Rаlph THOMAS and Carolee Thomas, husband and wife, Plaintiffs/Appellees, v. MONTELUCIA VILLAS, LLC, a Delaware limited liability company, Defendant/Appellant.
No. CV-12-0156-PR
Supreme Court of Arizona, En Banc.
June 14, 2013.
302 P.3d 617
BRUTINEL, Justice.
“to ‘guide future decisions’ as well as to ‘guide police, unify precedent, and stabilize the law.‘” Weisler, 35 A.3d at 979 (quoting Thompson, 516 U.S. at 114-15, 116 S.Ct. 457). In that regard, I have concerns similar to those recently expressed by Chief Justice Roberts in McNeely: “A police officer reading this Court‘s opinion would have no idea—no idea—what the Fourth Amendment requires of him, once he decides to obtain a blood sample from,” in this case, a juvenile DUI arrestee to ensure that the juvenile‘s consent to a blоod draw is voluntary. 133 S.Ct. at 1569 (Roberts, C.J., concurring in part and dissenting in part). The majority here says that “[i]f the arrestee is a juvenile, the youth‘s age and a parent‘s presence are relevant, though not necessarily determinative, factors that courts should consider in assessing whether consent was voluntаry under the totality of the circumstances.” Supra ¶ 18. The Court also refers generally to juveniles’ relative immaturity, and specifically to Tyler‘s interactions with the deputy and his fluctuating emotional states during the arrest. Supra ¶¶ 14, 20.
¶ 36 But faced with the not uncommon scenario presented in this case, a rеasonable officer, before drawing blood pursuant to the juvenile‘s ostensibly valid consent, surely will now wonder whether he or she must first take steps to have a parent notified and present, and inquire about the juvenile‘s maturity, general comprehension levels, and emotional status, lest the juvenile‘s consent later be deemed involuntary. Those individualized, unpredictable variables afford little guidance and certainty to law enforcement officers, school administrators, parents, minor drivers, or juvenile courts. Nor does such unpredictability advance the overarching purpose of the implied consent law—“to remove from the highways of this state drivers[, including juvenile motorists,] who are a menace to themselves and to others because they operate a motor vehicle while under the influence of intoxicating liquor” or drugs. Campbell v. Superior Court, 106 Ariz. 542, 546, 479 P.2d 685, 689 (1971); see also Carrillo, 224 Ariz. at 465 ¶ 13, 232 P.3d at 1247; cf. Statе v. Randy J., 150 N.M. 683, 265 P.3d 734, 742 (N.M.Ct.App.2011) (holding that state‘s implied consent law applies to any person, including juveniles, who drives a vehicle in the state).
¶ 37 Possibly compounding the problem, our opinion today might well engender dubious involuntariness claims and related suppression hearings aimed at excluding evidence derived from chemical testing of impaired drivers whose express consent was ostensibly voluntary and valid under Arizona‘s implied consent law. Such challenges can be made by defendants who, because they submitted to testing, retain their driving privileges in the interim. Audio or video recording of a suspect‘s сonsent might be a solution. But in view of the various contingencies and uncertainties surrounding determinations by officers in the field (and subsequently by courts) on whether express consent of DUI arrestees (particularly juveniles) is voluntary, the safest course of action for law enforcement might simply be to оbtain search warrants, when reasonably feasible, for obtaining blood samples in DUI investigations. See
Lake & Cobb, P.L.C. By Joel E. Sannes, Kiel S. Berry, Blake Rebling, Tempe, Attorneys for Montelucia Villas, LLC.
OPINION
BRUTINEL, Justice.
¶ 1 Buyers of a new home anticipatorily breached the purchase contract and then sued to recover progress payments made to the seller during the home‘s construction. The contract provided that these payments were to serve as liquidated damages in the event of the buyer‘s breach. We hold that the defendant seller, in order to retain the payments, must prove that it was ready, willing, and able to perform under the contract.
I.
¶ 2 On January 20, 2006, Ralph and Carolee Thomas signed a contract with Montelucia Villas, LLC for the construction of a custom villa for $3,295,000. As part of the purchase agreement, the Thomases made three installment deposits totaling $659,000, or twenty percent of the villa‘s purchase price. The remainder of the purchase price was due аt close of escrow. Although the deposits became due as construction progressed and could be used by Montelucia rather than held in escrow, the contract characterized them as “earnest money deposits.” The contract also provided, however, that Montеlucia could elect to treat the payments as liquidated damages if the buyers breached.
¶ 3 On April 25, 2008, Montelucia notified the Thomases by letter that it had set the closing date for May 16. When the letter was sent, Montelucia did not have a certificate of occupancy for the property, which the contract required as a condition for closing escrow.
¶ 4 The Thomases responded on May 6 with a letter stating that they would not close on May 16 and they were terminating the
¶ 5 In February 2009, the Thomases sued to recover the deposits. Montelucia counterclaimed for breach of contract.1 On cross-motions for summary judgment, the trial court ruled that Montelucia had breached the contract by, among other things, not completing certain resort amenities, access points, and infrastructure and not providing a certificate of occupancy by the closing date. The court concluded that the Thomases were entitled to a refund оf the $659,000 in deposits.
¶ 6 The court of appeals reversed and remanded, holding that the Thomases had anticipatorily repudiated the contract by sending the May 6 letter. Thomas v. Montelucia Villas, LLC, 229 Ariz. 308, 310 ¶ 7, 275 P.3d 607, 609 (App.2012). The court concluded that because Montelucia was not a plaintiff seeking affirmative relief, but instead was seеking to retain the deposits in the face of the Thomases’ lawsuit, Montelucia was not required to show its ability to perform. Id. at 310-11 ¶¶ 8, 10, 275 P.3d at 609-10.
