Opinion
No. 1 CA-CV 11-0787
03-19-2013
CITIBANK, N.A., Plaintiff/Appellee, v. TERRY MAJOR, Defendant/Appellant.
Greenberg Traurig LLP By Brian J. Schulman and Nathan T. Mitchler Attorneys for Plaintiff/Appellee Terry Major Defendant/Appellant In Propria Persona
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED
EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
Ariz. R. Crim. P. 31.24
MEMORANDUM DECISION
(Not for Publication -
Rule 28, Arizona Rules of
Civil Appellate Procedure)
Appeal from the Superior Court in Yavapai County
Cause No. P1300CV20090302
The Honorable Anna C. Young, Judge
AFFIRMED IN PART; VACATED IN PART
Greenberg Traurig LLP
By Brian J. Schulman and Nathan T. Mitchler
Attorneys for Plaintiff/Appellee
Phoenix Terry Major
Defendant/Appellant In Propria Persona
Cottonwood BROWN, Judge ¶1 Terry Major appeals the trial court's order awarding attorneys' fees against him in relation to a discovery dispute. He also appeals the court's grant of summary judgment in favor of Citibank, N.A. ("Citibank"). Because we conclude the court abused its discretion in issuing a protective order, we vacate the order and the resulting award of attorneys' fees. However, because the court properly determined there were no issues of material fact remaining in the case, we affirm the grant of summary judgment in Citibank's favor.
BACKGROUND
¶2 In January 2006, Major obtained a $60,000 line of credit for home improvements ("the Note"), secured by a deed of trust. Through a series of assignments, Citibank acquired the Note. Major defaulted and Citibank filed suit on the Note for breach of contract. Citibank moved for summary judgment, supported by the loan application, the Note, deed of trust, and transaction history. Citibank also attached an affidavit avowing that Major defaulted on the Note and that a balance of $59,381.95 remained due. Major requested more time to respond pursuant to Arizona Rule of Civil Procedure 56(f), asserting in part he needed to conduct discovery to determine whether insurance would "offset" any amounts he owed. The trial court denied Major's Rule 56(f) request and granted summary judgment. ¶3 On appeal, this court affirmed in all respects except for the narrow issue of "whether Citibank received insurance proceeds in compensation for its loss arising out of Major's default, an issue on which Major sought but did not obtain discovery." Citibank, N.A. v. Major, 1 CA-CV 09-0665, 2010 WL 5033544 *1 (Ariz. App. Dec. 7, 2010) (mem. decision). We concluded that Major's Rule 56(f) motion should have been granted because the issue of "whether Citibank received insurance proceeds related to Major's default on the Note[] could be relevant to a defense or offset against Citibank's claim." Id. at *4. We therefore remanded to the trial court, directing it to consider the narrow issue of whether Citibank received any insurance proceeds arising out of Major's default. Id. at *6. ¶4 Consistent with the mandate, Major sought further discovery from Citibank, serving a request for admissions, a request for production of documents, and interrogatories. Major sought information as to whether Citibank had "contract default insurance" and whether it "ha[d] been indemnified by some form of loan default insurance." However, Major's discovery requests also inquired about the assignment of the loan, whether the Note had been securitized, and other questions regarding the Note unrelated to insurance. In response, on June 7, 2011, Citibank served a "Supplemental Response to Discovery Dated June 20, 2009." Regarding insurance proceeds, Citibank replied "that it did not carry insurance for or receive insurance proceeds related to Terry Major's default on the home equity line of credit that is the subject of this lawsuit." Citibank also disclosed this information in a supplemental Rule 26.1 disclosure statement. Citibank otherwise objected to Major's discovery requests and refused to respond to them, except by referring to its June 20th supplemental response. ¶5 Citibank then moved for summary judgment, arguing no genuine issue of material fact existed as to whether Citibank received insurance proceeds for Major's default and that Citibank was entitled to judgment as a matter of law. In support, Citibank attached the declaration of Kevin Smith, a business