MARKHAM v. CAHAVA

IN THE

SUPREME COURT OF THE STATE OF ARIZONA

MARKHAM CONTRACTING CO., INC.,
Plaintiff/Appellant,

v.

CAHAVA SPRINGS PHASE I, INC., ET AL.,
Defendants/Appellees.

No. CV-25-0036-PR
Filed June 17, 2026

Appeal from the Superior Court in Maricopa County
The Honorable Erik Thorson, Judge
No. CV2021-054458
REVERSED AND REMANDED

Memorandum Decision of the Court of Appeals,
Division One
No. 1 CA-CV 22-0746
VACATED

COUNSEL:

Karen A. Palecek, James J. Palecek, Palecek & Palecek PLLC, Scottsdale;
Thomas L. Hudson, Eric M. Fraser (argued), John S. Bullock, Osborn
Maledon, P.A., Phoenix, Attorneys for Markham Contracting Co., Inc.

Timothy J. Berg (argued), J. Christopher Gooch, Tyler D. Carlton,
Fennemore Craig, P.C., Phoenix, Attorneys for Cahava Springs Phase I, Inc.,
et al.

Michael J. Holden, Jackson C. Pittman, Holden Willits PLC, Attorneys for
 MARKHAM v. CAHAVA
Opinion of the Court

Amici Curiae American Subcontractors Association and American
Subcontractors Association of Arizona

CHIEF JUSTICE TIMMER authored the Opinion of the Court, in which
VICE CHIEF JUSTICE LOPEZ, JUSTICES BOLICK, BEENE,
MONTGOMERY, KING, and CRUZ joined.

CHIEF JUSTICE TIMMER, Opinion of the Court:

¶1 In Wang Electric, Inc. v. Smoke Tree Resort, the court of appeals
held that a property owner is not unjustly enriched by retaining unpaid-for
leasehold improvements made at its tenant’s direction unless the owner
acted improperly. 230 Ariz. 314, 320 ¶¶ 15–17 (App. 2012). We adopt
Wang Electric’s holding and consider whether its improper-conduct
requirement extends beyond the landlord-tenant-contractor scenario. We
conclude it does not.
BACKGROUND

¶2 Cahava Springs is a master-planned residential community
under development in the desert foothills of Cave Creek, Arizona. The
developer and related entities (collectively, “Landowners”) own all real
property within the community. Upon the Landowners’ petition, the
Town of Cave Creek formed the Cahava Springs Revitalization District (the
“District”), a tax-levying public improvement district organized under
A.R.S. §§ 48-6801 to -6819 (the “Act”) to finance and build public
infrastructure, including roads and water lines, within Cahava Springs.
The District’s governing board consisted of three Landowner
representatives, as the Act requires. See A.R.S. § 48-6802(C)(1).
Following a District-wide election, the Landowners authorized the District
board to finance the infrastructure by levying special assessments against
all taxable property in the District—capped at $105,000 per lot—and issuing
and selling special assessment bonds, which are repaid from those
assessments. See A.R.S. §§ 48-6812, -6815, -6818 (governing financing,
assessments, and elections).

2
 MARKHAM v. CAHAVA
Opinion of the Court

¶3 The Landowners and the District then entered into a
development agreement to implement that financing structure and acquire
and construct the improvements. The Landowners’ obligations under the
agreement would serve as a covenant, be recorded in the county recorder’s
records, and run with the land. Upon completion of the improvements,
the District would dedicate them to the Town of Cave Creek.

¶4 To fulfill its agreement with the Landowners, the District
entered into an agreement with Markham Contracting Co., Inc.
(“Markham”) to construct the infrastructure improvements for about
$13 million. The Landowners were not parties to that agreement. After
substantial construction of the improvements, a dispute arose between the
District and Markham. The District then stopped paying Markham, and
both parties made claims against each other. The claims went to
arbitration, which produced a judgment of approximately $6.5 million in
Markham’s favor against the District. That judgment is now in collection
proceedings. The limited record here does not reflect whether the
improvements were completed and dedicated to the Town of Cave Creek.

