Opinion
No. 2 CA-CV 2013-0153
07-28-2014
TONY'S CONSTRUCTION, INC., AN ARIZONA CORPORATION, PLAINTIFF/APPELLANT, v. SELECT DEVELOPMENT, LLC, AN ARIZONA LIMITED LIABILITY COMPANY; SELECT DEVELOPMENT & CONSTRUCTION, INC., AN ARIZONA CORPORATION; SELECT, AN ENTITY; SELECT DEVELOPMENT, AN ENTITY; BRANDON J. NEAL; THOMAS B. "BRIAN" NEAL; FAC LEASING, LLC, A NEVADA LIMITED LIABILITY COMPANY; PWBCO INVESTMENT SERVICES, LLLP, AN ARIZONA LIMITED LIABILITY PARTNERSHIP; BLSH INVESTMENT SERVICES, LLLP, AN ARIZONA LIMITED LIABILITY PARTNERSHIP, DEFENDANTS/APPELLEES.
Carl M. Tootle, Tucson Counsel for Plaintiff/Appellant Law Offices of Dennis A. Rosen, Tucson By Dennis A. Rosen and Gayle D. Reay Counsel for Defendants/Appellees
THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
NOT FOR PUBLICATION
See Ariz. R. Sup. Ct. 111(c); Ariz. R. Civ. App. P. 28(c).
Appeal from the Superior Court in Pima County
No. C20081406
The Honorable Stephen C. Villarreal, Judge
The Honorable Charles V. Harrington, Judge
AFFIRMED IN PART, VACATED IN PART, AND REMANDED WITH INSTRUCTIONS
COUNSEL Carl M. Tootle, Tucson Counsel for Plaintiff/Appellant Law Offices of Dennis A. Rosen, Tucson By Dennis A. Rosen and Gayle D. Reay Counsel for Defendants/Appellees
MEMORANDUM DECISION
Presiding Judge Kelly authored the decision of the Court, in which Judge Howard and Judge Brammer concurred. KELLY, Presiding Judge: ¶1 In this contract action, appellant Tony's Construction, Inc. (TCI) argues the trial court erred in various rulings against it, including the court's grant of summary judgment and judgment as a matter of law in favor of Select Development, LLC (Select LLC). For the following reasons, we affirm the court's rulings on the merits but vacate the award of attorney fees and remand with instructions.
The Hon. J. William Brammer, Jr., a retired judge of this court, is called back to active duty to serve on this case pursuant to orders of this court and the supreme court.
Factual and Procedural Background
¶2 In January 2006, Select LLC contracted with TCI to work as a subcontractor on a housing development. After TCI performed its work between late 2006 and early 2007, it received payments in January and March 2007. TCI contended the payments did not represent the full amount it was owed for work and materials. ¶3 In March 2008, TCI filed a complaint for mechanic's lien foreclosure and breach of contract against Select LLC and other persons or entities it believed were affiliated with Select LLC or the housing development project. Two years later, in March 2010, Select LLC stipulated to a judgment on the breach of contract claim and judgment was entered against it in the principal sum of $107,250.63, plus interest, attorney fees, and costs. Thereafter, the trial court dismissed TCI's lien foreclosure claim with prejudice, and denied its requests for leave to amend its complaint to assert a claim for equitable relief and for additional discovery. TCI appealed, but this court dismissed the appeal with prejudice based upon the parties' stipulation. ¶4 In the fall of 2011, the trial court granted Select Development, an entity, and Select Development & Construction, Inc.'s joint motion for summary judgment, ruling that Select LLC was the only party that had contracted with TCI and thus was the only proper defendant in TCI's breach of contract action. TCI subsequently was permitted to amend its complaint to add additional defendants and three new causes of action for alter ego, fraudulent transfer, and breach of the corporate trust fund doctrine (CTFD). In April 2012, the court granted summary judgment on TCI's fraudulent transfer and alter ego claims as to all defendants, and for breach of the corporate trust fund doctrine as to certain defendants. The court denied TCI's motion for reconsideration in June 2012 and, in January 2013, denied TCI's motion for summary judgment on the fraudulent transfer claim. ¶5 TCI then filed its second motion to amend its complaint seeking to add claims of unjust enrichment and a violation of A.R.S. § 29-706. The trial court denied the motion, stating it was "unwilling to revisit [the fraudulent transfer] issue for [the] fourth time" and that "it would be futile to allow the amendment." The court also concluded the unjust enrichment claim was futile, the statutory claim based on § 29-706 was inapplicable and futile, and TCI had unduly delayed bringing the claims. ¶6 TCI's sole remaining claim—breach of the CTFD— proceeded to trial. At the close of TCI's case, defendants moved for judgment as a matter of law. The trial court found a transfer of corporate assets had occurred between December 2006 and March 2007. With respect to that time period, it concluded TCI had failed to prove the elements of its claim for breach of the CTFD or the amount of Select LLC's liability, and that TCI lacked standing to bring the claim for its individual benefit. The court entered judgment in favor of defendants in July 2013, and awarded defendants their attorney fees and costs. It subsequently denied TCI's motion for new trial and TCI timely appealed. We have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).
