Vazirani v. Annexus ( 2017 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
ANIL VAZIRANI, an individual; SECURED FINANCIAL SOLUTIONS,
LLC, an Arizona limited liability company, Plaintiffs/Appellants/Cross-
Appellees,
v.
ANNEXUS DISTRIBUTORS AZ, LLC, an Arizona limited liability
company; RONALD L. SHURTS, an individual; ADVISORS EXCEL, LLC,
a Kansas limited liability company; CREATIVE ONE MARKETING
CORPORATION, a Kansas corporation, Defendants/Appellees/Cross-
Appellants.
No. 1 CA-CV 14-0815
FILED 2-2-2017
Appeal from the Superior Court in Maricopa County
No. CV2009-010331
The Honorable David O. Cunanan, Judge
AFFIRMED IN PART, REVERSED IN PART AND REMANDED
COUNSEL
Dickinson Wright PLLC, Phoenix
By David G. Bray, Todd A Baxter
Counsel for Plaintiffs/Appellants/Cross-Appellees
Ryley Carlock & Applewhite PA, Phoenix
By Rodolfo Parga, Jr., Clarke H. Greger, Andrea G. Lovell
Counsel for Defendants/Appellees/Cross-Appellants Annexus and Shurts
Jennings Strouss & Salmon PLC, Phoenix
By Garrett J. Olexa
Counsel for Defendant/Appellee/Cross-Appellant Advisors Excel
Stinson Leonard Street LLP, Phoenix
By Michael L. Parrish, Brandon R. Nagy
Counsel for Defendant/Appellee/Cross-Appellant Creative One Marketing
MEMORANDUM DECISION
Judge Donn Kessler delivered the decision of the Court, in which Acting
Presiding Judge Kent E. Cattani and Judge Lawrence F. Winthrop joined.
K E S S L E R, Judge:
¶1 Anil Vazirani (“Vazirani”) and Secured Financial Solutions,
LLC (“SFS”) (collectively, “Appellants”), appeal from a series of summary
judgments dismissing their second amended complaint against Annexus
Distributors AZ LLC (“Annexus”) and Ronald L. Shurts (“Shurts”)
(collectively “Annexus Defendants”), Advisors Excel LLC (“Excel”), and
Creative One Marketing Corporation (“Creative”) (collectively,
“Appellees”). Appellees cross-appeal from an order denying portions of
their request for costs. For the reasons stated below, we affirm the superior
court except for its denying an award of mediation costs to Appellees and
remand for further proceedings consistent with this decision.
FACTUAL AND PROCEDURAL HISTORY
¶2 After a series of alleged disparaging remarks made by
Appellees, Appellants brought this action for defamation per se,1 tortious
1 The record does not show that Appellants ever filed an amendment
or sought to assert a defamation claim as opposed to defamation per se
claims. Appellants stated at oral argument on appeal that they had limited
their claim on this theory to one for defamation per se.
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interference with contract, tortious interference with business expectancies,
and injurious falsehood against all the Appellees. Appellants also asserted
a claim of trade libel against the Annexus Defendants. In a second amended
complaint,2 Appellants alleged that SFS was an independent marketing
organization (“IMO”) that contracts with insurance companies to distribute
those companies’ products, including Aviva Life & Annuity Company
and/or its predecessor entities American Investors and AmerUS (“Aviva”).
The complaint alleged that Vazirani, as the president and CEO of SFS,3 was
the main catalyst of SFS and played a key role in its marketing. As
discussed in more detail below, Appellants alleged that the Appellees
sought to have Aviva terminate its relationship with SFS by: (1) Excel
spreading false rumors at a trade meeting in Kansas that SFS and Vazirani
had engaged in illegal conduct in their business leading to a government
investigation and that they would be “shut down”; (2) Creative making
similar statements to Aviva, its parent company; and (3) the Annexus
Defendants falsely disparaging Vazirani to Aviva over an email SFS had
sent out and to a company with whom SFS did business, the Financial
Independence Group (“FIG”), and telling FIG it would have Aviva cancel
Vazirani’s contracts.
¶3 Appellants alleged that based on complaints Aviva had
received about Vazirani’s business practices, Aviva terminated Vazirani’s
at-will contract with Aviva as well as the contracts he had with downline
agents (“Vazirani’s contracts”). The complaint alleged that Aviva falsely
told Vazirani that its decision was based on its need to focus on key core
groups, although it admitted Aviva’s relationship with Vazirani had been
strained since it received complaints from other IMOs about his business
practices. The complaint alleged that after terminating the at-will contract,
Aviva falsely informed Vazirani that it had terminated his contract as part
of an effort to reduce annuity sales and to redirect sales to its life insurance
2 The superior court earlier dismissed a trade libel claim against Excel,
and Appellants expressly state they are not appealing that order. SFS also
stated it is not appealing the order dismissing its defamation per se claim
against Excel. Appellants additionally waived the issue of the trial court’s
dismissal of their claim for injurious falsehood by not addressing it in their
opening brief on appeal. See Dawson v. Withycombe, 216 Ariz. 84, 100 n.11,
¶ 40 (App. 2007) (stating that “an issue preserved on appeal, but not argued
in an appellant’s opening brief, is waived”).
3 Vazirani is the sole member of SFS.
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product lines, which had nothing to do with Vazirani, SFS, or any alleged
communications from Creative, Annexus Defendants, or others.
¶4 While this case was pending, Vazirani, SFS, and another
Vazirani limited liability company, Vazirani & Associates Financial (“the
Heitz plaintiffs”), sued two officers of Aviva, Mark Heitz and Jordan
Canfield (“the Heitz defendants”), in the United States District Court for the
District of Kansas. See Vazirani v. Heitz, 741 F.3d 1104, 1105 (10th Cir. 2013)
(“Heitz”). In that complaint, the Heitz plaintiffs alleged that, in response to
the same conduct of the Appellees alleged here, the Aviva officers
tortiously interfered with Aviva’s contractual relationship with SFS by
terminating the Aviva contract. Id. at 1105-09. The federal district court
granted the Heitz defendants summary judgment, and the federal court of
appeals affirmed. Id. at 1105, 1111. Applying Arizona law to the
interference with contract claim, the Tenth Circuit Court of Appeals (“Tenth
Circuit”) held that “a reasonable juror could not believe that [Aviva’s]
motives for terminating [the Heitz plaintiffs’] contract were [sic] all
unrelated to the business needs of Aviva,” Id. at 1108, 1110-11. Those
business reasons included Aviva’s desire to move out of the annuity market
and focus on its core group and other products.4 Id. at 1109.
¶5 Appellees filed a series of summary judgment motions. First,
Excel moved for summary judgment on the tortious interference claims and
the defamation per se claim. The superior court denied that motion as to
the tortious interference claims, but granted it on the defamation per se
claims, concluding the statements were not defamatory and they did not
relate to SFS. Each defendant then separately moved for summary
judgment on all claims against it. The court again denied the motions as to
the tortious interference claims based on a genuine dispute of material fact,
but it granted the motions on the defamation per se claims, concluding the
relevant statements were not actionable as either trade libel (as to the
Annexus Defendants, which were the only remaining defendant on that
claim), or defamatory under Kansas law. This left only the tortious
interference claims against all defendants.
4 In addition, in 2011, Vazirani & Associates Financial sued Creative,
Excel, and Annexus in a separate action in Arizona based on this same
conduct. The superior court dismissed that complaint as barred by the
statute of limitations,and we affirmed. Vazirani & Assocs. Fin., LLC v.
Advisors Excel, LLC, 1 CA-CV 12-0449, 2013 WL 3009363, at *1 (Ariz. App.
