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Stephan v. Stewart

Court of Appeals of Arizona, First Division, Department E

July 18, 2013

ROBERT J. STEPHAN, JR, an individual, Plaintiff/CounterDefendant/ Appellant,
v.
MARK STEWART, an individual, Defendant/CounterClaimant/ Appellee.

Not for Publication - Rule 28, Arizona Rules of Civil Appellate Procedure

Appeal from the Superior Court in Maricopa County Cause No. CV 2010-053887 The Honorable Maria del Mar Verdin, Judge

Robert S. Porter, P.C. Robert S. Porter and Knapp & Roberts, P.C., David L. Abney Co-Counsel for Plaintiff/CounterDefendant/Appellant.

Cook & Price PLC, Jesse Cook Attorneys for Defendant/CounterClaimant/Appellee.

MEMORANDUM DECISION

MICHAEL J. BROWN, Judge.

¶1 This appeal arises out of a lease of a condominium ("condo") and its furnishings between Robert Stephan, the landlord, and Mark Stewart, the tenant. On appeal, Stephan challenges the sufficiency of the evidence regarding his damages claim for lost furnishings and the superior court's "intent" instruction to the jury relating to Stewart's counterclaim for overpaid rent. For reasons that follow, we affirm the jury's verdict denying Stephan's claim but we vacate the jury's verdict awarding damages to Stewart. We also vacate the superior court's award of attorneys' fees and costs in favor of Stewart and remand for a determination of whether either party should be awarded fees or costs incurred in the superior court.

BACKGROUND

¶2 In 2008, Stephan obtained a loan from M&I Bank to purchase the condo, which he then furnished. To secure the loan, Stephan gave the bank a deed of trust on the condo. Because of the decline in the housing market, the condo's value decreased and Stephan owed more on the loan than the condo was worth. Stephan attempted to negotiate a loan modification with the bank and in June 2009 stopped making his loan payments.

¶3 On July 7, 2009, Stewart leased Stephan's furnished condo for one year, from July 11, 2009 through July 10, 2010. Pursuant to the lease, Stewart paid Stephan $36, 648 as prepaid rent for the year. The lease included a clause, handwritten by Stewart's realtor ("handwritten clause"), which provided:

Tenant has been informed of Landlord's situation with the lender regarding loan modification, etc. If Tenant is required to vacate the premises prior to expiration of this lease, then Landlord shall reimburse Tenant for all rent plus tax pre-paid but not used through the expiration of the lease.

¶4 Stephan was unsuccessful in renegotiating the loan with the bank. On February 18, 2010, the bank non-judicially foreclosed on the deed of trust and, making a credit bid, purchased the condo at the trustee's sale. Nonetheless, Stewart continued residing in the condo and, on June 7, 2010, he purchased the condo from the bank.

¶5 Stephan sued Stewart for the return of his furnishings or their fair market value, and rent for their use after the lease had expired. Stewart counterclaimed for a refund of the prepaid rent from the date of the foreclosure through the end of the lease period. After a trial, the jury found against Stephan on his claim against Stewart and in favor of Stewart on his counterclaim against Stephan. The jury awarded Stewart $34, 808.50. Upon Stewart's request for attorneys' fees and costs pursuant to the terms of the lease agreement and Arizona Revised Statutes ("A.R.S.") section 12-341.01, the superior court awarded Stewart attorneys' fees in the amount of $37, 277 and costs in the amount of $1, 654. Stephan timely appealed. We have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).

STEPHAN'S CLAIM AGAINST STEWART

¶6 We first address Stephan's claim against Stewart for the value of the furnishings within the condo. In finding in favor of Stewart and against Stephan, the jury rejected Stephan's claim. Stephan argues that the superior court erred in sending the issue to the jury because Stewart failed to present any evidence Stephan abandoned the furnishings. We disagree, however, because we conclude that Stewart presented evidence from which a jury could reasonably conclude Stephan abandoned the furnishings. Strawberry Water Co. v. Paulsen, 220 Ariz. 401, 408, ¶ 16, 207 P.3d 654, 661 (App. 2008) (abandonment as applied ...


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