Opinion
1 CA-CV 23-0624
06-04-2024
GERARDO MACIAS, Defendant/Appellee, v. MARICOPOLY, LLC, Intervenor/Appellant.
Law Offices of Kyle A. Kinney, PLLC, Scottsdale By Kyle A. Kinney Counsel for Intervenor/Appellant
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Maricopa County No. CV2017-092698 The Honorable Brian Kaiser, Judge Pro Tempore
Law Offices of Kyle A. Kinney, PLLC, Scottsdale By Kyle A. Kinney Counsel for Intervenor/Appellant
Judge Michael J. Brown delivered the decision of the Court, in which Presiding Judge Samuel A. Thumma and Judge Jennifer B. Campbell joined.
MEMORANDUM DECISION
BROWN, JUDGE
¶1 Maricopoly, LLC challenges the superior court's order awarding Gerardo Macias excess proceeds from a judicial foreclosure sale. Because Macias assigned his right to receive the excess proceeds to Maricopoly, we vacate the court's order and remand with instructions to order Macias to return the excess proceeds to the clerk of court and for the clerk of court to then distribute them to Maricopoly.
BACKGROUND
¶2 In February 2018, Trails at Amber Ridge Homeowners Association (the "Association") judicially foreclosed on Macias' home ("the Property"). At that time, the Property was subject to a first position deed of trust held by Wells Fargo Bank, N.A. ("Wells Fargo") and a junior deed of trust held by Arizona Home Foreclosure Prevention Funding Corporation ("AHFPFC"). On June 7, 2018, Maricopoly bought the Property at a sheriff's sale for $77,100. The sheriff satisfied the Association's lien of $14,954.63 (plus costs and interest) and deposited $59,819.17 in excess proceeds with the clerk of the superior court.
¶3 In September 2018, Wells Fargo issued a notice of trustee's sale for December 2018. On October 1, 2018, Macias executed a document titled "REAL ESTATE PURCHASE AGREEMENT" ("Purchase Contract"), agreeing to sell the Property to Central Holdings for $20,000, of which $10,000 was to be paid immediately, and the rest when Macias moved out of the Property at the end of November. However, because Maricopoly had already purchased the Property at the sheriff's sale, the only practical effect of the Purchase Contract was that Macias waived his six-month statutory right of redemption, which otherwise would have expired on December 4, 2018. See A.R.S. § 12-1282(B) ("The judgment debtor . . . may redeem at any time within six months after the date of the [sheriff's] sale ...."). The Purchase Contract also contained an alternative dispute resolution clause ("ADR clause") permitting additions to the agreement if they were "expressly made in a writing signed by all Parties."
Although the Purchase Contract is between Macias and Central Holdings, LLC ("Central Holdings"), Maricopoly attached a document memorializing an agreement in which Central Holdings assigned Maricopoly all its interests in the Purchase Contract. Because Macias did not challenge that assignment, we consider Maricopoly to be the assignee of the Purchase Contract.
¶4 The same day, Macias signed a document, which Central Holdings signed the next day, titled "Agreement for Rent and Assignment of Excess Proceeds from Sheriff Sale" ("Assignment Contract"), stating the following:
As it did with the Purchase Contract, Central Holdings assigned Maricopoly all its interests in the Assignment Contract, which Macias does not challenge. Thus, we consider Maricopoly to be the assignee of the Assignment Contract.
Central Holdings agrees to allow Macias to live in the Property through November 31[sic], 2018. Central Holdings will pay $5,809.45 to the first position Deed of Trust immediately upon completion of this agreement. Central Holdings will also pay the three months of rental mortgage totaling $3,390.75. Maricopoly will also pay $20,000 to Macias for assignment of excess proceeds.
...
For the consideration of the $29,200.20 towards the delinquent Deed of Trust payment, the rent, and the assumption of liabilities, Macias agrees to waive his six-month redemption rights for the Sheriffs Sale and agrees to execute a "General Warranty Deed" for the Property to Central Holdings. Macias hereby assigns and transfers to Central Holdings all of his interests as the owner to the excess proceeds of the Property generated by the Sheriff Sale.(Emphasis added.) At the same time, Macias signed a general warranty deed conveying "all right, title, or interest" in the Property to Central Holdings, and Maricopoly sent Macias a check for $10,000.
¶5 In November 2018, Maricopoly moved to intervene in the judicial foreclosure action, asserting that as the purchaser of the Property at the sheriff's sale, Maricopoly has an interest in the distribution of the sheriff's sale proceeds. Wells Fargo then canceled the trustee's sale it had previously noticed for December 2018.