June 13, 2013) (mem. decision).
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¶6 The Appellees moved for reconsideration of their summary
judgment motions on the tortious interference claims based on the Tenth
Circuit’s decision in Heitz. See id. at 1110-11. They argued that Heitz’s
finding that Aviva had business reasons for terminating the Appellants’
contract precluded a finding of any genuine issue of material fact as to
whether the defendants intentionally interfered with plaintiffs’ contract
with Aviva and thereby caused the termination of that contract. See id. The
trial court granted that motion and entered summary judgment for the
Appellees on the tortious interference claims based both upon its review of
the motion and of the previously filed motions for summary judgment, thus
dismissing the remaining claims.
¶7 Appellees then sought an award of taxable costs for expenses
incurred in this case. They requested reimbursement of filing fees,
subpoena and witness fees, court reporter fees, videographer fees, private
mediator fees, and travel expenses. The court awarded less than all the
costs requested without explanation by signing the proposed form of
judgment filed by Vazirani.
¶8 Appellants timely appealed from the judgment. Appellees
timely filed a notice of cross-appeal on taxable costs. This Court has
jurisdiction over the appeal and cross-appeal pursuant to Arizona Revised
Statutes (“A.R.S.”) sections 12-120.21(A)(1) (2016) and 12-2101(A)(1) (2016).5
ISSUES ON APPEAL AND STANDARDS OF REVIEW
¶9 Appellants argue that the superior court erred in granting
summary judgment on their claims of: (1) defamation per se against
Creative and the Annexus Defendants; (2) trade libel as to the Annexus
Defendants; and (3) tortious interference with contract and business
expectancy as to all the Appellees.
¶10 “A trial court should only grant a motion for summary
judgment ‘if the facts produced in support of the claim or defense have so
little probative value, given the quantum of evidence required, that
reasonable people could not agree with the conclusion advanced by the
proponent of the claim or defense.’” Airfreight Exp. Ltd. v. Evergreen Air Ctr.,
Inc., 215 Ariz. 103, 110, ¶ 19 (App. 2007) (quoting Orme Sch. v. Reeves, 166
Ariz. 301, 309 (1990)).
5 We cite to the current version of relevant statutes unless changes
material to this decision have occurred.
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¶11 On appeal, we review summary judgment and questions of
law de novo, see Andress v. City of Chandler, 198 Ariz. 112, 114, ¶¶ 5, 7 (App.
2000), including the application of issue preclusion which is a question of
law, see Campbell v. SZL Props., Ltd., 204 Ariz. 221, 223, ¶ 8 (App. 2003) (issue
preclusion reviewed de novo). We review the evidence and draw
reasonable inferences therefrom in the light most favorable to the party
against whom summary judgment was entered. See Duncan v. Scottsdale
Med. Imaging, Ltd., 205 Ariz. 306, 308, ¶ 2 (2003); Angus Med. Co. v Digital
Equip. Corp., 173 Ariz. 159, 162 (App. 1992). We will affirm the trial court’s
grant of summary judgment when an appellant has not shown “there exists
evidence of genuine issues for trial,” Molever v. Roush, 152 Ariz. 367, 370
(App. 1986), and when the trial court was correct for any reason argued
below and supported by the record, see City of Tempe v. Outdoor Sys., Inc.,
201 Ariz. 106, 111, ¶ 14 (App. 2001) (citation omitted) (“We may affirm
summary judgment even if the trial court reached the right result for the
wrong reason.”).
DISCUSSION
I. Additional Facts Concerning the Parties’ Relationships and the
Alleged Misconduct of Appellees
¶12 Aviva has several distribution partners, one of which is Excel,
a Kansas limited liability company. Creative, a Kansas corporation, also
performs distribution functions for Aviva and is Aviva’s wholly-owned
subsidiary. Aviva has its headquarters and some of its offices located in
Kansas. Aviva’s Executive Vice President of Sales and Distribution Jordan
Canfield (“Canfield”), a resident of Topeka, Kansas, communicated with
the parties out of Aviva’s Kansas office.
¶13 Annexus, an Arizona limited liability company, developed
specialized annuity products with Aviva (“Annexus annuities”) and
created a group of IMOs (“Annexus Group”) with exclusive rights to sell,
market, and distribute the Annexus annuities. To manage the Annexus
Group and to enforce its rules, Annexus negotiated with Aviva a right to
cooperate in selecting agents authorized to sell the Annexus annuities.
¶14 Vazirani contracted with Aviva to sell its annuity products
through all three of Aviva’s distribution channels. Vazirani also executed a
contract to sell the specialized Annexus annuities through FIG, a member
of the Annexus Group. FIG has a place of business in North Carolina. Its
then Senior Marketing Director, Phil Graham (“Graham”), is also a resident
of North Carolina.
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¶15 As discovery disclosed, SFS did not have a contract with
Aviva or with any other insurance company. Vazirani conceded in his
depositions that SFS has no assets, employees, agents, income, never kept
any books or records, never filed any tax returns, and was simply a
marketing name used to market Vazirani & Associates Financial, LLC. In
a deposition taken in Heitz, Vazirani admitted that SFS had no contracts
with downline agents, but filed declarations in this case that SFS did have
such contracts and testified in deposition that SFS contracted with downline
sales agents, providing those agents with marketing materials at no charge.
Vazirani testified in a deposition that SFS had value as a brand. For
purposes of this appeal, we assume that SFS had sufficient existence to
successfully assert the claims made in this action and will refer to SFS and
Vazirani interchangeably unless we expressly limit a reference to either
Vazirani or SFS.
A. Allegedly Defamatory Statements Made by Annexus Defendants
¶16 During a telephone conversation in October 2008, Shurts, the
general partner of Annexus’ sole member, stated to Graham at FIG that: (1)
Vazirani is a “f-----g greaseball”; (2) Vazirani “is a total f-----g scumbag.
Nobody wants to do business with him. For some reason, you guys got
your head up his a--, okay? And he’s toast after today. I mean, they’re
[Aviva] fricking done. They’re [Aviva] so f-----g sick and tired of his f-----g
bull---t.”; (3) “His Aviva’s just getting terminated, too.”; (4) “He is just done
across the board . . . You know, he’s just done. I mean, you know. He’s
just— nobody wants to do business with the guy. I mean, any companies,
but they’re being held hostage at premium, which I’ll vi—I vow to the day
of my death that I’ll never be held hostage to [sic] premium . . . .”; and (5)
Shurts would not “do business with a grease ball like that for a fricking five
point override” (a large commission by industry standards). Shurts had not
met Vazirani prior to this lawsuit and did not know his business practices
outside of Vazirani’s contract to sell Annexus annuities.
¶17 In an October 2008 email, Shurts wrote to Canfield at Aviva
stating: “Let’s terminate this F-----G idiot. I didn’t know that Anil [Vazirani]
could request transfers.” Shurts’ email spurred a conversation later that
same day between two Aviva officers in Kansas. Canfield concluded that
Aviva should terminate Vazirani’s contract to sell any of its products “by
no later than very early November 2008.”
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B. Allegedly Defamatory Statements Made by Excel
¶18 In May 2008, an insurance conference was organized in
Topeka, Kansas. At that meeting, Excel employees allegedly made verbal
statements to unidentified persons that Vazirani and SFS were being
investigated by government regulators for illegal activities and would soon
be shut down. That same month, in response to an accusation by an
executive at Excel that insurance carrier Allianz was considering
terminating Vazirani, an internal Aviva email stated “We will cancel
[Vazirani] as soon as Allianz does.” In July 2008, Excel sent an email to
Canfield at Aviva stating, “Are 50/50 partners now I guess. See if you can’t
get him [Vazirani] out of the Aviva family.” This email was in response to
an alleged prohibited commission split between Vazirani and Matthew
Rettich, an agent terminated by Aviva.
