Hatch v. 3b

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

HATCH INDUSTRIES, LLC,
an Arizona limited liability company,
Plaintiff/Counter-Defendant/Appellee,

v.

3B PROTECTION, INC., a California corporation;
JOHN and JANE DOES 1-99; ABC ENTITIES 1-99,
Defendant/Counterclaimant/Appellant.

No. 1 CA-CV 25-0738
FILED 06-16-2026

Appeal from the Superior Court in Navajo County
No. S0900CV202300213
The Honorable Melinda K. Hardy, Judge

AFFIRMED

COUNSEL

Tiffany & Bosco PA, Phoenix
By Amy D. Sells
Counsel for Plaintiff/Counter-Defendant/Appellee

Jaburg & Wilk PC, Phoenix
By Thomas S. Moring and David N. Farren
Counsel for Defendant/Counterclaimant/Appellant
HATCH v. 3B
Decision of the Court

MEMORANDUM DECISION

Presiding Judge Andrew M. Jacobs delivered the decision of the Court, in
which Judge Brian Y. Furuya and Judge James B. Morse Jr. joined.

J A C O B S, Judge:

¶1 Making a proper disclosure of your damages under Arizona
Rule of Civil Procedure (“Rule”) 26.1(a)(7) is important. 3B Protection, Inc.
(“3B”) appeals: (1) a summary judgment against it on its counterclaims that
Hatch Industries, LLC (“Hatch”) built a substandard wall, entitling 3B to
damages; (2) a jury award to Hatch of $161,256.47 for its damages arising
from 3B’s failure to pay Hatch for that work; and (3) the court’s award of
costs, fees, and sanctions to Hatch premised on it prevailing at trial. Here,
3B failed to disclose how much damage it suffered, or witnesses or
documents from which the amount of its damages could be proved, all of
which Rule 26.1(a)(7) requires. As such, there was no issue of material fact
as to its lack of provable damages. Additionally, the record does not
support 3B’s argument that the jury awarded duplicative damages. For
these reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

A. Hatch and 3B Accuse Each Other of Breach of Contract.

¶2 PNM Resources, Inc. (“PNM”) hired 3B to perform work at an
electrical substation in Sandia, New Mexico. 3B subcontracted with Hatch
to complete part of that work — building and installing a wall around the
substation. Hatch finished its work on the wall and sent 3B a final invoice
for $106,570.62. 3B didn’t pay, so Hatch sued 3B, alleging breach of
contract, breach of the covenant of good faith and fair dealing, and unjust
enrichment.

¶3 3B denied Hatch’s claims and counterclaimed for breach of
contract and breach of the covenant of good faith and fair dealing. 3B said
it didn’t pay Hatch’s invoice because Hatch’s work was untimely,
substandard, and more expensive than the estimate Hatch provided. Hatch
denied 3B’s counterclaims.

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HATCH v. 3B
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B. Hatch Disputes the Adequacy of 3B’s Damages Disclosures.

¶4 The superior court’s scheduling order gave the parties until
January 11, 2024 to make their initial disclosures under Rule 26.1(a) (a date
the parties extended by agreement to January 25, 2024), and until May 19,
2024 to make their final supplemental disclosures.

¶5 3B’s January 2024 initial disclosure averred that 3B “suffered
loss of income, damage to reputation, delay, and inconvenience,” and
requested “damages in an amount to be determined at trial.” 3B disclosed
a report from Verti-Crete, LLC President Mike Sharp (the “Sharp Report”),
which assessed the quality of Hatch’s work on the Sandia wall. 3B listed
Dominic Dillon, President and CEO of 3B, and Jarom Hatch, General
Manager of Hatch, as trial witnesses, but disclosed no expert witnesses.

