Arizona Court of Appeals Division One affirms the trial court’s rulings based on sufficiency of the evidence and holds that jury instructions regarding agency agreements and contract modification were accurate.

A restaurant franchisor brought suit against a potential franchisee for breach of multiple contracts, anticipatory breach of multiple contracts, negligent misrepresentation, fraudulent inducement, and promissory fraud.  The franchisee counterclaimed with claims for breach of multiple contracts, the covenant of good faith and fair dealing, and fiduciary duties.  After the jury returned a verdict in favor of the franchisee, the franchisor renewed its motion for judgment as a matter of law and moved for a new trial in the alternative.  The trial court denied both motions.                                                 

On appeal, the franchisor argued that (1) the trial court erred in denying its motion for judgment as a matter of law because the jury’s verdicts were based on insufficient evidence, and (2) a new trial was warranted because two of the jury instructions were inaccurate and the trial court erroneously awarded the franchisee its expert witness fees.  The Court of Appeals rejected both arguments.

First, the court affirmed the trial court’s denial of the franchisor’s motion for judgment as a matter of law because there was sufficient evidence to support the jury’s conclusions that (1) the franchisor was either directly liable or liable under an alter-ego theory for its subsidiaries’ actions; (2) the franchisor breached the “quiet enjoyment” provision of a lease agreement; (3) the contracts at issue were enforceable; and (4) the franchisor breached the implied covenant of good faith and fair dealing.  The court also found sufficient evidence to uphold the jury’s damages award.

Second, the court held that the jury instructions regarding agency agreements and contract modification were consistent with Arizona law, and that expert witness fees were available pursuant to the express terms in one of the contracts between the parties.

Judge Howe authored the opinion of the court, in which Presiding Judge Cattani and Judge Jones joined