C. Allegedly Defamatory Statements Made by Creative
¶19 In July 2008, Michael Tripses (“Tripses”), the CEO of Creative,
sent an email to Michael Dickerson (“Dickerson”), Aviva’s Vice President
of Sales and Recruiting in Topeka, Kansas, with the subject heading: “RE:
Can you help me get Anil Vazirani’s AVIVA contract terminated?”
¶20 In August 2008, Tripses sent another business email to
Dickerson in which he complained about Vazirani, advising his agents to
report violations of the Investment Advisers Act of 1940 by his former
agents.
¶21 In that same month, Tripses stated in an email to Dickerson:
“This guy is bad for the industry.” Through this email, Tripses also
republished to Dickerson a previous email of the same date sent by Michael
Cajthaml, the Senior Vice President of Creative, in which Cajthaml
explained how Vazirani threatened to report non-compliant agents if they
did not join his company.
II. The Defamation Per Se Claims
¶22 The first dispute between the parties on the defamation per se
claims is whether Arizona law should apply. Vazirani argues that Arizona
law applies to all the communications and that Arizona recognizes
defamation per se claims. Vazirani also seems to argue that some of the
statements could be deemed defamatory in nature, so the court erred in
holding the statements were not actionable as defamation or trade libel.
Appellees argue that Kansas law applies to all the statements and they were
properly dismissed because Kansas does not recognize defamation per se
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and Vazirani failed to show any damages from the alleged statements.
They also argue that none of the statements were defamatory and they were
entitled to a qualified privilege.
¶23 We conclude that Kansas law applies to all statements except
the Annexus Defendants’ statements to FIG in North Carolina. Kansas law
does not recognize defamation per se claims, see Polson v. Davis, 895 F.2d
705, 708 (10th Cir. 1990), and Appellants conceded during oral argument
that they never sought to allege any defamation claims except for
defamation per se. Accordingly, the trial court properly dismissed all of the
defamation per se claims except as to the latter statements to FIG in North
Carolina, to which Arizona law applies, but which were properly dismissed
for other reasons.
¶24 In Arizona, defamation per se presumes pecuniary damages
for statements which “tend to injure a person in his or her profession, trade
or business.” Boswell v. Phx. Newspapers, Inc., 152 Ariz. 1, 6 n.4 (App. 1985),
approved as supplemented, 152 Ariz. 9 (1986).6 As previously noted, Kansas
does not recognize defamation per se. Polson, 895 F.2d at 708. Instead,
Kansas requires that damages be proven as an element of a defamation
claim. Wright v. Bachmurski, 29 Kan. App. 2d 595, 600 (2001); see Zoeller v.
Am. Family Mut. Ins. Co., 17 Kan. App. 2d 223, 229 (1992) (“[A]ny plaintiff
in a defamation action must allege and prove actual damages and may no
longer rely on the theory of presumed damages.”). The choice of law is thus
outcome-determinative. Because Arizona is the forum state, Arizona choice
of law rules will determine whether Kansas’ or Arizona’s substantive law
of defamation applies. See Pounders v. Enserch E & C, Inc., 232 Ariz. 352, 354,
¶ 8 (2013). “We review choice-of-law questions de novo.” Id. at ¶ 6.
¶25 In Arizona, the local law of the state with the most significant
relationship to the occurrence and the parties determines the rights and
liabilities for torts. Garcia v. Gen. Motors Corp., 195 Ariz. 510, 516-17, ¶ 20
(App. 1999); see Restatement (Second) of Conflict of Laws (“Restatement”)
§§ 6, 145 (1971). According to section 149 of the Restatement, in a
defamation action the state
6 Libel per se covers a written “publication which impeaches the
honesty, integrity or reputation of a person . . . and [is] actionable without
proof of special damages because damages are presumed.” Peagler v. Phx.
Newspapers, Inc., 114 Ariz. 309, 316 (1977) (citations omitted).
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where the publication occurs determines the rights and
liabilities of the parties . . . unless, with respect to the
particular issue, some other state has a more significant
relationship under the principles stated in § 6 [of the
Restatement] to the occurrence and the parties, in which event
the local law of the other state will be applied.7
Restatement § 149. “[E]ach communication to a person . . . is considered a
separate publication for choice-of-law purposes.” Id. at cmt. a.; Jaurequi v.
John Deere Co., 986 F.2d 170, 173 (7th Cir. 1993) (analyzing choice-of-law
provisions for each substantive issue separately). However, we conduct a
qualitative analysis of choice-of-law issues and “we [assess] the weight to
be accorded each contact in light of the circumstances of th[e] case.” Garcia,
195 Ariz. at 518, ¶ 23. Accordingly, we must view the presumptive choice
of law for defamation as the state in which the publication occurred in light
of the factors stated in Restatement § 6 which include: (1) the needs of the
interstate and international systems; (2) the relevant policies and interest of
the competing forums; (3) the promotion of justified expectations; (4) the
basic policies underlying the field of law; (5) the certainty, predictability,
and uniformity of result; and (6) the ease of determining and applying the
law of the particular forum. Restatement § 6; Garcia, 195 Ariz. at 518, ¶ 23.
¶26 As the Restatement explains, in most cases when the person
making the allegedly defamatory communication and the person (other
than the person defamed) receiving the communication are in the same
state, the law of that state will control. Restatement § 149 cmt. c. That state’s
law also controls the need to show special damages because the conduct
and publication occurred in the same state, and that state will have the
dominant interest in regulating the defendant’s conduct and in determining
whether the plaintiff should receive compensation. Id. at cmt. b.
¶27 The trial court properly concluded that Kansas law applied to
the claims against Excel and Creative. All of the allegedly defamatory
communications between representatives of Excel, Creative, and Aviva
were originated and published in Kansas. Excel, Creative, and Aviva were
incorporated in Kansas, where they also have their places of business. The
7 “The likelihood that some state other than that where the publication
occurred is the state of most significant relationship is greater in those
relatively rare situations where the state of publication bears little relation
to the occurrence and the parties.” Restatement § 149 cmt. b. However,
that is not the case here as all of the parties conduct business in Kansas.
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officers involved were Kansas residents and created or received the
communications in their Kansas offices.
¶28 Nor can we say that Arizona has a more significant
relationship under Restatement § 6. The needs of the international or
interstate systems will not be hindered or advanced by which state’s law
applies. Garcia, 195 Ariz. at 519, ¶ 27. The basic policies of Kansas and
Arizona are relatively in equipoise. Arizona may have a basic interest in
protecting its citizens from damage to their reputation, but Kansas has a
basic policy in limiting liability of its citizens if the plaintiff cannot show
any damages from the alleged defamation. The third factor, justified
expectations, has little bearing in tort law. Id. at 518, ¶ 24. We may give
greater weight in this context to the next factor, basic policies underlying
the field of law. Id. at 519, ¶¶ 28-29. While Arizona may have a basic policy
in ensuring that its citizens receive compensation when their reputations
are damaged, Kansas has a significant policy in limiting such claims when
no damages can be proven. To the extent we would apply this factor when
all of the actors are in Kansas, the communication and publication occurred
in Kansas, and the business relationship of the parties is in Kansas, this
factor favors applying Kansas law consistent with the presumption of
Restatement § 149. The next factor, uniformity of result, has little bearing
in negligence actions. Id. at 518, ¶ 26. The final factor, ease of determining
and applying the law of the particular forum, has no bearing because
Arizona can easily determine and apply the Kansas law barring defamation
per se actions. Id.
