Focus point/kantor v. johnson/oak Acres

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

FOCUS POINT PROPERTIES, LLC; JEFF KANTOR, Plaintiffs/Appellees,

v.

CLEO JOHNSON; OAK ACRES TRUST, Defendants/Appellants.

No. 1 CA-CV 12-0766
FILED 06-19-2014

Appeal from the Superior Court in Maricopa County
No. CV2010-015770
The Honorable Dean M. Fink, Judge

AFFIRMED IN PART, REVERSED IN PART

COUNSEL

Dickinson Wright/Mariscal Weeks, PLLC, Phoenix
By Timothy J. Thomason
Counsel for Plaintiffs/Appellee

Ridenour Hienton & Lewis, PLLC, Phoenix
By Patricia A. Premeau
Counsel for Defendants/Appellants
 FOCUS POINT/KANTOR v. JOHNSON/OAK ACRES
Opinion of the Court

OPINION

Presiding Judge Kent E. Cattani delivered the opinion of the Court, in
which Judge Margaret H. Downie and Judge Michael J. Brown joined.

C A T T A N I, Judge:

¶1 This case involves litigation commenced under Arizona
Revised Statutes (“A.R.S.”) § 32-3152(A), 1 which authorizes a “qualified”
licensed real estate salesperson to file a lawsuit to collect an unpaid real
estate commission for services rendered. We are asked to address
whether “qualified” in this context means something other than being
licensed at the time services are provided, or alternatively, whether a
court assessing whether someone is qualified under the statute should
consider conduct unrelated to the services rendered but that calls into
question whether the salesperson’s license should have been suspended or
revoked. For reasons that follow, we affirm the trial court’s ruling that
under § 32-3152(A), the only relevant inquiry is whether the person
seeking to collect a commission was licensed at the time services were
provided.

¶2 We are also asked to address whether an individual who
signs a real estate contract on behalf of a trust, without specifying her
representative capacity, may be held personally liable for breaching a
provision in the contract that requires payment of a real estate
commission. We reverse the trial court’s ruling on this issue and find that,
under the circumstances presented here, a trustee who contracts on behalf
of a trust cannot be held personally liable for breaching the contract.

FACTS AND PROCEDURAL BACKGROUND 2

¶3 In May 2009, Cleo Johnson, who was the trustee of the Oak
Acres Trust, hired Jeff Kantor of Focus Point Properties, LLC to sell

1 Absent material revisions after the relevant date, we cite a statute’s
current version.
2 We view the evidence in the light most favorable to upholding the
jury’s verdict. Warrington v. Tempe Elementary Sch. Dist. No. 3, 197 Ariz. 68,
69, ¶ 4, 3 P.3d 988, 989 (App. 1999).

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commercial real estate in Apache Junction owned by the Trust. In June
2009, Johnson signed a letter authorizing Kantor to speak about the
property directly with the City of Apache Junction for planning purposes,
and Kantor thereafter worked to assist Johnson with rehabilitating and
selling the property.

¶4 Kantor prepared and signed a six-month listing agreement,
dated October 15, 2009, to sell the property. Kantor reviewed the terms of
the agreement with Johnson and gave it to her to sign. 3

¶5 After discussing the agreement with Johnson, Kantor
discovered it would take months to rehabilitate the property because of its
blighted condition, including substantial issues with vagrancy, criminal
activity, and debris. In several conversations with Johnson, Kantor
explained that, given the increased time required to adequately
rehabilitate the property, he would need a one-year listing agreement.
During those discussions, Johnson requested that Kantor expand the
scope of the listing agreement to include leasing the commercial units on
the property to generate money to pay property taxes. After multiple
conversations with Johnson, Kantor prepared a revised one-year listing
agreement to sell or lease the property. Johnson signed the new
agreement on October 29, 2009.

¶6 Johnson did not read the new agreement before signing it.
Although Kantor offered to explain the details of the agreement, Johnson
indicated that, based on their previous discussions, she understood the
new terms. Kantor gave Johnson a copy of the October 29 agreement at
their next meeting, approximately one week after Johnson signed it.

¶7 Over the last three months of 2009, Kantor spent at least 25
to 30 hours each week coordinating the rehabilitation of the property.
During the listing period, Kantor procured a tenant, and in January 2010,
he arranged for the tenant to meet with him and Johnson to discuss lease
terms. Johnson failed to attend the meeting, but she nevertheless
subsequently signed a lease with the tenant without letting Kantor know
she was doing so.

