Le Canard v. Thorpe ( 2021 )


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  •                       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    UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
    LE CANARD INC, et al.,
    Plaintiffs/Appellants,
    v.
    FRANK S. THORPE, et al.,
    Defendants/Appellees.
    No. 1 CA-CV 20-0679
    FILED 11-30-2021
    Appeal from the Superior Court in Maricopa County
    No. CV2017-007412
    The Honorable Pamela S. Gates, Judge
    AFFIRMED
    COUNSEL
    Law Firm of Richard T. Treon, Phoenix
    By Richard T. Treon
    Counsel for Plaintiffs/Appellants
    Porter Law Firm, Phoenix
    By Robert S. Porter
    Counsel for Defendants/Appellees
    LE CANARD, et al. v. THORPE, et al.
    Decision of the Court
    MEMORANDUM DECISION
    Judge David D. Weinzweig delivered the decision of the Court, in which
    Presiding Judge Peter B. Swann and Judge Paul J. McMurdie joined.
    W E I N Z W E I G, Judge:
    ¶1            Le Canard, Inc., Randall Andrus and Dana Andrus appeal
    from an adverse judgment on their claims for anticipatory breach of
    contract and interference with a business expectancy, and from the superior
    court’s award of attorney fees to the Thorpe Revocable Trust (“Trust”).
    Because the judgment is supported by substantial evidence, we affirm.
    FACTS AND PROCEDURAL BACKGROUND1
    ¶2           In December 2003, Randall Andrus joined a real estate
    venture with Frank Thorpe and Kenn Francis, forming PRA/LB, LLC
    (“PRA”). Andrus owned 20% of PRA through Le Canard; Thorpe owned
    20% through the Thorpe Revocable Trust (“Trust”); and Francis owned the
    rest through Pacific Investments Limited Partnership and Pacific Realty
    Advisors, Inc. Le Canard and the Trust each invested $133,000 in PRA.
    ¶3             PRA acquired a membership interest in Broadway 101
    Venture, LLC (“B101”), a second venture formed to acquire and develop
    72.5 acres of land near Broadway and Dobson Roads in Mesa. B101 had
    acquired the parcel from Motorola in April 2004, and needed to demolish
    several older buildings standing on it. PRA was responsible for all
    demolition and environmental remediation and was promised some of the
    land for its efforts. Andrus often worked on site as PRA’s representative.
    ¶4           Then came the Great Recession of 2008, and Andrus needed
    cash. He turned to Thorpe. They negotiated a Membership Interest
    Purchase Agreement dated March 12, 2009, under which the Trust acquired
    Le Canard’s stake in PRA for $131,000. But Le Canard retained an option
    to repurchase that stake. To exercise the option, Le Canard was required to
    repay the Trust’s $131,000 purchase price, plus 15% interest. The option
    1     After a bench trial, this court views the facts in the light most
    favorable to affirming the trial court’s judgment. Ariz. Biltmore Hotel Villas
    Condos. Ass’n v. Conlon Grp. Ariz., LLC, 
    249 Ariz. 326
    , 329, ¶ 3 (App. 2020).
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    LE CANARD, et al. v. THORPE, et al.
    Decision of the Court
    clause required Le Canard to exercise the option “prior to or
    simultaneously with” two events, both tied to PRA’s anticipated land
    acquisition from B101, including (1) PRA’s sale of that land, or (2) “upon
    the expiration of the loan” PRA needed ”to finance the acquisition of [that
    land] (or any extension or replacement thereof).” To preserve the option,
    Le Canard also needed to cover any capital contributions required of a 20%
    stakeholder “within 45 days following notice.”
    ¶5           Just weeks later, in late March 2009, the B101 development
    was completed, and B101 conveyed 18 acres of the development (the “Real
    Property”) to PRA. To finance the deal, PRA borrowed $1,500,000 from
    Reliance Bank of Missouri. SunWest Bank later acquired the loan from
    Reliance Bank in February 2011 and pushed the maturity date to January
    2014.
    ¶6             By 2013, Andrus understood the substantial value of Le
    Canard’s option. Thorpe and Andrus remained in touch. In November
    2013, Thorpe updated Andrus on the status of PRA’s loan, explaining the
    loan was set to mature on January 31, 2014, and unless PRA secured an
    extension, it would owe $1,150,000: “As you can see there is a possibility we
    will have to come up with a considerable amount of cash.” Thorpe added
    that PRA would “wait to pay [the bank] either when we close the
    construction loan (approx[imately] April) or we will pay it off ourselves.”
    Andrus asked for a meeting with Thorpe to “go over the options that I have
    come up with that best works for everyone,” adding that his “ultimate goal
    would be to stay in for everything to the very end but I do not know what
    form that will be.”
    ¶7            Around six weeks later, on January 8, 2014, SunWest Bank
    sent notice to PRA that the loan would mature on January 23. Thorpe
    emailed Andrus: “I guess you and I need to talk to see how [Le Canard is]
    going to fund [its] interest.” Thorpe followed up by email on January 25,
