Opinion
No. 1 CA-CV 17-0767
04-04-2019
DAKOTA TERRITORY TOURS AAC, Plaintiff/Appellant, v. SEDONA-OAK CREEK AIRPORT AUTHORITY INC., Defendant/Appellee.
COUNSEL Davis Miles McGuire Gardner PLLC, Tempe By Bradley D. Weech, Marshall R. Hunt Counsel for Plaintiff/Appellant Henze Cook Murphy PLLC, Phoenix By Kiersten A. Murphy Law Office of Tony S. Cullum PC, Flagstaff By Tony S. Cullum O'Connor & Campbell PC, Tempe By J. Daniel Campbell, Ellen B. Davis Co-Counsel for Defendant/Appellee
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
Appeal from the Superior Court in Yavapai County
No. V1300CV201780201
The Honorable John David Napper, Judge
AFFIRMED
COUNSEL
Davis Miles McGuire Gardner PLLC, Tempe
By Bradley D. Weech, Marshall R. Hunt
Counsel for Plaintiff/Appellant
Henze Cook Murphy PLLC, Phoenix
By Kiersten A. Murphy
Law Office of Tony S. Cullum PC, Flagstaff
By Tony S. Cullum
O'Connor & Campbell PC, Tempe
By J. Daniel Campbell, Ellen B. Davis
Co-Counsel for Defendant/Appellee
MEMORANDUM DECISION
Judge Peter B. Swann delivered the decision of the court, in which Presiding Judge James B. Morse Jr. and Judge Jon W. Thompson joined.
SWANN, Judge:
¶1 This appeal concerns the dissolution of a conditional preliminary injunction that allowed appellant to continue business operations during litigation over a bid protest. The superior court concluded that the condition justifying the injunction no longer existed. For reasons that follow, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 Dakota Territory Tours AAC ("Dakota") conducts a helicopter and airplane tour business out of the Sedona Airport under a lease agreement with Sedona-Oak Creek Airport Authority Inc. ("SOCAA"), which manages the airport's operations. Dakota's lease with SOCAA gave it exclusive access to a commercial building, public parking, and aircraft parking.
¶3 The parties began litigating a lease dispute in 2014 but reached a settlement in April 2017, the same month that the lease was set to expire. Under the settlement agreement, Dakota could continue leasing the existing property on a month-to-month basis until SOCAA issued a Request for Proposals ("RFP") for a potential replacement tenant. The agreement provided that if Dakota was the successful proponent, its use of the premises would continue uninterrupted, but if Dakota was not the successful proponent, it would have to vacate the premises with 30 days' notice.
¶4 SOCAA issued an RFP in May 2017. The RFP provided that "[t]he 'best responsible proponent' shall be that proponent which [SOCAA] and Yavapai County may determine," that "[t]he Yavapai County Board of Supervisors will consider the proposals on or before June, 2017," and that "[a]ny proposal will be subject to Federal Aviation Administration review and approval prior to commencement of any lease."
¶5 A SOCAA committee evaluated the various proposals (including Dakota's) on a point-based system and selected Guidance
Aviation (another air-tour business based out of the Sedona Airport) as the best proponent. SOCAA did not consult either the Yavapai County Board of Supervisors ("Board") or the Federal Aviation Administration ("FAA") before deciding the best proponent. SOCAA notified Dakota that its proposal was not chosen and that its lease was terminated.
¶6 Before vacating the premises, Dakota filed a complaint in Yavapai County Superior Court requesting a temporary restraining order. Dakota alleged, among other things, that SOCAA breached the settlement agreement because the Board and the FAA had not participated in the proposal selection, as was required under Dakota's interpretation of the RFP. The court granted the temporary restraining order, enjoining SOCAA from evicting Dakota pending a preliminary injunction hearing.
¶7 After a three-day evidentiary hearing, the court concluded that the RFP required the Board to have the "opportunity to consider" the proposals, but not that it "act on them." The court found that the Board did not have such an opportunity, and therefore that Dakota would likely succeed on its breach of contract claim "until the [Board] has the opportunity to consider these matters." The court further found that the possibility of irreparable harm "cut[s] in the favor of [Dakota]" because, despite most of the harm being financial, Dakota would lose employees and does not have another place to store its materials. And, noting that "the testimony has been very clear that the FAA has no interest in this lease," the court ruled that the RFP's FAA provision was "surplusage," and that SOCAA was not required to get approval from the FAA.