¶8 On February 1, 2010, Focus Point sent Johnson/Oak Acres
an invoice for a lease commission of $2,720. Johnson canceled the listing

3 Although Johnson promised to sign and return the agreement, she
did not deliver a signed copy until after this litigation began.

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agreement three days later. Focus Point then sent Johnson/Oak Acres a
letter demanding $140,000, based on a liquidated damages provision in
the agreement. 4

¶9 When Johnson/Oak Acres refused to pay, Focus
Point/Kantor filed a complaint in Maricopa County Superior Court
alleging breach of contract, fraud, promissory estoppel, and unjust
enrichment. Johnson/Oak Acres counterclaimed for fraudulent
misrepresentation and inducement into contract, negligent
misrepresentation, breach of fiduciary duty, and damages under
Arizona’s vulnerable adult statute, A.R.S. § 46-456.

¶10 Both sides filed motions for summary judgment. After
briefing and oral argument, the trial court denied Focus Point/Kantor’s
motion for summary judgment and granted Johnson/Oak Acres’ motion
for summary judgment on Focus Point/Kantor’s claims for promissory
estoppel and unjust enrichment. The ruling left for trial Focus
Point/Kantor’s claims for breach of contract and fraud, along with
Johnson/Oak Acres’ counterclaims for fraudulent misrepresentation and
inducement into contract, negligent misrepresentation, breach of fiduciary
duty, and violations of the vulnerable adult statute.

¶11 Two days before trial was scheduled to begin, Johnson/Oak
Acres filed an emergency motion to dismiss the complaint and vacate the
trial based on information regarding Kantor’s real estate license history.
Johnson/Oak Acres’ motion stated that in September 2006, Kantor had
entered into a consent order with the Arizona Department of Real Estate
(“ADRE”) for failing to timely disclose two DUI convictions. Pursuant to
the consent order, ADRE placed Kantor under a two-year provisional
license from September 2006 until September 2008 and required that he
abstain from alcohol and illegal drugs, and that he submit to random
testing. In May 2008, Kantor was convicted of another DUI offense, but he
did not report the conviction to ADRE until September 28, 2011. In March

4 Paragraph 6(b) of the October 29 listing agreement provided that
“[t]he same amount of sale or rental commission shall be due and payable
to Broker if, without the consent of Broker, the Premises is withdrawn
from this Listing, otherwise withdrawn from sale or rental or rented,
transferred, or conveyed by Owner.” Paragraph 6(g) provided that “[i]f
completion of a sale or rental is prevented by default of Owner, or with
the consent of Owner, the entire sale or rental commission, as appropriate,
shall be paid to Broker by Owner.”

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2012, while ADRE’s investigation into that report remained pending,
Kantor voluntarily surrendered his real estate license.

¶12 Johnson/Oak Acres’ motion to dismiss asserted that if
Kantor had properly disclosed his DUI conviction, he would not have
held a real estate license when he provided services to Johnson/Oak
Acres, and, therefore, he was not entitled to a commission. The trial court
denied the motion, reasoning that because Kantor was licensed at the time
he provided the services at issue, the fact that he had committed an act
that might have, or even should have, resulted in the loss of his license
was not relevant.

¶13 The case proceeded to trial, and the jury found in favor of
Focus Point/Kantor on their breach of contract and punitive damages
claims, but against them on their fraud claim. The jury ruled against
Johnson/Oak Acres on all of their counterclaims.

¶14 In June 2012, Johnson/Oak Acres filed a motion for
judgment as a matter of law and a motion for new trial. Among other
arguments, Johnson/Oak Acres asserted that Kantor should not have been
permitted to maintain his lawsuit for a real estate commission because of
his failure to disclose his violation of the ADRE consent order; the jury’s
verdict awarding punitive damages arising from a breach of contract
claim was not permitted by law; and the jury’s verdict awarding damages
against Johnson in her individual capacity was not factually or legally
supported. The trial court vacated the award of punitive damages but
affirmed the remaining verdicts. The court entered judgment against
Johnson/Oak Acres for compensatory damages in the aggregate sum of
$140,000 plus interest, and awarded Focus Point/Kantor their attorney’s
fees in the amount of $39,000 plus interest, and costs in the amount of
$2,511.26 plus interest. 5

¶15 Johnson/Oak Acres timely appealed. We have jurisdiction
under Article 6, Section 9, of the Arizona Constitution and A.R.S. §§ 12-
120.21(A)(1) and -2101(A)(1).

