PNC Bank, N.A. v. Stromenger

Decision Date22 August 2016
Docket NumberNo. 2 CA-CV 2015-0135,2 CA-CV 2015-0135
CourtArizona Court of Appeals



See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f).

Appeal from the superior Court in Pima County

No. C20127052

The Honorable D. Douglas Metcalf, Judge



Gurstel Chargo PA, Scottsdale

By Wendy M. Gillott and Brian Williamson

Counsel for Plaintiff/Appellant/Cross-Appellee

Alannah Taylor Ariel, Las Vegas, Nevada

In Propria Persona

Matthew J. Stromenger, Tucson

In Propria Persona

Presiding Judge Howard authored the decision of the Court, in which Judge Espinosa and Judge Miller concurred.

HOWARD, Presiding Judge:

¶1 PNC Bank appeals from the trial court's order granting summary judgment, dismissing its claims for breach of contract, account stated, and unjust enrichment against Alannah T. Ariel and Matthew Stromenger (collectively, "appellees").1 It claims the court erred in applying Pennsylvania's statute of limitations, pursuant to a choice-of-law provision in the parties' contract. Ariel cross-appeals from the court's denial of her motion to amend her counterclaim and answer and the court's order vacating entry of default.2 Because the contract's choice-of-law provision was valid and effective, and because the court did not abuse its discretion in denying Ariel's motion to amend or vacating the entry of default, we affirm the judgment of the trial court.

Factual and Procedural Background

¶2 "On appeal from a grant of summary judgment, we view all facts and reasonable inferences therefrom in the light most favorable to the party against whom judgment was entered." Villa De Jardines Ass'n v. Flagstar Bank, FSB, 227 Ariz. 91, ¶ 2, 253 P.3d 288, 291 (App. 2011), quoting Bothell v. Two Point Acres, Inc., 192 Ariz. 313, ¶ 2, 965 P.2d 47, 49 (App. 1998). In September 2007, appellees contracted to receive a student loan from PNC Bank. Those funds were disbursed, but by November 2008,3 appellees were in default.

¶3 In November 2012, PNC Bank sued appellees for breach of a promissory note, account stated, and unjust enrichment. Appellees answered and counterclaimed for malicious prosecution, abuse of process, breach of fiduciary duty, defamation, intentional infliction of emotional distress, and false light. PNC Bank moved to dismiss these claims, and the trial court dismissed all counterclaims "except for . . . abuse of process as to Matthew Stromenger." It also struck Ariel from the answer and counterclaim. In January 2014, Ariel filed an answer and counterclaim similar to that filed originally.

¶4 PNC Bank did not reply to Ariel's answer and counterclaim, so she filed an "application for entry of default" and thereafter moved for entry of default judgment "for a sum certain." See Ariz. R. Civ. P. 55(b)(1). The trial court ultimately denied the motion for default judgment, effectively vacating the entry of default, reasoning that

[b]ecause the Court only ordered [Ariel] to file an answer and because [the court] had previously dismissed . . . Stromenger's counterclaim that raised substantially the same issues as [Ariel's] . . . it was reasonable for [PNC Bank] to believe that it did notneed to reply to [Ariel's] counterclaim as that counterclaim was not properly before the Court.

¶5 Stromenger eventually filed a motion to dismiss the action against appellees on the ground that Pennsylvania's applicable four-year statute of limitations had run. See 42 Pa. Const. Stat. § 5525. Ariel joined this motion. The court construed the motion as one for summary judgment. During oral argument on the motion, PNC Bank conceded that the date of default was more than four years before it filed suit. While the motion for summary judgment was pending, Ariel filed a motion to amend her answer/counterclaim to add a defense of lack of standing and to expand her counterclaim.

¶6 The trial court granted summary judgment to appellees on the statute of limitations ground, and to PNC Bank on the remaining abuse of process counterclaim, but denied Ariel's motion to amend her answer/counterclaim. In deciding to grant appellees' motion for summary judgment, the court determined that, although Arizona's six-year limitation period, A.R.S. § 12-548, would apply if the at-issue contract had been executed in Arizona, it did not apply because the promissory note in this case had been "executed in Pennsylvania because the parties included language in the promissory note to say it was formed in Pennsylvania." The court denied Ariel's motion to amend her counterclaim on the grounds that it came "too late in the life of this lawsuit" noting that it had continued the original trial date to allow appellees to argue the statute of limitations issue. These appeals followed. We have jurisdiction pursuant to A.R.S. §§ 12-120.21(A), 12-2101(A)(1), and 12-2102(A).4

Choice-of-Law Provision

¶7 PNC Bank argues that the trial court erred by finding that this contract was executed in Pennsylvania and not subject to § 12-548. We review choice-of-law questions de novo. Swanson v. Image Bank, Inc., 206 Ariz. 264, ¶ 6, 77 P.3d 439, 441 (2003). We also review "questions of statutory interpretation and questions of law regarding statute of limitations defenses" de novo. City of Tucson v. Clear Channel Outdoor, Inc., 218 Ariz. 172, ¶ 5, 181 P.3d 219, 225 (App. 2008). And we review the interpretation of a contract de novo. Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588, ¶ 9, 218 P.3d 1045, 1050 (App. 2009). We may affirm the trial court "if it is correct for any reason." Forszt v. Rodriguez, 212 Ariz. 263, ¶ 9, 130 P.3d 538, 540 (App. 2006).

