the agreement” and “$20 million a
year every year after, or they lost the license.” And in fact, McAlister’s
expected $20 million annual payment is consistent with the unsigned draft
licensing agreements between O’Flynn and McAlister/MT that Plaintiffs
produced in this case. Those draft agreements provide that O’Flynn would
pay an annual license fee of $20 million.

¶39 O’Flynn’s testimony was remarkably different on this term.
O’Flynn testified that he was at “15 million euros a year” and McAlister
“was at $20 million a year.” O’Flynn indicated that he and McAlister

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“would have settled probably somewhere in the middle,” and “I believe the
negotiated settlement . . . in between those ranges . . . would have been
achieved.” (Emphasis added.) But O’Flynn did not reference any evidence
supporting his belief. And his additional testimony regarding payments
under the agreement—using terminology such as “maybe” and “I
think”—further supports the speculative nature of whether he and
McAlister would have resolved this material term. At bottom, McAlister
wanted to be paid $20 million per year and O’Flynn expected to pay $15
million per year, and there is no evidence that this $5 million annual
payment disparity was close to resolution.

3. Timing Of Annual Payments

¶40 Loeb & Loeb contends that there was another fundamental
disagreement about the timing of O’Flynn’s annual payments. According
to Loeb & Loeb, McAlister demanded $20 million every year of the
agreement (even before construction and commercialization of the
product), while O’Flynn was only willing to begin making subsequent
payments after the business succeeded in developing a product and
generating revenue.

¶41 As noted, McAlister testified that he has “always required the
licensee to pay $20 million at the beginning of the agreement” and “$20
million a year every year after, or they lost the license.” Also, McAlister’s
draft licensing agreements with O’Flynn included an annual license fee of
$20 million at the beginning of each year. Under McAlister’s deal structure,
O’Flynn would have been required to make these payments even before
any revenue was generated from the business.

¶42 O’Flynn’s testimony differed significantly regarding the
timing of his annual payments under a licensing deal. O’Flynn testified that
he would have agreed to an initial payment of $5 million, but he would not
have agreed to pay a $15 to $20 million annual payment until
“post-construction”—that is, after the facility was built, the business was
operating, and revenue was being generated. O’Flynn was not willing to
pay an ongoing annual payment when the business was still in the
construction phrase, as this was “unattainable” from his perspective.
Notably, O’Flynn testified that it would take four years before the new
business venture would be operational and generating revenue. O’Flynn

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also testified that this post-construction annual fee was still a point of
negotiation with McAlister.

¶43 In sum, Plaintiffs have not established that the material terms
of a licensing agreement with O’Flynn were sufficiently resolved such that
the transaction was reasonably certain to occur. It is speculative whether
O’Flynn and McAlister would have agreed on these unresolved terms.

4. The Nature Of The Proposed $5 Million Initial Payment

¶44 Plaintiffs claim they are entitled to $5 million in lost profit
damages. In doing so, they characterize O’Flynn’s testimony as a
declaration that he would pay “$5 million up front without contingencies.”
Plaintiffs contend this $5 million payment was subject only to one
contingency—that MT’s name was on the patent documents as owner. But
the record refutes this claim.

¶45 As discussed, O’Flynn and McAlister were not close to an
agreement on the initial payment amount. But even assuming they would
have agreed to a $5 million initial payment, this payment was not a
standalone agreement that would have resulted in $5 million of pure profit
to Plaintiffs. O’Flynn was not agreeing to pay $5 million for nothing in
return. Instead, the parties were negotiating one licensing agreement, with
the initial payment being just one of many terms in the agreement. Thus,
any initial payment—$5 million or otherwise—was contingent on
McAlister and O’Flynn reaching agreement on all final terms and executing
the licensing agreement. But McAlister and O’Flynn had fundamental
disagreements about several material terms, including the amount and
timing of O’Flynn’s annual payments under a licensing deal.

¶46 Plaintiffs have failed to meet their burden of establishing that
O’Flynn and McAlister had agreed on material terms such that it was
reasonably certain they would have executed a licensing agreement with a
$5 million initial payment term. O’Flynn’s mere expectation of a $5 million
initial payment does not equate to $5 million in lost profits to Plaintiffs.
Thus, Plaintiffs are not entitled to $5 million in lost profit damages.

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 MCALISTER, ET AL. V. LOEB
Opinion of the Court

C. Trespass To Chattel Claim

¶47 We also granted review on the issue of whether the court of
appeals erred in recognizing a claim for trespass to chattel based on Loeb &
Loeb’s alleged electronic interference with McAlister’s patent applications.
However, because Plaintiffs have not established lost profit damages—the
only type of damages they seek in this case—their claim for trespass to
chattel necessarily fails. See Koepnick v. Sears Roebuck & Co., 158 Ariz. 322,
330–32 (App. 1988) (citing Restatement (Second) of Torts §§ 217, 218, 221)
(discussing the elements of a trespass to chattel claim, including the
requirement that plaintiff was harmed by defendant’s conduct).
Accordingly, we need not reach the issue of whether electronic interference
with a patent application can give rise to a trespass to chattel claim.

CONCLUSION

¶48 We conclude that the court of appeals erred in reversing
summary judgment in favor of Loeb & Loeb on Plaintiffs’ claim for $5
million in lost profit damages, and erred in reversing summary judgment
in favor of Loeb & Loeb on Plaintiffs’ trespass to chattel claim. Accordingly,
we vacate paragraphs 36 to 44 of the court of appeals’ memorandum
decision, as well as the portions of paragraphs 2 and 53 that address
Plaintiffs’ trespass to chattel claim and their alleged $5 million in lost profit
damages.

¶49 We affirm the superior court’s entry of summary judgment in
favor of Loeb & Loeb on Plaintiffs’ alleged lost profit damages. We also
affirm on other grounds the entry of summary judgment in favor of Loeb &
Loeb on Plaintiffs’ trespass to chattel claim. See Cross v. Cross, 94 Ariz. 28,
31 (1963) (noting that “we will consider any legal theory within the issues
and supported by the evidence which tends to support and sustain the
judgment of the trial court”).

¶50 As discussed, the court of appeals reversed the superior
court’s entry of summary judgment in favor of Loeb & Loeb on the slander
of title claim. McAlister, 2024 WL 372214, at *1 ¶ 2, *8–10 ¶¶ 45–53. We
were not asked to review the court of appeals’ decision on the slander of
title claim. We remand to the superior court for further proceedings
consistent with this Opinion.

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