Bennett James L. Bennett Money Purchase Pension Plan Meyerstein v. Baxter Group

FILED BY CLERK
IN THE COURT OF APPEALS FEB 10 2010
STATE OF ARIZONA
COURT OF APPEALS
DIVISION TWO DIVISION TWO

JAMES L. BENNETT, individually and )
as trustee of the JAMES L. BENNETT )
MONEY PURCHASE PENSION PLAN ) 2 CA-CV 2009-0046
) DEPARTMENT A
Plaintiff/Appellee, )
) OPINION
v. )
)
BAXTER GROUP, INC., an Arizona )
corporation, )
)
Defendant/Third-Party )
Plaintiff/Appellant, )
)
v. )
)
ARNOLD MEYERSTEIN, )
)
Third-Party Defendant/Appellee. )
)

APPEAL FROM THE SUPERIOR COURT OF COCHISE COUNTY

Cause No. CV-200200586

Honorable Stephen M. Desens, Judge

AFFIRMED IN PART
VACATED AND REMANDED IN PART

Borowiec, Borowiec & Russell, P.C.
By D. Christopher Russell Sierra Vista
Attorneys for Plaintiff/Appellee

The Baxter Law Firm
By Judith L. Baxter Encino, CA
 and

Geoffrey Walker, PLC
By Geoffrey Walker Phoenix
Attorneys for Defendant/Third-Party Plaintiff/Appellant

Gregory G. McGill, P.C.
By Gregory G. McGill Scottsdale
Attorneys for Third-Party Defendant/Appellee

H O W A R D, Chief Judge.

¶1 Appellant Baxter Group, Inc. (Baxter) appeals from the trial court‟s rulings

after a bench trial on slander of title and breach of contract claims. Baxter also appeals

the court‟s awards of attorney fees, sanctions, and costs to appellees, James L. Bennett,

individually and as trustee of the James L. Bennett Money Purchase Pension Plan

(collectively “Bennett”) and Arnold Meyerstein (Meyerstein). For the reasons that

follow, we affirm in part and vacate and remand in part.

Facts and Procedural History

¶2 When reviewing issues decided following a bench trial, we view the facts

in the light most favorable to upholding the court‟s ruling. Sabino Town & Country

Estates Ass’n v. Carr, 186 Ariz. 146, 148, 920 P.2d 26, 28 (App. 1996). In early January

2002, Baxter contracted to sell Bennett and Meyerstein a hotel for the sum of $1,700,000.

The purchase was conditioned upon Bennett‟s and Meyerstein‟s “[a]pproval of available,

acceptable and suitable financing” for the property. Under the terms of the contract,

Bennett and Meyerstein were also required to deposit $10,000 in an escrow account as a

good faith deposit toward the purchase of the property. If Bennett and Meyerstein

2
“default[ed] or otherwise fail[ed] to complete the purchase,” the contract stated that

Baxter would retain any money deposited in the escrow account as liquidated damages.

¶3 Bennett made the required $10,000 deposit into an escrow account. Due to

difficulties in obtaining appropriate financing, however, the closing date for the sale was

extended several times. The buyers were never able to obtain the required financing.

Eventually, Baxter accepted another buyer‟s offer to purchase the property.

¶4 Because Baxter had sold the property to someone else, Bennett requested

that the $10,000 security deposit be returned. Baxter refused, claiming it was entitled to

the money as liquidated damages under the terms of the sales contract. In an attempt to

ensure that Baxter returned the deposit, Bennett had the “Agreement of Purchase and

Sale” (Agreement) recorded, before Baxter and the new buyer had closed the hotel‟s sale

under their agreement.

¶5 The title company subsequently discovered the recorded Agreement and

asked Bennett and Meyerstein to release it, which they agreed to do in exchange for the

$10,000 escrow deposit. Baxter refused to return the deposit, and Bennett and

Meyerstein refused to release the recorded Agreement.

