Opinion
No. 1 CA-CV 15-0030
01-21-2016
COPPER STATE FINANCIAL MANAGEMENT, LLC, Plaintiff/Appellee, v. HIGH VALLEY BUILDERS, LLC and CARL B. PENNY, Defendants/Appellants.
COUNSEL Hameroff Law Group, P.C., Tucson By David E. Hameroff, Garrett M. Culver, Rohit Talwar Counsel for Plaintiff/Appellee Warnock, MacKinlay & Carman, PLLC, Prescott By André E. Carman Counsel for Defendants/Appellants
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. Appeal from the Superior Court in Yavapai County
No. P1300CV201200046
The Honorable Patricia A. Trebesch, Judge
AFFIRMED
COUNSEL Hameroff Law Group, P.C., Tucson
By David E. Hameroff, Garrett M. Culver, Rohit Talwar
Counsel for Plaintiff/Appellee Warnock, MacKinlay & Carman, PLLC, Prescott
By André E. Carman
Counsel for Defendants/Appellants
MEMORANDUM DECISION
Judge Randall M. Howe delivered the decision of the Court, in which Presiding Judge Kent E. Cattani and Judge Samuel A. Thumma joined. HOWE, Judge:
¶1 High Valley Builders, LLC and Carl B. Penny appeal the trial court's orders granting Copper State Financial Management, LLC's motion for summary judgment, denying their motion for a new trial, and awarding Copper State attorneys' fees and costs. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 In October 2005, High Valley obtained a $15,000 credit loan from Wells Fargo Bank, N.A. The credit application, signed by Penny as High Valley's "Owner/Guarantor," provided that Penny promised to pay Wells Fargo all High Valley's indebtedness and attorneys' fees and costs in enforcing the guaranty:
By signing below, I also, in my individual capacity (even though I may place a title or other designation next to my signature), jointly and severally unconditionally guarantee and promise to pay Bank all indebtedness of the Applicant at any time arising under or relating to any credit requested through this application. . . . I agree (i) I will pay Bank's costs and attorneys' fees in enforcing this guaranty . . . and (iii) this guaranty should benefit Bank and its successors and assigns.Wells Fargo approved the application and loaned High Valley $15,000.
¶3 Beginning in 2008 and continuing through 2009, High Valley missed payments and received financial statements from Wells Fargo regarding its account balance being past due and delinquent. Wells Fargo claimed that by January 2010 High Valley owed it $15,948, comprising of $13,706.02 in principal and $2,241.98 in finance charges. The loan was subject to a 13.75% annual interest rate, 0.03767% daily finance charge rate, and periodic finance charges totaling $195.88. Months later, Wells Fargo "[sold], assign[ed] and transfer[red]" High Valley's account to Absolute Resolutions Corporation ("ARC") through a bill of sale accompanied by an electronic record detailing the account information. ARC in turned "[sold], assign[ed] and convey[ed]" the account to Copper State, a debt collector, also through a bill of sale with the same electronic record.
¶4 In January 2013, Copper State sued High Valley and Penny, its guarantor, (collectively, "HVB") for the $15,948 remaining balance, $4,403.72 in accrued interest, interest at a rate of 13.75% from January 9, 2012, and attorneys' fees and costs. Copper State alleged that Wells Fargo extended credit to High Valley and that Wells Fargo's claim against High Valley was assigned to it. HVB moved for a more definite statement, seeking to clarify Copper State's standing to assert a claim against HVB. The court granted the motion, and Copper State filed an amended complaint, addressing the issues.
¶5 Copper State subsequently moved for a default judgment because HVB had not answered the amended complaint. But six days later, HVB filed an answer and the matter was referred to compulsory arbitration. At the arbitration hearing, Ivan Lavinsky, Copper State's custodian of records, "testified that he was personally responsible for the transaction by which [Copper State] acquired the account from [ARC] and in the course thereof ascertained that [ARC] was the legal owner of the account." The arbitrator found in favor of Copper State, awarding it the "contract damages at $20,351.72, plus interest accruing at the contract rate of 13.75% from and after January 9, 2012[,] until paid in full." The arbitrator also awarded Copper State attorneys' fees and costs. HVB appealed the arbitration award and moved to file an amended answer to the complaint, which the trial court granted.
¶6 HVB then moved for summary judgment, arguing that Copper State provided no evidence to support its action against it, that Copper State improperly attempted to shift the burden of proving the action to it, and that the three-years' limitations period governing "open accounts" barred Copper State's action. Copper State cross-moved for summary judgment, arguing that HVB's motion for summary judgment and attached documents established every element of Copper State's breach of contract claim against HVB.
