Sparlin v. Sorensen
| Decision Date | 27 December 2016 |
| Docket Number | No. 2 CA-CV 2015-0233,2 CA-CV 2015-0233 |
| Parties | DERRY DEAN SPARLIN JR., EXECUTOR FOR THE ESTATE OF DERRY DEAN SPARLIN SR., Plaintiff/Appellant, v. PAUL Y. SORENSEN AND ANGELA B. SORENSEN, Defendants/Appellees. |
| Court | Arizona Court of Appeals |
THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
NOT FOR PUBLICATION
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
The Honorable Gus Aragón, Judge
AFFIRMED IN PART; VACATED IN PART AND REMANDED
Kenneth E. Chase, P.C., Scottsdale
By Kenneth E. Chase
and
Sparlin Law Office, P.L.L.C., Fairfax, Virginia
By Derry Dean Sparlin, Jr.
Counsel for Plaintiff/Appellant
Russo, Russo & Slania, PC, Tucson
By Stephen Portell and Joseph D. Chimienti
Judge Espinosa authored the decision of the Court, in which Judge Miller and Judge Staring concurred.
¶1 Derry Dean Sparlin Jr., as executor of his late father's estate, appeals the entry of summary judgment in favor of Paul and Angela Sorensen on claims related to Sparlin Sr.'s loss of real estate investments.1 Sparlin argues the trial court erred by finding there were no material facts in dispute, making witness credibility determinations, and failing to consider an affirmative defense. He also raises several issues related to the award of the Sorensens' attorney fees. For the reasons that follow, we find no error in the trial court's grant of summary judgment, but remand for a redetermination of the attorney fees award.
¶2 This case arises out of a series of events in which Sparlin Sr. allegedly lost over one million dollars investing in southern Arizona real estate. In a complaint filed in November 2011, he asserted seven counts based on fraud and misrepresentation against five individual defendants, their spouses, and twelve corporate entities associated with those defendants.2 Nearly two years later Sparlin was granted leave to amend his complaint to include the Sorensens, alleging that discovery had revealed Paul Sorensen was "intimately related to the remaining Defendants,"3 with liability arising "out of the same transactions, conduct, and occurrences" alleged in the original complaint.4 All defendants filed various summary judgment motions by the end of 2014, some of which the trial court granted and thereby limited the issues to be litigated at trial. The motions granted included the Sorensens' request for summary judgment, and after the remaining defendants settled with Sparlin in the ensuing months, the court entered a final judgment. That judgment, which included an award of attorney fees, wassubsequently amended to include Rule 54(c), Ariz. R. Civ. P., finality language. We have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1).
¶3 In 2003, Sparlin Sr. began investing in private real estate development projects in southern Arizona. His initial investment with defendants came in the form of a $350,000 loan for development of a 1,926-lot subdivision in southeast Pima County called Corona de Tucson ("Corona"), with an additional $250,000 loaned to the project approximately one year later. His investments were secured by a $100,000 convertible capital note and two $250,000 promissory notes issued by entities created and managed by defendants Michael Figueroa and Jeffrey Utsch. But after lot sales fell short of anticipated goals, the bank holding the note foreclosed on the Corona property.
¶4 In August 2004, Sparlin Sr. invested $500,000 in the residential development of a seventy-two acre parcel of land in northeast Tucson called Terra Rancho Grande ("TRG"). His initial investment was followed by subsequent $150,000 investments in July 2005 and June 2006.5 Sparlin did not invest in the TRG project personally, but rather through his ten percent interest in an investment company, Hadrianus Terra, LLC ("Hadrianus"), formed by defendant Figueroa and owned by Figueroa's pension plan. Development of the TRG property was hindered by regulatory restrictions that defendants were unable to surmount, and in December 2009 was sold to Pima County under its conservation acquisition program. For his $800,000 investment, Sparlin Sr. saw a return of less than $250,000.
¶5 Sparlin also invested in the residential development of a 370-acre parcel of land in Santa Cruz County known as Las Colinas Sagradas ("LCS"). In August 2005 he provided a $200,000 loan for the project to repay an advanced credit line and to fund the engineering, subdivision plan, and platting of the property. The loan was initially secured by a promissory note, but subsequently was exchanged for an equity interest in the entity created to manage project development, promoted through a Private Offering Memorandum, which, according to Sparlin, contained numerous irregularities and misrepresentations. Not all investors participated in the equity conversion, however, including the largest debt holder, who threatened foreclosure after the loan went unpaid. Pursuant to a settlement agreement, ownership of the LCS property was forfeited in exchange for an equity interest in another real estate project, and for cash considerations. The settlement agreement additionally required that all "LCS Members and LCS Creditors . . . fully and completely release any and all claims of whatever nature, whether known or unknown, that they may have against LCS and its manager [or] members," and was signed by Sparlin and his wife.
