Court Opinion

ID: 4392051
Source: CourtListenerOpinion
Date Created: 2019-04-30 15:02:02.938043+00
Date Added: 2024-06-11T13:32:01.408942
License: Public Domain

NOTICE: NOT FOR OFFICIAL PUBLICATION.
 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                 AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

                                    IN THE
             ARIZONA COURT OF APPEALS
                                DIVISION ONE

                 LINDA V. LYNAUGH, Plaintiff/Appellant,

                                        v.

          12TH STREET PROPERTY TRUST, Defendant/Appellee.

                             No. 1 CA-CV 18-0375
                               FILED 4-30-2019

           Appeal from the Superior Court in Maricopa County
                          No. CV2016-017960
                  The Honorable Daniel J. Kiley, Judge

                                  AFFIRMED

                                   COUNSEL

Linda V. Lynaugh, Phoenix
Plaintiff/Appellant

Law Offices of Kyle A. Kinney, PLLC, Scottsdale
By Kyle A. Kinney
Counsel for Defendant/Appellee
                           LYNAUGH v. 12TH ST.
                            Decision of the Court

                       MEMORANDUM DECISION

Acting Presiding Judge Maria Elena Cruz delivered the decision of the
Court, in which Judge Kenton D. Jones and Chief Judge Samuel A. Thumma
joined.

C R U Z, Judge:

¶1              Linda V. Lynaugh sued 12th Street Property Trust (the
“Trust”) to void a trustee’s sale, alleging that the Trust committed fraud
and that the trustee’s sale was illegal. Lynaugh did not seek to enjoin the
sale before it occurred. We thus hold her claims against the Trust are barred
by Arizona Revised Statutes (“A.R.S.”) section 33-811(C) and affirm.

             FACTS AND PROCEDURAL BACKGROUND

¶2            Lynaugh entered a Home Equity Credit Agreement (the
“Loan”) in 2007 with M&I Bank, which was secured by a deed of trust on
rental property she owned (the “Property”). BMO Bank acquired M&I
Bank and sent a notice of acquisition to customers, including Lynaugh.
Lynaugh later defaulted on the Loan, a trustee’s sale was scheduled, and
BMO Bank mailed Lynaugh a notice of sale. The sale was held on December
13, 2016. A trustee’s deed upon sale conveyed the Property to the Trust.

¶3            Lynaugh filed a complaint in superior court against the Trust
and other defendants, including BMO Bank (the “Defendants”).
Defendants filed or joined a motion for summary judgment on all claims.
Lynaugh filed her own motion for summary judgment, which the court
struck for noncompliance with page limitations. Lynaugh later filed a
response to the motion for summary judgment. The superior court granted
the Defendants’ motion for summary judgment on all claims, finding that
Lynaugh waived her claims by not obtaining injunctive relief before the
December 2016 sale took place. The court also found the Trust was entitled
to summary judgment on Lynaugh’s “fraud by concealment” claim because
even if a relationship existed between the Trust and any Defendant, such
relationship did not cause Lynaugh’s default and claimed damages; A.R.S.
§ 33-811(C) barred Lynaugh’s claims challenging the validity of the
trustee’s sale; and the default judgment entered against Foresight
Investment Group, LLC (“Foresight”), in Gregory Best v. Steve Villareal, et al.,
CV 2017-000578 (the “Best Case”), had no “preclusive effect or precedential

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                           LYNAUGH v. 12TH ST.
                            Decision of the Court

value in this case.” Lynaugh filed a new motion for summary judgment,
complying with page limitations, and a motion to amend her complaint.
The superior court denied both motions because her motion for summary
judgment was moot and thus amendment to her complaint would be futile.

¶4            Lynaugh timely appealed, and then obtained a stay from this
court to file an Arizona Rule of Civil Procedure (“Rule”) 60 motion
challenging the summary judgment ruling based on new evidence. The
superior court denied the motion, explaining that A.R.S. § 33-811(C) barred
her argument. Lynaugh timely appealed that denial. We have jurisdiction
pursuant to A.R.S. § 12-2101(A)(1).

