Court Opinion

ID: 5141584
Source: CourtListenerOpinion
Date Created: 2021-12-30 16:01:42.804269+00
Date Added: 2024-06-11T08:24:29.911622
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

   SILVERDOVE ENTERPRISES, INC. DEFINED BENEFIT PENSION
             PLAN, Plaintiff/Appellant/Cross-Appellee,

                                         v.

            JOHN GREENBANK and CAROL A. GREENBANK,
                  Defendants/Appellees/Cross-Appellants.

                              No. 1 CA-CV 21-0215
                               FILED 12-30-2021

            Appeal from the Superior Court in Maricopa County
                           No. CV2018-003140
                  The Honorable M. Scott McCoy, Judge

                                   AFFIRMED

                                    COUNSEL

Tiffany & Bosco, P.A., Phoenix
By Robert A. Royal, Todd Thomas Lenczycki
Counsel for Plaintiff/Appellant/Cross-Appellee

Timothy H. Barnes, P.C., Phoenix
By Timothy H. Barnes
Counsel for Defendants/Appellees/Cross-Appellants
                      SILVERDOVE v. GREENBANK
                          Decision of the Court

                      MEMORANDUM DECISION

Judge Maria Elena Cruz delivered the decision of the Court, in which
Presiding Judge Cynthia J. Bailey and Judge Jennifer M. Perkins joined.

C R U Z, Judge:

¶1           Silverdove Enterprises, Inc. Defined Benefit Pension Plan
(“Silverdove”) appeals the superior court’s judgment in favor of John
Greenbank and Carol A. Greenbank and related rulings. For the following
reasons, we affirm.

               FACTUAL AND PROCEDURAL HISTORY

¶2           Bonnie Vanzant, trustee of Silverdove, was married to John
Greenbank until they divorced in 1984. Vanzant was the sole owner of
Silverdove Enterprises, Inc. and Silverdove was the defined benefit plan of
that company.

¶3            Greenbank was the sole owner of Energetics, Inc. Energetics,
Inc. created a profit-sharing plan in 1986, and amended and restated the
plan in 2016. The restated plan was entitled Energetics, Inc. Restated Profit
Sharing Plan (“ERPSP”). Greenbank was the sole beneficiary of, and only
participant in ERPSP.        Energetics, Inc. was ERPSP’s owner and
administrator. Section 12.3 of ERPSP, entitled “No Title to Assets,”
provided that beneficiaries of ERPSP would have no “right to, or interest
in, any assets of the Trust except otherwise provided by the terms of the
Plan.”

¶4            Silverdove Properties, LLC (“Silverdove Properties”) was a
real estate investment company organized and owned by ERPSP and
Silverdove for the purpose of making joint real estate investments.

¶5           From 2013 to 2017, the asset value of ERPSP ranged from
$1,228,842 to $1,106,500. Greenbank began taking disbursements from
ERPSP in 2013.

¶6            In 2012, Silverdove filed a complaint against Greenbank in
superior court alleging he misappropriated Silverdove’s investment funds.
Thereafter, Silverdove and Greenbank entered into a settlement agreement.
Under the 2013 settlement agreement, which Silverdove’s counsel drafted,

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                      SILVERDOVE v. GREENBANK
                          Decision of the Court

Greenbank had to pay Silverdove $424,626.30 plus interest from half of the
proceeds of his investments. The settlement agreement’s key provisions
(set forth in paragraphs 8 and 9) provided that Greenbank was to list “all of
Greenbank’s investments (the “Investments”) and other assets” in a
verified affidavit and to pay Silverdove “one half of any payments that
Greenbank receive[d] on any of the Investments” until the funds and
interest were repaid. Greenbank’s financial affidavit did not list ERPSP as
an investment subject to the settlement agreement.

¶7             In 2015, Silverdove filed a second complaint against
Greenbank in superior court alleging violations of the settlement
agreement. This lawsuit resulted in a stipulated judgment, wherein the
court found that Greenbank had violated the 2013 settlement agreement
and ordered him to “specifically perform his obligations under the
Settlement Agreement, including his obligation to produce sworn verified
affidavits detailing a full and complete list of his investments and other
assets to VanZant on a quarterly basis for at least one year beginning on
June 30, 2015 and on a timely basis thereafter.” The stipulated judgment
specifically stated it did not resolve whether ERPSP was an investment
subject to the settlement agreement.

