Ariz. Hydro Pro Carpet Cleaning, LLCv.Lakridis

No. 1 CA-CV 18-0176 (Ariz. Ct. App. Jun. 11, 2019)

No. 1 CA-CV 18-0176


ARIZONA HYDRO PRO CARPET CLEANING, LLC, Plaintiff/Appellee, v. CHAD M. LAKRIDIS, Defendant/Appellant.

COUNSEL Lipson Neilson P.C., Phoenix By Daxton R. Watson, Michael H. Orcutt, Brent Demmitt Counsel for Plaintiff/Appellee Callagy Law, Phoenix By Brian A. Williamson Counsel for Defendant/Appellant

No. CV2015-006633
The Honorable Sherry K. Stephens, Judge


COUNSEL Lipson Neilson P.C., Phoenix
By Daxton R. Watson, Michael H. Orcutt, Brent Demmitt
Counsel for Plaintiff/Appellee
Callagy Law, Phoenix
By Brian A. Williamson
Counsel for Defendant/Appellant


Presiding Judge David D. Weinzweig delivered the decision of the Court, in which Judge Kent E. Cattani and Judge James P. Beene joined. WEINZWEIG, Judge:

¶1 Chad Lakridis appeals from a jury verdict for Arizona Hydro Pro Carpet Cleaning, LLC ("Hydro Pro") on its claims for defamation and unjust enrichment. We affirm.


¶2 Lakridis owned a Scottsdale condominium and leased it to George Gillas. Gillas discovered a water leak in the master bedroom after heavy rains on July 21, 2013, which had damaged the drywall and soaked the carpet. Gillas tried to reach Lakridis, but he was out of town. He then contacted Hydro Pro, a water restoration company with "twenty plus" years of experience with only one complaint from regulators during that time. Hydro Pro's owner, Ray Odom, visited the condo within two hours to investigate the leak.

We view the evidence in the light most favorable to sustaining the jury's verdicts. See S Dev. Co. v. Pima Capital Mgmt. Co., 201 Ariz. 10, 18, ¶ 16 (App. 2001).

¶3 Shortly thereafter, Odom spoke to Lakridis on the telephone, and Lakridis said to "do what you have to do" to address the problem. Hydro Pro worked on the condominium for the next five days; it used specialized equipment, removed the carpet pads and base board, and dried the carpet and walls.

¶4 Hydro Pro asked Lakridis to sign a written authorization form on July 25, which would enable Hydro Pro "to be able to go to bat for you and deal with the insurance." Lakridis refused to sign because the form did not place liability "where it belongs," which meant his insurance company and the homeowner's association. Lakridis said the bills should be sent to the insurance company and homeowner's association.

¶5 A week later, the insurance adjuster informed Odom that damage from the leak was not a covered loss. Hydro Pro billed Lakridis "for the dryout" and filed a mechanics' lien on the condominium to ensure payment. Lakridis refused to pay, claiming he "did not approve nor ask for you to come to my home." He warned that Hydro Pro would hear from his attorney. Lakridis then hired his own handyman to repair the water damage.

¶6 A year later, Hydro Pro's attorney sent a demand letter to Lakridis for the outstanding balance of $5,331.71. Soon after, Lakridis complained about Hydro Pro to the Better Business Bureau ("BBB") and Arizona Registrar of Contractors ("ROC"). Lakridis reported, among other things, that Hydro Pro had worked on his condominium without his consent, damaged his condominium and refused to remove its equipment after he asked. Hydro Pro sued Lakridis for breach of contract, unjust enrichment and defamation. Lakridis counterclaimed for negligence.

¶7 A jury trial was held. The jury heard from several witnesses, including Lakridis, Gillas and Odom. Gillas and Odom both testified that Lakridis's statements in the ROC and BBB complaints. The jury found in Hydro Pro's favor on the unjust enrichment claim, defamation claim and negligence counterclaim. The jury found in Lakridis's favor on the breach of contract claim. Hydro Pro was awarded $4,970.52 in damages for unjust enrichment and $5,000 for defamation. Lakridis timely appealed from the final judgment, and we have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).


I. Defamation

A. Substantial Evidence

¶8 Lakridis first argues the jury's defamation verdict was unsupported by evidence. To begin, we lack jurisdiction to consider the sufficiency of the evidence because A.R.S. § 12-2102(C) instructs that a reviewing court "shall not consider the sufficiency of the evidence to sustain the verdict or judgment in an action tried before a jury unless a motion for a new trial was made," and Lakridis never so moved. We exercise our discretion to accept special action jurisdiction, however, and consider the argument. See A.R.S. § 12-120.21(A)(4); Lloyd v. State Farm Mut. Auto. Ins. Co., 189 Ariz. 369, 375 (App. 1996).

