Grabois v. Bmo Harris Bank, N.A.

• Decision Date: 30 June 2015
• Docket Number: No. 1 CA-CV 13-0164,1 CA-CV 13-0164
• Parties: DALE R. GRABOIS; FIFTY-FOUR, INC.; FIFTY-ONE, INC.; DESERT VENTURES, INC., Plaintiffs/Appellants, v. BMO HARRIS BANK, N.A., a national banking association; GRAND CANYON TITLE AGENCY, INC., Defendants/Appellees.
• Court: Arizona Court of Appeals

DALE R. GRABOIS; FIFTY-FOUR, INC.; FIFTY-ONE, INC.; DESERT VENTURES, INC., Plaintiffs/Appellants, v. BMO HARRIS BANK, N.A., a national banking association; GRAND CANYON TITLE AGENCY, INC., Defendants/Appellees.

No. 1 CA-CV 13-0164

ARIZONA COURT OF APPEALS DIVISION ONE

June 30, 2015

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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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. CV2009-11561, CV2009-15369, CV2009-018110 (Consolidated)

The Honorable Dean M. Fink, Judge

DISMISSED IN PART AND AFFIRMED IN PART

COUNSEL

McGill Law Firm, Scottsdale

By Gregory G. McGill

Counsel for Plaintiffs/Appellants

Stinson Leonard Street LLP, Phoenix

By Jeffrey J. Goulder, Stefan M. Palys

Co-Counsel for Defendant/Appellee BMO Harris Bank, N.A.

Gust Rosenfeld, P.L.C., Phoenix

By Scott Malm

Co-Counsel for Defendant/Appellee BMO Harris Bank, N.A.

Jennings Strouss & Salmon PLC, Phoenix

By Michael R. Palumbo, John J. Egbert

Counsel for Defendant/Appellee Grand Canyon Title Agency

MEMORANDUM DECISION

Presiding Judge Samuel A. Thumma delivered the decision of the Court, in which Judge Patricia A. Orozco joined and Chief Judge Diane M. Johnsen specially concurred.

THUMMA, Judge:

¶1 This appeal arises out of loans and related activities involving various parcels of Maricopa County real estate in and after 2005. After the onset of "the 2007-2008 financial collapse, which has also been referred to as the Great Recession, which . . . had a negative impact on real-estate values nationwide," United States v. Courtney, 960 F. Supp. 2d 1152, 1196 (D. N.M. 2013), the lender filed two collection actions and other parties filed a third action against the lender, a title company and others. Substantial motion practice in these consolidated actions resolved several of the claims in favor of the lender and the title company. At the close of the evidence at trial of the remaining claims, the superior court granted a motion for judgment as a matter of law in favor of the lender and the title company. After entry of judgment, this appeal followed.

¶2 Appellants Dale R. Grabois, Fifty-One, Inc., Fifty-Four, Inc. and Desert Ventures, Inc., appeal from the entry of judgment in favor of Appellees BMO Harris Bank, N.A. (BMO) and Grand Canyon Title Agency (GCTA). To the extent Appellants purport to challenge the ratification of what is described below as the 2005 Peoria Property Loan, that portion of the appeal is dismissed for lack of jurisdiction. Because Appellants have not shown that the superior court erred in granting summary judgment in favorof Appellees, or in granting Appellees' motion for judgment as a matter of law, the judgment is affirmed.

FACTS AND PROCEDURAL HISTORY¹

I. Relevant Individuals And Entities.

¶3 Appellant Grabois, along with Ricardo Jimenez and Louay Yacoub, were associated with Fifty-One, Inc. and/or Fifty-Four, Inc. in various capacities. Fifty-One, Inc., and Fifty-Four, Inc., were involved in certain Maricopa County real estate ventures. Fifty-One, Inc., or Fifty-Four, Inc., once held title to the parcels of land giving rise to this litigation: (1) the Peoria Property; (2) Lot 54 in Scottsdale; (3) Lots 55/56 in Scottsdale and (4) the Fountain Hills Lot. BMO made loans secured by guaranties and deeds of trust on the parcels.² GCTA was the escrow agent on the loans relating to Lot 54, Lots 55/56 and the Fountain Hills Lot, but not the Peoria Property.

II. The Properties.

A. The Peoria Property.

¶4 In July 2005, Jimenez and Yacoub, purportedly acting on behalf of Fifty-One, Inc., purchased the Peoria Property with a $240,000 purchase money loan secured by a deed of trust on the Peoria Property. Jimenez and Yacoub personally guaranteed this loan. The Peoria Property was a vacant lot on which Fifty-One, Inc., planned to build "affordable housing."

B. Lot 54.

¶5 In April 2005, Fifty-Four, Inc., with Grabois signing as president, borrowed $566,200 in a construction loan secured by a deed of trust on Lot 54. In 2006, Fifty-Four, Inc., with Jimenez signing as president, refinanced the construction loan and increased the loan amount to $875,000,secured by a deed of trust on Lot 54. Jimenez, Yacoub and allegedly Grabois personally guaranteed this loan.³

C. Lots 55/56.

¶6 In March 2005, Fifty-One, Inc. borrowed $305,500 secured by a deed of trust on Lots 55/56. In 2006, Fifty-One, Inc. refinanced the loan and increased the loan amount to $513,500, secured by a deed of trust on Lots 55/56. Grabois, Jimenez and Yacoub personally guaranteed this refinanced loan.

