Maxwell v. Fidelity Financial Services, Inc.
| Decision Date | 28 October 1993 |
| Docket Number | No. 1,CA-CV,1 |
| Citation | 179 Ariz. 544,880 P.2d 1090 |
| Parties | Elizabeth A. MAXWELL, Plaintiff-Appellant, v. FIDELITY FINANCIAL SERVICES, INC., an Arizona corporation, Defendant-Appellee. 91-0485. |
| Court | Arizona Court of Appeals |
Elizabeth A. Maxwell ("Maxwell") appeals the trial court's grant of Appellee Fidelity Financial Services' ("Fidelity") motion for summary judgment and dismissal of her complaint. The central issue is whether the trial court erred in determining that a loan transaction between Fidelity and Maxwell was valid and not unconscionable, and therefore not an unenforceable contract as asserted by Maxwell. We conclude by a majority of this panel that the trial court properly granted Fidelity summary judgment.
In reviewing the trial court's grant of Fidelity's motion for summary judgment, this Court will view the evidence and inferences to be drawn from that evidence in a light favorable to the nonmoving party. Hill-Shafer Partnership v. Chilson Family Trust, 165 Ariz. 469, 472, 799 P.2d 810, 813 (1990). We will affirm the trial court's grant of summary judgment if the evidence the parties produced "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Ariz.R.Civ.P. 56(c).
In December of 1984, Maxwell and her husband, Charles Maxwell, purchased a solar water heater from Steve Lasica, a door-to-door salesman for National Solar Corporation ("National"). Lasica arranged an appointment between the Maxwells and Fidelity to finance the purchase. In connection with this 1984 transaction, Maxwell signed numerous documents, including a loan contract, a deed of trust, a truth-in-lending disclosure form, and a promissory note and security agreement. 1
In July of 1988, before she had completely paid off the 1984 loan, Maxwell and her husband requested an additional cash loan of $800 from Fidelity. Fidelity agreed. In the 1988 transaction, the balance on the 1984 loan was consolidated into the new transaction. In connection with this second transaction, Maxwell and her husband signed a new promissory note and security agreement, deed of trust, truth-in-lending form, deed of release and reconveyance, and notice of right to cancel. Maxwell did not cancel. Rather, she commenced and continued making payments on the consolidated amount for approximately two more years.
On October 22, 1990, Maxwell filed her complaint against Fidelity, requesting the trial court to declare the promissory notes, security agreements, and deeds of trust on her home to be unconscionable and void. In addition, she requested damages and attorney's fees. After conducting discovery, Fidelity filed a motion for summary judgment. The trial court found that the doctrine of novation barred Maxwell's recovery and, therefore, granted Fidelity's motion for summary judgment. The trial court denied Fidelity's request for attorney's fees based on the financial hardship that would occur to Maxwell. Following entry of judgment and the trial court's denial of her motion for reconsideration, Maxwell timely appealed.
When Maxwell responded to Fidelity's motion for summary judgment, she did not file any separate affidavits. Instead, she relied on her deposition which Fidelity had taken, documents attached to Fidelity's motion for summary judgment, and her unverified complaint. We note that a party opposing a motion for summary judgment may not "rely solely on unsworn assertions of fact to controvert a motion which is supported by sworn fact." GM Development Corp. v. Community Am. Mortgage Corp., 165 Ariz. 1, 5, 795 P.2d 827, 831 (App.1990) (); see also Ariz.R.Civ.P. 56(e) ().
We will not affirm a grant of summary judgment, however, even in the absence of controverting evidence, if the motion and evidence filed in support of the motion for summary judgment are insufficient to show that no material issue of fact exists or that the movant is entitled to judgment as a matter of law. United Bank v. Allyn, 167 Ariz. 191, 194-96, 805 P.2d 1012, 1015-17 (Ct.App.1990); GM Development, 165 Ariz. at 5, 795 P.2d at 831. The evidence is insufficient to withstand a motion for summary judgment "if the facts produced in support of the claim or defense have so little probative value, given the quantum of evidence required, that reasonable people could not agree with the conclusion advanced by the proponent of the claim or defense." Orme School v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990).
