Opinion
No. 1 CA-CV 18-0234
02-05-2019
US BANK NATIONAL ASSOCIATION, Plaintiff/Appellee, v. BETH K. FINDSEN, Defendant/Appellant.
COUNSEL Ballard Spahr, LLP, Phoenix By Craig C. Hoffman Counsel for Plaintiff/Appellee Barbara J. Forde PC, Scottsdale By Barbara J. Forde Counsel for Defendant/Appellant
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
Appeal from the Superior Court in Maricopa County
No. CV2015-013865
The Honorable Rosa Mroz, Judge
VACATED IN PART; REMANDED
COUNSEL
Ballard Spahr, LLP, Phoenix
By Craig C. Hoffman
Counsel for Plaintiff/Appellee
Barbara J. Forde PC, Scottsdale
By Barbara J. Forde
Counsel for Defendant/Appellant
MEMORANDUM DECISION
Judge Jon W. Thompson delivered the decision of the Court, in which Presiding Judge Jennifer M. Perkins and Judge Lawrence F. Winthrop joined.
THOMPSON, Judge:
¶1 Beth K. Findsen appeals from the entry of a judgment for judicial foreclosure that included an award of attorneys' fees and other debt, damages, and costs. For the following reasons, we vacate in part and remand to the superior court for further proceedings.
FACTS AND PROCEDURAL HISTORY
¶2 US Bank National Association ("US Bank") acting by and through its attorney in fact, PNC Bank, N.A., sued Findsen, among others, for breach of contract and judicial foreclosure related to a piece of residential real property in December 2015. US Bank alleges that PNC assigned it the loan in 2012 and PNC remained the loan servicer. Findsen counterclaimed for breach of the covenant of good faith and fair dealing and quiet title.
¶3 Findsen and US Bank entered a settlement agreement wherein the parties agreed the property would be listed and sold within nine months with the proceeds of the sale apportioned between the parties. If the property failed to sell, Findsen agreed to stipulate to a judgment of foreclosure under Arizona law. The pertinent clause reads: "[i]f the house is not sold within 9 months of today, then defendants agree to stipulate to a judgment of foreclosure under Arizona law in the pending action and to dismissal of all other claims by both parties with prejudice with each party to bear its own costs and fees."
¶4 Prior to the sale deadline, the parties agreed to an additional 60-day extension for Findsen to sell the property. When the property was not sold by the deadline, US Bank filed a proposed form of judgment for the superior court's consideration, including "$133,199.13 in foreclosure fees/costs, which includes attorneys' fees." In support of its proposed judgment, US Bank filed the declaration of Dorothy J. Thomas, a PNC mortgage officer (the "Thomas Declaration"). The Thomas Declaration
attached as exhibits attorney billing statements and the final settlement statement in support of the amount due and owing in the proposed judgment.
¶5 Findsen objected to the proposed form of judgment because US Bank included an attorneys' fee award, including fees from previous lawsuits, in violation of the terms of the settlement agreement. US Bank concedes it included fees from other lawsuits, namely Beth and Marc Findsen v. National City Mortgage Co., et al., CV2011-056154 and Marc Findsen v. Credit Suisse First Boston Adjustable Mortgage Trust 2004-2, CV2012-051707. Findsen also disputed the admissibility of the Thomas Declaration supporting the remaining sums due and owing.
¶6 The superior court entered US Bank's proposed form of amended judgment against Findsen. Findsen timely appealed. We have jurisdiction pursuant to Arizona Revised Statutes (A.R.S.) section 12-2101(A)(1) (2018).
DISCUSSION
¶7 Findsen argues the superior court improperly awarded US Bank its attorneys' fees in violation of the terms of the settlement agreement. Contract interpretation is a question of law we review de novo. Dunn v. FastMed Urgent Care PC, 245 Ariz. 35, 38 ¶10 (App. 2018) (citation omitted).
I. US Bank's Stipulation to Bear Its Own Attorneys' Fees and Costs is Binding.
¶8 General contract principles govern the construction and enforcement of settlement agreements. Emmons v. Superior Court, 192 Ariz. 509, 512, ¶ 14 (App. 1998). "A general principle of contract law is that when parties bind themselves by a lawful contract the terms of which are clear and unambiguous, a court must give effect to the contract as written." Grubb & Ellis Mgmt. Servs., Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 86, ¶ 12 (App. 2006). The purpose of contract interpretation is to determine the parties' intent and enforce that intent. Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 152 (1993). In order to determine what the parties intended, we first consider the plain meaning of the words in the context of the contract as a whole. United Cal. Bank v. Prudential Ins. Co., 140 Ariz. 238, 259 (App. 1983). "'Where the intent of the parties is expressed in clear and unambiguous language, there is no need or room for construction or interpretation and a court may not resort thereto.'" Mining Inv. Grp. v.
Roberts, 217 Ariz. 635, 639, ¶ 16, (App. 2008), quoting Goodman v. Newzona Inv. Co., 101 Ariz. 470, 472 (1966).
