5th Avenue v. Kahlon ( 2016 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT
PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
5TH AVENUE PROFESSIONAL OFFICE LLC, an Arizona limited
liability company, Plaintiff/Appellant,
v.
MANINDER KAHLON and RAMIT KAHLON, husband and wife;
ATUL SYAL and JYOTI SYAL, husband and wife; JATIN SHAH and
RIMA SHAH, husband and wife; JASON REINHART, an unmarried
man; ANDREW GORMAN and BRENDA GORMAN, husband and
wife; ANDRE HAGEVIK and MELANIE LANE, husband and wife;
NIRMALA ARYAL and PRASHANT NARAIN, husband and wife;
LAWRENCE KUTZ and ELANA KUTZ, husband and wife; PRAFUL
REDDY and AMRITA REDDY, husband and wife, Defendants/Appellees.
No. 1 CA-CV 15-0666
FILED 12-8-2016
Appeal from the Superior Court in Maricopa County
No. CV2014-015004
The Honorable James T. Blomo, Judge
REVERSED AND REMANDED
COUNSEL
Ayers & Brown PC, Phoenix
By Charles K. Ayers
Counsel for Plaintiff/Appellant
5TH AVENUE v. KAHLON et al.
Decision of the Court
Poli & Ball P.L.C., Phoenix
By Jeffrey Messing
Counsel for Defendants/Appellees Syal, Shah, Reinhart, Gorman, Hagevik, Lane,
Aryal, Narain, and Kutz
MEMORANDUM DECISION
Judge Patricia A. Orozco delivered the decision of the Court, in which
Presiding Judge Andrew W. Gould and Judge Peter B. Swann joined.
O R O Z C O, Judge:
¶1 Appellant 5th Avenue Professional Office LLC (5th Avenue)
sued to enforce a commercial lease guaranty (Guaranty) signed by all but
one of a number of named personal guarantors. The trial court found the
missing signature rendered the Guaranty incomplete and invalid under
Modular Systems, Inc. v. Naisbitt, 114 Ariz. 582, 585 (App. 1977) and entered
judgment to the guarantors. For the reasons set forth below, we reverse and
remand for further proceedings consistent with this decision.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 5th Avenue leased office space to Arizona Neurological
Institute, P.C. (ANI). An addendum to the lease obligated ANI to “deliver
. . . a fully executed Guaranty of Lease, to include signatures from all above
named Guarantors.” The addendum named the Kahlons, the Syals, the
Shahs, the Gormans, the Kutzes, the Reddys, Nirmala Aryal, Prashant
Nararin, Jason Reinhart, and Kirk Puttlitz as guarantors.
¶3 The Guaranty provided that all named guarantors would
“jointly, severally, unconditionally and irrevocably guarantee the prompt
payment by [ANI] of all rents and other sums payable . . . .” The Guaranty
further provided that 5th Avenue “would not execute the Lease if
Guarantors did not execute and deliver to Lessor this Guaranty of Lease.”
All named guarantors signed the Guaranty except Puttlitz. 5th Avenue
accepted the Guaranty without Puttlitz’s signature, and ANI took
possession of the space.
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5TH AVENUE v. KAHLON et al.
Decision of the Court
¶4 ANI subsequently breached the lease and filed for
bankruptcy. 5th Avenue sued the named guarantors, including Puttlitz,1 to
collect on the Guaranty. Appellees moved to dismiss the complaint,
arguing the Guaranty was ineffective because Puttlitz did not sign it. In its
response, 5th Avenue attached an affidavit from one of its assistant building
managers and a series of emails between its broker and ANI’s broker.
Based on the affidavit and emails, 5th Avenue argued the signing
guarantors had “affirmatively represented . . . through their agent that the
sole missing signature on the Guaranty was not necessary to make the
Guaranty binding.”
¶5 The trial court dismissed 5th Avenue’s complaint, finding
that “Dr. Puttlitz did not sign the Guaranty and therefore the Guaranty of
Lease is not a valid contract.” The trial court entered final judgment
pursuant to Arizona Rule of Civil Procedure 54(c) and awarded attorney’s
fees and costs to Appellees. 5th Avenue timely appealed. We have
jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution,
and Arizona Revised Statutes (A.R.S.) section 12-120.21.A.1 and -2101.A.1
(West 2016).2
DISCUSSION
I. The Motion to Dismiss Should Have Been Converted into a
Motion for Summary Judgment
¶6 5th Avenue first contends the trial court should have
converted Appellees’ motion to dismiss into a motion for summary
judgment. If “matters outside the pleading are presented to and not
excluded by the court,” a Rule 12(b)6 motion to dismiss “shall be treated as
one for summary judgment and disposed of as provided in Rule 56, and all
parties shall be given reasonable opportunity to present all material made
pertinent to such a motion by Rule 56.” Ariz. R. Civ. P. 12(b).
¶7 5th Avenue presented an affidavit and email evidence beyond
the pleadings in response to Appellees’ motion to dismiss. The trial court
did not exclude any of this evidence; indeed, in making its ruling, the court
1 There is no proof of service for Puttlitz but at oral argument 5th
Avenue admitted he was never served.
2 We cite the current version of applicable statutes when no revisions
material to this decision have since occurred.
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5TH AVENUE v. KAHLON et al.
Decision of the Court
considered this evidence, expressly noting that Dr. Puttlitz refused to sign
the Guaranty - a fact outside the pleadings that was contained in the factual
information attached to 5th Avenue’s response. Therefore, the superior
court was required to treat Appellees’ motion to dismiss as a motion for
summary judgment, and give both parties a “reasonable opportunity to
present all material made pertinent to such a motion by Rule 56.” Ariz. R.
Civ. P. 12(b)6. Because the superior court did not comply with Rule 12(b)6,
we reverse and remand, directing the trial court to comply with the Rule,
and give “all parties . . . reasonable opportunity to present all material made
pertinent to [the motion for summary judgment] by Rule 56.” Id.
II. Attorney Fees on Appeal
¶8 5th Avenue requests its attorney fees and costs pursuant to
the Guaranty and A.R.S. § 12-341.01.A. In our discretion, we deny the
request for fees, but award 5th Avenue its taxable costs incurred in this
appeal upon compliance with ARCAP 21.
CONCLUSION
¶9 We reverse and remand to the superior court for proceedings
consistent with this decision.
AMY M. WOOD • Clerk of the Court
FILED: AA
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