Court Opinion

ID: 6497949
Source: CourtListenerOpinion
Date Created: 2022-07-05 19:02:12.17917+00
Date Added: 2024-06-11T08:51:34.441877
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

               JUDITH VINCENT BROWN, Plaintiff/Appellant,

                                         v.

    THE BANK OF NEW YORK MELLON, et al., Defendants/Appellees.

                              No. 1 CA-CV 21-0504
                                FILED 7-5-2022

            Appeal from the Superior Court in Maricopa County
                           No. CV2020-050262
                    The Honorable Sara J. Agne, Judge

                                   AFFIRMED

                                    COUNSEL

Teresa H. Foster PLLC, Phoenix
By Teresa H. Foster
Counsel for Plaintiff/Appellant

Klinedinst PC, San Diego, CA
By Teresa M. Beck, Neeru Jindal
Co-Counsel for Defendants/Appellees
              BROWN v. THE BANK OF NEW YORK, et al.
                       Decision of the Court

                        MEMORANDUM DECISION

Judge Jennifer M. Perkins delivered the decision of the Court, in which
Presiding Judge David D. Weinzweig and Judge Brian Y. Furuya joined.

P E R K I N S, Judge:

¶1           In a last-ditch effort to prevent her home’s foreclosure, Judith
Brown appeals the superior court’s order denying her relief. For the
following reasons, we affirm.

           FACTUAL AND PROCEDURAL BACKGROUND

¶2            Brown borrowed nearly $1 million in May 2004 to buy her
Paradise Valley home. She defaulted on that loan and declared Chapter 11
bankruptcy eight years later. Brown then declared Chapter 13 bankruptcy
in 2019 and still owes the Bank of New York Mellon (“Bank”) for mortgage
payments from July 2012 forward.

¶3            In January 2020, Brown sued the Bank for unjust enrichment
and sought declaratory relief to claim credit for supposed bankruptcy bond
payments made toward her loan balance. She also sought injunctive relief
to halt her home’s foreclosure. The superior court issued a temporary
restraining order preventing a trustee’s sale and requiring Brown to post a
$752,000 cash bond.

¶4            In April 2021, the superior court held a consolidated
evidentiary hearing on Brown’s request for a preliminary injunction and
the trial on the merits of Brown’s amended complaint. Brown denied
defaulting on her loan and instead claimed she did not know who to pay.
She claimed she paid $22,000 toward her loan since May 2012 but admitted
she did not send those payments to her loan servicer. As it turns out, Brown
confused a cash bond she posted under the temporary restraining order
with a “bankruptcy bond” that supposedly reduced her loan’s principal
balance. When asked whether she had seen the bankruptcy bond, Brown
replied, “I don’t think so. I don’t know.”

¶5           Brown attempted to qualify her other witness, William
McCaffrey, as a financial expert. But because Brown failed to properly
disclose McCaffrey as an expert, see Ariz. R. Civ. P. 26.1, the court did not
allow him to give expert opinions. McCaffrey testified as a fact witness that

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               BROWN v. THE BANK OF NEW YORK, et al.
                        Decision of the Court

he received monthly reports from the Bank’s “investor portal,” showing
Brown’s declining principal loan balance. He agreed the reports he received
did not reference a bankruptcy bond, but he was “very confident that [a]
bankruptcy bond is what’s reducing these payments over the last several
years.”

¶6            During McCaffrey’s testimony, Brown objected to Exhibit 28,
which included the Bank’s responses to Brown’s requests for admission.
Brown argued the Bank’s responses were untimely and it had thus
admitted her assertion that a bankruptcy bond reduced her principal loan
balance. But Brown served her requests by email, and the Bank did not
consent to service by email. See Ariz. R. Civ. P. 5(c)(2)(D) (requiring written
consent to service by email). The superior court admitted Exhibit 28 because
it promoted resolution on the case’s merits, and the court found that Brown
suffered no prejudice.

¶7             Natalie Boyd, an authorized representative for the loan
servicer, testified about Brown’s loan history and confirmed that her
company does not submit monthly reports containing loan-level
information to the Bank. Boyd was unfamiliar with the Bank’s investor
portal. Brown unsuccessfully renewed her objection to Exhibit 28, arguing
Boyd lacked the personal knowledge necessary to sign the Bank’s responses
to Brown’s requests for admission.

¶8             Boyd testified Brown’s loan had no associated bankruptcy
bond. She explained that the prospectus, a general document about loans
in various portfolios, contemplates a bankruptcy bond to cover potential
losses “[i]f specified in the related prospectus supplement.” And she noted
the prospectus supplement related to Brown’s loan does not specify a
bankruptcy bond. Boyd also testified that Brown’s loan history, which
included a $704,428.23 reinstatement amount and $997,243.29 in current
total principal owed, shows neither Brown nor a bankruptcy bond reduced
the principal amount owed. Boyd showed that the “reinstatement balance”
document was the apparent source of Brown and McCaffrey’s confusion: it
showed a declining balance but represented the anticipated trajectory of the
loan if Brown made her payments. In other words, the document did not
reflect actual payments, merely payments that should have occurred.

¶9           In July 2021, the superior court lifted the temporary
restraining order and denied Brown’s requests for relief. The court
concluded Brown did not establish the elements for a preliminary
injunction because she failed to show she was likely to succeed on the

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              BROWN v. THE BANK OF NEW YORK, et al.
                       Decision of the Court

merits of her unjust enrichment claim given she provided no evidence that
a bankruptcy bond covered the losses from her bankruptcy.

¶10           Although Brown filed her notice of appeal before the final
judgment, it was not premature. See ARCAP 9(c) (we treat as timely a notice
of appeal filed after the superior court’s decision order, but before entry of
an appealable final judgment). We have jurisdiction over Brown’s appeal
under A.R.S. § 12-2101(A)(1).

