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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION DOES NOT CREATE
LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.
IN THE
MEMORANDUM DECISION
Judge Margaret H. Downie delivered the decision of the Court, in which
Presiding Judge Kenton D. Jones and Judge Donn Kessler joined.
D O W N I E, Judge:
1
Jacob Hafter, Jaclyn Hafter, and the Law Office of Jacob
Hafter, P.C. (LOJH) filed a notice of appeal challenging the superior
courts grant of summary judgment to Aprea II, L.P. (Aprea) on Apreas
breach of contract claims and on LOJHs counterclaim. LOJH has not
submitted an opening brief or otherwise participated in this appeal since
filing the notice of appeal through counsel. 1 We therefore deem LOJHs
appeal abandoned. For the following reasons, we affirm the grant of
summary judgment against the Hafters on Apreas breach of contract
claims but vacate the judgment against the Hafters on LOJHs
counterclaim. We do not disturb or address either grant of summary
judgment against LOJH.
FACTS AND PROCEDURAL HISTORY
2
LOJH entered into a three-year commercial lease with Aprea
in April 2009 for office space. The Hafters signed a Guaranty of Lease
(Guaranty). It is undisputed that LOJH failed to pay rent due under the
lease in December 2009.
3
In February 2010, Aprea and LOJH entered into a settlement
agreement. When LOJH failed to make payments required by that
agreement, Aprea sued LOJH, alleging breaches of the lease and the
settlement agreement, and the Hafters as guarantors under the lease.
LOJH filed a counterclaim alleging illegal eviction, breach of contract, and
tortious interference.
4
Aprea moved for summary judgment on its contract claims.
LOJH and the Hafters opposed the motion and sought additional time to
conduct discovery. The superior court granted summary judgment to
The Hafters state that LOJH has not appeared in the appeal because it is
no longer in business and has no assets.
1
8
The extent of a guarantors liability is governed by the
terms of the guaranty agreement. Pi'Ikea, LLC v. Williamson, 234 Ariz.
284, 287, 10, 321 P.3d 449, 452 (App. 2014); accord Tenet Healthsystem
TGH, Inc. v. Silver, 203 Ariz. 217, 219, 7, 52 P.3d 786, 788 (App. 2002).
The Guaranty at issue here is broad in scope, making the Hafters liable for
any liability, expense or fee (including reasonable attorneys fees)
incurred or sustained as a result of the failure by Tenant to satisfy its
obligations under the Lease. The Guaranty further provides:
Guarantors absolutely and unconditionally guarantee[] and
promise[] to Landlord the due, punctual and full
performance by Tenant of each and all of the covenants,
obligations, liabilities and promises of Tenant . . . including
without limitation, the payment of Annual Basic Rent and
Additional Rent (as defined in the Lease) and any and all
other sums payable thereunder.
....
Guarantors waive[] and agree[] not to assert or take
advantage of any right or defense based on the absence of
any or all presentments, demands (including demands for
performance), notices (including . . . notices of nonperformance . . . ) and protests of each and every kind.
The Hafters also acknowledged in the Guaranty that Aprea had no duty to
provide them with any information whatsoever regarding Tenant or
Tenants financial condition or business affairs.
9
In defending against the breach of contract claims, the
Hafters primary contention has been that Aprea failed to give notices
required under the lease. However, the Hafters expressly waived their
right to notices of each and every kind and acknowledged in the
Guaranty that Aprea had no duty to communicate with them about LOJH.
Additionally, the Hafters may not collaterally attack the judgment against
LOJH or relitigate issues that LOJH lost below. See Smith Plumbing Co. v.
Aetna Cas. & Sur. Co., 149 Ariz. 524, 527, 720 P.2d 499, 502 (1986) (A surety
may generally raise any defense available to the principal, except personal
defenses.); see also E.H. Schopler, Annotation, Conclusiveness and Effect,
Upon Surety, of Default or Consent Judgment Against Principal, 59 A.L.R. 2d
752 6 (1958) (discussing conclusive effect on surety of consent judgment
rendered against principal in litigation to which surety was a party,
4
12
The counterclaim was brought solely by LOJH. Because the
Hafters were not parties to the counterclaim, the superior court erred by
including them in the August 15, 2012 judgment, which, among other
things, held them jointly and severally liable for attorneys fees of $11,078,
costs of $45.68, and interest on those sums. Cf. McDonnell v. S. Pac. Co., 79
Ariz. 10, 12, 281 P.2d 792, 793 (1955) (Parties cannot be brought into court
and a valid judgment rendered for or against them by merely including
LOJH specifically avowed it was entering into the settlement agreement
voluntarily, in good faith, without duress or undue influence of [Aprea].
[LOJH] has been represented by legal counsel of its own choice regarding
the meaning, interpretation and effect of this Agreement.
3
The Hafters obligations under the Guaranty were not vitiated by the
settlement agreement, which stated that Aprea retained all rights and
remedies under the lease and Guaranty until LOJH fully and completely
satisfied its obligations under the settlement agreement. It is undisputed
that LOJH failed to make payments required by the settlement agreement.
4
Damages
13
Finally, the Hafters dispute the amount of damages awarded
to Aprea. We decline to address their contention that LOJHs first
payment under the settlement agreement constituted surrender of the
premises and termination of the lease, such that Aprea was limited to
damages incurred before LOJHs re-entry and removal of its property.
Neither LOJH nor the Hafters raised this argument in the superior court.
We will not address it for the first time on appeal. See Cahn v. Fisher, 167
Ariz. 219, 221, 805 P.2d 1040, 1042 (App. 1990) (A party cannot raise new
theories on appeal to seek reversal of summary judgment.).
14
The Hafters also contend the doctrine of mitigation of
damages should limit Apreas damages. Arizona law generally permits a
landlord to recover possession of the premises upon default and to sue for
rent, damages, or breach of the lease, subject to reasonable mitigation
efforts. W. Pinal Family Health Ctr., Inc. v. McBryde, 162 Ariz. 546, 548, 785
P.2d 66, 68 (App. 1989); Roosen v. Schaffer, 127 Ariz. 346, 348, 621 P.2d 33,
35 (App. 1980). However, the breaching party bears the burden of proof
as to mitigation. Fairway Builders, Inc. v. Malouf Towers Rental Co., 124
Ariz. 242, 255-56, 603 P.2d 513, 526-27 (App. 1979). The remedies section
of the lease agreement is consistent with this legal tenet, stating:
(a) Landlord may terminate Tenants right to possession of
the Premises at any time by written notice to Tenant. . . .
Upon such termination in writing of Tenants right to
possession of the Premises, as herein provided, this Lease
shall terminate and Landlord shall be entitled to recover
damages from Tenant as provided in any applicable existing
or future Law providing for recovery of damages for such
breach, including the worth at the time of award of the
amount by which the rent which would be payable by
Tenant hereunder for the remainder of the Term after the
date of the award of damages, including Additional Rent as
reasonably estimated by Landlord, exceeds the amount of
such rental loss as Tenant proves could have been reasonably
avoided.
:gsh