¶6 In addition to his real estate investments, Sparlin made a number of more traditional investments through a Colorado-based, two-person investment firm ("Monument") operated by Peter Skalla and appellee Paul Sorensen. In November 2004 defendants Figueroa and Utsch, who had previously invested with Skalla, hired Monument to perform Chief Financial Officer (CFO) duties for WRS and WAD. Much of that work was performed by Sorensen, who left Monument in May 2005 and became CFO of WAD.
¶7 In an affidavit supporting his motion for summary judgment, Sorensen avowed he had not done any work for the defendant entities before November 2004, and that at all times his responsibilities at WRS and WAD were "limited to finance and accounting." Affidavits from Figueroa and Utsch supported Sorensen's limited involvement in the investments at issue in this appeal.
¶8 In November 2014, three years after the initial complaint was filed and four months after the Sorensens were added to the lawsuit, the Sorensens filed a motion for summary judgment, alleging Sparlin's claims were barred by the statute of limitations and, in any event, Sorensen was not materially involved in the transactions at issue in the lawsuit. Although Sparlin focused on the liability of the other defendants, his response to the motion relied on Sorensen's position as CFO of WAD, his access to financial information, and his inclusion on management-level emails, to support his assertion that Sorensen had intimate knowledge of the investments at issue.
¶9 In its April 2015 under-advisement ruling, the trial court found that Sparlin had failed to identify any particular instances of actual misrepresentation by Sorensen, and concluded there was "insufficient evidence to support the claims against the Sorensens." In particular, the court noted "sworn proof of facts," including affidavits from Sorensen and his co-defendants that refuted Sparlin's claims, as well as Sparlin's failure to "come forward in his Response with evidence showing a genuine dispute as to any issue of material fact as to the Sorensens." The court found that Sparlin's "multiple specific allegations" lacked "support," and granted the Sorensens' motion for summary judgment.
¶10 Summary judgment is appropriate when there are no genuine disputes as to any material fact and the moving party is entitled to judgment as a matter of law. Ariz. R. Civ. P. 56(a). To obtain a judgment under Rule 56(c), the moving party must come forward with evidence that demonstrates the absence of a genuine issue of material fact and must explain why summary judgment should be entered in its favor. See Orme Sch. v. Reeves, 166 Ariz. 301, 310, 802 P.2d 1000, 1009 (1990); Nat'l Bank of Ariz. v. Thruston, 218 Ariz. 112, ¶ 14, 180 P.3d 977, 980 (App. 2008).
¶11 The moving party's burden of persuasion does not shift at the summary judgment stage, and all evidence and justifiable inferences are viewed in a light most favorable to the non-moving party. Nat'l Bank, 218 Ariz. 112, ¶¶ 16-17, 180 P.3d at 980-81. The court will, however, consider the burden applicable to the claim at trial. Id. ¶ 21; see also Orme Sch., 166 Ariz. at 309, 802 P.2d at 1008. When, as here, the burden of proving the claim rests with the nonmoving party, the moving party need only "point out by specific reference to the relevant discovery that no evidence exist[s] to support an essential element of the [non-moving party's] claim." Nat'l Bank, 218 Ariz. 112, ¶ 22, 180 P.3d at 982, quoting Orme Sch., 166 Ariz. at 310, 802 P.2d at 1009 (alterations in Nat'l Bank). If that burden of production is met, it is incumbent upon the nonmoving party to present sufficient evidence demonstrating the existence of a genuine dispute of a material fact. Id. ¶ 26. To defeat the motion, the nonmoving party must present evidence overlooked or ignored by the moving party, id., or must come forward with contradicting facts with sworn proof, see Sato v. Van Denburgh, 123 Ariz. 225, 228, 599 P.2d 181, 184 (1979). Summary judgment is proper if "the facts produced in support of the claim have so little probative value, given the quantum of evidence required, that reasonable people could not agree with the conclusion advanced by the proponent." Orme Sch., 166 Ariz. at 309, 802 P.2d at 1008.
¶12 Sparlin first argues the trial...
To continue reading
Request your trial