Green Cross v. Mangisi

CourtCourt of Appeals of Arizona
DecidedOctober 8, 2024
Docket1 CA-CV 23-0692
StatusUnpublished

This text of Green Cross v. Mangisi (Green Cross v. Mangisi) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Green Cross v. Mangisi, (Ark. Ct. App. 2024).

Opinion

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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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

GREEN CROSS MEDICAL, INC., an Arizona non-profit corporation, Plaintiff/Appellee,

v.

CARYN MANGISI, Trustee of the John V. Gally Family Protective Trust, dated January 11, 1993, Defendant/Appellant.

No. 1 CA-CV 23-0692 FILED 10-08-2024

Appeal from the Superior Court in Navajo County No. S0900CV201200208 The Honorable Joseph Samuel Clark, Judge

AFFIRMED

COUNSEL

Aspey Watkins & Diesel, PLLC, Flagstaff By Whitney Cunningham, Caitlin Rynn Counsel for Plaintiff/Appellee

Hunter, Humphrey & Yavitz, PLC, Phoenix By Randall S. Yavitz, Isabel M. Humphrey Counsel for Defendant/Appellant GREEN CROSS v. MANGISI Decision of the Court

MEMORANDUM DECISION

Judge Cynthia J. Bailey delivered the decision of the Court, in which Presiding Judge Paul J. McMurdie and Judge Maria Elena Cruz joined.

B A I L E Y, Judge:

¶1 Caryn Mangisi, Trustee of the John V. Gally Family Protective Trust, dated January 11, 1993 (“the Trust”), appeals the superior court’s judgment awarding $3,565,000 in damages, along with attorneys’ and expert witness fees and accruing interest, to Green Cross Medical, Inc. (“Green Cross”). We affirm.

FACTS AND PROCEDURAL HISTORY1

¶2 In April 2012, John Gally, in his capacity at the time as Trustee of the Trust, entered a lease agreement to allow Green Cross to cultivate and dispense medical marijuana on commercial property held by the Trust in Winslow, Arizona (“the Property”). The lease allowed Green Cross to lease the Property until it obtained a dispensary operating license from the Arizona Department of Health Services (“ADHS”). After issuance of the license, the lease provided for a three-year term and an additional three- year tenant’s renewal option.

¶3 The Property was one of only two parcels within the Winslow Community Health Analysis Area (“CHAA”) appropriately zoned for a medical marijuana dispensary. Another entity seeking an operating license from ADHS, The Medicine Room (“TMR”), obtained permission from the owner of the other property. A few weeks after entering the lease agreement, Green Cross received a letter from Gally, through Gally’s attorney, Kathryne Ward, stating that Gally and the Trust were unilaterally revoking the lease. The Property’s locks were changed, and from then on, Green Cross could not access the Property.

1 We take portions of the facts and procedural history from this court’s prior

memorandum decision and opinion involving the parties. See Green Cross Med., Inc. v. Gally (“Green Cross I”), 1 CA–CV 12–0610, 2013 WL 5435817 (Ariz. App. Sept. 26, 2013) (mem. decision); Green Cross Med., Inc. v. Gally (“Green Cross II”), 242 Ariz. 293 (App. 2017) (review denied Sept. 12, 2017).

2 GREEN CROSS v. MANGISI Decision of the Court

¶4 Green Cross filed a complaint against Gally, as Trustee of the Trust, for breach of contract and motions for a temporary restraining order (“TRO”) and preliminary injunction. Gally argued he was required to revoke the lease because a prior month-to-month lessee—a sister company to Compassionate Care Dispensary (“CCD”), which also wanted to operate a medical marijuana dispensary on the Property—allegedly had a superior interest in the form of an option to purchase the Property.2 The superior court issued the TRO and later the preliminary injunction, barring Gally and the Trust from revoking the lease and taking possession of the Property pending final determination of the action. Gally did not restore Green Cross’s possession of the Property, however, and in July 2012, he appealed the preliminary injunction.

¶5 Green Cross had applied with ADHS to be awarded the single Winslow dispensary license, but given its limited funds and the uncertainty over the lease’s status, Green Cross instructed ADHS to assign its sole $150,000 “proof of deposit” to the Kingman dispensary lottery—a lottery with more contestants and a significantly smaller chance of winning— instead of the Winslow lottery.

¶6 In August 2012, the ADHS dispensary bingo-ball lottery drawings took place. TMR won the Winslow dispensary lottery over CCD. Green Cross did not win the Kingman dispensary lottery.

¶7 In September 2013, this court affirmed the preliminary injunction in favor of Green Cross. See Green Cross I, 1 CA–CV 12–0610, at *3, ¶¶ 13, 15.

¶8 On remand, the superior court granted Ward’s motion to withdraw as counsel for Gally and the Trust, and the parties cross-moved for summary judgment. Green Cross sought partial summary judgment on liability for possible damages for the lease revocation; Gally and the Trust argued the lease was illegal and therefore unenforceable under the Arizona Medical Marijuana Act (“AMMA”), see Ariz. Rev. Stat. (“A.R.S.”) §§ 36– 2801 to –2822, and the federal Controlled Substances Act, see 21 U.S.C. §§ 801 to 904. The superior court denied Green Cross’s motion and granted Gally and the Trust’s motion, holding the lease violated both state and federal law and was therefore void for illegality.

2 Ward, the attorney for Gally and the Trust, was stepmother of a principal/owner of CCD.

3 GREEN CROSS v. MANGISI Decision of the Court

¶9 Green Cross appealed, and this court held the lease was not void, either for being contrary to the AMMA or for being contrary to the Controlled Substances Act, and “was enforceable at least for purposes of a damages action for its breach.” Green Cross II, 242 Ariz. at 298, 300-01, ¶¶ 15, 25, 29. We reversed and remanded for consideration of Green Cross’s damages claim. Id. at 300-01, ¶¶ 25, 30

¶10 In May 2018, Gally and the Trust filed their answer, denying Ward ever acted as their agent and positing she had “used” them “as an unwitting tool” to further her family’s interests. They later moved for summary judgment, arguing Green Cross could not show damages from breach of the lease because Green Cross’s lottery ball would likely have replaced CCD’s losing lottery ball in the Winslow drawing. Green Cross responded that even had its application “replaced” CCD’s, the lottery ball assignment was not guaranteed to be identical because ADHS randomized their assignment to qualified dispensary applicants via a computer program before the lottery. Thus, it was not a foregone conclusion Green Cross would have been assigned the same lottery ball as CCD. Green Cross also noted the Trust’s argument assumed CCD would not have been included in the Winslow lottery absent the breach, despite what it termed a “likelihood” it would have been. Finally, Green Cross argued the Trust’s argument ignored the opinions of the parties’ experts, both of whom had employed—at least in part—an ex-ante framework in calculating or critiquing lost profit damages. This approach considered only information known or knowable on the date of the breach and excluded subsequent events, such as the lottery drawing, from the calculation. After oral argument, at which the Trust’s attorney “agreed that either Ball ‘A’ or Ball ‘B’ could have been assigned to [Green Cross],” the court denied the motion.

¶11 The superior court also denied the Trust’s subsequent motion to exclude Green Cross’s claimed lost profits damages as speculative. In 2021, Gally passed away, and his daughter, Mangisi, replaced him as Trustee.

¶12 In February 2022, the superior court conducted a two-day bench trial on the damages issue.

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Green Cross v. Mangisi, Counsel Stack Legal Research, https://law.counselstack.com/opinion/green-cross-v-mangisi-arizctapp-2024.