The motion was filed after TCI refused to sign a stipulation dismissing Select Development & Construction, Inc. and "other Select entities" from the case.
Specifically, the trial court determined the statute of limitations precluded the fraudulent transfer claim and that TCI had not proven the elements for an alter ego claim. The court also concluded that because certain defendants owed no fiduciary duty to the creditors of Select LLC, they were not subject to a claim for breach of the CTFD.
Fraudulent Transfer
¶7 TCI argues the trial court erred by "dismiss[ing its] fraudulent conveyance claim on the ground of statute of limitations" because the court ruled "without benefit of the records concealed by Defendants[]." In September 2011, TCI had alleged in its amended complaint that defendants transferred assets or equipment in violation of A.R.S. §§ 44-1004 and 44-1009 of the Uniform Fraudulent Transfer Act, either to "hinder, delay or defraud" TCI or "without receiving a reasonably equivalent value in exchange for the transfer or obligation." In December 2011, Select LLC filed a motion for summary judgment, arguing TCI's claim was barred by the limitations period set forth in § 44-1009. ¶8 The trial court agreed and granted summary judgment in favor of defendants on the fraudulent transfer claim. The court found the transfer giving rise to TCI's claim had involved certain equipment owned by Select LLC and had occurred between December 2006 and March 2007. It found that a July 6, 2009 letter provided notice to TCI that the equipment had been transferred to a Nevada leasing corporation; Select LLC had insufficient funds to pay any money it owed to TCI; and Select LLC had provided TCI with contact information for an attorney to whom it could direct questions about the transfer or business. The court then concluded that
[u]pon receipt of the letter, or shortly thereafter, [TCI] could have discovered this transfer was done with the intent to defraud creditors, or left the company insufficiently funded and unable to pay creditors, and therefore either knew or should have discovered, with due diligence, that the transfer may have been fraudulent.¶9 The trial court further concluded that under §§ 44-1004 and 44-1009, TCI was required to bring a claim by "early 2011" at the latest. Because TCI did not assert a claim for fraudulent transfer until it filed its September 2011 amended complaint, "over four years after the completion of the transfer, over two years after the July 2009 letter, and over a year and almost three months after judgment was entered against Select LLC for breach of contract," its claim was barred by the statute of limitations and defendants were entitled to summary judgment. ¶10 The trial court denied TCI's motion for reconsideration in June 2012. Three months later, TCI filed a motion for summary judgment "to revisit the previous ruling barring its fraudulent conveyance claim." The court denied the motion on the grounds it was an "improper procedural mechanism" and the court "[could ]not make the findings necessary to revisit [the] earlier decisions." Further, although it found "[d]efendants ha[d] been less than forthcoming with disclosure," the court found TCI had "not been diligent in doing what [was] necessary to counteract defendant[s'] conduct." ¶11 On appeal, TCI argues that defendants' "concealment of evidence . . . made the [trial court's] first ruling manifestly erroneous or unjust, and . . . the belated discovery of the new evidence constituted a substantial change in the essential facts, issues and evidence," mandating reconsideration of the court's grant of summary judgment. We review questions of law de novo, and will uphold the court's summary judgment ruling if correct for any reason. See Rowland v. Great States Ins. Co., 199 Ariz. 577, ¶ 6, 20 P.3d 1158, 1162-63 (App. 2001). ¶12 With respect to the denial of its motion for reconsideration, TCI restates the arguments it made to the trial court but fails to assert or support specifically how the court purportedly erred, claiming summarily that the court "abused its discretion in failing to provide [it] any relief." We therefore deem this issue waived. See Ariz. R. Civ. App. P. 13(a)(6); In re Aubuchon, 233 Ariz. 2, ¶ 6, 309 P.3d 886, 888-89 (2013) (arguments waived when not "supported by adequate explanation, citations to the record, or authority"). And although we may review the denial of a motion for summary judgment in some circumstances, ordinarily we do not review such orders on appeal even after entry of final judgment, and we decline to do so here. See Strojnik v. Gen. Ins. Co. of Am., 201 Ariz. 430, ¶ 11, 36 P.3d 1200, 1203 (App. 2001). ¶13 To the extent TCI challenges the trial court's grant of summary judgment in favor of defendants based on its finding that TCI had brought its fraudulent transfer claim after the limitations period had lapsed, we disagree. Although TCI suggests this issue is "better left to a trier of fact," it presents no argument and cites no evidence that the court erred in concluding the 2009 letter placed TCI on notice of the transfer and that, to be timely, its fraudulent transfer claim needed to have been asserted in early 2011. Although TCI alleges it "could not have discovered the fraud before the testimony and production of documents in 2011," the court explicitly concluded that the 2009 letter provided it notice. TCI has failed to demonstrate the court's conclusion was erroneous. ¶14 Although TCI claims that additional discovery and earlier production of documents would have placed it on notice of the transfer "well within four years after the March 2007 transfer," we fail to see how newly discovered evidence—even if improperly withheld—would negate the trial court's conclusion based on the uncontested evidence in the record that TCI was on notice of the transfer in 2009. We therefore uphold the court's ruling. See Rowland, 199 Ariz. 577, ¶ 6, 20 P.3d at 1162 ("We will affirm if the trial court's [summary judgment] ruling is correct on any ground."). ¶15 Aside from alleging the result was "unjust" and that newly discovered evidence mandates reconsideration, TCI does not point to any other error in the trial court's April 2012 grant of summary judgment for defendants on the fraudulent transfer claim. We therefore do not consider this issue further. See Ariz. R. Civ. App. P. 13(a)(6) (brief "shall contain the contentions of the appellant . . . and the reasons therefor, with citations to the authorities, statutes and parts of the record relied on."); DeElena v. S. Pac. Co., 121 Ariz. 563, 572, 592 P.2d 759, 768 (1979) (arguments not raised on appeal deemed abandoned).