¶8 "Arizona courts apply the [Restatement (Second) of Conflict of Laws (1971)] to determine the applicable law in a contract action." Swanson, 206 Ariz. 264, ¶ 6, 77 P.3d at 441. "If a contract includes a specific choice-of-law provision, we must determine whether that choice is 'valid and effective' under Restatement § 187." Id., quoting Cardon v. Cotton Lane Holdings, Inc., 173 Ariz. 203, 208, 841 P.2d 198, 203 (1992). Restatement § 187(1) provides: "The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue." See Swanson, 206 Ariz. 264, ¶ 10, 77 P.3d at 442 ("[t]he 'particular issue' [in a § 187(1) analysis] is whether parties may contractually waive [a] statutory right or claim" under Arizona law), quoting Swanson v. Image Bank, Inc., 202 Ariz. 226, ¶ 25, 43 P.3d 174, 182 (App. 2002), vacated in part on other grounds, 206 Ariz. 264, ¶¶ 10-11, 77 P.3d at 442-43.

¶9 The at-issue contract provision comes from the promissory note that PNC Bank provided to appellees. It reads:

I[, the Borrower,] understand that you[, the Lender,] are located in Pennsylvania and that this Credit Agreement will be entered into in the same state. Consequently, the provisions of this Credit Agreement will begoverned by federal law and the laws of the Commonwealth of Pennsylvania, without regard to conflict of law rules. (Emphasis added.)

Section 5525(a)(7), Pa. Cons. Stat., provides a four-year statute of limitations for actions on a contract for a "negotiable or nonnegotiable bond, note or similar instrument in writing." But § 12-548 provides a six-year statute of limitations for actions for debt based on a written contract "executed" in Arizona. Thus, if parties may explicitly contract to shorten the statute of limitations applied under Arizona law, this choice-of-law provision is "valid and effective." Swanson, 206 Ariz. 264, ¶ 6, 77 P.3d at 441, quoting Cardon, 173 Ariz. at 208, 841 P.2d at 203; see also Restatement § 187(1).

¶10 Subject to some limitations, parties may generally shorten the statute of limitations by express contractual provision. Angus Med. Co. v. Digital Equip. Corp., 173 Ariz. 159, 166-68, 840 P.2d 1024, 1031-33 (App. 1992) (suggesting provision shortening statute of limitations was potentially enforceable and not unconscionable); see also Swanson, 206 Ariz. 264, ¶ 12, 77 P.3d at 443 ("Generally speaking, however, parties do have the power to determine the terms of their contractual engagements."); Nangle v. Farmers Ins. Co. of Ariz., 205 Ariz. 517, ¶ 17, 73 P.3d 1252, 1255 (App. 2003) (reduction in limitation period allowed contractually); Zuckerman v. Transamerica Ins. Co., 133 Ariz. 139, n.5, 650 P.2d 441, 445 n.5 (1982) (same). And PNC Bank has not cited any Arizona case holding to the contrary. Thus § 187(1) applies, and the choice-of-law provision is "valid and effective." Swanson, 206 Ariz. 264, ¶ 6, 77 P.3d at 441, quoting Cardon, 173 Ariz. at 208, 841 P.2d at 203.

¶11 Turning to the facts at hand, the at-issue contract contains a valid and effective choice-of-law provision, which manifests the intent of the parties to have Pennsylvania law govern any disputes, regardless of choice-of-law rules. Thus, the four-year period set forth in § 5525(a)(7), Pa. Cons. Stat., applies. The parties, by choosing to apply Pennsylvania law, essentially chose to contract for a shorter statute of limitations—a contractual provision we must give effect. See Zuckerman, 133 Ariz. at 143 n.5, 650 P.2d at 445 n.5; Desarrollo Immobiliario y Negocios Industriales De Alta Tecnologia DeHermosillo, S.A. De C.V. v. Kader Holdings Co., 229 Ariz. 367, ¶ 24, 276 P.3d 1, 8 (App. 2012); Angus Med., 173 Ariz. at 166-68, 840 P.2d at 1031-33. Thus, the trial court correctly applied Pennsylvania's statute of limitations.

¶12 But PNC Bank contends that Restatement § 6 requires us to apply § 12-548 notwithstanding the contract's choice-of-law...

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