¶8             In 2018, Silverdove filed a third complaint in superior court
against Greenbank for breach of contract and for an accounting relating to
the 2013 settlement agreement. The parties submitted a joint report asking
the court to rule on several issues, and it agreed to do so. Silverdove filed
a motion entitled “Motion For Court to Determine Applicability [of]
Greenbank’s Investments” which did not comply with Arizona Rule of
Civil Procedure (“Rule”) 56. In his response, Greenbank argued, among
other things, that if the court accepted Silverdove’s interpretation of the
settlement agreement, the court must evaluate whether the settlement
agreement was reasonably susceptible to more than one interpretation, and
if it was, “the question of the parties’ intent becomes a fact question which
must be left to the trier of fact.” The court ruled that distributions from
ERPSP were subject to the 2013 settlement agreement’s payment terms.

¶9            Greenbank moved for a new trial. The superior court granted
the motion, overturning the court’s ruling on the ERPSP issue. The court
found that its previous ruling had been based on briefing that did not
“articulate the appropriate standard . . . to be applied,” and that the court
had incorrectly made “a determination as a matter of law or determination
that there were undisputed facts or no genuine issue of material fact.”

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                      SILVERDOVE v. GREENBANK
                          Decision of the Court

¶10           Silverdove moved for summary judgment on the ERPSP
issue. After briefing, the court denied the motion. It concluded there were
genuine issues of material fact as to whether ERPSP was an investment for
purposes of the 2013 agreement, the language of the 2013 settlement
agreement was reasonably susceptible to more than one interpretation, and
the interpretation was a determination for the trier of fact.

¶11           The matter proceeded to a bench trial. The parties submitted
a joint pretrial statement. The parties stipulated that (1) “[t]he issue of
whether the parties intended ERPSP’s investments to come within the
scope of the Settlement Agreement is a question of fact for the trier of fact
to resolve”; and (2) “[c]ontested issues of law and fact the parties agree are
material” include . . . “[w]hether Silverdove and [Greenbank] intended
ERPSP’s investments to come within the scope of the 10/11/13 Settlement
Agreement.”

¶12           After a bench trial, the superior court ruled that (1) ERPSP
was not an investment subject to the settlement agreement; (2) Greenbank
did not breach the settlement agreement by failing to remit fifty percent of
the disbursements he received from ERPSP to Silverdove; and (3)
Greenbank did not breach the 2013 settlement agreement or the 2015
stipulated judgment with respect to providing Silverdove with financial
affidavits. The court found that the settlement agreement’s language in
paragraph 8 was “reasonably susceptible to more than one interpretation
and therefore the final determination of the parties’ intention is for the trier
of fact.” The court then found:

       Based on the evidence presented at the trial—namely during
       the negotiations of the Settlement Agreement the parties had
       not discussed whether [Silverdove] intended that ERPSP was
       to be included as an “Investment” under ¶ 8 (although
       [Silverdove’s] principal had been aware of the existence of
       ERPSP since 1994 through mutual business dealings in
       Silverdove Properties), John Greenbank did not intend to
       include ERPSP as an “Investment” and ERPSP was not
       included on the list of investments in John Greenbank’s
       October 29, 2013 Financial Affidavit—ERPSP was not
       intended by the parties to be an “Investment” within the
       meaning of Paragraphs 8 or 9 of the Settlement Agreement.

The court awarded Greenbank attorneys’ fees.

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                      SILVERDOVE v. GREENBANK
                          Decision of the Court

¶13           Silverdove moved for a new trial, the superior court denied
the motion, and Silverdove timely appealed. We have jurisdiction pursuant
to Arizona Revised Statutes (“A.R.S.”) section 12-2101(A)(1), (3), and (5)(a).

                               DISCUSSION1

I.     Parol Evidence

¶14           We review issues of contract interpretation de novo. Sw. Non-
Profit Hous. Corp. v. Nowak, 234 Ariz. 387, 393, ¶ 19 (App. 2014). Whether a
contract is reasonably susceptible to more than one interpretation is a
question of law which we review de novo. In re Est. of Lamparella, 210 Ariz.
246, 250, ¶ 21 (App. 2005) (citations omitted).

¶15            The primary function of a court when interpreting a contract
is “to enforce the meaning intended by the contracting parties.” Taylor v.
State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 154 (1993). “It is axiomatic that
a contract must be construed as a whole, and each and every part must be
read in the light of the other parts.” Goodman v. Newzona Inv. Co., 101 Ariz.
470, 473 (1966) (citation omitted).