We also agree with the trial court that TCI's motion for summary judgment was improper procedurally. Rule 56(a), Ariz. R. Civ. P., allows a party to move for summary judgment on any "claim or defense" or part thereof. But the fraudulent conveyance cause of action had been effectively removed from TCI's action with the court's grant of summary judgment in favor of defendants. TCI does not challenge the court's ruling that its "renewed" motion for summary judgment was an "improper procedural mechanism."
Although TCI implies that its appeal tolled the limitation period, it fails to provide any support or authority for its claims. We thus find these arguments waived. See Ariz. R. Civ. App. P. 13(a)(6); Aubuchon, 233 Ariz. 62, ¶ 6, 309 P.3d at 888-89.
Although TCI argues the 2009 letter did "not reveal details of any transfer or the identity of those causing it or receiving it," or "confer . . . any requirement to depose [the attorney mentioned in the letter]," such details are not required by the statute. Rather, § 44-1009 states that a cause of action for fraudulent transfer must be brought either within four years of the transfer or "within one year after the fraudulent nature of the transfer or obligation was or through the exercise of reasonable diligence could have been discovered by the claimant." The trial court expressly concluded the 2009 letter provided TCI with sufficient notice of the transfer to discover its purportedly fraudulent nature.
Corporate Trust Fund Doctrine
¶16 TCI next claims the trial court erred by granting defendants' motion for judgment as a matter of law (JMOL) on TCI's CTFD claim. We review de novo the court's ruling on a motion for JMOL, Monaco v. HealthPartners of S. Ariz., 196 Ariz. 299, ¶ 6, 995 P.2d 735, 738 (App. 1999), viewing the evidence in the light most favorable to TCI as the non-moving party, see Warner v. Sw. Desert Images, LLC, 218 Ariz. 121, ¶ 8, 180 P.3d 986, 992 (App. 2008). "A trial court should grant a motion for JMOL '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.'" Acuna v. Kroack, 212 Ariz. 104, ¶ 24, 128 P.3d 221, 227-28 (App. 2006), quoting Orme Sch. v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990). ¶17 When TCI amended its complaint in September 2011, it added a claim for breach of the CTFD against "Select Businesses." Select LLC and other defendants filed a motion for summary judgment in December 2011, claiming TCI could not prove the elements of the CTFD claim. In April 2012, the trial court denied their motion after finding there was a triable issue of fact regarding whether TCI could prove the elements of breach of the CTFD. ¶18 During the trial on the CTFD claim, at the close of TCI's case, defendants moved for judgment as a matter of law, arguing TCI had not proven that Select LLC was insolvent at the time of transfer—an element of the CTFD claim. Defendants also argued TCI had not proven the value of the transferred equipment, which established the amount of liability, and maintained that TCI did not have standing to bring a CTFD claim in its capacity as an individual creditor. ¶19 The trial court granted defendant's motion, concluding TCI lacked standing and had failed to establish defendant's insolvency or the value of the transferred equipment. It first considered A.R. Teeters & Associates, Inc. v. Eastman Kodak Co., 172 Ariz. 324, 836 P.2d 1034 (App. 1992), and concluded that although the court in that case had not determined explicitly whether a judgment creditor could sue on its own behalf without bringing an action for the benefit of all creditors, id. at 333, n.1, 836 P.2d at 1043 n.1, this was nonetheless an appropriate basis on which to grant JMOL. The court then found that a transfer of defendants' corporate assets had occurred between December 2006 and March 2007 but the "uncontroverted evidence," provided primarily by TCI's expert witness, demonstrated that Select LLC was solvent during those months. See A.R. Teeters & Assocs., Inc., 172 Ariz. at 331, 836 P.2d at 1041 (to establish breach of CTFD, plaintiff must prove transfer occurred while defendant company was insolvent). Finally, the court found TCI had failed to prove the true value, as opposed to "book value," of the equipment that had been transferred. Under Teeters, liability for breach of the CTFD is limited to the fair value of the assets transferred. See 172 Ariz. at 331, 836 P.2d at 1041. ¶20 On appeal, TCI argues the trial court erred by finding it had no standing to bring the CTFD claim "based upon a footnote in the A.R. Teeters case" and by finding it was required to present evidence of the value of the equipment at issue, which TCI claims it did. But TCI does not challenge the court's separate finding that Select LLC was solvent when the assets were transferred between December 2006 and March 2007. We agree with the court that TCI was required to establish that Select LLC was insolvent at the time of the transfer. ¶21 To prevail on its CTFD claim, TCI—as a judgment creditor of Select LLC—was required to prove that (1) Select LLC had transferred [company] assets to a [member]; (2) the transfer occurred while the [company] was insolvent; and (3) the transfer preferred the [member] to the disadvantage of Select LLC's other creditors of equal priority. See A.R. Teeters & Assocs., Inc., 172 Ariz. at 331, 836 P.2d at 1041. TCI's witnesses testified, however, that Select LLC was solvent during the transfer period. Because TCI presented no evidence at trial establishing Select LLC was insolvent at any time between December 2006 and March 2007, we conclude that no reasonable person could find TCI had sustained its burden of proof as to that element. See Acuna, 212 Ariz. 104, ¶ 24, 128 P.3d at 227-28. We thus affirm the court's grant of JMOL in favor of the defendants.
