Reyes v. Mendez ( 2014 )

NOTICE: NOT FOR PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION DOES NOT CREATE
LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
MANUEL REYES, Plaintiff/Appellant,
v.
NANCY J. MENDEZ, Defendant/Appellee.
No. 1 CA-CV 13-0449
FILED 05-27-2014
Appeal from the Superior Court in Maricopa County
CV2012-095259
The Honorable Mark F. Aceto, Judge
AFFIRMED
COUNSEL
Law Office of David E. Johnson, Mesa
By David Earl Johnson
Counsel for Plaintiff/Appellant
Dominguez Law Firm, Phoenix
By Antonio Dominguez, Lisa Montes
Counsel for Defendant/Appellee
REYES v. MENDEZ
Decision of the Court
MEMORANDUM DECISION
Judge Lawrence F. Winthrop delivered the decision of the Court, in which
Presiding Judge John C. Gemmill and Judge Peter B. Swann joined.
W I N T H R O P, Judge:
¶1 Appellant Manuel Reyes (Reyes) appeals the trial court’s
ruling in favor of Appellee Nancy J. Mendez (Mendez). Specifically,
Reyes argues the trial court erred when it found that he converted
Mendez’s personal property and that no partnership existed between the
parties. Reyes also argues the trial court’s order granting attorney fees to
Mendez was improper.
FACTS AND PROCEDURAL HISTORY
¶2 This case arises from an alleged partnership between Reyes
and Mendez regarding a public reception hall they leased as co-tenants.
Reyes previously signed a lease in November 2011 with Saia Family
Limited Partnership (the Landlord) for the rental of one of their buildings
(the Facility). At the time Reyes signed the lease, the Landlord
understood Reyes would use the Facility as a banquet hall.
¶3 Reyes and Mendez met when Mendez, who was seeking to
open her own banquet hall, responded to an advertisement Reyes placed
in a magazine attempting to sell a business. Shortly thereafter, however,
the parties decided to operate the Facility as co-tenants. In furtherance of
that decision, Mendez moved certain catering equipment and other event-
related personal property onto the Facility’s premises. Reyes sought the
assistance of his accountant (the Accountant) to draft a partnership
agreement. However, Mendez did not attend a scheduled meeting with
Reyes and his accountant, and thus, the agreement was never drafted.
¶4 Nevertheless, in February 2012, Mendez and Reyes
coordinated an event together at the Facility; to some extent, they shared
in the resulting revenue generated from the event. After that event,
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REYES v. MENDEZ
Decision of the Court
Mendez continued to solicit and hold events at the Facility without
Reyes’s involvement. 1
¶5 In August 2012, Reyes filed a complaint requesting
dissolution of partnership against Mendez. In his complaint, Reyes also
requested an accounting, and further claimed Mendez breached her
fiduciary duty and violated Arizona Revised Statute (A.R.S.) § 13-2301.D.4
(2010). That same day, Reyes also filed a motion for a preliminary
injunction requesting the trial court prohibit Mendez from entering the
Facility. The trial court ultimately granted the motion at an uncontested
order to show cause hearing. As a result of the preliminary injunction, the
police went to the Facility to advise Mendez she needed to leave the
Facility. Mendez believed she was not allowed to remove any of her
equipment or other business-related personal items from the Facility.
¶6 Mendez filed an amended answer and counterclaim where
she denied the existence of a partnership and also brought claims against
Reyes and his wife for unjust enrichment and conversion of the personal
property she was unable to remove from the Facility.
¶7 At a bench trial, both parties testified and gave conflicting
testimony. Reyes testified that he and Mendez had entered into a verbal
contract that they were going to work as partners and share profits.
Reyes also explained that he took steps to remove Mendez from the lease
after she failed to attend the meeting with his accountant. In contrast,
Mendez testified she and Reyes never discussed anything regarding a
partnership. According to Mendez, she agreed to employ Reyes for a fee
to provide food, catering, and wait staff for agreed-upon events. Mendez
testified about her efforts to recover her property from the Facility and
that she was prevented from doing so after Reyes obtained the injunction.