¶6 Bennett sued Baxter for breach of contract for failing to return the deposit,

among other acts, and for fraud concerning an alleged extension of time for closing.

Baxter filed a counterclaim against Bennett and a third-party complaint against

Meyerstein, alleging against both, inter alia, fraud in the inducement and interference

with its contract with the new buyer.

3
¶7 The trial court granted summary judgment in favor of Bennett and

Meyerstein on the majority of Baxter‟s counterclaims and cross-claims but denied

summary judgment on Baxter‟s claims of interference with contract and slander of title.

After a bench trial on the remaining claims, the court ruled in favor of Bennett on his

breach of contract claim against Baxter—awarding him the money held in escrow—but

ruled in favor of Baxter on Bennett‟s fraud claim. The court also ruled against Baxter on

its two remaining claims for interference with contract and slander of title. The court

awarded Bennett and Meyerstein their attorney fees incurred during the litigation, as well

as costs and sanctions. Baxter appeals from these rulings.

Slander of Title Claim

¶8 Baxter first argues the trial court erred in granting Bennett and Meyerstein

judgment after trial on Baxter‟s slander of title claim, contending that “[n]o specific legal

authority, statute or judgment permits the recording of a real estate sales agreement” and

therefore the recorded Agreement was groundless and invalid pursuant to A.R.S. § 33-

420(A) and (D). No facts relevant to our resolution of this claim are in dispute, and we

review the issue de novo as a matter of law. McMurray v. Dream Catcher USA, Inc., 220

Ariz. 71, ¶ 6, 202 P.3d 536, 539 (App. 2009).

¶9 Section 33-420(A) subjects a person to financial penalties for recording a

document with the county recorder knowing or having reason to know “the document” is

groundless or invalid. Section 33-420(D) provides that “[a] document purporting to

create an interest in, or a lien or encumbrance against, real property not authorized by

statute, judgment or other specific legal authority is presumed to be groundless and

4
invalid.” Baxter‟s argument focuses solely on whether the recording of the Agreement

was groundless, not on the validity of the recorded document and underlying real

property interest itself. And § 33-420(D) pertains only to the validity of the document; it

does not govern its recording. Therefore, Baxter has not shown that Bennett violated

§ 33-420.

¶10 Baxter further contends that the trial court erred in ruling in favor of

Bennett and Meyerstein because they violated § 33-420(C) by “refusing to release a

groundless and invalid document within twenty days of a written request.” But because

Baxter has not shown the document Bennett and Meyerstein recorded was groundless, it

has not shown Bennett and Meyerstein violated § 33-420(C) by failing to release the

interest. Additionally, because Bennett and Meyerstein did not violate any subsection of

§ 33-420, we also reject Baxter‟s additional argument that Bennett‟s and Meyerstein‟s

purported violations entitled Baxter to damages. The trial court did not err in rejecting

Baxter‟s slander of title claims.

Breach of Contract Claims

¶11 Baxter next contends that the trial court erred in its ruling in favor of

Bennett on his breach of contract claim. Baxter initially states that the grant of summary

judgment on its breach of contract claim in favor of Bennett and Meyerstein should be

reversed because the court “misconstrued the terms of the contract.” But this claim is

“wholly without supporting argument or citation to authority,” so it is waived. Brown v.

U.S. Fid. & Guar. Co., 194 Ariz. 85, ¶ 50, 977 P.2d 807, 815 (App. 1998); see also Ariz.

R. Civ. App. P. 13(a)(6).

5
¶12 Baxter further argues that, in ruling on Bennett‟s breach of contract claim

after trial, the trial court misinterpreted the relevant provisions of the Agreement in

concluding that Baxter was in breach by refusing to release the $10,000 earnest money.

In the absence of any relevant factual dispute, we review matters of contract

interpretation de novo. See Rand v. Porsche Fin. Servs., 216 Ariz. 424, ¶ 37, 167 P.3d

111, 121 (App. 2007).