¶5 Subsequently, Markham sued the Landowners, among other
parties, for unjust enrichment, seeking the $6.5 million it had been awarded
in the arbitration. 1 Markham alleged that (1) the Landowners had not
paid all assessments to fund payments to Markham, (2) they had received
an uncompensated benefit from the infrastructure improvements, and (3) it
would be unjust to permit the Landowners to retain that benefit without
paying for it.

¶6 The Landowners moved to dismiss the complaint pursuant to
Arizona Rule of Civil Procedure 12(b)(6). Relevant here, they argued that
the complaint failed because it did not allege any improper conduct, as
required by Wang Electric. Markham responded that no such allegation
was necessary because Wang Electric requires improper conduct only for
unjust enrichment claims brought against a property owner for tenant
improvements. Markham also moved for leave to file a second amended
complaint, which removed the other parties as defendants.

¶7 The superior court granted the motion to dismiss. It agreed
with the Landowners that Wang Electric required Markham to allege and

1 Markham intends to drop its claims against the other parties, so we do
not describe those claims in detail.
3
 MARKHAM v. CAHAVA
Opinion of the Court

prove improper conduct to hold them liable for unjust enrichment, and it
found that the proposed second amended complaint did not cure that
deficiency. The court, therefore, dismissed the first amended complaint
and denied leave to file a second amended complaint.

¶8 Markham appealed, arguing that Wang Electric’s improper
conduct requirement only applies to unjust enrichment claims in the
landlord-tenant context. The court of appeals agreed, reversed the
superior court’s judgment, and granted Markham leave to amend its
second amended complaint. Markham Contracting Co. v. Cahava Springs
Phase I, Inc., No. 1 CA-CV 22-0746, 2025 WL 337535, at *4 ¶¶ 14–15 (Ariz.
App. Jan. 30, 2025) (mem. decision).

¶9 We granted the Landowners’ subsequently filed petition for
review to decide whether improper conduct is required to maintain an
unjust enrichment claim outside the landlord-tenant-contractor context, an
issue of statewide importance. We have jurisdiction pursuant to article 6,
section 5(3) of the Arizona Constitution.

DISCUSSION

¶10 We review the superior court’s dismissal of Markham’s first
amended complaint de novo because it presents issues of law. See City of
Mesa v. Ryan, 258 Ariz. 297, 299 ¶ 8 (2024). Dismissal under Rule 12(b)(6)
is proper only if, as a matter of law, Markham would not be entitled to relief
even if the alleged facts are proven true. See Coleman v. City of Mesa,
230 Ariz. 352, 356 ¶ 8 (2012). In making this determination, we assume the
truth of the complaint’s well-pleaded factual allegations and indulge all
reasonable inferences from those facts. Id. ¶ 9. We give no weight to
conclusory statements. See id.

¶11 An unjust enrichment claim “provides a remedy when a party
has received a benefit at another’s expense and, in good
conscience, . . . should compensate the other.” Wang Elec., 230 Ariz. at 318
¶ 10; see also Murdock-Bryant Constr., Inc. v. Pearson, 146 Ariz. 48, 53 (1985)
(“A person who has been unjustly enriched at the expense of another is
required to make restitution to the other.” (quoting Restatement (First) of
Restitution (“Restatement”) § 1 (1937))). The remedy is flexible and
available “whenever the court finds that ‘the defendant, upon the
circumstances of the case, is obliged by the ties of natural justice and equity’

4
 MARKHAM v. CAHAVA
Opinion of the Court

to make compensation for benefits received.” Murdock-Bryant, 146 Ariz.
at 53 (quoting D. Dobbs, Law of Remedies § 4.2 at 235 (1st ed. 1973)).

¶12 To state a claim, Markham had to allege five elements: (1) the
Landowners’ enrichment, (2) Markham’s corresponding impoverishment,
(3) a causal link between them, (4) no justification for either, and (5) no
available legal remedy. See Wang Elec., 230 Ariz. at 318 ¶ 10; see also
Murdock-Bryant, 146 Ariz. at 53 (describing the essence of the inquiry as
whether, under the facts, the defendant received a benefit that is unjust to
retain without compensating the plaintiff for the value received). Only the
fourth element is in dispute: whether Markham sufficiently alleged that the
Landowners’ enrichment, at its expense, was unjustified.

