United Bank of Arizona v. Allyn

Decision Date17 April 1990
Docket NumberNo. 1,CA-CIV,1
Citation167 Ariz. 191,805 P.2d 1012
PartiesUNITED BANK OF ARIZONA, an Arizona corporation, Plaintiff-Appellee, v. James E. ALLYN and Martha H. Allyn, husband and wife; James Allyn & Associates, Inc., Pension Plan, Defendants-Appellants. 88-474.
CourtArizona Court of Appeals

Carson, Messinger, Elliott, Laughlin & Ragan by Evan R. Laughlin, Phoenix, for plaintiff-appellee.

Tiffany & Hoffmann, P.A. by Dow Glenn Ostlund, Phoenix, for defendants-appellants.

OPINION

LANKFORD, Judge.

This appeal challenges a summary judgment entered by the superior court. The question presented is whether the court properly granted appellee's motion for summary judgment despite evidence presented with the motion which revealed on its face that summary judgment was not warranted. Appellants claim that the exhibits attached to the moving party's summary judgment motion revealed genuine issues of material fact which precluded summary judgment even though they did not file a response to the motion. We agree and reverse the judgment.

I.

The facts must be viewed most favorably to the appellants as the parties against whom summary judgment was entered. State ex rel. Corbin v. Challenge, Inc., 151 Ariz. 20, 725 P.2d 727 (App.1986).

Appellant James Allyn borrowed $150,000 from appellee United Bank. He signed a promissory note to that effect on July 10, 1985.

James Allyn's wife, Martha, did not sign the note. In fact, Martha Allyn is not named anywhere in the note and James is not identified as a married man. The note also does not specify whether the loan was for James Allyn's own benefit or for the benefit of his marital community. The note does provide that the bank may collect the debt against either James Allyn's separate property or against community property.

As security for the loan, James Allyn executed a deed of trust on real property, with the bank acting as the trustee and the beneficiary. The deed of trust indicates that it is

for the purpose of securing: (1) payment of the sum of One Hundred Fifty Thousand and no/One Hundred ($150,000.00) with interest thereon, together with costs and attorney's fees, according to the terms of a promissory note dated July 10, 1985 herewith made by James E. Allyn, husband of Martha H. Allyn, dealing with his sole and separate property ... 1

The bank extended the original due date on the promissory note on six occasions. Each extension was evidenced by a "Notice of Modification Agreement," which the bank recorded along with a legal description of the encumbered real estate. 2

All six of these documents were executed by "James E. Allyn, husband of Martha H. Allyn, dealing with his sole and separate property." Four of the modification agreements also indicated that the agreement was between "James E. Allyn, husband of Martha H. Allyn, dealing with his sole and separate property," as borrower, and the other two identified the borrower simply as "James E. Allyn."

After Mr. Allyn defaulted on the promissory note, United Bank brought this action in superior court. The bank sought not only payment on the note against James, but also judgment against "the marital community of James E. Allyn and Martha H. Allyn, and each of them jointly and severally." The bank asked for payment of $145,490.59, the unpaid principal balance plus interest at the bank's prime rate plus five percent, and attorney's fees of not less than $10,000. Attached to the complaint were copies of the note, the modifications and the deed of trust. The Allyns filed a verified answer which inter alia denied that James acted at any time on behalf of the marital community.

United Bank immediately moved for summary judgment. The bank filed a statement of facts with its motion as required by Rule IV(f), Uniform Rules of Practice of the Superior Court. The bank also attached as exhibits to its statement of facts the same documents that it had attached to its complaint--the note, the modifications and the deed of trust.

The superior court entered an order establishing a briefing schedule and fixing a date for oral argument on the motion. The court's order warned that the motion would be decided "summarily in accordance with Uniform Rule IV(b)" if the parties did not adhere to the established briefing schedule.

Apparently due to a filing error in the office of appellants' former counsel, the court's order was misplaced and no response to the motion for summary judgment was ever filed on behalf of Mr. and Mrs. Allyn.