¶16            “Antecedent understandings and negotiations may be
admissible . . . for purposes other than varying or contradicting a final
agreement. . . . Interpretation is one such purpose.” Taylor, 175 Ariz. at 152
(citing Corbin on Contracts §§ 576, 579, at 384, 412-13 (1960); Restatement
(Second) of Contracts § 214(c)). When a party offers extrinsic evidence to
aid in the interpretation of a contract, the court “first considers the offered
evidence and, if [the court] finds that the contract language is ‘reasonably
susceptible’ to the interpretation asserted by its proponent, the evidence is
admissible to determine the meaning intended by the parties.” Taylor, 175
Ariz. at 154 (citations omitted). “The court must decide what evidence,
other than the writing, is admissible in the interpretation process, bearing
in mind that the parol evidence rule prohibits extrinsic evidence to vary or
contradict, but not to interpret, the agreement.” Id. at 152. “The meaning
that appears plain and unambiguous on the first reading of a document
may not appear nearly so plain once the judge considers the evidence.” Id.
at 154. The court may properly decide not to consider extrinsic evidence
when the “asserted meaning of the contract language is so unreasonable or
extraordinary that it is improbable that the parties actually subscribed to

1     Greenbank filed a cross appeal in this matter but did not raise any
argument or file a brief in support of the cross appeal. Accordingly, we
dismiss the cross appeal. See ARCAP 15(a)(4).

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                      SILVERDOVE v. GREENBANK
                          Decision of the Court

the interpretation asserted by the proponent of the extrinsic evidence.” Id.
at 153.

¶17           Silverdove argues the settlement agreement was not
reasonably susceptible to more than one interpretation because the
agreement required Greenbank to pay Silverdove one-half of any payments
from all of his investments, and ERPSP was “admittedly an investment by
Greenbank.” It argues the superior court ignored the parties’ objective
intent and wrongly relied on Greenbank’s parol evidence of his “secretive
intent” to exclude ERPSP. Silverdove claims paragraph 8’s language
unambiguously reflects the parties’ intention to include ERPSP’s
investments within the scope of the settlement agreement. The agreement
provides:

       8. Financial Affidavit. Contemporaneously with execution
      of this Agreement, John shall execute a sworn and verified
      affidavit detailing a full and complete list of all of
      Greenbank’s investments (“the Investments”) and other
      assets. Greenbank shall timely supplement this sworn and
      verified affidavit as the Investments and other assets change.
      A copy of the Financial Affidavit is attached as Exhibit B.

      9. Dollar-for-Dollar on Investment Payments. Greenbank
      shall pay to [Silverdove] one half of any payments that
      Greenbank receives on any of the Investments and
      Greenbank will be entitled to the other half of any payments
      on the Investments until he has repaid in full the Missing
      Funds plus all applicable interest.

(Emphasis added.)    In addition, the settlement agreement defines
“Greenbank” as “John A. Greenbank.”

¶18          ERPSP was not listed as an investment or asset on
Greenbank’s financial affidavit incorporated into the agreement. And
paragraph 8 referred to “Greenbank’s investments,” with no mention of
ERPSP. Further, Greenbank did not “admit” that ERPSP was an investment
by Greenbank subject to the settlement agreement as Silverdove suggests.
Silverdove cites to Greenbank’s testimony to support its contention that
“ERPSP . . . is admittedly an investment by Greenbank.” The cited
testimony, however, was that ERPSP owns investments, ERPSP is owned
by Energetics, Inc., and Greenbank, as president of Energetics, Inc. controls
ERPSP. Greenbank consistently maintained that ERPSP was a pension plan
owned by Energetics, Inc. and that he did not personally own ERPSP’s

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                      SILVERDOVE v. GREENBANK
                          Decision of the Court

investments. The language of the settlement agreement was reasonably
susceptible to Greenbank’s interpretation—that ERPSP was not an
investment subject to the settlement agreement.

¶19            Greenbank’s extrinsic evidence included the following:
Greenbank was the sole owner and president of Energetics, Inc., an Arizona
corporation. Energetics, Inc. created a profit-sharing retirement plan,
ERPSP, in 1986. Greenbank was the sole beneficiary of, and only participant
in ERPSP. Energetics, Inc. was ERPSP’s owner and administrator, not
Greenbank. Section 12.3 of ERPSP, entitled “No Title to Assets,” provided
that beneficiaries of ERPSP would have no “right to, or interest in, any
assets of the Trust except otherwise provided by the terms of the Plan.”
Greenbank never intended for ERPSP to be included as an investment
subject to the settlement agreement because it was his retirement plan and
“separate” from his personal investments. Greenbank never spoke with
Vanzant or Silverdove’s attorney about what investments to include in the
financial affidavit. He did not discuss ERPSP with the attorney before
signing the settlement agreement and never would have agreed to the
settlement if he had been required to include ERPSP on the financial
affidavit.