¶9 In reviewing a jury verdict based on sufficiency of the evidence, we "resolve every conflict in the evidence and draw every reasonable inference in favor of the prevailing party." St. Joseph's Hosp. & Med. Ctr. v. Reserve Life Ins. Co., 154 Ariz. 307, 312 (1987). And "if any substantial evidence could lead reasonable persons to find the ultimate facts sufficient to support the verdict, we will affirm the judgment." Styles v. Ceranski, 185 Ariz. 448, 450 (App. 1996).

¶10 "A defamation action compensates damage to reputation or good name caused by the publication of false information." Godbehere v. Phoenix Newspapers, Inc., 162 Ariz. 335, 341 (1989) (emphasis in original). When directed at a private figure on matters of private concern, the statement "must be false and must bring the defamed person into disrepute, contempt, or ridicule, or must impeach [the private figure's] honesty, integrity, virtue, or reputation." Sign Here Petitions LLC v. Chavez, 243 Ariz. 99, 104, ¶ 15 (App. 2017) (quotation omitted). "Slight inaccuracies will not prevent a statement from being true in substance, as long as the 'gist' or 'sting' of the publication is justified." Id. at 107-08, ¶ 30 (quotation omitted). Substantial truth is an absolute defense in a defamation action. Fendler v. Phoenix Newspapers Inc., 130 Ariz. 475, 479 (App. 1981).

¶11 Lakridis argues the record "conclusively demonstrates" his ROC and BBB complaints were substantially true. In his BBB complaint, Lakridis asserted:

[Hydro Pro] was called without my authorization by a former tenant who was benefiting from below [fair market value] rent. Tenant was instructed to call Native Environmental and did not. Tenant informed me [that Hydro Pro] owed him a favor.

AZ Hydro Pro was instructed to provide me with a written estimate and to NOT do work without a signed contract by me. I had informed them that I signed a contract with Native Environmental and to remove their equipment, they did not. I demanded that my tenant . . . excuse [Hydro Pro] - he did not.

Lastly I substantially reduced the rent for 2 ½ months (approximately a $1,800 loss) during this squabble, as the company I wanted to work on my home [was] not able to because [Hydro Pro] left their equipment there.

Similar statements were in his ROC complaint.

¶12 The record contains sufficient evidence from which a jury could find defamation. Reserve Life Ins. Co., 154 Ariz. at 312. At least two witnesses testified that Lakridis's statements were false. Odom testified that Lakridis never said Hydro Pro should not begin work until a contract is signed, but instead told Odom over the telephone to "do what you have to do" in their first conversation. Odom also testified that Hydro Pro owed no favors to Gillas, and Hydro Pro retrieved its equipment after nine or 10 days at the house. Meanwhile, Gillas testified he never disobeyed Lakridis's instructions and Lakridis never directed him to "excuse" Hydro Pro or call Native Environmental. He also said Hydro Pro owed him no favors and confirmed that Hydro Pro promptly removed its equipment when asked, which was within two weeks.

¶13 Lakridis might disagree with the testimony or point to other evidence, but we must "resolve every conflict in the evidence and draw every reasonable inference in favor of the prevailing party." Id. The jury's role was "to determine factually whether an allegedly defamatory statement is true," Fendler, 130 Ariz. at 479, and we will not reweigh the evidence, Whittemore v. Amator, 148 Ariz. 173, 175 (1986).

B. Qualified Privilege

¶14 Lakridis next argues his statements were shielded from defamation liability by a qualified privilege, which extends to situations in which a "privileged occasion arose." Green Acres Tr. v. London, 141 Ariz. 609, 616 (1984). Whether a privileged occasion arose is a question of law that we review de novo. Id.

¶15 Arizona law recognizes a qualified or conditional privilege as a defense to defamation. Id. This privilege is "limited to particular occasions requiring the exchange of information reasonably thought to be true," and "is based on the social utility of protecting statements required to be made in response to a legal, moral or social duty." Id. at 613, 616. "To establish that a privileged occasion arose, a defamation defendant must establish that the circumstances in which the communication was made created an obligation to speak." Id. at 616.

¶16 Lakridis argues the statements he made in the ROC and BBB complaints are protected by the qualified privilege in Aspell v. American Contract Bridge League of Memphis, Tennessee, 122 Ariz. 399 (App. 1979), and Restatement (Second) of Torts § 594 (1977) ("Restatement"). We disagree. Aspell applied a conditional privilege to members of a bridge-league board of directors who made statements in their official capacity and as part of their official duty to regulate league affairs. 122 Ariz. at 400-01 (conditional privilege applies "when the speaker has a duty to make the communication, and it is made in the performance of this duty"). Lakridis had no official duty here or any obligation to speak.