¶8 In September 2017, the court granted Dakota's preliminary injunction as to its breach of contract claim, but allowed SOCAA "to file a motion to lift the injunction once [the Board] has had the opportunity to review and consider the proposals." The court explained that once that condition had been met, there was little left to keep the injunction in place, and made clear that "the limitation on [the potential hearing] will be whether or not [the Board] was given the opportunity to exercise its discretion."
¶9 One month later, SOCAA filed a motion to dissolve the injunction, explaining that it had given the Board the opportunity to consider the proposals, but the Board declined to participate. Attached to the motion were several pieces of correspondence between SOCAA and two County officials, who stated that the selection of an RFP proponent is not within the Board's duties, and that the Board "will not act upon the RFP submitted by [SOCAA]." In its response to the motion to dissolve, Dakota
again argued that, contrary to the court's interpretation, the RFP required the Board to "participate with SOCAA in choosing the best proponent." Dakota further argued that SOCAA's correspondence did not establish that the Board "even had an opportunity to consider the proposals." In support of its arguments, Dakota attached three of the Board's public meeting agendas indicating that it had not considered the proposals in open session.
¶10 The court held argument on SOCAA's motion. The court reiterated that Dakota's likelihood of success due to the Board's lack of participation in the proposal process "was the basis for . . . continuing the injunction," and explained that it would not "rebalance all of the equities" regarding the basis for the injunction. The court then found that SOCAA established that the Board was given the requisite opportunity, and dissolved the injunction.
¶11 Dakota appeals from the order dissolving the preliminary injunction. We stayed the dissolution order pending this appeal.
DISCUSSION
¶12 In its appeal from the superior court's order dissolving the preliminary injunction, Dakota argues that the court erred by (1) ruling on SOCAA's dissolution motion before SOCAA had filed an answer and without holding an evidentiary hearing, (2) improperly balancing the parties' potential harms, (3) improperly weighing Dakota's likelihood of success on various issues, and (4) interpreting the RFP to require that the Board have the "opportunity to consider" the proposals and that the FAA need not participate in the proposal process at all. Dakota further argues that, even if the court's interpretation of the RFP was correct, the court erred by finding that SOCAA had established that the Board actually had an opportunity to consider the proposals.
¶13 Several of Dakota's arguments, however, are outside the scope of our review on appeal from this intermediate order. The superior court based the September 2017 preliminary injunction on its interpretation of the RFP and its weighing of the traditional injunction considerations (i.e., balance of harms and likelihood of success), and conditioned the injunction on the Board having an opportunity to consider the proposals. But the dissolution order was more narrow—it simply applied the condition contained in the original order.
¶14 While Dakota seeks to challenge several aspects of the preliminary injunction (i.e., its interpretation of the RFP and its weighing of the injunction considerations), Dakota did not appeal that order. The time
to appeal the September 2017 preliminary injunction had passed by the time Dakota filed its notice of appeal. See A.R.S. § 12-2101(A)(5) (separate right to appeal the grant of an injunction); see also ARCAP 9(a) ("To appeal a judgment, a party must file a notice of appeal under Rule 8 no later than 30 days after entry of the judgment from which the appeal is taken."). There is no final judgment in this case, and our jurisdiction extends only to Dakota's appeal of the November 2017 order dissolving the injunction. Accordingly, we will only consider those issues addressed in the court's dissolution order, including (1) whether the court erred by ruling on SOCAA's dissolution motion before SOCAA filed an answer and without holding an evidentiary hearing, (2) whether SOCAA's evidence established that the County had an opportunity to consider the proposals, and (3) whether the court's dissolution of the injunction was appropriate.
¶15 We review the court's decision to dissolve an injunction for abuse of discretion, Town of Tortolita v. Napolitano, 199 Ariz. 556, 559-60, ¶ 10 (App. 2001), and we review the court's legal conclusions de novo, Gnatkiv v. Machkur, 239 Ariz. 486, 489, ¶ 9 (App. 2016).
