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Reversing “Not My Contract”: Arizona’s roadmap for unjust enrichment after Markham

7/14/26

By: Juliana Sleeper

Before a neighborhood has children on bicycles or dogs testing the limits of their leashes, it needs less romantic things: roads, water lines, infrastructure. No one writes poems about water lines, which is probably fair. But everyone notices when they are missing, and everyone has an opinion when no one pays for them.

That is the problem at the center of Markham Contracting Co., Inc. v. Cahava Springs Phase I, Inc., a recent Arizona Supreme Court decision about what happens when the contractor is unpaid, the landowners say “not my contract,” and equity is asked to look past the signature block.

Cahava Springs was supposed to be a planned residential community in Cave Creek, Arizona. Like most planned communities, it needed things before it could become a place where people lived: roads, water lines, and the unglamorous bones of a neighborhood. The Landowners helped create a revitalization district to finance and build those improvements. The District then hired Markham Contracting Co. to do the work. The contract was for about $13 million.

That detail matters because the District signed the contract, not the Landowners. The Landowners never had a direct contract with Markham. Markham performed substantial work, but a payment dispute arose between Markham and the District. Arbitration eventually awarded Markham roughly $6.5 million against the District. But winning an award and collecting money are not the same thing. Any lawyer who has ever chased a judgment knows this. So does anyone who has ever lent money to a cousin with a podcast.

After obtaining the arbitration award, Markham sued the Landowners under unjust enrichment theory. In ordinary terms, Markham was saying: you may not have signed our contract, but you wanted the infrastructure, arranged the structure to get it, and benefited from the work.

The Landowners moved to dismiss. Their response was simple: we did not sign the contract, and we did not act improperly. They had a reason for thinking that answer might work. They relied on Wang Electric, Inc. v. Smoke Tree Resort, LLC, 230 Ariz. 314, 283 P.3d 45 (App. 2012), and it persuaded the superior court.

In Wang Electric, a tenant ordered improvements to leased property. The landlord benefited in the broad sense that the property was improved, but the landlord had not hired the contractor. The contractor wanted to recover from the landlord under unjust enrichment. The court said no, at least not without more. In that landlord-tenant-contractor setting, the contractor had to show that the landlord engaged in improper conduct.

That rule makes sense. If a tenant decides to remodel a restaurant, build out a yoga studio, or install a suspiciously elaborate juice bar, the landlord should not automatically become the backup payer when the tenant fails to satisfy the construction bills. A landlord may approve plans, know improvements are happening, and even receive some benefit from the improved space. But that does not mean the landlord chose the contractor, ordered the work, or agreed to pay for it.

The superior court accepted the Landowners’ argument and dismissed Markham’s claim. The Arizona Supreme Court reversed. The reversal did not mean Markham won. It meant Markham had alleged enough to get back into court.

To understand why, it helps to understand unjust enrichment. It is an equitable claim, not a contract claim. It does not ask whether the defendant signed a promise. It asks whether the defendant received a benefit under circumstances that make it unfair to keep that benefit without paying for it.

Arizona law breaks unjust enrichment into five elements: the defendant was enriched, the plaintiff was impoverished, the enrichment and impoverishment are connected, there is no justification for the defendant keeping the benefit without paying, and there is no adequate legal remedy. The fourth element was the fight in Markham: was it unjustified for the Landowners to keep the alleged benefit of the infrastructure without paying Markham?

The Landowners said no, again relying on Wang Electric. The Arizona Supreme Court was not persuaded. It did not toss Wang Electric aside. It drew a border around it. Wang Electric still protects passive landlords when tenants order improvements and fail to pay for them. But it does not protect every owner simply because someone else signed the construction contract.

That distinction mattered. Markham was not a tenant-improvement case. Markham alleged that the Landowners themselves sought the infrastructure, helped create the District to finance and build it, entered into agreements to implement that structure, and benefited from the work. The Landowners were not alleged to be passive recipients of someone else’s renovation. They were alleged to be the parties who wanted the roads and water lines in the first place.

Once the Court put Wang Electric in its proper place, the rule became clearer. Outside the landlord-tenant-contractor context, a plaintiff does not necessarily have to allege improper conduct by the owner to state an unjust enrichment claim. Instead, the question is whether the owner sought, authorized, or acquiesced in receiving improvements that were performed with the expectation of payment, and whether the owner paid anyone for them.

That rule keeps both sides of the doctrine intact. It protects passive owners from surprise bills for work they did not ask for. But it also prevents an owner who allegedly arranged for improvements, received them, and paid no one from hiding completely behind the absence of direct contractual privity.

For contractors and subcontractors, Markham confirms that unjust enrichment may remain available when the contracting party cannot pay and the owner allegedly received the benefit anyway. That does not mean every unpaid contractor can leapfrog the contract chain and sue the owner. The contractor still has to plead and prove unjust enrichment. But lack of privity alone does not necessarily end the case.

For developers and landowners, the warning is simple. Using a district, intermediary, or related entity may be perfectly lawful and commercially sensible. But if the owner sought the improvements, helped arrange them, benefited from them, and allegedly paid no one, “not my contract” may not be enough.

For landlords, Wang Electric remains important. A passive landlord is not automatically liable just because a tenant’s improvements made the property better. But after Markham, courts will look closely at whether the owner was really passive or instead helped set the project in motion.

That is where future cases will live: in the emails, approvals, agreements, payment applications, assessment records, and meeting minutes showing who wanted the work, who arranged it, who expected to benefit, and who paid.

Markham is about roads and water lines, but not only roads and water lines. It is about the difference between a contract claim and an equity claim. It is about the difference between saying “not my signature” and saying “not my benefit.”

Those are not always the same thing. The Arizona Supreme Court did not decide that the Landowners owe Markham money. It decided that Markham alleged enough to get back into court.

That is the lesson of Markham. A missing signature still matters. Contract lines still matter. But when an owner allegedly helped set the project in motion, received the benefit, and doesn’t make full payment, equity may have one more question:

Can you keep the benefit of the road without paying the party who paved it?

For more information, please contact Juliana Sleeper at juliana.sleeper@fmglaw.com or your local FMG attorney.

Information conveyed herein should not be construed as legal advice or represent any specific or binding policy or procedure of any organization. Information provided is for educational purposes only. These materials are written in a general format and not intended to be advice applicable to any specific circumstance. Legal opinions may vary when based on subtle factual distinctions. All rights reserved. No part of this presentation may be reproduced, published or posted without the written permission of Freeman Mathis & Gary, LLP.