Thienes v. City Center ( 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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
BRIAN THIENES, an individual; JOHN BALL and MONICA BALL,
husband and wife; THE THOMPSON FAMILY TRUST; JUAN
BRACAMONTE and JACQUELINE BRACAMONTE, husband and wife,
Plaintiffs/Appellees,
v.
CITY CENTER EXECUTIVE PLAZA, LLC; INFORMATION SOLUTIONS,
INC.; and JERRY and CINDY ALDRIDGE, Defendants/Appellants.
__________________________________________________________________
CITY CENTER EXECUTIVE PLAZA, LLC, Plaintiff/Appellant,
v.
THE REFUGE COMMUNITY ASSOCIATION, INC., Defendant/Appellee.
No. 1 CA-CV 14-0077
1 CA-CV 14-0264
(Consolidated)
FILED 9-22-2016
Appeal from the Superior Court in Mohave County
No. S8015CV201001563
The Honorable Lee F. Jantzen, Judge
AFFIRMED IN PART; VACATED IN PART; REMANDED
COUNSEL
Beus Gilbert P.L.L.C., Phoenix
By Franklyn D. Jeans, Cory L. Broadbent, Lyn Anne Bailey, Cassandra H.
Ayres
Counsel for Plaintiffs/Appellees Thienes, et al.
Perkins Coie, L.L.P., Phoenix
By Daniel C. Barr, James A. Ahlers, Joshua M. Crum, John H. Gray,
Alexander W. Samuels
Counsel for Defendants/Appellants & Plaintiff/Appellant City Center Executive
Plaza, L.L.C., et al.
Maxwell & Morgan, P.C., Mesa
By Penny L. Koepke, Nicole A. Miller
Co-counsel for Defendant/Appellee The Refuge Community Association, Inc.
Houser & Allison A.P.C., Phoenix
By Solomon S. Krotzer
Co-counsel for Defendant/Appellee The Refuge Community Association, Inc.
Carpenter Hazlewood Delgado & Bolen, P.L.C., Tempe
By Edith I. Rudder
Co-counsel for Defendant/Appellee The Refuge Community Association, Inc.
Manning & Kass Ellrod, Ramirez, Trester, LLP., Phoenix
By Richard V. Mack
Counsel for Amicus Curiae National Association of Realtors and Arizona
Association of Realtors
Arizona Association of Realtors, Phoenix
By K. Michelle Lind, Scott M. Drucker
Counsel for Amicus Curiae Arizona Association of Realtors
MEMORANDUM DECISION
Judge Lawrence F. Winthrop delivered the decision of the Court, in which
Presiding Judge Kent E. Cattani and Judge Peter B. Swann joined.
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W I N T H R O P, Judge:
¶1 In this consolidated appeal, we consider a series of jury
verdicts and rulings by the trial court that culminated in three injunctions
and a significant award of attorneys’ fees and costs. City Center Executive
Plaza, L.L.C. (“City Center”), Information Solutions, Inc. (“Information
Solutions”), and Jerry and Cindy Aldridge (“the Aldridges”)1 (collectively,
“Appellants”) appeal the trial court’s orders enjoining them (1) from further
use of “Golf Course Facilities Easements” for anything other than golf or
golf-related facilities, (2) from further use of “Declarant’s Easements” for
anything other than selling or marketing lots within the gated residential
community known as The Refuge at Lake Havasu (“The Refuge”), and (3)
against further use and development of a recreational vehicle park (“the RV
Park”) within the community.
¶2 The underlying case in this appeal arose when a group of lot
owners within The Refuge (“the Thienes Plaintiffs”)2 sued Appellants after
Appellants purchased the interlocking eighteen-hole championship Arnold
Palmer Signature Golf Course (“the golf course”), made aggressive
redevelopment plans, and began carrying out those plans to (1)
significantly reduce the size of the golf course, (2) put in a permanent
pavilion tent (“the Event Tent”) near the golf course’s clubhouse to host
public events,3 and (3) build a high-end motor coach or RV Park with
related amenities to attract visitors to the area. During Appellants’ efforts
to carry out their redevelopment, members of The Refuge Community
Association, Inc. (“the Association”)4 attempted to enforce the Association’s
1 The Aldridges are the controlling owners and
managers/principals/directors/officers of City Center and Information
Solutions.
2 The Thienes Plaintiffs are Brian Thienes, John and Monica Ball, the
Thompson Family Trust, and Juan and Jacqueline Bracamonte.
3 The Event Tent is a large, permanent structure capable of being
opened to accommodate various events, including outdoor concerts.
4 The Association is the homeowners’ association for The Refuge, and
is responsible for enforcing the Association’s Amended and Restated
Declaration of Covenants, Conditions, and Restrictions (“CC&Rs”), and
maintaining the common areas, including the roads within The Refuge,
which are owned by the Association. Members of the Association own lots
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CC&Rs, leading to conflicts between Appellants and the Association.
Those conflicts formed the basis of a lawsuit filed by Appellants against the
Association and other individual defendants, and counterclaims made by
the Association against Appellants. The lawsuits were consolidated, and
the matter was tried before a jury, which decided the majority of the issues
in favor of Appellees.5 After consideration, the trial court agreed with and
adopted the jury’s verdicts and issued the aforementioned injunctions.
¶3 Appellants maintain the permanent injunctions prohibit them from
non-golf uses of the property they purchased, and argue the only notice
they had of an alleged golf-only restriction when they purchased the
property was the presence of the original championship golf course
covering the property. They argue the trial court erred in shutting down a
vital portion of their business based on a restriction they did not and could
not have known about, and also erred in awarding substantial attorneys’
fees and costs to Appellees. At the heart of this appeal is the question
whether Appellants’ use and development of an RV Park in the midst of
Appellees’ golf course community may be properly enjoined. For the
following reasons, we affirm the injunctions, but we vacate the court’s
awards of costs and attorneys’ fees, and remand for a recalculation of the
awards.
FACTUAL AND PROCEDURAL HISTORY6
I. Factual History
A. Development of The Refuge
¶4 The Refuge is a master-planned community in Mohave
County (“the County”), consisting of 360 individual home sites built
around or near the privately owned golf course at issue in this case.
in the Refuge, and its affairs are governed by a volunteer Board of Directors
elected by the Association’s members.
5 We refer to the Thienes Plaintiffs and the Association collectively as
“Appellees” or “Plaintiffs.”
6 We view the facts and reasonable inferences therefrom in the light
most favorable to upholding the judgments. See IB Prop. Holdings, L.L.C. v.
Rancho Del Mar Apartments Ltd. P’ship, 228 Ariz. 61, 63, ¶ 2, 263 P.3d 69, 71
(App. 2011).
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Originally known as “The Cliffs at Lake Havasu,” The Refuge was
conceived and developed by Zenn LHC, LLC (“Zenn”), an Arizona-based
subsidiary of Sienna Corporation (“Sienna”).7
¶5 Sienna, through Zenn, began developing The Refuge in 2001.