¶6 3B’s April 2024 supplemental disclosure again claimed “loss
of income, damage to reputation, delay, and inconvenience,” and again
requested “damages in an amount to be determined at trial.” 3B said it
suffered damages because of Hatch’s poor work and because it believed
PNM would not allow Hatch to perform repair or warranty work, so 3B
would have to foot the bill if that work were requested in the future. But
3B didn’t quantify any damage. Instead, it disclosed that the “exact
numbers [of its damages] are not yet capable of calculation” because it was
“still collecting invoices and amounts due to rectify the poor work done by
Hatch.” 3B suggested the use of this formula to calculate its damages at
trial: 3B’s Damages = Amounts Paid to Hatch for Poor Work + Cost of
Future Repair, Warranty, or Replacement Work – Hatch’s Claimed
Damages. 3B acknowledged these variables were “presently unknown,”
and listed no new trial witnesses, expert witnesses, or exhibits to explain
them.

¶7 Just before disclosure concluded, the parties filed a joint
statement of discovery dispute under Rule 26(d) concerning the adequacy
of 3B’s damages disclosures. Hatch argued 3B’s disclosures were
insufficient under Rule 26.1(a)(7), which requires “a computation and
measure of each category of damages alleged by the disclosing party, the
documents and testimony on which such computation and measure are
based, and . . . each witness whom the disclosing party expects to call at
trial to testify on damages.” Ariz. R. Civ. P. 26.1(a)(7). 3B maintained “[i]t
is difficult to calculate with specificity the amount of damage suffered”
because of Hatch’s failures. 3B explained, “[t]he amount of lost sales is
difficult to gauge, since they did not happen.” 3B continued to argue that
it would establish at trial using the disclosed formula what its damages

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HATCH v. 3B
Decision of the Court

were, despite not being able to disclose the contents of the variables that
were to be plugged into the formula. For reasons the record does not
disclose, this discovery dispute was not resolved.

B. Hatch Serves an Offer of Judgment on 3B as to All Claims
in This Suit, to Which 3B Does Not Respond.

¶8 On April 8, 2024, Hatch served 3B with an offer of judgment
under Rule 68, proposing to resolve all claims by accepting $170,000 from
3B “inclusive of all damages, taxable court costs, interest, and attorney’s
fees.” 3B did not respond.

C. The Court Grants Hatch’s Motion for Summary Judgment
on 3B’s Counterclaims.

¶9 In June 2024, Hatch moved for summary judgment on 3B’s
counterclaims. Hatch argued damages were necessary for each of 3B’s
claims, but 3B could not “prove its damages with any certainty,” because
its disclosed evidence suggested it could not show it lost any income,
suffered harm from inconvenience or delay, or suffered reputational harm.
Hatch further pointed out that 3B admitted PNM accepted the wall and
waived any alleged defects in Hatch’s work, thus undermining any
suggestion that 3B suffered damages.

¶10 3B opposed Hatch’s motion, arguing it “produced evidence
that shows damages suffered, and evidence from which a reasonable juror
could conclude that 3B has been damaged.” 3B again said it could not
quantify its damages with any certainty — it claimed they “may be as little
as an offset against some or all of Hatch’s claims, or may be so high that it
justified affirmative relief in favor of 3B” — but said it “disclosed a
computation and measure of damages alleged” and that it would “provide
testimony of disclosed witnesses related to the damages suffered.” 3B
relied on its final supplemental disclosure statement, the Sharp Report, and
a declaration from Dominic Dillon (the “Dillon Declaration”) stating that
Hatch did poor work, that he believed PNM would not allow Hatch to
conduct future remedial or warranty work because PNM “reluctantly
accepted the wall,” and that 3B would therefore be “forced to find another
company to subcontract with to remedy the work done by Hatch” if
“remedial work or warranty work is requested.”

¶11 In reply, Hatch argued that 3B’s disclosures, the Sharp Report,
and the Dillon Declaration were either inadmissible or, to the extent
admissible, insufficiently specific to create a genuine issue of material fact
as to 3B’s claimed damages. Hatch also noted that 3B admitted — in a

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HATCH v. 3B
Decision of the Court

deposition taken after Hatch moved for summary judgment — it was paid
in full by PNM for Hatch’s work and had paid nothing to remedy any of
Hatch’s work.

