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Mill Alley Partners v. Wallace

Court of Appeals of Arizona, First Division

November 20, 2014

MILL ALLEY PARTNERS, an Arizona general partnership, Plaintiff/Appellee,
v.
WILLIAM H. WALLACE; CLUB LEVEL, INC., Defendants/Appellants

As Corrected March 17, 2015.

Appeal from the Superior Court in Maricopa County. No. CV2009-032774. The Honorable Michael D. Gordon, Judge.

For Plaintiff/Appellee: Robert A. Mandel, Taylor C. Young, Jennifer M. Perkins, Mandel Young, PLC, Phoenix.

For Defendants/Appellants: Mary T. Hone, The Law Offices of Mary T. Hone, PLLC, Scottsdale.

Chief Judge Diane M. Johnsen delivered the opinion of the Court, in which Acting Presiding Judge Lawrence F. Winthrop and Judge John C. Gemmill joined.

[236 Ariz. 421] OPINION

Page 463

JOHNSEN, Chief Judge:

[¶1] After a jury entered a general verdict in favor of the defendant on a landlord's claim for breach of a guaranty, the superior court granted a new trial because it concluded it had erred by allowing the jury to decide whether the claim was barred [236 Ariz. 422] by

Page 464

laches or equitable estoppel. Equitable defenses are for the court to decide, not the jury. But because the landlord had failed to object, absent fundamental, prejudicial error, the superior court lacked the power to grant a new trial on that ground. On appeal, the landlord has not demonstrated it was prejudiced by the error. Accordingly, and because the superior court properly instructed the jury about when the claim accrued for purposes of the statute of limitations, we reverse the new-trial order and reinstate the verdict in favor of the defendant.

FACTS AND PROCEDURAL HISTORY

[¶2] Mill Alley Partners leased the second floor of a Tempe building to William H. Wallace and his company Club Level, Inc. (collectively " Wallace" ) for use as a nightclub. Wallace sold the nightclub in early 2003. In connection with the sale, Wallace guaranteed the first 36 months of a new lease between the new nightclub owner and Mill Alley.

[¶3] From the beginning, the new tenant persistently failed to pay the rent in full and on time, and ultimately closed the nightclub seven months into the lease. Mill Alley sued Wallace in October 2009, alleging breach of his guaranty of the lease. In answering the complaint, Wallace alleged Mill Alley's claim was barred by laches, estoppel and the applicable six-year statute of limitations. See Ariz. Rev. Stat. § 12-548 (2014).[1] During a three-day trial, the parties put on evidence regarding the tenant's missed payments, the date the tenant abandoned the space and subsequent unsuccessful negotiations between Wallace and Mill Alley.

[¶4] Over Wallace's objection, the superior court instructed the jury that Mill Alley's claim accrued for purposes of the statute of limitations upon a material breach of the guaranty by Wallace. Neither party objected to the proposed instructions regarding laches or equitable estoppel, nor to allowing the jury to decide those equitable defenses. During deliberations, the jury submitted questions regarding the accrual of Mill Alley's claim. After discussing the issue with counsel, the court concluded it had instructed the jury incorrectly about when the claim accrued for purposes of limitations. Over Mill Alley's objection, the court reinstructed the jury that Mill Alley's claim accrued ...


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