Iftiger v. Weston
1 CA-CV 15-0385
| Ariz. Ct. App. | Oct 20, 2016Background
- The Iftiger Family Trust owned the Foot Hill Mine; Gyro Stone (Sweet and Hamilton) entered a 2006 agreement giving Gyro Stone a 60% working interest and the Trust 40%; Gyro Stone would bear startup costs until production reached 1 oz/ton.
- Gyro Stone uncovered a gold vein and by June 4, 2007 produced 2.3 ounces from two tons, prompting Hamilton to declare the startup period over and that sharing of costs/profits should commence.
- After that declaration, trustees (James and Jeffrey) changed locks, used intimidation (including firearms), removed ore stockpiles, and mining equipment was later vandalized or stolen; Scharlotte (former trustee) transferred the mine to an LLC and was later removed as trustee in a separate action.
- Gyro Stone (later represented by Sweet and then assignee Weston) sued; the Trust failed to respond to requests for admission and default was entered against the Trust only; a default hearing followed where the superior court dismissed most of Weston’s counterclaims and third-party claims but awarded $20,000 for conversion (mill) and denied other relief.
- On appeal Weston challenged (1) lack of notice that the default hearing would address liability and dismissal of third-party claims, (2) the court’s findings on breach and damages despite Trust admissions/default, and (3) punitive damages; the Court of Appeals affirmed the conversion award, reversed dismissal of contract-based claims against the Trust, and remanded for damages determinations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the default hearing proceeded without proper notice on liability and extinguished third-party claims | Weston: court lacked notice it would decide liability; jury trial/right to present liability evidence; third-party claims improperly dismissed | Trust/other parties: default and procedure were proper | Waived on appeal re: third-party claims (no timely objection/motion for relief). Court declines to reverse dismissal of third-party claims for procedural defects but preserved issues against the Trust tied to admissions/default |
| Effect of Trust’s admissions and default on breach-of-contract liability | Weston: Trust’s failures and admissions conclusively establish liability; court erred in finding no breach | Trust: court could evaluate credibility and deny relief despite admissions | Court: admissions under Rule 36(c) are conclusive if not withdrawn; trust was bound by admissions and default — reversal of dismissal of breach-based claims and remand on damages |
| Damages recoverable (including loans and post-startup costs) and cap on recoverable amount | Weston: seeks full claimed damages ($141,340) and punitive damages | Trust: argued insufficient proof and court previously found no breach-caused damages | Remanded: trial court must determine damages based on evidence for period after June 4, 2007; award $5,200 for admitted loans; cap recovery on remand for breach-related costs to no more than $47,497.02; punitive damages may be considered by trial court |
| Conversion award and proof of ore stockpiles | Weston: court mis-evaluated evidence on ore stockpiles and conflated profitability with conversion value | Trust: evidence insufficient and testimony not credible | Affirmed the $20,000 conversion award for the mill; trial court’s credibility findings re: ore stockpiles are supported by substantial evidence, so stockpile damages were not awarded |
Key Cases Cited
- Patterson v. Maricopa County Sheriff’s Office, 177 Ariz. 153 (App. 1993) (standard for de novo review of rules interpretation)
- Reed v. Frey, 10 Ariz. App. 292 (1969) (default is judicial admission of right to recover; damages must be proven if unliquidated)
- Cont’l Bank v. Wa-Ho Truck Brokerage, 122 Ariz. 414 (App. 1979) (failure to seek relief from admissions binds party to them)
- Loiselle v. Cosas Mgmt. Grp., LLC, 224 Ariz. 207 (App. 2010) (unjust enrichment/quasi-contract unavailable when adequate legal remedy exists)
- Sw. Soil Remediation, Inc. v. City of Tucson, 201 Ariz. 438 (App. 2001) (deference to trial court factual findings; legal issues reviewed de novo)