Fisher v. Rondo Pools ( 2019 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
AMY S FISHER,
Plaintiff/Appellant,
v.
RONDO POOLS AND SPAS INC,
Defendant/Appellee.
No. 1 CA-CV 18-0343
FILED 5-16-2019
Appeal from the Superior Court in Maricopa County
No. CV2014-010050
The Honorable Kerstin G. LeMaire, Judge
AFFIRMED
COUNSEL
Mark J. DePasquale, PC, Phoenix
By Mark J. DePasquale
Co-Counsel for Plaintiff/Appellant
Law Office of Scott E. Boehm, PC, Phoenix
By Scott E. Boehm
Co-Counsel for Plaintiff/Appellant
Lang & Klain, PC, Scottsdale
By George H. King, Michael W. Thal
Counsel for Defendant/Appellee
FISHER v. RONDO POOLS
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Diane M. Johnsen delivered the decision of the Court, in
which Judge Michael J. Brown and Judge Jennifer M. Perkins joined.
J O H N S E N, Judge:
¶1 Amy Fisher appeals the judgment in favor of Rondo Pools
and Spas, Inc. following a jury trial. For the following reasons, we affirm.
FACTS AND PROCEDURAL BACKGROUND
¶2 Fisher contracted with Rondo in November 2013 to redesign
and remodel her swimming pool. Rondo began working on the job the
following month. Multiple disputes soon arose, and Fisher terminated the
contract on January 22, 2014. Bob Rondeau, the founder of Rondo, met with
Fisher later that month and the parties exchanged emails, but no resolution
was reached. Fisher filed a complaint against Rondo with the Arizona
Registrar of Contractors ("ROC"), then hired a different contractor,
Brandenburg Pools, to complete her pool renovation.
¶3 Fisher sued Rondo in July 2014. She alleged consumer fraud,
breach of contract, breach of implied warranty, and breach of the covenant
of good faith and fair dealing. Broadly speaking, Fisher alleged Rondo
misrepresented its expertise and failed to perform in a professional and
workmanlike manner. Fisher asked for damages of $17,723.63 (the deposit
she had paid), plus the additional amount she paid to have the work
completed by Brandenburg, and punitive damages. Rondo filed a
counterclaim alleging Fisher breached by wrongfully terminating the
contract.
¶4 Following a six-day trial, a jury found against Fisher on all her
claims and in favor of Rondo on its counterclaim. The court awarded
$4,005.64 in damages to Rondo, plus $6,935.72 in taxable costs, $286,047.86
in attorney's fees and $13,361.44 in sanctions pursuant to Arizona Rule of
Civil Procedure 68, totaling $310,350.66. Fisher timely appealed. We have
jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution,
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and Arizona Revised Statutes ("A.R.S.") sections 12-120.21(A)(1) (2019) and
-2101(A)(1) (2019).1
DISCUSSION
A. Jury Instructions.
¶5 The primary issue for the jury was whether Rondo materially
breached in a manner that allowed Fisher to terminate the contract. On that
issue, the superior court instructed the jury as follows:
A breach of contract occurs when a party fails to perform an
obligation under the contract. Not every breach of contract is
a material breach. A material breach occurs when a party fails
to perform a substantial part of the contract or one or more of
its essential terms or conditions or fails to do something
required by the contract which is so important to the contract
that the breach defeats the very purpose of the contract. Amy
Fisher has the burden of proving that any breach was
material.
Material Breach . . . When determining whether [Rondo]
materially breached the contract, you may consider [Rondo's]
ability to cure or fix the alleged breach and whether [Rondo]
can make any reasonable assurances that it would cure the
alleged breach.
¶6 Whether a jury instruction correctly states the law is a matter
we review de novo. A Tumbling-T Ranches v. Flood Control Dist., 222 Ariz.