On December 3, 2001, the County rezoned the property for The Refuge,8
and on May 14, 2002, Zenn obtained a loan from Home Federal Savings
Bank (“Home Federal”) and executed a Deed of Trust in favor of Home
Federal for Zenn’s property in The Refuge.
¶6 Sienna chose to develop The Refuge because of its proximity
to Lake Havasu and the Havasu National Wildlife Refuge, and because
Sienna believed views of the area would result in a beautiful golf course
community. The golf course was the centerpiece, weaving throughout the
subdivision; approximately one hundred of the residential lots abutted the
golf course and more than eighty percent of the lots had favorable views.
Although The Refuge Golf Course and Country Club is private property
and not part of the common areas of The Refuge, it was built in conjunction
with the community, and Sienna added the Arnold Palmer-designed golf
course to The Refuge because applying Arnold Palmer’s name to the golf
course increased the marketability and value of the lots within The Refuge.9
7 One of Sienna’s principals is John Hankinson. Hankinson was
integrally involved in the original planning and development of The Refuge
community and golf course, and he testified extensively at trial regarding
the community’s development. According to Hankinson, Sienna never
intended an RV Park or Event Tent to be built in the Refuge, as neither is
considered a golf club-related facility. Further, Sienna never envisioned the
golf course being used for or converted to any other purpose, and intended
the golf course to stay there forever.
8 Because the County did not have a golf course-only zoning
designation, the golf course property was zoned C-RE (Commercial
Recreation), a classification that permits several types of uses, including RV
parks and golf courses. Nonetheless, Hankinson testified and the trial court
found that if there had been a golf course-only zoning designation, Sienna
would have utilized this zoning for the golf course.
9 The Refuge Golf Club, Inc.’s Membership Plan and Offering Circular
provided that Zenn was to turn over control and management of the golf
club to a board of directors selected by the golf members no later than
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B. Agreements with Mohave County
¶7 Meanwhile, as part of The Refuge’s development, Sienna
submitted applications to the County for approval.10 The County placed
conditions on its approval of the development. One condition included
Sienna establishing a conservation easement for the golf course to ensure
the durability of that feature of the subdivision.11 Sienna, however, had
expressed concerns about the impact a conservation easement would have
on its ability to obtain financing for The Refuge. In lieu of a conservation
easement, Sienna and the County agreed to restrict the uses of the golf
course via designations on the Final Plat and via the County’s Resolutions
approving development of The Refuge. In its Resolutions, the County
noted the central feature of the subdivision is an “18-hole professional golf
course and clubhouse” and provided that lots within the Final Plat could
not be further divided.
¶8 On September 24, 2002, the County approved the Final Plat
for The Refuge. In the recorded Final Plat, approved uses for each parcel
were identified. The County and Sienna agreed that the parcels, including
those designated as “golf course/drainage easement” would be limited to
golf course uses. The Final Plat also provided for the roads and “common
areas” that the Association owns, manages, and maintains.
C. The CC&Rs
¶9 Also on September 24, 2002, Zenn recorded the original
CC&Rs as part of the development of the Refuge.12 The CC&Rs set forth
the rights, responsibilities, and obligations of the “Declarant,” “Golf Club
within thirty days of the earlier of (1) sale of all 362 golf memberships or (2)
September 1, 2012.
10 Sienna used local engineers and contractors, including A&N West,
to develop The Refuge. A&N West was responsible for interacting and
interfacing with the County on behalf of Sienna.
11 The County wanted protections to ensure the longevity of the golf
course, in part because it was aware of a golf course in another county that
had gone into bankruptcy, leading to a dispute regarding redevelopment
of that golf course.
12 The original CC&Rs were amended and restated by Zenn on
September 16 and December 31, 2008.
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Owner,” the “Association,” and the lot owners (“Members”), and define
those terms. As the original developer of The Refuge, Zenn was the original
Declarant under the CC&Rs. In part, the CC&Rs state that the Golf Club
Facilities are not common areas and are not subject to the CC&Rs, and lot
owners have no ownership interest in or right to use the golf course. The
CC&Rs also provide limited easements for “Golf Club Facilities” and the
Declarant.
D. Promises Made to Purchasers of Property in The Refuge
¶10 Sales materials for The Refuge reflected that its centerpiece
was a “masterfully designed Arnold Palmer Signature Golf Course.”
Sienna provided lot purchasers at The Refuge, including the Thienes
Plaintiffs, a map of the community, which showed the layout of the golf
course, the subdivision, the streets, the 360 individual lots surrounding the
golf course, and open spaces in the community. Sienna also presented as
part of its sales materials a diorama of the community, which also showed
the 360 individual lots, the golf course layout, the clubhouse, the streets,
and open spaces. Additionally, Sienna leased a billboard in Lake Havasu
City, on which it advertised Arnold Palmer and the golf course. Further, as
part of its development of The Refuge, Sienna prepared a Subdivision
Public Report for the Arizona Department of Real Estate (“the public
report”). See Ariz. Rev. Stat. (“A.R.S.”) § 32-2183 (Supp. 2015).13 The public
report reflects the community is a master-planned community developed
pursuant to a common scheme, and references the golf course.
¶11 Salespersons encouraged prospective lot buyers to rely on the
sales materials, the map of the community, the diorama of the development,
the billboard, the public report, and other materials presented to them, all
of which suggested the golf course would remain in its designated and
platted state.
E. The Lot Purchase Contracts
¶12 Buyers of lots at The Refuge signed purchase contracts
requiring that the buyer receive, read, and understand numerous
documents, including but not limited to the purchase contract, the public
report, the golf course “Club Offering Circular,” and the applicable
recorded Final Plat. Buyers also received copies of the CC&Rs and agreed
to be bound by them. With regard to the community’s master plan, the
13 We cite the current version of all statutes unless changes material to
our decision have occurred since the relevant dates.
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purchase contracts contained disclaimers warning that “[t]he only
representations by [Zenn], its employees, or agents are set forth herein,”
“the master plan is subject to change,” and “future circumstances could
prevent the construction or operation of one or more of the planned
amenities.”
¶13 With regard to the golf course and related clubhouse facilities,
the purchase contracts provided that Zenn “is the owner of and will be
operating a golf club with related clubhouse facilities in the Refuge project.”
The contracts further noted that the golf club “is a private club which is not
a part of the common areas of the Refuge development,” and warned that
lots located adjacent to the golf club “may be subject to additional noise,
reduced privacy and other related impacts.”
¶14 Additionally, the contracts warned that oral representations
could not be relied upon, stating that “[n]o salesperson, employee or agent
of [Zenn] has authority to make any other representations to Buyer that are
not signed by [Zenn] or to modify the terms of this Purchase Contract or
any other written agreement signed by [Zenn].”