¶13 The Landowners argue that their retention of the benefits
Markham conferred was justified because they were not parties to the
District’s contract with Markham and did not engage in any improper
conduct. Markham responds that the enrichment was unjustified because
the Landowners arranged for the District to improve their land and then
failed to pay for those improvements. Markham further contends that no
showing of improper conduct is required and that, in any event, the
Landowners acted improperly by petitioning to create the District as a
financing vehicle, agreeing to pay assessments to fund the construction, and
then failing to pay enough in assessments to cover Markham’s work.
Whether Markham must allege and prove improper conduct to establish
the absence of justification turns on whether we adopt the court of appeals’
analysis in Wang Electric and if so, how broadly.

A. Wang Electric Requires Improper Conduct To
Hold A Landlord Liable In Unjust Enrichment
For Tenant Improvements

¶14 Wang Electric arose from a construction dispute involving a
resort property owner (Smoke Tree), its tenant (REM), a general contractor
(KAI), and several subcontractors. See Wang Elec., 230 Ariz. at 316 ¶¶ 1–2.
Smoke Tree leased restaurant space to REM under a lease that required
REM to remodel the space using plans Smoke Tree approved, with Smoke
Tree agreeing to reimburse up to $840,000 of REM’s costs. Id. ¶ 2. REM
hired KAI as general contractor for an approximately $2 million remodel,
and KAI, in turn, hired several subcontractors. Id. at 316–17 ¶ 3.
Although Smoke Tree did not contract with KAI and its reimbursement
obligation under the lease ran only to REM, Smoke Tree paid roughly

5
 MARKHAM v. CAHAVA
Opinion of the Court

$790,000 directly to KAI before progress payments stopped. Id. at 317
¶¶ 4–5. Relevant here, the subcontractors sued, and the superior court
entered summary judgment for them and against Smoke Tree on their
unjust enrichment claims, reasoning it would be unjust for Smoke Tree to
retain the benefit of the improvements without compensating the
subcontractors. Id. ¶ 7.

¶15 The court of appeals reversed. Id. at 316 ¶ 1. It began by
surveying Arizona’s existing unjust enrichment case law involving owners,
contractors, and subcontractors, observing that those cases generally fall
into two categories: those in which the owner has fully paid the general
contractor and those in which it has not. Id. at 318 ¶ 12. In the first
category, recovery is unavailable because an owner who has paid in full has
not been unjustly enriched. Id. In the second, recovery is available
because allowing the owner to retain the benefit without paying for it
would be unjust. Id. at 318–19 ¶ 12. The court then observed that neither
category addressed the situation before it: an unjust enrichment claim
against an owner for improvements ordered not by the owner itself, but by
its tenant. See id. at 319 ¶ 12.

¶16 To resolve whether an unjust enrichment claim is viable in
that circumstance, the court looked to DCB Construction Co. v. Central City
Development Co., 965 P.2d 115 (Colo. 1998), which involved facts similar to
those in Wang Electric. See Wang Elec., 230 Ariz. at 319–20 ¶¶ 13-–15.
There, the Colorado Supreme Court relied on two principles to decide
whether an owner was liable in unjust enrichment to a contractor who
made improvements contracted for by a tenant. See DCB Constr., 965 P.2d
at 121. First, it cited the general rule that when a non-owner contracts for
improvements to the owner’s property but fails to pay, “the owner is not
liable to the contractor or supplier unless he agreed to pay them.” See id.
(first quoting 3 Dan B. Dobbs, The Law of Remedies, § 12.20(3) at 473 (2d ed.
1993); then citing Brannan Sand & Gravel Co. v. Santa Fe Land & Improvement
Co., 332 P.2d 892, 895 (Colo. 1958) (explaining that when “there is no
privity . . . between the [contractor] and the [owner], and no contract
established between them” an owner cannot be liable for improvements)).
That rule preserves an owner’s freedom to choose its own contractual
relationships and reflects the general principle that owners should not be
compelled to enter into legal obligations with parties they never selected.
See id. Second, the Colorado Supreme Court relied on Restatement § 110,
which provides that “[a] person who has conferred a benefit upon another
as the performance of a contract with a third person is not entitled to

6
 MARKHAM v. CAHAVA
Opinion of the Court

restitution from the other merely because of the failure of performance by
the third person.” See id. (alteration in original).