                               DISCUSSION

¶11         In support of her appeal, Brown offers us only conclusory
arguments with no citation to legal authority, hyperbolic attacks, and
demands that we reweigh evidence. We are not persuaded.

¶12            Brown contends the superior court erred: (1) by admitting the
Bank’s responses to her requests for admission because they were untimely,
and Boyd lacked personal knowledge to sign them; and (2) “in rejecting the
uncontroverted testimony from McCaffrey.” Brown argues these supposed
errors led to the court’s improper determination that she did not meet her
burden of proof.

¶13            Brown failed to sufficiently develop these arguments by
providing our court with “citation to legal authority.” ARCAP 13(a)(7)(A).
Without articulation of authority for why the court abused its discretion in
these evidentiary rulings, we cannot discern a basis to find error. “We are
not required to look for the proverbial needle in the haystack. We must
insist that a bona fide and reasonably intelligent effort to comply with the
rules be manifest.” In re Aubuchon, 233 Ariz. 62, 64, ¶ 6 (2013) (cleaned up).
Brown thus waived these arguments on appeal.

¶14           Brown argues the superior court applied the wrong burden of
proof and should have shifted the burden to the Bank. We disagree. Brown
asserted the unjust enrichment claim and had the burden to show “(1) an
enrichment, (2) an impoverishment, (3) a connection between the two, (4)
the absence of justification for the enrichment and impoverishment and (5)
the absence of any remedy at law.” Mousa v. Saba, 222 Ariz. 581, 588, ¶ 29
(App. 2009). She never met her burden because she never proved the
phantom bankruptcy bond existed. Boyd testified there was no bankruptcy
bond, and the court rejected McCaffrey’s testimony as not credible. See
Nutek Info. Sys., Inc. v. Ariz. Corp. Comm’n, 194 Ariz. 104, 113, ¶ 39 (App.
1998) (we will not reassess witness credibility on appeal).

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              BROWN v. THE BANK OF NEW YORK, et al.
                       Decision of the Court

¶15          Brown ineffectively counters by accusing Boyd of committing
perjury and the Bank of spoliation of evidence because it did not provide
her evidence of a bankruptcy bond that never existed. Brown’s briefs offer
nothing to support her perjury and spoliation accusations beyond
hyperbole and speculation. We reject Brown’s baseless accusations. The
superior court did not err in relying on Boyd’s testimony—and Brown’s
lack of evidence—to conclude no bankruptcy bond existed. The record
supports the court’s resulting rulings denying Brown her requested relief.
Brown did not prevail and is thus not entitled to the fees and costs she
requested.

                                  Sanctions

¶16            When a party is represented, Arizona Rule of Civil Procedure
11 requires an attorney of record to sign all pleadings, motions, and papers
she files with the court. The signature verifies “that to the best of the
person’s knowledge, information, and belief formed after reasonable
inquiry,” the document is well grounded in fact and is warranted by
existing law or a good faith argument for the extension, modification, or
reversal of existing law. Ariz. R. Civ. P. 11(b). When a pleading is signed in
violation of this rule, the court may impose sanctions “on the person who
signed it, a represented party, or both,” id. at (c), “when: (1) there was no
reasonable inquiry into the basis for a pleading or motion; (2) there was no
chance of success under existing precedent; and (3) there was no reasonable
argument to extend, modify or reverse the controlling law.” Villa De Jardines
Ass’n v. Flagstar Bank, FSB, 227 Ariz. 91, 96, ¶ 13 (App. 2011) (quoting
Wolfinger v. Cheche, 206 Ariz. 504, 510, ¶ 29 (App. 2003)). “In general, an
attorney violates Rule 11 by filing a document that he or she knows or
should know asserts a position that is insubstantial, frivolous, groundless
or otherwise unjustified.” Cal X-Tra v. W.V.S.V. Holdings, L.L.C., 229 Ariz.
377, 410, ¶ 113 (App. 2012) (cleaned up). We evaluate an attorney’s conduct
“under an objective reasonableness standard.” Id.

¶17            Similarly, our rules of appellate procedure allow us to
“impose sanctions on an attorney or a party” for submitting an appeal that
“is frivolous, or was filed solely for the purpose of delay.” ARCAP 25. We
may also sanction an attorney or a party for violating our appellate
procedural rules. Id. We “may impose sanctions that are appropriate in the
circumstances of the case, and to discourage similar conduct in the future.
Sanctions may include contempt, dismissal, or withholding or imposing
costs or attorneys’ fees.” Id.

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              BROWN v. THE BANK OF NEW YORK, et al.
                       Decision of the Court

¶18           We impose sanctions here under Rule 11 and ARCAP 25,
awarding the Bank part of its reasonable attorneys’ fees on appeal upon
compliance with ARCAP 21, to be paid jointly and severally by Brown and
her counsel, Teresa Foster. Ms. Foster’s briefs are rife with unsubstantiated
allegations and her legal theory deceptively conflates the prospectus and
prospectus supplement. The applicable supplement, which Foster failed to
identify, made zero mention of a bankruptcy bond. Foster’s conflation
inspired her allegations that the Bank possessed but destroyed evidence of
the bankruptcy bond and that Boyd perjured herself by testifying that the
bond did not exist. We applied waiver to Foster’s other arguments, supra
¶¶ 12–13, because she cited little to no legal authority. We also forward this
decision to the State Bar of Arizona to determine whether Foster violated
any rules of professional conduct.

¶19          As the prevailing party, the Bank is also entitled to its
reasonable costs, upon compliance with ARCAP 21.

                               CONCLUSION

¶20           We affirm.

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

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