                                DISCUSSION

I.     Summary Judgment

¶5            We review the superior court’s grant of summary judgment
de novo, viewing the evidence in the light most favorable to the non-moving
party. Lee v. M & H Enters., Inc., 237 Ariz. 172, 175, ¶ 10 (App. 2015).
Summary judgment is appropriate if the moving party demonstrates that
“there is no genuine dispute as to any material fact and [it] is entitled to
judgment as a matter of law.” Ariz. R. Civ. P. 56(a). We review a court’s
decision denying a motion to amend a complaint for an abuse of discretion.
Hall v. Romero, 141 Ariz. 120, 124 (App. 1984).

¶6              As noted above, the superior court granted summary
judgment, in part, based on A.R.S. § 33-811(C). Under that statute, when a
trustee mails a notice of sale to the trustor, the trustor waives any title claims
and any claims that are dependent on the trustee’s sale unless they obtain
an injunction halting the sale. Morgan AZ Fin., LLC v. Gotses, 235 Ariz. 21,
23-24, ¶ 7 (App. 2014). The statute is strictly construed in favor of trustors.
Id. at 24, ¶ 8.

¶7              Lynaugh did not seek injunctive relief before the trustee’s
sale. She argues her claims are not waived, the superior court wrongly
granted summary judgment for the Trust before the close of discovery and,
finally, that the court wrongly denied her leave to amend her complaint.

       A.     Lynaugh’s A.R.S. § 33-420 Claims are Waived Pursuant to
              A.R.S. § 33-811(C)

¶8           Lynaugh challenges the dismissal of her A.R.S. § 33-420
claims against the Trust.        Specifically, Lynaugh contends she is
“challenging [the] validity” of both the trustee’s sale and the deed after the

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                           LYNAUGH v. 12TH ST.
                            Decision of the Court

trustee’s sale, which she argues was a “transfer [of] property via
inducement, not a sale[.]” Moreover, she argues the Trust was not the
highest bidder at the trustee’s sale and thus the Trust’s “active
concealment” precluded the superior court from granting summary
judgment for the Trust. We disagree.

¶9            Section 33-420(A) authorizes an owner of real property to
recover damages from a person claiming an interest in real property, “who
causes a document asserting such claim [to be filed] knowing or having
reason to know that the document is forged, groundless, contains a material
misstatement or false claim or is otherwise invalid[.]” The Arizona
Supreme Court held in Zubia v. Shapiro, 243 Ariz. 412, 415, ¶ 18 (2018), that
any claim, including an A.R.S. § 33-420 damage claim, is waived by A.R.S.
§ 33-811(C) if the claim is dependent on the validity of the sale. Here,
Lynaugh’s claims depend on a finding that the trustee’s sale was invalid
and are therefore waived. Accordingly, the superior court did not err.

¶10            Lynaugh relies on Sitton v. Deutsche Bank National Trust Co.,
233 Ariz. 215 (App. 2013) to argue that “A.R.S. § 33-420 claims survive even
when a TRO is not obtained prior to a trustee’s sale.” Lynaugh’s reliance
on Sitton is misplaced. Sitton recognized that A.R.S. § 33-811(C) does not
bar claims or defenses that are independent of the trustee’s sale. 233 Ariz.
at 217-18, ¶¶ 12-13. Because Lynaugh’s claims are dependent on the
validity of the trustee’s sale, they are waived. See A.R.S. § 33-811(C) (stating
that the trustor “waive[s] all defenses and objections to the sale” unless
raised in a successful request for a presale injunction). Here, the trustee’s
deed raised a presumption that the sale comported with statutory
requirements, see A.R.S. § 33-811(B), and the record before us shows
Lynaugh received prior notice of the trustee’s sale. Accordingly, the
superior court did not err.