¶12 After argument, the court granted Hatch’s motion for
summary judgment, dismissing 3B’s counterclaims. The court found that:
3B’s disclosed estimates of its damages were speculative and wide-ranging;
neither the Sharp Report nor the Dillon Declaration “address or identify
damages suffered by 3B or provide a basis to compute the damages”; the
uncontroverted evidence showed PNM paid 3B in full and accepted and
waived any defects in the wall, therefore precluding the possibility of future
work for which Hatch would be liable; and the uncontroverted evidence
showed 3B had not yet paid anything to “fix” any of Hatch’s allegedly poor
work. The court concluded “3B failed to show a reasonable basis to identify
any evidence that it suffered damages on its counterclaims” and “as a
matter of law 3B cannot establish that 3B suffered damages . . . that can be
calculated with reasonable certainty.”

D. A Jury Awards Hatch Damages After Trial and the Court
Enters Final Judgment in Favor of Hatch.

¶13 A jury heard Hatch’s claims against 3B in June 2025. Near the
end of trial, Hatch’s counsel sought court guidance on whether it could ask
the jury to award 2% per month pre-judgment interest, the undisputed
amount provided for in the invoice 3B did not pay, on its requested
$106,570.62 in damages, or whether it should ask the jury not to award
interest so that the court could determine whether the 2% per month or the
statutory interest rate applied. The court and 3B’s counsel agreed Hatch’s
counsel could ask the jury to proceed however she chose. In closing,
Hatch’s counsel asked the jury to award Hatch $106,570.62, the amount of
the final unpaid invoice, and $54,615.82, the exact sum of the 2% per month
interest rate if the jury returned a verdict the next day. Hatch’s counsel
walked the jury through the math required to reach that total and told the
jury it could calculate interest up to the day of its verdict.

¶14 The jury found in favor of Hatch on its breach of contract and
breach of the covenant of good faith and fair dealing claims. The verdict
form didn’t have a box for interest but had blanks to award damages for:
(1) breach of contract; (2) breach of the covenant of good faith and fair
dealing; and (3) unjust enrichment. The jury awarded Hatch $106,570.62,
which it filled in the blank for damages on the claim for breach of contract,
and $54,685.85 for interest, which it filled in the blank for damages on the
claim for breach of the covenant of good faith and fair dealing.

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HATCH v. 3B
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¶15 Hatch asked the court to enter a judgment awarding it the
exact sums in the jury’s verdicts, costs as the successful party under A.R.S.
§ 12-341, attorneys’ fees (as provided for in the parties’ contract), and
sanctions for rejecting the offer of judgment but failing to obtain a more
favorable outcome. 3B objected to Hatch’s proposed judgment, arguing the
jury awarded duplicate damages for the same injury, so a new trial was
warranted. 3B also objected to Hatch’s requested costs, attorneys’ fees, and
sanctions.

¶16 The court entered Hatch’s proposed judgment, including the
damages the jury awarded, and the costs, attorneys’ fees, and sanctions
Hatch requested. 3B appealed. We have jurisdiction. Ariz. Const. art. 6, §
9; A.R.S. § 12-2101(A)(1).

DISCUSSION

¶17 On appeal, 3B argues the court erred by: (1) granting Hatch’s
motion for summary judgment, either because there was a genuine issue of
material fact concerning 3B’s damages, or because the summary judgment
ruling was an impermissible Rule 37 sanction; (2) adopting the jury’s
allegedly duplicative awards; and (3) awarding Hatch costs, attorneys’ fees,
and sanctions because Hatch shouldn’t have prevailed. Hatch defends the
propriety of each challenged ruling. Hatch is right, as we next explain.

I. 3B Failed to Demonstrate a Genuine Issue of Material Fact
Regarding Its Claimed Damages.

¶18 We review the grant of summary judgment de novo, reviewing
the record in the light most favorable to the non-moving party. Amtrust
Bank v. Fossett, 223 Ariz. 438, 439 ¶ 4 (App. 2009). When the party moving
for summary judgment shows that the non-moving party has insufficient
evidence to carry its ultimate burden of proof at trial, the burden shifts to
the non-moving party to present sufficient evidence demonstrating the
existence of a genuine factual dispute. Nat’l Bank of Ariz. v. Thruston, 218
Ariz. 112, 119 ¶ 26 (App. 2008); Ariz. R. Civ. P. 56(c), (e).

