Compass Bank v. Amberwood Dev., Inc.
| Decision Date | 13 March 2012 |
| Docket Number | No. 1 CA-CV 11-0107,1 CA-CV 11-0107 |
| Parties | COMPASS BANK, Plaintiff/Appellee, v. AMBERWOOD DEVELOPMENT, INC.; REIDS RANCH DEVELOPMENT, LLC; AMBERWOOD HEIGHTS DEVELOPMENT, LLC; and BILL G. JOHNSON, Defendants/Appellants. |
| Court | Arizona Court of Appeals |
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
(Not for Publication - Rule 28, Arizona Rules of Civil Appellate Procedure)
The Honorable Gary E. Donahoe, Judge
Quarles & Brady, LLP
By Nicole France Stanton
And John Craiger
Lauren Elliott Stine
Attorneys for Plaintiff/Appellee
Phoenix
Dioguardi Flynn, LLP
By John P. Flynn
And Todd A. Williams
Mark D. Dioguardi
Attorneys for Defendants/Appellants
GOULD, Judge ¶1 Amberwood Development, Inc. ("Amberwood"); Reid's Ranch Development, LLC ("Reid's Ranch"); Amberwood Heights Development, LLC ("Amberwood Heights"); Montecito at Mirabel Development, LLC ("Montecito"); Weston Ranch Development, LLC ("Weston Ranch"); and The Landings at Reid's Ranch Development, LLC ("Landings") appeal from the trial court's grant of summary judgment, the dismissal of their counterclaim, the admission of certain expert testimony, and the award of attorneys' fees. For the reasons that follow, we affirm on all issues except for a portion of the fee award, which we vacate. We remand for entry of a new judgment for an award of attorneys' fees and costs.
¶2 In 2004, Amberwood and its related entities ("Borrowers") borrowed approximately $20 million from Guaranty Bank, which later became Compass Bank ("Lender"). The loan agreement was secured by a promissory note and deeds of trust on three pieces of real property. The loan was guaranteed by Billy G. Johnson ("Guarantor"). Between February 11, 2005 and April 24, 2008, the Borrowers executed five amendments to the loan agreement that increased the principal amount of the loan to $40 million and required all amounts due and owing to be paid by the loan maturity date, as defined in the loan documents. The Guarantor also guaranteed payment for all amounts due and owing using an amended guaranty.
¶3 Borrowers failed to repay the amounts due under the loan. Lender filed a complaint for breach of contract and breach of guaranty and sought the appointment of a receiver over certain entities of the Borrowers. Borrowers and Guarantor asserted a counterclaim that Lender breached the implied covenant of good faith and fair dealing by failing to allow Borrowers "the opportunity to sell or transfer properties which would have paid debts or obligations against the claimed debt." The trial court dismissed this counterclaim.
¶4 Shortly afterwards, three of the defendants (including Landings) declared bankruptcy. Lender moved for summary judgment on its contract claims, which the trial court granted. After the trial court entered judgment in favor of Lender, Borrowers and Guarantor ("Appellants") filed a motion for new trial and a motion for leave to file an amended answer and counterclaim, both of which were denied by the trial court.
¶5 After judgment was entered, Lender took action to foreclose its security interests in the properties securing the underlying Loan. After Lender acquired title to these properties, Appellants requested a fair market value hearing pursuant to Arizona Revised Statutes ("A.R.S.") section 33-814. The trial court held a fair market value hearing on September 23 and 24, 2010. Prior to the hearing, Appellants moved to exclude the testimony of two of Lenders' experts. After both sidesbriefed the issue, the trial court denied this motion on September 22, 2010.
¶6 On November 23, 2010, the trial court entered an amended judgment in favor of Lender and against Appellants, jointly and severally, in the total amount of $7,241,178.05 (exclusive of interest, attorneys' fees, and costs). As part of the amended judgment, the trial court awarded Lender its attorneys' fees and costs, including fees incurred in connection with enforcing its rights and remedies under the loan documents in a related bankruptcy proceeding against former defendant/co-borrower Landings, for which sums all Borrowers and Guarantor were jointly and severally liable under the loan documents.
