Court Opinion

ID: 9587026
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:17:27.970235+00
Date Added: 2024-06-11T17:32:59.793466
License: Public Domain

CAMERON, Justice,
specially concurring,
I concur in the result only. The issue in this case is whether the trial judge erred by granting summary judgment for the Vonks. Summary judgment is proper when there are no material issues of fact in dispute and when the party moving for summary judgment is entitled to judgment as a matter of law. Luplow v. Pasqualetti Properties, Inc., 101 Ariz. 90, 91, 416 P.2d 414, 415 (1966). In this case no material transactional facts are in dispute. However, whether foreclosure is unconscionable is also a question of fact, not law, and because the fact of unconscionability is contested the Vonks were not entitled to summary judgment. Arizona Coffee Shops, Inc. v. Phoenix Downtown Parking Ass’n, 95 Ariz. 98, 102, 387 P.2d 801, 803 (1963) (mortgagee’s allegation of unconscionable foreclosure and affidavit in support thereof were sufficient to create an issue for the trier of fact precluding summary judgment). For this reason, I agree with the majority that summary judgment was inappropriate in this case.
I believe, however, that the majority opinion goes much further than merely stating that summary judgment was inappropriate. The majority opinion could be construed as indicating that the foreclosure was in fact unconscionable. A review of the facts will show that this is not necessarily so.
Upon discovering that the bank wrongfully dishonored the check, the Vonks offered to dismiss the foreclosure action if the Dunns would pay their attorney’s fees and costs incurred to that date. I believe the trial judge could find that this satisfied the Vonks’ duty to act equitably for two reasons. First, the Dunns had agreed, in the mortgage agreement, to pay for any attorney’s fees the Vonks incurred in any collection proceeding. Second, the Dunns, unlike the Vonks, were the logical party to bring a suit against the bank to recover the amount of the attorney’s fees and costs.
The majority also implies that the Vonks’ conduct was unconscionable because they failed to notify the Dunns that the check had bounced before they contacted their attorney. The entire litigation, the majority states, could have been avoided if the Vonks would have just called the Dunns. However, it can just as easily be said that the entire litigation could have been avoided if the Dunns would have accepted the Vonks’ settlement offer and then sued their bank for their costs. The effect of the majority opinion is to discourage people from contacting their attorney quickly when their rights or claims are at stake. I believe this is bad policy.
Furthermore, I do not think it was unreasonable for the Vonks not to suspect a bank error when the check was dishonored. Two reasons support this proposition. First, prior to the bank error, the Dunns had had trouble making their monthly payments. Second, even though, as the majority states, because of the volume of computerized transactions, banks will occasionally wrongfully dishonor a check, the vast majority of times a check is dishonored, it is because the account does not contain sufficient funds, not because the bank erred. I do not think it unreasonable nor necessarily unconscionable that the Vonks did not consider the possibility of a bank error before contacting their attorney. Unfortunately, the majority opinion could lead the trial judge to believe that this was unconscionable conduct.
The majority also implies that the Vonks had no reason to believe their security was in jeopardy. I disagree. The Dunns had made a total of seven late payments, five of which were in consecutive months. These seven payments were 19, 16, 11, 86, *3013, 25 and 24 days late, respectively. This alone was reason enough to cause the Vonks to feel uneasy about their security and about receiving payment.
Furthermore, the loan was arranged such that the monthly payments were only $259.79 and a large balloon payment of $16,787.85 was due at the end of five years. The balloon payment was almost 70% of the total loan amount and was coming due just eleven months after the Dunns’ check for a mere $259 was dishonored. Admittedly, the check was wrongfully dishonored, but the Vonks did not know this at the time and therefore had reason to believe their security was in jeopardy and reason to begin foreclosure proceedings.
The majority also states that the Vonks’ security was not in jeopardy due to the delinquent taxes because the amount past due was so “trivial.” However, I believe this is the very reason why the Vonks had cause to be concerned about their security. When a debtor has not paid a mere $66 past due tax payment, it surely reflects on his or her ability to pay a $16,787 balloon payment in less than one year.
Furthermore, the majority fails to acknowledge that the Dunns had also paid the prior year’s tax assessment late and the Vonks, prior to the $66 in taxes becoming delinquent, gave the Dunns notice that if they again failed to pay the taxes on time, they would foreclose. The Vonks letter to the Dunns, dated 31 July 1986, states in part:
Our demand for strict performance relates not only to timely payments of principal and interest, but also to all other terms of the note and mortgage, including payment of taxes on the subject property before such taxes become delinquent. As you have been advised, the 1985 taxes are unpaid, past due, and delinquent; and, as provided for in the mortgage, this is a default which entitles us to declare the unpaid balance of the note and mortgage to be immediately due and payable____
... [I]n the event of any other default under the terms of the note and mortgage, you are hereby put on notice that we will, immediately and without further notice or demand, declare the balance of the note and mortgage to be due and payable and forthwith file action for judicial foreclosure.
At the time the check was dishonored only 24% of the loan and only 35% of the total purchase price had been paid. This is not á case in which the mortgagor paid a majority of the purchase price, missed one payment, and the mortgagee foreclosed. On the contrary, the Vonks had been patient with the Dunns. The Vonks had written numerous letters between April, 1986 and July, 1986 regarding late payments and demanding timely payment. In fact, the Vonks notified the Dunns in May, 1986 that they intended to begin foreclosure proceedings on 16 June 1986 because the May payment was late. When the Vonks received the May payment they then notified the Dunns that they would wait for the June payment before taking any action. When the June payment was also late, the Vonks notified the Dunns that they would begin foreclosure proceedings on 11 July 1986. When the July payment was also late, the Vonks, instead of beginning foreclosure, gave the Dunns written notice that they would no longer accept late payments and would begin foreclosure proceedings if any future payment was late. Thereafter, the Dunns made timely payments until the February check was dishonored.
The majority also fails to acknowledge that the Dunns were aware of exactly what would happen if they failed to comply with the terms of the mortgage. In a letter written to the Vonks, the Dunns stated:
If we fail to make a payment, or if we are later than the agreed upon “grace” period”, [sic] you start proceedings to take the property back. At that time, if we wish to keep the property we have to pay the late payment and any legal fees you incurred in taking the property back. If we failed to pay the late payment and all legal fees then we would lose the down payment, all monies already paid to you in payments, and any improvements we made on the property____
*31The majority lists many factors that the trial judge should consider in determining whether the foreclosure was unconscionable. I believe in addition to those factors enumerated by the majority, the trial judge should also consider the additional facts enumerated in this concurring opinion.