The superior court then issued a minute entry order which stated in its entirety as follows:

No response having been filed pursuant to the minute entry order of 3/10/88, the rule, or at all, and a review of the record to date showing no genuinely contested issue of material fact or law, ORDERED:

1. Granting plaintiff's Motion for Summary Judgment on the Complaint and Counterclaim, and

2. Vacating oral argument set 4/13/88.

United Bank thereafter filed a request for attorney's fees, to which the Allyns objected on the ground that the amount requested was excessive. The superior court awarded the requested fee and signed the form of judgment proposed by the bank.

The judgment entered in favor of the bank was against the marital community for the balance due on the debt, plus interest at the bank's prime rate plus five percent, and attorney's fees of more than $14,000. The superior court's judgment also included judgment against the Allyns' counterclaim, a decision which the Allyns do not challenge here.

The Allyns filed a motion for new trial. They argued that the summary judgment was not justified by the evidence and was contrary to law. The court denied the motion.

Mr. and Mrs. Allyn appeal from the judgment and the order denying the new trial motion.

II.

The Allyns contend on appeal that summary judgment was improper because the record in the superior court contained evidence creating genuine issues of material fact. In particular, they argue that two issues required a trial and thus precluded summary judgment.

The first issue was created by the text of the note, which sets forth a default interest rate of only the prime rate plus four percent, whereas the bank claimed (and was awarded in the judgment) interest of prime plus five percent.

The second issue was created by the rest of the documents accompanying the motion. All of the documents except the original note clearly specified that James Allyn was acting on behalf of his sole and separate property, whereas the bank sought and received judgment against Mrs. Allyn and the marital community.

The bank does not dispute that there are genuine issues of material fact concerning the amount of interest and the bank's claim for judgment against Mrs. Allyn and the marital community. Instead, the bank argues that the Allyns are barred from raising these issues on appeal because they failed to respond to the bank's motion for summary judgment and failed to object to the form of the judgment.

The bank argues that the Allyns were required to respond to the motion. The bank contends that the superior court judge was not obligated to search the record to determine whether the moving party is entitled to summary judgment. According to the bank, the party adverse to summary judgment therefore must either produce controverting evidence or at least point to evidentiary items otherwise in the record which reveal a genuine dispute of fact. In short, the bank contends that the summary judgment was correctly entered regardless of its merits and merely because the Allyns failed to file a memorandum responding to the motion.

A.

Summary judgment is appropriate when the record shows that there is no real dispute as to any material facts and the moving party is entitled to judgment as a matter of law. Rule 56(c), Arizona Rules of Civil Procedure; Nicoletti v. Westcor, Inc., 131 Ariz. 140, 142, 639 P.2d 330, 332 (1982); State ex rel. Corbin v. Sabel, 138 Ariz. 253, 255, 674 P.2d 316, 318 (App.1983). The party seeking judgment bears the burden of satisfying this standard and demonstrating both the absence of any factual conflict and his or her right to judgment. See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Appellate courts review summary judgments on the basis of the record made in the trial court, but their determination of whether the entry of judgment was proper is essentially de novo: appellate courts apply the same standard as that used by the trial court in ruling on the summary judgment motion in the first instance. See Nicoletti v. Westcor, supra.

Any evidence or reasonable inference contrary to the material facts--i.e., the facts which the moving party needs to show his entitlement to judgment--will preclude summary judgment. Mere speculation or insubstantial doubt as to the facts will not suffice, but where the evidence or inferences would permit a jury to resolve a material issue in favor of either party, summary judgment is improper. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

Although Arizona case law is divided on whether a reasonable inference is needed to avoid summary judgment or mere "slightest doubt" will suffice, 3 we believe that our Supreme Court would resolve the conflict in favor of consistency with recent pronouncements of the United States Supreme Court adopting the reasonable inference standard. See Burrington v. Gila County, 159 Ariz. 320, 767 P.2d 43 (App.1989) (citing Matsushita, supra; Anderson, supra; and Celotex, supra, federal decisions interpreting Rule 56, Federal Rules of Civil Procedure). Cf. Edwards v. Young, 107 Ariz. 283, 486 P.2d 181 (1971) (federal decisions interpreting the federal rules are entitled to "great weight" in...

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