¶13 “[W]e will give effect to a contract as written where the terms of the

contract are clear and unambiguous.” Mining Inv. Group, LLC v. Roberts, 217 Ariz. 635,

¶ 16, 177 P.3d 1207, 1211 (App. 2008). The liquidated damages clause of the Agreement

states:

In the event Buyers default or otherwise fail to complete the
purchase in accordance with this agreement, Seller shall be
released from all obligations to sell the real property to
Buyers and may proceed against Buyers upon any claims or
remedy which Sellers may have in law or equity; provided,
however that by placing their initials below[,] Buyer and
Seller agree that it would be impractical or extremely difficult
to fix actual damages in the event of Buyers‟ default or failure
to complete the purchase, and that the amounts actually
deposited by Buyers in escrow shall be paid to Seller as
liquidated damages and as Sellers‟ sole and complete remedy,
except that Buyer[s] will also be responsible to pay any and
all costs incurred by Buyer[s] in the course of Buyer[s‟]
investigation.

¶14 Baxter argues that only the second clause of that provision specifically

addresses liquidated damages and that, because this clause does not include the words “in

accordance with this agreement,” Baxter would be entitled to collect damages for a

“failure to complete the purchase” even if the conditions required of the buyers had not

6
been met. Moreover, Baxter contends that the use of the word “or” in the clause “default

or failure to complete the purchase” means that, even in situations where Bennett and

Meyerstein had not defaulted on the contract but had failed to complete the purchase,

they still would have forfeited their earnest money. The trial court found the clause

unambiguous and concluded that the language “in accordance with this Agreement”

incorporates the provision of the Agreement outlining the conditions to the buyers‟

obligations.

¶15 We reject Baxter‟s attempt to parse the various clauses and instead read the

provision as a whole. See State ex rel. Goddard v. R.J. Reynolds Tobacco Co., 206 Ariz.

117, ¶ 12, 75 P.3d 1075, 1078 (App. 2003) (we construe contract in its entirety). The

phrase “in accordance with this Agreement” is implied in the second clause.

Additionally, as the trial court found, sections seven and twelve are unambiguous when

read together. The liquidated damages clause of the Agreement states that the forfeiture

of the earnest money would be in lieu of damages, which would be difficult to calculate.

But section eight of the contract indicates that Baxter is not entitled to any damages if the

conditions to Bennett‟s performance are not fulfilled. Therefore, in turn, the liquidated

damages clause cannot apply when the conditions to Bennett‟s performance were not

fulfilled. We agree with the interpretations of the trial court and, thus, conclude that it

did not err by finding Baxter in breach of the contract for failing to return the earnest

money.

¶16 Moreover, the trial court reached its conclusions after hearing all of the

evidence at the bench trial. Substantial evidence supports the court‟s factual findings

7
concerning the meaning of the contract. See Kocher v. Ariz. Dep’t of Revenue, 206 Ariz.

480, ¶ 9, 80 P.3d 287, 289 (App. 2003) (factual finding sustained unless clearly

erroneous; not clearly erroneous “if substantial evidence supports it”); see also Ariz. R.

Civ. P. 52(a) (“Findings of fact . . . shall not be set aside unless clearly erroneous.”). The

court resolved any conflict in the evidence, and we uphold its decision. See Moreno v.

Jones, 213 Ariz. 94, ¶ 20, 139 P.3d 612, 616 (2006) (findings may be clearly erroneous if

based on reasonable conflict of evidence). And we reject Baxter‟s argument that this

interpretation would prevent Bennett from ever being in default. As Bennett notes, if he

had prevented fulfillment of the condition, he could not rely on that condition to defeat

the Agreement. See Sec. Nat’l Life Ins. Co. v. Pre-Need Camelback Plan, Inc., 19 Ariz.

App. 580, 582, 509 P.2d 652, 654 (1973).

