Gray v. Capstone
1 CA-CV 21-0538
| Ariz. Ct. App. | Apr 19, 2022Background
- Cheetah Foods LLC (owned by Michele Gray) obtained a Capstone loan in 2016 secured by a South Carolina property; Gray personally guaranteed the loan.
- Capstone (through Tyler Stone) declined Gray’s request for a loan modification; Cheetah quitclaimed the property to Gray, who then filed Chapter 7.
- Bankruptcy court lifted the automatic stay and Capstone foreclosed on the property in 2018.
- Gray sued Capstone and Stone in Feb. 2021 alleging federal statutory/regulatory violations, wrongful foreclosure, and negligent infliction of emotional distress; she filed an amended complaint.
- The case was reassigned to a commercial court judge; the judge dismissed Gray’s amended complaint without prejudice and gave a short deadline to file a second amended complaint; Gray sought extensions and other relief which the court denied; the case was ultimately dismissed and Gray appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gray’s pro se status entitles her to special leniency after failing to timely file an amended complaint | Gray contends her pro se status and that her claims were ignored warrant leniency | Courts should not afford special leniency to pro se litigants; dismissal for failure to timely amend is proper | No special leniency; dismissal for failure to timely file the amended complaint was appropriate (Flynn applied) |
| Validity of superior-court attorneys’ fee determination | Gray argued the Social Security Act/related authority precluded the fee award | Capstone invoked the loan documents and A.R.S. §§ 12-341.01 and 12-349 to justify fees | Social Security Act authority did not apply; fee award under loan documents/statute was appropriate below (but appellate contractual fee award later declined for reasons of party identity) |
| Whether assignment to a commercial court judge was improper | Gray argued the case sought only monetary relief tied to property value and thus was ineligible for commercial assignment | Capstone noted Gray sought damages exceeding $300,000, making commercial assignment proper | Assignment to commercial court judge was proper because claimed relief exceeded the non-commercial threshold |
| Whether various claims (judicial-conduct violations, electronic signature, alleged threats, wrong legal standard) preserve error | Gray raised multiple claims but provided little specific argument, record support, or legal authority | Capstone invoked waiver/insufficient development rules | Court deemed these arguments undeveloped/waived; electronic signature did not make the judgment invalid; the quoted warning about possible fee awards was not shown to violate constitutional or other law |
| Whether Capstone can recover attorneys’ fees on appeal | N/A (Gray opposed) | Capstone sought fees under the promissory note/mortgage/guaranty and under A.R.S. § 12-341.01 | Contractual fee recovery under loan documents was declined on appeal (obligations tied to Cheetah or not being enforced); Capstone may recover reasonable appellate fees under § 12-341.01 upon compliance with ARCAP 21 |
Key Cases Cited
- Sullivan v. Pulte Home Corp., 232 Ariz. 344 (2013) (treat pleadings’ allegations as true when reviewing dismissal)
- Flynn v. Campbell, 243 Ariz. 76 (2017) (courts may not afford special leniency to pro se litigants)
- In re Aubuchon, 233 Ariz. 62 (2013) (arguments not developed with explanation/citations are waived)
- Haywood Sec., Inc. v. Ehrlich, 214 Ariz. 114 (2007) (electronic signature can render judgment final and appealable)
- MacMillan v. Schwartz, 226 Ariz. 584 (2011) (mere mention of an argument is insufficient on appeal)
- Tripati v. Forwith, 223 Ariz. 81 (2009) (appellate courts generally do not consider arguments raised for the first time in a reply brief)
- Geller v. Lesk, 230 Ariz. 624 (2012) (contractual attorneys’ fees provisions generally enforced but subject to court discretion)