U.S. Bank National Association v. Starr Pass Resort Developments LLC, 052219 AZAPP2, 2 CA-CV 2018-0030

Docket Nº:2 CA-CV 2018-0030
Opinion Judge:BREARCLIFFE, JUDGE
Party Name:U.S. Bank National Association, as Trustee, successor-in-interest to Bank of America, N.A., as Trustee, successor to Wells Fargo Bank, N.A., as Trustee, for the Registered Holders of Credit Suisse First Boston Mortgage Securities Corporation, Commercial Mortgage Pass-Through Certificates, Series 2006 TFL2, by and through its Special Servicer, C...
Attorney:Ballard Spahr LLP, Phoenix By Brian Schulman, Dean C. Waldt, and Craig Hoffman Counsel for Plaintiff/Appellee U.S. Bank National Association Snell & Wilmer L.L.P., Tucson By Mark E. Konrad and James D. Carlson Counsel for Defendant/Appellee Receiver Douglas P. Wilson Campbell Killin Brittan & Ray...
Judge Panel:Judge Brearcliffe authored the decision of the Court, in which Presiding Judge Staring and Judge Vásquez concurred.
Case Date:May 22, 2019
Court:Court of Appeals of Arizona
 
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U.S. Bank National Association, as Trustee, successor-in-interest to Bank of America, N.A., as Trustee, successor to Wells Fargo Bank, N.A., as Trustee, for the Registered Holders of Credit Suisse First Boston Mortgage Securities Corporation, Commercial Mortgage Pass-Through Certificates, Series 2006 TFL2, by and through its Special Servicer, CW Capital Asset Management, LLC, Plaintiff/Appellee,

v.

Starr Pass Resort Developments LLC; Title Security Agency of Arizona; Starpass Master Homeowners Association, Inc.; Starr Pass Residential LLC; Starr Pass Redevelopment LLC; Starr Pass Holdings LLC; and F. Christopher Ansley, Defendants/Appellants,

and

Receiver Douglas P. Wilson, Defendant/Appellee.

No. 2 CA-CV 2018-0030

Court of Appeals of Arizona, Second Division

May 22, 2019

Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court

Appeal from the Superior Court in Pima County No. C20117682 The Honorable Charles V. Harrington, Judge

Ballard Spahr LLP, Phoenix By Brian Schulman, Dean C. Waldt, and Craig Hoffman Counsel for Plaintiff/Appellee U.S. Bank National Association

Snell & Wilmer L.L.P., Tucson By Mark E. Konrad and James D. Carlson Counsel for Defendant/Appellee Receiver Douglas P. Wilson

Campbell Killin Brittan & Ray LLC, Denver, Colorado By Bruce E. Rohde and BurnsBarton LLP, Phoenix By C. Christine Burns Counsel for Defendants/Appellants

Stephen J. Gonzalez, Tucson Counsel for Appellant Starr Pass Resort Developments LLC

Deconcini McDonald Yetwin & Lacy, Tucson By Jody Corrales Counsel for Appellant Starr Pass Residential LLC

Judge Brearcliffe authored the decision of the Court, in which Presiding Judge Staring and Judge Vásquez concurred.

MEMORANDUM DECISION

BREARCLIFFE, JUDGE

¶1 Starr Pass Resort Developments LLC ("SPR Developments"), Starr Pass Holdings LLC ("SP Holdings"), Starr Pass Residential LLC ("SP Residential"), and F. Christopher Ansley ("Ansley") (collectively "2015 Appellants") appeal the trial court's two individual grants of partial summary judgment in 2013 and 2014.1 SPR Developments and Ansley also appeal the court's 2017 denial of a post-trial restraining order and a motion for new trial. SP Holdings, SP Residential, Title Security Agency of Arizona as Trustee of Trust 708 ("Trust 708"), StarPass Master Homeowners Association Inc., and Starr Pass Redevelopment LLC, ("SP Redevelopment") (collectively "Related Entities"), appeal the court's 2017 grant of partial summary judgment, denial of specific performance, grant of accounting, and final judgment.2 We affirm.

Factual and Procedural History3

¶2 In reviewing the trial court's summary judgment rulings below, we view the facts in the light most favorable to the nonmoving party. In re Estate of Evitt, 245 Ariz. 352, ¶ 8 (App. 2018). We consider the factual material placed before the court at the time of the ruling. See Tilley v. Delci, 220 Ariz. 233, ¶ 10 (App. 2009) ("[T]he trial court considers 'those portions of the verified pleadings, depositions, answers to interrogatories and admissions on file which are brought to the court's attention by the parties.'" (emphasis omitted) (quoting Choisser v. State ex rel. Herman, 12 Ariz.App. 259, 261 (1970))). Otherwise, and as to the remaining rulings made following the bench trial, we view the facts adduced at trial in the light most favorable to sustaining the judgment. All. Marana v. Groseclose, 191 Ariz. 287, 288 (App. 1997).