¶17 Baxter further argues that we should reverse certain findings of the trial

court regarding oral extensions of the contract. But Baxter concedes that these findings

did not directly result in any award of damages against it. Consequently, we decline to

review them. See Ariz. R. Civ. App. P. 1 (appeals for party “aggrieved by the

judgment”).

Attorney Fees, Sanctions, and Costs

¶18 Baxter next argues that the trial court erred in its award of attorney fees,

sanctions, and costs to Bennett and Meyerstein. The court awarded attorney fees,

sanctions, and costs under multiple statutes and multiple theories, and we address each

one in turn.

8
Attorney Fees Pursuant to A.R.S. § 12-341.01(A)

¶19 Baxter asserts that the trial court incorrectly applied § 12-341.01(A) in

awarding attorney fees to Bennett and Meyerstein because it included fees related to the

tort claims. “As a general rule, the parties to a civil proceeding are responsible for their

own litigation expenses.” Foster ex rel. Foster v. Weir, 212 Ariz. 193, ¶ 4, 129 P.3d 482,

484 (App. 2006). Certain statutes, however, allow parties to recover these expenses

under specific circumstances. Id.; see, e.g., § 12-341.01. Section 12-341.01(A) allows

parties to recover “reasonable attorney fees” for contested claims “arising out of a

contract.” Its application “is a question of statutory interpretation, which we review de

novo.” Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, ¶ 12, 6 P.3d 315,

318 (App. 2000).

¶20 The meaning of “arising out of a contract” as used in § 12-341.01(A) has

been the subject of many appeals in which courts have had to evaluate its applicability to

non-contract claims. See, e.g., Marcus v. Fox, 150 Ariz. 333, 335, 723 P.2d 682, 684

(1986); Sparks v. Republic Nat’l Life Ins. Co., 132 Ariz. 529, 542-43, 647 P.2d 1127,

1140-41 (1982); Ramsey Air Meds, 198 Ariz. 10, ¶ 18, 6 P.3d at 318; Amphitheater Pub.

Schs. v. Eastman, 117 Ariz. 559, 560, 547 P.2d 47, 48 (App. 1977). Many of the

decisions interpreting “arising out of a contract” seem contradictory, but Arizona courts

have held attorney fee awards appropriate under § 12-341.01(A) even for certain non-

contract claims, including torts.

¶21 In Ramsey Air Meds, one of the more recent cases, this court directly

addressed the recoverability of attorney fees expended for litigating a tort claim “arising

9
out of a contract.” See 198 Ariz. 10, ¶ 18, 6 P.3d at 318. There, the court first analyzed

Ramsey Air Meds‟s tort claim to determine if it was “interwoven” with the breach of

contract claim. Id. ¶ 17. The court did not define “interwoven” but cited Pettay v.

Insurance Marketing Services, Inc. (West), 156 Ariz. 365, 368, 752 P.2d 18, 21 (1987),

which stated that attorney fees could be awarded for litigating the tort claim because it

could not have been brought but for the breach of contract, and Campbell v. Westdahl,

148 Ariz. 432, 440-41, 715 P.2d 288, 296-97 (1985), which allows an award of attorney

fees if the tort and contract actions are “intertwined.” Ramsey Air Meds, 198 Ariz. 10,

¶ 17, 6 P.3d at 318. But, because the party requesting attorney fees in Ramsey Air Meds

failed on the contractual claim, the court found that § 12-341.01(A) could not support an

award of fees for the tort claims under this theory. Id.