¶17 Considering the general rule, the Restatement, and the weight
of authority in other jurisdictions, the Colorado court concluded that an
owner is not liable for tenant improvements simply because it owns the
improved property and the tenant treated the contractor unjustly. See id.
(“There must be more.”). Otherwise, the owner would effectively become
“an insurer of the risk assumed by contractors in extending credit to
tenants.” See id. at 122. The court, therefore, determined that a
contractor demonstrates that an owner’s retention of the benefit conferred
is unjust if the contractor can show both the contractor’s loss and some
improper, deceitful, or misleading conduct by the owner. See id. at 121–22.
Applying that framework, the court found that the owner there was not
liable for unjust enrichment. See id. at 122–23. Although the owner had
consented to tenant improvements, required them to conform to its
specifications, and would retain them upon lease termination, it had neither
created the impression that it would pay for the work nor engaged in any
improper, deceitful, or misleading conduct. See id.

¶18 The Wang Electric court gave three reasons for adopting DCB
Construction’s improper-conduct requirement. First, it aligned with
Arizona’s general rule that a subcontractor lacking privity with the owner
cannot recover a personal judgment against the owner for unpaid work
even if a mechanic’s lien is enforceable against the property. See Wang
Elec., 230 Ariz. at 320 ¶ 15 (citing Keefer v. Lavender, 74 Ariz. 24, 25–26
(1952)). Second, Arizona courts also follow Restatement § 110. Id.
Third, conditioning an owner’s liability on its own conduct “comports with
the Arizona-adopted principle that unjust enrichment should not be used
to saddle entities with expenses they chose not to incur.” Id. The court
also noted that courts in other jurisdictions agreed with this analysis. See
id. ¶ 15 n.5.

¶19 Applying this reasoning, the court held that Smoke Tree’s
retention of the improvements was not unjust because there was no
allegation or evidence that Smoke Tree had engaged in improper conduct.
Id. ¶ 16. It had not directly engaged KAI and then withheld payment
knowing that doing so would harm the subcontractors, nor had it misled
anyone about the source of payment. Id. The court rejected the superior
court’s reasoning that Smoke Tree’s approval of the remodel plans
rendered its retention of the benefits unjust, explaining that approving

7
 MARKHAM v. CAHAVA
Opinion of the Court

plans to alter one’s own property is an ordinary incident of ownership and
cannot itself be deemed improper. Id. The court, therefore, held that a
contractor hired by a tenant to make improvements to leasehold premises,
or subcontractors retained by that contractor, may recover from the
property owner on an unjust enrichment theory only when the owner has
engaged in improper conduct. Id. ¶ 17.

¶20 Wang Electric’s reasoning is sound, and we adopt it as our
own. We add an additional reason supporting its holding. The landlord
with a residual interest in a lease that permits or requires improvements is
not unjustly enriched by receiving the benefit of improved premises at the
end of the term. It obtained what it was entitled to obtain under the lease:
tenant-improved premises. See 3 Dan B. Dobbs, The Law of Remedies,
§ 12.20(3) at 474. Depending on the landlord’s use of the property or the
next tenant’s needs, the improvements may or may not benefit the landlord.
Regardless, its receipt of improved premises is a contractually
bargained-for outcome rather than a windfall, which further explains why
the law does not require a landlord to compensate the contractor or
subcontractors who produced those improvements, absent some improper
conduct on its part.