Although we have found no authority applying the CTFD to a LLC, the parties apparently have not challenged its applicability here. Our analysis assumes without deciding that the doctrine may be applied to a LLC.
We have modified the elements of the CTFD to reflect that our discussion addresses a company and its members rather than a corporation and its stockholders.
Second Motion to Amend Complaint
¶22 TCI claims the trial court abused its discretion by denying its second motion to amend its complaint filed in February 2013 seeking to add as a cause of action Select LLC's violation of A.R.S. § 29-706. The court ruled that TCI's claim based on § 29-706 was "inapplicable and futile," and that there had been "undue delay" by TCI in bringing the claim. ¶23 TCI argues the trial court erred by denying its motion to add a new legal theory supported by the facts in the case. TCI claims § 29-706 is "the statutory version of a trust fund doctrine claim," and its motion "merely sought to allow [it] a theory as to Defendants' equipment distribution with a statute of limitations of six years." We review the denial of a motion to amend a pleading for a clear abuse of discretion. Tumacacori Mission Land Dev., Ltd. v. Union Pac. R.R. Co., 231 Ariz. 517, ¶ 4, 297 P.3d 923, 925 (App. 2013). An abuse of discretion can include misapplication of the law. City of Phoenix v. Geyler, 144 Ariz. 323, 329, 697 P.2d 1073, 1079 (1985). "To determine if the trial court abused its discretion in denying the amendment, we presume that the facts alleged in the complaint are true." MacCollum v. Perkinson, 185 Ariz. 179, 185, 913 P.2d 1097, 1103 (App. 1996). We will uphold the court's ruling if the result is correct for any reason. Tumacacori, 231 Ariz. 517, ¶ 4, 297 P.3d at 925. ¶24 Rule 15(b), Ariz. R. Civ. P., provides that a party may amend its pleadings once as a matter of course "no later than twenty-one days after service of a responsive pleading"; after that, a party may amend its pleading only by leave of the court. See also MacCollum, 185 Ariz. at 185, 913 P.2d at 1103. A motion to amend should be granted "'unless the court finds undue delay in the request, bad faith, undue prejudice, or futility in the amendment.'" Tumacacori, 231 Ariz. 517, ¶ 4, 297 P.3d at 925, quoting MacCollum, 185 Ariz. at 185, 913 P.2d at 1103; see also Bishop v. State Dep't of Corr., 172 Ariz. 472, 474-75, 837 P.2d 1207, 1209-10 (App. 1992). Absent these circumstances, leave to amend a pleading should be granted "'[i]f the underlying facts or circumstances relied upon . . . may be a proper subject of relief.'" Spitz v. Bache & Co., Inc., 122 Ariz. 530, 531, 596 P.2d 365, 366 (1979), quoting Foman v. Davis, 371 U.S. 178, 182 (1962). ¶25 Section 29-706 states, in pertinent part, as follows:
A. A limited liability company shall not make a distribution to a member to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the limited liability company would exceed the fair value of the assets of the limited liability company . . . .When examining and applying a statute, "[o]ur primary purpose . . . is to give effect to the legislature's intent." Parker v. City of Tucson, 233 Ariz. 422, ¶ 12, 314 P.3d 100, 106 (App. 2013). "Because the plain language of a statute is the best reflection of that intent, when a statute is clear and unambiguous we need look no further than the statute's terms to determine its meaning and do not employ other principles of statutory construction." Id. ¶26 The plain language of § 29-706 describes a remedy to a limited liability company (LLC) from a member of that LLC. The statute does not provide a creditor who is not a member of the LLC with a cause of action for relief. We thus agree with the trial court that a cause of action for breach of § 29-706 does not apply to TCI and adding any cause of action based on the statute would be futile. The court did not abuse its discretion in denying the motion to amend the complaint. Tumacacori, 231 Ariz. 517, ¶ 4, 297 P.3d at 925.