¶6 On March 8, 2019, Macias moved out of the Property, and Maricopoly sent him a check for $6,250. Although the contracts only permitted Macias to stay until the end of November 2018, Maricopoly explained by affidavit that it later agreed to allow Macias to remain on the Property for several more months and consequently reduced the second payment by the rental value of the additional time he stayed.
¶7 In April 2019, Macias moved for an order releasing (1) $21,902.81 of excess proceeds to satisfy AHFPFC's lien and (2) the remaining $37,916.36 to him. Maricopoly opposed the motion, contending that Macias had assigned Maricopoly his right to receive the excess proceeds under the Assignment Contract. Macias replied that Maricopoly had not shown that Central Holdings assigned Maricopoly its rights under the Assignment Contract, and regardless, the Assignment Contract was not enforceable due to the disparity in the value exchanged.
Maricopoly had yet to attach the document memorializing the assignment from Central Holdings to Maricopoly.
¶8 A few weeks later, the superior court allowed Maricopoly to intervene, finding that Maricopoly had "an interest in the disposition of the proceeds at issue that it" acquired via sheriff's sale. In March 2020, the court ruled that all $59,819.17 of the excess proceeds would be paid to Maricopoly because it had received an equitable assignment of the Wells Fargo senior lien. The ruling did not address the contracts between Macias and Maricopoly. This court vacated that ruling because the record did not support an equitable assignment. Ariz. Home Foreclosure Prevention Funding Corp. v. Maricopoly LLC, No. 1 CA-CV 20-0254, 2021 WL 1098578, at *2, ¶ 11 (Ariz. App. Mar. 23, 2021) (mem. decision).
¶9 On remand, after Maricopoly failed to prove that it received an equitable assignment of the Wells Fargo senior lien, the superior court ordered $21,902.81 of the excess proceeds to be paid to junior lienholder AHFPFC, a ruling later affirmed on appeal. Trails at Amber Ridge Homeowners Ass'n v. Macias, No. 2 CA-CV 22-0096, 2022 WL 10208498 (Ariz. App. Oct. 17, 2022).
¶10 Macias requested that the remaining $37,916.36 of excess proceeds be paid to him as the judgment debtor. See A.R.S. § 12-1562(A) ("Any excess in the proceeds over the judgment and costs shall be returned to the judgment debtor ...."). Maricopoly opposed the request, asserting Macias had assigned Maricopoly his right to receive the excess proceeds, pointing to the Assignment Contract.
¶11 In response, Macias did not dispute the validity of the documents he signed or that the $16,250 he received from Maricopoly was sufficient consideration for the Purchase Contract. Instead, he argued the Purchase Contract and Assignment Contract were separate contracts with separate consideration and that Maricopoly never made the "$20,000 payment required under the Assignment [Contract]" and therefore Maricopoly "cannot now enforce the Assignment [Contract] to obtain the excess proceeds." After oral argument in August 2023, the court adopted Macias's position, and upon the court's order, the $37,916.36 in excess proceeds was paid to Macias. Maricopoly timely appealed, and we have jurisdiction under A.R.S. § 12-2101(A)(1).
DISCUSSION
¶12 Maricopoly argues the superior court erred by failing to address the ADR clause, or alternatively, by granting the excess proceeds to Macias instead of itself. Macias did not file an answering brief.
¶13 When an appellee fails to file an answering brief and debatable issues exist, we generally may consider such failure a confession of reversible error. See Tiller v. Tiller, 98 Ariz. 156, 157 (1965); Barrett v. Hiney, 94 Ariz. 133, 134 (1963). For reasons explained below, Maricopoly has not raised a debatable issue about the ADR clause, but it has raised debatable issues on whether the court improperly awarded the excess proceeds to be released to Macias.
¶14 Maricopoly first argues the superior court erred by resolving the dispute without making findings concerning the ADR clause in paragraph 19 of the Purchase Contract. The ADR clause requires that "[a]ll claims or disputes related to the performances or interpretation of this Agreement . . . will be first submitted to [mediation]," and if unsuccessful, to "neutral binding arbitration."