B. Wang Electric’s Improper-Conduct
Requirement Does Not Govern When An
Owner Itself Arranges For Improvements And
Pays No One For Them

¶21 The more pressing question here is whether Wang Electric’s
reasoning extends to the circumstances here. It does not.

¶22 Wang Electric announced a rule exclusive to the
landlord-tenant-contractor scenario. The court was explicit that it
addressed a unique scenario that fell outside the more-typical circumstance
in which the owner had arranged for others to improve its own property.
See id. at 319 ¶ 12. To fill that gap, the court adopted DCB Construction’s
improper-conduct requirement. Id. at 320 ¶¶ 15–17. Without such a
requirement, the Wang Electric court warned, a property owner who merely
leased space to a tenant would become an “unwitting guarantor[]” of
whatever contracts the tenant chose to make. Id. ¶ 16; see also DCB Constr.,
965 P.2d at 120 (explaining that a specific rule is needed because tenants
frequently contract for improvements and both landlords and contractors
need more stability and predictability than what an ad hoc equity review

8
 MARKHAM v. CAHAVA
Opinion of the Court

provides). That concern is the engine driving Wang Electric’s holding, and
it arises only when the party who arranged for the improvements was a
tenant, not the owner. See Lewis v. Lewis, 189 P.3d 1134, 1142–43
(Colo. 2008) (stating that DCB Construction’s improper-conduct
requirement is specific to the landlord-tenant-contractor context and does
not extend to unjust enrichment claims arising in other circumstances).

¶23 Also, the rationale for permitting a landlord to keep the
benefit of its bargain does not extend to an owner who itself sought the
improvements, agreed to fund them, and paid no one for the work that
produced them. Such an owner cannot claim that its receipt of the benefit
was a contractually anticipated outcome of its bargain with someone else.
An owner who requested the improvements and then retained them
without payment is in a materially different position than the landlord in
Wang Electric.

¶24 Critically, Wang Electric recognized that the broader law of
unjust enrichment continues to govern the circumstance where a property
owner arranges for improvements to its own property through a third party
but does not pay for them. See Wang Elec., 230 Ariz. at 318–19 ¶ 12. The
Landowners nonetheless contend that because Wang Electric drew support
from Restatement § 110, Keefer, 74 Ariz. 24, and Blue Ridge Sewer
Improvement Dist. v. Lowry & Assocs., 149 Ariz. 373 (App. 1986)—none of
which are limited to the landlord-tenant-contractor scenario—its
improper-conduct requirement applies whenever an owner does not
directly contract for improvements. See Wang Elec., 230 Ariz. at 320 ¶ 15.

¶25 That reading misapprehends the role those authorities
played. Wang Electric cited § 110 and Keefer for the general rule that a
subcontractor lacking privity with an owner cannot recover a personal
judgment against the owner for unpaid work. See id. It cited Blue Ridge
Sewer for the principle that unjust enrichment cannot be used to saddle
property owners with expenses they implicitly chose not to incur by
declining to authorize the work at all. See id. The court did not rely on
these authorities to foreclose unjust enrichment liability in every case
lacking direct contractual privity.

¶26 Indeed, the court expressly recognized that unjust enrichment
claims may be viable without a showing of improper conduct when an
owner itself arranges for improvements and agrees to pay for them but then
does not do so. See id. at 318–19 ¶ 12. And the right-to-choose principle

9
 MARKHAM v. CAHAVA
Opinion of the Court

reflected in Blue Ridge Sewer protects owners from being forced into legal
relationships they did not select; it has no application to owners who
themselves sought the improvements, regardless of who was ultimately
hired to perform them. See Blue Ridge Sewer, 149 Ariz. at 376–77. It is the
broader law of unjust enrichment preserved by Wang Electric, not its
improper-conduct requirement, that governs here.

C. An Owner Who Seeks Improvements
Performed Under Contract With A Third Party
And Pays No One For Them Is Not Insulated
From Unjust Enrichment Liability By The
Absence Of Contractual Privity

¶27 The broader law governing unjust enrichment comes from
Murdock-Bryant; Flooring Systems, Inc. v. Radisson Group, Inc., 160 Ariz. 224
(1989); and similar cases, which recognized the viability of unjust
enrichment claims against defendants who lacked contractual privity with
the plaintiffs.

