Opinion
No. 1 CA-CV 17-0637
07-10-2018
LAURIE NAVON, Plaintiff/Counter-Defendant/Appellee, v. JAMES R. MCMAHON, Defendant/Counter-Claimant/Appellant.
COUNSEL Law Offices of Kimberly A. Eckert, Tempe By Kimberly A. Eckert Counsel for Plaintiff/Counter-Defendant/Appellee Henman Law Firm, P.C., Phoenix By G. Lee Henman, Jr. Counsel for Defendant/Counter-Claimant/Appellant
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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 Maricopa County
No. CV2016-009497
The Honorable Randall H. Warner, Judge
AFFIRMED
COUNSEL Law Offices of Kimberly A. Eckert, Tempe
By Kimberly A. Eckert
Counsel for Plaintiff/Counter-Defendant/Appellee Henman Law Firm, P.C., Phoenix
By G. Lee Henman, Jr.
Counsel for Defendant/Counter-Claimant/Appellant
MEMORANDUM DECISION
Presiding Judge James B. Morse Jr. delivered the decision of the Court, in which Judge Kent E. Cattani and Judge Lawrence F. Winthrop joined. MORSE, Judge:
¶1 Appellant James R. McMahon challenges several aspects of the trial court's judgment following a bench trial. We affirm because the rulings he challenges are supported by substantial evidence.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 McMahon and Laurie Navon began dating in 2006. The parties purchased a house in Scottsdale in 2010. They also reached an oral agreement to share household expenses.
¶3 The parties briefly separated, then reconciled in 2015. At that time, they executed a "Release and Settlement Agreement" which provided that, "[r]egarding the Residence, all monies owed to . . . Navon will be paid after the sale of the residence" with the amount "to be determined by both of us after accounting."
¶4 The parties started multiple businesses during their relationship, none of which were ultimately successful. Navon provided some startup funds for these ventures. She also provided $35,000 to purchase an Audi for McMahon's daughter. Navon contended these funds were loans, while McMahon contended they were gifts.
¶5 The relationship ended in June 2016. Navon sued McMahon shortly thereafter seeking to recover her share of the value of the home and various expenditures she incurred during the relationship, including the startup and Audi funds. Navon contended she contributed approximately $300,000 to the home purchase, while McMahon contended she contributed $188,654.75. Navon also alleged that McMahon transferred the home to a revocable trust to avoid paying her share of the sale proceeds. McMahon counterclaimed for fraud and conversion, among other things, alleging that Navon had opened multiple credit cards in his name without his permission and had misappropriated appearance fees he had earned.
¶6 The case proceeded to a bench trial. There, the trial court determined that Navon had contributed $288,654.75 to the purchase of the home and imposed an equitable lien on the property. It also found the parties "have a contract by which [McMahon] will repay her investment in the house . . . plus a pro-rata share of any appreciation . . . at the time he sells the house." The court determined, however, that McMahon had not breached the agreement because the lawsuit impaired his ability to sell the home. The court also held that McMahon had breached an oral agreement regarding the Audi payment and awarded Navon $35,000. The court denied McMahon's fraud and conversion counterclaims, finding that he suffered no damages because "[t]he charges incurred [on the accounts Navon opened] . . . were typical of the expenses McMahon and Navon incurred while living together" and "he and Navon agreed to pool resources and share expenses while they were together."
¶7 McMahon timely appealed following the entry of final judgment. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101(A)(1).
DISCUSSION
¶8 On appeal from a bench trial, we review questions of law de novo but review the court's findings of fact for clear error. Castro v. Ballesteros-Suarez, 222 Ariz. 48, 51-52, ¶¶ 11-12 (App. 2009). "A finding of fact is not clearly erroneous if substantial evidence supports it, even if substantial conflicting evidence exists." Id. at 51-52, ¶ 11 (quoting Kocher v. Dep't of Revenue of Ariz., 206 Ariz. 480, 482, ¶ 9 (App. 2003)). "Evidence is substantial if it allows 'a reasonable person to reach the trial court's result.'" Id. at 52, ¶ 11 (quoting Davis v. Zlatos, 211 Ariz. 519, 524, ¶ 18 (App. 2005)). "We view the evidence and reasonable inferences from that evidence in the light most favorable to the prevailing party." FL Receivables Trust 2002-A v. Ariz. Mills, L.L.C., 230 Ariz. 160, 166, ¶ 24 (App. 2012).
I. The Trial Court Did Not Err in Determining Navon's Contribution to the Home Purchase.
¶9 McMahon contends the court erred in finding Navon contributed $288,654.75 to the purchase of the home. He concedes that Navon testified to that amount at trial, but argues the court should have discounted that testimony based on evidence that had previously been presented in her divorce case involving her former husband. McMahon argues that the evidence in that proceeding suggested that Navon only contributed approximately $200,000 to McMahon's home purchase. The divorce case record was equivocal, however, and also supported an argument that Navon had contributed nearly $300,000 to the home purchase. All of this evidence was before the trial court and we will not reweigh it on appeal. Premier Fin. Servs. v. Citibank (Ariz.), 185 Ariz. 80, 85 (App. 1995).
¶10 McMahon also contends that Navon's testimony was not credible, citing her testimony on other issues. It is not our role to reassess witness credibility following a bench trial. In re U.S. Currency in Amount of $26,980.00, 199 Ariz. 291, 295, ¶ 10 (App. 2000). We thus conclude the court did not clearly err in resolving this issue.
