Green Cross v. Mangisi
1 CA-CV 23-0692
| Ariz. Ct. App. | Oct 8, 2024Background
- In 2012, Green Cross Medical, Inc. (Green Cross) entered into a lease with the John V. Gally Family Protective Trust (the Trust) to cultivate and dispense medical marijuana on the Trust’s Winslow, Arizona, property.
- Shortly after the agreement, the Trust, through its trustee and attorney, revoked the lease, changed locks, and prevented Green Cross from accessing the property, despite legal challenges and an injunction.
- As a result, Green Cross could not participate in the limited state lottery process to obtain the single Winslow dispensary license, harming its business opportunity.
- The Trust alleged the lease was void for illegality under state and federal law, but prior appellate proceedings held the lease enforceable for damages actions.
- On remand, after a bench trial, the superior court awarded Green Cross over $3.5 million in damages plus attorneys’ and expert fees; the Trust appealed on various causation and damages grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Causation of damages | Lease revocation and Trust's actions directly caused exclusion from lottery and lost profits | Intervening acts of attorney/third parties, not Trust’s breach, caused harm | Trust’s actions foreseeably caused damages; agency principles apply |
| Effect of actual lottery outcome | Ex ante damages methodology is proper, lottery result was not predetermined | Only effect of breach: replacement of one losing lottery ball with another | Ex ante approach valid; not a foregone conclusion Green Cross would lose |
| Lost profits calculation | Damages proved with reasonable certainty through expert analysis and business plans | Claimed profits were speculative, Green Cross lacked plans and funding | Substantial evidence supported lost profits; speculative argument rejected |
| Non-profit lost profits/profit distribution | Non-profits can have and recover lost profits; standard damages logic applies | Profits would go to management fees, so not compensable as damages | Non-profits can recover lost profits; Trust’s argument unpersuasive |
Key Cases Cited
- Gilmore v. Cohen, 95 Ariz. 34 (Ariz. 1963) (doubts as to extent of injury should be resolved in favor of innocent plaintiff)
- Rancho Pescado, Inc. v. Nw. Mut. Life Ins. Co., 140 Ariz. 174 (App. 1984) (new businesses can recover lost profits; standard depends on facts)
- SDR Assocs. v. ARG Enters., 170 Ariz. 1 (App. 1991) (damages measured as of date of breach; ex ante analysis appropriate)