¶28 In Murdock-Bryant, Pearson, the primary contractor for the
construction of a shopping center, provided a subcontractor,
Murdock-Bryant, with inaccurate rock-quantity estimates that formed the
basis for Murdock-Bryant’s successful, but too-low, blasting bid. 146 Ariz.
at 50–51. After the two entered into a subcontract, Pearson formed a joint
venture with Wilbur to perform on Pearson’s prime contract with the
owner. See id. When Murdock-Bryant later discovered Pearson’s error
and realized it would have to blast far more rock than represented, it
rescinded the contract and sued both Pearson and Wilbur in equity for
restitution. See id. at 51–52. The question before the Court was whether
Murdock-Bryant could recover against Wilbur given the absence of
contractual privity, the fact that the joint venture was formed after
Pearson’s misrepresentation, and the undisputed fact that Wilbur had no
knowledge of or involvement in the misrepresentation. See id. at 52. The
Court held that restitution was available because Wilbur, as a joint venturer
with a direct pecuniary interest in the completed shopping center, must
have known that someone would have to perform the site preparation
work, Murdock-Bryant did so, and Wilbur benefitted from it. See id.
at 53–54.

¶29 The Court’s reasoning in Murdock-Bryant illuminates what the
unjustness inquiry actually requires. Whether retention of a benefit is

10
 MARKHAM v. CAHAVA
Opinion of the Court

unjust does not turn on whether the defendant intended to compensate the
plaintiff or whether the plaintiff intended the defendant to be the party to
pay. See id. at 54. The duty to compensate for unjust enrichment “is an
obligation implied by law without reference to the intention of the parties.”
Id. What matters instead is “that it was not intended or expected that the
services be rendered or the benefit conferred gratuitously, and that the
benefit was not ‘conferred officiously.’” 2 Id. A subcontractor who
performs pursuant to a contract and with the expectation of compensation
is, by definition, neither acting gratuitously nor thrusting an unwanted
benefit on the owner, so long as the owner sought, authorized, or
acquiesced in receiving the improvements. The unjustness inquiry is,
therefore, satisfied whenever an owner in that circumstance pays no one for
the work.

¶30 Flooring Systems applied Murdock-Bryant’s reasoning and
confirmed it in a more typical construction setting. There, CSA, as
Radisson Group’s agent, solicited Flooring Systems’s bid on carpeting work
for a hotel renovation and then accepted its bid. See Flooring Systems,
160 Ariz. at 225. Radisson Group’s general contractor, Five Star Services,
Inc., then entered into a subcontract with Flooring Systems for the same
carpeting work. See id. After Flooring Systems completed its work, Five
Star failed to pay the full amount due, and Radisson Group withheld final
payment to Five Star because the subcontractors had not been fully paid.
See id. at 225–26. Flooring Systems sued both Radisson Group and CSA for
unjust enrichment, and they responded that Flooring Systems’s subcontract
with Five Star precluded any recovery against them. See id.

2 An “officiously” conferred benefit is one “bestowed on another without
the encouragement or even acquiescence of the person so enriched.”
Benefit, Black’s Law Dictionary (12th ed. 2024) (def. 2). Blue Ridge Sewer
illustrates the principle. There, an engineering firm performed design
services for a sewer improvement district under a contract that was invalid
because an insufficient number of property owners had signed petitions
required by statute to authorize the work. See Blue Ridge Sewer, 149 Ariz.
at 376. The court denied the firm’s unjust enrichment claim, reasoning that
because the property owners had implicitly chosen not to receive those
services by declining to sign the petitions, any benefit conferred on them
could not be considered unjust. See id. at 376–77. To apply the doctrine
under those circumstances would be to saddle them with an expense they
chose not to incur. See id.
11
 MARKHAM v. CAHAVA
Opinion of the Court