Finally, Mendez identified and testified as to the value of the allegedly
converted property.
¶8 A representative for the Landlord testified at trial that when
the initial lease was signed, the Landlord was aware Reyes intended to
use the Facility as a banquet hall. The lease was amended to add Mendez
as a co-tenant, and based upon conversations with both Reyes and
1 The evidence at trial was conflicting as to this fact. Reyes testified
Mendez never contacted him again, while Mendez testified she attempted
to contact Reyes but he failed to return her calls.
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REYES v. MENDEZ
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Mendez, the Landlord understood that Reyes would provide the food
product while Mendez would organize the events and decorate the
Facility.
¶9 Reyes’s accountant testified he was asked to draft a
partnership agreement and that, according to Reyes, the parties planned
on advertising their services and soliciting business together, entering
contracts together with clients for the Facility, and equally dividing all
profits.
¶10 In its ruling, the trial court found no partnership existed
between the parties. The trial court also held Mendez failed to prove her
unjust enrichment claim, but had successfully proved her conversion
claim in the amount of $15,725. The trial court declined to order Reyes
return Mendez’s property . The trial court also awarded attorney fees and
costs to Mendez.
¶11 Reyes timely appealed. We have jurisdiction pursuant to
Article 6, Section 9, of the Arizona Constitution, A.R.S. §§ 12-120.21.A.1
(2003), and -2101.A.1 (Supp. 2013).
DISCUSSION
I. Conversion
¶12 Reyes first argues the trial court erred when it found that
Reyes converted Mendez’s property.
¶13 We will affirm a trial court’s findings of fact unless they are
clearly erroneous. Factual findings are not clearly erroneous if substantial
evidence supports them, even in the face of conflicting evidence. See
Kocher v. Dep’t of Revenue of State of Ariz., 206 Ariz. 480, 482, ¶ 9, 80 P.3d
287, 289 (App. 2003).
¶14 To prove conversion, Mendez was required to demonstrate
that Reyes (1) intentionally exercised dominion or control over her
personal property, and (2) interfered with Mendez’s right to control the
property to an extent that Reyes may justly be required to pay her for the
full value of the inventory. See Focal Point, Inc. v. U-Haul Co. of Ariz., Inc.,
155 Ariz. 318, 319, 746 P.2d 488, 489 (App. 1986) (acknowledging that
Arizona has adopted the definition of conversion contained in the
Restatement (Second) of Torts § 222.A.1 (1965)).
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REYES v. MENDEZ
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¶15 We find the trial court did not err in finding that Reyes
exercised dominion or control over Mendez’s personal property. Reyes
asserts that Mendez’s conversion claim incorrectly assumes that Reyes
converted the property simply by applying for and receiving the
preliminary injunction. To that end, Reyes argues a ruling holding a
party liable for conversion for “merely abiding by [court] orders” will turn
justice “on its head.” We disagree.
¶16 At trial, Reyes admitted that he was aware that several of the
items of Mendez’s personal property were at the Facility. In fact, the trial
court explicitly stated that if it had “the benefit of all of the evidence
ultimately presented at trial, [it] would not have issued a preliminary
injunction.“ This evidence is sufficient to support a finding that Reyes
made a misrepresentation in order to exercise control over Mendez’s
personal property.
¶17 Moreover, Mendez testified the preliminary injunction
precluded her from entering the Facility. Mendez described her property
that she was prohibited from accessing and provided receipts and
photographs of the subject items. Mendez also testified not having access
to her property prevented her from doing business at other locations
because she could not fully decorate for events without linens and other
items stored at the Facility. She also testified she had not been able to
replace these items. As a result, Mendez explained she was unable
operate an event business and now worked part-time at a flower shop and
at a call center.
¶18 Based on this evidence, we find the trial court did not err in
finding that Reyes interfered with the subject property and that Reyes
should justly be required to pay for the property’s full value.