5 The compensatory damages amount was based upon the loss of a
four percent commission on the list price of $3.5 million. Johnson/Oak
Acres have not challenged on appeal the amount of the award.

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DISCUSSION

¶16 Johnson/Oak Acres raises three arguments on appeal,
asserting that (1) Kantor did not have standing under § 32-2152(A) to
maintain a lawsuit for a real estate commission, (2) the trial court
improperly denied Johnson/Oak Acres’ motion for summary judgment
on their breach of fiduciary duty claim, and (3) Johnson should not have
been found to be personally liable for the real estate commission. We
address each argument in turn.

I. Kantor’s Right to Sue for a Real Estate Commission.

¶17 Johnson/Oak Acres contend the trial court erred under
A.R.S. § 32-2152(A) by ruling that Kantor could initiate and maintain a
lawsuit for a real estate commission notwithstanding evidence that he
violated Arizona law by not timely disclosing to ADRE that he had
violated a prior consent order. Johnson/Oak Acres’ argument fails,
however, because Kantor held an active Arizona real estate license at the
time he earned the commission, and questions regarding whether
Kantor’s license should have been revoked were collateral to the dispute
in this case.

¶18 We review de novo issues of statutory interpretation. Keenen
v. Biles, 199 Ariz. 266, 267, ¶ 4, 17 P.3d 111, 112 (App. 2001). Here, we
address the interplay between § 32-2152(A), which imposes qualifications
for filing an action to collect a disputed real estate commission, and A.R.S.
§ 32-2153(B), which details the Arizona Real Estate Commissioner’s duties
regarding disciplining real estate licensees. Section 32-2152(A) provides:

An action for the collection of compensation earned may be
maintained in the courts of the state by any broker or
salesperson. To commence the action the complaint shall
allege that the plaintiff was a qualified licensed broker or
salesperson at the time the claim arose. Prior to hearing the
action the court shall require the plaintiff to prove the
alleged qualifications.

(Emphasis added.) Section 32-2153(B) provides in relevant part:

The commissioner may suspend or revoke a license, deny
the issuance of a license, issue a letter of concern to a
licensee, issue a provisional license or deny the renewal or
the right of renewal of a license issued under this chapter
when it appears that the holder or applicant has:

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Opinion of the Court

....

2. Been convicted in a court of competent jurisdiction in this
or any other state of a felony or of any crime of forgery,
theft, extortion, conspiracy to defraud, a crime of moral
turpitude or any other like offense.

¶19 Johnson/Oak Acres argue that although Kantor’s license
had not been revoked at the time he performed services on Oak Acres’
behalf, he was not a “qualified” licensed salesperson under § 32-2152(A)
because of his acknowledged violation of the consent order relating to his
prior DUI violations. Johnson/Oak Acres assert that the trial court’s
ruling that Kantor had standing to initiate litigation renders insignificant
the term “qualified” in § 32-2152(A). They argue that under that statute,
the trial court should have determined not only whether Kantor was
licensed, but also whether he was a “qualified” licensee.

¶20 Viewing the statutory scheme as a whole, we conclude that
the Legislature intended that a determination regarding whether a
salesperson is qualified to obtain or maintain a license is to be made by the
Real Estate Commissioner under § 32-2153(B). Although § 32-2152(A)
requires a determination of whether the salesperson was a “qualified”
licensed salesperson at the time the claim for compensation arose, the
more specific provision (§ 32-2153) detailing when and by whom a license
should be suspended or revoked is controlling as to that issue. See Lange
v. Lotzer, 151 Ariz. 260, 261, 727 P.2d 38, 39 (App. 1986) (“The law is well
settled that a specific statute governs over a general statute on the same
subject and will control.”).