¶22 Absent an express, successful contract claim, the Ramsey Air Meds court

then looked at whether the tort claims there independently arose “out of a contract” for

purposes of the statute. Id. ¶¶ 18-29. Following a comprehensive review of the case law,

Ramsey Air Meds concluded that

the court should look to the fundamental nature of the action
rather than the mere form of the pleadings. The existence of a
contract that merely puts the parties within tortious striking
range of each other does not convert ensuing torts into
contract claims. Rather, a tort claim will “arise out of a
contract” only when the tort could not exist “but for” the
breach or avoidance of contract. When the duty breached is
one implied by law based on the relationship of the parties,
that claim sounds fundamentally in tort, not contract. In such
cases, it cannot be said that the plaintiff‟s claim would not
exist “but for” the contract. The test is whether the defendant
would have a duty of care under the circumstances even in the
absence of a contract.

10
Id. ¶ 27.

¶23 In Modular Mining Systems, Inc. v. Jigsaw Technologies, Inc., 221 Ariz.

515, ¶¶ 22-23, 212 P.3d 853, 859-60 (App. 2009), we specifically noted that the “arising

out of” analysis is complex, and we relied on the fact that the claims were interwoven in

upholding the fee award. We cited several cases from foreign jurisdictions that primarily

found attorney fees incurred in defending or prosecuting non-contract claims can be

awarded when these claims are so factually connected to a contract claim that they

require the same work that is already necessary for the defense or prosecution of the

contract claim alone. Id. n.10. Allowing an award of fees in this situation better serves

the legislative intent in § 12-341.01 than denying contract-related fees because they are

interwoven with non-contract fees. See New Pueblo Constructors, Inc. v. State, 144 Ariz.

95, 111, 696 P.2d 185, 201 (1985) (legislative intent of § 12-341.01 to “mitigat[e] the

burden of the expense of litigation to establish a just claim or just defense, and

discourag[e] frivolous lawsuits”); see also Zeagler v. Buckley, 223 Ariz. 37, ¶ 9, 219 P.3d

247, 249 (App. 2009) (“[W]hen . . . claims are so interrelated that identical or

substantially overlapping discovery would occur, there is no sound reason to deny

recovery of such legal fees.”).

¶24 Baxter brought claims on several tort theories in addition to its claim for

breach of contract. The tort claims include: interference with a contractual relationship

and prospective business advantage with the new buyer, fraud in the inducement, unfair

competition, and slander of title and filing false documents. These types of claims have

11
been found not to arise “out of a contract.” Morris v. Achen Constr. Co., 155 Ariz. 512,

514, 747 P.2d 1211, 1213 (1987) (“The duty not to commit fraud is obviously not created

by a contractual relationship and exists . . . even when there is no contractual relationship

between the parties at all.”); Fairway Constructors, Inc. v. Ahern, 193 Ariz. 122, ¶ 17,

970 P.2d 954, 957-58 (App. 1998) (unfair competition arises out of tort); Bar J Bar

Cattle Co. v. Pace, 158 Ariz. 481, 486, 763 P.2d 545, 550 (App. 1988) (“The duty not to

interfere with the contract of another arises out of law, not contract.”); W. Techs., Inc. v.

Sverdrup & Parcel, Inc., 154 Ariz. 1, 3, 7-8, 739 P.2d 1318, 1320, 1324-25 (App. 1986)

(interference with prospective business advantage not found to arise out of contract); cf.

W. Techs., 154 Ariz. at 3, 6-8, 739 P.2d at 1320, 1323-25 (slander of title shares a

“common root” with tortious interference, which does not arise out of contract).

¶25 And the trial court‟s finding that these claims “would” not have been

brought “but for” the contract claim does not satisfy the Ramsey Air Meds standard which

allowed attorney fees for tort claims that could not have been brought but for the breach

of contract. See Ramsey Air Meds, 198 Ariz. 10, ¶ 27, 6 P.3d at 320. Additionally,

because Modular Mining Systems was decided after the judgment in this case, the trial

court did not have the benefit of considering the administrative-necessity avenue for

awarding fees. See Modular Mining Sys., 221 Ariz. 515, ¶¶ 22-25, 212 P.3d at 859-61.

Accordingly, we vacate the award of fees and remand for reconsideration under the

proper standards.

