Court Opinion

ID: 2814184
Source: CourtListenerOpinion
Date Created: 2015-07-02 16:05:46.969915+00
Date Added: 2024-06-11T11:30:30.868182
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

             MARK GANLEY, an individual, Plaintiff/Appellant,

                                         v.

  DEPENDABLE MEDICAL TRANSPORT SERVICES, LLC, an Arizona
          limited liability company, Defendant/Appellee.

                              No. 1 CA-CV 14-0255
                                FILED 7-02-2015

            Appeal from the Superior Court in Maricopa County
                           No. CV2011-018678
                The Honorable Randall H. Warner, Judge

                                   AFFIRMED

                                    COUNSEL

Spiess & Bell, Phoenix
By James O. Bell
Counsel for Plaintiff/Appellant

Milligan Lawless, P.C., Phoenix
By James Burr Shields, Emily D. Armstrong
Counsel for Defendant/Appellee
                           GANLEY v. DMTS
                          Decision of the Court

                     MEMORANDUM DECISION

Presiding Judge Randall M. Howe delivered the decision of the Court, in
which Judge Andrew W. Gould and Judge Peter B. Swann joined.

H O W E, Judge:

¶1           Mark Ganley appeals the trial court’s order granting
summary judgment in favor of Dependable Medical Transport Services,
LLC, (“DMTS”) and awarding DMTS attorney’s fees. For the following
reasons, we affirm.

                FACTS AND PROCEDURAL HISTORY

¶2           In July 2007, Ganley was a director of DMTS. Due to the
company’s financial difficulties, Ganley in his individual capacity lent
DMTS $125,000. Ganley and DMTS executed a promissory note, which
provided that DMTS would repay Ganley in 36 installments beginning in
August 2007. Around the same time, DMTS took two loans from the
Biltmore Bank of Arizona. Ganley signed the loan agreements and their
corresponding promissory notes in his capacity as a director of DMTS.

¶3           Ganley, DMTS, and Biltmore Bank also entered into
subordination agreements—both before and after executing the promissory
notes—in which they agreed to subordinate DMTS’s indebtedness to
Ganley to DMTS’s indebtedness to Biltmore Bank. According to the
agreements, the “subordinated indebtedness” included “all present and
future indebtedness, obligations, liability, claims, rights, and demands of
any kind which may be now or hereafter owning from” DMTS to Ganley.
The “superior indebtedness” included “all present and future
indebtedness, obligations, liabilities, claims, rights, and demands of and
kind which may be now or hereafter owning from” DMTS to Biltmore Bank.
The agreements provided that all “Subordinated Indebtedness of [DMTS]
to [Ganley] is and shall be subordinated in all respects to all Superior
Indebtedness of [DMTS] to [Biltmore Bank]” and that Ganley would not
accept any payments on the subordinated indebtedness “at any time while
any Superior Indebtedness is owning to [Biltmore Bank].” Ganley signed
the agreements in his capacities as a director of DMTS and as an individual
creditor.

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                             GANLEY v. DMTS
                            Decision of the Court

¶4             Beginning August 2007, under the promissory note between
DMTS and Ganley, DMTS made four payments to Ganley. But DMTS was
still indebted to Biltmore Bank. In November 2007, because DMTS was still
experiencing financial difficulties, Richard Ganley and Bill Gibbs each lent
DMTS $105,000 (“the emergency loans”). Mark Ganley agreed that DMTS
would repay the emergency loans before repaying his promissory note.
After DMTS entered into the contracts for the emergency loans, it stopped
making payments to Ganley on his promissory note because of the board
members’ agreement that DMTS was to repay the emergency loans first.

¶5            After unsuccessful attempts to recover on his promissory
note, Ganley sued DMTS for breach of contract. DMTS counterclaimed for
fraud and conspiracy to commit fraud. DMTS then moved for summary
judgment on both Ganley’s claim and DMTS’s counterclaims. The trial
court granted summary judgment in DMTS’s favor on Ganley’s claim. It
awarded DMTS attorney’s fees incurred while defending against Ganley’s
claim, but did not award fees for pursuing DMTS’s counterclaims. The
court also dismissed DMTS’s counterclaims without prejudice.

¶6            Ganley filed a notice of appeal prematurely. We stayed the
appeal for the trial court to enter a final judgment pursuant to Arizona Rule
of Civil Procedure 54(c). When the trial court did so, the appeal was
reinstated.

                               DISCUSSION

¶7            Ganley argues that the trial court erred because issues of
material fact precluded summary judgment in favor of DMTS. Summary
judgment may be granted when no genuine issue of any material fact exists,
and the moving party is entitled to judgment as a matter of law. Ariz. R.
Civ. P. 56(c)(1). “We review the grant of summary judgment de novo to
determine whether any genuine issue of material fact exists, and we view
the evidence and all reasonable inferences in favor of the non-moving
party.” Russell Piccoli P.L.C. v. O’Donnell, 237 Ariz. 43, 46–47, 344 P.3d 345,
348–49 (App. 2015). Summary judgment should be granted “if the facts
produced in support of [a] claim . . . have so little probative value, given the
quantum of evidence required, that reasonable people could not agree with
the conclusion advanced by the proponent of the claim. . . .” Orme Sch. v.
Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990).