¶15 Between 2003 and 2008, each of the Thienes Plaintiffs
purchased one or more lots at The Refuge. Before purchasing their lots, the
Thienes Plaintiffs reviewed the community’s CC&Rs. The Thienes
Plaintiffs construed the language of the CC&Rs to mean that RVs were not
permitted in The Refuge, and that the golf course was protected and would
remain in its designed and platted state. The Thienes Plaintiffs paid a
higher price for their lots in The Refuge because of the inclusion of the
Arnold Palmer Signature Golf Course in the community and because of the
proximity of their property to the golf course.
F. Golf Course Difficulties and Appellants’ Interest
¶16 By 2008, all of the community infrastructure was complete,
amenities for the residents were built, all lots in The Refuge had utilities to
the lot lines, the lots were graded, and homes could be built on them. On
December 31, 2008, pursuant to ¶ 1.46 of the CC&Rs, Sienna/Zenn
voluntarily transitioned control of the Association to The Refuge property
owners, who took over control of the community’s operations.14
14 In the planned community industry, a developer’s main objective is
to build out the community and sell lots or homes. Generally, once the
majority of lots are sold, the developer turns control of the community’s
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¶17 Zenn had anticipated limiting the total golf memberships to
362; however, membership in the golf course never exceeded ninety-four
members, and the course consistently lost more than $1 million annually.
Zenn eventually defaulted on its loan, and the golf course and the
remaining lots owned by Zenn were noticed for a trustee’s sale in May 2009,
with a foreclosure date of August 5, 2009.
¶18 The Aldridges knew the golf club was to be turned over to its
members by a date certain; nonetheless, in July 2009, through City Center,
they entered discussions with Zenn to acquire the golf course and country
club property.15 Zenn and City Center signed a purchase agreement;
however, the purchase was not completed.
¶19 On August 4, 2009, Sienna/Zenn assigned its Declarant rights
to Home Federal.16 On August 6, Home Federal foreclosed and purchased
via credit bid the real property owned by Zenn, which included the golf
course property and twenty-four home lots within the Refuge. Home
Federal did not operate the golf course during its brief ownership.
operations over to the actual property owners. The date this occurs is
known as the “transition date.” It is customary in the planned community
industry for the developer’s rights and obligations to “sunset,” typically
after all the amenities have been constructed, most of the lots have been
sold, and the transition date has occurred. Once transition occurs, the
financial exposure to the developer is greatly reduced and the developer’s
focus is on selling its remaining lots.
15 The Aldridges had become familiar with The Refuge and golf course
because they became members of the golf club, played the golf course
numerous times, had friends who lived in The Refuge, and hosted business
clients, golf tournaments, and related events there. Also, Cindy Aldridge’s
mother worked at the golf shop for a period of time. In 2007, one of Zenn’s
managers, Peter Loyd, approached Jerry Aldridge about buying the golf
course, but after considering the financials, the Aldridges declined at that
time. The Aldridges eventually cancelled their golf membership; however,
they continued to discuss with others the possibility of buying the course.
16 The assignment was recorded on September 30, 2009.
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G. Appellants Acquire the Golf Course
¶20 Meanwhile, the Aldridges had begun making plans to revive
the golf club by replacing portions of the golf course with the Event Tent,
RV Park, and related amenities, and in August 2009, they again entered
discussions with Home Federal to acquire the golf course and country club
property and the twenty-four lots Home Federal had acquired in
foreclosure. Before purchasing the golf course property, City Center,
through the Aldridges, had a full opportunity to conduct due diligence.17
¶21 On September 30, 2009, City Center purchased the golf course
and country club property, related assets, and twenty-four lots at The
Refuge for $3.9 million. At the same time, Home Federal assigned its
Declarant’s rights to City Center. City Center also became the golf course
owner as defined in the CC&Rs.18
17 According to Appellants, Home Federal marketed the property to
City Center as unencumbered by any use restrictions, and no residents of
The Refuge told City Center there were any such restrictions. Appellants
assert that, before closing on the purchase, they obtained a current title
report and reviewed all recorded documents, including the zoning, the
CC&Rs, the public report, the Final Plat, the land survey, and the County
Resolutions relating to the property. They also assert they informed Home
Federal and the County of their plan to build an upscale RV resort with
amenities and that their due diligence uncovered no use restrictions
prohibiting changes to the golf course.
18 Jerry Aldridge testified in his deposition and at trial that “Jerry and
Cindy Aldridge and Information Solutions and City Center are all the same
entity.” In late December 2011—in the midst of the subsequent litigation—
City Center, as the golf club owner, transferred title to the golf club to the
Aldridges personally, and the Aldridges subsequently transferred title to
the golf course to Information Solutions, a company with no other apparent
assets. According to Cindy Aldridge, the transfer to Information Solutions
was effectuated because “the accounting was very confusing for our
accountant and for the bank, [and] it was too difficult to tell what was
happening with the rental properties and on the other developments that
we had versus just The Refuge, so the banks wanted it separate and our
accountant wanted it separate.” On February 16, 2012, City Center
recorded a “Partial Assignment of Declarant Rights” to Information
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H. Appellants’ Redevelopment Plans
¶22 After acquiring the property from Home Federal, the
Aldridges, through City Center, sought to launch their redevelopment
plan.19 Aware that they would face “strong opposition to the trailer park
concept,” the Aldridges gave a formal presentation to homeowners at The
Refuge on October 31, 2009, in an attempt to sway the owners to accept their
plan. When the Aldridges announced City Center’s plans to remove
portions of the golf course for the RV Park and Event Tent, the Thienes
Plaintiffs and other lot owners in The Refuge strongly and vocally opposed
the plans, arguing that the proposed changes to the golf course were not
consistent with what they had been promised by the original developers.
I. Alleged Nuisance Caused by the RV Park and Event Tent
¶23 Despite Plaintiffs’ opposition and subsequent lawsuits,
Appellants built the Event Tent and the first phase of the RV Park. Though
not constructed when the lawsuits were filed in 2010, the Event Tent and
RV Park were operational as of trial.20
¶24 Appellants’ construction and operation of the RV Park have
had a negative impact on The Refuge community. Throughout the
redevelopment, Appellants and their agents damaged the Association’s
Solutions. City Center still owns twenty-three of the residential lots, and
Information Solutions owns the golf club.
19 At trial, Cindy Aldridge testified that she and her husband
conceived of the “unique” redevelopment plan of building the RV Park
inside the master-planned community while she was working on a paper
for an MBA course, and while travelling with friends in a motorhome to an
RV park in Indio, California. She also acknowledged that before buying the
property from Home Federal, she had no prior experience in developing a
master-planned community, with CC&Rs, or in managing a golf course or
RV park. She also stated she believed she had not reviewed the County
Resolutions before purchasing the golf course property, and she
acknowledged the public report did not mention that an RV park could be
included with the golf course.