12
Attorney Fees Pursuant to A.R.S. §§ 12-341.01(C) and 12-349(A)

¶26 Baxter argues the trial court erred in awarding attorney fees pursuant to

§§ 12-341.01(C) and 12-349(A) because the court did not make appropriate findings and

because its claims were not groundless, did not constitute harassment, and were made in

good faith.1 The applicability of §§ 12-341.01(C) and 12-349(A) is a question of

statutory interpretation that this court reviews de novo. See Ramsey Air Meds, 198 Ariz.

10, ¶ 12, 6 P.3d at 318; see also Zamora v. Reinstein, 185 Ariz. 272, 275, 915 P.2d 1227,

1230 (1996) (issues of statutory construction reviewed de novo).

¶27 Section 12-341.01(C) provides: “The court shall award reasonable attorney

fees in any contested action upon clear and convincing evidence that the claim or defense

constitutes harassment, is groundless and is not made in good faith.” And § 12-349(A)

provides:

the court shall assess reasonable attorney fees, expenses and,
at the court‟s discretion, double damages of not to exceed five
thousand dollars against an attorney or party, including this
state and political subdivisions of this state, if the attorney or
party does any of the following:

1. Brings or defends a claim without substantial justification.
2. Brings or defends a claim solely or primarily for delay or
harassment.
3. Unreasonably expands or delays the proceeding.

Section 12-349(F) defines “without substantial justification” as “mean[ing] that the claim

or defense constitutes harassment, is groundless and is not made in good faith.”

1
Baxter addresses §§ 12-341.01(C) and 12-349(A) in separate sections of its
opening brief, but its argument sometimes conflates the two. And because of the
similarity of the requirements under each statute, we address the arguments together.
13
¶28 “[T]he trial court must make appropriate findings of fact and conclusions of

law” for all three elements. Fisher ex rel. Fisher v. Nat’l Gen. Ins. Co., 192 Ariz. 366,

¶ 13, 965 P.2d 100, 104 (App. 1998); see also Trantor v. Fredrikson, 179 Ariz. 299, 300,

878 P.2d 657, 658 (1994) (requirement of findings same for §§ 12-341.01(C), 12-349).

Further, A.R.S. § 12-350 requires the trial court, when making an award under § 12-349,

to set forth the specific reasons for an award. State v. Richey, 160 Ariz. 564, 565, 774

P.2d 1354, 1355 (1989). The purpose of this requirement is to assist the appellate court

on review. See id. Thus, the findings “need only be specific enough to allow an appellate

court „to test the validity of the judgment.‟” Phoenix Newspapers, Inc. v. Ariz. Dep’t of

Corrs., 188 Ariz. 237, 243, 934 P.2d 801, 807 (App. 1997), quoting Miller v. Bd. of

Supervisors, 175 Ariz. 296, 299, 855 P.2d 1357, 1360 (1993).

¶29 Here, the trial court referred to its earlier findings of fact regarding Baxter‟s

having made false statements in a letter sent to the title company, the closing of the sale

to the third party, and Baxter‟s claim for damages for slander of title and intentional

interference. It found that Baxter had “asserted certain claims without substantial

justification causing unreasonable delay in this litigation and which claims were in the

nature of harassment up to the day of trial.” It also concluded that Baxter had “brought or

defended claims without substantial justification and unreasonably expanded the

proceedings by failing until the time of trial to notify the parties and this Court of which

claims or defenses it was no longer pursuing.”

¶30 Baxter complains the trial court did not make a finding that its claims were

groundless or were made in bad faith. But, as it notes, “without substantial justification”

14
includes a finding that the claim is groundless and made in bad faith. See § 12-349(F).

And the court‟s findings are specific enough for us to evaluate them on review. See

Richey, 160 Ariz. at 565, 774 P.2d at 1355. The court specifically found that Baxter had

unreasonably expanded the proceedings and that its claims were in the nature of

harassment. Therefore, we will not reverse the award for lack of findings.

