Dorn v. Robinson

• Court: Arizona Court of Appeals
• Writing for the Court: GREER; CONTRERAS, P.J., and FEDEL
• Citation: Dorn v. Robinson, 762 P.2d 566, 158 Ariz. 279 (Ariz. App. 1988)
• Decision Date: 29 March 1988
• Docket Number: CA-CIV,No. 1,1
• Parties: Delores M. DORN, and Elizabeth Britt, Plaintiffs-Appellants, v. Roger B. ROBINSON, and Lois D. Robinson, husband and wife, Defendants-Appellees. 9344.

Page 566

762 P.2d 566

158 Ariz. 279

Delores M. DORN, and Elizabeth Britt, Plaintiffs-Appellants, v. Roger B. ROBINSON, and Lois D. Robinson, husband and wife, Defendants-Appellees.

No. 1 CA-CIV 9344.

Court of Appeals of Arizona Division 1, Department B.

March 29, 1988.

Reconsideration Denied May 24, 1988.

Review Denied Nov. 1, 1988.

[158 Ariz. 280] Thomas P. Kack, Prescott, for plaintiffs-appellants.

Toci, Murphy and Beck by Thelton Beck, Prescott, for defendants-appellees.

OPINION

GREER, Judge.

Appellants Delores M. Dorn and Elizabeth Britt appeal from summary judgment entered in favor of Appellees Roger B. and Lois D. Robinson. The judgment dismissed appellants' complaint for foreclosure of a deed of trust and awarded the Robinsons their attorney's fees under A.R.S. § 12-341.01(A). Appellants urge these issues for our review:

(1) whether the trial court erred in holding that appellants' acceptance of late payments constituted a waiver of the "time is of the essence" clause under a deed of trust containing a clear non-waiver statement;

(2) whether the trial court erred in failing to appoint a receiver; and

(3) whether this court should vacate the Robinsons' award of attorney's fees and award appellants their attorney's fees and costs incurred at trial and on appeal.

We have jurisdiction pursuant to A.R.S. § 12-2101(B).

Appellants owned a mobile home in Prescott and the lot on which it stood. In May 1984, they sold the mobile home and lot to Neal Zimmerman and Gladys Wagner, who are not parties to this appeal. In connection with the sale, Zimmerman and Wagner executed a promissory note in favor of appellants secured by a deed of trust on the property.

Zimmerman died shortly thereafter. On or about July 12, 1984, Wagner sold the mobile home and lot to appellees Robinson. The Robinsons took the property subject to the Zimmerman-Wagner promissory note and deed of trust.

The promissory note was in the principal amount of $33,500 and provided for regular monthly payments of $300 beginning on June 4, 1984. The promissory note provided:

This Note is secured by a Deed of Trust or Mortgage on real property.

Should default be made in the payment of principal and interest thereon, as above provided, or other default occur in the performance of or compliance with any of the covenants or conditions of said Deed of Trust or Mortgage, then in any such event the holder may, in addition to such other remedies or combination of remedies holder may have under law and equity, declare the whole sum of principal and interest immediately due and payable.

....

Should suit be brought to recover this Note, I, we, or either of us, promise to pay a reasonable attorney's fee in addition to the amount found due on this Note.

The deed of trust provided:

7. That time is of the essence of this Deed of Trust and that by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his right either to require prompt payment when due of all other sums so secured or to declare default for failure so to pay.

....

11. That upon default by Trustor in the payment of any indebtedness secured hereby or in performance of any agreement hereunder, Beneficiary may declare all sums secured hereby immediately due and payable by delivery to Trustee of written notice thereof, setting forth the nature thereof, and of election to cause to be sold said property under this Deed of Trust.

....

Beneficiary may foreclose this Deed of Trust as a realty mortgage.

The trustee under the deed of trust was First American Title Insurance Company of Arizona.

After the Robinsons purchased the property, they commenced making payments on the promissory note through First American Title. Through December 1984, none of their payments were late by more than one week.

By January 16, 1985, First American Title had not received the Robinsons' January payment, due January 4, 1985. It sent the Robinsons a notice which stated, in part:

We have been requested to remind you that we did not receive your payment(s) on the above account. In order to protect your equity in the property involved please bring the account up to date immediately.

First American Title received the Robinsons' January payment on January 21, 1985.