¶8          Further, “when a party moves for summary judgment with
supporting affidavits containing sworn facts on material issues, it is
incumbent upon the [opposing] party to contradict the facts in a positive

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                             GANLEY v. DMTS
                            Decision of the Court

manner with sworn proof.” Kiser v. A. J. Bayless Markets, Inc., 9 Ariz. App.
103, 106, 449 P.2d 637, 640 (1969). The opposing party may not rely on
allegations or denials of its own pleadings; it must come forward with
specific facts showing a genuine issue for trial. Ariz. R. Civ. P. 56(e). If the
opposing party does not so respond, summary judgment, if appropriate,
shall be entered against that party. Id. Because no genuine issue of any
material facts exists, as discussed below, we affirm the trial court’s order.

              1. The Subordination Agreements

¶9            Ganley argues that regardless of the subordination
agreements’ language, the parties intended at the time they entered into the
agreements that DMTS could make payments to satisfy its salary and debt
obligations if DMTS was in compliance with its covenants with Biltmore
Bank. But this argument fails because the subordination agreements’
language plainly and unambiguously state the parties’ intended meaning.
Both agreements provide that all of DMTS’s indebtedness to Ganley was
subordinated in all respects to DMTS’s indebtedness to Biltmore Bank.
They state that subordinated indebtedness include all present and future
indebtedness from DMTS to Ganley and superior indebtedness include all
present and future indebtedness from DMTS to Biltmore Bank. The
agreements also provide that Ganley may not accept any payments on his
subordinated indebtedness at any time while any superior indebtedness is
owed to Biltmore Bank. When the provisions of a contract are plain and
unambiguous, they must be applied as written. IB Prop. Holdings, LLC v.
Rancho Del Mar Apartments Ltd. P’ship, 228 Ariz. 61, 66–67 ¶ 16, 263 P.3d 69,
74–75 (App. 2011) (internal quotation marks and citation omitted). “[T]he
court will not pervert or do violence to the language used, or expand it
beyond its plain and ordinary meaning or add something to the contract
which the parties have not put there.” Id. Thus, because the record shows
that DMTS was still indebted to Biltmore Bank, pursuant to the
subordination agreements, DMTS could not pay and Ganley could not
accept payments on DMTS’s debt to Ganley.

¶10            Ganley counters the agreements’ language with extrinsic
evidence indicating that: (1) a Biltmore Bank representative stated to
Ganley that the “[i]nvestor loans may only be repaid when all loan
covenants in Biltmore’s indentures are satisfied” and (2) DMTS made four
payments on Ganley’s note, made payments on the emergency loans, and
paid salaries to himself and his brother, Richard. But because Ganley’s
evidence contradicts the agreements, the parole evidence rule prohibits the
admission of such evidence. See Taylor v. State Farm Mut. Auto. Ins. Co., 175
Ariz. 148, 152, 854 P.2d 1134, 1138 (1993) (providing that the parole evidence

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                             GANLEY v. DMTS
                            Decision of the Court

rule prohibits the admission of extrinsic evidence to vary or contradict the
terms of a contract). Further, those events could not be used to ascertain the
parties’ intended meaning at the time the contract was made because they
occurred after the contract was made. See id. at 153, 854 P.2d at 1139
(providing that in interpreting a contract, we must “attempt to ascertain
and give effect to the intention of the parties at the time the contract was
made if at all possible”).

¶11           In any event, contrary to Ganley’s argument, the bank
representative’s statement was consistent with the subordination
agreements in that DMTS could not pay and Ganley could not accept
payment on his promissory note if DMTS still owed Biltmore Bank money.
Moreover, although DMTS made loan payments and paid salaries, nothing
in the record shows that Biltmore Bank approved of those actions or that it
waived its rights to enforce the subordination agreements. Consequently,
because the language of the subordination agreements provide that DMTS
could not pay and Ganley could not accept payments on DMTS’s debt to
Ganley so long as DMTS owed Biltmore Bank money, the trial court did not
err in granting DMTS summary judgment.

              2. Attorney’s Fees

¶12             Ganley next argues that the trial court erred in awarding
DMTS attorney’s fees pursuant to A.R.S. § 12–341.01(A), which provides
that in “any contested action arising out of a contract, express or implied,
the court may award the successful party reasonable attorney fees.”
Although the promissory note provides that Ganley may recover attorney’s
fees in attempting to collect on the note, the note is silent on whether DMTS
is entitled to recover its attorney’s fees from Ganley. Arizona law provides
that when a contract has a unilateral provision permitting one party to
recover attorney’s fees under certain circumstances, the other party may
recover its fees pursuant to A.R.S. § 12–341.01. Pioneer Roofing Co. v. Mardian
Constr. Co., 152 Ariz. 455, 471, 733 P.2d 652, 668 (App. 1986). Here, the note
has a unilateral provision permitting Ganley to recover attorney’s fees.
Accordingly, DMTS, as the successful party on Ganley’s contract claim, was
entitled to its fees pursuant to A.R.S. § 12–341.01(A). Consequently, the trial
court did not err in awarding DMTS attorney’s fees.

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                    GANLEY v. DMTS
                   Decision of the Court

                     CONCLUSION

¶13   For the foregoing reasons, we affirm.

                           :ama

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