    informing Andrus: “I received notice today that our loan was due on
    [January 23].” That same day, Andrus and Thorpe met to discuss Le
    Canard’s options.
    ¶8             The Trust repaid PRA’s loan on January 28 in exchange for a
    promissory note from PRA and a deed of trust on the Real Property. Kenn
    Francis later explained the Trust repaid the loan because PRA would have
    otherwise been required to issue a capital call.
    ¶9          More emails were exchanged on January 29. Thorpe wrote:
    “As we discussed on the phone yesterday, we have to pay off the Sunwest
    3
    LE CANARD, et al. v. THORPE, et al.
    Decision of the Court
    [sic] loan since it matured on 1/23/14. We are paying it off on 1/30/2014.
    The payoff amount is $1,151,656.47. In addition, we are probably going to
    have some other cash calls to pay for real estate taxes & insurance. I know
    this is not what you wanted to hear, and we are not happy about it, too.
    Although, we have all known this was a possibility.” Andrus responded:
    “I know the situation and I am working on a solution. I spoke to two people
    yesterday and I am making appointments for two more as soon as I can. I
    thought this would be the last thing that would happen based upon the
    feedback from the lender so I did not have any plan for this. I am going to
    try and get it done as soon as I can.”
    ¶10           By January 2014, the option price for Le Canard to reacquire
    its former interest in PRA was around $270,000, after interest. If a cash call
    was needed to repay the loan, Le Canard would also be responsible for a
    capital contribution of $230,000. Andrus said the option clause “requires
    any cash calls to be within 45 days of request. I am sure you would like for
    something sooner and that is what I am trying to do.” PRA never issued a
    cash call.
    ¶11           Months later, in May 2014, Le Canard had still not tendered
    the option price, but Andrus told Thorpe he was looking for a lender.
    Thorpe said it was too late because the option had “long ago expired,” when
    the Trust repaid PRA’s loan. Thorpe added: “You have known since
    January of this year that our existing loan was called and a new one was
    placed. As per our agreement, that triggered the expiration of your option.
    This is why I kept you in the loop for the previous year about the possibility
    of the loan expiration.”
    ¶12           This lawsuit followed. Randall Andrus, his wife Dana, and
    Le Canard sued Frank Thorpe, his wife Michelle, and the Trust in May 2017,
    asserting several claims. After discovery and summary judgment, only two
    claims remained: (1) Le Canard’s breach of contract claim against the Trust,
    and (2) Randall and Dana Andrus’ and Le Canard’s tortious interference
    with business expectancy claim against the Trust and Frank Thorpe.
    ¶13           A three-day bench trial was held on those claims. The court
    admitted over 120 exhibits and heard testimony from four witnesses,
    including Andrus and Thorpe. A few months later, the superior court
    issued its findings of fact and conclusions of law, dismissing both claims
    with prejudice. Andrus and Le Canard appealed. We have jurisdiction. See
    A.R.S. §§ 12-2101(A), -120.21.
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    LE CANARD, et al. v. THORPE, et al.
    Decision of the Court
    DISCUSSION
    ¶14            On appeal from a bench trial, we review the superior court’s
    legal conclusions de novo and defer to its findings of fact unless clearly
    erroneous. Town of Marana v. Pima Cnty., 
    230 Ariz. 142
    , 152, ¶ 46 (App.
    2012). We consider the evidence in the light most favorable to upholding
    the court’s ruling. 
    Id.
     And we affirm the court’s judgment if correct for any
    reason. FL Receivables Tr. 2002–A v. Ariz. Mills, L.L.C., 
    230 Ariz. 160
    , 166, ¶
    24 (App. 2012).
    I.     Breach of Contract: Anticipatory Repudiation
    ¶15           Le Canard argues the superior court erroneously entered
    judgment for the Trust on Le Canard’s claim for breach of contract. Le
    Canard contends the Trust breached the option agreement by anticipatory
    repudiation in May 2014, when Thorpe told Andrus that Le Canard’s option
    had “long ago expired.” Thorpe counters that Le Canard’s option to
    repurchase the PRA stake had already expired in late January 2014, when
    the Trust repaid PRA’s loan.
    ¶16           A breach of contract action may be maintained when a party
    anticipatorily repudiates a contract by a “positive and unequivocal
    manifestation” that it will not perform when the time for performance
    becomes due. Diamos v. Hirsch, 
    91 Ariz. 304
    , 307 (1962) (citations omitted).
    Anticipatory repudiation “giv[es] rise to a claim for damages and also
    excus[es] the necessity for the non-breaching party to tender performance.”
    Thomas v. Montelucia Villas, LLC, 
    232 Ariz. 92
    , 95, ¶ 9 (2013) (citations
    omitted). But the non-breaching party cannot recover damages for