¶19 Because damages are an element of both of 3B’s claims, 3B had
to point to evidence sufficient to establish that a reasonable trier of fact
could agree with its assertion that it suffered damages resulting from
Hatch’s alleged breaches. See Thomas v. Montelucia Villas, LLC, 232 Ariz. 92,
96 ¶ 16 (2013) (breach of contract claim requires proving damages); Enyart
v. Transamerica Ins. Co., 195 Ariz. 71, 76 ¶ 14 (App. 1998) (breach of the
covenant of good faith and fair dealing requires proving damages). The
court’s scheduling order required 3B to disclose by May 19, “a computation

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HATCH v. 3B
Decision of the Court

and measure of each category of damages [3B] alleged . . . the documents
and testimony on which such computation and measure are based, and the
name, address, and telephone number of each witness [3B] expects to call
at trial to testify on damages.” Ariz. R. Civ. P. 26.1(a)(7).

¶20 But 3B didn’t make a disclosure that complied with Rule
26.1(a)(7). Instead, 3B disclosed a formula it said could be used to calculate
its damages. And the formula rested on variables no disclosed testimony
or exhibits could fill in. 3B said it was trying to track down documents to
help it quantify the amounts to be used in its formula, but it didn’t say
which documents it was looking for, or how they would fill in the variables.
And while 3B did identify two witnesses it expected to call at trial, it did
not disclose “a description of the substance — and not merely the subject
matter — of the testimony” it expected those witnesses would provide
regarding the amount of its alleged damages. Ariz. R. Civ. P. 26.1(a)(3).

¶21 Hatch’s motion for summary judgment exposed this
deficiency. It was 3B’s burden “to show the amount of their damages with
reasonable certainty,” meaning it had to offer evidence upon which a trier
of fact could approximately estimate its damages. See Gilmore v. Cohen, 95
Ariz. 34, 36 (1963). 3B pointed to its Rule 26.1(a)(7) disclosure (which
contained its formula), the Sharp Report, and the Dillon Declaration.
Viewed in the light most favorable to 3B, this evidence suggested that: a
non-party (Verti-Crete President Sharp) would testify that Hatch’s work on
the wall did not meet aesthetic requirements; and 3B’s President would
testify to his belief that PNM was unhappy with the work so 3B might have
to fix it — but again, disclosing no asserted cost for repair.

¶22 3B’s evidence was insufficient for a trier of fact to determine
the amount of 3B’s damages with any reasonable certainty. See Gilmore, 95
Ariz. at 36 (Though “certainty in amount of damages is not essential to
recovery when the fact of damage is proven,” that does not “dispel [the]
requirement that the [party’s] evidence provide some basis for estimating
his loss.” (citations omitted) (cleaned up)); see also Short v. Riley, 150 Ariz.
583, 585-86 (App. 1986) (“Once the fact of damages has been proven, the
amount of the damages may be shown with proof of a lesser degree of
certainty than is required to establish the fact of damage,” but “[t]he law
still requires ‘a reasonable basis in the evidence for the trier of fact to fix
compensation when a dollar loss is claimed.’” (quoting Nelson v. Cail, 120
Ariz. 64, 67 (App. 1978) (citations omitted)).

¶23 To put a finer point on it, even if Hatch’s work was faulty, it
is undisputed that PNM paid for it in full and waived any defects. Thus,

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HATCH v. 3B
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3B received the benefit of its contract with PNM, and any possible future
expenditures to fix the work were unquantified, and whether those
expenses would be incurred was entirely speculative. But “conjecture or
speculation cannot provide the basis for an award of damages.” Gilmore, 95
Ariz. at 36. Thus, even drawing all reasonable inferences in 3B’s favor, 3B
failed to establish a genuine issue of material fact as to its damages. See
State Comp. Fund v. Yellow Cab Co. of Phx., 197 Ariz. 120, 122 ¶ 5 (App. 1999).

¶24 3B suggests two other reasons for overturning the court’s
summary judgment ruling, but neither persuades.