¶31 Baxter further argues its claims were not groundless, intended to harass,

made in bad faith, or meant to cause unreasonable delay. “We view the evidence in a

manner most favorable to sustaining the award and affirm unless the trial court‟s finding

that the action [was groundless, harassing and in bad faith] is clearly erroneous.”

Phoenix Newspapers, 188 Ariz. at 243, 934 P.2d at 807.

¶32 Baxter has not made any substantial argument on appeal that its claims

against Bennett for slander of title and interference with a business relationship were

valid. The trial court could have found they were groundless, intended to harass, made in

bad faith, or meant to cause an unreasonable delay, and we cannot say that such a finding

would be “clearly erroneous.” Therefore, we reject Baxter‟s claim.

¶33 Baxter further contends that the trial court misapplied § 12-349(A) by

basing its decision on “a few minor elements of damages.” The court found that Baxter

had “asserted . . . claims without substantial justification causing unreasonable delay” and

that the claims “were in the nature of harassment.” Thus, it concluded that Bennett and

Meyerstein were entitled to attorney fees pursuant to § 12-349. Although the court‟s

finding that Bennett was entitled to fees followed a paragraph finding that Baxter had

presented no evidence on certain elements of damage, the court did not limit the basis for

15
its award to the “few minor elements of damages” to which Baxter refers. Rather, the

court referred to its findings of fact and conclusions of law from an earlier ruling in

finding that Baxter‟s claims were “without substantial justification.”

¶34 Finally, Baxter challenges the amount of attorney fees awarded based on

the expansion of the issues. Although the findings of fact and conclusions of law upon

which the trial court relied in awarding the fees are sufficient to meet the requirements of

the statutes, they pertain to discrete issues which were not central to the basic breach of

contract and tort contests. But the amount the court awarded does not appear to be

confined to these specific issues. We cannot uphold the court‟s awards of the entire

amount of Bennett‟s and Meyerstein‟s attorney fees based on these limited findings.

Therefore, we vacate the attorney fees awards based on §§ 12-341.01(C) and 12-349(A)

and return the issue for reconsideration.

Sanctions

¶35 Baxter further argues the trial court erred by awarding Bennett and

Meyerstein each $4,000 as a sanction, claiming that the court gave no factual basis for

those awards. But, as we have concluded above, the court made sufficient findings and

conclusions to support an award under § 12-349(A), which authorizes the court to grant

“double damages of not to exceed” $5,000. And Baxter does not identify with

particularity and proper argument any other defect, so any further argument is waived.

See Brown, 194 Ariz. 85, ¶ 50, 977 P.2d at 815; see also Ariz. R. Civ. App. P. 13(a)(6).

Therefore, we affirm the award of sanctions.

16
Costs

¶36 Baxter argues the trial court erred in awarding taxable costs to Bennett and

Meyerstein because it included certain expenses that do not meet the requirements of the

applicable statute. “[W]hether certain expenditures are taxable costs is a matter of law

that we review de novo.” Foster ex rel. Foster v. Weir, 212 Ariz. 193, ¶ 5, 129 P.3d 482,

484 (App. 2006). Taxable costs are defined in A.R.S. § 12-332(A) and include, in

relevant part: “[f]ees of officers and witnesses,” “[c]ost of taking depositions,”

“[c]ompensation of referees,” “[c]ost of certified copies of papers or records,” and

“[o]ther disbursements that are made or incurred pursuant to an order or agreement of the

parties.” There have been no orders requiring specific expenditures, and there is no

evidence in the record of a relevant agreement of the parties.

¶37 The trial court awarded taxable costs to Bennett and Meyerstein in the

amounts of $1,571.61 and $5,023.92 respectively. But few of the taxable costs charged

by both Bennett and Meyerstein meet the definition in § 12-332(A). There are some

costs for the taking of depositions, but their totals fall far short of the awards. Travel

costs related to the taking of depositions outside Arizona and photocopies of deposition

records have been determined to be taxable costs. Young’s Market Co. v. Laue, 60 Ariz.