¶11            Lynaugh also claims that the superior court erred because the
doctrine of judicial estoppel binds the Trust in this case to the “admissions”
obtained through a default judgment against Foresight in the Best Case.
Although the Trust was also a defendant in that case, it is unclear what
Lynaugh claims the default judgment against Foresight proves concerning
the Trust. In granting summary judgment for the Trust, the superior court
concluded, “[w]hile a default judgment has been entered against a different
defendant, [Foresight,] . . . a default judgment entered against a non-party
to this case has no preclusive effect or precedential value in this case.” The
Best Case is not part of this record on appeal. Moreover, Lynaugh failed to
cite to the record or relevant authority and thus this argument is waived on
appeal, and we do not address it. See ARCAP 13(a)(6)-(7).

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                          LYNAUGH v. 12TH ST.
                           Decision of the Court

       B.     Lynaugh’s Failure to File a Rule 56(d) Request Waives Her
              Discovery Argument

¶12            Lynaugh argues the superior court erred by granting the
Trust’s motion for summary judgment before the close of discovery.
Arizona Rule of Civil Procedure 56 allows parties other than the plaintiff to
“move for summary judgment at any time after the action is commenced.”
Ariz. R. Civ. P. 56(b)(2). Further, Rule 56(d) permits a party to request
additional time for discovery if it “cannot present evidence essential to
justify its opposition,” but the request must include an affidavit

       establishing specific and adequate grounds for the request
       and addressing, if applicable, . . . (i) the particular evidence
       beyond the party’s control; (ii) the location of the evidence;
       (iii) what the party believes the evidence will reveal; (iv) the
       methods used to obtain it; (v) an estimate of the amount of
       time the additional discovery will require; and . . . a good faith
       consultation certificate.

Ariz. R. Civ. P. 56(d)(1)(A)-(B). Because Lynaugh did not request additional
time pursuant to Rule 56(d), she waived her argument that the summary
judgment ruling was premature. Edwards v. Bd. of Supervisors, 224 Ariz. 221,
224, ¶ 19 (App. 2010) (construing 56(f), predecessor to current Rule 56(d)).

       C.     Lynaugh’s Motion to Amend Her Complaint was Moot

¶13             Finally, Lynaugh argues the superior court improperly
denied her motion for leave to amend her complaint. In denying the
motion, the court concluded the amended complaint was futile because it
“simply re-urges claims that have already been resolved against [Lynaugh]
as a matter of law.” See First-Citizens Bank & Trust Co. v. Morari, 242 Ariz.
562, 567, ¶ 12 (App. 2017) (“A court does not abuse its discretion by denying
a request to amend if the amendment would be futile.”). Lynaugh contends
her amended complaint would have cured deficiencies in her prior
pleading but does not specifically show how the proposed amended
complaint’s allegations would have defeated summary judgment.
Accordingly, this argument is waived. See MT Builders, L.L.C. v. Fisher
Roofing, Inc., 219 Ariz. 297, 304 n.7, ¶ 19 (App. 2008) (noting that arguments
not developed on appeal are generally waived). Additionally, as a practical
matter, Lynaugh’s motion to amend the complaint was moot. Although the
opportunity to amend the complaint should usually be freely given, the
superior court did not abuse its discretion because the court already
granted summary judgment in favor of the Defendants, which was proper,

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                           LYNAUGH v. 12TH ST.
                            Decision of the Court

and Lynaugh cites no authority suggesting otherwise. Accordingly, the
superior court did not err.

II.   Vexatious Litigant

¶14           The Trust requests that we declare Lynaugh a vexatious
litigant pursuant to A.R.S. § 12-3201(C) and (E)(1)(a)-(c), (e). Assuming
without deciding that Lynaugh could qualify for such a designation, in the
exercise of our discretion, we decline to do so here.

                              CONCLUSION

¶15           Lynaugh requests her costs on appeal. Lynaugh’s request is
denied. The Trust requests its costs and attorneys’ fees on appeal pursuant
to A.R.S. § 12-349(A)(1)-(3). In the exercise of our discretion, we grant the
Trust’s request for costs upon compliance with ARCAP 21 and decline its
request for fees.

¶16          For the foregoing reasons, we affirm.

                            AMY M. WOOD • Clerk of the Court
                             FILED: AA

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