20 In 2012, the RV Park and related amenities lost over one million
dollars.
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gates, roads, and other property. Contrary to established rules and policies,
Appellants instructed their construction vendors to use the south gate—
rather than the north gate—for access.21 In one instance, Appellants’
steamroller, which had big cleats, caused indentations on the south
entrance pavement, and the steamroller also took chips and chunks out of
the curbing.
¶25 In addition to property damage, Appellants’ construction and
operation of the RV Park and Event Tent had a negative impact on the
community in other ways. After the RV Park became operational, RV Park
guests began using the south gate entrance area and Arnold Palmer Drive
to get to and from the RV Park. The south gate entrance area and its
adjoining roads were not designed to accommodate such large vehicles,
and Appellants’ business operations, including the Event Tent and RV
Park, tended to overburden the Association’s roads.
¶26 The RV Park has caused security concerns because customers
enter the gated community and camp overnight, and as a result, some
homeowners fear for their safety.22 Also, construction and operation of the
RV Park and Event Tent have caused an increase in trespassing and other
criminal and offensive conduct in The Refuge. Further, with just phase one
of the RV Park complete, the security and nuisance concerns are likely to
21 The south gate of The Refuge community is the main entrance to
Arnold Palmer Drive, the community, and the golf club entrance. To give
a positive first impression as to the community, the south gate entrance area
is comprised of cobblestone at the entry, has big stone columns on both
sides, and has stamped concrete on the apron of the entry. The south gate
entrance area is thus considerably more delicate, expensive, and fancy than
the paving at the north gate, which is blacktop and better suited for heavy
construction equipment or construction vehicles. From the inception of The
Refuge community, construction traffic and heavier vehicles had always
used the north gate, but Appellants refused to follow this practice.
22 The Refuge is located adjacent to a high crime area; thus, security is
very important to many of The Refuge’s homeowners.
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increase,23 and Appellants were not providing adequate security to address
the security issues caused by the RV Park and Event Tent.24
¶27 The Event Tent produced loud music and other distracting
and bothersome noise. Events held at the Event Tent occasionally caused
parking and traffic problems in The Refuge. As a result of the various
activities and loud noise coming from Appellants’ business operations,
including the Event Tent and RV Park, the sheriff’s office had been called
to The Refuge on multiple occasions.
¶28 Both the RV Park and Event Tent are visible from many
homeowners’ lots, and the RV Park obstructs homeowners’ views. Thus,
for various reasons, Appellants’ construction of the RV Park and Event Tent
have negatively affected the value of the homeowners’ properties.
II. Procedural History
¶29 In an effort to prevent construction of the RV Park and the
concomitant destruction of approximately thirty-eight acres of the golf
course, the Thienes Plaintiffs filed a complaint and application for a
temporary restraining order (“TRO”) on July 16, 2010, against Appellants
in Mohave County Superior Court Case No. CV2010-01563. Appellants
filed their answer and counterclaim on August 12, 2010.
¶30 In late September and early October 2010, the Association’s
Board adopted resolutions aimed at addressing the nuisance being created
by Appellants. On October 8, 2010, counsel for the Association sent a letter
to counsel for City Center, advising that, beginning October 11, 2010,
the Association [would] act to prohibit any entry of vehicles
or persons on or over the Association’s private roadways and
Common Area easements, for purposes which are not directly
related to the Golf Course and the Golf Club Facilities, which
included non-golf-course uses including swimming pools,
spas, tennis courts, an RV Park or Motor Home Park, non-golf
related shows and activities and other such thing[s], also
23 Appellants’ original plan regarding the RV Park was to have 350
spaces for RVs scattered across the golf course.
24 Cindy Aldridge acknowledged “having vandalism attacks on our
property” and receiving a complaint from “Chuck” (Chuck Elias was one
of the Association’s security persons) about RV campers wandering into the
homeowners’ areas.
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including without limitation, non-golf course social
memberships, and the like.
¶31 On the morning of October 11, 2010, while the case with the
Thienes Plaintiffs was pending, members of the Association’s board
attempted to enforce the CC&Rs by positioning themselves at the south
gate in an effort to redirect Appellants’ construction traffic to the north gate.
Appellants maintained their easements pursuant to the CC&Rs were being
abridged, and asserted that they could “drive when and where we want to”
on the Association’s roads.
¶32 On October 13, 2010, Appellants filed a complaint against the
Association in Mohave County Superior Court Case No. CV2010-04163.
Appellants also obtained a TRO from the trial court, prohibiting the
Association from impeding Appellants’ “construction, maintenance,
and/or development” activities, based on their alleged easement rights
under the CC&Rs. The trial court upheld the injunction on several
occasions while Appellants worked on construction of their
redevelopment, which included the shortened 6,200-yard golf course, the
RV Park and resort, an expanded clubhouse, a swimming pool, and the
Event Tent. Appellants also assert they constructed their own private road,
enabling greater access to the RV resort.
¶33 The Association counter-claimed against City Center, alleging
that City Center trespassed, breached a contract, and “overburdened” two
easements by using the Association’s roads to redevelop the property, and
that City Center’s activities constituted a nuisance. In the meantime, on
January 26, 2011, the trial court consolidated Case Nos. CV2010-01563 and
CV 2010-04163, and the Association joined the Thienes Plaintiffs’ claims as
a plaintiff. On February 16, 2011, City Center filed an amended complaint
that included claims against the individual Board members. On June 21,
2012, the Thienes Plaintiffs filed an amended complaint.
¶34 Meanwhile, in 2012, while the consolidated matter was
pending, the Association started a political action committee to bring
another lawsuit, in which City Center intervened. See Schilling v. Tempert,
1 CA-CV 12-0505 EL, 2012 WL 4893221 (Ariz. App. Oct. 16, 2012) (mem.
decision). The lawsuit arose out of the Association’s efforts to mount a
referendum to overturn the Mohave County Board of Supervisors’
approval of City Center’s RV Park permit. See id. at *1, ¶ 2. The Association
asserted the County had previously imposed a golf-only zoning restriction
on the property that prohibited the redevelopment, and that allowing the
RV Park was an impermissible legislative act changing the existing zoning
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classification as opposed to implementation of the existing zoning
classification policy. Id. at *1, ¶ 2, *3-4, ¶¶ 16-17. The trial court rejected
that claim, and this court affirmed. Id. at *2, ¶ 9, *6, ¶ 26. After Schilling,
the trial court denied the parties’ motions for summary judgment.
¶35 On April 15, 2013, the consolidated matter proceeded to a jury
trial. At trial, Appellees maintained that use of the golf course property for
an RV Park is inconsistent with the County’s agreement with Sienna, the
language of the County’s Resolutions, the designated uses of the parcels
within The Refuge as identified in the Final Plat, and the best interest of the
residents who bought into the concept of the community.