The Loan and Guaranty

¶3 In August 2006, SPR Developments, as borrower, entered into a loan agreement with Column Financial Inc., as lender. The loan, in the principal amount of $145 million, was to refinance debt incurred in constructing the JW Marriott Starr Pass Resort and Spa in Tucson (the "Resort"). Ansley was the president of SP Holdings, which was the sole member of SP Resort Holdings LLC ("SPR Holdings"), which itself was the sole member of SPR Developments. 4

¶4 The loan, evidenced by a promissory note, was secured by a deed of trust and security agreement providing the lender with a security interest in certain real property owned by SPR Developments. This property included the Resort, golf course, and "Block 14, "5 which contained a temporary overflow parking lot for the hotel and the maintenance facility for the golf course. Adjacent to the Resort and golf course are residential properties and common areas that make up the "Starr Pass" master planned community.

¶5 The loan was a non-recourse loan, meaning that the obligation was secured first and foremost by the pledged collateral; the lender could foreclose on the collateral in the event of a breach, but could not seek a money judgment against the borrower. However, the loan would become a full-recourse loan if, among other events, "Borrower fails to obtain Lender's prior consent to any . . . voluntary Lien encumbering the Property" or "if Borrower fails to obtain Lender's prior consent to any Transfer as required by [the loan agreement] or the Mortgage." A "transfer" is defined in the loan agreement broadly as, among other things, selling, conveying, encumbering, or pledging the collateral property.

¶6 In conjunction with the loan agreement, Ansley executed a guaranty agreement. In that guaranty, Ansley personally "unconditionally guarantee[d]" to the lender the payment of certain defined obligations, including any full-recourse obligations and liabilities of SPR Developments under the loan agreement.

¶7 The loan agreement also contemplated, and SPR Developments acknowledged and agreed, that the lender could "securitize" the loan by selling all or any portion of the loan, or by selling securities which could be backed by all or part of the loan. Immediately after the loan was extended, Column Financial assigned the loan, note, and deed of trust to Wells Fargo Bank N.A., as "trustee." Ultimately, the loan was securitized through the sale of securities to several classes of participants (specifically "A" and "B" participants).

Default and Lawsuit

¶8 In October 2011, appellee U.S. Bank as trustee and successor note-holder and secured party, filed a complaint against SPR Developments claiming it was in default for failing to make loan payments. In November 2011, the trial court appointed Douglas P. Wilson to act as receiver (the "Receiver") for the Resort and "all other collateral relating thereto." In October 2012, U.S. Bank filed a second amended complaint, asserting new claims and adding several additional defendants, including Ansley, SP Residential, and SP Holdings.

¶9 The second amended complaint alleged, among other things, that SPR Developments had committed several breaches of the loan agreement and that the breaches triggered both SPR Developments' full-recourse liability under the loan agreement and also Ansley's corresponding personal liability under the guaranty "for all amounts due and owing under the Note." In November 2013, U.S. Bank filed a third amended complaint, asserting new claims, including a request for imposition of alter-ego liability among the various defendants.

Pretrial Motions

Partial Summary Judgment Re: Block 14

¶10 In August 2009, SPR Developments transferred Block 14 to SP Residential for nominal recited consideration. As stated above, as with all other collateral for the loan, SPR Developments could not sell, transfer, or otherwise convey Block 14 without the consent of the lender. And, while the loan documents contemplated the eventual release of Block 14 as collateral and its transfer to SP Residential, any such transfer had to comply with certain stated conditions, including that the transfer deed "contain a restriction prohibiting the use of [Block 14] as a hotel or any similar hospitality business or golf course." In April 2013, U.S. Bank moved for partial summary judgment, seeking a declaratory judgment that the Block 14 transfer violated the loan agreement, and as such, that Block 14 remained as collateral under the deed of trust ("Block 14 motion").

¶11 U.S. Bank argued that the transfer violated the loan agreement because it was made without its consent and SPR Developments had failed to satisfy "eleven separate and specific conditions precedent set forth in Section 5.2.10(i) of the Loan Agreement." The named defendants, including the 2015 Appellants here, opposed the motion, arguing that the conditions set forth in § 5.2.10 of the loan agreement are not conditions precedent, that the conditions were satisfied, that enforcement of the section would result in disproportionate forfeiture, and that U.S. Bank should be estopped from claiming default due to the transfer. The trial court granted the Block 14 motion concluding that because "the transfer . . . did not contain the requisite [deed] restrictions . . . the [d]efendants breached the contract."...

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