Opinion
1 CA-CV 12-0205
04-02-2013
JAMES J. CORDELLO and RYAN P. WALTER, as Co-Trustees of THE MORTGAGES LTD 401(K) PLAN; ML MANAGER, LLC, an Arizona limited liability company, as authorized agent for City Lofts Investors, GP Properties Investors, McKinley Lofts, L.L.C. Investors, and 4633 Van Buren Investors; 4633 VB LOAN LLC, an Arizona limited liability company; MCKIN LOAN LLC, an Arizona limited liability company; CITLO LOAN LLC, an Arizona limited liability company, Plaintiffs/Appellees, v. KAY M. PELOQUIN, Defendant/Appellant.
Gust Rosenfeld, PLC By Christopher M. McNichol Richard A. Segal Kimberly M. McIntier Attorneys for Plaintiffs/Appellees Jeffrey M. Proper, PLLC By Jeffrey M. Proper Attorneys for Defendant/Appellant
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(Not for Publication -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 Nos. CV2010-001044
CV2010-002179
CV2010-004386
CV2010-004388
CV2010-004393
The Honorable Michael J. Herrod, Judge
REVERSED AND REMANDED
Gust Rosenfeld, PLC
By Christopher M. McNichol
Richard A. Segal
Kimberly M. McIntier
Attorneys for Plaintiffs/Appellees
Phoenix Jeffrey M. Proper, PLLC
By Jeffrey M. Proper
Attorneys for Defendant/Appellant
Phoenix GOULD, Judge ¶1 Appellant Kay M. Peloquin ("Kay") appeals the trial court's judgment granting summary judgment in favor of Appellees. We reverse the trial court's judgment on the grounds there are genuine issues of material fact concerning the authenticity of the loan guaranties purportedly signed by Kay and the fair market value of the subject foreclosure properties.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 This case deals with post-trustee's sale deficiencies under Arizona Revised Statutes ("A.R.S.") § 33-814, arising under five separate loans (the "Loans"). The Loans were made to five different business entities (hereinafter, the "Borrowers") that were owned and operated by Kay's husband, Michael Peloquin ("Michael"). ¶3 In addition to securing the Loans with deeds of trust, the promissory notes underlying each of the Loans were purportedly backed by personal guaranties executed by Kay and Michael. Michael does not contest the fact he executed the personal guaranties. Kay, however, denies signing the Loan guaranties and asserts that she did not agree to personally guaranty any of the Loans. ¶4 In 2008, the Borrowers defaulted on the Loans. As a result, the various properties securing the Loans were sold at non-judicial trustee's foreclosure sales pursuant to A.R.S. § 33-814(A) (hereinafter, the "foreclosure properties"). Following the trustee's sales, the remaining deficiency balance on the Loans was approximately $71 million, plus interest, costs of collection, and attorneys' fees. The creditors/lenders on this deficiency balance consisted of ML Manager, LLC, as authorized agent for certain investors ("ML Manager"), James J. Cordello and Ryan P. Walter, Co-Trustees of The Mortgages Ltd. 401(k) Plan (the "Plan"), and various limited liability companies created to hold certain interests in the respective foreclosed Loans (collectively, the "Lenders"). ¶5 The Lenders filed five separate lawsuits against Kay, Michael, and the Borrowers to obtain deficiency judgments for the unpaid Loan obligations. The trial court eventually granted Kay's motion to consolidate all five cases. After filing suit, the Lenders moved for summary judgment. In response, Kay filed a motion for summary judgment on the ground she never signed or agreed to the personal guaranties. ¶6 One of the issues addressed in the Lenders' motion for summary judgment was the amount of the deficiency judgment. In support of their motion, the Lenders presented evidence as to the sales prices obtained at the trustee's sales, as well as appraisals from their expert witnesses. In response, Kay submitted five affidavits from Michael stating his opinion as to the value of each of the foreclosure properties. ¶7 On October 17, 2011, the court granted the Lenders' motion for summary judgment and denied Kay's motion. On February 6, 2012, the court entered a final order and judgment. The court determined the collective deficiency judgment for the Loans was $48,832,934.61 plus interest and Lenders' costs and fees. Kay timely appealed.
