Opinion
No. 1 CA-CV 13-0524
12-18-2014
BULLHEAD 315 OC IRREVOCABLE BUSINESS TRUST, through Royal Union Nevada LLC, its Administrative Trustee, through its Manager Royal Union Nevada Corp. ("Trust"), Plaintiff/Appellant, v. HERMAN and DONNA AHLERS, Trustees of the Ahlers Family Trust; FIRST AMERICAN TITLE INSURANCE COMPANY, a California corporation, Defendan ts/Appellees.
COUNSEL Warner Angle Hallam Jackson & Formanek PLC, Phoenix By Catherine Conner, J. Brent Welker Counsel for Plaintiff/Appellant Gust Rosenfeld PLC, Phoenix By Scott A. Malm Counsel for Defendant/Appellee First American Title Insurance Company Law Offices of Paul Lenkowsky, Bullhead City By Paul Lenkowsky, Virginia L. Crews Counsel for Defendants/Appellees Herman and Donna Ahlers
NOTICE: NOT FOR PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED. Appeal from the Superior Court in Mohave County
No. S8015CV200901452
The Honorable Lee F. Jantzen, Judge
AFFIRMED AS AMENDED
COUNSEL Warner Angle Hallam Jackson & Formanek PLC, Phoenix
By Catherine Conner, J. Brent Welker
Counsel for Plaintiff/Appellant
Gust Rosenfeld PLC, Phoenix
By Scott A. Malm
Counsel for Defendant/Appellee First American Title Insurance Company
Law Offices of Paul Lenkowsky, Bullhead City
By Paul Lenkowsky, Virginia L. Crews
Counsel for Defendants/Appellees Herman and Donna Ahlers
MEMORANDUM DECISION
Presiding Judge Jon W. Thompson delivered the decision of the Court, in which Judge Donn Kessler and Judge Kent E. Cattani joined. THOMPSON, Judge:
¶1 Bullhead 315 OC Irrevocable Business Trust ("Bullhead 315") appeals from the superior court's decision granting summary judgment to Herman and Donna Ahlers, Trustees of the Ahlers Family Trust ("Ahlers"), and First American Title Insurance Company ("First American"). Bullhead 315 argues that the judgment violates due process because the caption incorrectly names a predecessor plaintiff, because the court wrongly applied res judicata in granting judgment to Ahlers, and because the court wrongly dismissed First American when First American was not part of the motion for summary judgment on which the court ruled and had not requested that relief. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 Bullhead MPOC, LLC ("MPOC") borrowed $13,580,000 from Bullhead 1117, LLC, a Nevada corporation owned by Vince Hesser. OneCap Mortgage ("OneCap"), a Nevada corporation of which Vince Hesser was President, acted as loan servicer. The Note ("MPOC Note") was secured by a deed of trust ("MPOC DOT") on property in Mohave County, Arizona. OneCap sold and assigned the beneficial interest in the MPOC Note and the MPOC DOT to investors, who executed a power of attorney in favor of OneCap.
¶3 Bullhead 1117 then borrowed $8,000,000 from Herman Ahlers as trustee of the Ahlers Family Trust. The promissory note was secured by an assignment of proceeds from the MPOC Note and the MPOC Deed of Trust. Hesser personally guaranteed the $8,000,000 note. Hesser, as President of OneCap, signed a provision titled "Assignment of Promissory Note," which declared that OneCap assigned the MPOC Note in favor of Ahlers. On the same page, a second paragraph titled "Acceptance of Assignment of Promissory Note," (reassignment provision) declared that Ahlers accepted assignment of the Note and agreed that upon payment in part or in full of the $8,000,000 debt, Ahlers would reassign a pro-rata portion of the MPOC Note back to OneCap. Although that provision had a signature block for Herman Ahlers, that block was left unsigned.
¶4 Through a workout agreement, Bullhead 1117 received a $2,000,000 credit, leaving a balance of $6,000,000 owed to Ahlers.