¶36 Appellees also presented substantial evidence that
Appellants’ construction and operation of the RV Park and Event Tent have
negatively impacted the community. Several of the Thienes Plaintiffs’
witnesses testified about how their property value has been significantly
devalued or made “absolutely worthless” by the change in use; however,
they provided few specifics for the trial court to evaluate in determining
whether they should be reimbursed for their loss. During closing
argument, Appellees took the position that their case was not directly about
money; instead, they argued the RV Park and the “lesser” golf course
needed to be terminated, and the only remedy was to shut down the RV
Park and return the golf course to its originally intended championship
level.
¶37 On May 6, 2013, after sixteen days of trial, the jury rendered
its verdicts, reaching a decision on twenty-one out of twenty-three possible
verdict forms. Some of the verdict forms were binding and some were
advisory. Although the weight of the jury verdicts clearly favored the
respective positions presented by the Thienes Plaintiffs and the Association,
the results were mixed. The Thienes Plaintiffs and the Association
prevailed on their joint claims against Appellants for (1)25 implied
restrictive covenant, (2) express restrictive covenant, (3) equitable
servitude, (5) breach of the covenant of good faith and fair dealing
(awarding one dollar), (6) breach of contract - third-party beneficiary, (8)
25 The numbering employed in this and subsequent paragraphs refers
to the verdict form numbers.
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Decision of the Court
private nuisance, and (10) quiet title.26 The Association prevailed on its
claims against Appellants for (18) “misuse and overburdening” of the
Declarant Easement, (20) nuisance, and (22) nuisance (Event Tent).27
¶38 Appellants prevailed on the Thienes Plaintiffs’ and the
Association’s joint claims against them for (4) breach of contract,28 (7)
negligent misrepresentation, and (9) public nuisance, and on the
Association’s separate claims for (19) “misuse and overburdening” of the
Golf Club Facilities easement and (21) trespass.
26 On Special Verdict Form 11, the jury found the Aldridges personally
liable for any claims on which the jury found City Center and Information
Solutions liable.
27 Additionally, the jury found against Appellants on Appellants’
claims for (13) breach of contract against the Association, (14) tortious
interference with business relations against Appellees and the individual
defendants, (15) breach of fiduciary duty against the individual defendants,
and (16) slander against the Association and the individual defendants.
Those findings are not at issue in this appeal.
28 In its subsequent Findings of Fact and Conclusions of Law, the trial
court correctly noted that “[t]he jury’s binding verdict in City Center’s favor
on the breach of contract claim necessarily means the integrated lot
purchase contracts (which incorporated by reference the CC&Rs) contained
no restrictive covenant. As a matter of law, an implied covenant cannot
trump ‘an integrated written contract for the sale of an interest in real
property.’” Shalimar Ass’n v. D.O.C. Enters., Ltd., 142 Ariz. 36, 43, 688 P.2d
682, 689 (App. 1984). The court then noted, however, that this “is not how
this jury interpreted the testimony and the facts,” and further noted that
“[t]he jury found [the Thienes] Plaintiffs bought the property with the
expectation of it remaining the same and that [Appellants] had both an
obligation and an opportunity to find out about these restrictions before
purchasing their interest and beginning their development plan.” To the
extent the trial court’s findings and conclusions may be interpreted as
indicating the court found such an implied restrictive covenant was
incorporated into the written contract documents, and that Appellants
violated that implied contractual covenant, such a finding was error. See id.
However, any such erroneous finding and application of the law—if it
exists—does not affect the resolution of the nuisance claims or our analysis
of the injunctive relief granted in this matter.
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¶39 The jury did not sign two advisory verdict forms: Verdict
Form 12 would have recommended requiring Appellants to remove the RV
Park and Event Tent and “restore the golf course to an Arnold Palmer Golf
Course,” and Verdict Form 17 would have recommended the court grant
injunctive relief in favor of City Center and Information Solutions. Instead,
on Verdict Form 23, the jury in its advisory capacity recommended
injunctions limiting Appellants’ further use of the Golf Course and
Declarant Easements (effectively prohibiting Appellants’ use of the
Association’s roads and related property to operate the RV Park and Event
Tent) and against further use and development of the RV Park, but
recommended against an injunction against hosting public events and
concerts at the Event Tent. Consequently, although the jury only awarded
Appellees $1 in damages out of the $16.2 million sought, it did recommend
the majority of the injunctive relief sought by Appellees.
¶40 On December 17, 2013, the trial court issued lengthy and
detailed findings of fact and conclusions of law, in which the court largely
adopted the jury’s findings and concluded that the recommended
injunctive relief against Appellants was appropriate:
IT IS ORDERED enjoining City Center[29] from further
use of the Golf Course Easement for anything other than golf
or golf related facilities, which does not include an RV Park
or an Event Tent; and
IT IS ORDERED enjoining City Center from further use
of the Declarant Easement for anything other than selling or
marketing of lots within the community owned by the
Declarant.
IT IS FURTHER ORDERED enjoining City Center
against further use and development of the RV Park.
¶41 In March 2014, the trial court entered final judgment, which
included awards of attorneys’ fees against Appellants totaling
$2,358,755.19, plus taxable costs totaling $31,531.68.30 Appellants timely
29 The trial court clarified in its order that its references to City Center
included all Appellants.
30 In separate judgments, the court awarded attorneys’ fees in the
amount of $600,482.46, plus taxable costs in the amount of $15,844.83, to the
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Decision of the Court
appealed, and we have jurisdiction over this consolidated appeal. See
A.R.S. § 12-2101(A)(1) and (5)(b). See also LaFaro v. Cahill, 203 Ariz. 482, 484-
85, ¶ 7, 56 P.3d 56, 58-59 (App. 2002) (stating that § 12-2101 “explicitly
permits the appeal of injunctions”).
ANALYSIS
¶42 Appellants argue that the trial court erred in its findings and
legal conclusions and in ordering the three injunctions imposed. We have
thoroughly reviewed the record and the briefs presented to this court on
appeal, and we find no legal error or abuse of discretion in the trial court’s
decision to uphold/implement the jury’s verdicts and order the injunctions.
I. Standard of Review and Legal Principles
¶43 In reviewing a jury’s verdict, we view the evidence and
reasonable inferences therefrom in the light most favorable to sustaining
the verdict. See, e.g., Romero v. Sw. Ambulance, 211 Ariz. 200, 202, ¶ 2, 119
P.3d 467, 469 (App. 2005). In our review, we search the record “for a
reasonable way to read the verdicts as expressing a coherent view of the
case.” Standard Chartered PLC v. Price Waterhouse, 190 Ariz. 6, 39, 945 P.2d
317, 350 (App. 1996) (citation omitted). In general, we will affirm a verdict
if substantial evidence supports it. Flanders v. Maricopa Cty., 203 Ariz. 368,
371, ¶ 5, 54 P.3d 837, 840 (App. 2002).