¶9 The subject settlement agreement clearly states that each party is to bear their own costs and fees, yet US Bank's proposed form of judgment included an award of attorneys' fees. Notably, the billing statements relied upon include fees from two prior lawsuits dating back to 2011. It is not clear from the record whether US Bank was a party to the other lawsuits. Moreover, the billing statements include fees for US Bank's failed effort to obtain certain attorneys' fees as a Rule 11 sanction.
¶10 US Bank contends that the underlying contracts, i.e., the Deed of Trust and the Note, permit its recovery of reasonable attorneys' fees. US Bank further contends that language of the settlement agreement only precludes recovery of attorneys' fees for the dismissal of the claims. Both arguments are unpersuasive. Parties to a settlement agreement are bound by their stipulations unless relieved therefrom by the court. Peart v. Superior Court, 6 Ariz. App. 6, 8 (1967), citing Higgins v. Guerin, 74 Ariz. 187 (1952). The plain, unambiguous language of the settlement agreement precludes recovery of US Bank's attorneys' fees. Mining Inv. Grp., 217 Ariz. at 635, ¶ 16. Had US Bank wanted to preserve its right to seek attorneys' fees, it should not have stipulated to bear its own fees and costs. Based on its stipulation, US Bank waived any claim for attorneys' fees.
¶11 US Bank's argument that it is entitled to recover its attorneys' fees as damages under A.R.S. § 33-725(b) (2018) also fails. Section 33-725(b) states in relevant part, "[j]udgments for the foreclosure of mortgages . . . shall provide that the plaintiff recover his debt, damages and costs . . . ." As explained above, US Bank waived its right to recover its attorneys' fees under the settlement agreement. Peart, 6 Ariz. App. at 8. Moreover, in light of this explicit waiver, we see no reason to consider US Bank's attorneys' fees, which including the fees from two separate lawsuits, as recoverable damages in the foreclosure judgment. The superior court erred in awarding US Bank its attorneys' fees and costs.
II. Thomas Failed to Establish Her Competency Regarding the Remaining Amounts Due and Owing.
¶12 Findsen also contends that the Thomas Declaration is inadmissible and, therefore, the judgment should be reversed in its entirety. Specifically, Findsen argues the Thomas Declaration failed to establish personal knowledge and competency. Notably, other than her objection to the inclusion of US Bank's attorneys' fees and costs, Findsen does not
dispute the figures contained in the Thomas Declaration or the supporting payoff statement attached thereto. Specifically, Findsen does not dispute that the outstanding principal balance is $269,654.95, nor does she dispute that she owes $64,858.09 in unpaid interest, $38,341.10 in escrow/overdraft fees, $146.54 in unpaid late charges, $966.00 in other fees, $13.00 in recordation fees, and $187.50 for outstanding corporate advances.
¶13 While the Thomas Declaration meets the requirements of Arizona Rule of Civil Procedure ("Rule") 80(c), it fails to establish Thomas' competency. In support of her argument, Findsen cites State v. Johnson, 184 Ariz. 521, 524 (App. 1994), which held that when documents are attached and/or referenced in an affidavit, the affiant must for admissibility purposes establish that he or she reviewed the documents and was familiar with the manner in which they were prepared. Although Johnson was not resolved by summary judgment, we find the competency requirement analysis under Rule 56 and in Villas at Hidden Lakes Condos. Ass'n v. Geupel Const. Co., 174 Ariz. 72, 81-82 (App. 1992) to be instructive.
¶14 In Hidden Lakes, we analyzed the proposition that competency must be established with respect to computer-generated reports. Hidden Lakes, 174 Ariz. at 81-82. There, the plaintiff submitted an affidavit that listed the amounts due and owing and referred to computer-generated exhibits that contained no information about their preparation. Id. The affidavit did not state the affiant reviewed the exhibits, nor did the affiant state he was familiar with the preparer of the documents or the manner in which they were prepared. Id. at 82. As such, we concluded the affiant failed to affirmatively "show that he was competent to testify to any conclusions derived from the exhibits attached to the affidavit." Id.
¶15 In this matter, Thomas failed to state that she reviewed the attached exhibits, or that she was familiar with the preparer of the documents or the manner in which the documents were prepared. As such, she did not demonstrate her competency to testify as to the amounts due and owing contained in paragraph 6 of the amended judgment. Even though US Bank is indisputably owed outstanding principal, unpaid interest, escrow/overdraft fees, late charges, recordation fees, corporate advances and other fees, we must vacate the amended judgment with respect to the amounts due and owing listed in paragraph 6 of the amended judgment and remand to the superior court for further proceedings so it can consider competent evidence that supports the amounts due to US Bank.
ATTORNEYS' FEES AND COSTS
¶16 Findsen and US Bank both request an award of attorneys' fees and costs on appeal pursuant to A.R.S. § 12-341.01 (2018) and Arizona Rule of Civil Appellate Procedure ("ARCAP") 21. In our discretion, we decline to award attorney fees to either party. We award costs on appeal to Findsen upon compliance with ARCAP 21.
CONCLUSION
¶17 The superior court erred in awarding US Bank its attorneys' fees. Additionally, the court erred in relying on the Thomas Declaration for the remaining amounts due and owing to US Bank. Thus, we vacate paragraph 6 of the amended judgment. We remand this matter for further proceedings consistent with this decision.