PNL Credit L.P. v. Southwest Pacific Investments, Inc.

• Decision Date: 28 April 1994
• Docket Number: CA-CV,No. 1,1
• Citation: PNL Credit L.P. v. Southwest Pacific Investments, Inc., 877 P.2d 832, 179 Ariz. 259 (Ariz. App. 1994)
• Parties: PNL CREDIT L.P., a Texas limited partnership, Plaintiff-Appellant, v. SOUTHWEST PACIFIC INVESTMENTS, INC., an Arizona corporation; R. Gregory Orians and Constance S. Orians, husband and wife; James Ricketts, a single man, Defendants-Appellees. 91-0389.
• Court: Arizona Court of Appeals

Page 832

877 P.2d 832

179 Ariz. 259

PNL CREDIT L.P., a Texas limited partnership, Plaintiff-Appellant, v.SOUTHWEST PACIFIC INVESTMENTS, INC., an Arizona corporation; R. Gregory Orians and Constance S. Orians, husband and wife; James Ricketts, a single man, Defendants-Appellees.

No. 1 CA-CV 91-0389.

Court of Appeals of Arizona Division 1, Department E.

April 28, 1994.

Reconsideration Denied July 8, 1994.

[179 Ariz. 261] Ridenour, Swenson, Cleare & Evans, P.C. by William G. Ridenour, Phoenix, for plaintiff-appellant.

David W. Curtis, Scottsdale, and Bruce W. Griffin, Phoenix, for defendants-appellees.

OPINION

SKELLY, Judge¹.

PNL Credit L.P.("PNL")² appeals from a grant of summary judgment in favor of Southwest Pacific Investments, Inc.("SW Pacific"), R. Gregory Orians and Constance Orians("the Orians"), and James Ricketts("Ricketts").³PNL challenges the trial court's ruling that Arizona's anti-deficiency statute for deeds of trust, Ariz.Rev.Stat.Ann.("A.R.S.")section 33-814(G)(Supp.1990), protects SW Pacific from a deficiency judgment.PNL also challenges the trial court's ruling that A.R.S. section 33-814(G) bars a deficiency action against loan guarantors, and that the loan guarantors in this case, the Orians and Ricketts, did not waive their available statutory defenses.For the reasons set forth herein, we reverse the trial court's rulings and judgment.

I.FACTS

In late 1985, PNL's predecessor in interest, Comcal Mortgage Services, Inc., made a loan to SJM Arizona Development Corporation("SJM").The loan was executed through six promissory notes, but secured by a single blanket deed of trust encumbering six individual condominium units.In late 1986, PNL and SW Pacific entered into an Assumption Agreement, whereby SW Pacific assumed SJM's obligations.The Orians and Ricketts also executed separate guaranty agreements, each unconditionally guaranteeing the promissory notes, deed of trust, and Assumption Agreement up to the sum of $88,940.SW Pacific subsequently defaulted on its loan payments.PNL noticed a trustee's sale on the six condominium units.Prior to the trustee's sale, two of the units were sold to third parties.PNL purchased the remaining four units at the trustee's sale with a credit bid of $355,000.The outstanding debt at the time was $472,100.21.PNL thereafter filed this deficiency action.

II.PROCEDURAL BACKGROUND

Because the Orians challenge the timeliness of the appeal and the issues that can be raised, we need to review the procedural history of this case.PNL moved for summary judgment against SW Pacific, the Orians and the Ricketts (collectively, the "Defendants").The trial court granted the motion and entered judgment in favor of PNL.The Defendants filed a motion for a new trial, arguing that the holding in Mid Kansas Fed. Sav. & Loan v. Dynamic Dev. Corp., 163 Ariz. 233, 787 P.2d 132(App.1989), vacated, 167 Ariz. 122, 804 P.2d 1310(1991), required a reversal of the judgment.The Defendants also argued that the trial court failed to make a finding that the bid price at the trustee's sale was the fair market value of the property.The trial court granted the motion only as to the effect of the Mid Kansas decision.The trial court then instructed the parties to file summary judgment motions addressing the applicability of the Mid Kansas holding.

In their motion, the Defendants argued that, according to the holding in the Mid Kansas case, A.R.S. section 33-814(G) protected them from a deficiency action.PNL argued that the anti-deficiency statute did not apply to the trust property in this case, that guarantors are not protected by that statute, and alternatively that the guarantors waived any protection provided by the statute.

On July 30, 1990, the trial court granted the Defendants' motion for summary judgment.Around this time, the Arizona Supreme Court granted a petition for review in the Mid Kansas case.The trial court, therefore, directed the Defendants to prepare a formal written judgment which did not include the "no just reason for delay" language described in Rule 54(b),Arizona Rules of Civil Procedure.The trial court also directed the Defendants to file a motion to stay the case on the inactive calendar for one year pending the supreme court's ruling.However, the trial court later denied both sides' motions to continue and signed and filed the formal judgment on October 4, 1990.