¶31 This Court disagreed. See id. at 227. Relying on
Murdock-Bryant, the Court reasoned that Flooring Systems had not
provided its work gratuitously or officiously, as evidenced by its
subcontract with Five Star. See id. CSA had invited Flooring Systems to
bid and then accepted that bid, and Radisson Group withheld final
payment knowing that Flooring Systems had not been fully paid. See id.
Based on these facts, the Court found it could not conclude as a matter of
law that Radisson Group and CSA could justly retain the full benefit of
Flooring Systems’s work without paying for it. See id. The existence of an
intervening subcontract did not change that calculus. Id. Because
Radisson Group and CSA had paid no one for the work they received,
whether their enrichment was unjust was a question that could not be
resolved against the subcontractor on summary judgment. See id.

¶32 The Landowners read Flooring Systems as requiring direct
interaction between the owner and the subcontractor as a precondition to
liability, pointing to CSA’s solicitation of Flooring Systems’s bid. But the
Flooring Systems Court’s analysis rested entirely on the Murdock-Bryant
framework—whether the work was gratuitous or officious and whether the
owner paid anyone for it—and those were the only questions the Court
treated as legally operative. CSA’s solicitation was relevant only as
evidence that Radisson Group sought and acquiesced in the improvements,
satisfying Murdock-Bryant’s requirement that the owner not have received
the benefit officiously. An owner who seeks improvements through other
means, such as arranging for improvements by hiring a general contractor,
fully satisfies that requirement. See Williamson v. PVOrbit, Inc., 228 Ariz.
69, 74 ¶¶ 27–28 (App. 2011); see also A M Leasing, Ltd. v. Baker, 163 Ariz. 194,
199 (App. 1989) (describing Flooring Systems as “typical of those cases in
which the defendant, while retaining a benefit conferred by the plaintiff
with expectation of payment, pays no one or renders only partial
payment”).

¶33 Cases before and after Murdock-Bryant and Flooring Systems
have reached similar conclusions. See Williamson, 228 Ariz. at 74 ¶¶ 27–28
(relying on Flooring Systems to reverse summary judgment for owners on
an unjust enrichment claim where a factual dispute existed whether they
had fully paid the contractor for a subcontractor’s work); Com. Cornice &
Millwork, Inc. v. Camel Constr. Servs. Corp., 154 Ariz. 34, 40 (App. 1987)
(reversing dismissal of restitution claim where the owner paid no one for
the subcontractor’s work, notwithstanding that the subcontractor’s contract
was with the general contractor); Costanzo v. Stewart, 9 Ariz. App. 430,
12
 MARKHAM v. CAHAVA
Opinion of the Court

432–33 (1969) (holding the owner liable for unjust enrichment where he
knew the subcontractor expected payment and paid no one for the
completed work). 3

¶34 Additionally, the principles drawn from Murdock-Bryant and
Flooring Systems are consistent with Restatement (Third) of Restitution and
Unjust Enrichment § 25(2)(a)-–(c) (2011), which builds on Restatement § 110
and provides that a claimant who renders uncompensated contractual
performance that benefits a third party is entitled to restitution if:
(1) restitution would not subject the defendant to a forced exchange, (2) the
defendant would otherwise retain the benefit without paying anyone for it,
and (3) restitution would not impose on the defendant an obligation from
which the parties understood it would be free. See Restatement (Third) of
Restitution and Unjust Enrichment § 25 cmt. b (stating that Restatement
§ 110 is the provision’s starting point).

¶35 Taken together, Murdock-Bryant, Flooring Systems, and their
progeny establish that the unjustness inquiry turns on a straightforward
question: did the owner seek, authorize, or acquiesce in receiving
improvements that someone performed without gratuitous intent, and did
it pay no one for them? If so, the owner’s retention of the benefit without
compensating the party whose work produced it is unjust.