¶5 MPOC defaulted on the MPOC Note and MPOC DOT. OneCap purchased a Trustee's Sale Guarantee from First American Title Insurance Company, which recorded a Notice of Trustee's Sale for the Mohave County property. Before the sale, an "Assignment of Deed of Trust" was recorded by which OneCap, through Hesser, purported to assign seventy-five percent of its interest in the MPOC DOT to Ahlers. OneCap contended that Ahlers had only a seventy-five percent interest in the property based on the reassignment provision, which OneCap maintained required reconveyance of one-quarter of the interest based on the $2,000,000 credit on the $8,000,000 loan. After First American conducted the Trustee's Sale, but before it recorded the Trustee's Deed, Ahlers twice demanded that First American issue the Trustee's Deed one hundred percent to Ahlers. First American did not record the deed, but recorded a Cancellation of Notice of Sale.
¶6 Ahlers filed an eleven-count suit in Nevada against OneCap, Hesser, Bullhead 1117, and others. The Nevada court found a principal balance of $6,000,000 remaining on Bullhead 1117's loan from Ahlers and entered judgment against Hesser on the promissory note and guaranty. In making its ruling, the court found that Ahlers had blocked foreclosure of the note based on a valid assignment and lack of consent to the foreclosure. The court also found that, under the terms of the personal guaranty and the promissory note, "neither Hesser nor his entities had the right to foreclose in the first place."
¶7 In July 2009, OneCap sued Bullhead MPOC, the Ahlers, and First American in Mohave Superior Court. OneCap asserted that, by insisting they retained one hundred percent of the MPOC Note, Ahlers breached their agreement with OneCap under the reassignment provision and caused First American to refuse to issue a Trustee's Deed, thereby interfering with OneCap's contractual relationship with First American. OneCap also asserted claims of breach of contract and breach of fiduciary duty against First American based on First American's failure to issue a Trustee's Deed. ¶8 In May 2012, the Arizona court granted a motion to substitute Bullhead 315 for OneCap as the plaintiff and to add some of those holding a beneficial interest in the MPOC DOT as defendants. Bullhead 315 filed a motion for summary judgment against Ahlers for breach of contract based on the reassignment provision of the promissory note. Ahlers filed a cross-motion for summary judgment, denying the existence of any binding agreement requiring Ahlers to reassign a percentage of interest in the MPOC Note to OneCap and affirmatively arguing that he never executed the reassignment provision. Ahlers also argued that the issue of the MPOC Note and Hesser's liability and guaranty on the note had already been decided by the Nevada action and that res judicata therefore required judgment in favor of Ahlers. ¶9 The court denied Bullhead 315's motion for summary judgment and granted Ahlers's cross-motion. In doing so the court found:
Bullhead 315 explained that OneCap had had the power of attorney for all the beneficial interest holders of the MPOC DOT. However, OneCap filed for bankruptcy, at which point some of the beneficial interest holders transferred their interest to Bullhead 315 and wanted to proceed with the litigation. Those that did not transfer their interests were named as defendants to put their interest before the court as indispensable parties.
The question is whether or not the $2 million credit (a non-monetary transaction) that Ahlers received in this matter triggered a reassignment clause to Plaintiff. Plaintiff argues that is that simple. They argue in order for Ahlers to accept the provisions of the note they had to accept the reassignment clause. However, there is not a signed agreement in the record in which Ahlers accepts the reassignment clause of the note. Plaintiff also argues A.R.S. § 33-811(C).
There are no issues of disputed fact in this matter. Ahlers never signed the reassignment provision of the original promissory note. Ahlers cannot be bound by the provisions of this reassignment by Hesser to Plaintiff. A Nevada Court has already made that ruling and ruled in favor
of Ahlers on this note. The note was pledged to Plaintiff without Ahlers consent. The note cannot be foreclosed upon.