¶20            The superior court did not err by considering extrinsic
evidence to determine the parties’ intent as to the investments that would
be subject to the repayment schedule in the agreement. The evidence was
not offered to “vary or contradict” the agreement, and Greenbank’s
asserted meaning of the contract language was not “so unreasonable or
extraordinary that it is improbable that the parties actually subscribed to
the interpretation asserted by [Greenbank].” Taylor, 175 Ariz. at 152-53.

II.   Financial Affidavits

¶21          Silverdove next argues Greenbank breached the settlement
agreement and the 2015 stipulated judgment by failing to provide accurate
and timely supplemental financial affidavits.

¶22           “The trial judge makes factual determinations in the first
instance, and we will sustain these findings unless they are clearly
erroneous or unsupported by any credible evidence.” Federoff v. Pioneer
Title & Tr. Co. of Ariz., 166 Ariz. 383, 388 (1990). The superior court found
that Greenbank had not materially breached the settlement agreement or
stipulated judgment by failing to provide Silverdove with financial
affidavits. The court specifically found that Greenbank complied with the

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                      SILVERDOVE v. GREENBANK
                          Decision of the Court

stipulated judgment by providing affidavits for one year beginning in June
2015.

¶23           Paragraph A of the stipulated judgment required Greenbank
to provide financial affidavits to Silverdove on a “quarterly basis for at least
one year beginning on June 30, 2015 and on a timely basis thereafter.”
Paragraph 8 of the settlement agreement provided that “Greenbank shall
timely supplement this sworn and verified affidavit as the Investments and
other assets change.”

¶24           Vanzant testified that Greenbank provided her quarterly
affidavits for one year as required by the stipulated judgment. The last
affidavit was dated March 29, 2016. Greenbank testified that he did not
send additional updated financial affidavits thereafter because his
investment assets had not changed significantly. According to Silverdove,
Greenbank’s “biggest mistake” was his failure to list Mortgages Limited on
his financial affidavits. When questioned about why he did not include
Mortgages Limited, Greenbank testified that the company had been in
bankruptcy proceedings since 2012, and he “didn’t expect anything from
them.” Greenbank and Vanzant were both creditors in the bankruptcy.
And when Greenbank did receive payments from Mortgages Limited in
2014, 2016, and 2018, he remitted half to Silverdove.

¶25             The superior court’s finding that Greenbank had not
materially breached the settlement agreement or stipulated judgment was
not clearly erroneous or unsupported by credible evidence. See id. at 388.
“It is not our prerogative to weigh the evidence and determine the
credibility of witnesses; that role belongs to the trial court.” Premier Fin.
Servs. v. Citibank, 185 Ariz. 80, 85 (App. 1995).

III.   Greenbank’s Motion for New Trial

¶26           Silverdove next argues that the superior court erred by
granting Greenbank’s motion for new trial and reversing its decision that
distributions from ERPSP were subject to the 2013 settlement agreement’s
payment terms. “We review an order granting a new trial under a more
liberal standard than an order denying one, and we will not overturn the
order absent a clear abuse of discretion.” State Farm Fire & Cas. Co. v. Brown,
183 Ariz. 518, 521 (App. 1995).

¶27           The superior court’s ruling granting Greenbank’s motion for
new trial stated:

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                      SILVERDOVE v. GREENBANK
                          Decision of the Court

       THE COURT FINDS Commissioner French’s ruling was
       based upon the briefing presented to her at that time which
       did not articulate the appropriate standard needed to be
       applied.

       Furthermore, based upon the briefing presented to this Court
       in the Motion for New Trial,

       THE COURT FINDS that there was a determination as a
       matter of law or determination that there were undisputed
       facts or no genuine issue of material fact. For those reasons,
       the Court believes it is appropriate to grant the motion.

