Opinion
No. 1 CA-CV 14-0647
03-01-2016
SYLVIA MAE BROWNING RUCH; NORMA JEAN SONNENTAG; STEPHANIE MARIE SINOCK; and THE ELLIS V. BROWNING FAMILY LIMITED PARTNERSHIP-C, Plaintiffs/Appellants, v. JAMES ELLIS BROWNING and CYNTHIA BROWNING, husband and wife, Defendants/Appellees.
COUNSEL Shadle & Walsma, PLC, Yuma By Stephen P. Shadle Co-Counsel for Plaintiffs/Appellants Schneider & Onofry PC, Yuma By Jason M. Kelly Co-Counsel for Plaintiffs/Appellants Garcia, Kinsey & Villarreal, PLC, Yuma By John S. Garcia, Meghan C. Scott Counsel for Defendant/Appellee James Browning Edgar & Minore, PC, Yuma By Richard J. Edgar Counsel for Defendant/Appellee Cynthia Browning
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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 Yuma County
No. S1400CV201300909
The Honorable John Neff Nelson, Judge
VACATED AND REMANDED
COUNSEL Shadle & Walsma, PLC, Yuma
By Stephen P. Shadle
Co-Counsel for Plaintiffs/Appellants Schneider & Onofry PC, Yuma
By Jason M. Kelly
Co-Counsel for Plaintiffs/Appellants Garcia, Kinsey & Villarreal, PLC, Yuma
By John S. Garcia, Meghan C. Scott
Counsel for Defendant/Appellee James Browning Edgar & Minore, PC, Yuma
By Richard J. Edgar
Counsel for Defendant/Appellee Cynthia Browning
MEMORANDUM DECISION
Judge Jon W. Thompson delivered the decision of the Court, in which Presiding Judge Randall M. Howe and Judge Lawrence F. Winthrop joined. THOMPSON, Judge:
¶1 Appellants Sylvia Mae Browning Ruch, Norma Jean Sonnentag, Stephanie Marie Sinock and The Ellis V. Browning Family Limited Partnership-C (the Partnership) (collectively, Appellants) appeal the trial court's issuance of a preliminary injunction preventing Appellants from evicting Appellees James Ellis Browning and Cynthia Browning (collectively, Browning) from an office suite owned by the Partnership. For the reasons set forth below, we vacate the preliminary injunction and remand for trial on the merits.
FACTUAL AND PROCEDURAL BACKGROUND.
¶2 James Browning is a dentist practicing in Yuma County. Browning's practice is located in a suite in the Partnership's office building. Browning is a limited member in the Partnership, as are the individual Appellants, each of whom is related to Browning.
¶3 Browning's grandfather originally owned the building. When Browning was a child, his grandfather promised him that, should he return to Yuma to practice medicine, he would be allowed to use a suite in the building rent-free for as long as he liked. Browning's grandfather orally confirmed this promise years later while visiting Browning at dental school. Browning then moved his dental practice into Suite E of the building in or around 1996. Approximately two years after his grandfather passed away, Browning moved his practice from Suite E to Suite A and expended significant funds to convert Suite A from a restaurant into a dental office.
It is unclear from the record when Browning's grandfather conveyed the building to the Partnership.
¶4 Appellants filed suit against Browning in 2013, alleging that Browning had been "operating [his] dental practice out of the ... building for several years without paying rent" and seeking judicial dissolution of the Partnership. The Partnership also filed a separate forcible entry and detainer action against Browning. Browning sought to forestall the forcible entry and detainer action by moving for a temporary restraining order and preliminary injunction in the main case. Browning claimed he would suffer irreparable harm if forced to vacate the building. He also contended that he held an executed license to occupy the suite rent-free based on the expenditures he made to convert Suite A into a dental office.
¶5 The trial court granted a temporary restraining order, set a bond of $500, and set a hearing on Browning's preliminary injunction request. At the hearing, Browning testified that his grandfather told him "at age 10 or 12" that "if you ever want to practice in my building, you are welcome to come and practice in my building, you know, whenever you would like to, of course rent-free, and then when I retire, I'll just give it to you." Browning further testified that his grandfather said the arrangement would last "for as long as [Browning] wanted to be there." Browning acknowledged that his grandfather's promise was never put in writing, but testified that Appellants were aware of it.
¶6 Browning further testified that the other Partnership members did not object to his move to Suite A or the work he had done to convert it into a dental office. Browning admitted, however, that the other Partnership members started pressing him to pay rent sometime after his grandfather passed away.
¶7 Based on Browning's testimony, the trial court issued a preliminary injunction, finding that Browning had established an executed license to use Suite A and therefore had a high likelihood of success on the merits. Appellants timely appealed. We have jurisdiction pursuant to Arizona Revised Statutes (A.R.S.) § 12-2101(A)(5)(b) (2011).
DISCUSSION
¶8 We review an order granting a preliminary injunction for an abuse of discretion. TP Racing, L.L.L.P. v. Simms, 232 Ariz. 489, 492, ¶ 8, 307 P.3d 56, 59 (App. 2013). An abuse of discretion occurs if the trial court applied the incorrect substantive law or preliminary injunction standard, based its decision on an erroneous material finding of fact, or applied the appropriate preliminary injunction standard in a manner resulting in an abuse of discretion. Id. We are bound by the trial court's factual findings unless they are clearly erroneous. Ahwatukee Custom Estates Mgmt. Ass'n, Inc. v. Turner, 196 Ariz. 631, 634, ¶ 5, 2 P.3d 1276, 1279 (App. 2000).