II. The Trial Court Did Not Err in Finding Navon Was Entitled to Receive a Share of the House's Appreciation in Value.
¶11 McMahon next argues that the court erred in finding the parties "had an agreement whereby [Navon] would receive back her contribution to the purchase of [the] home plus a pro-rata share of appreciation upon sale of the home," citing his own testimony that she would receive only what she contributed to the purchase. McMahon again asks us to discredit Navon's testimony, but we decline to do so. See Castro, 222 Ariz. at 52, ¶ 11 ("We will not reweigh the evidence or substitute our evaluation of the facts.").
III. The Trial Court Did Not Err in Finding the Audi Funds Were a Loan.
¶12 McMahon asserts that the court erred in finding that the $35,000 Navon provided to purchase his daughter's Audi was a loan, not a gift. McMahon also challenges the court's attorney fee award to Navon on the same grounds. He again asks us to accept his testimony as more credible than Navon's on these issues. Id. Because the parties' testimony conflicts, we defer to the superior court's credibility determinations and assume the court found all facts necessary to support its decision. Leggett v. Wardenburg, 53 Ariz. 105, 107 (1939).
IV. The Trial Court Did Not Err in Rejecting McMahon's Fraud Counterclaim.
¶13 McMahon also claims that the court erred in rejecting his fraud claim, which was based on his contention that Navon opened multiple credit card accounts in his name without his knowledge. To prove fraud, McMahon must establish: "(1) [a] representation; (2) its falsity; (3) its materiality; (4) [Navon's] knowledge of its falsity or ignorance of its truth; (5) [her] intent that it should be acted upon by [him] and in the manner reasonably contemplated; (6) [his] ignorance of its falsity; (7) [his] reliance on its truth; (8) [his] right to rely thereon; and (9) [his] consequent and proximate injury." KB Home Tucson, Inc. v. Charter Oak Fire Ins. Co., 236 Ariz. 326, 333, ¶ 31 (App. 2014) (quoting Nielson v. Flashberg, 101 Ariz. 335, 338-39 (1966)). Fraud must be established by clear and convincing evidence. Enyart v. Transamerica Ins. Co., 195 Ariz. 71, 77, ¶ 18 (App. 1998).
¶14 As noted above, the trial court found that the charges Navon incurred "were typical of the expenses McMahon and Navon incurred while living together" and that McMahon therefore suffered no damages. McMahon contends the court overlooked his testimony that three accounts "were reported on [his] credit report and he was later denied a credit card based on 'negative performance' concerning one of the cards Ms. Navon opened." He does not, however, challenge the court's finding that he "generally authorized Navon to enter into financial transactions on his behalf with respect to their joint expenses," nor does he connect the "negative performance" to any specific charges that were not joint expenses.
¶15 McMahon also contends that Navon's decision to open accounts without his knowledge "eliminate[d] any . . . agreement" to share joint expenses. Even if this were true, it would not establish that he suffered any damages. Thus, there is no clear error in the court's ruling.
V. The Trial Court Did Not Err in Rejecting McMahon's Conversion Counterclaim.
¶16 Conversion is "an act of wrongful dominion or control over personal property in denial of or inconsistent with the rights of another." Case Corp. v. Gehrke, 208 Ariz. 140, 143, ¶ 11 (App. 2004) (citation omitted). To prevail, McMahon had to specifically identify the property Navon allegedly converted and show he was entitled to immediate possession of it when it was converted. Id.; Cassell v. Gen. Motors Corp., 154 Ariz. 75, 77 (App. 1987). A party may sue for conversion of money if the funds "can be described, identified or segregated and there is an obligation to treat the funds in a specific manner." Koss Corp. v. Am. Express Co., 233 Ariz. 74, 90, ¶ 54 (App. 2013).
¶17 McMahon maintains that Navon converted appearance fees he earned for her personal use and opened credit cards in his name without his authorization, citing his own trial testimony. Assuming arguendo these funds and accounts could be segregated, Navon testified that she either gave appearance fees to McMahon, used them for household expenses, or deposited them with SwangWear, one of the parties' business ventures. Navon also denied converting any appearance fees or opening any credit card accounts without McMahon's knowledge. The trial court had discretion to accept Navon's testimony and discount other conflicting evidence on these issues. Kocher, 206 Ariz. at 482, ¶¶ 9-10.
VI. Attorney Fees on Appeal
¶18 Navon requests her attorney fees incurred on appeal pursuant to A.R.S. § 12-341.01(A), which permits a discretionary fee award to the successful party "[i]n any contested action arising out of a contract, express or implied." "It is well-established that a successful party on a contract claim may recover not only attorneys' fees expended on the contract claim, but also fees expended in litigating an 'interwoven' tort claim." Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, 13, ¶ 17 (App. 2000). McMahon's fraud and conversion counterclaims are not interwoven because they did not arise out of or induce any contract between the parties. See Morris v. Achen Const. Co., 155 Ariz. 512, 514 (1987) ("The duty not to commit fraud is obviously not created by a contractual relationship and exists . . . even when there is no contractual relationship between the parties at all."); cf. Deutsche Credit Corp. v. Case Power & Equip. Co., 179 Ariz. 155, 163 (App. 1994) (awarding attorney fees on conversion claim because the claim "depend[ed] for its existence on an alleged breach of contract"). We thus will award Navon reasonable attorney fees incurred in this appeal that relate to her breach of contract claim and taxable costs upon compliance with Arizona Rule of Civil Appellate Procedure 21. See Dooley v. O'Brien, 226 Ariz. 149, 153-55, ¶¶ 14-21 (App. 2010) (assessing entitlement to fees on a claim-by-claim basis).
CONCLUSION
¶19 We affirm the judgment.