1 CA-CV 22-0270
Ariz. Ct. App.Mar 30, 2023Background:
- Mago contracted to buy a Subway franchise; Arizona Escrow was the escrow agent and received a $79,000 deposit to be released at closing.
- An imposter, using an email address nearly identical to the sellers’, sent fraudulent wiring instructions; Arizona Escrow released the $79,000 without telephoning the sellers to verify the account.
- The funds were wired to the imposter’s account and never recovered; the sale failed.
- Mago sued for negligence, breach of fiduciary duty, and breach of contract; the breach of contract claim was dismissed on summary judgment and the other two claims went to a jury.
- The jury allocated 100% fault to Arizona Escrow and awarded $379,000; the superior court denied a new trial, remitted damages to $79,000, awarded prejudgment interest, attorney’s fees, and costs; appeals followed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Allocation of fault under A.R.S. § 12-2506(B) | Jury properly assigned 100% fault to Arizona Escrow. | Statute required the jury to apportion some fault to the imposter. | §12-2506(B) requires consideration of all fault but does not compel assigning a percentage to every considered person; jury could assign 0% to the imposter; denial of new trial affirmed. |
| Prejudgment interest | Mago entitled to prejudgment interest on the liquidated $79,000 from the escrow closing date. | Claim not wholly liquidated because Mago sought consequential damages (lost profits), so interest inappropriate or should be limited. | $79,000 is a liquidated portion; prejudgment interest proper; trial court did not err in starting interest from the escrow-closing date. |
| Attorney’s fees eligibility under A.R.S. § 12-341.01 | Fees recoverable because escrow’s duties to Mago arose from the contractual relationship. | Fees not recoverable because the breach of contract claim was dismissed at summary judgment. | Escrow’s duty to Mago arose out of contract, so § 12-341.01 applies; fee award was permissible. |
| Fee amount and remittitur of damages | Jury’s $379,000 verdict reflects common-sense damages (lost value/opportunity) and should stand. | No evidence supported the extra $300,000 above the $79,000; remittitur proper. | Remittitur to $79,000 affirmed due to lack of evidentiary support for the excess; fee award affirmed but remanded to correct mathematical error (award reduced from $67,750 to $66,750). |
Key Cases Cited
- Rasor v. Nw. Hosp., LLC, 243 Ariz. 160 (Ariz. 2017) (statutory interpretation: ascertain and effectuate legislative intent; plain language controlling)
- State ex rel. Ariz. Dep't of Revenue v. Capitol Castings, Inc., 207 Ariz. 445 (Ariz. 2004) (plain-language rule for statutory construction)
- Gunnell v. Ariz. Pub. Serv. Co., 202 Ariz. 388 (Ariz. 2002) (jury is sole arbiter on apportionment of comparative fault)
- Ogden v. J.M. Steel Erecting, Inc., 201 Ariz. 32 (Ariz. App. 2001) (apportionment principles distinguishing stipulated liability contexts)
- Gemstar Ltd. v. Ernst & Young, 185 Ariz. 493 (Ariz. 1996) (prejudgment interest accrual: general rule is from date claim becomes due; special rule for unconditional money debts)
- Alta Vista Plaza, Ltd. v. Insulation Specialists Co., Inc., 186 Ariz. 81 (Ariz. App. 1995) (different elements of a claim may become liquidated at different times)
- Marcus v. Fox, 150 Ariz. 342 (Ariz. App. 1985) (definition of "liquidated" claim for prejudgment interest purposes)
- Schweiger v. China Doll Restaurant, Inc., 138 Ariz. 183 (Ariz. App. 1983) (fees may include work on unsuccessful but intertwined theories)
- Soto v. Sacco, 242 Ariz. 474 (Ariz. 2017) (trial court’s remittitur role; modify verdict sparingly but act as a "thirteenth juror" when damages are exaggerated)