¶10 The court signed the judgment, which identified OneCap in the caption as plaintiff, ruled in favor of Ahlers, and dismissed First American as a defendant with prejudice.
¶11 The court denied Bullhead 315's motion for new trial, and Bullhead 315 appealed. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101(A)(1) (Supp. 2014).
DISCUSSION
¶12 Summary judgment may be granted when "there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Ariz. R. Civ. P. 56(a). In reviewing a motion for summary judgment, we determine de novo whether any genuine issues of material fact exist and whether the trial court properly applied the law. Eller Media Co. v. City of Tucson, 198 Ariz. 127, 130, ¶ 4, 7 P.3d 136, 139 (App. 2000).
Judgment Incorrectly Captioned
¶13 Bullhead 315 argues that the judgment was entered in violation of due process because the caption erroneously designates OneCap as the plaintiff against which judgment was entered, yet OneCap was no longer the plaintiff at that time and had not participated in the motion and cross-motions for summary judgment. It further argues that entry of judgment against OneCap also violated the automatic bankruptcy stay because OneCap had filed for bankruptcy.
¶14 Bullhead 315 and Ahlers agree that the judgment caption identifying OneCap as plaintiff is incorrect. Unfortunately, the body of the judgment refers only to judgment being entered against "plaintiff" and does not identify Bullhead 315 as the plaintiff. Consequently, on its face, the judgment appears to be against OneCap. Nevertheless, this miscaptioning presents a clerical error rather than a due process violation.
¶15 Arizona Rule of Civil Procedure 60(b)(2) provides that "[w]here there is a mistake, miscalculation or misrecital of a sum of money, or of a name, and there is among the records of the action a verdict or instrument of writing whereby such judgment may be safely corrected, the court shall on application and after notice, correct the judgment accordingly."
¶ 16 In addition to the parties' agreement that the identity of the plaintiff in the judgment caption is incorrect, the record contains ample evidence demonstrating that the plaintiff against whom the judgment was entered was, in fact, Bullhead 315. Specifically, the Second Amended Complaint, Bullhead 315's motion for summary judgment, and Ahlers's response to Bullhead 315's motion for summary judgment and cross-motion all identify the plaintiff as Bullhead 315 in the caption. The court's minute entry ruling on the summary judgment, although captioned incorrectly, expressly identifies the plaintiff as Bullhead 315 in the body of the decision. Given that the record is clear that the plaintiff against whom judgment was entered was Bullhead 315 and not OneCap, this court corrects the judgment accordingly. See Lane Title & Trust Co. v. Brannan, 103 Ariz. 272, 279, 440 P.2d 105, 112 (1968) (court will correct amount of judgment where uncontroverted evidence shows verdict was in excess of balance due).
Res Judicata
¶17 Bullhead 315 further argues that the trial court erred in relying on the Nevada judgment and applying the doctrine of res judicata. The doctrine of res judicata applies to bar a claim when a prior final judgment on the merits involved the same parties or their privies and was based on the same cause of action. Pettit v. Pettit, 218 Ariz. 529, 531, 189 P.3d 1102, 1104 (App. 2008). Bullhead 315 asserts that it was not a party in the Nevada action, that the issue in the Arizona case concerned the foreclosure of the Mohave County property and the Nevada action concerned liability on the debt and so were not the same issue, and that the Nevada judgment was not final. Despite these differences, argues Bullhead 315, the superior court ruled in favor of Ahlers because it concluded that the Nevada court had ruled in favor of Ahlers on the MPOC Note and had found that Ahlers could not be bound by the reassignment provision. Bullhead 315 asserts that the Nevada court made no such rulings.
¶18 The court's minute entry ruling does not support Bullhead 315's contention that the trial court applied res judicata in reaching its decision. The court noted that the Nevada court had entered a related judgment. However, in addressing whether the reassignment provision was binding on Ahlers, which Bullhead 315 identified as the critical issue before the court, the trial court made its own independent findings. The court found that Ahlers could not be bound by the reassignment provision because the record contained no signed agreement by which Ahlers accepted the reassignment clause. Although the court then mentioned that the Nevada court had already made that ruling, the court's decision by its own terms was based on the absence in the record before it of any signed agreement by Ahlers accepting the reassignment clause on which Bullhead 315 relies. The court articulated no res judicata analysis.
