Atr v. Cec
1 CA-CV 15-0285
| Ariz. Ct. App. | Nov 10, 2016Background
- CEC (landlord) leased retail property under a five-year written Master Lease (May 2008) that incorporated an MOU specifying annual rent increases; ATR became the subtenant/assignee in October 2009 and paid rent until 2012.
- Scott Ayers was CEC’s member/manager; Ayers (or an entity he controlled) had earlier made a $6,828 loan to a third party (the Rayna loan).
- In 2012 ATR agreed to sell its assets to buyer Fiori for $79,000 and sought CEC’s consent to assign and to renew the lease; Ayers conditioned consent on payment of the Rayna loan and claimed ATR owed additional rent/charges.
- Ayers told the buyer he owned ATR’s assets, threatened eviction/locking out, and asserted an alleged (unrecorded) lien; as a result Fiori did not complete the purchase.
- ATR sued CEC and Scott (and Etsuko) Ayers for tortious interference with business expectancy and breach of the implied covenant of good faith and fair dealing; after a bench trial the court awarded ATR $75,000 plus fees and costs.
- On appeal defendants challenged only the contract good-faith claim and personal liability of Ayers; they did not challenge the trial court’s tortious interference finding, which the appellate court held independently supports the judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Tortious interference with business expectancy | CEC/Ayers improperly conditioned lease assignment and renewal on payment of amounts ATR did not owe, asserted improper lien, and threatened eviction, causing the sale to fail | Defendants did not contest this finding on appeal | Affirmed — record supports elements: conditioning consent, improper collection attempts, lien assertion, eviction threats disrupted sale |
| Breach of implied covenant of good faith and fair dealing | CEC/Ayers acted in bad faith by exploiting lease terms and prior loan to block assignment/renewal | Defendants argued as a matter of law CEC did not breach and Ayers cannot be personally liable without veil-piercing/alter-ego | Not addressed on merits — judgment stands on independent tortious interference ground; defendants waived challenge |
| Personal liability of Scott Ayers | ATR sought recovery against Ayers individually for tortious conduct | Ayers argued individual liability required piercing corporate veil or alter-ego showing | Rejected — record shows Ayers’ personal actions supported direct tort liability without veil-piercing; veil arguments waived for appeal |
| Attorneys’ fees on appeal | ATR sought fees under the Master Lease and A.R.S. § 12-341.01 | Defendants sought fees under A.R.S. § 12-341.01 | ATR awarded fees and costs on appeal; defendants’ request denied |
Key Cases Cited
- Ritchie v. Krasner, 221 Ariz. 288 (App. 2009) (appellate briefs must present and support arguments; failure to do so waives issues)
- Antwerp Diamond Exch. of Am., Inc. v. Better Bus. Bureau of Maricopa Cnty., 130 Ariz. 523 (1981) (articulates elements of tortious interference)
- MacMillan v. Schwartz, 226 Ariz. 584 (App. 2011) (issues not raised on appeal are abandoned/waived)
- Warner v. Sw. Desert Images, LLC, 218 Ariz. 121 (2008) (an agent is responsible for his own tortious conduct even when acting for a principal)
- Alosi v. Hewitt, 229 Ariz. 449 (App. 2012) (community liable for intentional torts of a spouse if committed with intent to benefit the community)