¶21 Moreover, to allow a court to assess (under § 32-2152(A))
whether a salesperson’s license should have been suspended or revoked
could potentially result in the court and the Real Estate Commissioner
addressing identical facts and making conflicting factual findings.
Additionally, under § 32-2153(B), the Commissioner is not required to
suspend or revoke a real estate license based on specified facts; instead the
Commissioner “may” suspend or revoke a license, or alternatively may
determine to issue a letter of concern or impose other types of discipline
upon finding that a real estate salesperson engaged in misconduct. Thus,
permitting a court to determine whether a license should have been or
should be revoked could similarly result in different factfinders reaching
conflicting conclusions, even assuming agreement that the actions
constituted misconduct.

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¶22 Furthermore, permitting the type of inquiry Johnson/Oak
Acres seek would result in potentially extensive collateral litigation of
matters unrelated to the specific transaction at issue. Here, Johnson/Oak
Acres do not assert that Kantor’s DUI conviction had any bearing on any
of his dealings with Oak Acres or Johnson. Nor do they dispute that
Kantor held an active real estate license when he performed work on
behalf of the Trust. Thus, the trial court correctly excluded evidence of the
DUI conviction as irrelevant, and properly left to the Real Estate
Commissioner (in a different proceeding) the task of determining whether
to revoke Kantor’s license or otherwise sanction him. 6

¶23 Johnson/Oak Acres cite several cases in which courts
declined to award commissions to real estate agents. But those cases
involved real estate commissions sought by individuals who were not
licensed at the time services were rendered. See, e.g., Mousa v. Saba, 222
Ariz. 581, 586, ¶ 20, 218 P.3d 1038, 1043 (App. 2009) (stating that an
unlicensed individual could not maintain an action for compensation for
services that required a real estate license); Realty Execs., Inc. v. Northrup,
King & Co., 24 Ariz. App. 400, 402–03, 539 P.2d 514, 516–17 (1975) (finding
that a brokerage firm was barred from recovering a commission because
the salesperson arranged for and signed a listing agreement on behalf of a
brokerage firm during a period of time in which the salesperson was
unlicensed). Because Kantor was undisputedly licensed at the time he
provided the services at issue, those cases are not dispositive.

¶24 In sum, we agree with the trial court that a determination
whether to suspend or revoke a real estate license is to be left to the Real
Estate Commissioner, and that the court’s responsibility under § 32-
2152(A) is to determine whether the salesperson had a current license at
the time services were performed.

II. Breach of Fiduciary Duty.

¶25 Johnson/Oak Acres argue that the trial court erred by
denying their cross-motion for summary judgment regarding Kantor’s
alleged breach of fiduciary duty and by imposing an additional element of

6 Kantor surrendered his license in 2012, and the Commissioner
apparently chose not to further pursue the matter, even though under §
32-2153(E) the Commissioner could have proceeded with disciplinary
proceedings notwithstanding Kantor’s surrender of his license.

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intent into their breach of fiduciary duty claim. But the denial of
summary judgment is generally not reviewable on appeal from a final
judgment entered after trial. John C. Lincoln Hosp. & Health Corp. v.
Maricopa County, 208 Ariz. 532, 539, ¶ 19, 96 P.3d 530, 537 (App. 2004).
Thus, Johnson/Oak Acres is not entitled to relief on this aspect of their
claim.

¶26 Moreover, Kantor presented more than adequate evidence
from which the jury could reject Johnson/Oak Acres’ allegations that
Kantor failed to explain the changed terms in the second agreement before
Johnson signed it, and that Kantor improperly placed his own financial
interests above those of Johnson/Oak Acres. Kantor testified that he (1)
discussed the terms of the October 15 listing agreement with Johnson, (2)
had multiple conversations with Johnson about the revised terms in the
October 29 listing agreement and the reasons for the revisions, (3) asked
Johnson if she wanted to discuss the terms of the October 29 agreement
when he presented it to her for signature, and (4) provided Johnson a copy
of the October 29 agreement, albeit a week later. Notwithstanding
contrary testimony from Johnson, there was sufficient evidentiary support
for the jury’s verdict in favor of Focus Point/Kantor on Johnson/Oak
Acres’ breach of fiduciary duty claim.