In order for the 1988 agreement to be considered a novation which extinguishes the parties' rights and obligations under the prior contract, the party claiming a novation occurred must show the following:
The essential elements of a valid novation are a previously valid obligation, the agreement of all parties to a new contract, the extinguishment of the old obligations, and the validity of the new one.... It is not essential for a valid novation that assent and acceptance of the terms thereof be shown by express words, either spoken or written, but may be implied from the facts and circumstances surrounding the transaction and the conduct of the parties thereafter.
United Sec. Corp. v. Anderson Aviation Sales Co., Inc., 23 Ariz.App. 273, 275, 532 P.2d 545, 547 (1975) (citations omitted); see also Western Coach Corp. v. Roscoe, 133 Ariz. 147, 152, 650 P.2d 449, 454 (1982); Cely v. DeConcini, McDonald, Brammer, Yetwin & Lacy, P.C., 166 Ariz. 500, 501 n. 2, 803 P.2d 911, 912 n. 2 (Ct.App.1990).
Maxwell argues that the trial court erred in granting Fidelity's motion for summary judgment based on the doctrine of novation on the ground that there are material issues of fact as to two elements of this defense:
(1) Whether the prior (1984) obligation was a valid, enforceable contract; and
(2) Whether the parties had mutually agreed to substitute the 1988 contract for the 1984 obligation.
As a preliminary matter, we conclude that the evidence in the record is insufficient to show that an agency relationship existed between Fidelity and National. Maxwell's deposition testimony indicates that she understood that Lasica and the National Solar Corporation were separate from Fidelity. For example, when Maxwell experienced problems with the water heater, she called Lasica, not Fidelity. Similarly, she stated several times during her deposition that she never complained about problems with the water heater to Fidelity because she understood that she only borrowed money from Fidelity and that they were not responsible for defects in the merchandise or installation. Maxwell further admitted that Fidelity was not advised of any problems she had with the water heater until 1990, although the problems existed since the 1984 installation. Even viewing the deposition testimony in a light favorable to Maxwell, based on the Orme School test there was insufficient evidence of an agency relationship between Fidelity and Lasica and the National Solar Corporation to defeat a motion for summary judgment on this issue. See 166 Ariz. at 309, 802 P.2d at 1008. The dissent disagrees with the conclusion that there was insufficient evidence of an agency relationship to defeat a motion for summary judgment. Although the dissent posits that "a finder of fact could infer from this that National and Fidelity were engaged in a common effort to sell hot water heaters at what was almost surely an enormous profit to both", the dissent readily admits in an accompanying footnote that "The record is sparse on this point." The footnote states that Maxwell did not depose any officer or employee of Fidelity and that such omission was perhaps due to financial constraints. Whatever the reason, the immutable fact remains that, based upon the record in this case, there simply is no evidence that would rise to the level of presenting a genuine issue of material fact as to "agency" let alone any speculation of a "joint venture." Again, from a fair, objective reading of Maxwell's deposition, it can only be concluded that she did not believe there was an agency relationship. More importantly, Maxwell produced nothing to suggest, let along establish for factual consideration that there was an agency relationship.
The central issue in this case is whether the 1984 loan transaction was a valid or an unconscionable, and therefore unenforceable, contract. Maxwell contends that the issue of "unconscionability" of a contract is always a question of fact and, therefore, the trial court erred in granting Fidelity's motion for summary judgment.
This Court, however, has recently determined that "[u]nconscionability is a question of law for the court to decide." Angus Medical Co. v. Digital Equip. Corp., 173 Ariz. 159, 167 n. 3, 840 P.2d 1024, 1032 n. 3 (Ct.App.1992) (). Thus, in reviewing Fidelity's motion for summary judgment, we will determine whether there are underlying material issues of fact concerning the validity of the parties' contract.
Maxwell argues that the 1984 loan transaction constituted an adhesion contract, that is, a form...
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Maxwell v. Fidelity Financial Services, Inc.
...of novation barred Maxwell's claim that a contract was unconscionable and therefore unenforceable. See Maxwell v. Fidelity Fin. Servs., Inc., 179 Ariz. 544, 880 P.2d 1090 (Ct.App.1993). We granted review to examine the law dealing with grounds for novation and unconscionability and to deter......
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