The City of Scottsdale owns several swimming pools. In 2016 Neptune complained the City’s contract with a non-profit group called SAC for operating the swimming leagues should be open for bidding. Neptune asserted SAC was not paying a fair value for the contract and violated the Gift Clause. The City ignored this and renewed a three year contract with SAC thus continuing a 50-year relationship. But as that contract was expiring, the City for the first time issued a Request for Proposal. Neptune and SAC submitted proposals. City employees used a grading matrix and initially said SAC’s proposal scored substantially higher. Not true. The City then said it was a virtual tie and came up with other reasons for awarding the contract once again to SAC. Then when this was questioned, the City cancelled the RFP and stated the City was not required to use the RFP process. Neptune filed suit.

The Arizona Supreme Court holds the Gift Clause does not require competitive bidding or accepting the highest bid although the competitive bid process is a factor as to the market value of the license. The focus is on whether a public entity gets more than it gives. The Gift Clause is violated if the “give” and “get” are grossly disproportionate. Public entities may also consider nonpecuniary factors. “In sum, the Gift Clause serves to check mismanagement of public resources, but it does not require a public entity to maximize profits in every transaction.” Neptune did not prove a violation of the Gift Clause. The Court recognized, however, that failing to follow its own rules and cancelling the RFP may violate the public interest and be an abuse of discretion. The RFP is different from an invitation to bid on a contract where a public entity is required to award a contract “to the lowest responsible and responsive bidder.”  An RFP allows for discretion. While the City was not required to award Neptune the contract, “We conclude that disputed issues of material fact exist as to whether the City acted with a ‘fixed intent’ to award the license to SAC throughout the RFP process and engaged in favoritism by canceling the RFP after Neptune submitted the more advantageous proposal.” The Court runs through a list of questionable actions and remands the case for further consideration.  On remand, the trial court has been given pretty good reasons for finding an abuse of discretion.

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The Arizona Supreme Court starts off 2024 discussing the land use doctrine of “boundary by acquiescence.”  The doctrine applies when there is 1) occupation or possession up to a defined line, 2) mutual acquiescence as to the boundary, and 3) and ten years. The Court adds an additional element requiring the actual boundary must be uncertain or disputed. Anyone claiming “boundary by acquiescence” must prove these elements by clear and convincing evidence.

The parties purchased adjoining parties. The Becks hired a landscaper, and the landscaper did not follow the actual property line but cut the line short. Years later, when the Becks remodeled their backyard they wanted to move their pavers and landscaping out to the actual property line. The Nevilles sought advantage from the earlier mistake. Litigation ensued.  Trial court ruled on summary judgment for the Becks holding the Nevilles did not meet their burden as a matter of law.

Having less confidence in the rule of law, the court of appeals held there were material disputed facts and remanded for trial. 

The Supreme Court reverses the court of appeals. The Becks keep their property as a matter of law.  After discussing the importance of property rights, the Court holds occasionally parking your car on your neighbors’ property is not occupation; the Becks never acquiesced to changing the boundary; and while more than ten years passed, the actual property line was not disputed or uncertain.  The Court then cuts up Neville’s “adverse possession” claim for similar reasons.  The Court unnecessarily includes a picture showing the disputed property, but perhaps the picture reassures hundreds of other property owners.  The Nevilles are ordered to pay the Becks’ attorney’s fees and costs.

Justice Timmer concurs but finds little reason for the Court’s referencing the Constitution, the Declaration of Independence, the Virginia Declaration, and discussing “natural rights.”  We respect her concerns, but if she feels squeamish or skeptical over the history lesson, and these sources do not reflect anchoring principles or a foundation upon which courts should draw, then reason and fully explain why. She has as much ink and paper as she needs and hundreds of articles, books, and authorities to cite.

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Motions under Rule 12(b)(6) are largely undeveloped. This appeal comes from the granting of such a motion on an undeveloped piece of land. Hammer Homes contacted the City of Phoenix asking about land restrictions or stipulations. The planner misses some zoning-related stipulations, and Hammer purchased the property. The city later tells Hammer about the stipulations. Hammer alleges the property is undevelopable as planned and demands $2.5 million in lost profits. The trial court holds no duty and, oddly, the representations were legal not factual. (Our guess is the city was looking for immunity or a lack of duty and was having trouble finding it.) The court of appeals holds there is a duty, and based on the allegations, Hammers sufficiently alleges negligent misrepresentation under Restatement (Second) of Tort § 552(1). The court of appeals finds a duty under § 552: the only section in the entire Restatement regarding negligent communication and economic loss. This expansive section includes innocent misrepresentation and states if one has a pecuniary interest and negligently provides false information for the guidance of others in their business, and they rely upon this information, then there may be liability for negligent misrepresentation. The duty, the court of appeals holds, is created by providing information. Since the city would have received fees had the property been developed, the court of appeals hold this “pecuniary interest” is sufficiently pleaded. The city argued Hammer was seeking legal advice on whether applicable zoning and land-use stipulations applied and not factual information. The court of appeals responds: “But Hammer did not request or rely on a legal opinion about a stipulation; it merely asked whether any existed.” The court of appeals rejects additional arguments focusing on whether there could have been justifiable reliance. Since this was decided on a motion to dismiss, we expect better arguments and evidence on summary judgment. Our criticism: Stop issuing opinions on remanded motions to dismiss when neither the facts nor the law is developed. Doing so creates an impression of substance. This opinion creates more questions than answers. Pecuniary interest? Reliance? Lost profits? Better to sort this out on summary judgment. For now, at the notice pleading stage a 12(b)(6) motion is a mumble strip on entry into court.

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