These entities consisted of Downtown Community Builders Limited Partnership ("Downtown LP"); City Lofts, LLC ("City Lofts LLC"); GP Properties Carefree Cave Creek, LLC ("GP Properties LLC"); McKinley Lofts LLC ("McKinley Lofts LLC"); and 4633 Van Buren, LLC ("4633 Van Buren LLC").
As the trial court noted in reaching its decision, if Kay's guaranties are not valid, then Michael and Kay's community property cannot be used to guaranty payment of the Loans. See A.R.S. § 25-214(C)(2013) (providing that both spouses must execute a personal guaranty before their community property may be bound).
Kay later moved to join in Michael's Cross Motion for Summary Judgment regarding unlawful penalties charged on the Loans.
The delay between the court's minute entry ordering summary judgment for the Lenders and the court's final order and judgment resulted from disputes regarding the proposed form of final order and judgment. The Lenders did not file the ultimate final order and judgment until the end of January 2012.
DISCUSSION
¶8 On appeal, Kay argues that the trial court erred in granting the Lenders' motion for summary judgment. Kay asserts there are two triable issues of material fact in this case: (1) the authenticity of her personal guaranties, and (2) the fair market value of the foreclosed properties. ¶9 In reviewing a grant of summary judgment, we view the evidence in a light most favorable to the party against whom summary judgment was entered and draw all justifiable inferences in its favor. Riley, Hoggatt & Suagee, P.O. v. English, 177 Ariz. 10, 12-13, 864 P.2d 1042, 1044-45 (1993); Nat'l Bank of Ariz. v. Thruston, 218 Ariz. 112, 116, ¶ 17, 180 P.3d 977, 981 (App. 2008). We must determine de novo whether there are any genuine issues of material fact and whether the trial court erred in applying the law. L. Harvey Concrete, Inc. v. Agro Constr. & Supply Co., 189 Ariz. 178, 180, 939 P.2d 811, 813 (App. 1997). ¶10 Summary judgment may be granted when the moving party proves "there is no genuine issue as to any material fact and [] the moving party is entitled to a judgment as a matter of law." Ariz. R. Civ. P. 56(c) (West 2013). Once the moving party meets its burden, the party opposing the motion for summary judgment must "come forward with evidence to establish disputed material facts." MidFirst Bank v. Chase, 230 Ariz. 366, 368, ¶ 6, 284 P.3d 877, 879 (App. 2012); Ariz. R. Civ. P. 56(c)(3) (West 2013). The mere existence of a scintilla of evidence is insufficient to withstand a motion for summary judgment; there must be evidence on which a jury could reasonably find for the party opposing the motion. Orme School v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250-51 (1986)). ¶11 Summary judgment must be supported by facts admissible in evidence. Mason v. Bulleri, 25 Ariz. App. 357, 359, 543 P.2d 478, 480 (1975). A party opposing a motion for summary judgment must set forth by affidavit or other admissible evidence specific facts showing that a genuine issue of fact exists. Ariz. R. Civ. P. 56(e).
