MARKHAM v CAHAVA et al, CV-25-0036-PR

Background

Cahava Springs is a residential development whose landowners formed a public revitalization district to finance infrastructure through special assessments and bonds. 1
The district contracted with Markham to build the infrastructure for about $13 million; the landowners were not parties to that contract. 2
After the district stopped paying, Markham obtained an arbitration judgment of about $6.5 million against the district and then sued the landowners for unjust enrichment. 3
The superior court dismissed because Markham had not alleged improper conduct, believing Wang Electric required it. 4
The court of appeals disagreed and reversed, and the supreme court granted review to decide whether Wang Electric's improper-conduct requirement applies outside the landlord-tenant context. 5
The supreme court held that Wang Electric is limited to landlord-tenant-contractor cases and that Markham sufficiently alleged unjust enrichment against the landowners. 6

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does Wang Electric require improper conduct outside landlord-tenant cases? 7	Markham said Wang Electric is limited to tenant-improvement claims.	Landowners said improper conduct is required whenever no direct contract exists.	No; Wang Electric is limited to landlord-tenant-contractor tenant improvements. 8
Did Markham plead unjust enrichment against the landowners? 9	Markham said landowners sought the work, benefited, and paid no one.	Landowners said they lacked privity and did not act improperly.	Yes; the complaint alleged a non-gratuitous benefit sought and retained without payment. 10
Do public-policy concerns bar the unjust enrichment claim? 11	Markham said equitable liability still applies under existing doctrine.	Landowners said liability would destabilize the district financing scheme.	No; the argument was waived and, in any event, premature. 12
Were fees awarded under A.R.S. § 12-341.01(A)? 13	Markham requested fees as the successful party.	Landowners requested fees too.	No; fee requests denied without prejudice because no party yet prevailed. 14

Key Cases Cited

Wang Electric, Inc. v. Smoke Tree Resort, 230 Ariz. 314 (Ariz. Ct. App. 2012) (tenant-improvement unjust enrichment requires improper conduct by the owner 15)
Murdock-Bryant Constr., Inc. v. Pearson, 146 Ariz. 48 (Ariz. 1985) (unjust enrichment turns on whether a benefit was conferred non-gratuitously and retained without payment 16)
Flooring Systems, Inc. v. Radisson Group, Inc., 160 Ariz. 224 (Ariz. Ct. App. 1989) (an owner may be unjustly enriched despite lack of direct privity when it sought work and paid no one 17)
Blue Ridge Sewer Improvement Dist. v. Lowry & Assocs., 149 Ariz. 373 (Ariz. Ct. App. 1986) (equity does not force owners into expenses they chose not to incur 18)
City of Mesa v. Ryan, 258 Ariz. 297 (Ariz. 2024) (de novo review of dismissal presenting issues of law 19)
Coleman v. City of Mesa, 230 Ariz. 352 (Ariz. 2012) (Rule 12(b)(6) dismissal standard and assumption of well-pleaded facts 20)
Keefer v. Lavender, 74 Ariz. 24 (Ariz. 1952) (subcontractor lacking privity generally cannot recover a personal judgment against the owner 21)
DCB Construction Co. v. Central City Development Co., 965 P.2d 115 (Colo. 1998) (owner liability for tenant improvements requires improper conduct 22)
Williamson v. PVOrbit, Inc., 228 Ariz. 69 (Ariz. Ct. App. 2011) (owner's awareness and acquiescence can support unjust enrichment without direct dealings with the subcontractor 23)
A M Leasing, Ltd. v. Baker, 163 Ariz. 194 (Ariz. Ct. App. 1989) (describes typical unjust enrichment cases where the owner pays no one for the work 24)
Commercial Cornice & Millwork, Inc. v. Camel Construction Services Corp., 154 Ariz. 34 (Ariz. Ct. App. 1987) (restitution claim may proceed even without direct subcontractor-owner contract when owner paid no one 25)
Costanzo v. Stewart, 9 Ariz. App. 430 (Ariz. Ct. App. 1969) (owner liable where it knew the subcontractor expected payment and paid no one 26)