¶29 Since Kansas does not recognize defamation per se claims, the
superior court properly dismissed the defamation per se claims against
those two defendants.
¶30 Turning to the Annexus Defendants, the allegedly libelous
per se email to Kansas resident Canfield originated in Arizona. However,
the email was ultimately published in Kansas, causing the alleged injury to
Vazirani’s reputation in Kansas, and not in Arizona. As the Restatement
explains, when an alleged defamatory statement is communicated from one
state to a recipient other than the defamed person in another state so that it
is published in the other state, the local law of the state where publication
occurs will usually be applied to determine issues relating to the tort.
Restatement § 149 cmt. d. Rationales for that rule are to ensure that the
person who causes injury in a state cannot escape liability imposed by the
local law of that state and because the place of publication is usually readily
ascertainable. Id. However, if the plaintiff does not have a settled
relationship to the state of publication or the “publication of the defamatory
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matter was done in the course of a relationship between plaintiff and
defamer which is centered in the state where the defamer’s act of
communication was done,” then the state in which the defendant acted
might be the state of most significant relationship. Id. Kansas has the more
significant relationship to the occurrence and the parties relative to
Arizona. First, Vazirani had a settled relationship with Aviva in Kansas
where his reputation was arguably injured. Second, Vazirani and the
Annexus Defendants do not have a direct business relationship in Arizona
and any possible relationship between them is centered in Kansas through
Aviva (or in North Carolina through FIG). Consequently, Kansas’ interest
in enforcing its laws against foreign residents causing injury within its
borders is more significant then Arizona’s interest in deterring its residents
from causing injury outside of its borders.8
¶31 Thus, the trial court properly dismissed the defamation per se
claim against the Annexus Defendants as it applied to the email from
Arizona to Kansas.9
8 For the reasons stated supra, ¶ 28, the qualitative factors of
Restatement § 6 do not change the conclusion that Kansas law should apply
to these communications.
9 Although the parties also dispute whether any of the above
statements could be deemed defamatory, we need not reach that issue
because Vazirani never asserted a claim for defamation, but only
defamation per se, and Kansas does not recognize defamation per se. Even
if Appellants had asserted a defamation claim, they failed to show any
damages that resulted from these statements. In his Expert Report on
Damages, Vazirani’s expert witness John J. Gorman calculated only
damages for lost net-profit caused by the termination of contract with
Aviva. Gorman specifically stated that he did not calculate, and Vazirani
did not otherwise specify, “damages for lost goodwill in Mr. Vazirani’s
business, statutory interest, punitive damages, legal fees, or other such
damages that may be appropriate.” We will not consider as purported
damages Aviva’s cancellation of Vazirani’s and his or SFS’ downline
agents’ contracts with Aviva. As we note below in the discussion of the
tortious interference claims, Vazirani’s claims that the Appellees’ allegedly
defamatory statements resulted in the loss of the Aviva contracts are barred
both under the doctrine of issue preclusion because it has already been
determined that Aviva had independent business reasons to terminate
those at-will contracts and because Vazirani could not show any reasonable
possibility those contracts would have continued.
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¶32 This leaves the allegedly slanderous per se telephone
conversation between Shurts, an Arizona resident, and Graham, a North
Carolina resident. Because Graham is not a party to this litigation, North
Carolina has less significant interest to enforce its laws than Arizona, where
the act of communication occurred and where the Annexus Defendants
were incorporated, have a residence, and conduct business. Thus, based on
the Restatement factors discussed above, Arizona would have the most
significant relationship to those communications and the defamation per se
claim can survive under Arizona law if the communication was defamatory
per se and not privileged.
III. Whether the Annexus Defendants’ Statements to FIG are Actionable
¶33 Vazirani argues the trial court erred in finding that the
Annexus Defendants’ statements made to Graham “do not constitute
actionable defamation or libel,” and in granting summary judgment. We
limit our review only to slander per se pursuant to our analysis supra and
pursuant to Vazirani’s Second Amended Complaint.
¶34 To fit within the business category of statements slanderous
per se in Arizona, “the slanderous utterance must prejudice the person in
the profession, trade or business in which he is actually engaged. This
means that the statement must be of or concerning one in his business
capacity.” Modla v. Parker, 17 Ariz. App. 54, 56 (1972).
¶35 In Yetman v. English, 168 Ariz. 71, 79 (1991), our supreme court
established a two-step analysis of when statements are actionable as
defamation. First, the trial court decides whether “a statement is even
capable of [bearing] a defamatory meaning” under all of the circumstances,
and considering the meaning of the words in broad and specific contexts,
the impression created by the words, and the expression’s general tenor.
Burns v. Davis, 196 Ariz. 155, 165, ¶ 39 (App. 1999) (citing Yetman, 168 Ariz.
at 76-79). If a statement is so capable, “the jury then determines whether
the defamatory meaning was actually conveyed.” Id.¶36 Under Arizona law, “[s]tatements that can be interpreted as
nothing more than rhetorical political invective, opinion, or hyperbole are
protected speech, but false assertions that state or imply a factual accusation
may be actionable.” Id.; see Rodriguez v. Panayiotou, 314 F.3d 979, 985 (9th
Cir. 2002) (citation omitted) (“Even if the speaker states the facts upon
which he bases his opinion, if those facts are either incorrect or incomplete,
or if his assessment of them is erroneous, the statement may still imply a
false assertion of fact.”). When an “allegedly defamatory statement could
13
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reasonably be construed as either fact or opinion, the issue should be
resolved by a jury.”10 Breeser v. Menta Grp., Inc., 934 F. Supp. 2d 1150, 1162
(D. Ariz. 2013), aff’d sub nom. Breeser v. Menta Grp., Inc., 622 Fed. Appx. 649(9th Cir. 2015) (quoting Rodriguez, 314 F.3d at 985).
¶37 Vazirani argues that Shurts’ statements to Graham were false
factual assertions implying that Vazirani conducted his business in an
unprofessional and unethical manner and was an undesirable business
partner. Annexus Defendants argue Shurts’ statements were vague, mere
opinions, and did not concern characteristics valuable to Vazirani as a
salesman of annuity products.
¶38 Several of Shurts’ statements to Graham, taken in their totality
and in the context that Shurts was allegedly attempting to persuade
Graham to terminate Vazirani’s contract, are sufficiently factual in nature
and relate to his reputation in the insurance business so as to be reasonably
construed as being “capable of [bearing] a defamatory meaning.” Burns,
196 Ariz. at 165, ¶ 39. Specifically, Shurts’ stated: “Nobody wants to do
business with him . . . And he’s toast after today. I mean, . . . His Aviva’s
just getting terminated, too” and “He is just done across the board . . .
nobody wants to do business with the guy.” Arguably, these statements
could be understood as describing Vazirani as an undesirable business
partner, and thus capable of bearing a defamatory meaning.11 See Reynolds
v. Reynolds, 231 Ariz. 313, 317, ¶ 10 (App. 2013) (holding that in determining
whether a statement could be understood as defamatory, a court should
10 “If the jury finds that a defamatory statement of objective fact
(beyond mere hyperbole) exists, it should then consider actual damage to
[the plaintiff’s] reputation in the real world by measuring the defamatory
aspect of [the statement] by its natural and probable effect on the mind of
the average recipient.” Desert Palm Surgical Grp., PLC v. Petta, 236 Ariz. 568,
579, ¶ 28 (App. 2015) (citations omitted).