¶27 Johnson/Oak Acres further argue that during oral argument
on the motions for summary judgment approximately five months before
trial, the court improperly commented that a person claiming a breach of
fiduciary duty must prove intent. The court did not, however, instruct the
jury on “intent” as an additional element of breach of fiduciary duty. The
jury instructions relating to breach of fiduciary duty correctly stated that a
real estate agent is required “to protect and promote the interests of the
client, and to deal fairly with all parties to the transaction,” and further
provided that an agent “who breaches the fiduciary duty owed to the
client is not entitled to a commission.” Accordingly, because the jury
instructions properly set forth the law regarding fiduciary duty, anything
the court said during the summary judgment argument is irrelevant.

III. Jury Verdict Holding Johnson Personally Liable.

¶28 Johnson contends that the jury improperly found her
personally liable, along with Oak Acres, for the real estate commission
owed to Focus Point/Kantor. Johnson argues that the evidence presented
at trial established that Kantor knew Oak Acres owned the property, and
that the listing agreement was between the property owner and the
broker. Thus, it was clear that Kantor was dealing with Johnson in her

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capacity as trustee. We agree that the contract at issue was between Oak
Acres and the real estate broker, and that the evidence was thus
insufficient to establish a basis for finding Johnson personally liable for
breach of contract.

¶29 Paragraph 30 of the October 29 listing agreement expressly
provided that the parties to the agreement were the “Owner and Broker,”
and Focus Point/Kantor have never asserted that anyone other than Oak
Acres owned the subject property. In the signature block of the
agreement, “Oak Acres Trust-Cleo Johnson” was typed above the printed
words “Print Name of Owner.” Johnson signed the document
immediately below that designation and above the printed designation
“Owner’s Signature.” Thus, although Johnson’s handwritten signature
did not delineate the capacity in which she was signing, the signature
block made clear that the document was to be signed by the property
owner. Moreover, in an addendum that listed the assessor’s parcel
numbers for the subject property and that was attached to the agreement,
the signature block designated the signee as “Oak Acres Trust by Cleo
Johnson” (emphasis added), and Johnson again signed only her name,
clearly doing so in her representative capacity.

¶30 While settling jury instructions, Johnson’s counsel argued
that the jury should not be instructed that Johnson could be held
personally liable for breach of contract because “there’s only one way that
she could have been signing [the agreement]. And that would be as
trustee of the Oak Acres Trust.” The trial court determined that “at this
point I think this is probably a jury question and not a question for the
Court to decide through jury instructions.” The court thus allowed the
jury to determine whether Johnson was acting in her individual or
representative capacity (or both) when signing the listing agreement. The
jury subsequently returned a verdict in favor of Focus Point/Kantor on
their breach of contract claim, finding both Johnson individually and Oak
Acres liable for breaching the contract.

¶31 After the verdict, Johnson filed a motion for judgment as a
matter of law and a motion for new trial, asserting, among other
arguments, that the verdict against her personally was not factually or
legally supported. The court rejected that argument, finding that “[t]he
meaning of the signature line ‘Oak Acres Trust – Cleo Johnson’ is also a
matter for the jury as factfinder. [The jury] found that Ms. Johnson’s
signature was intended to bind both the trust and her personally. Here
too the Court must defer.”

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¶32 Focus Point/Kantor argue that the typed line “Oak Acres
Trust-Cleo Johnson” created an ambiguity regarding whether Johnson
was signing in her individual or representative capacity (or both), and that
we should thus uphold the jury’s finding that Johnson is personally liable
for breach of contract. We recognize that if a contract is ambiguous,
determining what the parties intended is a question of fact for the jury.
See Pasco Indus., Inc. v. Talco Recycling, Inc., 195 Ariz. 50, 62, ¶ 52, 985 P.2d
535, 547 (App. 1998). But here, there was no ambiguity regarding the
parties to the contract, and Johnson’s signature appeared over a line that
called for the owner’s signature.

¶33 Because the contract clearly specified that it was an
agreement between the property owner and the broker, and because the
signature block on the contract, coupled with the signature block on the
addendum, made clear that Johnson signed on behalf of the owner, we
conclude that the jury verdict holding Johnson personally liable for breach
of contract must be set aside.