D. The Fountain Hills Lot.

¶7 In February 2005, Fifty-One, Inc., borrowed $236,000 secured by a deed of trust on the Fountain Hills Lot. Grabois signed for this loan as president of Fifty-One, Inc. and, as applicable here, Grabois and Jimenez personally guaranteed the loan.

III. Subsequent Events.

¶8 In 2007, Jimenez and Yacoub purported to transfer title to Lots 55/56 and the Fountain Hills Lot from Fifty-One, Inc. to their own names. Jimenez and Yacoub also obtained new personal loans to retire the then-outstanding loans to Fifty-One, Inc. on these properties and the corresponding personal guaranties described above.

¶9 In April 2009, BMO sued Fifty-Four, Inc. for default of the loan secured by Lot 54 and sued Grabois, Jimenez, and Yacoub for their guaranties on that loan.

¶10 In May 2009, BMO sued Fifty-One, Inc. for default of the loan secured by the Peoria Property and sued Jimenez and Yacoub for their guaranties on that loan.

¶11 In June 2009, Appellants sued BMO, GCTA, Jimenez and others challenging the transactions signed for by Jimenez and Yacoub as described above. Appellants alleged various contract, tort, statutory and equitable claims and sought money damages, injunctive relief and an award of attorneys' fees. Appellants claimed that Appellees knew or should have known that Jimenez and Yacoub lacked authority to act on behalf of Fifty-One, Inc. and Fifty-Four, Inc.¶12 The three cases were consolidated and a preliminary injunction was issued in October 2009 enjoining any sale of the properties, with the exception of Lot 54, which had already been sold. After discovery, the parties filed various potentially dispositive motions. As relevant here, the superior court:

• Granted Appellees' motion for partial summary judgment that Grabois and Fifty-One, Inc. had ratified the 2005 Peoria Property Loan by keeping the property and failing to return the loan proceeds after learning of the loan. In February 2011, the court entered a final partial judgment on that ruling. See Ariz. R. Civ. P. 54(b) (2015).⁴

• Granted Appellees' motion for partial summary judgment that Grabois and Fifty-Four, Inc., by using the loan proceeds after acquiring actual or constructive knowledge of the loan, had ratified the 2006 refinancing increasing the construction loan on Lot 54 to $875,000.

• Granted Appellees' motion for partial summary judgment that Appellants' claims based on Arizona Revised Statutes (A.R.S.) section 33-420 (imposing liability for recording false documents regarding real property) were time-barred, establishing a deficiency balance on Lot 54 and finding that Appellants' claims premised on credit reporting were preempted by federal law.

¶13 In March 2012, the parties proceeded to a jury trial on the remaining claims. Appellants sought damages for lost profits based on a series of transactions: (1) a transaction whereby some of the propertieslisted above would be exchanged for another property (the 24th Street Property), owned by Robert McDowell and his company; (2) a transaction whereby McDowell would have built and sold houses on the properties listed above and McDowell and Appellants would have used those proceeds to build condominiums on the 24th Street Property and then (3) a transaction whereby the condominiums to be built on the 24th Street Property would be sold and those proceeds would have been used to develop and sell the Tonopah Project -- described as roughly 65 acres of vacant land approximately 50 miles west of Phoenix, which would be developed into an outlet mall. Appellants contend that, as a result of these transactions, they would have made more than $100 million in profit but for Appellees' improper conduct.

¶14 After nine days of trial, Appellants rested. Appellees moved for judgment as a matter of law on several grounds, including lack of standing by Appellants Grabois and Desert Ventures, Inc., and failure to present sufficient evidence of damages to create a jury issue. The superior court granted Appellees' motion for judgment as a matter of law on these grounds.⁵ The court later denied Appellants' motion for new trial and awarded Appellees their attorneys' fees pursuant to the parties' contracts and A.R.S. § 12-341.01.

¶15 This court has jurisdiction over Appellants' timely, amended appeal from the superior court's September 19, 2012 judgment pursuant to the Arizona Constitution, Article 6, Section 9, and A.R.S. §§ 12-2101(A)(1), (A)(5)(a), (A)(5)(b) and -120.21(A)(1).

DISCUSSION

I. Issues Not Adequately Raised By Appellants.

¶16 Appellants' notice of appeal purports to "appeal from all rulings and issues in connection with" the September 19, 2012 judgment and their amended notice of appeal lists additional issues. Many of those issues, however, are not developed in Appellants' opening brief, meaning they are waived and will not be addressed by this court. See Ariz. R. Civ. App. P. (ARCAP) 13(a); State Farm Mut. Auto. Ins. Co. v. Novak, 167 Ariz. 363, 370, 807 P.2d 531, 538 (App. 1990) (declining to consider contentions not stated in opening brief or supported by reasoning or citations).

¶17 Among other things, Appellants do not contest the superior court's ruling that Appellants Grabois and Desert Ventures, Inc. lacked standing to assert any claims in this case and, by implication, prosecute this appeal. As a result, although Grabois and Desert Ventures, Inc. are named as Appellants,...