11 In contrast, the statements that Vazirani was a greaseball and a
scumbag, supra, ¶ 16, are mere opinion and not capable of being
defamatory. See Breeser, 834 F. Supp. 2d at 1162-63 (holding that the
defendant former employer referring to the plaintiff as a “b--ch,” even if
made in a context in which the recipient might have considered the victim
an incompetent in her job, was insufficient to be more than an opinion
under Arizona law and thus not actionable as defamation).
14
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consider the surrounding circumstances “including the impression created
by the words used and the expression’s general tenor”); compare Ultimate
Creations, Inc. v. McMahon, 515 F. Supp. 2d 1060, 1065-67 (D. Ariz. 2007)
(holding statements concerning former employee of defendant that he was
fired because he was unprofessional in not honoring his contracts were
sufficiently factual and damaging to his reputation in his profession and his
honesty so as to be capable of bearing a defamatory per se meaning), with
Baker v. Tremco, Inc., 917 N.E.2d 650, 658 (Ind. 2009) (statement that former
salesman had “inappropriate sales practices” was too vague to be
construable as defamatory per se). 12
¶39 However, we need not decide whether the statements
described in paragraph 38, supra, are actionable because we agree with the
Annexus Defendants that Shurts’ telephone conversation with Graham was
protected by a qualified privilege.
¶40 The qualified privilege “is based on the social utility of
protecting statements required to be made in response to a legal, moral or
social duty.” Green Acres Tr. v. London, 141 Ariz. 609, 616 (1984). In
analyzing whether a qualified privilege exists, “[t]he court must first
determine whether a privileged occasion arose,” which is a question of law
for the court. Id. The jury will then determine “whether the occasion for
the privilege was abused,” id., “unless only one conclusion can be drawn
from the evidence,” Melton v. Slonsky, 19 Ariz. App. 65, 68 (1973) (citation
omitted). The privilege can be abused “by excessive publication, by use of
the occasion for an improper purpose, or by lack of belief or grounds for
belief in the truth of what is said.” Id.¶41 An abuse through excessive publication results from
“publication to an unprivileged recipient not reasonably necessary to
protect the interest upon which the privilege is grounded.” Lewis v. Oliver,
178 Ariz. 330, 335 (App. 1993). Abuse through “actual malice” occurs when
the defendant makes a statement with knowledge of its falseness or with
reckless disregard of whether it was true or not. Id.¶42 Shurts of Annexus and Graham of FIG shared a duty to
enforce the Annexus Group’s rules governing the sale of Annexus annuities
and who would have the right to market those annuities. Shurts’
communications to Graham related to whether Vazirani should be allowed
12 We cannot say that Shurts’ statements were reasonably related to
SFS to be “of and concerning” SFS. See Ultimate Creations, 515 F. Supp. 2d
at 1064 (citation omitted).
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to continue marketing those annuities and thus was protected by the
qualified privilege. See Aspell v. Am. Contract Bridge League, 122 Ariz. 399,
400 (App. 1979) (holding that a qualified privilege applied to statements
published by bridge club members about disciplining one of the club’s
members); Restatement (Second) of Torts, §§ 594-96. Indeed, comment c of
section 596 of the Restatement (Second) of Torts notes that a partner is
entitled to be told about the discharge of an employee by his fellow partner
and the reasons for his discharge even if it reflects on the character of the
employee in question. The privilege may have been abused when Shurts
discussed Vazirani’s ability to sell other insurance products and Shurts may
have knowingly made a false statement when he claimed that Vazirani’s
contract with Aviva was terminated, while Canfield did not decide to
terminate the Vazirani contract until early November, days after this
telephone conversation took place. However, in responding to the motion
for summary judgment, Vazirani did not argue that the privilege had been
abused based on actual malice or reckless disregard of the truth of the
statements. At trial, Vazirani would have had the burden to show an abuse
of any privilege in response to Annexus’s argument that the statements to
Graham were privileged. See Burns v. Davis, 196 Ariz. 155, 164, ¶ 36 (App.
1999). While Annexus had a duty to point out there was no evidence of
abuse in its summary judgment motion, Nat’l Bank of Ariz. v. Thruston, 218
Ariz. 112, 118-19, ¶¶ 23, 28 (App. 2008), Vazirani’s failure to argue abuse of
the privilege in his response waived that issue, Dugan v. Fujitsu Bus.
Commc’ns Sys., Inc., 188 Ariz. 516, 521 (App. 1997).
¶43 Accordingly, we affirm the trial court’s ruling on Vazirani’s
only remaining claim of slander per se based on the telephone conversation
between the Annexus Defendants and Graham.
IV. Trade Libel Claim against the Annexus Defendants
¶44 For his trade libel claim, Vazirani relied on the same facts as
alleged for his defamation per se claims and argued that Arizona trade libel
laws apply to the Annexus Defendants’ statements. In contrast, the
Annexus Defendants argued that Kansas law applies.
¶45 In Arizona, trade libel involves “the intentional publication of
an injurious falsehood disparaging the quality of another’s property with
resulting pecuniary loss.” Gee v. Pima Cty., 126 Ariz. 116, 116 (App. 1980)
(citation omitted). Special damages are a required element of a trade libel
claim. Id. (holding that summary judgment was proper because
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“appellants failed to allege special damages”). Kansas on the other hand,
does not recognize a trade libel action at all.13
¶46 However, we do not need to decide which law applies. In
either case, Vazirani failed to provide evidence of special damages
supporting his claim for trade libel sufficient to avoid summary judgment.
As noted supra, n.9, Vazirani provided evidence as to damages limited to
the loss of the Aviva contract. As we conclude below that Appellants do
not have a colorable tortious interference claim, Vazirani cannot show
damages from the loss of the Aviva contract. Therefore, his trade libel claim
fails.
¶47 Accordingly, we affirm the trial court’s decision dismissing
Vazirani’s trade libel claim against the Annexus Defendants.
V. The Tortious Interference with Contract and Business Expectancy
Claims
¶48 Appellants’ tortious interference with contract and business
expectancy claims stem from Aviva’s termination of Vazirani’s contracts.
Appellants alleged that Aviva cancelled Vazirani’s contracts as a result of
Appellees’ tortious interference. Appellants argue that the superior court
erred in granting the Appellees summary judgment on these claims based
on issue preclusion (formerly known as collateral estoppel) after the Tenth
Circuit’s decision in Heitz.
13 The most analogous claim is for slander of title, which Kansas courts
define as “a false and malicious statement, oral or written, made in
disparagement of a person's title to real or personal property, causing him
injury.” LaBarge v. City of Concordia, 23 Kan. App. 2d 8, 16 (1996) (citations
omitted). Slander of title is similar to trade libel, “except that the
disparagement in the trade libel goes to the quality of property, rather than
title.” Gee, 126 Ariz. at 116 (citation omitted).
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¶49 The superior court did not err in granting summary judgment
to the Appellees on the interference claims because of issue preclusion and
based on the record in this matter.14
¶50 To establish a prima facie claim for tortious interference with
contract, “a plaintiff must show ‘the existence of a valid contractual
relationship or business expectancy; the interferer’s knowledge of the
relationship or expectancy; intentional interference inducing or causing a
breach or termination of the relationship or expectancy; and resultant
damage to the party whose relationship or expectancy has been
disrupted.’” Miller v. Hehlen, 209 Ariz. 462, 471, ¶ 32 (App. 2005) (quoting
Wallace v. Casa Grande Union High Sch. Dist. No. 82 Bd. of Governors, 184 Ariz.
419, 427 (App. 1995)).