¶7 Appellants timely appealed. We have jurisdiction pursuant to A.R.S. § 12-2101(A)(1), (A)(5)(a) (West 2012).1
¶8 Appellants argue the trial court erred by (1) granting summary judgment to Lender, (2) dismissing their counterclaim for breach of the implied covenant of good faith and fair dealing and denying leave to amend, (3) failing to exclude Lender's expert opinions and testimony from the fair market value hearing, and (4) awarding Lender its attorneys' fees relating to bankruptcymatters and the fair market value hearings. We address each argument below.
¶9 When reviewing summary judgment, our role "is to determine whether there is any genuine issue of material fact underlying the adjudication, and, if not, whether the substantive law was correctly applied." Long v. Buckley, 129 Ariz. 141, 142, 629 P.2d 557, 558 (App. 1981). We review the trial court's determination de novo. Kosman v. State, 199 Ariz. 184, 185, ¶ 5, 16 P.3d 211, 212 (App. 2000). We review the facts and all reasonable inferences in the light most favorable to Appellants as the parties opposing the motion. Id.
¶10 Appellants argue the trial court erred in granting summary judgment because Lender misstated the maturity date in its motion. Lender's motion for summary judgment stated that "all amounts due and owing under the Third Amended Note were due on the loan maturity date of April 22, 2009." Based on this alleged error, Appellants assert that Lender failed to present a prima facie case for breach of contract.
¶11 Appellants' assertion lacks merit. When evaluating how the maturity date affects the validity of the summary judgment motion, we may consider only what was before the trial court atthe time summary judgment was granted. Phx. Baptist Hosp. & Med. Ctr., Inc. v. Aiken, 179 Ariz. 289, 292, 877 P.2d 1345, 1348 (App. 1994) (). In their response to Lender's motion for summary judgment, Appellants conceded that the April 22, 2009 maturity date was the correct maturity date.2 As a result, this fact was "uncontroverted" at the time the trial court decided the summary judgment motion. See Sato v. Van Denburgh, 123 Ariz. 225, 228, 599 P.2d 181, 184 (1979) (); Ariz. R. Civ. P. 56(c)(2) () (emphasis added).
¶12 Appellants argue that their failure to point out the wrong maturity date to the trial court is irrelevant because the adequacy of any motion for summary judgment must be determined on its face and not based on the procedural failings of the party opposing the motion. In support of this position, Appellantsrely on United Bank of Arizona v. Allyn, 167 Ariz. 191, 805 P.2d 1012 (App. 1990).
¶13 In Allyn, a bank alleged that a contract had been breached and the interest rate was five percent, but attached a promissory note to its motion for summary judgment that indicated the interest rate was four percent. Id. at 193-94, 805 P.2d at 1014-15. The borrower failed to respond to the summary judgment motion and the trial court entered judgment with an interest rate of four percent. Id. at 194, 805 P.2d at 1015. After this error was pointed out, the trial court denied the motion for new trial and the appellant appealed from both the judgment and the order denying the new trial motion. Id. We explained that "[t]he trial court was obligated to . . . review the motion and accompanying evidence presented by the bank" to make sure that summary judgment was appropriate even if the other party did not oppose the motion. Id. at 198, 805 P.2d at 1019. Given that the discrepancy was "apparent from the moving party's papers," we reversed the part of the judgment relating to the interest rate. Id. at 196, 198, 805 P.2d at 1017, 1019. We declined, however, to reverse the entire judgment (including the liability portion), as the appellants desired. Id. at 198, 805 P.2d at 1019. Instead, we limited our reversal to the rate of interest, the only part of the judgment that was inconsistent with the moving party's papers. Id. ¶14 Appellants' reliance on Allyn is misplaced. Unlike Allyn, Appellants not only filed a response to Lender's motion for summary judgment, but they agreed with Lender's recitation of the maturity date. Allyn does not require a court to search the record to determine whether the parties have correctly agreed to or conceded certain factual issues in their moving papers. While we are cognizant that the trial court has an independent duty to ensure that summary judgment is appropriate even when the other party does not respond to the motion, our supreme court has explained that Mast v. Standard Oil Co. of Cal. , 140 Ariz. 1, 2, 680 P.2d 137, 138 (1984); see also White v. Lewis, 167 Ariz. 76, 80, 804 P.2d 805, 809 (App. 1990) (...
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