¶34 Moreover, holding Johnson personally liable would be
inconsistent with finding liability against Oak Acres on the breach of
contract claim because Johnson’s signature on the contract was the basis
for establishing Oak Acres’ status as a party to the contract. In Valley
National Bank, Sunnymead v. Cook, 136 Ariz. 232, 235–36, 665 P.2d 576, 579–
80 (App. 1983), this court rejected a claim that a person who signed a
corporate check without specifying the capacity in which the check was
being signed could be held personally liable, along with the corporation,
for the amount of the check:

Having secured a judgment on that basis against the
corporate defendant, we are at a loss to see how he may now
contend that appellant’s signature was on his individual
behalf and not in a representative capacity. It must be one or
the other. It cannot be both.

(Emphasis added, citation omitted.) Here, Johnson only provided one
signature on the document, and Focus Point/Kantor’s breach of contract
judgment against Oak Acres is based on that signature. Thus, Focus
Point/Kantor are precluded from obtaining judgments for breach of
contract against both Oak Acres and Johnson individually based on the
same signature.

¶35 Focus Point/Kantor cite four cases from other jurisdictions
for the proposition that Johnson can be held personally liable for the

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payment of their commission. Even were we to accept the reasoning of
those cases, they are factually distinguishable. Two of the out-of-state
cases found personal liability based on a separate personal guaranty. See
Schroeder v. Hunter Douglas, Inc., 324 S.E.2d 746, 747–48 (Ga. Ct. App.
1984); Hope Petty Motors, Inc. v. Hyatt, 425 S.E.2d 786, 791 (S.C. Ct. App.
1992). Here, Johnson did not personally guarantee Oak Acres’ obligations,
and the document at issue did not reference any obligations of a
guarantor. The third case did not reach the issue of whether a jury could
properly conclude that a single signature bound the signer in both
representative and individual capacities, finding instead that the litigant
had waived its objection by failing to object before the trial court. See
Griffin v. Associated Payphone, 534 S.E.2d 540, 543–44 (Ga. Ct. App. 2000).
The fourth case reasoned that because corporate representatives had
signed some documents that clearly specified the individuals’
representative capacity, their signatures on other documents without such
a designation suggested they had signed those documents in their
individual capacity. See First Union Nat’l Bank v. United States, 164 F.
Supp. 2d 660, 664 (E.D. Pa. 2001). Here, Johnson consistently signed
documents without designating a representative capacity, even when
unequivocally acting as trustee of Oak Acres. See supra ¶ 29. Thus, the
documents she signed do not reflect a conscious choice to sign in an
individual, rather than representative, capacity.

¶36 Because the contracting party in this case was clearly the
property owner (Oak Acres), and because Johnson’s sole signature was
binding as to Oak Acres, we reverse the judgment against Johnson in her
individual capacity.

IV. Attorney’s Fees and Costs.

¶37 The parties have requested their attorney’s fees and costs on
appeal pursuant to the terms of the listing agreements and A.R.S. § 12-
341.01(A).

¶38 When a contract contains an attorney’s fees provision, we
will grant fees consistent with that provision. A. Miner Contracting, Inc. v.
Toho-Tolani County Improvement Dist., 233 Ariz. 249, 261, ¶ 40, 311 P.3d
1062, 1074 (App. 2013). Here, Paragraph 18 of the October 29 listing
agreement provides for payment of attorney’s fees and costs:

In any action or proceeding to enforce any provision of this
Listing, or for damages sustained by reason of its breach, the
prevailing party shall be entitled to receive from the other

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party reasonable attorney’s fees, as set by the court or
arbitrator and not by a jury, and all other related expenses,
such as expert witness fees, fees paid to investigators and
court costs.

¶39 Focus Point/Kantor have prevailed against Oak Acres on
their breach of contract claim. Accordingly, pursuant to the terms of the
contract, we grant Focus Point/Kantor their reasonable fees on appeal
incurred as to Oak Acres upon their compliance with ARCAP 21. As the
overall prevailing parties on appeal, Focus Point/Kantor are entitled to
their costs upon compliance with ARCAP 21.

¶40 Although Johnson has prevailed on her claim that she is not
personally liable, our holding also dictates that the agreement—including
its attorney’s fees language—is not applicable to her personally.
Accordingly, we look to A.R.S. § 12-341.01(A), rather than the contract
provision, in determining whether to award attorney’s fees. Exercising
our discretion under that statute, we decline to award Johnson fees.

CONCLUSION

¶41 For the foregoing reasons, we affirm the trial court’s
judgment against Oak Acres, but reverse the judgment against Johnson.

:gsh

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