First United v. Four Corners
1 CA-CV 15-0377
Ariz. Ct. App.Oct 18, 2016Background
- Four Corners borrowed $1,730,000 from First United in 2007; the note was secured by real property and Shumway personally guaranteed payment.
- In 2008 the parties split the 2007 loan into two notes (characterized by the parties as a modification).
- Appellants defaulted; a trustee’s sale occurred in August 2010 and First United purchased the property by credit bid.
- First United moved for partial summary judgment on breach of contract and breach of guaranty; the superior court granted it.
- Appellants then raised authenticity and fraud defenses, and asserted counterclaims including wrongful foreclosure and racketeering; the court dismissed those counterclaims.
- On appeal, the court affirmed summary judgment and dismissal, awarding First United appellate fees and costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authentication of loan documents | First United relied on the filed loan documents; Appellee says documents were properly before the court | Appellants argued documents were unauthenticated and thus insufficient for summary judgment | Waived: Appellants failed to challenge authenticity before the court’s ruling, so issue cannot be raised on appeal |
| Characterization of 2008 transaction (modification) | First United treated 2008 papers as modification of 2007 loan | Appellants contended the 2008 transaction was not a modification | Held: Appellants’ repeated admissions in pleadings and responses judicially bound them; court properly treated 2008 transaction as a modification |
| Fraudulent inducement / rescission | Appellants argued loans were voidable because of First United’s fraud (its principal pled guilty to fraud) | Appellants sought rescission but did not return or offer to return loan proceeds | Held: Rescission unavailable as a matter of law absent restoration or offer to restore funds; fraud defense rejected |
| Wrongful foreclosure & racketeering counterclaims | Appellants alleged trustee’s sale was wrongfully conducted and asserted racketeering damages caused by First United | Appellee argued sale-related defenses were waived and racketeering claim failed for lack of causation/damages | Held: Wrongful-foreclosure claim barred by A.R.S. §33-811(C) because no pre-sale injunction; racketeering claim dismissed for failure to plead causation/damages given summary judgment against Appellants |
Key Cases Cited
- Comerica Bank v. Mahmoodi, 224 Ariz. 289 (App. 2010) (summary judgment standard and review)
- Brookover v. Roberts Enters., Inc., 215 Ariz. 52 (App. 2007) (consideration limited to evidence before trial court on summary judgment)
- Airfreight Express Ltd. v. Evergreen Air Ctr., Inc., 215 Ariz. 103 (App. 2007) (untimely objections to declarations after summary judgment)
- Brenteson Wholesale, Inc. v. Ariz. Pub. Serv. Co., 166 Ariz. 519 (App. 1990) (pleading admissions are binding)
- Jennings v. Lee, 105 Ariz. 167 (1969) (rescission requires restoration or offer to restore)
- BT Capital, LLC v. TD Serv. Co. of Ariz., 229 Ariz. 299 (2012) (claims related to trustee’s sale governed by deeds-of-trust statutes)
- Morgan AZ Fin., L.L.C. v. Gotses, 235 Ariz. 21 (App. 2014) (failure to enjoin sale waives claims dependent on the sale)