I. Authenticity of Guaranties
¶12 Kay contends the court erred in granting summary judgment in favor of the Lenders because there was a genuine issue of material fact as to whether she signed the Loan guaranties. For the reasons discussed below, we agree. ¶13 The Lenders argue that there is strong evidence showing that Kay signed the guaranties. The signature "Kay M. Peloquin" appears on each of the guaranties, and the initials "KMP" appear at the bottom of each page of the documents. Nechelle Wimmer, the loan processor who notarized Kay's signatures, recognized the signatures as belonging to Kay, and the Lenders' handwriting expert opined the guaranties bore Kay's signature. ¶14 Kay denied signing the Loan Guaranties in her answer and her related verifications of her answer. Moreover, Kay contends that she could not have signed the guaranties because she was not physically present to sign them. Although Kay's signatures are not dated, her signatures were purportedly witnessed, or notarized, by Wimmer on July 19, 2007, at Wimmer's office in Phoenix, Arizona. However, Kay presented evidence that she was in Connecticut, not Arizona, from July 16 to July 28. Thus, when Kay was asked about the authenticity of her signatures at her deposition, she testified, "I wasn't there [Arizona], so I didn't sign it." Kay also submitted an affidavit stating she was out of the state when her alleged signatures were notarized. Kay asserts in her affidavit that she did not sign the Loan Guaranties, and that she "did not agree to the alleged personal guarant[y] through signature or otherwise." ¶15 Kay also presented the deposition testimony of Nechelle Wimmer, the loan processor who notarized her signatures. Wimmer testified the Loan documents arrived in an overnight mail package from the "east coast." Wimmer stated that when she first received the guaranties, she recognized the signatures as belonging to Kay, but also noticed the documents were not notarized. As a result, she contacted Michael on his cell phone and he confirmed that Kay had signed the documents. Thereafter, Wimmer admitted she fraudulently notarized Kay's signature without seeing Kay sign the documents. ¶16 Wimmer further testified that at the time she notarized Kay's signature, she knew Kay was not in Arizona. Nonetheless, Wimmer admitted that she never called Kay to confirm whether she had actually signed the guaranties, nor did Kay ever come to Wimmer's office to confirm her signature on the guaranties. ¶17 Kay's and the Lenders' conflicting evidence created a genuine issue of material fact that required the court to weigh the evidence and the credibility of witnesses. However, when ruling on a summary judgment motion, the court should not "assess the credibility of witnesses." Braillard v. Maricopa Cnty., 224 Ariz. 481, 489, ¶ 19, 232 P.3d 1263, 1271 (App. 2010) (citations omitted). Summary judgment is not permissible when the trial court would be required to weigh the evidence and choose between possible inferences. Orme School, 166 Ariz. at 311, 802 P.2d at 1010. Here, we are unable to conclude that "reasonable people could not agree with the conclusion advanced by" Kay. Id. 166 Ariz. at 309, 802 P.2d at 1008. As a result, the authenticity of Kay's signatures could not be decided on summary judgment. ¶18 The Lenders assert Kay's sworn denials are not enough to defeat summary judgment because conclusory allegations in an affidavit or "self-serving assertions without factual support in the record" are not enough to defeat a motion for summary judgment. Florez v. Sargeant, 185 Ariz. 521, 526, 917 P.2d 250, 255 (1996) (quoting Jones v. Merchants Nat'l Bank & Trust Co., 42 F.3d 1054, 1057 (7th Cir. 1994)). However, the facts of this case are distinguishable from Florez. Here, Kay presented more than her own self-serving denials; she presented corroborating evidence showing that she was out of town during the entire time period when the Loan Guaranties were allegedly signed and notarized.
Wimmer had a copy of Kay's driver's license, which contained her signature. Wimmer had also notarized Kay's signature on a few prior occasions.
The Lenders appear to argue that Kay's affidavit was a sham affidavit because it contradicted her deposition testimony. See Allstate Indem. Co. v. Ridgely, 214 Ariz. 440, 442, ¶ 9, 153 P.3d 1069, 1071 (App. 2007) (holding that under sham affidavit rule, court must disregard affidavits that attempt to create an issue of fact by contradicting prior deposition testimony). Here, however, the rule does not apply because Kay's deposition testimony is consistent with statements made in her affidavit. In both the deposition and the affidavit, Kay provides essentially the same testimony: (1) she has no recollection of ever signing the guaranties, and (2) she knows she did not sign the guaranties because she was not in Arizona on the date she purportedly signed them.
The Lenders assert in their Supplemental Statement of Facts the guaranties were personally delivered by Michael to the lender.
The Lenders argue that the guaranties were not required to be notarized to be valid. However, in considering the authenticity of Kay's signatures, the issue is not whether the guaranties had to be notarized, but whether Wimmer's false acknowledgments are evidence that Kay never signed the guaranties.