515, 533, ¶ 50 (App. 2009). But the superior court "has considerable
discretion in deciding" what instructions are necessary, and we will affirm
its decision absent a clear abuse of discretion. Cotterhill v. Bafile, 177 Ariz.
76, 79-80 (App. 1993). On review, we read jury instructions "as a whole with
an eye toward determining whether the jury was given the proper rules of
law to apply in arriving at its decision." Thompson v. Better-Bilt Aluminum
Prods. Co., 187 Ariz. 121, 126 (App. 1996). We consider all the instructions
together to determine whether they misled the jury. Levitt v. First Am. Title
Ins. Co., 159 Ariz. 359, 364 (App. 1988). When an appellant challenges the
instructions, we will reverse a verdict only if an erroneous instruction
1 Absent material revision after the relevant date, we cite the current
version of a statute or rule.
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prejudiced the appellant's rights. Am. Pepper Supply Co. v. Fed. Ins. Co., 208
Ariz. 307, 309, ¶ 7 (2004).
¶7 Fisher argues the superior court erred by effectively
instructing the jury that Rondo could cure a breach when the contract
contained no such right. But the court did not instruct the jury the contract
gave Rondo a right to cure. Instead, the instruction merely told the jury
that, in determining whether Rondo materially breached the contract, it
could consider Rondo's "ability to cure or fix the alleged breach" and
whether Rondo "can make any reasonable assurances that it would cure the
alleged breach."
¶8 Under Arizona law, although the victim of a material breach
may terminate the contract without performing, "the victim of a minor or
partial breach must continue his own performance." Zancanaro v. Cross, 85
Ariz. 394, 400 (1959). As applied here, this rule means that Fisher lawfully
could terminate the contract only if she could show that Rondo materially
breached. Fisher correctly contends that whether the contract gave Rondo
a right to cure is an issue of contract interpretation that was for the court.
But the court did not err by directing the jury that in deciding whether
Rondo had materially breached, it could consider, among other things,
whether Rondo had the ability to cure and whether it gave assurances that
it would do so. In that manner, the instruction focused the jury on the key
factors bearing on the materiality of a breach, which is a question of fact.
See Maleki v. Desert Palms Prof'l Props., L.L.C., 222 Ariz. 327, 333, ¶ 27 (App.
2009) ("the record contains substantial evidence that [appellee] did not
materially breach the lease").
¶9 The Arizona Supreme Court has adopted the factors set out
in Restatement (Second) of Contracts ("Restatement") § 241 (1981) as a
"workable standard to evaluate the triviality of a breach." Found. Dev. Corp.
v. Loehmann's, Inc., 163 Ariz. 438, 446 (1990). One of the factors in
Restatement § 241 is "the likelihood that the party failing to perform or to
offer to perform will cure his failure, taking account of all the circumstances
including any reasonable assurances." Restatement § 241(d). In the
instruction at issue here, the superior court largely mirrored the language
of Restatement § 241(d). Cf. Rev. Ariz. Jury Instr. (Civil) Contract 9 (5th ed.
2015) (the superior court "may . . . want to instruct the jury on some or all
of the factors" of § 241 that can help the jury evaluate whether a breach is
material) (citing Restatement § 241).
¶10 Fisher cites Mining Investment Group, LLC v. Roberts, 217 Ariz.
635 (App. 2008), in which this court declined to apply Restatement § 241 in
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FISHER v. RONDO POOLS
Decision of the Court
determining whether to affirm summary judgment on the issue of whether
a party materially breached a contract. Id. at 639-40, ¶¶ 17-18. That case is
inapposite, however, because the contract there – unlike the contract here –
"expressly provide[d] for the materiality of the breach at issue." Id. at 639,
¶ 17.