operations analyst with CitiMortgage, Inc., attorney-in-fact and servicing agent for Citibank. Based on Smith's "personal knowledge" and under "penalty of perjury," he avowed that the information in the declaration was "true and correct." Smith further avowed that "[Citibank] obtained no mortgage insurance of any kind on Major's home equity line of credit and would not be entitled to recover insurance proceeds of any kind to reimburse it as a result of Major's default." Smith added that "[Citibank] has not received any insurance proceeds or other payout for the financial loss resulting from Major's default." The declaration was "[b]ased upon [his] investigation of this matter, including but not limited to [his] review of the loan file regarding the home equity line of credit extended to Major." ¶6 Major served additional discovery requests on July 20, 2011. He requested "copies of Smith's report, analysis and conclusions and/or notes taken regarding [Smith's] 'review of the loan file regarding the home equity line of credit extended to Major'" as well as "all written correspondence and email messages" Smith had regarding his investigation. Further, in his interrogatories, Major asked about Smith's employment history and positions held in the company. Citibank refused to further respond to these discovery requests, asserting they went beyond the scope of the issue to be addressed on remand. ¶7 Major filed a motion to compel Citibank to provide the requested discovery, asserting Citibank filed its summary judgment motion without providing any substantive discovery to Major in direct violation of this court's memorandum decision. In response, Citibank noted its supplemental discovery responses and disclosures and moved for a protective order against Major's July 20 discovery requests, asserting his demands were "entirely outside the scope of [the court of appeals' decision]." The court denied Major's motion to compel and entered a protective order stating that Citibank was not required to respond to Major's July 20 discovery requests. The order also stated that Major was precluded from submitting additional discovery requests not pertaining specifically to the issue of insurance proceeds, but at the same time directed him "not [to] propound new discovery demands." The court later awarded attorneys' fees to Citibank for fees incurred relating to the protective order. ¶8 Prior to the court's issuance of the protective order, Major responded to the summary judgment motion. He challenged Smith's declaration as self-serving and lacking any corroboration or evidence. He attached his own affidavit, avowing that (1) "Defendant has seen NO evidence to verify the declaration of Kevin Smith and [Citibank] has refused to produce ANY evidence supporting Mr. Smith's declaration;" and (2) "Defendant has seen NO evidence that [Citibank] has not already been indemnified through insurance . . . for the alleged 'default' and/or 'losses' that [Citibank] claims in this case." The remainder of his avowals addressed issues unrelated to whether Citibank received insurance proceeds. Major did not seek additional time for discovery pursuant to Rule 56(f). ¶9 In reply, Citibank filed a "Supplemental Declaration of Kevin Smith." Avowing under "penalty of perjury" that the information was "true and correct" and based on his "personal knowledge," Smith's supplemental declaration expressly stated he was authorized to submit his declarations, provided further foundational support for his statements, and reiterated that Citibank never received insurance proceeds and would not be entitled to do so. ¶10 The trial court granted summary judgment, finding there was no genuine issue of material fact because Smith's uncontroverted affidavit established that Citibank did not receive insurance proceeds with respect to Major's default. This timely appeal followed.
Although Major unsuccessfully moved to strike Citibank's reply as untimely, he did not include any substantive objection.
Major first appealed the trial court's order awarding attorneys' fees relating to the protective order. Because it was not a final appealable order, this court suspended the appeal to allow Major to obtain a signed final order. The trial court issued a signed order and Major filed a timely notice of appeal.
