Resort Funding, L.L.C. v. Canyonview Dev., L.P.

• Decision Date: 30 August 2012
• Docket Number: 1 CA-CV 11-0069
• Parties: RESORT FUNDING, L.L.C., Plaintiff/Appellee, v. CANYONVIEW DEVELOPMENT, L.P., Defendant/Appellant. DALE GOODMAN, Receiver/Appellee,
• Court: Arizona Court of Appeals

RESORT FUNDING, L.L.C., Plaintiff/Appellee, v. CANYONVIEW DEVELOPMENT, L.P., Defendant/Appellant. DALE GOODMAN, Receiver/Appellee,

1 CA-CV 11-0069

COURT OF APPEALS STATE OF ARIZONA DIVISION ONE DEPARTMENT E

Dated: August 30, 2012

NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED

EXCEPT AS AUTHORIZED BY APPLICABLE RULES.

See Ariz. R. Supreme Court 111(c); ARCAP 28(c);

Ariz. R. Crim. P. 31.24

MEMORANDUM DECISION

(Not for Publication -

Rule 28, Arizona Rules

of Civil Appellate

Procedure)

Appeal from the Superior Court in Maricopa County

Cause No. CV2008-012608

The Honorable Larry Grant, Judge

AFFIRMED

Quarles & Brady, LLP

By C. Bradley Vynalek

And Lori Winkelman

Phoenix

And Venable, LLP

By Brent W. Procida

Attorneys for Plaintiff/Appellee Resort Funding, LLC

Baltimore, Maryland

Jackson White, PC

By J. Grant Walker

And Kelly G. Black

Attorneys for Defendant/Appellant Canyonview Development, LP

Mesa

Kelhoffer Manolio & Firestone,

By Veronica L. Manolio

Attorneys for Receiver/Appellee Dale Goodman

PLC Scottsdale

OROZCO, Judge

¶1 Appellant Canyonview Development, L.P. (Canyonview) appeals: (1) the order dismissing Canyonview's counterclaims against Appellee Resort Funding, L.L.C. (Resort Funding); (2) the trial court's failure to rule on and/or its denial of Canyonview's partial motion for summary judgment; (3) the dismissal of Canyonview's crossclaims against Appellee Receiver Dale Goodman (Receiver); (4) an order exonerating the bond of the Receiver; (5) an order terminating the receivership and releasing the Receiver from the action; and (6) a protective order barring Canyonview from conducting discovery. For the reasons set forth herein, we affirm.

PROCEDURAL AND FACTUAL HISTORY

¶2 Canyonview was the owner and operator of a timeshare resort (Resort Property). In addition to operating the Resort Property, Canyonview's business operations involved a sales and marketing center (Marketing Center), which sold timeshare interests in the Resort Property and serviced the installment contracts of existing timeshare owners (Installment Contracts).

¶3 In 2005, Resort Funding made a secured loan (Loan) to Canyonview for the development of the Resort Property, secured bya first priority security interest in all of Canyonview's real and personal property (Collateral). The Loan was also secured by a deed of trust recorded against the Resort Property.

¶4 By early 2008, Canyonview was in default of its obligations under the Loan and approached Resort Funding for additional financing. When the parties were unable to reach an agreement regarding a loan modification or the extension of an additional loan, Resort Funding filed a complaint with the superior court seeking the appointment of a receiver to manage the Resort Property. The court appointed the Receiver on a temporary basis in May 2008 and made the receivership permanent in October 2008. Pursuant to the deed of trust, the Resort Property was sold at a trustee's sale in December 2008.¹ In February 2009, the Receiver filed a Motion for Order Approving Receiver's Final Accounting, Discharging Receiver and Exonerating Receiver's Bond.

¶5 In March 2009, Canyonview objected to the final accountings of the Receiver, the discharge of the Receiver and the exoneration of the bond. Canyonview also filed counterclaims against Resort Funding and crossclaims against the Receiver. Thetrial court summarily dismissed the crossclaims against the Receiver. In May 2009, prior to the hearing on Canyonview's objections to the discharge of the Receiver, Canyonview filed a hearing memorandum and petition to surcharge the Receiver. The petition alleged that the Receiver had mismanaged the Resort Property by failing to maintain the Marketing Center, collect payment on existing Installment Contracts, and promote additional sales of timeshare contracts.²

¶6 Over the course of several months, hearings were held on Canyonview's objections to discharging the Receiver. After taking the matter under advisement, the trial court found Canyonview's objections to the discharge of the receiver were without merit. The court also terminated the receivership, released the Receiver from the litigation and exonerated the Receiver's bond. In the minute entry terminating the receivership, the court found that the Receiver had not mismanaged the property and that he was not responsible for maintaining the operations in the Marketing Center. However, the court did not rule on or address the petition to surcharge. Canyonview appealed the order exonerating the Receiver's bond and the minute entry terminating the receivership. This court, citing Cushman v. Nat'l Surety Corp. of New York, 4 Ariz. App.24, 28, 417 P.2d 537, 541 (1966), dismissed the appeal because an order exonerating a receiver's bond is not an appealable order.³