¶11 Although Loehmann's applied Restatement § 241 in a dispute
between a landlord and a tenant, Fisher does not persuasively argue the
Restatement provision is not likewise appropriate here. She contends the
notion of cure is unworkable in a construction contract and posits that a
purchaser could be "stuck" with an incompetent contractor so long as the
contractor was willing to try to fix its mistakes. But neither § 241 nor the
instruction the court gave turns on empty promises. The issue is whether
the breaching party "will cure his failure," Restatement § 241(d), or, as the
court put it here, whether Rondo could "cure or fix the alleged breach" or
could reasonably assure Fisher that it would do so.
¶12 More broadly, the factors of § 241 reflect well-established
"notions of equity and common sense" that courts will not enforce a
forfeiture for "trivial or insignificant" breaches. Loehmann's, 163 Ariz. at
445-46; see also Zancanaro, 85 Ariz. at 400; Restatement § 241 cmt. a ("The
standard of materiality applies to contracts of all types and without regard
to whether the whole performance of either party is to be rendered at one
time or part performances are to be rendered at different times."). And the
Restatement explicitly contemplates application of § 241 to construction
cases. See Restatement § 241 cmt. b, d, illus. 1, 2, 4, 6 & 7; see also Tyro Indus.,
Inc. v. Trevose Const. Co., 737 F. Supp. 856, 865-67 (E.D. Pa. 1990) (citing
Restatement § 241 in considering whether subcontractor on highway
project could have cured its breach even though contract provided no right
to cure); Ranta Const., Inc. v. Anderson, 190 P.3d 835, 841-42 (Colo. App. 2008)
(affirming trial court's application of Restatement § 241 in determining
whether breach of construction contract was material); Oak Ridge Const. Co.
v. Tolley, 504 A.2d 1343, 1348 (Pa. 1985) (citing Restatement § 241, finding
homebuilder materially breached by stopping work, noting homebuilder
"gave no indication that the company would cure its failure to perform").
¶13 Fisher next argues the cure instruction was confusing and
misleading because it was inconsistent with three other instructions the
court gave the jury. The first of the three other instructions was labeled
"Claims and Elements" and addressed Rondo's counterclaim, which alleged
that Fisher breached the contract by wrongfully terminating even though
Rondo was "ready, willing, and able to perform." The instruction stated:
"[Rondo] claims [Fisher] wrongfully terminated her contract with [Rondo]
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FISHER v. RONDO POOLS
Decision of the Court
that she failed to allow it to cure any claimed deficiencies, and that she
failed to mitigate her damages. [Rondo] must prove that they had a right
to cure." Fisher does not argue on appeal that this instruction on Rondo's
counterclaim was incorrect, but argues it conflicts with the cure instruction
discussed above because the latter, she asserts, told the jury it can consider
a "right to cure" in determining the materiality of a breach. We see no
conflict. Rondo's counterclaim effectively alleged Fisher was liable for
anticipatory breach of the contract, and the jury was correctly instructed
that to recover, Rondo would have to prove it was "ready, willing and
offered to perform its duties under the contract if [Fisher] had not refused
to perform."
¶14 Fisher also argues the cure instruction discussed above
conflicted with the following two instructions addressing material breach:
A material breach occurs when a party fails to perform a
substantial part of the contract or one or more of its essential
terms or conditions.
* * *
A material breach occurs when a party fails to perform a
substantial part of the contract or one or more of its essential
terms or conditions or fails to do something required by the
contract, which is so important to the contract that the breach
defeats the very purpose of the contract.
Fisher does not challenge the substance of these instructions, but argues
they conflicted with the cure instruction. As with the "Claims and
Elements" instruction, however, Fisher has not shown reversible error
resulting from any perceived conflict.
¶15 Examining the instructions together, "the jury was given the
proper rules of law to apply in arriving at its decision." Thompson, 187 Ariz.
at 126. The superior court did not abuse its discretion in giving the
instructions, which, viewed as a whole, were not so confusing or
misleading that they prejudiced Fisher. See Cotterhill, 177 Ariz. at 80; Am.
Pepper, 208 Ariz. at 309, ¶ 7.