¶51 In Marmis v. Solot Co., 117 Ariz. 499, 502 (App. 1977), the court
concluded that:
Before recovery can be had for interference with [business
expectancy] or for preventing a contract, it must appear that
14 To the extent that Appellants contend the trial court erred in
applying Kansas law on these claims, we conclude that such argument is
misplaced. The court only granted the motions for summary judgment on
the tortious interference claims after considering the Appellees’ argument
based on Heitz in the motion for reconsideration and reviewing the
previously filed motions for summary judgment. The elements for tortious
interference claims in Kansas and Arizona are essentially the same.
Compare Miller v. Hehlen, 209 Ariz. 462, 471, ¶ 32 (App. 2005) (establishing
prima facie claim for tortious interference with contract requires showing
of “the existence of a valid contractual relationship or business expectancy;
the interferer’s knowledge of the relationship or expectancy; intentional
interference inducing or causing a breach or termination of the relationship
or expectancy; and resultant damage to the party whose relationship or
expectancy has been disrupted”), with Rodriguez v. ECRI Shared Servs., 984
F. Supp. 1363, 1366-67 (D. Kan. 1997) (stating the elements essential to
recovery for tortious interference with contract as: “(1) the existence of a
contract between the plaintiff and a third party; (2) the wrongdoer’s
knowledge thereof; (3) his or her intentional procurement of its breach; (4)
the absence of justification; and (5) resulting damage to the plaintiff”).
Accordingly, we will not separately address the issue, as posed by
Appellants, of whether the trial court erred in allegedly applying Kansas
law to the interference claims.
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a relationship or contract would otherwise have been entered
into. It is not necessary that it be absolutely certain that
contracts would have been made were it not for the
interference. [But there must be] [r]easonable assurance thereof
in view of all the circumstances . . . .
Id. (citation and internal quotation marks omitted) (emphasis added).
Similarly, “an action for tortious interference with a business relationship
requires a business relationship evidenced by an actual and identifiable
understanding or agreement which in all probability would have been
completed if the defendant had not interfered.”15 Dube v. Likins, 216 Ariz.
406, 414, ¶ 19 (App. 2007) (quoting Ethan Allen, Inc. v. Georgetown Manor,
Inc., 647 So. 2d 812, 815 (Fla. 1994)) (emphasis added). Thus, for Appellants
to prevail on either tortious interference claim, they have to be able to show
that Appellees’ conduct caused Aviva to breach the existing contract with
Vazirani. In addition, since the Vazirani contracts were cancellable by
Aviva without cause,16 such contracts were at-will, and thus analogous to
prospective contracts. See Restatement (Second) of Torts § 766 cmt. g.
Based upon Appellants’ statements at oral argument, we understand
Vazirani’s prospective business advantage that was allegedly interfered
with were future contracts with potential downline agents to market Aviva
annuities. Therefore, the interference with prospective business advantage
claim rises or falls on whether there was an actionable interference with
Vazirani’s contracts; if Vazirani could not market Aviva annuities, there
was no possibility that any contracts with downline agents to market such
annuities could continue.
¶52 Appellees were entitled to summary judgment on the tortious
interference claims for two reasons. First, based on Heitz, Appellants were
15 On appeal, Appellants contend the trial court erred in requiring
Vazirani to affirmatively prove that his contract with Aviva would have
otherwise continued for any specified time to withstand summary
judgment on his tortious interference claims. The court did not err on that
issue. See Marmis, 117 Ariz. at 502 (stating that plaintiff must show
reasonable assurance of the business expectancy); Dube v. Likins, 216 Ariz.
406, 414, ¶ 19 (App. 2007) (holding that plaintiff must show the business
relationship would have continued “in all probability”).
16 Vazirani’s contracts provided that they could be terminated with or
without cause by either party immediately upon written notice to the last
known address of the other party.
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precluded from proving that any improper conduct caused Aviva to cancel
its contracts with Vazirani and Appellants could thus not prove there was
any reasonable probability that the contract would have continued except
for the Appellees’ conduct. See Heitz, 741 F.3d at 1110-11. Second, the
record in this case independently shows that the Appellees were entitled to
summary judgment on those claims.
¶53 “[I]ssue preclusion[] applies when an issue was actually litigated
in a previous proceeding, there was a full and fair opportunity to litigate
the issue, resolution of the issue was essential to the decision, a valid and
final decision on the merits was entered, and there is common identity of
the parties.” Hullet v. Cousin, 204 Ariz. 292, 297-98, ¶ 27 (2003) (emphasis
added). It is the Appellees’ burden to show that the elements of issue
preclusion have been met. Bayless v. Indus. Comm’n, 179 Ariz. 434, 439 (App.
1993); see also Restatement (Second) of Judgments § 27 cmt. f (1982) (“The
party contending that an issue has been conclusively litigated and
determined in a prior action has the burden of proving that contention.”).
¶54 It is undisputed that the issue of causation was actually
litigated and that Appellants had a full opportunity to litigate that issue in
Heitz. Indeed, one of their claims was that Aviva’s two executives
interfered with Appellants’ contracts with Aviva17 as a result of the same
conduct of Appellees, which they claim here interfered with the Aviva
contracts and caused their termination. Heitz, 741 F.3d at 1105, 1107-08.
¶55 In Heitz, the issue of whether Aviva had business reasons for
terminating Vazirani’s contract and those of his downline agents,
regardless of any conduct by the Appellees, was essential to the Tenth
Circuit’s judgment that Aviva executives did not terminate Vazirani’s
contract for its officers’ purely personal reasons. As the Tenth Circuit
explained in Heitz, regardless of whether the Aviva executives might have
had personal reasons to have Aviva cancel Appellants’ contract based on
Excel’s, Annexus Defendants’, and Creative’s alleged misconduct, Aviva
would have and did cancel that contract for two business reasons. First,
Aviva wanted to focus on core marketing groups so that Aviva could limit
annuity sales and Appellants’ contract with Aviva was to sell annuities. Id.
at 1110. Second, the circuit court explained that Vazirani’s “improper
business practices” “caused problems between Aviva and [its business
17 The main issue in Heitz was whether former Aviva executives were
motivated solely by personal reasons when they terminated Appellants’
contract with Aviva. Heitz, 741 F.3d at 1105.
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partner,] Annexus.” Id. at 1106, 1110-11. Appellants contend these are the
same reasons Aviva cancelled Vazirani’s contracts here.
¶56 As the Appellees explained at oral argument, given the
independent business reasons for Aviva’s decision to terminate Vazirani’s
contracts with Aviva, Appellants are now precluded from showing any
reasonable assurance that the at-will contract with Aviva would have
continued absent the Appellees’ conduct. We agree. Given the Tenth
Circuit’s decision that no triable issue of fact existed on Aviva’s
independent business reason to terminate contracts to focus on annuity
sales, Appellants are precluded from showing that the contract would have
reasonably continued but for the Appellees’ conduct.
¶57 Appellees also met their burden of showing the final two
elements of issue preclusion. Heitz was a valid and final judgment on the
merits of Vazirani and SFS’ claims for tortious interference with contract.
See generally id. at 1104-11. Finally, although Excel, the Annexus
Defendants, and Creative were not parties to Heitz, party commonality is
not required where, as here, the doctrine of issue preclusion is used
defensively. See Campbell, 204 Ariz. at 223, ¶ 10 (“If the first four elements
of [issue preclusion] are present, Arizona permits defensive, but not
offensive use of the doctrine.”).
¶58 To avoid issue preclusion, Vazirani argues this Court is not
bound by the factual findings in Heitz as the real issue in Heitz was whether
the Aviva officers had purely personal motives to have their employer
terminate Vazirani’s contracts. It is not the factual findings from Heitz that
trigger issue preclusion; it is the decision in Heitz that no triable issue as to
the tortious interference claims existed because Aviva had independent
business reasons to terminate Vazirani’s contracts, including Aviva’s
decision to focus on selling non-annuity products through its core groups.