¶15 "[E]ven when a dispute is subject to arbitration, that right may be waived by a party who participates substantially in litigation without promptly seeking an order from the court compelling arbitration." City of Phoenix v. Fields, 219 Ariz. 568, 575 n.4 (2009). Despite submitting two filings and moving for a ruling on the contract dispute, Maricopoly admits that it did not mention the ADR clause to the court until the August 2023 oral argument. The only discussion of the ADR clause was this statement from Maricopoly's counsel:
And they're the ones, actually, that don't have the jurisdiction to argue a bifurcation of the purchase contract because that purchase contract has an arbitration clause. So it would be a jurisdictional problem for him anyways. But [sic] they have not initiated an arbitration on us to attack that purchase contract.
¶16 The record shows that Maricopoly substantially participated in litigating the contract dispute before bringing the ADR clause to the court's attention, and it never sought an order compelling arbitration. Maricopoly has waived the right to invoke the ADR clause and thus has not raised a debatable issue here.
¶17 Alternatively, Maricopoly argues the court erred by interpreting the Assignment Contract to require consideration separate from the Purchase Contract. The parties do not dispute the facts surrounding the contracts, but do dispute the contract's interpretation, which we review de novo. Worldwide Jet Charter, Inc. v. Toulatos, 254 Ariz. 331, 334, ¶ 9 (App. 2022). The purpose of contract interpretation is to effectuate the parties' expressed intent. Terrell v. Torres, 248 Ariz. 47, 49, ¶ 14 (2020). In doing so, we "consider the plain meaning of the words in the context of the contract as a whole." Grosvernor Holdings, L.C. v. Figueroa, 222 Ariz. 588, 593, ¶ 9 (App. 2009). Because the Purchase Contract and the Assignment Contract were executed on consecutive days and deal with the same subject matter, we will read them together. See Pearll v. Williams, 146 Ariz. 203, 206 (App. 1985) ("[U]nder Arizona law, substantially contemporaneous instruments will be read together to determine the nature of the transaction between the parties.").
Maricopoly argues the superior court erred in resolving the dispute without holding an evidentiary hearing. Because neither party requested an evidentiary hearing and there were no genuine disputes of material fact, the court did not err. See Atreus Cmtys. Grp. of Ariz. v. Stardust Dev., Inc., 229 Ariz. 503, 507, ¶ 15 (App. 2012) ("[T]he trial court did not have to hold an evidentiary hearing here . . . because neither party requested it and the documents submitted to the court did not present a genuine issue of material fact ....").
¶18 Under the Purchase Contract, Macias sold the Property to Maricopoly and thus waived his right of redemption for $20,000. However, the Assignment Contract expressly states that Macias waived his right of redemption and assigned his right to receive the excess proceeds for $20,000. The inclusion of promises from both contracts indicates that 20,000 was the intended consideration for the entire agreement. Thus, the court erred in finding that the contracts required separate $20,000 payments as consideration and that Maricopoly had not performed on the Assignment Contract. At a minimum, this is a debatable error that Macias now concedes by failing to file an answering brief. See Stover v. Kesmar, 84 Ariz. 387, 388 (1958) (holding that appellee's "failure to file an answering brief is a confession . . . of reversible error" because the appeal raised "debatable questions" and appellee has shown "no valid excuse" for its failure to file an answering brief).
The Assignment Contract breaks down the $29,200.20 as $20,000 to Macias, $5,809.45 toward the delinquent deed of trust payment, and $3,390.75 for rental mortgage. However, because the parties only dispute the performance of the $20,000 payment, we treat that amount as the operable consideration.
¶19 Given the concession of error, as well as our review of the undisputed facts and our interpretation of the contracts, we conclude there was a binding and enforceable agreement assigning Maricopoly the right to receive the excess proceeds. The superior court erred by awarding the excess proceeds to Macias instead of Maricopoly.
¶20 Maricopoly requests an award of attorneys' fees incurred on appeal under paragraph 18 of the Purchase Contract, which states that "the prevailing Party of any action . . . brought to enforce or interpret this Agreement will be entitled to reasonable attorneys' fees and costs." We will enforce a contractual provision for attorneys' fees by its terms. First Fed. Sav. &Loan Ass'n of Phoenix v. Ram, 135 Ariz. 178, 181 (App. 1982). We therefore award reasonable attorneys' fees to Maricopoly, along with taxable costs, upon compliance with ARCAP 21.
CONCLUSION
¶21 We vacate the superior court's order granting the $37,916.36 of excess proceeds to Macias and remand with instructions to order Macias to return the excess proceeds to the clerk of the court and for the clerk of court to then distribute them to Maricopoly.