By February 19, 1985, First American Title had not received the Robinsons' February payment. On that date, it sent the Robinsons another notice of the type it had issued the previous month. On March 2, 1985, appellant Delores Dorn sent the Robinsons a handwritten letter stating:

I would appreciated [sic] if you would get both payments, February and March sent in, so that the title company will receive the payments no later than the 8th of March. If the payments (both) aren't paid by then, you leave me no alternative but to start foreclosure proceedings.

If you get both payments in on time and you will have a problem in continuing to pay on time, please come and talk to me. Maybe we could change the payment date if that will help you to pay on time. Please let me hear from you.

On March 5, 1985, appellee Lois Robinson sent Dorn the following handwritten reply:

I am sorry we have gotten behind on the payments.

My father lives in Texas and is dying of cancer and I have had to make two trips home that I had not counted on.

Things look like we are seeing our way clear from now on if you can bear with us this month. I am sending one payment in today and the other payment will be in March 14, 84. [sic] The April payment will be on time. Again, I am sorry, but this is all I can do at this time.

Thank you for your patience and understanding as this will not happen again.

The Robinsons actually paid the February payment on March 11, 1985, and the March payment on April 1, 1985. The April and May payments were made together on May 9, 1985. They then paid the June payment on June 3, 1985, and the July payment on July 19, 1985. No further notices or letters were sent in connection with the March, April, May or July payments.

During the summer of 1985, the Robinsons were informed that Mrs. Robinson's father was seriously ill. According to the Robinsons' affidavits, Mrs. Robinson went to visit her father without making arrangements with her husband or anyone else to insure that the monthly payments on their Prescott property would be made on time.

By September 20, 1985, neither the August nor the September payments had been made. On that date, appellants initiated this action by filing a complaint for judicial foreclosure of the deed of trust. The complaint alleged:

Plaintiff [sic], in accordance with the terms of the Promissory Note, has elected and hereby does, unless acceleration has been accomplished prior to the filing of this Complaint, declare the whole of said unpaid principal balance, interest and other charges immediately due and payable.

In her deposition, Mrs. Robinson testified that Delores Dorn never told her in writing or orally after June of 1985 that the Robinsons could miss payments and that, when she failed to make the August and September payments, it was not in reliance on any representation by Dorn. She also testified that she knew Dorn wanted the payments made on time and that her only reason for not making the August and September payments was because she was out of state. Mr. Robinson testified that there was no agreement between appellants and the Robinsons that allowed the Robinsons to miss further payments after the payments were brought up to date following the March letter. He further testified that he never had the impression that the Robinsons could miss several payments in a row and still not worry about foreclosure.

Near the end of September or the first of October, 1985, local realtor Ray Denny called the Robinsons and told them they were two months delinquent in their payments. On October 2, 1985, the Robinsons tendered two payments, or $600, to First American Title. On October 7, 1985, they tendered an additional $300 for the October payment. On October 11, 1985, the Robinsons were served with process in this action, and on October 18, 1985, First American Title returned all three payments to the Robinsons.

Ruling on cross-motions for summary judgment, the trial court concluded:

It appears to the Court that the law in Arizona is at long last clear: After late payments have been accepted under a note and deed of trust, the obligee is bound to give notice reinstating time is of the essence provisions and allow time to cure prior to filing suit. Ciavarelli, Ram and Miller v. Uhrick are not inconsistent on this point.

Because Plaintiffs did not give the notice required by law, IT IS ORDERED denying Plaintiffs' Motion for Summary Judgment and granting Defendants' Motion for Summary Judgment.

IT IS FURTHER ORDERED denying Plaintiffs' request for order allowing possession or appointment of receiver.

The trial court later awarded the Robinsons $2,867.50 as attorney's fees pursuant to A.R.S. § 12-341.01(A). The trial court entered formal judgment in favor of the Robinsons on August 28, 1986, and later entered a formal order denying appellants' motion for new trial or hearing. Appellants timely appealed.

We begin with a review of the pertinent Arizona case law. In Ciavarelli v. Zimmerman, 122 Ariz. 143, 593 P.2d 697 (App.1979), the debtor executed a new note and deed of trust to settle a pending trustee's sale on a prior note and deed of trust. Both the note and the deed of trust contained acceleration clauses, and the deed of trust included a "time is of the essence" clause. The debtor's third payment under the new note was due on October 5, 1977. On October 3, the debtor asked the lender's lawyer if he could pay only half of what was due on October 5, 1977. The next day, October 4, 1977, the lender's lawyer told him he could not. That same day, the debtor mailed a check for the full amount to the escrowee. On October 6, 1977, the lender's lawyer instructed the escrowee to return...