¶19 Bullhead 315 argues that the record contains evidence that a specific change to the reassignment provision was negotiated that required Ahlers to reassign back to OneCap a proportionate share of the MPOC Note upon payment on the $8,000,000 loan. Bullhead 315 contends that counsel for Ahlers drafted the change to the reassignment provision, presented the assignment and reassignment provisions to OneCap, and thereafter, OneCap executed the assignment provision. Bullhead 315 relies on an exchange of emails between Hesser and an attorney named William Silbey discussing a "fractionalized interest" in a note. In the last email, Silbey asks if the purchaser of a fractionalized interest in the note would be on notice of Ahlers's interest in the note as security. At most, these emails demonstrate that discussions occurred regarding the reassignment of partial interest in the Note, but they do not establish that Ahlers agreed to the reassignment provision that was never executed. ¶ 20 At oral argument, Bullhead 315 also contended that that Ahlers's receipt of the $2,000,000 credit against the loan triggered the reassignment provision. In support, Bullhead 315 cited to the following documents in the record: the affidavit of Vince Hesser, the Nevada complaint, and the declaration of Herman Ahlers. Because Bullhead 315 failed to raise this argument in its appellate brief, we deem it waived. See Mitchell v. Gamble, 207 Ariz. 364, 369-70, ¶ 16, 86 P.3d 944, 949-50 (App. 2004) ("[I]ssues and arguments raised for the first time at oral argument on appeal are untimely and deemed waived."); ARCAP 13(a)(5), (6) ("[A]ppellant shall concisely and clearly set forth . . . [a] statement of the issues presented for review . . . [and] [a]n argument which shall contain the contentions of the appellant with respect to the issues presented."). But even if the argument were not waived, Bullhead 315 failed to establish specific factual evidence to support its claim.
¶21 Bullhead 315 cites to a portion of Ahlers's Nevada complaint and declaration whereby Ahlers admits that a $2,000,000 credit was made against the loan amount, pursuant to the work out agreement. However, it does not necessarily follow that by accepting the promisory note, and a subsequent payment made against the loan amount, Ahlers must have accepted the reassignment provision. Bullhead 315 fails to cite any specific evidence in the record that the $2,000,000 credit was given in exchange for Ahlers's acceptance of the reassignment provision. Furthermore, Hesser's conclusory, unsupported statements in his affidavit do not constitute specific evidence of facts. See Florez v. Sargeant, 185 Ariz. 521, 526, 917 P.2d 250, 255 (1996) ("Self-serving assertions without factual support in the record" are not enough to defeat motion for summary judgment), quoting Jones v. Merchants Nat'l Bank & Trust Co., 42 F.3d 1054, 1057 (7th Cir. 1994); Margaret H. v. Ariz. Dep't of Econ. Sec, 214 Ariz. 101, ¶ 10, 104, 148 P.3d 1174, 1177 (App. 2006) (stating that a party's conclusory affidavit is usually not enough to defeat motion for summary judgment).
The affidavit states: "6. The Ahlers Assignment was subject to the limitation set forth in the Acceptance of Assignment of Promissory Note that upon payment in part or in full of all sums owing under the Ahlers Note, the MPOC Note '. . . or the applicable pro-rata portion of the Note which has been paid . . .' would be reassigned to Bullhead 3117. . . . 9. Ahlers received a $2,000,000.00 principal reduction payment which entitled the Trust Beneficiaries and Defendant Beneficiaries to reassignment of 25% of the MPOC Note and MPOC DOT and left Ahlers with 75% remaining interest in the MPOC Note and MPOC DOT."