¶7 The trial court denied both motions. The court concluded that Copper State's action was not time-barred because High Valley's account was not an open account, but a credit card account, subject to a six-years' limitations period. The court also concluded that although HVB admitted all the breach of contract elements "as to the account with Wells Fargo" in its motion for summary judgment, whether Wells Fargo assigned High Valley's account to ARC and then to Copper State was an issue of disputed fact with competing inferences. The court further concluded that the accuracy of the damages calculation could not be resolved by motion because the attached documents were inadmissible hearsay. HVB unsuccessfully moved for reconsideration.
¶8 Copper State then moved again for summary judgment. This time, Copper State argued that the bills of sale and electronic record detailing the account information were admissible under the business records exception to the rule against hearsay. Copper State included an affidavit by Lavinsky to lay foundation for the documents. In the affidavit, Lavinsky provided his qualifications as Copper State's custodian of records and explained how he kept and maintained Copper State's records, including records Copper State received as the assignee of debts from the original lenders and any intermediary brokers. Specifically, Lavinsky stated that ARC purchased High Valley's account from Wells Fargo and Copper State in turn purchased the account from ARC. He also stated that the remaining balance was $15,948 and the interest rate was 13.75% per year. When discussing the transaction between Wells Fargo, ARC, and Copper State, Lavinsky referenced High Valley's credit application and billing statements, the bills of sale between Wells Fargo and ARC and Copper State, and the electronic record of account information transferred with the bills of sale. These documents were attached to Lavinsky's affidavit. Copper State also sought attorneys' fees and costs.
¶9 HVB moved to strike Copper State's motion, arguing that it was untimely and that it introduced new evidence—Lavinsky's affidavit—after the discovery deadline had passed. After full briefing, the trial court denied the motion to strike and granted Copper State's motion for summary judgment. The court entered judgment against HVB for $15,948, plus $305.50 in costs, $3,508.56 in attorneys' fees, $8,116.55 in interest, accruing interest on the $15,948 at 13.75% per year until paid in full and on attorneys' fees and costs at 4.25% per year until paid in full, and accruing costs. Although the amount of the attorneys' fees had not been resolved, the judgment did not contain Arizona Rule of Civil Procedure 54(b) language.
¶10 HVB subsequently moved for a new trial, arguing that the judgment should be vacated because the court erroneously admitted new evidence, the judgment was not justified by evidence and was contrary to law, and the court and Copper State engaged in misconduct depriving HVB of a fair trial. After full briefing, the trial court denied HVB's motion for a new trial and directed Copper State to file an application for attorneys' fees and costs and a form of judgment containing Arizona Rule of Civil Procedure 54(c) language. Copper State complied with the court's order, and the court entered judgment in favor of Copper State for attorneys' fees with language providing that "[n]o further matters remain pending and judgment is entered pursuant to Rule 54(c)." HVB timely appealed from that judgment.
DISCUSSION
1. Jurisdiction
¶11 Before we address HVB's arguments, we first address Copper State's argument that this Court only has jurisdiction to address whether the trial court erred in awarding HVB attorneys' fees and costs because the notice of appeal does not reference the orders granting summary judgment in favor of Copper State and denying HVB's motion for a new trial. We have jurisdiction to address all of HVB's arguments because HVB appealed from a final judgment. This Court has jurisdiction in appeals "taken . . . [f]rom a final judgment," A.R.S. § 12-2101(A)(1), which is a judgment that disposes of all claims and parties, Baker v. Bradley, 231 Ariz. 475, 479 ¶ 9, 296 P.3d 1011, 1015 (App. 2013). "Upon an appeal from a final judgment, [we] shall review any intermediate orders involving the merits of the action and necessarily affecting the judgment, and all orders and rulings assigned as error, whether a motion for a new trial was made or not." A.R.S. § 12-2102(A). Here, we have jurisdiction to address all of HVB's claims because HVB appealed from the final judgment, which contained the language required by Arizona Rule of Civil Procedure 54(c), thereby permitting us to review all intermediate orders involving the merits of the action.
2. Motion for Summary Judgment
¶12 HVB first argues that the trial court erred in granting Copper State's motion for summary judgment because whether Wells Fargo assigned High Valley's account was an issue of material fact. HVB claims that Lavinsky's affidavit could not establish the foundation for the bills of sale or electronic account statements to prove the assignments, and therefore, those documents constituted inadmissible hearsay. We review de novo the trial court's grant of summary judgment, viewing the evidence and all reasonable inferences therefrom in the light most favorable to the party opposing summary judgment. Andrews v. Blake, 205 Ariz. 236, 240 ¶ 12, 69 P.3d 7, 11 (2003). A court may grant summary judgment when no genuine issue of material fact exists, and the moving party is entitled to judgment as a matter of law. Ariz. R. Civ. P. 56(c). We will uphold a trial court's ruling regarding the admissibility of evidence in summary judgment proceedings absent an abuse of discretion. Mohave Elec. Co-op., Inc. v. Byers, 189 Ariz. 292, 301, 942 P.2d 451, 460 (App. 1997). Here, because the trial court did not abuse its discretion in considering Lavinsky's affidavit in determining that no genuine issue of material fact existed, the court correctly granted summary judgment in favor of Copper State.
