The Arizona Supreme Court recently ruled in the case of Markham Contracting Co., Inc. v. Cahava Springs Phase I, Inc., reversing a lower court's decision regarding unjust enrichment claims. This ruling, filed on June 17, 2026, affects contractors and property owners involved in public improvement projects across Arizona.
The case began when Markham Contracting, a construction company, sought to recover $6.5 million from the Landowners of Cahava Springs, a residential community under development in Cave Creek, Arizona. Markham alleged that the Landowners were unjustly enriched by improvements made to the property without compensating the contractor. The ruling is significant as it clarifies the requirements for proving unjust enrichment claims in Arizona.
Background
Cahava Springs is a master-planned community being developed by a group of Landowners who own all the real property within the area. To finance public infrastructure improvements, the Town of Cave Creek established the Cahava Springs Revitalization District. This district was set up under Arizona law to levy taxes and issue bonds for infrastructure projects.
Markham Contracting entered into an agreement with the District to construct infrastructure improvements worth approximately $13 million. However, after significant construction was completed, the District stopped paying Markham, leading to an arbitration process that resulted in a judgment in favor of Markham. Following this, Markham filed a lawsuit against the Landowners, claiming unjust enrichment for the benefits they received without compensation.
The Ruling
The Arizona Supreme Court, led by Chief Justice Ann Scott Timmer, ruled that the Landowners could not dismiss the unjust enrichment claims simply based on the absence of improper conduct. The court stated, "Markham has sufficiently alleged that the Landowners were unjustly enriched" and emphasized that the Landowners' enrichment at Markham's expense was unjustified.
The court's decision reversed the lower court's dismissal of Markham's complaint, allowing the contractor to amend its claims and proceed with the case. The ruling clarified that the improper conduct requirement established in a previous case, Wang Electric, does not apply to situations where a property owner directly arranges for improvements and fails to pay for them.
Impact
This ruling has significant implications for contractors and property owners involved in similar public improvement projects. It establishes that property owners can be held liable for unjust enrichment even if they did not directly contract with the contractor, as long as they sought improvements and did not compensate the contractor for their work.
The ruling also reinforces the idea that unjust enrichment claims can be viable without requiring proof of improper conduct in situations where the property owner directly benefits from improvements made by a contractor. This decision may lead to increased accountability for property owners in Arizona who benefit from construction work without compensating the contractors involved.
What's Next
The case is now remanded to the lower court for further proceedings, where the Landowners will have the opportunity to contest the facts surrounding the unjust enrichment claims. There is no indication that the case will be appealed further at this time.