B. Admissibility of Evidence.
¶16 Fisher also argues the superior court erred by admitting
certain evidence. We review the admission of evidence for an abuse of
discretion but interpret the Arizona Rules of Evidence de novo. State v. Gill,
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Decision of the Court
242 Ariz. 1, 3, ¶ 7 (2017). The superior court abuses its discretion when it
commits an error of law. State v. Romero, 239 Ariz. 6, 9, ¶ 11 (2016). We will
not grant a new trial due to an evidentiary error, however, absent both an
abuse of discretion and resulting prejudice. Hudgins v. Sw. Airlines, Co., 221
Ariz. 472, 480, ¶ 10 (App. 2009).
1. Rondo's settlement offers.
¶17 Fisher first challenges the admission of testimony and emails
reflecting Rondo's offers to settle the dispute after Fisher canceled the
contract. Fisher contends the evidence was inadmissible under Arizona
Rule of Evidence 408, which bars evidence of settlement negotiations
offered to prove the validity or amount of a disputed claim.
¶18 The first of the two exhibits at issue is Exhibit 143, an email
Rondeau sent Fisher in which Rondeau reiterated an offer to refund Fisher
$10,110 of her $17,723 deposit. At trial, Rondo introduced Exhibit 143 while
cross-examining Fisher about her efforts to hire Brandenburg to complete
the pool and her filing of a complaint with the ROC. Rondo's counsel did
not examine Fisher about settlement talks or the amounts stated in the
email, and instead, quickly moved on to other matters. Fisher also
challenges the admission of Exhibit 159, an undated letter (Fisher asserts it
was written in February 2014) from Bob Rondeau to Fisher. The letter
recounted some of the project's history, detailed Bob Rondeau's efforts to
resolve Fisher's issues and complained that Fisher would not allow Rondo
to complete work. The letter then recounted Rondo's prior refund offers,
which Fisher rejected, and concluded by making a "final" offer to settle the
matter for a refund of $8,358.35 plus tax. On direct examination, Rondeau
testified about the exhibit and recounted that he offered Fisher a refund of
roughly $9,000 to settle the dispute.
¶19 Although the challenged evidence constituted offers of
settlement, Rule 408 bars such evidence only when offered "either to prove
or disprove the validity or amount of a disputed claim or to impeach by a
prior inconsistent statement or a contradiction." Ariz. R. Evid. 408. Fisher
does not contend Rondo offered the settlement negotiation evidence to
prove or disprove the substance of any claim at issue in the trial. Instead,
she argues Rondo offered the evidence to show that Fisher unreasonably
refused to settle the case in the hopes of a windfall punitive-damage award.
As she puts it, the problem was that the jurors were allowed to know that
they were sitting through a six-day trial just before the December holidays
on a dispute that could have been avoided if Fisher had accepted Rondo's
$9,000 settlement offer.
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¶20 We conclude Fisher's contention about the purpose for which
the evidence was offered does not implicate Rule 408. See Dannenbring v.
Wynn Las Vegas, LLC, 907 F. Supp. 2d 1214, 1219-20 (D. Nev. 2013) (no
violation of Federal Rule of Evidence 408 when settlement evidence was
admitted to prove retaliatory motive); ESPN, Inc. v. Office of Comm'r of
Baseball, 76 F. Supp. 2d 383, 412-13 (S.D.N.Y. 1999) (settlement statements
admissible to show a party's "improper motive"); Resolution Tr. Corp. v.
Blasdell, 154 F.R.D. 675, 681 (D. Ariz. 1993) (no violation of Federal Rule of
Evidence 408 when defendant offered evidence not "to prove liability, but
rather to reveal to the court what it perceives as the [Plaintiff's] improper
retaliatory motive" for the suit). See also State v. Green, 200 Ariz. 496, 498, ¶
10 (2001) ("When interpreting an evidentiary rule that predominantly
echoes its federal counterpart, we often look to the latter for guidance.").