DISCUSSION
A. Discovery Disputes ¶11 Major argues the trial court erred in awarding attorneys' fees to Citibank in connection with issuance of the protective order. We review a trial court's issuance of protective orders and award of attorneys' fees for an abuse of discretion. Charles I. Friedman, P.C. v. Microsoft Corp., 213 Ariz. 344, 350, ¶ 17, 141 P.3d 824, 830 (App. 2006). An abuse of discretion may occur when the court's decision is "clearly untenable, legally incorrect, or amount[s] to a denial of justice." Id. (internal quotation omitted). ¶12 As relevant here, the protective order stated that Major could seek additional discovery but only if it related to insurance coverage. A different paragraph, however, stated "that Major may not propound new discovery demands." Thus, the inherently inconsistent order placed Major in an untenable position—he could properly ask for additional documents from Citibank relating to the insurance coverage issue, but in doing so he would violate the order's blanket prohibition against any further discovery requests. ¶13 Furthermore, we reject Citibank's characterization of Major's July 20 discovery requests. Citibank asserted that Major's discovery was "duplicative, unduly burdensome, and [was] for no purpose other than harassment." Citibank also claimed good cause for the protective order because it had either previously responded to Major's discovery requests or they were outside the scope of this court's mandate. Citibank further claimed it did not have "any relevant correspondence or email messages to produce to Major" and that Major's request is "duplicative of prior discovery." ¶14 Without question, many of Major's prior discovery requests went beyond the single remaining issue on remand, the existence of insurance coverage. However, his July 20, 2011, discovery requests were directly relevant to the issue of how Smith reached his conclusion that Citibank had no insurance coverage relating to Major's default. And, this was the first opportunity Major had to obtain information about Smith because Smith's declaration was disclosed for the first time a month earlier in connection with the summary judgment motion. Because the information requested was likely to lead to the discovery of admissible evidence, see Ariz. R. Civ. P. 26(b)(1)(A), the trial court abused its discretion in granting Citibank's protective order. We therefore vacate the protective order as well as the court's related order granting attorneys' fees to Citibank. Based on our conclusion, we need not address Major's argument that the court erred in denying his motion to compel discovery.
B. Grant of Summary Judgment ¶15 Major argues there are genuine issues of material fact sufficient to preclude summary judgment in favor of Citibank. Notwithstanding our decision to vacate the protective order and award of attorneys' fees, we disagree and thus conclude the trial court did not err in granting summary judgment. ¶16 A trial court may grant summary judgment when there is "no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Ariz. R. Civ. P. 56(c)(1). We review whether a genuine issue of material fact exists de novo. L. Harvey Concrete, Inc. v. Agro Constr. & Supply Co., 189 Ariz. 178, 180, 939 P.2d 811, 813 (App. 1997). ¶17 In arguing for reversal of the summary judgment, Major relies in part on Rule 56(e), which requires "[s]worn or certified copies of all papers or parts thereof referred to in an affidavit [to] be attached thereto or served therewith." Ariz. R. Civ. P. 56(e). According to Major, Smith's sworn statement that Citibank received no insurance proceeds should be disregarded as hearsay because Smith failed to attach supporting documents to his declaration in accordance with Rule 56(e). ¶18 An "[o]bjection to insufficient documentation is required so that the offering party may have an opportunity to cure the alleged defects." Johnson v. Svidergol, 157 Ariz. 333, 335, 757 P.2d 609, 611 (App. 1988). Accordingly, when a party fails to object or move to strike documents offered by the other party on summary judgment, he or she waives any objections to the evidence. Id. This reasoning is consistent with the general rule that arguments not specifically raised in the trial court are waived on appeal. See, e.g., Sobol v. Marsh, 212 Ariz. 301, 303, ¶ 7, 130 P.3d 1000, 1003 (App. 2006). ¶19 As noted, Citibank supported its motion for summary judgment with Smith's declaration. Major challenged the declaration only by asserting it "was a self-serving statement without any corroboration or evidence" and "must be discarded as opinion without documentation to [back up] his research, which [Citibank] refused to provide." In support, Major attached his own affidavit, avowing he had received no evidence to verify or support Smith's declaration. In reply to Major's objections, Citibank filed Smith's supplemental declaration, wherein Smith laid more foundation and support for his avowal that