. . . .
D. If a member receives a distribution with respect to his interest in a limited liability company in violation of this chapter[] or an operating agreement, he is liable to the limited liability company for a period of six years thereafter for the amount of the wrongful distribution.
Accordingly, we do not address whether the motion to amend was brought with undue delay. See Tumacacori, 231 Ariz. 517, ¶ 4, 297 P.3d at 925 (court may deny leave to amend complaint if request brought with undue delay, bad faith, undue prejudice, or if futile).
Denial of Discovery Requests
¶27 TCI next argues the trial court erred by denying without prejudice its March 2011 motion to compel production regarding six subpoenas duces tecum it had served on various defendants in May 2010, and by "refusing to allow [TCI] to discover [other] documents." Defendants had claimed the subpoenas were improper in form and subject matter, listed improper parties, were overbroad, and requested irrelevant information. TCI "reasserted" its motion to compel against a number of defendants in August 2012. The defendants again objected to the motion and filed a motion for a protective order, arguing an identical motion already had been denied in May 2011, and had been superseded by subsequent court rulings, was overbroad, and sought improper and irrelevant information. ¶28 Relying on Southern Pacific Transportation Co. v. Veliz, 117 Ariz. 199, 201, 571 P.2d 696, 698 (App. 1977), the trial court agreed the subpoenas were "overly broad" and lacked a "description that will apprise a man of ordinary intelligence of the document desired." The court thus sustained the defendants' objection to TCI's motion to compel, rendering moot defendants' request for a protective order. ¶29 TCI initiated discovery for a third time in September 2012 by sending six subpoenas duces tecum to Select LLC and other parties, as well as to the law offices of defendants' counsel. Defendants again opposed the subpoenas, filing a motion to quash on the basis that the subpoenas were overbroad, sought irrelevant information, and were improper in form. TCI then served additional subpoenas duces tecum and requests for production on various parties and entities. Defendants filed a motion to quash the additional subpoenas, arguing they were overbroad and violated Rule 34, Ariz. R. Civ. P. The trial court granted in part defendants' motion, finding TCI's requests for discovery proper only as to two tax schedules. TCI then moved to compel production of a number of its outstanding discovery requests. ¶30 In January 2013, the trial court denied TCI's motions to compel production and granted defendants' motion to quash, noting that breach of the CTFD was "the only issue[] remaining in this case." The court found as to the subpoenas served on third-party entities that "[t]he term 'record' [was] defined extremely broadly in the discovery submissions," the requested discovery spanned a time period of almost seven years, and the requests thus were "clearly overbroad." As to the subpoenas served on parties, the court found them to be "improper procedurally . . . since [the parties] are both remaining defendants in the litigation," and overbroad, adding that they sought irrelevant information. ¶31 On appeal, TCI claims the trial court erred in denying its March 2011 motion to compel production and abused its discretion by "refusing to allow [it] to discover documents relevant to its trust fund doctrine claim." We will not disturb a trial court's broad discretion over discovery matters absent a clear showing of abuse. Tritschler v. Allstate Ins. Co., 213 Ariz. 505, ¶ 41, 144 P.3d 519, 532 (App. 2006). A court abuses its discretion when it misapplies the law in reaching a discretionary conclusion, or when the record lacks substantial evidence to support its ruling. Id.; Blazek v. Superior Court, 177 Ariz. 535, 537, 869 P.2d 509, 511 (App. 1994).
March 2011 Motion to Compel Production
¶32 TCI argues the trial court was required to grant its March 2011 motion to compel because defendants had failed to object to the subpoenas within fourteen days of service pursuant to Rule 45(C)(5)(A)(ii), Ariz. R. Civ. P., thereby waiving any objection to such discovery requests. TCI further alleges the court committed "legal error" in refusing to compel production. But TCI has developed no argument to support its proposition that the court erred. And it has not argued properly nor cited authority to support the proposition that an untimely objection to a discovery request is a binding waiver upon a party or a court that finds the discovery request otherwise improper. We therefore do not consider this argument further. In re Aubuchon, 233 Ariz. 62, ¶ 6, 309 P.3d 886, 888-89 (2013) ("[W]e consider waived those arguments not supported by adequate explanation, citations to the record, or authority.").
TCI's arguments pursuant to Rule 45, which governs subpoenas, are particularly unpersuasive in light of the trial court's determination that a subpoena duces tecum was an improper method of discovery.
