Mill Alley Partners v. Wallace, 700 Ariz. Adv. Rep. 26 (App. Div. I, November 20, 2014) (J. Johnsen)
TRIAL COURT MAY NOT GRANT NEW TRIAL BASED UPON IMPROPER JURY INSTRUCTION NOT OBJECTED TO BY MOVING PARTY ABSENT SHOWING OF PREJUDICE
Plaintiff leased space to defendant in early 2003. When defendant sold his business and moved out he guaranteed the first 36 months of rent on the new lease executed by a new tenant. From the outset the new tenant routinely failed to pay the rent in full and on time, and ultimately closed the nightclub seven months into the lease. Plaintiff sued defendant for breach of the guarantee in October 2009. Defendant raised the defenses of laches, estoppel and the applicable six year statute of limitations (ARS § 12-548). At trial, without objection, the jury was instructed to decide the equitable defenses as well as the statute of limitations. The jury returned a general verdict for the defendant. Subsequently, the trial court sua sponte informed the parties it was considering ordering a new trial based upon the error of submitting equitable defenses to the jury rather than deciding them itself. Plaintiff then brought a motion for new trial which was granted. The Arizona Court of Appeals reversed. On appeal, both parties agreed that equitable defenses are for the court and not a jury to decide but defendant argued that plaintiff did not object to the instruction and in fact agreed the jury should decide them. The court of appeals found that because the jury returned a general verdict there was no way for plaintiff to show the jury decided in favor of the defendant based upon the equitable defenses rather than the defense at law of the statute of limitations. Accordingly, having failed to object and having failed to prove prejudice granting a new trial was improper. Finally, the court ruled that where the written guarantee specifically stated the defendant's obligation arose immediately upon the tenant's failure to pay, it was appropriate to instruct the jury that accrual of the statute of limitations should be decided based upon breach by the tenant and not based upon the date of notice and demand for payment by the plaintiff to the defendant.