I. DAKOTA WAIVED ITS ARGUMENTS REGARDING PROCEDURAL DEFECTS BY NOT RAISING THEM IN SUPERIOR COURT.
¶16 Dakota contends that the court erred under Ariz. R. Civ. P. ("Rule") 65. But Dakota did not raise either of these procedural arguments before the superior court, and has therefore waived them on appeal. See Lunney v. State, 244 Ariz. 170, 181, ¶ 40 (App. 2017) ("Issues not raised before the superior court are waived on appeal.").
II. THE COURT DID NOT ERR BY CONCLUDING THAT SOCAA'S EXHIBITS ESTABLISHED THAT THE BOARD HAD AN OPPORTUNITY TO CONSIDER THE PROPOSALS.
¶17 SOCAA attached several exhibits to its motion to dissolve, showing that it submitted the proposals to the Assistant County Administrator and requested that the Board review them per the court's order. The exhibits also show correspondence between SOCAA and the Deputy County Attorney, who explained that the "Master Lease" between the County and SOCAA (under which SOCAA maintains control of the County-owned airport) does not require, "or even authorize[,] the County to participate in the RFP process or select the best responsible proponent." The Deputy County Attorney, as counsel to the Board, further stated that the Board "has not and will not act upon the RFP submitted by [SOCAA]."
The Deputy County Attorney clarified that the Master Lease requires the Board to review sublease agreements, but not to select which applicant is best for the sublease.
¶18 Dakota responded to SOCAA's motion by arguing that the administrator and Deputy County Attorney's emails refusing to participate in the RFP process do not establish that the Board had the opportunity to consider the proposals. Instead, Dakota argued, the Board itself must have considered (or refused to consider) the proposals during a public meeting. Dakota attached three of the Board's public meeting agendas, indicating that the Board had not considered the proposals during a public meeting. Based on the exhibits presented, the court dissolved the injunction.
¶19 We agree with the superior court that the Deputy County Attorney's representation that the Board declined to participate in the RFP process constituted an "opportunity" for the Board to consider the proposals. The Board had an opportunity to participate, but through its counsel, declined it. Moreover, even if the RFP explicitly required the Board's review during open session, such a requirement would not be enforceable because SOCAA lacked authority to bind the Board to perform under the RFP, to which the Board was not a party. See Able Distrib. Co. v. James Lampe, Gen. Contractor, 160 Ariz. 399, 410 (App. 1989) (noting the principle that parties to a contract cannot control a non-party to the contract).
¶20 Dakota also argues that the Board violated Arizona's open meeting laws by declining to participate over email instead of during an open session, but we will not address this argument because Yavapai County is not a party to this appeal. Moreover, this issue, like those discussed above, is subject to litigation in the superior court.
III. REASONABLE EVIDENCE SUPPORTS THE COURT'S WEIGHING OF THE PRELIMINARY-INJUNCTION CONSIDERATIONS.
¶21 A preliminary injunction may be dissolved under Rule 65(a) when there are insufficient grounds for the injunction because of changed circumstances or changes in the law. See Nu-Tred Tire Co. v. Dunlop Tire & Rubber Corp., 118 Ariz. 417, 419-20 (App. 1978). On a motion to dissolve an injunction, the court will not reexamine the factual bases of the injunction. Id. at 418; see Town of Tortolita, 199 Ariz. at 560, ¶ 16.
¶22 At the three-day evidentiary hearing, the court explained the grounds for its preliminary injunction. The court found that the balance of harms "cut in favor of [Dakota]," and that Dakota had some likelihood of
success on its breach of contract claim, but noted that once SOCAA had given the Board an opportunity to review the proposals, there was not much "to keep the injunction in place." The conditional nature of the injunction was never appealed. After considering the parties' exhibits and hearing argument on SOCAA's motion to dissolve, the court found that Dakota no longer had a likelihood of success. The court declined to rebalance the other considerations.
¶23 We will not rebalance the equities that justified the court's preliminary injunction, in which it found that the balance of harms did not weigh greatly in either party's favor and therefore that the injunction was largely based on Dakota's likelihood of success. See Nu-Tred Tire Co., 118 Ariz. at 420. Dakota's likelihood of success was largely conditioned on SOCAA giving the Board an opportunity to consider the proposals. Once SOCAA satisfied that condition, Dakota was no longer likely to succeed and there was little left to justify the injunction. Accordingly, the court did not err by dissolving the injunction.
CONCLUSION
¶24 For the foregoing reasons, we affirm. We therefore lift this court's February 12, 2018, stay of the dissolution order.