¶44 “An injunction may serve to undo accomplished wrongs, or
to prevent future wrongs that are likely to occur.” TP Racing, L.L.L.P. v.
Simms, 232 Ariz. 489, 495, ¶ 21, 307 P.3d 56, 62 (App. 2013) (citations
omitted); see also Armory Park Neighborhood Ass’n v. Episcopal Cmty. Servs. in
Ariz., 148 Ariz. 1, 10, 712 P.2d 914, 923 (1985) (recognizing that a lawful
business may still be enjoined, and affirming an injunction prohibiting a
church from operating a free food distribution program, despite remedial
efforts by the church, because the program had caused an increase in
trespassing and criminal activity, and otherwise constituted a nuisance to a
neighboring community’s homeowners); Burton v. Celentano, 134 Ariz. 594,
597, 658 P.2d 247, 250 (App. 1982) (affirming a preliminary injunction
requiring the removal of a wall diverting water); McQuade v. Tucson Tiller
Apartments, Ltd., 25 Ariz. App. 312, 315, 543 P.2d 150, 153 (1975) (affirming
an injunction prohibiting a neighboring shopping center from holding
Association, and attorneys’ fees in the amount of $1,758,272.73, plus taxable
costs in the amount of $15,686.85, to the Thienes Plaintiffs.
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concerts due to the accompanying loud music, noise, parking problems,
trespassing, and other annoyances).
¶45 We generally review a trial court’s decision to grant injunctive
relief for an abuse of discretion. Flying Diamond Airpark, LLC v. Meienberg,
215 Ariz. 44, 47, ¶ 9, 156 P.3d 1149, 1152 (App. 2007). Although we defer to
the court’s findings of fact unless they are clearly erroneous, we review de
novo the court’s legal conclusions, including the interpretation of a contract.
See id.; Powell v. Washburn, 211 Ariz. 553, 555, ¶ 8, 125 P.3d 373, 375 (2006).
¶46 Because CC&Rs constitute a contract between property
owners as a whole and individual property owners, we review de novo the
interpretation of CC&Rs. Cypress on Sunland Homeowners Ass’n v. Orlandini,
227 Ariz. 288, 297, ¶ 31, 257 P.3d 1168, 1177 (App. 2011). In interpreting
CC&Rs, we read the language used in its ordinary sense, construing it in
light of the circumstances surrounding its formulation, and with the idea of
carrying out its object, purpose, and intent. Id. (citing Powell, 211 Ariz. at
557, ¶ 16, 125 P.3d at 377). “We are not bound by the ‘strict and technical
meaning of the particular words’ in the declaration.” Id. (citing Powell, 211
Ariz. at 556, ¶ 10, 125 P.3d at 376). Instead, “’the function of the law is to
ascertain and give effect to the likely intentions and legitimate expectations
of the parties’ who create the covenants.” Saguaro Highlands Cmty. Ass’n v.
Biltis, 224 Ariz. 294, 296, ¶ 6, 229 P.3d 1036, 1038 (App. 2010) (quoting
Powell, 211 Ariz. at 556–57, ¶ 13, 125 P.3d at 376–77). There is no dispute
that the CC&Rs were created by Sienna/Zenn, the developer of The Refuge,
who is referred to as the Declarant in the CC&Rs. Thus, in interpreting the
CC&Rs, the question is the intent of Sienna/Zenn, the Declarant. See id.
¶47 As with CC&Rs, principles of contract interpretation also
apply to easements. IB Prop. Holdings, 228 Ariz. at 66, ¶ 16, 263 P.3d at 74.
The parol evidence rule prohibits the admission of extrinsic evidence to
vary or contradict the terms of a contract, but such evidence is admissible
to interpret those terms and explain what the parties truly may have
intended. Id. (citing Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148,
152, 854 P.2d 1134, 1138 (1993)). Although a court should consider the
evidence once proffered, the court retains discretion to determine if the
contract language is “reasonably susceptible” to the interpretation offered
by its proponent, and then should limit its use to determining the parties’
intended meaning. See id. (citing Taylor, 175 Ariz. at 154, 854 P.2d at 1140).
“When the provisions of the contract are plain and unambiguous upon their
face, they must be applied as written, and the court will not pervert or do
violence to the language used, or expand it beyond its plain and ordinary
meaning or add something to the contract which the parties have not put
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Decision of the Court
there.” Id. at 66-67, ¶ 16, 263 P.3d at 74-75 (citations and internal quotations
omitted).
II. The Injunctions Relating to the Easements
A. The Golf Club Facilities Easements
¶48 As part of its verdicts, the jury found Appellants prevailed on
the Association’s claims for misuse and overburdening of the Golf Club
Facilities Easements. Nevertheless, the jury recommended an injunction
limiting Appellants’ further use of the Golf Course Facilities Easements.
¶49 The trial court found that, in granting the Golf Club Facilities
Easements in the CC&Rs, Sienna did not intend those limited easements to
facilitate constructing, using, or operating an RV Park or Event Tent.
Instead, Sienna’s purpose, as noted by the court, was to enable the golf club
owner to maintain the golf club:
When the developer created easement rights in favor
of the Declarant over the Association’s property, the
developer did not intend for the Declarant’s easements to be
used for the construction of an RV Park.
The intent of the developer in creating the golf course
facilities easements was to allow the golf course owner to do
maintenance work, for example, if one of the bunkers goes out
of place, you can repair it or if somebody dug up the tee box.
It was intended for the purpose of maintaining the golf club.
The trial court enjoined Appellants “from further use of the Golf Course
Easement for anything other than golf or golf related facilities, which does
not include an RV Park or an Event Tent.”
¶50 In construing the easements and making its determination,
the trial court relied in part on parol evidence—most specifically, the
testimony of John Hankinson, Sienna’s principal—“to clarify and explain
the CC&Rs and to help determine the intent of the parties.” See Johnson v.
Earnhardt’s Gilbert Dodge, Inc., 212 Ariz. 381, 384, ¶ 12, 132 P.3d 825, 828
(2006) (“Under Arizona’s parol evidence rule, [w]here . . . an ambiguity
exists on the face of [a] document or the language admits of differing
interpretations, parol evidence is admissible to clarify and explain the
document. The court may also admit evidence to determine the intention
of the parties if the judge . . . finds that the contract is reasonably susceptible
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THIENES et al. v. CITY CENTER et al.
Decision of the Court
to the interpretation asserted by its proponent.” (internal quotations and
citations omitted)).
