Court Opinion

ID: 6342324
Source: CourtListenerOpinion
Date Created: 2022-05-19 18:01:56.339+00
Date Added: 2024-06-11T09:16:21.839811
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                  IMH SPECIAL ASSET NT 168 LLC, et al.,
                    Plaintiffs/Appellants/Cross-Appellees,

                                         v.

          GREGORY M. BECK, Intervenor/Appellee/Cross-Appellant.

                              No. 1 CA-CV 21-0414
                                FILED 5-19-2022

            Appeal from the Superior Court in Maricopa County
                           No. CV2010-010943
                           No. CV2010-010990
                              (Consolidated)
                  The Honorable James D. Smith, Judge
             The Honorable Karen A. Mullins, Judge (retired)

                                   AFFIRMED

                                    COUNSEL

Snell & Wilmer L.L.P., Phoenix
By Christopher H. Bayley, Benjamin W. Reeves, and James G. Florentine
Counsel for Plaintiffs/Appellants/Cross-Appellees

Udall Shumway, Mesa
By Joel E. Sannes and Eli T. Enger
Counsel for Intervenor/Appellee/Cross-Appellant
                           IMH, et al. v. BECK
                           Decision of the Court

                      MEMORANDUM DECISION

Presiding Judge Paul J. McMurdie delivered the Court’s decision, in which
Vice Chief Judge David B. Gass and Judge Angela K. Paton joined.

M c M U R D I E, Judge:

¶1           Appellants, IMH Special Asset NT 161, LLC and IMH Special
Asset NT 168, LLC (collectively “IMH”),1 challenge the superior court’s
compliance with our mandate in IMH Special Asset NT 168 LLC v. Beck, No.
1 CA-CV 19-0156, 2020 WL 6192846 (Ariz. App. Oct. 22, 2020) (mem.
decision). Because the superior court complied with our mandate, we
affirm.

             FACTS AND PROCEDURAL BACKGROUND

¶2            In 2012, the superior court entered summary judgment for
IMH in its post-foreclosure deficiency action. IMH was awarded around
$8.6 million. The court temporarily froze the judgment debtor’s bank
accounts pending satisfaction of the judgment. IMH stipulated to releasing
the bank accounts and temporarily ceasing enforcement of the judgment if
the debtor, among other things, transferred his corporate stock to an entity
(“Stockholder,” LLC) created by IMH. The court ordered the debtor’s
shares transferred to Stockholder and appointed a receiver to manage,
maintain, and preserve the assets. The transfer included a 9.6% ownership
interest in Recorp Partners, Inc. (“RPI”). RPI was the managing general
partner of Recorp New Mexico Associates, LP (“RNMA I”), which owns a
large land parcel northwest of Albuquerque, New Mexico. Stockholder
later acquired 100% of RPI, and the receiver appointed an individual to
serve as RPI’s sole director and president.

¶3            RNMA I was set to dissolve in December 2015. Under the
partnership agreement, the dissolution would follow “a liquidation period
not to exceed 12 months.” No one extended the term before the dissolution
date passed. In December 2016, more than 75% of the limited partners gave
notice that they were retroactively extending the term.

1     We refer to IMH in the singular for convenience.

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                           Decision of the Court

¶4             RNMA I made several capital calls on the limited partners.
Only IMH responded to the calls. One of the calls was for funds to repair a
well leaking toxic water on the parcel in New Mexico. RPI asserted the funds
were necessary to restore the well and preserve the parcel’s value. When no
capital was provided, the receiver requested authorization from the superior
court to direct Stockholder to borrow the money from another IMH
subsidiary. The court denied the request, finding the proposed loan contract
would allow IMH to foreclose on RNMA I’s assets without regard to the fair
market value in relation to the loan proceeds. Despite the ruling, RNMA I
ultimately borrowed the money from an IMH subsidiary, MRH Lending.
IMH asserted that RPI’s president did not need the court’s permission to
exercise his corporate authority to obtain the loan.

¶5            Following RNMA I’s final capital call, RPI sent the limited
 partners notices of default and assigned their interests to the IMH
 subsidiary that had made the well-repair loan.

¶6             One of RNMA I’s limited partners, Appellee Gregory Beck,
intervened to oppose the well-repair loan. When RPI called for capital, he
initiated discussions with the other limited partners about removing RPI as
general partner. He later wrote to the receiver that more than 75% of
RNMA I’s limited partners had given notice that they were removing RPI
as the general partner for cause. RPI asserted that the removal attempt did
not comply with the partnership agreement and continued to act as the
general partner.

¶7            In January 2019, the superior court found that the Stockholder
estate contained only 9.6% of RPI, so the receiver could not manage
RNMA I and could not make capital calls or declare that limited partners
had forfeited their interests in RNMA I by failing to answer.

¶8           IMH moved to amend the order, arguing the estate included
100% of RPI and the receiver could therefore exercise authority as
RNMA I’s general partner. In November 2019, the superior court modified
the January ruling, finding the estate included 100% of RPI. But the court
also found RPI had been removed as general partner and that RPI’s acts
following removal were ultra vires.

¶9           IMH appealed to this court, arguing that RNMA I became a
general partnership following the 12-month wind-up period after
dissolution and that the superior court erred by finding RPI was removed
as general partner. We concluded the limited partners’ attempt to extend
RNMA I’s term was invalid and remanded so the superior court could

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                           Decision of the Court

determine the effect of RNMA I’s failure to wind up by the date set by the
partnership agreement.