¶13 Hearsay is "a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." Ariz. R. Evid. 801(c). A hearsay statement is inadmissible unless it falls within certain exceptions. See Ariz. R. Evid. 803-04. One such exception is for "records of a regularly conducted activity," commonly denominated "business records." Ariz. R. Evid. 803(6). A business record is admissible if the proponent of the evidence shows by testimony from the custodian of records, or other qualified witness, or by certification that the record was (1) made at or near the time by, or from information transmitted by, someone with knowledge and (2) kept in the course of a regularly conducted business activity and (3) made in the business's regular practice. Id. Even if these conditions are established, the record will nevertheless be inadmissible if the opponent of the evidence shows that "the source of information or the method or circumstances of preparation indicate a lack of trustworthiness." Id. The custodian need not have personally assembled the record. State v. Parker, 231 Ariz. 391, 402-03 ¶ 33, 296 P.3d 54, 65-66 (2013). However, mere recitation of Rule 803(6) language in an affidavit is insufficient to establish admissibility; instead, the affidavit must substantively address the accompanying evidence well enough to establish its credibility and allow a court to review its accuracy. Wells Fargo Bank, N.A. v. Allen, 231 Ariz. 209, 213-14 ¶ 18, 292 P.3d 195, 199-200 (App. 2012); see also State v. Johnson, 184 Ariz. 521, 524, 911 P.2d 527, 530 (App. 1994) (holding that when documents are attached and/or referenced in an affidavit, the affiant must establish that he or she reviewed the documents and was familiar with the manner in which they were prepared for them to be admissible).
¶14 Here, Lavinsky's affidavit provided sufficient detail to authenticate the accompanying evidence such that the trial court did not abuse its discretion in admitting the evidence under the business records exception. In the affidavit, Lavinsky stated that he was the custodian of records for Copper State and that he had worked for it and related entities for seven years. Lavinsky avowed that he was a buyer of debt portfolios at Copper State and in the normal course of his responsibilities, he kept and maintained Copper State's records, which included incorporating into Copper State's general business records documents Copper State received as assignee of debts from the original lenders and any intermediary brokers. Lavinsky specifically avowed that "[a]t or near the time ARC transferred ownership of [High Valley's] account, these documents [including the bills of sale and electronic records transferred with the bills of sale], or the electronic data replicating these documents, [were] made available to [Copper State], and [were] incorporated into [Copper State's] general business records."
¶15 Moreover, Lavinsky substantively discussed those documents, making clear that Copper State used Wells Fargo's records in its regular practice as an assignee of debt and a debt collector. See Parker, 231 Ariz. at 402 ¶ 33, 296 P.3d at 65 ("Trustworthiness and reliability stem from the fact that Capital One regularly relies on the information that third parties submit as part of their ordinary course of business."). Lavinsky explained that Wells Fargo, through a bill of sale and accompanying electronic records replicating the account's data, transferred ownership of High Valley's account to ARC, which would have incorporated those records into its general business records. Lavinsky also explained that ARC subsequently transferred ownership of the account using another bill of sale but with the same electronic records to Copper State. He then incorporated those documents into Copper State's general business records.
¶16 In arguing that Lavinsky's affidavit was insufficient, HVB relies heavily on Allen—a case in which this Court concluded that a paralegal's affidavit submitted in conjunction with a motion for summary judgment was insufficient to show admissibility of documents obtained in discovery. See Allen, 231 Ariz. at 214 ¶ 19, 292 P.3d at 200. In concluding so, we stated that the paralegal only made "a general avowal that he [was] the custodian of records and that he personally reviewed records that established the amount of the Allens' indebtedness to Wells Fargo." Id. at ¶ 18. We further stated that those "records were neither described nor attached, nor was there anything in the affidavit to provide a reviewing court with the means to evaluate the accuracy of the paralegal's calculation of the amount claimed to be due." Id. But the affidavit and documents in this case differ materially from those in Allen. Lavinsky specifically referred to the attached documents and described how they were used in the transaction. He also attached and referred to numerous account statements that identified the statement date, specific purchases, balance owed, remaining balance, balance owed due date, and interest information—in stark contrast to the single statement found in the affidavit in Allen.