2. Admission of the Brandenburg email.
¶21 Fisher finally argues the superior court erred in admitting
Exhibit 151 because it was inadmissible hearsay and by permitting Rondeau
to testify about it because he was not a disclosed expert.
¶22 Exhibit 151 is an email chain between Rondeau and Dave
Brandenburg of Brandenburg Pools, which completed Fisher's pool after
Fisher canceled her contract with Rondo. In an email, Rondeau tells
Brandenburg:
I am reaching out to you again for your help on my lawsuit
with Ms. Fisher. . . . I realize that the pool remodel that you
completed for Ms. Fisher is nothing like the contract that we
signed with her however, I have to prove this in court. I have
attached a 28 line item contract that we signed with Ms. Fisher
for your review. . . . It would be a great help if you could
estimate what Brandenburg Pools would charge to complete
the Rondo Pools contract per the terms of our contract.
Rondeau then instructed Brandenburg to "[p]lease bid the following" line
items, which Rondeau identified as "[w]ork to be completed." In the copy
of the exhibit admitted at trial, next to each line item, there is a response
(presumably from Brandenburg or someone else at his company) listing a
price along with clarifying comments where relevant.
¶23 At trial, over Fisher's objection, Rondo introduced Exhibit 151
during Rondeau's direct examination. After tracing through the prices
recited in the email, Rondeau testified that the pool Brandenburg
eventually built for Fisher was not the same pool she had asked Rondo to
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build, and "if Ms. Fisher had just given Brandenburg her contract with
Rondo and said I want you to finish this project, it would have cost her less
than had she stayed with Rondo."
¶24 Even if the email was inadmissible hearsay, the record does
not show the error prejudiced Fisher. See Dykeman v. Ashton, 8 Ariz. App.
327, 329 (1968) ("In order to justify the reversal of a case, there must not only
be error, but it must be prejudicial to the substantial rights of the person
assigning this error, and it will not be presumed that an error is prejudicial
so as to require reversal, but the prejudice must appear from the record.").
Rondo offered the email to refute Fisher's claimed amount of damages, but
the jury found against Fisher and in favor of Rondo on Fisher's claim for
breach of contract. See Sheehan v. Pima County, 135 Ariz. 235, 239-40 (App.
1982) (because damages were not awarded, any error in admitting evidence
relating to damages was harmless); Dykeman, 8 Ariz. App. at 329.
¶25 Fisher nevertheless argues Exhibit 151 was prejudicial
because it supported Rondo's "overarching defense that Rondo never
breached, but Fisher only sued to get a more expensive pool." Fisher,
however, fails to cite a specific instance at trial in which Rondo used Exhibit
151 for any purpose other than to refute Fisher's damage calculations. We
will not "presume[] that an error is prejudicial so as to require reversal" and
in this case, we see no prejudice in the record. Dykeman, 8 Ariz. App. at 329.
¶26 In any event, the record contains other evidence - that Fisher
does not challenge on appeal – supporting the notion that the pool that
Fisher eventually obtained was more elaborate than that which she
contracted with Rondo to build. See Bonine v. Bonine, 90 Ariz. 319, 320 (1961)
(admission of hearsay evidence is not grounds for reversal if there is
sufficient competent evidence to sustain a judgment). For example, Robert
Snyder, a project manager for Brandenburg Pools, testified the pool
Brandenburg built was "completely different" and that comparing the two
pools would be like "comparing apples to golden pears."
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CONCLUSION
¶27 For the reasons set forth above, we affirm the superior court's
judgment in favor of Rondo. Rondo is entitled to its costs on appeal and, in
the exercise of our discretion, we award Rondo its reasonable attorney's fees
pursuant to A.R.S. § 12-341.01(A) (2019), contingent upon compliance with
Arizona Rule of Civil Appellate Procedure 21.
AMY M. WOOD • Clerk of the Court
FILED: AA
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