¶ 7 We granted review to address whether a defendant must prove ability to perform to retain damages for anticipatory repudiation, a recurring issue of statewide importance. We have jurisdiction under Article 6, Section 5(3) of the Arizona Constitution and
II.
¶ 8 At the outset, the Thomases challenge the court of appeals’ holding that they anticipatorily repudiated the contract. They argue that Montelucia breached the contract beforе May 6, thereby excusing their performance. The Thomases, however, did not seek review on this issue. We therefore accept for purposes of our analysis that the Thomases anticipatorily breached the contract by sending their May 6 letter.
¶ 9 “An anticipatory repudiation is а breach of contract giving rise to a claim for damages and also excusing the necessity for the non-breaching party to tender performance.” United Cal. Bank v. Prudential Ins. Co. of Am., 140 Ariz. 238, 283, 681 P.2d 390, 435 (1983) (citing Kammert Bros. Enters., Inc. v. Tanque Verde Plaza Co., 102 Ariz. 301, 428 P.2d 678 (1967);
¶ 10 The court of appeals held that plaintiffs seeking damages for anticipatory repudiation must show the ability to perform, but that a defendant who seeks to retain damages need not make that showing. Thomas, 229 Ariz. at 311 ¶ 10, 275 P.3d at 610. We disagree.
¶ 11 A distinction between a party seeking affirmative relief and a party trying to retain damages in the face of another‘s claim is unwarranted.
¶ 12 Here, the Thomases’ anticipatory repudiation on May 6 excused Montelucia from further performance and gave Montelucia a claim for damages for breach. But the anticipatory repudiation alone does not entitlе Montelucia to damages. Because the Thomases’ duty to pay damages was discharged if Montelucia could not have performed, Montelucia‘s entitlement to the deposits rests upon its ability to have performed its contractual obligations. If Montelucia could not have closed in accordance with the contract, then the Thomases are under no duty to pay damages for their anticipatory breach, and Montelucia cannot retain the deposits.
¶ 13 Montelucia argues that it can keep the deposits without showing that it was ready, willing, and ablе to perform because the deposits were earnest money that was forfeited when the Thomases anticipatorily repudiated the contract. But while the contract referred to the deposits as “earnest money,” the deposits are more accurately characterized as progress payments.
¶ 14 Earnest money is a “comparatively small amount ... paid to an escrow agent” to show that the “purchaser is in earnest and in good faith.” Brigham v. First Nat‘l Bank of Ariz., 129 Ariz. 160, 162, 629 P.2d 996, 998 (App.1981) (citing Mortenson v. Fin. Growth, Inc., 23 Utah 2d 54, 456 P.2d 181 (1969)). Typically, earnest money remains in neutral escrow until the sale closes or the purchaser has forfeited the earnest money by defaulting on the contract. See, e.g., Esplendido Apartments v. Olsson, 144 Ariz. 355, 363, 697 P.2d 1105, 1113 (App.1984). Earnest money usually does not finance construction.
¶ 15 The deposits in this case do not serve the traditional function of earnest money deposits. Like progress payments on a construction contract, the deposits here were made at the completion of specific phases of the villa‘s construction and were immediately available to Montelucia to use “for costs related to the development of the Montelucia Villas.” Thus, the deposits did not serve to show the Thomases’ good faith; rather they enabled Montelucia to fund the construction. As a result, we conclude that the deposits constituted progress payments rather than earnest money, notwithstanding the contract language. Cf. Aztec Film Prods., Inc. v. Quinn, 116 Ariz. 468, 470, 569 P.2d 1366, 1368 (App.1977) (“It is well settled that in determining whether a particular clause calls for liquidated damages or for a penalty, the name given to the сlause by the parties is not conclusive, and the controlling elements are the intention of the parties and the special circumstances of the case.“).
¶ 16 Montelucia further argues that it was not required to show that it was ready, willing, and able to perform because the contraсt characterized the deposits as liquidated damages, and a party seeking liquidated damages need not prove actual damages. We are not persuaded. “To bring an action for the breach of the contract, the plaintiff has the burden of proving the existence of thе contract, its breach and the resulting damages.” Graham v. Asbury, 112 Ariz. 184, 185, 540 P.2d 656, 657 (1975). A liquidated damages clause relieves the plaintiff of the burden of proving the amount of actual damages caused by the breach. Mech. Air Eng‘g Co. v. Totem Constr. Co., 166 Ariz. 191, 193, 801 P.2d 426, 428 (App.1989). But it does not establish whether a breach suffi-cient
¶ 17 The parties dispute whether Montelucia was able to perform its obligations; therefore, we remand to the superior court for a determination of this issue. On remand, Montelucia, as the party in the best position to marshal the evidеnce, bears the burden of showing it was able to close in accordance with the contract. See 10 Corbin on Contracts § 978 n.11 (1951) (noting that the non-repudiating party “can much more readily prove what the facts were in respect of his own ability to perform“). If it is ultimately determined that Monteluсia was ready, willing, and able to perform as required by the contract, the court can then determine the appropriate remedy available to Montelucia under the contract.
¶ 18 Both parties request an award of attorney fees pursuant to the contract and
III.
¶ 19 For the foregoing reasons, we vacate the court of appeals’ opinion, except ¶¶ 6-7, and remand to the trial court for further proceedings consistent with this opinion.
CONCURRING: REBECCA WHITE BERCH, Chief Justice, SCOTT BALES, Vice Chief Justice, JOHN PELANDER and ANN A. SCOTT TIMMER, Justices.
BRUTINEL, Justice