See Heitz, 741 F.3d at 1110-11. Thus, we find inapplicable Appellants’
argument that Heitz is irrelevant because its factual findings do not bind
this Court and because the findings concern a different legal standard.
¶59 Even if we were to conclude that Heitz is not issue preclusive,
Appellants could not prove actionable interference. As previously noted,
Vazirani’s contracts were terminable at will. Given the nature of those
contracts, Appellants had to show a “reasonable assurance” of the business
expectancy18 and/or that the contractual relationship would have
18 See Marmis, 117 Ariz. at 502.
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continued “in all probability,”19 but for Appellees’ alleged tortious
interference.
¶60 In their briefs and at oral argument, all parties agreed that
Aviva had business reasons to terminate Vazirani’s contracts independent
of the alleged tortious interference. While Appellants argue that one of the
independent reasons may have been pre-textual20 and a jury is entitled to
decide whether it was pre-textual, Appellants do not provide sufficient
evidence from which a reasonable jury could conclude they had either a
“reasonable assurance” in their business expectancy with Aviva or that
there was a “probability” the contract would have continued if not for
Appellees’ alleged interference and in spite of Aviva’s stated business
reasons.
¶61 At oral argument, Appellants’ counsel pointed to one
statement in the record he argued created a genuine dispute whether such
a “reasonable assurance” existed to be resolved by the jury; an email
exchange between two Aviva representatives. However, that exchange did
not mention the status of Appellants’ contract otherwise continuing, but
only that one of the Aviva representatives did not “mind cancelling
[Vazirani’s contract] for Ron,” presumably meaning Ron Shurts. The fact
that Aviva terminated thousands of other agents, some of whom were top
earners like Appellants, further supports Aviva’s uncontroverted reasoning
that it terminated Appellants’ contracts as part of its overall effort to focus
on its core groups. Given the standard for surviving summary judgment,
we cannot say that this email exchange created a genuine issue of material
fact. See Airfreight, 215 Ariz. at 110, ¶ 19 (“A trial court should only grant a
motion for summary judgment ‘if the facts produced in support of the claim
. . . have so little probative value, given the quantum of evidence required,
that reasonable people could not agree with the conclusion advanced by the
proponent of the claim . . . .’”) (citation omitted); see also Thruston, 218 Ariz.
at 116, ¶ 20 (citation and internal quotation marks omitted) (party is entitled
19 See Dube, 216 Ariz. at 414, ¶ 19.
20 Appellants argue that Aviva’s reason that it terminated their
contract in an overall effort to focus on its core groups to limit annuity sales
was pretextual because FIG, of which Vazirani was a part, was not also
terminated with Vazirani. However, FIG, unlike Appellants, is a core group
of Aviva; thus, the fact that FIG remains a core group of Aviva is consistent
with Aviva’s reasoning that it wanted to focus on its core groups.
22
VAZIRANI et al. v. ANNEXUS et al.
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to summary judgment if “no reasonable juror could conclude from the
evidence” that the claim could be established). In meeting that standard,
Appellees did not need to affirmatively establish the negative of the
element of the claim. Id. at 117, ¶ 21.
¶62 Without Appellants providing sufficient evidence to support
either of the respective showings, we decline to overlook Aviva’s stated
business reasons.
¶63 It is undisputed that Aviva had the right to terminate
Appellants’ contracts without cause and we will not disregard its reasons
for concluding it was no longer practical to maintain its contract with
Appellants. See Marmis, 117 Ariz. at 503 (stating that an agreement can be
terminated where its purposes have become “impracticable”). Summary
judgment is appropriate where, as here, Appellants have not demonstrated
any genuine dispute of material fact for a jury to resolve. Kadlec v. Dorsey,
224 Ariz. 551, 553, ¶ 12 (2010); Orme Sch., 166 Ariz. at 305-06, 309-10.
Accordingly, we affirm the trial court’s grant of summary judgment in
favor of Appellees on Appellants’ claims of tortious interference with
contract and business expectancy.
VI. Appellees’ Taxable Costs Claims
¶64 On the cross-appeal, Appellees argue the superior court erred
in not awarding them all of their requested costs. They claim that because
the court, without explanation, failed to award costs objected to by
Vazirani, the court must have denied the requests based on Vazirani’s
objections. The excluded costs are for video-recordings of certain
depositions ($7,453), travel expenses (including non-airfare travel
expenditures) associated with certain depositions ($6,425.57), and the costs
for a private mediator ($500). Although the court never explained which
costs it was denying, we infer findings to sustain its judgment. See Elliott v.
Elliott, 165 Ariz. 128, 135 (App. 1990) (internal citation omitted) (stating that
except in cases where a party requests findings of facts, when the basis on
which a court reached a certain conclusion is not clear, the “appellate court
may infer that the trial court has made the additional findings necessary to
sustain its judgment,” and that this “principle applies as long as the
additional findings are reasonably supported by the evidence and are not
23
VAZIRANI et al. v. ANNEXUS et al.
Decision of the Court
in conflict with any of the trial court’s express findings”).21 Since the court
signed the proposed judgment lodged by Vazirani without explanation and
that judgment essentially deleted the costs to which Vazirani objected, we
will infer the court agreed with Vazirani on which costs to deny.
¶65 For the following reasons, we affirm the costs awarded by the
superior court except for its denial of mediation fees.
¶66 Taxable costs are identified in A.R.S. § 12-332(A) (2016).
Unless authorized by statute, litigation expenses cannot be recovered as
costs. Reyes v. Frank’s Serv. & Trucking, LLC, 235 Ariz. 605, 608, ¶ 6 (2014)
(quoting Schritter v. State Farm Mut. Auto. Ins. Co., 201 Ariz. 391, 392, ¶ 6
(2001)). On appeal, we review the trial court’s award of costs for an abuse
of discretion, and we will affirm the award if it has any reasonable basis.
Maleki v. Desert Palms Prof’l Props., LLC, 222 Ariz. 327, 333-34, ¶ 32 (App.
2009). However, we review issues of statutory interpretation de novo.
Schwab Sales, Inc. v. GN Constr. Co., 196 Ariz. 33, 36, ¶ 9 (App. 1998); see
Foster v. Weir, 212 Ariz. 193, 195, ¶ 5 (App. 2006) (stating that whether a
particular expenditure qualifies as a taxable cost is a question of law that
we review de novo).
¶67 Thus, our process of review of taxable costs awards may be
broken into two parts: (1) whether, as a matter of law, the subject
expenditures qualify as taxable costs pursuant to A.R.S. § 12-332(A); and (2)
notwithstanding a finding that the expenditures are deemed taxable costs,
whether the trial court abused its discretion in deciding not to award taxable
costs. As to the latter, we recognize that the trial court may deny an award
of taxable costs where it reasonably makes the discretionary determination
that the underlying expenditures were not both necessarily and reasonably
incurred. See, e.g., Rabe v. Cut & Curl of Plaza 75, Inc., 148 Ariz. 552, 555 (App.
1986) (stating taxable costs include expenses necessarily and reasonably
incurred to obtain adverse expert’s deposition testimony); Fowler v. Great
Am. Ins. Co., 124 Ariz. 111, 114 (App. 1979) (taxable costs include
21 See also John C. Lincoln Hosp. & Health Corp. v. Maricopa Cty., 208 Ariz.
532, 538, ¶ 23 (App. 2004) (citation and internal quotation marks omitted)
(“[I]mplied in every judgment, in addition to express findings made by the
court, is any additional finding that is necessary to sustain the judgment, if
reasonably supported by the evidence, and not in conflict with the express
findings.”).