In the judgment, the trial court granted the Defendants' motion for new trial and motion for summary judgment, finding that, pursuant to the court of appeals' Mid Kansas holding, the anti-deficiency statute barred a deficiency action against the Defendants.The judgment awarded costs and attorneys' fees to the Defendants, but did not contain Rule 54(b) language.It did, however, dispose of all parties and issues in the case.Both parties agree that it was a final appealable judgment.

On October 12, 1990, PNL filed a motion for new trial or to alter or amend the judgment pursuant to Rule 59,Arizona Rules of Civil Procedure.PNL alleged that it was not given sufficient time to respond to the Defendants' application for attorneys' fees and argued that amount awarded was unsupported.PNL also filed an objection to application for attorneys' fees and costs, making the same argument.Prior to a hearing on the motion, PNL filed an amended Rule 59 motion, additionally arguing that the trial court erred in relying on the court of appeals' Mid Kansas opinion, because the supreme court had accepted the petition for review.By an unsigned minute entry dated November 26, 1990, the trial court denied PNL's motion for new trial, but sustained its objection to the award of attorneys' fees, reducing the amount awarded.The trial court did not issue a formal written judgment or signed order.

The supreme court issued its opinion in Mid Kansas on January 10, 1991.Mid Kansas, 167 Ariz. 122, 804 P.2d 1310(1991)(vacating the court of appeals decision).PNL filed a second motion for new trial on January 23, 1991, arguing that the trust property was not protected by the anti-deficiency statute because the condominiums were never occupied and, thus, they were not being "utilized as dwellings" as defined in Mid Kansas.PNL also argued that the condominiums were not "single one-family or single two-family dwellings."In response, the Defendants presented new evidence and argued that the condominiums were indeed being "utilized as dwellings."Following a hearing on March 25, 1991, the trial court denied PNL's latest motion for new trial in an unsigned minute entry.

On March 27, 1991, the trial court filed a signed modification of judgment, dated January 25, 1991, which repeated verbatim the judgment entered on October 4, 1990, except that it reduced the amount of attorneys' fees and costs awarded to the Defendants.On April 12, 1991, the trial court filed another modification of judgment which was identical to the document filed on March 27, 1991, except that it was dated April 12, 1991.Finally, on April 17, 1991, the trial court filed a signed order which denied PNL's second motion for new trial and stated that, under the supreme court's reasoning in Mid Kansas, the anti-deficiency statute precluded a deficiency judgment against the Defendants.PNL then filed a notice of appeal on May 13, 1991.

III.DISCUSSION

A.Jurisdiction

The Orians contend that the appeal is untimely and should be summarily dismissed.SeeLee v. Lee, 133 Ariz. 118, 124, 649 P.2d 997, 1003(App.1982)(failure to file a timely notice of appeal is jurisdictional).When a motion for new trial or to alter or amend the judgment is timely filed, the time to appeal is computed from the entry of an order granting or denying the motion.Ariz.R.Civ.App.P. 9(b).The time begins to run when a signed written order is filed with the clerk of the superior court.Id.

The Orians first argue that PNL's motion for new trial or to alter or amend judgment did not extend the time to appeal because it merely objected to the award of attorneys' fees and costs.The Orians claim that such an objection to an award of attorneys' fees should be made post-judgment pursuant to Rule 54(f),Arizona Rules of Civil Procedure, which deals with filing statements of cost.We disagree.In Title Ins. Co. of Minn. v. Acumen Trading Co., 121 Ariz. 525, 526-27, 591 P.2d 1302, 1303-04(1979), the Arizona Supreme Court held that an objection to a judgment's lack of attorneys' fees award needs to be made by a motion for new trial or motion to alter or amend the judgment.See alsoMark Lighting Fixture Co. v. General Elec. Supply Co., 155 Ariz. 27, 31-2, 745 P.2d 85, 89, 90(1987).It stands to reason, then, that a post-judgment objection to the amount of attorneys' fees awarded should also be made by a motion for new trial or motion to amend the judgment.

The Orians next argue that the time period began running on November 26, 1990, when the trial court denied PNL's motion for new trial making the May 13, 1991 notice of appeal untimely.PNL filed a timely motion for new trial or to alter or amend the judgment eight days after entry of the October 4, 1990 judgment.SeeAriz.R.Civ.P. 59(d).PNL also timely filed an amended motion for new trial before the original motion was ruled on.SeeAriz.R.Civ.P. 59(c)(1).On November 26, 1990, the trial court denied PNL's motion, except as to attorneys' fees.However, this ruling was made only in an unsigned minute entry and, therefore, did not constitute "entry of an order."Ariz.R.Civ.App.P. 9(b)(4). PNL's second motion for new trial, filed on January 23, 1991, was also timely because the trial court had not yet filed a signed order ruling on PNL's original motion.Seeid.We view the second motion for a new trial as a second amendment to the original motion.

The first documents to be both signed and filed by the trial court after the October 4, 1990 judgment were the modifications of judgment.PNL states...