¶17 Therefore, because Lavinsky's affidavit established the foundation to admit the bills of sale and electronic records, the trial court could consider those documents in determining whether Copper State was entitled to summary judgment. To prevail on its motion, Copper State must prove the existence of a contract, breach of the contract, resulting damages, Chartone, Inc. v. Bernini, 207 Ariz. 162, 170 ¶ 30, 83 P.3d 1103, 1111 (App. 2004), and assignment, Deatsch v. Fairfield, 27 Ariz. 387, 397-98, 233 P. 887, 891 (1925) (allowing assignment of breach of contract claim). Coupled with HVB's admission in its summary judgment motion to all the breach of contract elements regarding the account with Wells Fargo, Copper State's proffered evidence was sufficient to establish the assignment to Copper State. Every credit card statement provided specific information regarding accrual of the debt, and HVB did not submit controverting evidence. Further, the record is uncontroverted that Penny incurred charges on the account and ceased making payments. In fact, Penny admitted in his affidavit that he signed the credit application for the Wells Fargo credit account as owner/guarantor of High Valley and that he ceased making payments. Consequently, because Copper State submitted "undisputed admissible evidence that would compel any reasonable juror to find in its favor on every element of its claim," Comerica Bank v. Mahmoodi, 224 Ariz. 289, 293 ¶ 20, 229 P.3d 1031, 1035 (App. 2010), and no genuine issue of material fact exists, the trial court properly granted summary judgment in favor of Copper State.
3. Motion for a New Trial
¶18 HVB next argues that the trial court erred in denying its motion for a new trial under Arizona Rule of Civil Procedure 59(a) because the court erroneously admitted Lavinsky's affidavit, the judgment was not supported by sufficient evidence, and the court and Copper State engaged in misconduct, causing irregularity in the proceedings and depriving HVB a fair trial. We review a trial court's decision to deny a motion for a new trial for an abuse of discretion. Sandretto v. Payson Healthcare Mgmt., Inc., 234 Ariz. 351, 355 ¶ 8, 322 P.3d 168, 172 (App. 2014). The burden is on the party seeking to overturn the judgment to show such an abuse. Id. We will not reverse a denial of a motion for a new trial "unless the record and circumstances show it was a manifest abuse of discretion." Larsen v. Decker, 196 Ariz. 239, 245 ¶ 27, 995 P.2d 281, 286 (App. 2000). Because none of these grounds support granting a new trial, the trial court properly denied HVB's motion.
¶19 As discussed earlier, the trial court correctly admitted Lavinsky's affidavit and the accompanying records to establish the account's assignment to Copper State. See supra at ¶¶ 12-17. Further, the evidence supports the judgment. The record shows that all the breach of contract elements were met: a contract existed between Wells Fargo and High Valley with Penny as High Valley's guarantor; High Valley breached that contract when it stopped making monthly payments; and the damages were $15,948, the remaining balance, with the associated interest rate as 13.75% per year. Accordingly, the only disputed fact was whether Wells Fargo had assigned High Valley's account to ARC, which in turn assigned it to Copper State. Lavinsky's affidavit, the bills of sale, and the electronic records that were transferred with the bills of sale establish that Wells Fargo had indeed assigned the account to ARC and then ARC assigned the account to Copper State.
¶20 In claiming that the trial court and Copper State engaged in misconduct and caused irregularity in the proceedings depriving HVB a fair trial, HVB focuses on the trial court's allowing Copper State to move for summary judgment a second time and admitting new evidence—Lavinsky's affidavit— after disclosure and discovery had closed. But neither of these bases demonstrates misconduct or irregularity in the proceedings. First, Arizona Rule of Civil Procedure 56(b)(2) and (3) permits Copper State to move for summary judgment 90 days before the trial date. The trial court had not yet set a trial date; therefore, it could properly consider Copper State's second motion for summary judgment. Second, Lavinsky's affidavit was not new evidence as HVB claims. Arizona Rule of Civil Procedure 56(e) permits Copper State to attach such an affidavit to support its motion for summary judgment. Moreover, Copper State had previously disclosed Lavinsky as a potential witness in its initial disclosure statement. Further, Lavinsky testified at the arbitration hearing about High Valley's account, the assignment, and the amount owed, and Copper State offered the bills of sale to the arbitrator for consideration. Consequently, because the record and circumstances do not demonstrate that the trial court abused its discretion, the court properly denied HVB's motion for a new trial.
4. Attorneys' Fees and Costs at Trial
¶21 HVB argues finally that the trial court's award of attorneys' fees and costs to Copper State should be vacated. But HVB presents no argument independent of its assertions regarding the merits of the claims addressed above. Accordingly, for the reasons previously stated, we similarly reject HVB's fees and costs claim.
5. Attorneys' Fees and Costs on Appeal
¶22 HVB requests attorneys' fees and costs pursuant to A.R.S. § 12-341.01 and upon compliance with Arizona Rule of Civil Appellate Procedure 21. Because HVB is not the successful party, we deny the request. Copper State requests attorneys' fees and costs pursuant to A.R.S. §§ 12-341.01 and 12-341, respectively, and upon compliance with Rule 21. Because Copper State is the successful party, we grant the request.
CONCLUSION
¶23 For the foregoing reasons, we affirm.