Citibank did not and would not receive insurance proceeds because of Major's default. ¶20 To the extent Major may have raised an adequate objection based on Rule 56(e), Citibank responded by filing the supplemental declaration, to which Major offered no substantive objection. And the record is clear that Major never objected in the trial court to either Smith declaration on hearsay grounds. For these reasons, he has waived any argument on appeal questioning the legal sufficiency of the Smith declarations. See Campbell v. Warren, 151 Ariz. 207, 208, 726 P.2d 623, 624 (App. 1986) ("Arguments not made at the trial level cannot be asserted for the first time on appeal from summary judgment."). ¶21 Moreover, to the extent Major suggests that he should have been permitted additional time to obtain documents in discovery from Citibank to contest the summary judgment, Major did not comply with Rule 56(f). That rule "allows a party to request additional time to respond to a motion for summary judgment in order to undertake necessary additional discovery." Lewis v. Oliver, 178 Ariz. 330, 338, 873 P.2d 668, 676 (App. 1993); Ariz. R. Civ. P. 56(f). To comply with Rule 56(f), the moving party must, by affidavit, inform "the court of: (1) the particular evidence beyond the party's control; (2) the location of the evidence; (3) what the party believes the evidence will reveal; (4) the methods to be used to obtain it; and (5) an estimate of the amount of time the additional discovery will require." Id. It was therefore incumbent on Major to articulate the specific reasons why the court should allow him more time for discovery. See Bobo v. John W. Lattimore, Contractor, 12 Ariz. App. 137, 141, 468 P.2d 404, 408 (1970). ¶22 In sum, although part of Major's July 20 discovery requests were appropriately directed to the question of whether Citibank had received insurance proceeds, Major still had the burden to respond to the summary judgment motion with appropriate legal argument or evidence sufficient to create a material issue of fact, or file a Rule 56(f) affidavit seeking additional time for discovery. Because he failed to do so, we conclude the trial court properly entered summary judgment in favor of Citibank notwithstanding our decision to vacate the protective order. See Kelly v. NationsBanc Mortg. Corp., 199 Ariz. 284, 287, ¶ 14, 17 P.3d 790, 793 (App. 2000) ("When the party moving for summary judgment makes a prima facie showing that no genuine issue of material fact exists, the burden shifts to the opposing party to produce sufficient competent evidence to show that an issue exists.") (citation omitted); Hawkins v. Ariz. Dep't of Econ. Sec., 183 Ariz. 100, 103, 900 P.2d 1236, 1239 (App. 1995) (stating that an appellate court will affirm the trial court's disposition if it is correct for any reason).
We decline to address Major's arguments relating to other aspects of his loan agreement with Citibank. They are plainly outside the scope of the narrow remanded issue on insurance coverage.
C. Attorneys' Fees
¶23 Citibank requests attorneys' fees and costs on appeal pursuant to Arizona Revised Statutes ("A.R.S") sections 12-341 and 12-341.01 (2012), A.R.S. § 12-349 (2012), and the "deed of trust." Because an award under the deed of trust turns on the applicability of its language to the dispute between the parties, we deny Citibank's request for attorneys' fees on this basis. Our prior memorandum decision forces this conclusion. See Citibank, 1 CA-CV 09-0665, 2010 WL 5033544 *5 (refusing to award attorneys' fees because Citibank "seeks to collect on the Note" and no provision of the deed of trust "would apply the deed of trust attorneys' fees provision to collection action on the Note."). ¶24 We likewise deny Citibank's request for attorneys' fees under A.R.S. § 12-349, which mandates a fee award when a claim or defense is brought without substantial justification, primarily to delay or harass, the proceeding is unreasonably delayed or expanded, or an abuse of discovery occurred. A.R.S. § 12-349(A)(1)-(4). None of those circumstances are presented by this appeal. ¶25 Finally, A.R.S. § 12-341.01 gives courts discretionary authority to award attorneys' fees to the prevailing party in matters arising out of contract. In the exercise of our discretion, we deny Citibank's request for attorneys' fees. However, we award costs to Citibank upon its compliance with Arizona Rule of Civil Appellate Procedure 21.
Absent material revision after the relevant date, we cite a statute's current version.
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CONCLUSION
¶26 For the foregoing reasons, we vacate the protective order and resulting award of attorneys' fees, but affirm the trial court's grant of summary judgment for Citibank.
____________________
MICHAEL J. BROWN, Judge
CONCURRING: ____________________
SAMUEL A. THUMMA, Presiding Judge
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DIANE M. JOHNSEN, Judge