Sholes v. Fernando
228 Ariz. 455
| Ariz. Ct. App. | 2011Background
- Oasis at Wild Horse Ranch, LLC formed in 1999 with multiple family members listed as owners ( Judy, Raynu, Nihal, Eleanor, Russell, and Mary ) holding twenty percent or greater interests.
- Purchase funds for the Oasis property came from various sources and management of Oasis was largely by Raynu and Judy after formation.
- In 2006, the Sholes and Fernandos engaged in extensive litigation over Oasis ownership and management; prior partial judgments narrowed the dispute to ownership among Russell, Mary, Bruce, Raynu, and Judy.
- After a nine-day jury trial, the advisory jury found that Judy and Raynu contributed over $300,000 in services and that Russell and Mary, Raynu, and Judy had capital contributions shaping ownership.
- The trial court adjudicated Oasis ownership as 50% to Russell and Mary, 25% to Raynu, and 25% to Judy; Bruce was found to have no Oasis ownership interest and his assets were traced through trusts relating to Camino Verde.
- For the Camino Verde house, the court held title partly in constructive trust for Bruce’s creditors and partly in resulting trust for Judy, based on the alleged scheme to shelter Bruce’s assets.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Judy and Raynu have 25% interests in Oasis | Sholes contend insufficient evidence to support 25% each. | Fernandos contend substantial evidence shows agreed capital contributions and services. | Sufficient evidence supports Judy and Raynu each owning 25%. |
| Law of the case binding the trial court | Law of the case bound the court to prior ruling on capital contributions. | Law of the case not absolute; the court may reconsider with changed evidence. | Law of the case not binding; court could reconsider based on differing facts/evidence. |
| Authority to recognize capital contributions for services without a written promise | § 29-702(A) requires written promise; services alone cannot justify ownership. | § 29-701(A) allows capital contributions including services; promissory estoppel may apply. | Ownership valid under § 29-701; promissory estoppel can enforce promises. |
| Bruce's alleged abandonment of ownership interest | Bruce contributed cash toward Oasis; claimed ownership via that contribution. | Bruce never had an ownership agreement; no entitlement to Oasis interest. | Bruce had no ownership interest; substantial evidence shows no agreed exchange. |
| Camino Verde house ownership and jurisdiction to decide | Issue not raised in pleadings; trial court lacked jurisdiction to decide. | Issues consented or waived via Rule 15(b) and pretrial submissions; trial court could decide. | Issue waived/consented; trial court could decide resulting/constructive trust at issue. |
Key Cases Cited
- Hammoudeh v. Jada, 222 Ariz. 570 (Ariz. 2009) (standard of review for factual findings)
- Nordstrom, Inc. v. Maricopa Cnty., 207 Ariz. 553 (Ariz. 2004) (substantial evidence review; deference to trial court)
- Double A.A. Builders, Ltd. v. Grand State Constr. L.L.C., 210 Ariz. 503 (Ariz. 2005) (promissory estoppel and equitable remedies in construction contracts)
- Turley v. Ethington, 213 Ariz. 640 (Ariz. 2006) (constructive/trust principles for property acquired to shield creditors)
- Toth v. Toth, 190 Ariz. 218 (Ariz. 1997) (resulting trust arises from purchase money supplied by a party)
- Contempo Constr. Co. v. Mountain States Tel. & Tel. Co., 153 Ariz. 279 (Ariz. 1987) (promissory estoppel and equitable enforcement concepts)