¶7 Meanwhile, Canyonview filed amended counterclaims against Resort Funding, alleging that: (1) Resort Funding breached its contract with Canyonview by failing to make additional loans and fraudulently misrepresented and failed to disclose an appraisal of the Resort Property (the Appraisal) that was favorable to Canyonview; (2) Resort Funding breached its duty to negotiate in good faith by inducing Canyonview to rely to its detriment on representations that Resort Funding would make additional loans when Resort Funding never intended to make additional loans; (3) Canyonview was entitled to declaratory judgment that certain assets purportedly sold at the trustee's sale were not part of the Collateral and were not included in the recorded Notice of Trustee's Sale and Disposition of Personal Property; (4) Canyonview was entitled to declaratory judgment that the trustee's sale was void because the trustee allowed an entity other than the beneficiary of the deed of trust to submit a credit bid; (5) Canyonview was entitled to declaratory judgment that its debt to Resort Funding, pursuant to the Loan, had been satisfied; (6) Resort Funding and/or the Receiver should berequired to submit an accounting for the proceeds of certain assets that Resort Funding and/or the Receiver illegally obtained and negligently or fraudulently sold because those assets belonged to Canyonview and were not part of the Collateral; and (7) Resort Funding and/or the Receiver were liable to Canyonview for damages Canyonview sustained through the closure of the Marketing Center and the depreciation of certain assets during the receivership. After Canyonview filed the amended counterclaims, the court granted Resort Funding's motion for a protective order preventing Canyonview from conducting any discovery in the action.

¶8 In June 2009, Resort Funding filed a motion to dismiss. In August, Canyonview filed a motion for partial summary judgment, claiming that: (1) the trustee's sale was void; (2) Canyonview had a claim to any excess proceeds of the trustee's sale over and above the amount of the debt owed to Resort Funding;⁴ (3) because the trustee's sale was void, the subsequent sale of the collateral for a higher price than the bid price at the trustee's sale should be the measure of the fair market value of the property to determine whether there were any excessproceeds from the sale;⁵ and (4) Canyonview was entitled to a fair market value determination of whether its debt to Resort Funding had been satisfied.

¶9 In September 2010, following a hearing on Resort Funding's motion to dismiss, the court granted the motion and dismissed Canyonview's counterclaims without elaboration. The court did not rule on Canyonview's motion for partial summary judgment.

¶10 Canyonview filed a timely notice of appeal. We have jurisdiction pursuant to Arizona Revised Statutes (A.R.S) section 12-2101.A.1, 3 (Supp. 2011).⁶

DISCUSSION

Canyonview's Claims Against the Receiver

¶11 In its crossclaim and petition to surcharge the Receiver, Canyonview alleged that the Receiver mismanaged the receivership estate by failing to perform the marketing and administrative functions of the timeshare business operations. Arguing that the Receiver had a duty to carry on these marketing and administrative functions pursuant to the order appointing the Receiver, Canyonview contends the trial court erred by dismissingthe crossclaim, exonerating the Receiver's bond, and terminating the receivership and releasing the Receiver from the action.

¶12 At the outset, we again recognize that we do not have jurisdiction to review the order exonerating the Receiver's bond because it is not an appealable order. Cushman, 4 Ariz. App. at 28, 417 P.2d at 541. Furthermore, although Arizona has yet to address the issue, the general legal rule is that an order terminating a receivership is also not an appealable order.⁷ See generally E. H. Schopler, Annotation, Appealability of Order Discharging, or Vacating Appointment of, or Refusing to Discharge, or Vacate Appointment of, Receiver, 72 A.L.R.2d 1075.II.A § 4 (1960); see also A.R.S. § 12-2101.A.5.b (providing for appellate review of orders appointing a receiver but not for orders terminating a receivership). However, to the extent the trial court dismissed Canyonview's claims against the Receiver in its April 24, 2009 order and January 20, 2010 minute entry, we find we have jurisdiction to review the dismissal of those claims pursuant to A.R.S. § 12-2101.A.1 and A.3.

¶13 A court may appoint a receiver, pursuant to Arizona Rule of Civil Procedure 66 and A.R.S. § 12-1241 (2003), as anequitable remedy to protect property subject to pending litigation. First Phoenix Realty Invs. v. Superior Court, 173 Ariz. 265, 266, 841 P.2d 1390, 1391 (App. 1992). A receiver is a ministerial officer who derives his authority from the court, Sawyer v. Ellis, 37 Ariz. 443, 448, 295 P. 322, 324 (1931), and acts under the appointing court's authority for the benefit of all interested parties. Midway Lumber, Inc. v. Redman, 4 Ariz. App. 471, 472, 421 P.2d 904, 905 (1967).

¶14 A receiver acts in a fiduciary capacity and has the duty to exercise reasonable care in the...