¶51 Even without consideration of such evidence, however, our
de novo review of the language of the Golf Club Facilities Easements
convinces us the court did not err. The several subparagraphs of ¶ 4.5 of
the CC&Rs provide for the Golf Club Facilities Easements. Read as a whole,
and in conjunction with CC&R ¶ 1.20, which defines the terms “Golf Club
Facilities” and “Golf Course,” these subparagraphs clearly contemplate
uses associated with and related to the operation, maintenance, repair, and
use of the golf course by the golf course owner and its agents, as well as use
of the course by golfers. The language does not appear to contemplate non-
golf-related uses, and even an expansive reading of the language of these
easements does not reasonably support an interpretation that includes a
motor coach RV Park or concert Event Tent as part of the golf course or golf-
related Golf Club Facilities. Read in their ordinary sense, the object,
purpose, and intent of these subparagraphs was to further the developer’s
intent of supporting and using the golf course. Accordingly, we find no
ambiguity in the plain language of these subparagraphs of the CC&Rs.
Moreover, to the extent there is any ambiguity in the language of the Golf
Course Facilities Easements, the parol evidence introduced at trial fully
comports with the most reasonable interpretation of that portion of the
CC&Rs, was not used to vary the terms of the CC&Rs, and supports the
trial court’s decision. The trial court’s reliance on such evidence was not an
abuse of discretion, and the court did not abuse its discretion in enjoining
Appellants’ use of the Golf Course Facilities Easements to the uses
specifically contemplated by those easements.
B. The Declarant’s Easements
¶52 The jury found the Association prevailed on its claim against
Appellants for misuse and overburdening of the Declarant’s Easements.
Further, the jury recommended an injunction limiting Appellants’ further
use of the Declarant’s Easements.
¶53 The trial court found that, when Sienna granted easements to
the Declarant over the Association’s roads via the CC&Rs, Sienna did not
intend for these easements to facilitate constructing or operating an RV
Park. Accordingly, the trial court enjoined Appellants “from further use of
the Declarant Easement for anything other than selling or marketing of lots
within the community owned by the Declarant.”
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Decision of the Court
¶54 Our de novo review of the language of the Declarant’s
Easements convinces us the court did not err. The Declarant’s Easements
are provided for in the subparagraphs of ¶ 5.3 of the CC&Rs. Read in
context and in conjunction with ¶ 1.42, these limited easements allowed the
developer (Sienna/Zenn) and its assigns “to maintain sales or leasing
offices, management offices and models throughout” the community
property (which did not include the golf course or golf-related facilities)
while developing and marketing The Refuge community. The easements
also allowed the developer to do such things as place advertising signs in
common areas, restrict parking for the purpose of marketing unsold home
lots, and use property owned by the Declarant to maintain, repair, and
construct improvements in common areas and lots owned by the Declarant.
Nothing in the language of the Declarant’s Easements provides for the
Declarant or its assigns to use or access the golf course or golf club property.
Moreover, in reading the CC&Rs as a whole, we conclude that once the
developer turned the common areas over to the Association on the
transition date, see ¶ 1.46, the only remaining purpose of the Declarant’s
Easements was to allow the developer or its assigns access to sell any
remaining unsold home lots. We find no ambiguity in the plain language
of these subparagraphs of the CC&Rs, and even assuming arguendo some
ambiguity exists, the parol evidence introduced at trial fully supports the
trial court’s findings and conclusions, and our interpretation of that portion
of the CC&Rs. The trial court’s reliance on such evidence was not an abuse
of discretion, and the court did not abuse its discretion in enjoining
Appellants’ use of the Declarant’s Easements to the uses specifically
contemplated by those easements.31
III. The Injunction Related to the RV Park
¶55 The jury found Appellees prevailed on their joint claims
against Appellants for private nuisance, and the Association prevailed on
its claims against Appellants for private nuisance and nuisance (Event
Tent).32 The jury did not sign advisory Verdict Form 12, which would have
31 Further, even if the language of the Declarant’s Easements and Golf
Club Facilities Easements could somehow be construed as allowing
Appellants and their visitors access to the RV Park and Event Tent,
substantial evidence presented at trial supports the conclusion that the trial
court’s easement injunctions could still be upheld based on the resultant
nuisance activity surrounding those uses.
32 As previously recognized, however, Appellants prevailed on
Appellees’ joint claims for public nuisance.
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Decision of the Court
recommended requiring Appellants to completely remove the RV Park and
Event Tent and fully restore the golf course to its previous condition.
Further, as part of Verdict Form 23, the jury in its advisory capacity
recommended against an injunction prohibiting hosting public events and
concerts at the Event Tent, but recommended an injunction against further
use and development of the RV Park.
¶56 After considering the evidence presented at trial and the
jury’s verdicts, the trial court found that Appellants’ development and
continued use of the RV Park and Event Tent constituted nuisances:
The Association Parties proved that City Center, by
acting or failing to act, created a condition or permitted a
condition to exist that is offensive to the senses or an
obstruction to the free use of property that interferes with the
comfortable enjoyment of life or property; that City Center
created a condition that affected a substantial amount of
people at the same time; that an ordinary person would be
reasonably annoyed or disturbed by the condition; that the
condition causes harm that is different from the type of harm
suffered by the general public; and the condition is a
substantial factor in causing the harm.
City Center’s business operations, including the RV
Park and proposed changes to the Golf Course to
accommodate the RV Park constitute a nuisance. (See Verdict
Form 20).
City Center’s business operations on the golf course,
including the Event Tent, City Center’s use of the Event Tent,
City Center’s proposed changes to the Golf Course to
accommodate the Event Tent and the parking issues on the
Association’s property caused by events held at the Event
Tent all constitute separate and distinct nuisances. (See
Verdict Form 22).
After considering the jury’s recommendations, the trial court enjoined
Appellants “against further use and development of the RV Park.”
¶57 The trial court’s conclusions and decision to order injunctive
relief based on nuisance are fully supported by the evidence presented at
trial, the jury’s verdicts, and the court’s own findings. Also, the court’s
December 17 ruling makes clear the court carefully considered the jury’s
advisory verdicts and recognized it was not constrained by those verdicts.
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Decision of the Court
Further, contrary to Appellants’ representations, the court considered
Appellants’ argument that injunctive relief was inappropriate and weighed
the utility of that relief against the burden. Rather than rely on contract
terms or an implied covenant to enjoin the continued use and development
of the RV Park, the court relied on the substantial evidence supporting the
conclusion that Appellants’ use of the RV Park constituted a nuisance.