D. Markham Sufficiently Alleged That The
Landowners Were Unjustly Enriched

¶36 Turning to the case here, we conclude that Markham
sufficiently alleged that the Landowners’ enrichment at Markham’s
expense was unjustified. As alleged, the Landowners petitioned to
establish the District to finance and develop infrastructure in Cahava

3 The court of appeals concluded in Costanzo that the owner’s knowledge
of the subcontractor’s payment concerns and assurance of payment to the
subcontractor established good cause for restitution. 9 Ariz. App.
at 432–33. The court’s holding rested on Restatement § 40, which obligates
a recipient of services to pay for them if it has reason to know that the
provider believes it or someone else will pay. The owner’s direct
interaction with the subcontractor was evidence of that knowledge, not a
standalone requirement, as the Landowners suggest. Other circumstances
may equally establish that an owner had reason to know the work would
not be performed gratuitously.
13
 MARKHAM v. CAHAVA
Opinion of the Court

Springs for the benefit of their own property. The agreement between the
District and the Landowners evidences the latter’s intent to obtain
infrastructure and fund those improvements, in part, through assessments.
Markham’s agreement with the District evidences its intent not to construct
the improvements gratuitously or officiously. The Landowners are,
therefore, like Wilbur in Murdock-Bryant and Radisson Group in Flooring
Systems. Like those owners, the Landowners sought improvements,
arranged for a third party to make them, knew someone would have to
perform the work, and then allegedly reaped the benefit of that work
without paying for it. Adjudicating the Landowners liable for unjust
enrichment in this circumstance, if proven, would not effectively force them
into a legal relationship with Markham or make them “unwitting
guarantors” for District contracts. See Wang Elec., 230 Ariz. at 320 ¶ 16.
For the reasons explained, see supra ¶¶ 21–26, Wang Electric is inapplicable,
and there is no need to allege that the Landowners acted improperly.
Markham has sufficiently alleged that the Landowners were unjustly
enriched. See Murdock-Bryant, 146 Ariz. at 53–54; Flooring Systems,
160 Ariz. at 227.

¶37 The Landowners’ public policy arguments do not warrant a
different result. Their core contention here is that subjecting lot owners
within a revitalization district to unjust enrichment liability will destabilize
the Act’s bond-financing mechanism by introducing unpredictable
exposure that underwriters cannot price. The Landowners did not raise
this argument to the superior court or the court of appeals and have
therefore waived it here. See Willis v. Bernini, 253 Ariz. 453, 458 ¶ 13 (2022)
(“Normally, arguments raised for the first time in supplemental briefing are
waived.”).

¶38 Even if we considered the arguments, we would not reach a
different result. First, the Landowners cite nothing in the Act preempting
equitable remedies, and the Act is silent on what happens when the funding
mechanism fails and a contractor goes unpaid. Second, this case comes to
us on a motion to dismiss. The full contours of how unjust enrichment
liability interacts with the Act’s financing structure in this and future cases
will depend on facts not yet developed. Third, the Murdock-Bryant and
Flooring Systems framework itself may supply the limiting principle the
Landowners say is missing: only an owner who sought, authorized, or
acquiesced in improvements it paid no one for faces unjust enrichment
liability. An owner who played no such role likely has no exposure.

14
 MARKHAM v. CAHAVA
Opinion of the Court

¶39 For these reasons, the superior court erred by granting the
motion to dismiss. On remand, the Landowners remain free to contest
whether the facts as developed satisfy the unjust enrichment elements,
including whether their enrichment was in fact unjustified under the
Murdock-Bryant and Flooring Systems framework.

E. Attorney Fees

¶40 Both parties request an award of attorney fees under A.R.S.
§ 12-341.01(A), which authorizes an award of reasonable fees to the
successful party if the action arises out of a contract. Because neither party
is yet successful in this matter, we exercise our discretion to decline both
requests without prejudice to reasserting them before the superior court.
If the successful party requests fees again pursuant to § 12-341.01, the
parties and the court should address whether this matter is one “arising out
of a contract.”
CONCLUSION

¶41 For the foregoing reasons, although we agree with the court
of appeals’ disposition, we vacate its memorandum decision to replace its
reasoning with our own. We reverse the superior court’s dismissal of the
first amended complaint and its denial of the motion for leave to file a
second amended complaint and remand to that court for further
proceedings.

15