¶25 First, 3B argues summary judgment was improper because
Hatch first argued in its reply brief that 3B’s evidence was insufficient for a
reasonable jury to find it proved its damages. 3B’s premise is wrong.
Hatch’s motion argued, based on the evidence 3B had disclosed, that “3B
cannot establish with reasonable certainty that it suffered any damages,
which it admitted in its final supplemental disclosure statement,” so “there
is no genuine issue of material fact that 3B has not suffered any damages as
a result of Hatch Industries’ alleged breach[es].” Ironically, 3B only raised
this argument in its reply brief in this Court, so this argument is also
waived. See Univ. Med. Ctr. of S. Nev. v. Health Choice Ariz., 253 Ariz. 524,
529 ¶ 22 n.2 (App. 2022).

¶26 Second, 3B argues the court’s summary judgment ruling was
“effectively” a Rule 37 sanction for disclosure violations, asserting it was
unfair and error to impose such a sanction without appropriate process.
That position misunderstands or mischaracterizes Hatch’s motion, which
was a classic “no-evidence” motion. Such motions properly request
summary judgment when the nonmovant has no admissible evidence of an
element of their claim. 3B wasn’t sanctioned. It was challenged to present
evidence creating a material issue of fact under Rule 56, and it was unable
to do so. Finally, 3B’s argument fails because neither party nor the court
mentioned Rule 37 during the parties’ summary judgment motion practice.
Summary judgment under Rule 56 is not a discovery sanction under Rule
37. See Tilley v. Delci, 220 Ariz. 233, 238 ¶ 13 (App. 2009).

II. The Jury Did Not Improperly Award Duplicate Damages.

¶27 3B next argues the court’s final judgment impermissibly
adopted the jury’s damages awards, which it says were duplicative. On
review, we “must search for a reasonable way to read the verdicts as
expressing a coherent view of the case, and [we] must exhaust this effort

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HATCH v. 3B
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before [we] disregard[] the jury’s verdicts.” United Dairymen of Ariz. v.
Schugg, 212 Ariz. 133, 138 ¶ 19 (App. 2006).

¶28 3B is correct that “a plaintiff may not receive two separate
awards of damage to compensate it for the selfsame injury.” Smith v. Olsen,
257 Ariz. 518, 529-30 ¶ 43 (App. 2024) (quoting Restatement (Third) of Torts:
Remedies § 3). But we affirm verdicts where there is a “reasonable way”
for us “to read the verdicts as expressing a coherent view of the case.” See
United Dairymen, 212 Ariz. at 138 ¶ 19. There is here, and it goes like this:

¶29 Hatch asked the jury to award it $106,570.62, the amount of
the final unpaid invoice, and approximately $54,615.82 (depending on the
day the jury reached its verdict) representing the 2% per month pre-
judgment interest the unpaid invoice called for. The court and 3B’s counsel
agreed Hatch could make this request.

¶30 The jury did exactly what Hatch asked. On its verdict form,
the jury awarded Hatch $106,570.62 for “breach of contract,” and $54,685.85
for “breach of the covenant of good faith and fair dealing.” The latter was
the exact amount of interest, calculated to the day, Hatch sought. The fact
that the jury split the money between the two claims does not make its
awards duplicative. The verdict forms had no separate place to note
awards of interest, so this jury’s use of the verdict forms suggests the jury
accepted Hatch’s position that it was entitled to the amount of the unpaid
invoice and to 2% per month pre-judgment interest on that amount. Given
that the award expresses a coherent view of the case, see United Dairymen,
212 Ariz. at 138 ¶ 19, we decline to set aside the jury’s verdicts, or the
judgment founded on them.

III. Hatch Was the Prevailing Party, So We Decline to Reverse the
Court’s Award of Costs, Attorneys’ Fees, and Sanctions.

¶31 3B argues the jury’s verdict was erroneous, warranting a new
trial, and on that basis asks us to set aside the costs, attorneys’ fees, and Rule
68 sanctions the court awarded to Hatch. As we have explained, we see no
error in the jury’s verdict or in the court’s summary judgment ruling, so we
decline to disturb the awarded costs, attorneys’ fees, or Rule 68 sanctions.

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HATCH v. 3B
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CONCLUSION

¶32 We affirm. Hatch requests its attorneys’ fees and costs on
appeal under ARCAP 21 and A.R.S. § 12-341.01. We grant Hatch its costs
and reasonable attorneys’ fees, subject to its compliance with ARCAP 21.

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

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