Moreover, rather than enjoining Appellants’ entire business, the court
fashioned a compromise remedy that allowed Appellants to continue to
operate their Event Tent despite evidence and the court’s conclusion that
Appellants’ use of the Event Tent also constituted a nuisance. The court’s
decision to enjoin the RV Park was based on its implicit conclusion that the
RV Park constituted a greater nuisance and implicated greater security
concerns for homeowners and the Association. The court noted that
Appellants (and their agents and visitors) had consistently misused the
easements and failed to follow the Association’s rules, and had failed to
provide adequate security, despite the trespassing and other problems
created by their business.33 The court also noted “the existence of the RV
Park has affected the ‘value’ of the original purchasers’ lots,” and concluded
that “further expansion of the RV Park is untenable.” Substantial evidence
supports the court’s findings and conclusions, and we find no abuse of
discretion in the court’s decision to enjoin Appellants’ further use and
development of the RV Park.34
IV. The Trial Court’s Award of Costs and Attorneys’ Fees
¶58 In their consolidated appeal, Appellants challenge the trial
court’s awards of attorneys’ fees and costs to Appellees, and that Jerry and
Cindy Aldridge are personally liable for such expenses. Appellants first
maintain the court erred by finding the Aldridges personally liable for the
conduct of their business entities because insufficient evidence was
presented to pierce the corporate veil – most specifically, evidence that City
33 Moreover, although the RV Park might not be a prohibited use of
Appellants’ property under the County’s zoning restrictions, substantial
evidence was presented that it does not comport with the nature and
character of the community, or the intent of the original developer and lot
owners.
34 In their briefing, Appellants contend that the injunctive relief
provided by the court was inappropriate, and argue that the availability of
money damages was a sufficient remedy. We reject this argument, noting
that, at all material times, Appellees consistently sought injunctive relief,
not money damages.
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Decision of the Court
Center and Information Solutions were the alter ego of the Aldridges and
that observance of the businesses’ separate legal status would sanction a
fraud or permit injustice. See, e.g., Cammon Consultants Corp. v. Day, 181
Ariz. 231, 233, 889 P.2d 24, 26 (App. 1994) (citing Emp’rs Liab. Assurance
Corp. v. Lunt, 82 Ariz. 320, 323, 313 P.2d 393, 395 (1957) (recognizing that a
corporate fiction will be disregarded upon the concurrence of two
circumstances: (1) when the corporation is, in fact, the alter ego of an
individual or a few individuals, and (2) when the observance of the
corporate form would sanction a fraud or promote injustice)).
¶59 As we have previously noted, on Special Verdict Form 11, the
jury found the Aldridges personally liable for any claims on which the jury
found City Center and Information Solutions liable. The trial court adopted
that advisory finding, and concluded as follows:
Jerry and Cynthia Aldridge were and continue to be
the controlling owners and managers of City Center and
Information Solutions and control the foregoing entities so
that they have no separate mind, will or existence. Jerry and
Cynthia Aldridge used said control to violate a positive legal
duty and commit an unjust act in violation of Plaintiffs’ rights,
which violations and acts are the proximate and direct cause
of Plaintiffs’ injuries. Therefore, disregarding the entities’
separate legal status is necessary to prevent injustice.
¶60 We find no error. Appellants do not contend and the record
does not indicate the jury was improperly instructed on the applicable law
regarding piercing the corporate veil. Having been properly instructed, it
was entirely within the province of the jury to answer the advisory question
submitted to it. We decline to vacate that verdict or the subsequent finding
by the court, both of which are supported by substantial evidence and
reasonable inferences therefrom, including but not limited to the Aldridges’
own testimony.35
35 We also reject Appellants’ argument that the court erred in finding
the Aldridges personally liable for the Association’s costs and attorneys’
fees as well as those of the Thienes Plaintiffs. Appellants acknowledge “the
Association joined the Thienes Plaintiffs’ claims as part of the consolidation
below,” and the record is clear that the trial court granted the Association’s
motion to intervene as a plaintiff in the Thienes Plaintiffs’ case. Moreover,
even were we to construe the jury’s advisory finding on Special Verdict
25
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Decision of the Court
¶61 In deciding to award costs and attorneys’ fees to Appellees,
the trial court concluded Appellees were the prevailing parties both on their
claims against Appellants and on Appellants’ claims against them. That is
substantially correct; however, the court further concluded that the claims
in the matter arose out of contracts and covenants, express and implied,
including the CC&Rs,36 and as the overall prevailing parties, Appellees
were entitled to their attorneys’ fees pursuant to A.R.S. § 12-341.01. This
finding appears contrary in part to the jury’s verdict in favor of City Center
on Appellees’ breach of contract claim, and we have previously noted that,
to the extent the court apparently adopted the jury’s additional verdict
finding the existence of an implied restrictive covenant, the court erred. See
supra note 27, at ¶ 38. For this reason, and for the reasons mentioned below,
we remand the issue of the costs and attorneys’ fees awards to the trial court
for recalculation.
¶62 Appellants also raise numerous other challenges to the
awards, arguing that many of the costs and fees awarded were not properly
recoverable as costs or attorneys’ fees, unrelated to the case, supported by
vague documentation, etc. It appears several of Appellants’ arguments in
this regard may be correct; however, in light of our decision to remand the
awards as noted above, we do not analyze these additional challenges, but
trust that on remand the trial court will carefully review Appellees’ requests
for costs and fees, and properly consider the objections raised by Appellants
in its recalculation of the awards. See, e.g., Ahwatukee Custom Estates Mgmt.
Ass’n v. Bach, 193 Ariz. 401, 402-04, ¶¶ 6-12, 973 P.2d 106, 107-09 (1999)
(“Allowing a party to recover non-taxable costs under the guise of
attorneys’ fees would undermine the legislative intent expressed in A.R.S.
§ 12-332.”). Similarly, with respect to Appellants’ argument on appeal that
the awards did not identify the applicable interest rate, such issue can be
clarified by the trial court on remand.
Form 11 in the limited manner advocated by Appellants (which we do not),
that finding did not preclude the court from holding the Aldridges
personally liable. See generally Wooldridge Constr. Co. v. First Nat’l Bank of
Ariz., 130 Ariz. 86, 88, 634 P.2d 13, 15 (App. 1981) (recognizing that a trial
court is not bound by an advisory jury’s findings).
36 As we have recognized, CC&Rs constitute a contract between
property owners as a group and individual property owners. See Cypress
on Sunland Homeowners Ass’n, 227 Ariz. at 297, ¶ 31, 257 P.3d at 1177.
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Decision of the Court
V. Costs and Attorneys’ Fees on Appeal
¶63 Appellants and Appellees request costs and attorneys’ fees on
appeal pursuant to A.R.S. §§ 12-341, 12-341.01, and 12-342, and Rule 21,
ARCAP.37 Appellants also cite ¶ 4.11 of the CC&Rs. In our discretion, we
award taxable costs and an amount of reasonable attorneys’ fees on appeal
to Appellees, contingent upon compliance with Rule 21, ARCAP.
CONCLUSION
¶64 The trial court’s orders granting injunctive relief are affirmed.
The trial court’s awards of costs and attorneys’ fees are vacated, and the
matter is remanded for a recalculation of those awards.
AMY M. WOOD • Clerk of the Court
FILED: AA
37 Rule 21, ARCAP, is a procedural rule that does not provide a
substantive basis for an award of attorneys’ fees. See Tilley v. Delci, 220 Ariz.
233, 239, ¶ 19, 204 P.3d 1082, 1088 (App. 2009) (citation omitted).
27