August 2012 Motion to Compel Production
¶33 TCI maintains the trial court erred by denying its "reasserted" August 2012 motion to compel—the same motion the court previously had denied. TCI claims it provided "detailed analysis of the relevance of the requested documents" and re-alleges the court committed "legal error" in failing to find defendants' objections waived. But aside from blanket assertions that its requests were sufficiently specific and relevant, TCI has failed to develop adequately any argument that the court erred and has not supported its contentions with citations to the record. Because TCI does not claim the requests differed in any respect from those made in May, and has provided no authority to suggest the court was required to revisit its previous ruling, we do not consider these arguments further. See Ariz. R. Civ. App. P. 13(a)(6); Aubuchon, 233 Ariz. 62, ¶ 6, 309 P.3d at 888-89.
Other Discovery Requests
¶34 We now turn to the trial court's remaining discovery orders. TCI alleges the court "abused its discretion by refusing to allow [it] to discover documents relevant to its trust fund doctrine claim" and claims it satisfied the specificity requirements by serving "more precisely tailored requests," which "set forth the relevance of" each request. TCI ultimately claims the court's "ruling is legally incorrect . . . [because TCI] had the right to the requested documents." ¶35 But although TCI describes the value of the requested documents and the detrimental effect of the trial court's denial of TCI's discovery requests on its litigation efforts, it again fails to allege how the court erred, and provides no support for its claims of legal error. We thus find these arguments waived. See Ariz. R. Civ. App. P. 13(a)(6); Aubuchon, 233 Ariz. 62, ¶ 6, 309 P.3d at 888-89. To the extent TCI implies the court abused its discretion through its "overly restrictive interpretation of the scope of discovery," TCI has not pointed to any example of such overly restrictive interpretation. Additionally, TCI fails to challenge the court's ruling that its requests were "improper procedurally," and "overly broad and/or [seeking] information which is irrelevant." We see no error in the court's ruling. Tritschler, 213 Ariz. 505, ¶ 41, 144 P.3d at 532.
Attorney Fees
¶36 TCI maintains the trial court erred by awarding the defendants their attorney fees pursuant to A.R.S. § 12-341.01 for successfully defending against the claims of alter ego, breach of the CTFD, and fraudulent transfer. Section 12-341.01 provides that, "[i]n any contested action arising out of a contract, express or implied, the court may award the successful party reasonable attorney fees." TCI claims that although the "action . . . originally . . . arose from a construction contract," the breach of contract claim was resolved and the action "no longer arose from contract but was based on other theories in an attempt to prevail against other Defendants besides judgment debtor Select LLC." ¶37 Following trial on the CTFD claim, the defendants moved for an award of reasonable attorney fees, as well as expert witness fees and costs pursuant to Rule 68(g), in the amount of $246,853: $50,769 for Select Development and Construction, LLC's defense of the breach of contract claim and $38,650 for all defendants for their defense of the alter ego claim pursuant to § 12-341.01; $76,925 for all defendants' successful opposition to TCI's discovery requests pursuant to Rule 37(a)(4)(B), Ariz. R. Civ. P.; and an unspecified amount for Select Development & Construction, Inc. and FAC Leasing, LLC's successful defense on the CTFD claim pursuant to A.R.S. § 12-349. ¶38 The trial court awarded defendants $174,273 in attorney fees. Its award excluded $12,580 from the total amount sought for fees incurred prior to the March 2010 judgment against Select LLC for breach of contract and disallowed $60,000 for fees incurred unnecessarily when defendants were "less than forthcoming in their discovery and disclosure." The court concluded § 12-341.01 was an appropriate basis upon which to award fees but that § 12-349 was not applicable in this matter. ¶39 TCI claims the only fees the trial court could award properly under § 12-341.01 were those incurred defending the breach of contract claim, and that an award of fees under § 12-341.01 for defending against claims of alter ego, fraudulent transfer, and breach of the CTFD was improper because those causes of action did not arise from contract as required by the statute. TCI states the court "blindly start[ed] with the full requested amount" of attorney fees, "regardless of theory," and then improperly utilized a "'rough justice' approach" to subtract two sums, thereby "ignoring Defendants' own categorization of their fees" and sub-totals contained in defendants' fee application. ¶40 Although the trial court's ruling stated that the defendants were "entitled to an award of attorney's fees pursuant to A.R.S. § 12-341.01(A)," the defendants requested fees under that provision only for defending against the alter ego claim; they sought no fees under § 12-341.01 for defending either the fraudulent transfer or CTFD claims. We therefore must first determine whether the court's award of fees for defending against the alter ego claim was legally permissible under § 12-341.01(A). ¶41 The applicability of § 12-341.01(A) "is a question of statutory interpretation, which we review de novo." Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, ¶ 12, 6 P.3d 315, 318 (App. 2000). We review the trial court's award of fees for an abuse of discretion. Modular Mining Sys., Inc. v. Jigsaw Techs., Inc., 221 Ariz. 515, ¶ 21, 212 P.3d 853, 859 (App. 2009). ¶42 In awarding fees pursuant to § 12-341.01, "[t]he pivotal question is whether the asserted claims arise out of an express or implied contract for purposes of" the statute. Chaurasia v. Gen. Motors Corp., 212 Ariz. 18, ¶ 24, 126 P.3d 165, 173 (App. 2006). Section § 12-341.01 permits an award of attorney fees for actions that "could not exist but for the breach of contract." Sparks v. Republic Nat'l Life Ins. Co., 132 Ariz. 529, 543, 647 P.2d 1127, 1141 (1982). Attorney fees are not recoverable, however, if the contract is not the "essential basis" of the action but rather serves only as a factual predicate. Chaurasia, 212 Ariz. 18, ¶ 25, 126 P.3d at 173. To determine the nature of the action, courts "are guided but not bound by the form of the pleadings" and should consider the circumstances surrounding the case. Wenk v. Horizon Moving & Storage Co., 131 Ariz. 131, 132, 639 P.2d 321, 322 (1982). ¶43 TCI asserts the trial court's award was improper pursuant to § 12-341.01 because alter ego is merely "a theory by which a claimant may seek to expand an underlying liability, regardless of its basis." An alter ego theory, TCI posits, is "entirely independent" of the underlying contract action, which is only "peripherally or tangentially involved." And, it asserts further, the fact that the contract put the parties within "'alter ego' striking range" of one another does not necessarily mean it is an action "arising out of contract." ¶44 By TCI's own description, however, its assertion of an alter ego cause of action was an attempt to collect on its judgment against Select LLC for breach of contract by expanding liability for the breach against additional parties. The assertion of an alter ego theory could not have existed absent the underlying contract, see Sparks, 132 Ariz. at 543, 647 P.2d at 1141, and therefore "ar[ose] out of a contract" for purposes of § 12-341.01(A). The court did not err by awarding attorney fees for defense of the alter ego theory. ¶45 Nevertheless, although we will not presume the trial court exceeded the relief requested, see Fuentes v. Fuentes, 209 Ariz. 51, ¶ 32, 97 P.3d 876, 883 (App. 2004), we cannot reconcile the trial court's fee award with the defendants' fee request. We agree that fees of $50,769, as requested by defendants, may be awarded under § 12-341.01 for Select Development & Construction's defense of the breach of contract claim. We also agree that the court may award fees for defense of the alter ego claim under § 12-341.01, as requested by defendants, in the amount of $38,650. TCI does not contest whether fees may be awarded under Rule 37 and we do not address this issue. Although it appears the court may have granted defendants' request for $76,925 on this basis, we cannot determine from its ruling whether the court's reduction of $60,000 for defendants' discovery delays was from the amount requested pursuant to Rule 37 or was instead a sanction applied to the final award. ¶46 There must be a statutory basis for an award of attorney fees. See Taylor v. S. Pac. Transp. Co., 130 Ariz. 516, 523, 637 P.2d 726, 733 (1981) (attorney fees not recoverable "unless specifically provided for by statute or by an agreement between the parties"). Because we can neither reconcile the trial court's award of fees with the defendants' fee requests nor identify an appropriate basis for the entire $174,273 award, we vacate the award and remand for a new ruling on the attorney fees requested by defendants that identifies an appropriate statutory basis for any fees awarded.
The affidavit of defendants' attorney indicates that approximately $50,000 of the attorney fees were incurred in connection with the trial on the CTFD claim. Although this sum was not requested specifically by defendants in their motion for attorney fees, it contributed to the total amount of fees requested.
Because TCI does not challenge the award of costs, expert witness fees pursuant to Rule 68(g), or any fees awarded pursuant to Rule 37(a)(4)(b), we do not address them.
TCI sought to "pierce the corporate veil" to hold an individual member of Select LLC personally liable by showing was "the alter ego or business conduit of a person, and [that] observing the corporate form would work an injustice." See Standage v. Standage, 147 Ariz. 473, 476, 711 P.2d 612, 615 (App. 1985). Select LLC could be seen as the alter ego of its owners if TCI could show "such unity of interest and ownership that the separate personalities of the corporation and owners cease[d] to exist." Dietel v. Day, 16 Ariz. App. 206, 208, 492 P.2d 455, 457 (1972).
Motion for New Trial
¶47 TCI next argues, for the first time in its reply brief, that the trial court erred by denying its motion for a new trial. Because we do not consider substantive arguments not raised or supported in an opening brief, but raised for the first time in a reply, this argument is deemed waived. Romero v. Sw. Ambulance, 211 Ariz. 200, n.3, 119 P.3d 467, 471 n.3 (App. 2005) (appellate court not required to address issues first raised in reply brief); see also Ariz. R. Civ. App. P. 13(c).
Although TCI claims "the substance of its Opening Brief argues error on the points raised in the Motion [for a new trial]," this is an insufficient claim of error, as TCI has failed to develop its argument or support it with citations to the record and legal authority. See Ariz. R. Civ. App. P. 13(a)(6). Although the claims in TCI's brief may relate to the claims it raised in its motion for new trial, we will not consider arguments not supported by "adequate explanation, citations to the record, or authority." See Aubuchon, 233 Ariz. 62, ¶ 6, 309 P.3d at 888-89.