II. Value of the Foreclosed Properties
¶19 Kay also argues the court erred in granting summary judgment as to the amount of damages, because Michael's affidavits concerning the fair market value of the foreclosed properties raised a genuine issue of material fact. We agree. ¶20 Summary judgment must be supported by facts admissible in evidence. Mason, 25 Ariz. App. at 359, 543 P.2d at 480. An affidavit by an owner of property generally is admissible to dispute the value of the property without any explanation of facts underlying that opinion. See Town of Paradise Valley v. Laughlin, 174 Ariz. 484, 486, 851 P.2d 109, 111 (App. 1992) ("An owner may always testify as to the value of his property" even if not an expert). This is because "[a]n owner of property has, by definition, knowledge of the components of value that are useful in ascertaining value, and an owner, no less than an 'expert,' can base his opinion of value on that knowledge." United Cal. Bank. v. Prudential Ins. Co., 140 Ariz. 238, 304, 681 P.2d 390, 456 (App. 1983). If an owner's opinion of value otherwise lacks foundation, it is not inadmissible for that reason, although the court may consider that deficiency in determining the weight to give the opinion. Laughlin, 174 Ariz. at 486, 851 P.2d at 111. ¶21 Pursuant to A.R.S. § 33-814(A), a court determines the amount of a deficiency judgment by (1) calculating the total debt owed after the trustee's sale and (2) subtracting from that amount the fair market value or sales price obtained at the trustee's sale, whichever is higher. ¶22 The Lenders' experts valued the foreclosed properties at $11,674,000, whereas Kay, relying upon Michael's affidavits, valued them at $62,800,000. In granting the Lender's motion for summary judgment, the court impliedly adopted the opinions of the Lenders' experts by finding the fair market value of the foreclosed properties to be $11,674,000. ¶23 The Lenders contend that summary judgment was proper because Michael's opinions are "conclusory" and "perfunctory," and therefore failed to raise more than a "scintilla" of evidence necessary to defeat summary judgment. In its minute entry granting summary judgment, the court notes that Michael "provide[d] no market or other basis for his opinion, other than his 45 years experience as a developer." The court relied on United California Bank, 140 Ariz. 238, 681 P.2d 390, to support its proposition that "conclusory statement[s] [of a corporate officer] as to value" are not enough; there must be a rational basis underlying testimony as to the value of property. ¶24 Michael's affidavits were admissible evidence regarding the value of the subject properties. In his affidavit, Michael states that he was the owner of the foreclosed properties, he has "personal knowledge" of the values of the properties, and he has forty-five years of commercial real estate sales experience involving similar properties. ¶25 Moreover, given the clear conflict between Michael's affidavit and the Lenders' experts, we conclude a triable issue exists as to the fair market value of the foreclosure properties. The court erred when, in considering the parties' motions for summary judgment, it weighed the opinions of Michael and the Lenders' experts and found the Lenders' experts to be more credible. This determination should have been made at a hearing as provided for under A.R.S. § 33-814(A). As a result, the court's decision to grant summary judgment on the issue of damages was improper.
The Lenders also assert Michael's affidavits are insufficient to defeat summary judgment because the issue of the fair market value of the foreclosed properties was ultimately adjudicated against Michael. However, the Lenders did not raise this issue with the trial court nor did this issue form the basis for the court's grant of summary judgment. Therefore, this issue has been waived on appeal. State v. Gatliff, 209 Ariz. 362, 364, ¶ 9, 102 P.3d 981, 983 (App. 2004) (failure to raise an issue at trial waives the right to raise the issue on appeal).
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CONCLUSION
¶26 For the foregoing reasons, we reverse the judgment and remand for further proceedings consistent with this decision.
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ANDREW W. GOULD, Judge
CONCURRING: _______________
PATRICIA K. NORRIS, Presiding Judge
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RANDALL M. HOWE, Judge