Hadley v. Southwest Properties, Inc.

• Decision Date: 28 September 1977
• Citation: 116 Ariz. 503,570 P.2d 190
• Parties: John W. HADLEY and Mae Lee Hadley, husband and wife, Appellants, v. SOUTHWEST PROPERTIES, INC., an Arizona Corporation, and Minnesota Title Company, an Arizona Corporation, Appellees.
• Court: Arizona Supreme Court

Page 190

570 P.2d 190

116 Ariz. 503

John W. HADLEY and Mae Lee Hadley, husband and wife, Appellants, v. SOUTHWEST PROPERTIES, INC., an Arizona Corporation, and Minnesota Title Company, an Arizona Corporation, Appellees.

Supreme Court of Arizona, In Banc.

Sept. 28, 1977.

Penterman, Corbet & Grace by John Philip Grace, Phoenix, for appellants.

Burns, Ferrin & Ehrenreich by Arthur D. Ehrenreich, Phoenix, for appellee Southwest Properties, Inc.

O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears by Wilbert G. Anderson, Phoenix, for appellee Minnesota Title Co.

HAYS, Justice.

This appeal comes to us by way of rule 47(e)(5), 17A A.R.S., Supreme Court Rules, and raises one issue: Did the trial court correctly grant the defendants' motions for summary judgment?

Plaintiffs John and Mae Lee Hadley are husband and wife. Their complaint, in seven counts, alleges that on or about October 8, 1973, they entered into a trust agreement for the sale of a 320-acre parcel of land. The original buyers, not defendants herein, subsequently assigned all of their interests in the agreement to Southwest Properties, Inc. (hereinafter Southwest), one of the defendants.

The trustee of the agreement, Minnesota Title Company (hereinafter Minnesota), is the other defendant.

In a document entitled "Supplemental Escrow Instructions to Minnesota Title Escrow No. 12,251,171 CDH," signed by the Hadleys and an officer of Southwest, the Hadleys agreed that, in the event of a default or breach on the part of Southwest, they would

"not in any event be entitled to seek an in personam judgment against SOUTHWEST PROPERTIES, INC., . . . and that the sole remedy which the SELLERS shall be entitled to enforce as against SOUTHWEST PROPERTIES, INC., . . . shall be to forfeit the beneficial interest then held by SOUTHWEST PROPERTIES, INC. in and to the real property held under . . . (the) . . . Trust. . . ."

The agreement provided that Southwest would pay a large down payment and thereafter, a yearly installment of a set amount. The first yearly installment was due on December 19, 1974. The agreement also provided that

"(u)ntil Trustee shall have received from . . . (the Hadleys) . . . a written instruction declaring this Trust in default, lots into which the property has been subdivided, or portions of the property which have not been subdivided may be released from any further right, title, interest, claim or demand of . . . (the Hadleys) . . . (and Trustee shall convey such portion of the property in accordance with . . . (Southwest's) . . . directions) upon payment to Trustee for the benefit of . . . (the Hadleys) . . . of a release price per acre . . . . Any amount paid as a release price shall be applied toward payment of the next principal installment or installments to become due in the order of their maturity . . . ."

Shortly before the first yearly installment was due, Southwest purchased, pursuant to this preceding contract term, and with almost $4,000.00, a 1.25-acre parcel. This parcel contained a well site which was used as a supplemental source of irrigation water for the entire 320-acre parcel of land being sold.

The first count of the complaint alleged that Southwest was not going to be able to make the first yearly installment payment and for that reason it tortiously singled out and bought the 1.25-acre parcel to pressure the plaintiffs into renegotiating the agreement with better terms for Southwest, knowing full well this water was important to the value of all the property. The plaintiffs refused to renegotiate, and, in fact, Southwest did default on the first payment. The complaint seeks punitive damages for the alleged tort committed by Southwest.

Pursuant to the contract, Southwest forfeited all beneficial interest in the remaining land and legal title was retransferred from Minnesota to the Hadleys. The Hadleys then sold the remaining property to other parties for less money than they would have made on the original sale.

The other six counts of their complaint allege breaches of the contract and damages therefor. They argue in their brief that they were "denied proper forfeiture" by both defendants because of this clause in the trust agreement:

"(Southwest) shall have the right of pre-payment upon notice to the . . . (Hadleys) . . . ninety (90) days in advance of intent to pay more than the regular payments."

The Hadleys did not receive ninety days notice before Southwest paid for the 1.25-acre parcel.

Both Southwest and Minnesota moved for a summary judgment based on the fact that the completion of forfeiture of Southwest's beneficial interest terminated the contract and was the plaintiff's sole remedy against the defendants, in tort or contract. They argued successfully to the trial court that the ninety-day notice requirement did not apply to the transaction in question because, clearly, the less than $4,000.00 paid for the 1.25-acre parcel was not "more than the regular payment". Their motions were granted, and this appeal followed. We are of the opinion the trial court correctly granted summary judgment.

Before granting a motion for summary judgment, the trial court must consider all the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits. Chanay v. Chittenden, 115 Ariz. 32, 563 P.2d 287 (1977); 16 A.R.S. Rules of Civil Procedure, rule 56(c). The only pleadings before the court were the (amended) complaint and Minnesota's answer, counterclaim and cross-claim. The only affidavit on file was in support of Southwest's motion for summary judgment and was by Jerome H. Levy, a trust officer of Minnesota. No depositions, interrogatories or admissions were filed by any party. In reply to the motion for summary judgment, plaintiffs filed no affidavits at all; just a memorandum of points and authorities. After reviewing these documents and the contract language, we come to the unavoidable conclusion that the parties moving for summary judgment made a prima facie showing that no issue of material fact existed for trial. City of Phoenix v. Space Data Corp., 111 Ariz. 528, 534 P.2d 428 (1975). Since the facts supporting the motion were uncontroverted by the plaintiffs, we must presume them to be true. W....