Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-00901/USCOURTS-azd-2_10-cv-00901-1/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 15:1601 Truth in Lending

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Steve G. Thomas, 

Plaintiff, 

vs.

Wells Fargo Bank, National Association

dba Wells Fargo Home Mortgage; Wells

Fargo, N.A., a corporation, dba Wells

Fargo Home Mortgage and Wells Fargo

Home Equity; Wells Fargo Home

Mortgage, a corporation or National

Banking Association, dba Indymac, FSB;

First American Title Insurance Company

of Arizona, a corporation; John Doe I-X

and Jane Doe I-X, husband and wife;

Black Corporations I-X, 

Defendants. 

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No. CV-10-901-PHX-GMS

ORDER

Pending before the Court are: (1) a Motion for Summary Judgment (Doc. 29), filed

by First American Title Insurance Company (“Defendant”); and (2) a Motion to Strike and

Motion to Amend (Doc. 36), filed by Steve G. Thomas (“Plaintiff”). For the following

reasons, the Court denies Defendant’s Motion for Summary Judgment, and denies as moot

Plaintiff’s Motion to Strike and Motion to Amend.

BACKGROUND

The facts giving rise to Plaintiff’s lawsuit which are generally undisputed are as

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follows. (Doc. 29; Doc. 36). In the summer of 2006, Plaintiff purchased real property at 3644

East Maffeo Road in Phoenix, Arizona. Plaintiff obtained a $720,000 loan from Wells Fargo

Bank, N.A. (“Wells Fargo”) to finance a portion of the purchase. Plaintiff also obtained a

$90,000 ($85,000 less loan fees, etc.) home improvement loan from Wells Fargo to complete

landscaping on the purchased property. The funding of the $85,000 home improvement loan

was held back in escrow with Defendant pending Plaintiff’s completion of the landscaping.

Approximately six months after the close of escrow, Plaintiff completed the landscaping and

requested that Defendant release to him the $85,000. Defendant stated that it did not have the

$85,000, which was in the possession of Wells Fargo. Wells Fargo used the $85,000 then in

its possession to pay down principal on Plaintiff’s $720,000 loan. Plaintiff contends that

Defendant removed his $85,000 loan from escrow and returned it to Wells Fargo without his

knowledge and permission, which constituted a breach of contract. 

DISCUSSION

I. Motion for Summary Judgment

A. Legal Standard

Summary judgment is appropriate if the evidence, viewed in the light most favorable

to the nonmoving party, demonstrates “that there is no genuine issue as to any material fact

and that the movant is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(c)(2).

Substantive law determines which facts are material and “[o]nly disputes over facts that

might affect the outcome of the suit under the governing law will properly preclude the entry

of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “A fact

issue is genuine ‘if the evidence is such that a reasonable jury could return a verdict for the

nonmoving party.’” Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002)

(quoting Anderson, 477 U.S. at 248). Thus, the nonmoving party must show that the genuine

factual issues “‘can be resolved only by a finder of fact because they may reasonably be

resolved in favor of either party.’” Cal. Architectural Bldg. Prods., Inc. v. Franciscan

Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987) (quoting Anderson, 477 U.S. at 250).

B. Analysis

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In its Motion for Summary Judgment, Defendant “denies that it breached any

contract,” suggesting that it was challenging the second element of Plaintiff’s claim. (Doc.

29). However, in its Reply, Defendant clarifies its argument: “First American’s Motion only

argued one thing – that [P]laintiff was not damaged by [Defendant’s] purported

wrongdoing.” (Doc. 39). Thus, Plaintiff only challenges the third element of Plaintiff’s

breach of contract claim.

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Plaintiff seeks to recover damages from Defendant for breach of contract. (Doc. 1, Ex.

A). “It is well established that, in an action based on breach of contract, the plaintiff has the

burden of proving the existence of a contract, breach of the contract, and resulting damages.”

Chartone, Inc. v. Bernini, 207 Ariz. 162, 170, 83 P.3d 1103, 1111 (App. 2004) (citing

Thunderbird Metallurgical, Inc. v. Ariz. Testing Lab., 5 Ariz. App. 48, 423 P.2d 124 (1967)).

Defendant seeks summary judgment on the resulting damages (third) element of Plaintiff’s

breach of contract claim.1

 (Doc. 29). In a breach of contract claim, “[t]he determination of

damages is one of fact.” Milgard Tempering, Inc. v. Selas Corp. of Am., 902 F.2d 703, 710

(9th Cir. 1990). In calculating damages, “the applicable damages are always the sum which

will put the party in as good a position as if the contract had been fully performed.” Fairway

Builders, Inc. v. Malouf Towers Rental Co., Inc., 124 Ariz. 242, 255, 603 P.2d 513, 526

(App. 1979). Defendant claims that Plaintiff did not suffer damages, as a matter of law, even

if Defendant breached a contract it had with Plaintiff. (Id.). Defendant asserts that because

its return of the $85,000 home improvement loan to Wells Fargo resulted in the paying down

of the principal of the $720,000 debt Plaintiff owed Wells Fargo, Plaintiff “received a dollarfor-dollar benefit” as a result of Defendant’s breach. (Id.). Defendant essentially argues that

even though Plaintiff did not directly receive the funds owed to him, Plaintiff received them

indirectly through the paying off of his debt. (See id.). 

