Chaparral Development v. RMED Intern., Inc.

• Citation: 170 Ariz. 309,823 P.2d 1317
• Decision Date: 29 August 1991
• Docket Number: CA-CV,No. 1,1
• Parties: CHAPARRAL DEVELOPMENT, an Arizona general partnership, Plaintiff-Appellee, v. RMED INTERNATIONAL, INC., a Colorado corporation, f/k/a Rocky Mountain Medical Corporation, a Colorado corporation, Defendant-Appellant. 90-182.
• Court: Court of Appeals of Arizona

Page 1317

823 P.2d 1317

170 Ariz. 309

CHAPARRAL DEVELOPMENT, an Arizona general partnership, Plaintiff-Appellee, v. RMED INTERNATIONAL, INC., a Colorado corporation, f/k/a Rocky Mountain Medical Corporation, a Colorado corporation, Defendant-Appellant.

No. 1 CA-CV 90-182.

Court of Appeals of Arizona Division 1, Department D.

Aug. 29, 1991.

Review Denied Feb. 19, 1992.

Fred R. Esser, P.C. by Fred R. Esser, Richard W. Waite, Sedona, for plaintiff-appellee.

Charles H. Frankel, Sedona, for defendant-appellant.

OPINION

VOSS, Presiding Judge.

The question presented here is whether reinstatement of a contract under A.R.S. § 33-813 allows a trustor to prevent a judicial foreclosure of a deed of trust. The trial court ruled that reinstatement only protects the trustor from a trustee's sale, not from foreclosure, and accordingly granted summary judgment to the plaintiff, the beneficiary under the deed of trust. We reverse.

FACTS AND PROCEDURAL HISTORY

On appeal from summary judgment, we view the facts in the light most favorable to the party against whom judgment was entered. Gordinier v. Aetna Casualty & Surety Co., 154 Ariz. 266, 267, 742 P.2d 277, 278 (1987). However, the material facts are not in dispute.

The plaintiff, Chaparral Development, an Arizona general partnership, sold a parcel of real estate in Sedona to the defendant, RMED International, Inc., previously known as Rocky Mountain Medical Corporation. RMED gave Chaparral a promissory note for $87,000. The note was secured by a deed of trust on the property and required monthly payments, due on the first of each month.

During March and April, 1989, RMED learned that Steven W. Ridenour, its president, had been derelict in his duties, which included making the payments to Chaparral. RMED fired Ridenour in early April. However, RMED was unaware that Ridenour had failed to make the April payment to Chaparral. On April 17, 1989, RMED received a letter from Chaparral requesting it to make all further payments to an address in Colorado. The letter contained no notice that the April payment had not been received.

On May 1, 1989, a Chaparral representative told RMED that Chaparral had not received the April payment. RMED then mailed a check from its Tulsa office for the April payment, informed Chaparral of that fact and also stated that RMED's Sedona office had just issued a check for the May payment. Chaparral requested that the May check not be sent to the Colorado address but instead held for pick up at RMED's Sedona office. RMED therefore held the check and associated cover letter.

On May 3, 1989, Chaparral's attorney phoned RMED stating that Chaparral would not pick up the May check, and the attorney would be writing a letter of explanation. On May 4, Chaparral's attorney advised RMED that Chaparral was accelerating the note. On May 5, RMED received a letter from the attorney which stated:

Because the payment due on April 1 was not made timely, and is now more than 30 days past due, my client elects to accelerate the entire amount of principal and accrued interest.

Demand is therefore made that the principal sum of $86,111, plus all accrued interest from March 1, 1989, be paid in full, on or before the close of business on May 12, 1989. In addition to the accrued interest, my client is entitled to recover its reasonable attorney fees. At this time, those reasonable fees amount to $250....

If payment is not received in full as outlined above, my client will proceed to judicial foreclosure on the Deed of Trust....

On May 4, RMED mailed the check for the May installment to the Colorado address via certified mail. The envelope was initially accepted, but then refused on May 11, 1989.

On May 18, 1989, RMED's attorney wrote to Chaparral's attorney:

The April payment was sent by mail from R-Med's Tulsa office, and the envelope has not been returned. We have presumed that your client received payment for April, and if that is not the case, please advise. R-Med will stop payment on the original check for the April payment and issue another check.

Chaparral Development apparently refused to pick up the May payment on May 1, 1989, so the check was sent by Certified Mail to the Colorado Post Office Box for Chaparral Development. That letter and check was initially signed for but then refused on May 11, 1989.

It appears that all payments were properly tendered as of May 1, 1989, but that your client has refused to accept payment. Pursuant to A.R.S. Section 33-813, R-Med is entitled to cure any default and preclude a foreclosure action. Since the April payment has not been returned to us and is presumably in the possession of Chaparral Development, and the May payment was expressly refused, your client's intent is unclear.