¶28          Silverdove’s “Motion For Court to Determine Applicability
[of] Greenbank’s Investments” cited to and relied upon various facts but
did not comply with Rule 56 by including a separate Rule 56(c)(3)(A)
statement of facts with “the specific part of the record where support for
each fact may be found.” Nor was the motion supported by affidavits or
other testimony. See Rule 56(c)(5), (6). As noted supra paragraph 10, after
the superior court granted Greenbank’s motion for new trial, Silverdove
filed a motion for summary judgment on the determination of the ERPSP
as an investment in compliance with Rule 56. And thereafter, the court
concluded there were genuine issues of material fact as to whether ERPSP
was an investment for purposes of the 2013 agreement. It was within the
sound discretion of the superior court to grant the motion for new trial.

IV.    Silverdove’s Motion for New Trial

¶29           Finally, Silverdove argues the superior court abused its
discretion by denying its motion for new trial. We review the denial of a
motion for new trial for an abuse of discretion. First Fin. Bank, N.A. v.
Claassen, 238 Ariz. 160, 162, ¶ 8 (App. 2015). “To find an abuse of discretion,
there must either be no evidence to support the superior court’s conclusion
or the reasons given by the court must be clearly untenable, legally
incorrect, or amount to a denial of justice.” Charles I. Friedman, P.C. v.
Microsoft Corp., 213 Ariz. 344, 350, ¶ 17 (App. 2006) (citation and internal
quotation marks omitted).

¶30           Silverdove requested a new trial on several grounds,
including that there was new evidence that the promissory note
collateralizing the settlement agreement was worthless.      See Rule
59(a)(1)(D). The superior court summarily denied the motion.

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                      SILVERDOVE v. GREENBANK
                          Decision of the Court

¶31            The superior court “may” grant a new trial on certain grounds
materially affecting the moving party’s rights, including “newly discovered
material evidence that could not have been discovered and produced at
trial with reasonable diligence.” Rule 59(a)(1)(D). “[T]o grant a motion for
a new trial on the grounds of newly discovered evidence, it must appear to
the trial court that such evidence would probably change the result upon
rehearing.” Roberts v. Morgensen Motors, 135 Ariz. 162, 165 (App. 1982).

¶32          Silverdove argues the superior court abused its discretion by
denying the motion for new trial because it provided the court with
evidence that “before trial MRC Refining was extinct and its promissory
notes had no value,” which contradicted Greenbank’s trial testimony that
MRC Refining was a viable company. According to Silverdove, the new
evidence would have changed the superior court’s judgment because it
showed Greenbank breached the settlement agreement by inaccurately
valuing MRC Refining on his financial affidavits.

¶33           Silverdove’s new evidence consisted of an affidavit from
Vanzant; undated screenshots of a text message to Vanzant from Rock
Ballstaedt, the manager of MRC Refining; and a December 28, 2020 letter
from Ballstaedt to investors announcing the closing of MRC Refining.
Vanzant’s affidavit stated that after the superior court entered its findings
on October 16, 2020, Ballstaedt sent her a text message informing her that
MRC Refining would be closing down. The affidavit does not say when
Ballstaedt sent the text message other than after October 16, 2020, and, as
noted above, the screenshots were undated. Vanzant’s affidavit stated that
Ballstaedt’s “text message said the closing had been ongoing for months
which would mean it was known earlier in 2020 and before trial.”

¶34           We have reviewed the screenshots of the text message
attached to and cited in Vanzant’s affidavit and see no language in them
indicating that MRC Refining’s closing “had been ongoing for months.”
Although the December 28, 2020 letter stated that “[f]or some time it has
been increasingly clear that there are no viable financing options for the
project,” the phrase “for some time” is vague and Silverdove cited no
additional evidence establishing when MRC Refining and Greenbank knew
the project would have to be shut down. Silverdove’s new evidence did not
adequately support its argument that Greenbank, as MRC Refining’s
president, knew that the company was “worthless” at the time of trial in
early October 2020. The superior court did not abuse its discretion by
failing to grant Silverdove a new trial on the basis of newly discovered
evidence. It was within the court’s discretion to conclude the evidence
would probably not have changed the result at trial. See id. at 165.

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                      SILVERDOVE v. GREENBANK
                          Decision of the Court

V.    Attorneys’ Fees

¶35          Silverdove and Greenbank both request attorneys’ fees and
costs pursuant to A.R.S. §§ 12-341, -341.01 and the settlement agreement.
As the prevailing party, Greenbank is entitled to costs and in our discretion
we award him reasonable attorneys’ fees upon compliance with ARCAP 21.

                              CONCLUSION

¶36          For the foregoing reasons, we affirm.

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

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