Defendant cites the following to support its claim: “[i]t is the policy of the law in civil

cases to award only those damages which will fairly and adequately compensate the injured

party.” Higgins v. Guerin, 74 Ariz. 187, 193, 245 P.2d 956, 959 (1952). This language

suggests that there are limits to what a plaintiff can recover, but it does not require that these

determinations be made as a matter of law. See id. The court held in Higgins that if a plaintiff

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is not entitled to use of an object, then the plaintiff is not entitled to recover damages for

defendants’ use of the object. See id. at 191–92, 245 P.2d at 958–59. Neither the specific

language cited by Defendant nor the court’s holding in Higgins support Defendant’s

proposition that a non-breaching party has no damages, as a matter of law, if it has a debt

paid down instead of receiving actual payment from a party breaching a contract.

Defendant also relies on the following language in support of its claim that Plaintiff

has not been damaged as a matter of law: “[t]he familiar aim of compensatory contract

damages, the computation of which is hardly an exact science is to yield the net amount of

the losses caused and the gains prevented by the breach of contract.” A.R.A. Mfg. Co. v.

Pierce, 86 Ariz. 136, 141, 341 P.2d 928, 932 (1959) (internal citation omitted). Defendant

asserts that the net amount of losses and gains as a result of its alleged breach of contract

with Plaintiff is zero because Plaintiff had his debt paid down in the amount owed to him by

Defendant. (Doc. 29). However, Pierce held that a non-breaching party could recover

damages liberally despite a lack of specific jury instructions, which conclusion is inapposite

to the holding desired by Defendant. 86 Ariz. 141–42, 341 P.2d at 932. In fact, Pierce seems

to suggest a more flexible approach to determining damages, taking into consideration the

specific circumstances at issue. Thus, neither of the two cases cited by Defendant establish

that it is entitled to judgment as a matter of law regarding the damages element of Plaintiff’s

breach of contract claim. 

Moreover, in response to Defendant’s claim, Plaintiff presents sufficient evidence to

create a genuine issue of material fact as to the damages he sustained as a result of

Defendant’s alleged breach of contract. Plaintiff argues that although he received an $85,000

reduction on the principal of his $720,000 loan, he suffered at least $85,000 in damages

because of Defendant’s breach of contract. (Doc. 36). Plaintiff claims that he paid $105,000

cash in landscaping expenses for the 3644 East Maffeo Road property in reliance on Wells

Fargo’s promise to loan him $85,000 upon his completion of the work. (Id.) Plaintiff claims

that because he used his own funds to pay for the landscaping, and was not reimbursed with

the loan money as required by contract, he lost personal liquidity. (Id.) Plaintiff claims that

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had Defendant performed its end of the contract, Plaintiff could have used the $85,000 loan

he would have received from Defendants to pay Wells Fargo interest-only payments on his

$720,000 loan, thereby avoiding foreclosure on the property. (Id.)

Plaintiff’s claims of damages are sufficient to establish a question of fact as to whether

he was put “in as good a position as if the contract had been fully performed” by Defendant.

Because a genuine issue of material fact exists as to the damages element of Plaintiff’s

breach of contract claim, Defendant’s Motion for Summary Judgment is denied. 

II. Motion to Strike

Plaintiff filed a Motion to Strike (Doc. 36) paragraphs four and five, and

corresponding exhibits, from Flo Ludwig’s affidavit because they are inadmissible hearsay.

(Doc. 30). The Court will deny this Motion to Strike as moot, however, because it does not

take Ludwig’s affidavit into account when considering the Motion for Summary Judgment.

III. Motion to Amend

Plaintiff filed a Motion to Amend his Complaint to allege Defendant’s misapplication

of escrowed monies and breach of its fiduciary duty in the event that the court grants

Defendant’s Motion for Summary Judgement. (Doc. 36). The Court will deny this Motion

to Amend as moot, however, because the Court is not granting Defendant’s Motion for

Summary Judgment.

IT IS HEREBY ORDERED:

1. Defendant’s Motion for Summary Judgment (Doc. 29) is DENIED.

2. Plaintiff’s Motion to Strike (Doc. 36) is DENIED as moot.

3. Plaintiff’s Motion to Amend (Doc. 36) is DENIED as moot. 

DATED this 20th day of July, 2011.

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