IQTUNHEIMR v. VAL VISTA LAKES

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

IQTUNHEIMR, LLC,
Plaintiff/Appellant,

v.

VAL VISTA LAKES COMMUNITY ASSOCIATION, et al.,
Defendants/Appellees.

No. 1 CA-CV 25-0095
FILED 02-10-2026

Appeal from the Superior Court in Maricopa County
No. CV2024-002225
The Honorable Jennifer C. Ryan-Touhill, Judge

AFFIRMED

COUNSEL

CHDB Law, LLP, Tempe
By Kyle Banfield, Joshua M. Bolen
Counsel for Appellees

Denton Peterson Dunn, PLLC, Phoenix
By Larry A. Dunn
Co-Counsel for Appellant

Brown Patent Law, Scottsdale
By Nathan Brown
Co-Counsel for Appellant
Dessaules Law Group, Phoenix
By Jonathan A. Dessaules, Thomas E. Raccuia
Counsel for Amicus Curiae Arizona Homeowners Coalition

Lisa Marx, Sun City
Amicus Curiae

Jeremy Whittaker, Gilbert
Amicus Curiae

MEMORANDUM DECISION

Vice Chief Judge David D. Weinzweig delivered the decision of the Court,
in which Presiding Judge Jennifer M. Perkins and Judge Cynthia J. Bailey
joined.

W E I N Z W E I G, Vice Chief Judge:

¶1 Iqtunheimr, LLC (“Homeowner”) appeals the superior
court’s dismissal of its complaint against Val Vista Lakes Community
Association (“Association”) and Timothy Hedrick, along with the sanctions
order and award of attorney fees and costs. We affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 This lawsuit involves Val Vista Lakes, a master planned
community located in Gilbert with more than 2,200 homes and members.
The community is governed by a homeowners’ association, the Association,
under a Declaration of Covenants, Conditions, Restrictions, Assessments,
Charges, Servitudes, Liens, Reservations and Easements (“Declaration”).
The Association is a non-profit corporation. See A.R.S. § 33-1802(1)(a).
Homeowner owns one home in Val Vista Lakes.

¶3 In 2024, Homeowner sued the Association and Timothy
Hedrick, a board member, for breach of contract and breach of the implied
covenant of good faith and fair dealing. Homeowner alleged the
Association and Hedrick breached the Declaration by failing to maintain
common areas and amenities, including the clubhouse, fences, outdoor
shower, plumbing, electric wires, paving, community waterfall,
community parks, greenbelts, community walls, fountains, pools and lakes.

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IQTUNHEIMER v. VAL VISTA LAKES, et al.
Decision of the Court

¶4 The Association and Hedrick moved to dismiss under
Arizona Rule of Civil Procedure 12(b)(6), arguing Homeowner failed to
state a claim upon which relief could be granted. The superior court
granted the motion because Homeowner “has not complied with the
mandatory statutory requirements for a derivative claim.” The court
awarded the Association its attorney fees and costs as the prevailing party,
and sanctioned Homeowner $5,000 for bringing and pursuing claims
without substantial justification. Homeowner timely appealed. We have
jurisdiction. A.R.S. §§ 12-2101(A)(1), -120.21(A)(1).

DISCUSSION

¶5 On appeal, Homeowner argued that (1) Homeowner had
standing to bring a direct cause of action, (2) a derivative lawsuit must
involve a third party, (3) sanctions were not deserving and (4) the superior
court erred in granting attorney fees and costs. This court issued a
Memorandum Decision on October 31, 2025. The Association and Hedrick
filed a motion to publish. This court granted the motion and issued an
Opinion addressing standing and derivative claims. In this Memorandum
Decision, we affirm the sanctions and award of attorney fees and costs
entered against Homeowner.

I. Sanctions.

¶6 Homeowner appeals the sanctions imposed by the superior
court. We review an award of sanctions for an abuse of discretion. Villa De
Jardines Ass’n v. Flagstar Bank, FSB, 227 Ariz. 91, 96, ¶ 12 (App. 2011).

¶7 Arizona courts may sanction parties who bring claims
without substantial justification. A.R.S. § 12-349(A)(1). A claim is brought
without substantial justification when both groundless and not made in
good faith. A.R.S. § 12-349(F). “Groundless” is synonymous with
“frivolous.” Ariz. Republican Party v. Richer, 257 Ariz. 237, 243, ¶ 15 (2024).
A claim is groundless “if the proponent can present no rational argument
based upon the evidence or law in support of that claim.” Id. (citation
omitted). A claim is not groundless, by contrast, when “fairly debatable”
or a “long shot.” Id. (“[A] claim may lack winning merit without being
sufficiently devoid of rational support to render it groundless.”). A claim
is made in bad faith when (1) objectively groundless and (2) “the party or
attorney knows or should know that it is groundless, or is indifferent to its
groundlessness, but pursues it anyway.” Id. at 248–49, ¶¶ 38, 40. That is an
objective standard based on what professional, competent attorneys would
do under similar circumstances. Id.

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IQTUNHEIMER v. VAL VISTA LAKES, et al.
Decision of the Court

¶8 We discern no error. Arizona law plainly prevented
Homeowner from asserting a direct cause of action against the Association
for alleged injuries to the common areas. See A.R.S. §§ 10-3631, -3632. A
professional, competent attorney would have understood this was a
derivative lawsuit and sought to comply with the requirements for
derivative lawsuits. Homeowner was sanctioned because its claims were
groundless and not made in good faith.

II. Attorney Fees and Costs.

¶9 Homeowner challenges the superior court’s award of
attorney fees and costs. We review the superior court’s award of attorney
fees for abuse of discretion. Orfaly v. Tucson Symphony Soc’y, 209 Ariz. 260,
265, ¶ 18 (App. 2004). The superior court has broad discretion to award
attorney fees. Ray & Lindsay - 11, LLC v. Town of Gilbert, 252 Ariz. 147, 151,
¶ 23 (App. 2021). “To find an abuse of discretion, there must either be no
evidence to support the superior court’s conclusion or the reasons given by
the court must be clearly untenable, legally incorrect, or amount to a denial
of justice.” Charles I. Friedman, P.C. v. Microsoft Corp., 213 Ariz. 344, 350,
¶ 17 (App. 2006) (citation modified).

¶10 Homeowner argues the superior court abused its discretion
when it granted the Association and Hedrick their attorney fees because
many of the time entries on the supporting invoices did not fully describe
the lawyers’ activities. We discern no abuse of discretion because the
court’s award is supported by reasonable evidence. What is more, the
court already reduced the Association’s attorney fee award by $3,750. The
Association sought $63,720 in attorney fees, but the court awarded only
$59,970.

III. Attorney Fees and Costs on Appeal.

¶11 We awarded attorney fees and costs on appeal to the
Association and Hedrick under A.R.S. § 12-341.01.

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IQTUNHEIMER v. VAL VISTA LAKES, et al.
Decision of the Court

CONCLUSION

¶12 We affirm.

MATTHEW J. MARTIN • Clerk of the Court
FILED: JR

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