Garnishment Hearings
¶48 Finally, TCI argues the trial court violated A.R.S. § 12-1580(B) by failing to schedule garnishment hearings within five days after TCI had filed its objections to the answers of eight garnishees. In February 2013, TCI filed eight writs of garnishment on persons or entities it believed were indebted to Select LLC, the judgment debtor. TCI filed objections to the garnishees' answers and requested a hearing pursuant to § 12-1580(B). At the hearing in April 2013, the judicial officer found good cause and referred the case to the superior court to set a trial on the objections. ¶49 On appeal, TCI alleges that "[t]o date, no hearings have been granted" and that the trial court's failure to hold such hearings "is a plain violation of statute," which requires that a hearing on an objection to a garnishee's answer be held within five days of the request or no later than ten days with good cause. See A.R.S. § 12-1580(B). TCI thus requests us to order the trial court "to set hearings forthwith." But we may review issues only if we have jurisdiction, an inquiry we must conduct independently. Grand v. Nacchio, 214 Ariz. 9, ¶ 12, 147 P.3d 763, 769 (App. 2006); see also Robinson v. Kay, 225 Ariz. 191, ¶ 4, 236 P.3d 418, 419 (App. 2010) (we are required to examine our own jurisdiction in every appeal). ¶50 Appellate courts in Arizona, subject to certain exceptions, have jurisdiction over final judgments that dispose of all claims and all parties. In re Estate of McGathy, 226 Ariz. 277, ¶ 12, 246 P.3d 628, 630 (2010). If the order appealed is not among the kinds of orders the statute specifies, we lack jurisdiction of the appeal and must dismiss it. Kemble v. Porter, 88 Ariz. 417, 418-19, 357 P.2d 155, 156 (1960). Although A.R.S. § 12-2101 provides for limited statutory exceptions to the general requirement of finality, § 12-2101(A)(5)(c) specifically limits appeals regarding garnishments to orders "[d]issolving or refusing to dissolve an attachment or garnishment." ¶51 Here, TCI attempts to appeal from the absence of an order—the trial court's failure sua sponte to hold garnishment hearings on TCI's objections. Even if the court did not comply with the statute, it has entered no judgment and taken no action that we have jurisdiction to review. And although TCI maintains it "appeals from the trial court's failure to grant the garnishment hearings [as a part of] its final judgment, which is appealable under § 12-2101(A)(1)," garnishment proceedings are separate from the underlying action. See Knox v. Knox, 137 Ariz. 494, 496, 671 P.2d 935, 937 (App. 1983); see also Jackson v. Phoenixflight Prods., Inc., 145 Ariz. 242, 244, 700 P.2d 1342, 1344 (1985) ("Garnishment is a creature of statute and is strictly governed by the terms of the statute creating the remedy."). We thus lack the authority to consider this aspect of TCI's appeal.
The garnishment matter initially was heard by a judge pro tempore pursuant to Ariz. Const. art. VI, § 31 and A.R.S. §§ 12-141 through 12-147. See also A.R.S. § 12-122.
Rule 58(a), Ariz. R. Civ. P., further requires that such a decree or order, to be appealable, must be reduced to writing, signed by a judge, and filed with the clerk of the court. See also Haywood Sec., Inc. v. Ehrlich, 214 Ariz. 114, ¶ 9, 149 P.3d 738, 740 (2007).
Similarly, although TCI correctly notes that an appeal may be taken from an "order affecting a substantial right" pursuant to § 12-2101(A)(3) or (A)(4), there is no written and signed order entered here.
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Attorney Fees on Appeal
¶52 Select LLC has requested a portion of its attorney fees on appeal pursuant to § 12-341.01 ("contested action arising out of a contract") incurred in opposing TCI's argument challenging the trial court's award of attorney fees. Because we have concluded the court had appropriate legal bases for most of its attorney fee award in favor of Select LLC, and because Select LLC was substantially successful on appeal in its defense of those bases, we grant its request. Although we decline to award Select LLC its requested fees pursuant to Rule 37(a)(4)(B), Ariz. R. Civ. P. (attorney fees incurred in successfully opposing discovery motions), we award its fees for defending the trial court's discovery rulings, to the extent such discovery was related to TCI's collection efforts under its alter ego theory. We also grant Select LLC's requests for its reasonable attorney fees, to be assessed against TCI pursuant to Rule 25, Ariz. R. Civ. App. P. (sanctions for frivolous appeals), incurred in its defense of TCI's arguments regarding § 29-706 and the trial court's failure to hold garnishment hearings. These awards are contingent upon defendant's compliance with Rule 21, Ariz. R. Civ. App. P.
Disposition
¶53 For the foregoing reasons, we affirm the trial court's rulings except for its award of attorney fees, which we vacate. The case is remanded for entry of a new ruling on attorney fees.