¶10           On remand, the superior court ordered briefing on the
mandate’s scope. IMH argued the court had to address whether RNMA I
continued as a limited partnership after the twelve-month wind-up period
and order the method and manner of RNMA I’s liquidation, including
deciding whether RNMA I must repay MRH Lending before limited
partners receive distributions. Conversely, Beck argued that the mandate
required the court to determine whether the loans and capital calls made
by RNMA I after RPI was removed were proper wind-up activities. The
superior court declined to oversee RNMA I’s liquidation, noting that not all
of RNMA I’s limited partners are parties and that RNMA I is a New Mexico
entity with assets comprised only of real property in New Mexico. Instead,
the court determined only that the January 2017 capital call and July 2017
loan agreements were ultra vires and not proper winding-down acts.

¶11          IMH appealed, and we have jurisdiction under A.R.S.
§ 12-2101(A)(1).

                              DISCUSSION

A. The Superior Court Complied with Our Mandate.

¶12          IMH argues that the superior court erred by failing to order
the method and manner of RNMA I’s liquidation and by failing to decide
(1) the consequences of RNMA I’s dissolution date passing, (2) the status
of RNMA I as a legal entity after RPI was removed as general partner, and
(3) the priority of the loan repayment relative to limited-partner
distributions. Beck counters that the court complied with our mandate by
finding that RNMA I’s term ended and RNMA I was winding up.
Although IMH does not challenge that the term ended and that RNMA I
was winding up, it argues these findings did not adequately address our
mandate.

¶13           We remanded this case to allow the superior court to decide
whether the limited partnership was terminated following the 12-month
wind-up period or if RNMA I continued to exist as a limited partnership
during a wind-up period. The court complied with the mandate by finding
that RNMA I was in a wind-up period. IMH asserts the superior court failed
to decide the status of RNMA I as an entity. But the superior court’s finding
that RNMA I is in a wind-up period suggests the continued existence of the
limited partnership.

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                           IMH, et al. v. BECK
                           Decision of the Court

¶14          IMH does not challenge the superior court’s affirmative
findings, so we do not consider whether the court erred by finding that
RNMA I was in a wind-up period and that the January 2017 capital call and
July 2017 loan modification agreement, promissory note, and
mortgage/security agreement were ultra vires and not proper winding
down acts. See Crystal E. v. DCS, 241 Ariz. 576, 578, ¶ 6 (App. 2017)
(appellate review generally limited to specific issues raised by the
appellant).

¶15            IMH argues that, because we concluded RNMA I’s term could
not be retroactively extended, the superior court had to order the method
and manner of RNMA I’s liquidation and determine whether MRH
Lending must be repaid before distributions are made to limited partners.
We disagree. As IMH argued in its last appeal, when a receivership is
terminated, the scope of a trial court’s jurisdiction is limited to matters
ancillary to the receivership. See Bayoud v. Bayoud, 797 S.W.2d 304, 310 (Tex.
App. 1990).

¶16           On remand, the superior court determined RNMA I was in a
wind-up period and that the January 2017 capital call and July 2017 loan
agreements were ultra vires. These findings resolved the dispute correctly
before the court, specifically: what effect the passing of RNMA I’s wind-up
period had upon RPI’s authority to issue the January 2017 capital call or
enter into the July 2017 loan agreements. The court’s findings—that
RNMA I remained in a wind-up period and that the January 2017 capital
call and July 2017 loan agreements were ultra vires and not proper
winding-down acts—made it unnecessary to resolve the issues raised by
IMH. The court, therefore, did not err by failing to address the method and
manner of RNMA I’s liquidation and the priority of repayment to MRH
Lending. The court’s decision not to oversee RNMA I’s windup does not
leave the partners without access to that remedy. If one or more partners
wish to seek judicial supervision, they may do so in New Mexico. See N.M.
Stat. Ann. § 54-2A-803(D) (upon request by any partner, a New Mexico state
court may supervise windup if a limited partnership does not have a
general partner following dissolution or for other good cause).

B. Beck Waived the Argument that the Limited Partners Merely Started
   RPI’s Removal.

¶17            Concerned about the collateral consequences of RPI’s
removal, Beck cross-appeals and argues the superior court erred by finding
that the limited partners removed RPI as RNMA I’s general partner rather
than merely beginning removal procedures. After Beck notified the receiver

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                           Decision of the Court

that the limited partners had exercised their right to remove RPI, he
requested that the court order RPI take no further action as a general
partner. He specifically asserted that RPI had been removed as RNMA I’s
general partner. In a minute entry filed in November 2019, the court granted
Beck’s request and found that RPI had been removed as general partner.
Because Beck did not appeal that ruling, he waived the argument and we
lack jurisdiction to consider it. Edwards v. Young, 107 Ariz. 283, 284 (1971)
(perfecting appeal within the time prescribed is jurisdictional). Thus, the
court’s finding remains the law of the case and governs throughout the
case’s later proceedings. See Dancing Sunshines Lounge v. Indus. Comm’n of
Ariz., 149 Ariz. 480, 482 (1986).

                              CONCLUSION

¶18          We affirm. On balance, Beck is the successful party and may
recover his taxable costs after complying with Arizona Rule of Civil
Appellate Procedure 21.

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

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