512, 517, 141 P.2d 522, 524 (1943) (interpreting earlier statute for taxable costs including

“costs of taking deposition,” court allowed travel expenses for attorney to attend

deposition outside Arizona); State ex rel. Corbin v. Ariz. Corp. Comm’n, 143 Ariz. 219,

229-30, 693 P.2d 362, 372-73 (App. 1984) (photocopies of deposition transcript

allowable taxable cost). However, the record does not adequately reflect whether any of

17
the photocopying charges were for this purpose, nor does it appear that any of the

depositions were taken outside of Arizona. Most of the costs awarded are for ineligible

expenses such as photocopies, facsimiles, shipping, and travel expenses.

¶38 The trial court also awarded Bennett double taxable costs ($1,932) as a

sanction pursuant to Rule 68(g), Ariz. R. Civ. P., because Baxter had declined Bennett‟s

offer of judgment. However, the rule only allows consideration of taxable costs as

defined by § 12-332, and we are unable to find properly taxable costs that amount to

$966—half of the awarded amount. Thus, we remand this issue for a recalculation of

taxable costs, including the double taxable costs awarded as a sanction, consistent with

this decision and the definition set forth in the statute.

Judgment against Margaret and Loran Baxter

¶39 Baxter finally argues that Margaret and Loran Baxter were improperly

included in the judgment in violation of their right to due process because they were not

parties below. We first note that the Baxters, as individuals, were not parties to the

lawsuit.2 Under certain circumstances, nonparties are allowed to appeal a judgment. See,

e.g., Wieman v. Roysden, 166 Ariz. 281, 281, 284, 802 P.2d 432, 432, 435 (App. 1990)

(nonparty attorney allowed to appeal sanctions imposed against him by trial court). But

Rule 8(c), Ariz. R. Civ. App. P., requires that the notice of appeal “specify the party or

parties taking the appeal,” and the notice of appeal in this case does not include Margaret

2
Baxter does not assert that it, as an entity, has standing to bring an appeal on
behalf of Margaret and Loran Baxter, as individual shareholders, so we need not address
this question.

18
and Loran Baxter.3 Citing Wieman, Baxter argues that the absence of Margaret and

Loran Baxter on the notice of appeal does not preclude their appeal. Yet the nonparty in

Wieman had indeed filed a notice of appeal “from „the Judgment entered against [him].‟”

166 Ariz. at 284, 802 P.2d at 435 (alteration in Wieman); see also Abril v. Harris, 157

Ariz. 78, 81, 754 P.2d 1353, 1356 (App. 1987) (attorney included in notice of appeal).

Thus, because the Baxters did not file a proper notice of appeal, we lack jurisdiction to

determine whether the exceptions for nonparties would apply to them under the

circumstances of this case.

Attorney Fees on Appeal

¶40 All parties request attorney fees on appeal. Section 12-341.01(A)

authorizes the court to grant attorney fees to the “successful party” in a contract action.

Bennett has been successful on most of the issues but Baxter has obtained a remand on

some of the attorney fees, sanctions, and costs. If the trial court ultimately awards

Bennett all or substantially all of his attorney fees on any basis on remand, it is directed

to also award Bennett his reasonable attorney fees incurred on appeal. Baxter‟s request

for attorney fees is denied.

3
The notice of appeal states only that “Defendant Baxter Group, Inc. appeals”
from the trial court‟s judgment.

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 Conclusion

¶41 In light of the foregoing, we affirm in part and vacate and remand in part.

JOSEPH W. HOWARD, Chief Judge

CONCURRING:

PHILIP G. ESPINOSA, Presiding Judge

GARYE L. VÁSQUEZ, Judge

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