This letter will serve as an additional and formal tender of all sums due necessary to bring the Promissory Note current and in all respects comply with A.R.S. Section 33-813. All payments will be made immediately upon your clarification of the amount due.

Chaparral refused the tender and, on June 26, 1989, filed this action to foreclose the deed of trust.

RMED moved for summary judgment, arguing that it had complied with the reinstatement statute. In response, Chaparral did not argue that RMED had not so complied; it instead filed a cross-motion arguing that the statute did not apply and it was therefore entitled to judgment. RMED responded to the cross-motion arguing that there were material issues of fact regarding Chaparral's actions which precluded summary judgment, citing Vonk v. Dunn, 161 Ariz. 24, 775 P.2d 1088 (1989). The court agreed with Chaparral and granted its cross-motion. RMED appeals. ¹ We have jurisdiction pursuant to A.R.S. § 12-2101(B).

DISCUSSION

This appeal raises an issue of statutory interpretation, thus, we are not bound by the trial court's conclusion. See Arizona State Bd. of Accountancy v. Keebler, 115 Ariz. 239, 241, 564 P.2d 928, 930 (App.1977). Our first duty in interpreting a statute is to determine and give effect to the legislature's intent, and the first place to look is the wording of the statute. Id. at 240, 564 P.2d at 929. If the language is plain and unambiguous, then no construction is necessary and our duty is simply to apply that plain and unambiguous language. Id.; Jackson v. Phoenixflight Productions, Inc., 145 Ariz. 242, 245, 700 P.2d 1342, 1345 (1985).

The statute at the heart of the controversy reads in part:

§ 33-813. Default in performance of contract secured; reinstatement; cancellation of recorded notice of sale

A. If, prior to the maturity date fixed by the contract or contracts, all or a portion of a principal sum or interest of the contract or contracts secured by a trust deed becomes due or is declared due by reason of a breach or default in the performance of the contract or contracts or of the trust deed the trustor or his successor in interest, any person having a subordinate lien or encumbrance of record thereon or any beneficiary under a subordinate trust deed may, before five o'clock p.m. on the last day other than a Saturday or legal holiday before the date of sale or the filing of an action to foreclose the trust deed, reinstate by paying to the beneficiary the entire amount then due under the terms of the contract or contracts or trust deed, other than such portion of the principal as would not then be due had no default occurred, by curing all other defaults and by paying the amounts due under subsection B.

The trial court ruled that the beneficiary is not precluded from filing a judicial foreclosure action to foreclose the deed of trust even if the trustor reinstates under A.R.S. § 33-813. The court's position was that the statute only allows the trustor (or subordinate lienholder) to prevent a trustee's sale. ²

Chaparral argues that the right of reinstatement embodied in A.R.S. § 33-813 applies "in a context where all proceedings relate to a trustee sale and foreclosure via power of sale." It argues that the many references to actions taken by the trustee and information to be provided to the trustee, lead to the conclusion that it does not cover judicial foreclosures. Apparently, Chaparral contends the trustee's only function is to conduct trustee's sales. The trial court agreed with these arguments. In denying RMED's motion for reconsideration, it stated:

ARS sec. 33-813(a) provides that a trustor in default may "reinstate" before the trustee's sale or the filing of a foreclosure action. sec. 33-813(b) describes the effect of "reinstatement:" The "trustee" is notified, the "proceedings" are dismissed and the "trust deed" "deemed reinstated and in force as if no breach or default had occurred." The "proceedings" are "dismissed" by "cancellation of the notice of sale;" ARS sec. 33-813(E). The use of these particular terms implies that the tender of reinstatement precludes, only, the option of a trustee's sale. Under sec. 33-807 the trustee exercises the power of sale; the beneficiary elects foreclosure ("at the option of the beneficiary, a trust deed may be foreclosed"), and the trustee need not be involved in the foreclosure action. If the beneficiary had decided to foreclose and had never contemplated proceedings under the power of sale, there would be no reason to notify the trustee, because there would be, in that situation, no "proceedings" for the trustee to cancel. And the "proceedings" that are to be dismissed must be read to refer to the trustee's sale, since there can be no reinstatement after foreclosure proceedings have been filed. It must be concluded that the effect of reinstatement is only to preclude a trustee's sale, and that the tender of the reinstatement amounts, unaccepted, cannot preclude the filing of a foreclosure action....

We find these arguments unpersuasive. The trustee's duties are not limited to conducting trustee's sales. The trustee is involved in various ways. For example, under A.R.S. § 33-807, the trustee can be ...