Zambezi v. Proforma

NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. IN THE ARIZONA COURT OF APPEALS DIVISION ONE ZAMBEZI HOLDINGS, LLC, an Arizona limited liability company; and MARK LOVE, an individual, Plaintiffs/Counterdefendant/Appellants/Cross- Appellees, v. PROFORMA HEALTH, PLLC, an Arizona professional limited liability company; MUNDERLOH HOLDINGS, LLC, an Arizona limited liability company; MUNDERLOH MEDICAL, INC., an Arizona corporation; and TIMOTHY MUNDERLOH, an individual, Defendants/Counterclaimants/Appellees/Cross-Appellants. No. 1 CA-CV 21-0406 FILED 8-4-2022 Appeal from the Superior Court in Coconino County No. S0300CV201400492 The Honorable Cathleen Brown Nichols, Judge AFFIRMED IN PART; REVERSED IN PART; VACATED IN PART AND REMANDED COUNSEL Mangum Wall Stoops & Warden, PLLC, Flagstaff By Brandon J. Kavanagh Counsel for Plaintiffs/Counterdefendant/Appellants/Cross-Appellees Aspey, Watkins & Diesel, PLLC, Flagstaff By Whitney Cunningham Counsel for Defendants/Counterclaimants/Appellees/Cross-Appellants ZAMBEZI, et al. v. PROFORMA, et al. Decision of the Court MEMORANDUM DECISION Presiding Judge Cynthia J. Bailey delivered the decision of the Court, in which Judge D. Steven Williams and Chief Judge Kent E. Cattani joined. B A I L E Y, Judge: ¶1 This appeal and cross-appeal involve two brothers-in-law— Mark Love (“Mark”), an entrepreneur, and Timothy Munderloh (“Tim”), a chiropractor—and the entities they use to own and operate their businesses. Mark, Tim, and Siobhan Love Munderloh (“Siobahn”)—who is Tim’s wife and Mark’s sister—worked cooperatively for approximately a decade operating Munderloh Chiropractic, LLC (“Munderloh Chiropractic”) and later a Massage Envy franchise in Flagstaff. In 2013, Mark opened a Massage Envy franchise in Prescott, and shortly thereafter, Tim cut Mark and his company, Zambezi Holdings, LLC (“Zambezi”) (collectively, “Mark”) off from twice-monthly cash distributions from Proforma Health PLLC (“Proforma”), the holding company formed to do business as Munderloh Chiropractic. Mark sued Proforma; Munderloh Chiropractic, replaced by Munderloh Medical, Inc. (“MMI”); Munderloh Holdings, LLC (“Munderloh Holdings”); and Tim (collectively, “Tim”) alleging breach of contract and seeking judicial dissolution of Proforma. Tim then sued Mark alleging, among other things, the taking of a corporate opportunity because Mark had opened the Prescott Massage Envy without Tim. ¶2 Mark now appeals the superior court’s judgments in favor of Tim, raising several issues, including the court’s judgment as a matter of law in favor of Tim regarding liability on the corporate opportunity claim. Tim cross-appeals the jury’s verdict in favor of Mark on Mark’s claim for breach of contract and the superior court’s denial of Tim’s motion for a new trial. For the following reasons, we reverse as to the appeal on the corporate opportunity claim, affirm as to the cross-appeal, vacate the award of attorneys’ fees and costs and the separate judgment on 2018 jury fees, and remand for the court to reconsider attorneys’ fees, costs, and jury fees. FACTS AND PROCEDURAL HISTORY ¶3 After Tim resigned from his job working for a local chiropractic office in Flagstaff, Mark and Tim formed their own chiropractic business. Munderloh Chiropractic began business in April 2004, using the 2 ZAMBEZI, et al. v. PROFORMA, et al. …

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