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“reasonable and necessary travel expenses incurred for the taking of
depositions”).
¶68 As relevant here, A.R.S. § 12-332(A) provides:
A. Costs in the superior court include: . . .
2. Cost of taking depositions. . . .
6. Other disbursements that are made or incurred pursuant to
an order or agreement of the parties.
Id.
A. Video Recording of Depositions in Addition to Obtaining Written
Transcripts of the Same Depositions
¶69 Appellees argue the superior court abused its discretion by
not awarding them their requested costs for video recording of certain
depositions. The relevant video recordings for which the trial court did not
award taxable costs totaled $7,453. We do not agree with Appellees.
¶70 Expenditures for video recording a deposition qualify as
taxable costs. See Reyes, 235 Ariz. at 611, ¶ 20 (quoting A.R.S. § 12-332(A)(2))
(“Expenses associated with properly noticed video-recorded depositions
are undeniably ‘[c]ost[s] of taking depositions.’ As such, they qualify as
taxable costs under the plain language of the statute.”).
¶71 However, notwithstanding their status as taxable costs, we
next inquire as to whether the video cost expenditures were necessarily
incurred and reasonable in amount. See id. at ¶¶ 21, 22 (stating that when a
party has chosen to incur expenses for both written transcripts and video-
recordings of depositions, “the trial court must determine the
reasonableness and necessity of those expenses on a case-by-case basis. . . .
[T]he necessity and reasonableness of both modes of preservation is a
question for the trial court to resolve.”) (emphasis added).
¶72 Appellees argue that the video-recordings were necessary
and reasonable expenditures because: (1) presenting depositions to the jury
through video is more effective; (2) it was necessary to video tape the
deposition testimony of key, out-of-state, non-party witnesses to effectively
use excerpts from their depositions at trial; and (3) it was reasonable and
necessary to obtain video tapes of Vazirani’s deposition, despite the fact
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Decision of the Court
that he is an Arizona resident, to permit an examination of his credibility
and to demonstrate inconsistences in his testimony.
¶73 The superior court did not abuse its discretion. None of
Appellees’ arguments permit us to override a conclusion by the trial court
that the video recordings were not necessarily incurred and/or not
reasonable in amount given the availability of the written transcripts, even
if the recordings may have been more efficacious. Accordingly, we affirm
the trial court’s decision not to award taxable costs for video recordings.
B. Travel Costs
¶74 Appellees argue the superior court erred in not awarding
them their travel costs incurred in connection to certain, primarily out-of-
state depositions. They seek an award of taxable costs for their attorneys
(1) travelling to Kansas to attend Appellants’ depositions of three Excel
principals; (2) non-airfare travel costs such as food and lodging related to
non-party depositions of FIG and Aviva representatives in North Carolina
and Kansas, respectively; and (3) Creative’s instate travel costs to attend
depositions in Kansas.22 We affirm the court’s decision.
¶75 Section 12-332(A)(2) does not distinguish in-state deposition
costs from out-of-state deposition costs. See generally A.R.S. § 12-332;
Schrittter, 201 Ariz. at 392, ¶ 9; Reyes, 235 Ariz. at 609, ¶ 11. “[B]oth in-state
and out-of-state deposition expenses may be recovered as taxable costs
under § 12-332(A)(2) if they are reasonably and necessarily incurred.”
Reyes, 235 Ariz. at 609, ¶ 12 (citing Fowler, 124 Ariz. at 114) (stating that trial
courts have broad discretion in setting the amount of a taxable cost awards
and should consider the need for the expenditure and its reasonableness).
We have construed the statute as permitting the recovery of reasonable
travel expenses for attorneys. See, e.g., Schrittter, 201 Ariz. at 392, ¶ 9;
DeMontiney v. Desert Manor Conval. Ctr., 144 Ariz. 21, 29 (App. 1984)
(upholding the trial court’s characterization of travel expenses that Phoenix
22 Although on cross-appeal Creative sought review of the trial judge’s
denial of costs associated with its counsel’s travel to Palm Desert,
California, for a non-party deposition, Creative withdrew its request for
review as to those costs in its reply brief. We do not review those costs here.
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VAZIRANI et al. v. ANNEXUS et al.
Decision of the Court
attorneys incurred in attending depositions in Yuma as taxable costs under
section 12-332(A)), vacated in part on other grounds, 144 Ariz. 6 (1985).23
¶76 While these travel costs qualify as taxable costs under section
12-332(A), we cannot find that the superior court abused its discretion. The
trial court has great latitude in assessing the amount of recoverable travel
costs to award. Parrish v. Camphuysen, 107 Ariz. 343, 347 (1971); see Fowler,
124 Ariz. at 114. “[O]n appeal we shall not disturb the trial court’s exercise
of discretion absent a showing of clear abuse.” DeMontiney, 144 Ariz. at 29
(emphasis added). The court could have concluded that having all the
attorneys travel to Kansas and North Carolina to take the depositions was
simply unreasonable. This would not be an abuse of discretion.
C. Private Mediator
¶77 Appellees next challenge the superior court’s decision not to
award them costs associated with their share of private mediation expenses.
We reverse the superior court on this cost.
¶78 Section 12-332(A)(6) authorizes as taxable costs a cost award
for “[o]ther disbursements that are made or incurred pursuant to an order
or agreement of the parties.” Id. When dealing with the costs related to
retaining a private mediator, “the relevant inquiry under the statute is
whether the parties agreed to incur the costs, not whether they reached a
specific agreement about how the costs would ultimately be classified.”
Reyes, 235 Ariz. at 612, ¶ 29 (finding that taxable costs were properly
awarded when the parties agreed to incur costs in retaining a private
mediator, but did not address the reasonable and necessary component of
the requisite analysis).
¶79 It is undisputed that the court ordered the parties to attempt
to mediate the dispute and the parties hired a private mediator. Appellants
objected to qualifying the mediator as a referee under § 12-332(A)(3).
However, as Excel pointed out in its reply, mediation costs qualify under §
12-332(A)(6) as a disbursement incurred pursuant to an agreement of the
parties or ordered by the court. Reyes, 235 Ariz. at 612, ¶ 29. On appeal,
Appellants conceded that point, but they argued the parties agreed to
independently incur their pro rata portions of the mediation fee and that
the fee was not necessary. They cite no evidence in the record supporting
23 See, e.g., Schrittter, 201 Ariz. at 392, ¶ 9; see Young’s Mkt. Co. v. Laue,
60 Ariz. 512, 517 (1943) (finding that meals and taxi fare were legitimate
taxable costs in taking depositions).
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VAZIRANI et al. v. ANNEXUS et al.
Decision of the Court
the pro rata division agreement and ignore that the court ordered
mediation, requiring the cost to be incurred. Accordingly, given the limited
and unsupported argument against the mediation fees based on a pro rata
division, the superior court erred in denying the $500 per party mediation
cost incurred.
CONCLUSION
¶80 For the reasons stated above, we affirm the superior court’s
summary judgments for Appellees. We also affirm the superior court’s
rulings on costs except we reverse the court’s denial of the request for costs
for paying the mediator’s fee. We remand the matter for further
proceedings consistent with this decision.
¶81 We will award Appellees’ taxable costs on appeal upon
timely compliance with Arizona Rule of Civil Appellate Procedure 21.24
AMY M. WOOD • Clerk of the Court
FILED: AA
24 Excel and Creative have already filed applications for award of costs
on appeal and no objection thereto was filed. The Court will decide all
applications for costs on appeal after the Annexus Defendants’ filing of a
timely application for costs and any objection thereto or the time for such
application has expired without an application being filed.
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