¶19 Reyes also argues the trial “compounded [its] error” by
refusing Reyes the opportunity to return the property to Mendez.
However, the trial court is not required to order the return of converted
property. See Focal Point, 155 Ariz. at 319, 746 P.2d at 489.
¶20 On appeal, Reyes does not challenge the value the trial court
assigned to the subject personal property. Accordingly, we do not
address this issue. For these reasons, we affirm the trial court’s ruling
regarding Mendez’s conversion claim.
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REYES v. MENDEZ
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II. Partnership
¶21 Next, Reyes argues the trial court committed error when it
found Reyes and Mendez did not form a partnership. In the absence of a
written instrument, the question of whether a partnership exists is one of
fact. Bohmfalk v. Vaughan, 89 Ariz. 33, 38, 357 P.2d 617, 621 (1960).
Accordingly, we will review the finding for clear error. See Kocher, 206
Ariz. at 482, ¶ 9, 80 P.3d at 289. As discussed, supra, the existence of
substantial conflicting evidence on the issue does not give rise to a finding
of clear error. See id.
¶22 Under A.R.S. § 29-1012(A) (2014), 2 a partnership comes into
existence when “two or more persons carry on as co-owners of a business
for profit.” This is true whether or not the parties intend to form a
partnership. Id. However, § 29-1012(C)(1) provides that co-tenancy “does
not by itself establish a partnership, even if the co-owners share profits
made by the property.”
¶23 In this case, both Reyes and Mendez were co-tenants of the
Facility, as evidenced by the amended lease. Other evidence and
testimony was conflicting, particularly as to the nature of the business
relationship. Reyes testified that he and Mendez entered into a verbal
agreement to form a partnership. In support of this claim, Reyes’s
accountant testified that it was his understanding that Reyes and Mendez
were forming a partnership.
¶24 Conversely, Mendez testified she never discussed forming a
partnership with Reyes. Mendez explained Reyes was only going to
provide the food and wait staff for events, and Mendez was to provide
decorating services and coordination for the events. She also testified that
the parties did not have a joint bank account. As the trier of fact, the trial
judge was in the best position to evaluate the credibility of the witnesses
and to resolve these conflicting positions. See Premier Fin. Servs. v. Citibank
(Ariz.), 185 Ariz. 80, 85, 912 P.2d 1309, 1314 (App. 1995). The court made
findings based on its review of the testimony and evidence provided. On
this record, we find no error; accordingly, we affirm the trial court’s ruling
with regard to the partnership issue.
2 We cite to the current version of the applicable statutes when no
material revisions have since occurred.
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REYES v. MENDEZ
Decision of the Court
III. Attorneys’ Fees
¶25 Reyes does not contest the applicability of § 12-341.01 (Supp.
2013) to this contract action. Instead, Reyes argues he should have been
the prevailing party below and, thus, the trial court incorrectly awarded
Mendez her attorney fees pursuant to the statute. We will not disturb a
trial court’s award of fees if it is supported by “any reasonable basis.”
Desert Mountain Props. Ltd. P’ship v. Liberty Mut. Fire Ins. Co., 225 Ariz. 194,
213, 236 P.3d 421, 440 (App. 2010).
¶26 Section 12-341.01 allows the trial court, in an action arising
out of contract, to “award the successful party reasonable attorney fees.”
Here, Mendez was the successful party. As such, the trial court had the
discretion and a rational basis for awarding Mendez her reasonable
attorneys’ fees. That award is affirmed.
IV. Costs and Attorneys’ Fees on Appeal
¶27 Both parties request attorney fees pursuant to A.R.S. §§ 12-
341.01, -342, and ARCAP 21. Reyes is not the prevailing party on appeal, ;
thus, we deny his request. As the successful party on appeal, we award
taxable costs plus an amount of reasonable attorneys’ fees to Mendez,
subject to her timely compliance with ARCAP 21.
CONCLUSION
¶28 Based on the foregoing, we affirm the trial court’s judgment.
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