¶17 Nor does the Restatement shield Lakridis's complaints. Lakridis never explains whether and how "the circumstances induce[d]" him to have "a correct or reasonable belief" that his identified interest was in danger or whether and how the ROC and BBB complaints were necessary to protect his interest. Restatement § 594 (emphasis added); id. cmt. h (conditional privilege arises if "the circumstances are such as to lead a reasonable man to believe that the interest is in danger and that the defamatory publication is reasonably necessary for its protection").

¶18 Lakridis only asserts "a sufficiently important interest in ensuring that contractors act honestly and fairly in their dealings with customers, that work only be done upon proper authorization, and that the consumer's wishes are respected." But neither Lakridis nor a "reasonable man" had reason to believe Hydro Pro was dishonest or unfair in its dealings, performed more work than authorized or ignored his wishes. Rather, the evidence and testimony show Hydro Pro tackled the water damage after Odom spoke with Lakridis, billed Lakridis only for work performed, did not exceed authorization and removed its equipment when asked. Hydro Pro just wanted to be paid for the services it had been asked to provide and provided. Lakridis had no reasonable grounds to believe the circumstances required him to disseminate false information to the BBB, ROC or fellow consumers. He therefore failed to meet his burden of showing the privilege applies. See Green Acres Tr., 141 Ariz. at 616. No qualified privilege applies.

C. Jury Instruction

¶19 Lakridis also argues fundamental error because the jury was instructed upon and asked to resolve a question of law. "Fundamental error is error that goes to the foundation of the case and deprives a party of a fair trial." Mill Alley Partners v. Wallace, 236 Ariz. 420, 423, ¶ 9 (App. 2014). The doctrine is "sparingly applied in civil cases and may be limited to situations where the instruction deprives a party of a constitutional right." Bradshaw v. State Farm Mut. Auto. Ins. Co., 157 Ariz. 411, 420 (1988). "To prevail on appeal, a party claiming fundamental error also must show prejudice." Mill Alley Partners, 236 Ariz. at 423, ¶ 9.

¶20 We agree with Lakridis that the qualified privilege issue was a legal question, in part, for the court to decide, and the superior court erred by submitting it to the jury. See Green Acres Tr., 141 Ariz. at 616. Lakridis cannot establish any resulting prejudice, however, because he failed to show a qualified privilege applied here. See Mill Alley Partners, 236 Ariz. at 423, ¶ 10. Any error was therefore harmless. Ariz. R. Civ. P. 61 ("At every stage of the proceeding, the court must disregard all errors and defects that do not affect any party's substantial rights.").

We also note that Lakridis stipulated to the jury instruction. --------

II. Unjust Enrichment

¶21 Lakridis challenges the unjust enrichment verdict as unsupported by the evidence. An unjust enrichment claim requires proof of (1) an enrichment, (2) an impoverishment, (3) a connection between the enrichment and impoverishment, (4) the absence of justification for the enrichment and impoverishment, and (5) the absence of a remedy provided by law. Wang Elec., Inc. v. Smoke Tree Resort, LLC, 230 Ariz. 314, 318, ¶ 10 (App. 2012) (quotation omitted).

¶22 Lakridis argues the "verdict for unjust enrichment must be reversed because there is no evidence that Lakridis engaged in misconduct." Citing Wang Electric, Inc., Lakridis claims the record has no evidence that he "engaged in some form of improper, deceitful, or misleading conduct." 230 Ariz. at 319, ¶ 14 (quotation omitted).

¶23 The jury disagreed, however, based on reasonable evidence. The jury received testimony, for instance, that Lakridis spoke to Hydro Pro's owner shortly after the leak and said to "do what you have to do" to address the problem; that Hydro Pro spent several days at the condominium, drying the carpet and walls and removing the carpet pads and base boards; and Lakridis never told Hydro Pro to stop. As before, Lakridis might disagree or point to other evidence, but we must "resolve every conflict in the evidence and draw every reasonable inference in favor of the prevailing party." Reserve Life Ins. Co., 154 Ariz. at 312.

¶24 And last, Lakridis argues the jury should not have included overhead, profits and taxes in its damages award for unjust enrichment. "[T]he amount of an award for damages is a question peculiarly within the province of the jury, and such award will not be overturned or tampered with unless the verdict was the result of passion and prejudice." Larriva v. Widmer, 101 Ariz. 1, 7 (1966). Lakridis makes no argument that the jury was motivated by passion or prejudice. And as Professor Dobbs has explained: "When the defendant seeks the plaintiff's services by requesting or contracting for them, or by indicating an acquiescence in them, restitution if any may be measured by the value of those services in the labor market. Put otherwise, the measure of restitution is the costs that would be incurred by the defendant to purchase substantially similar services elsewhere." Dan B. Dobbs, The Law of Remedies § 4.5(2), at 428 (2d ed. 1993).


¶25 We affirm the jury's verdicts. We award taxable costs to Hydro Pro upon compliance with ARCAP 21.