    anticipatory repudiation unless it “would have been ready and willing to
    have performed the contract, if the repudiation had not occurred.” Id.; see
    also Restatement (Second) of Contracts § 254(1) (1981) (“A party’s duty to
    pay damages for total breach by repudiation is discharged if it appears after
    the breach that there would have been a total failure by the injured party to
    perform his return promise.”).
    ¶17          After hearing evidence and argument, the superior court
    rejected Le Canard’s anticipatory repudiation claim on two independent
    grounds. First, the court found that Le Canard’s “option expired on
    January 28, 2014, when the loan obtained to finance the acquisition of the
    property expired.” Second, even assuming the option remained active, the
    court found that Le Canard could not prevail because “[t]he credible
    testimony established that neither Le Canard nor Randall Andrus were
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    LE CANARD, et al. v. THORPE, et al.
    Decision of the Court
    financially able to perform Le Canard’s obligations under the Option
    Agreement in January 2014 or in May 2014.”
    ¶18            We need only reach the court’s second ground to affirm its
    judgment. Even assuming the option agreement had not expired, and even
    assuming the Trust repudiated the option agreement in May 2014, Andrus
    still needed to prove that Le Canard could have exercised the option, which
    required Le Canard to pay around $500,000, including $270,000 to
    repurchase the PRA stake from the Trust and $230,000 in capital
    contributions to PRA. See Thomas, 232 Ariz. at 95, ¶ 9.
    ¶19           The court found that neither Andrus nor Le Canard were
    financially able to exercise the option agreement in May 2014, and
    reasonable evidence supports that factual finding. Andrus conceded he did
    not have enough cash to repurchase PRA’s interest in May 2014, and instead
    needed to find a loan. Nor did Andrus present any evidence of a lender
    prepared to extend the loan to Le Canard. The record has no documents
    from or communications with potential lenders, no loan agreements, no
    lender testimony, no lines or letters of credit, and no evidence of due
    diligence to secure a large commercial loan. And while Andrus claimed he
    could have borrowed $500,000, the court heard and rejected his testimony
    as not credible and uncorroborated. Beyond that, Andrus himself had
    declared personal bankruptcy less than 18 months earlier, casting doubt on
    his ownership interest in and ability to secure financing for Le Canard.
    Because Le Canard has shown no reversible error, we affirm the superior
    court’s judgment.2
    II.    Tortious Interference with Business Expectancy
    ¶20            Andrus and Le Canard also challenge the superior court’s
    entry of judgment on their tortious interference claim. A claim of tortious
    interference requires (1) the existence of a contract; (2) the defendant’s
    knowledge thereof; (3) a breach of the contract induced by the defendant;
    (4) the absence of privilege or justification; and (5) damages. Marmis v. Solot
    Co., 
    117 Ariz. 499
    , 501 (App. 1977).
    ¶21          After trial, the superior court found the “evidence did not
    credibly establish that [Frank] Thorpe individually interfered or acted
    2      Andrus contends that because he requested equitable relief, he only
    needed to offer to perform. Not so. To claim equitable relief, a party must
    show they were “ready, willing and able” to perform. Nelson v. Cannon, 
    126 Ariz. 381
    , 385 (App. 1980).
    6
    LE CANARD, et al. v. THORPE, et al.
    Decision of the Court
    improperly, causing any breach.” The record has reasonable evidence to
    support that finding. To begin, Thorpe reminded Andrus about Le
    Canard’s option and kept him apprised of the loan’s status. Nor did Thorpe
    make false promises about the option. Because Le Canard has not shown
    clear error, we affirm the superior court’s judgment.
    III.   Attorney Fees
    ¶22           Andrus and Le Canard appeal the superior court’s award of
    attorney fees to the Trust. The court has broad discretion to award attorney
    fees under A.R.S. § 12-341.01. Vortex Corp. v. Denkewicz, 
    235 Ariz. 551
    , 562,
    ¶ 39 (App. 2014). We discern no abuse of discretion. Andrus argues the
    award should be reversed based on “Plaintiffs[‘] destitute financial
    circumstances,” but he offers no legal authorities in support. He does not
    argue the award was unreasonable and, in fact, the superior court
    subtracted nearly $100,000 from the Trust’s attorney fee request. Nor does
    he argue the court lacked authority to award attorney fees and costs.
    CONCLUSION
    ¶23          We affirm. Thorpe and the Trust are awarded their
    reasonable costs on appeal as the prevailing party upon compliance with
    ARCAP 21.
    AMY M. WOOD • Clerk of the Court
    FILED: AA
    7
    

Document Info

Docket Number: 1 CA-CV 20-0679

Filed Date: 11/30/2021

Precedential Status: Non-Precedential

Modified Date: 11/30/2021