¶22 On this record, Ahlers cannot be bound to the reassignment provision. The signature line for the reassignment provision was not signed by Ahlers. In addition, nothing in the promissory note, nor in the assignment clause signed by OneCap, made the assignment's validity conditional on the execution of the reassignment clause. Thus, because the MPOC Note was not reassigned in whole or in part to OneCap, neither OneCap nor Bullhead 315 could foreclose on the note or deed of trust. The superior court's summary judgment on this point is affirmed.
Dismissal of First American
¶23 Bullhead 315 also argues that the judgment dismissing First American violates due process because First American was not involved in the cross-motions for summary judgment, the cross-motions did not seek relief for First American, and therefore Bullhead 315 was not afforded a meaningful opportunity to argue against the dismissal of First American.
¶24 Due process requires that a party be given notice and an opportunity to be heard at a meaningful time and in a meaningful manner. Morrison v. Shanwick Int'l Corp., 167 Ariz. 39, 42, 804 P.2d 768, 771 (App. 1990). Bullhead 315 had an opportunity to object and be heard regarding the dismissal of First American and failed to do so. The judgment lodged by Ahlers included the dismissal of the complaint against First American with prejudice. Bullhead 315 filed an objection to the form of judgment and subsequently filed a motion for new trial. Bullhead 315 therefore had the opportunity to raise its arguments. However, in neither the objection nor the motion for new trial did Bullhead 315 object to the inclusion of First American in the judgment.
¶25 In addition, Bullhead 315's failure to raise this issue in the trial court despite having the opportunity to do so, constitutes waiver of the issue on appeal. See CDT Inc. v. Addison, Roberts & Ludwig, CPA, P.C., 198 Ariz. 173, 178, ¶ 19, 7 P.3d 979, 984 (App. 2000) (we consider only those arguments, theories, and facts properly presented below). Bullhead 315 argues that its January 2010 formal objection to First American's early motion for summary judgment precludes finding waiver.
¶26 In its earlier motion for summary judgment, First American asserted that it had acted properly in light of the dispute between OneCap and Ahlers on the ownership of the note. OneCap argued that First American had a duty to forbear taking any action until the parties reached agreement or the court adjudicated the dispute but had instead canceled the sale, violating that duty. The court found questions of fact existed as to whether the cancellation violated First American's forbearance duty and whether cancellation generated additional costs to OneCap. Since that earlier ruling, however, the court determined that OneCap had no interest in the note on which it had tried to foreclose. The claim against First American was based on First American's actions related to the deed of trust sale on that note. Bullhead 315 raised no objection to the inclusion of First American in the judgment and presented no argument to support the continuation of its claim, despite the court's ruling that OneCap (now Bullhead 315) owned no interest in the MPOC Note or MPOC DOT and therefore had no right to order the deed of trust sale. The earlier objection cannot preserve the issue here.
Bullhead 315 additionally contended at oral argument that because the trustee sale had already taken place, First American was precluded from cancelling the sale and refusing to record the trustee's deed. Because Bullhead 315 addressed this argument for the first time at oral argument and does not support it with authority, we do not address it further. See State v. Powers, 200 Ariz. 123, 129, ¶ 21, 23 P.3d 668, 674 (App. 2001) (issues raised for first time at oral argument are untimely and will not be considered); ARCAP 13(a)(6) (requiring appellant to develop argument in opening brief for each contention raised).
--------
Attorneys' Fees
¶27 Ahlers has requested an award of attorneys' fees on appeal pursuant to A.R.S. § 12-341.01, which authorizes the court to award reasonable attorneys' fees to the successful party in a contested action arising out of contract. A.R.S. § 12-341.01(A) (Supp. 2013). In our discretion, we grant fees to Ahlers upon compliance with Rule 21, Arizona Rules of Civil Appellate Procedure. Ahlers is also awarded costs pursuant to A.R.S. § 12-341 (2003).
CONCLUSION
¶28 The judgment of the superior court is affirmed as amended.