¶9 To obtain preliminary injunctive relief, the moving party must show a strong likelihood of success on the merits, a possibility of irreparable injury if the injunction is not granted, a balance of hardships weighing in his favor, and that public policy favors the requested relief. TP Racing, 232 Ariz. at 495, ¶ 21, 307 P.3d at 62 (citing Shoen v. Shoen, 167 Ariz. 58, 63, 804 P.2d 787, 792 (App. 1990)). The critical factor is relative hardship, for which the movant must show either probable success on the merits and the possibility of irreparable injury or the presence of serious questions and that the balance of hardships tips sharply in his favor. Shoen, 167 Ariz. at 63, 804 P.2d at 792.
I. The Trial Court Abused Its Discretion in Finding That Browning Had Established an Executed License.
¶10 An "executed license" arises when a licensee enters the property of another with notice, constructs valuable improvements thereon, and the owner acquiesces in the licensee's possession and use. Keystone Copper Mining Co. v. Miller, 63 Ariz. 544, 557-58, 164 P.2d 603, 610 (1945).
¶11 The parties extensively cite two Arizona executed license cases, the first of which is Keystone Copper. There, two directors of a mining company built a home and store on company-owned land, relying on a then-contemplated conveyance from the corporation to themselves. 63 Ariz. at 550, 164 P.2d at 607. The corporation used the building as a business office while the directors used it as both a place of business and a residence for that same period of time. Id. When the corporation sought to eject the directors after more than twenty years of peaceful use, our supreme court found that the directors had established an irrevocable executed license to use the building:
An executed license, as where the licensee expends money in constructing buildings and uses the ground with the assent, knowledge and acquiescence of the owner, creates or results in an equitable right capable of being assigned and which may not be disregarded or revoked by the owner of the premises.Id. at 557-58, 164 P.2d at 610 (internal citations omitted).
¶12 In the second case, Ulan v. Vend-A-Coin, Inc., Vend-A-Coin installed and maintained coin-operated laundry machines on a landlord's premises. 27 Ariz. App. 713, 714-15, 558 P.2d 741, 742-43 (1976). Vend-A-Coin later installed three additional machines that were used for a few years without incident. Id. at 715, 558 P.2d at 743. Another vendor subsequently convinced the landlord to replace all of Vend-A-Coin's machines, following which Vend-A-Coin filed suit. Id.
¶13 On appeal, Vend-A-Coin argued that it established an executed license when it installed the additional laundry machines. Id. at 716, 558 P.2d at 744. The court disagreed, holding that the doctrine "contemplates that any expense incurred must be for substantial improvements of a permanent rather than temporary nature." Id. On that basis, the court expressly distinguished Keystone Copper:
In our opinion the executed license exception should not be expanded to encompass the fact situation at bench. To hold otherwise could lead to unfortunate and unjust results. A supplier, simply by making a relatively small expenditure for a permanent improvement (e.g., a pipe), could claim the existence of an executed license. Every subsequent owner of the building or premises ... would be bound to deal with the original supplier. We do not believe that the Keystone court desired the executed license exception to encompass such situations.Id.
¶14 Finding an executed license, on this record, would lead to equally unfortunate and unjust results. Unlike Keystone Copper, where the building at issue was a permanent improvement that benefited both the directors and the corporation, Browning failed to show that his renovations to Suite A not only suited his own business purposes but also benefited the property. Moreover, unless the next Suite A occupant happens to be another dentist, that occupant likely would remove Browning's improvements just as Browning presumably removed restaurant-related improvements before he moved in.
¶15 Thus, even assuming Browning's Suite A improvements were substantial, they are not the sort of improvements that can trigger an executed license. See Ulan, 27 Ariz. App. at 715, 558 P.2d at 743; see also IMPROVEMENT, Black's Law Dictionary (10th ed. 2014) (defining "valuable improvement" as those that "add[] permanent value to the freehold" and are "both permanent and beneficial to the property."). The trial court thus erred in finding that Browning had established an executed license to use Suite A without paying rent.
II. The Trial Court Abused Its Discretion In Issuing a Preliminary Injunction.
¶16 As noted above, the trial court found that Browning was likely to succeed on the merits because it found that he had established an executed license. Because we find no executed license, Browning's license to occupy Suite A was revocable at any time and was in fact revoked when the Partnership demanded he sign a lease and pay rent. See Ulan, 27 Ariz. App. at 716, 558 P.2d at 744 ("The general rule is that a license ... is revoked Ipso facto by the licensor's ... doing any act inconsistent with the exercise of the license."). The trial court therefore abused its discretion in granting the preliminary injunction. See Ariz. Ass'n of Providers for Persons with Disabilities v. State, 223 Ariz. 6, 12, ¶ 14, 219 P.3d 216, 222 (App. 2009) ("[T]he superior court abuses its discretion [in granting a preliminary injunction] if it commits an error of law."); P & P Mehta LLC v. Jones, 211 Ariz. 505, 507, ¶ 9, 123 P.3d 1142, 1144 (App. 2005) ("A court should not wield its injunctive power to disrupt the settled rights of others without first requiring from the applicant significant evidence that he is on legally solid ground.").
Given our decision on this issue, we need not address Appellants' statute of frauds arguments, their arguments on the remaining preliminary injunctive relief factors, their arguments regarding the temporary restraining order that preceded the preliminary injunction, or their claim that the bond amount was insufficient. --------
CONCLUSION
¶17 We vacate the preliminary injunction and remand for trial on the merits. Appellants make a cursory request for attorney's fees under A.R.S. § 12-341.01(A) (2013), but do not say how this appeal arises out of any contract. Further, this case is not concluded. We thus deny appellees' fee request.