Court Opinion

ID: 5126021
Source: CourtListenerOpinion
Date Created: 2021-11-15 21:02:44.838855+00
Date Added: 2024-06-11T08:22:53.787481
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

   LINDA K. HARGRAVE, AS TRUSTEE OF THE LONSOME HAWK
        TRUST, U/T/D AUGUST 16, 2006, Plaintiff/Appellant,

                                         v.

   SELECT PORTFOLIO SERVICING, INC., et al., Defendants/Appellees.

                              No. 1 CA-CV 20-0567
                               FILED 11-2-2021

            Appeal from the Superior Court in Maricopa County
                           No. CV2019-010655
               The Honorable Christopher A. Coury, Judge

                                   AFFIRMED

                                    COUNSEL

Kelly McCoy PLC, Phoenix
By Matthew J. Kelly, Walid A. Zarifi
Counsel for Plaintiff/Appellant

Quarles & Brady LLP, Phoenix
By Coree E. Neumeyer, Daniel G. Roberts
Counsel for Defendants/Appellees
               HARGRAVE v. SELECT PORTFOLIO, et al.
                      Decision of the Court

                        MEMORANDUM DECISION

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

P E R K I N S, Judge:

¶1            Linda K. Hargrave appeals the superior court’s order
granting summary judgment to Select Portfolio Servicing, Inc. (“Select”).
For the following reasons, we affirm.

           FACTUAL AND PROCEDURAL BACKGROUND

¶2            When reviewing entry of summary judgment, we view the
facts in the light most favorable to Hargrave. See Stramka v. Salt River
Recreation, Inc., 179 Ariz. 283, 284 (App. 1994). Around September 2018,
Hargrave requested mortgage assistance, seeking relief from her monthly
payments. Later, Select took over Hargrave’s loan servicing, including her
request for mortgage assistance. Hargrave began making partial payments
on the loan, purportedly on advice from her previous lender.

¶3            Hargrave contends Select recommended she stop making
payments to expand the range of loan assistance options available to her.
The record contains no such communication from Select. On the contrary,
many of Select’s letters to Hargrave instructed her that she remained
“obligated to make all future account payments as they come due, even
while [Select] is evaluating the account for [mortgage assistance
programs].” Hargrave also continued to receive past-due notices from
Select while they evaluated her mortgage assistance application.

¶4           Over several months, Select regularly requested, and
Hargrave provided, financial information needed to evaluate her
application. Select determined Hargrave was ineligible for a loan
modification based on the information she provided. Select instead offered
Hargrave a payment plan that would allow her to remain in and keep her
home. The plan required Hargrave to make regular mortgage payments
plus substantial catch-up payments for twelve months to bring her
mortgage out of default.

                                    2
                HARGRAVE v. SELECT PORTFOLIO, et al.
                       Decision of the Court

¶5           Hargrave did not accept Select’s offer of a modified payment
plan. One week after offering the plan, Select notified Hargrave that it
scheduled a foreclosure sale of the property.

¶6            Hargrave filed a complaint in superior court three days before
the foreclosure sale, alleging seven causes of action: (1) declaratory relief;
(2) violation of A.R.S. § 33-420(A); (3) fraud; (4) consumer fraud; (5)
negligent misrepresentation/negligent non-disclosure; (6) defamation of
credit; and (7) a compound claim for breach of contract and breach of the
covenant of good faith and fair dealing. Select moved to dismiss each claim
under Rule 12(b)(6). The court granted Select’s motion to dismiss claim one
for mootness and claims two and six for failure to state a claim.

¶7            Select then filed, and the superior court granted, its motion
for summary judgment on the remaining claims, finding no genuine issue
of material fact existed to show Select violated the loan agreement. The
court described Select’s handling of Hargrave’s loan assistance request as
sometimes “sloppy and uncoordinated” but found “there is no admissible
evidence suggesting that [Select] dealt with [Hargrave] with anything other
than fairness and in good faith.” Hargrave timely appealed, and we have
jurisdiction under A.R.S. § 12-2101(A)(1).

                                DISCUSSION

¶8            We review a grant of summary judgment based on the record
made in superior court, but we determine de novo whether the entry of
summary judgment was proper. Nat’l Bank of Ariz. v. Thruston, 218 Ariz.
112, 115, ¶ 13 n.3 (App. 2008).

¶9             We first note that the only issue before us is Hargrave’s claim
for breach of the implied covenant of good faith and fair dealing. Arizona
Rule of Civil Appellate Procedure 13(a)(7) requires an appellant to provide
this court with “references to the record on appeal where the particular
issue was raised and ruled on, and the applicable standard of appellate
review with citation to supporting legal authority.” Hargrave identified the
issue on appeal as “[w]hether the trial court erred, as a matter of law, in
granting [Select] summary judgment on all of [Hargrave’s] remaining
claims.” Yet Hargrave does not include arguments addressing her other
claims. Hargrave thus waived those claims. See In re Est. of Sibley, 246 Ariz.
498, 501, ¶ 11 (App. 2018) (failure to develop and support arguments waives
the issue on appeal).

¶10            Every contract includes an implied covenant of good faith and
fair dealing. Maleki v. Desert Palms Pro. Props., L.L.C., 222 Ariz. 327, 333, ¶ 28

                                        3
                 HARGRAVE v. SELECT PORTFOLIO, et al.
                        Decision of the Court

(App. 2009). A breach of the implied covenant occurs when a party “do[es]
anything to prevent other parties to the contract from receiving the benefits
and entitlements of the agreement.” Wells Fargo Bank v. Ariz. Laborers,
Teamsters and Cement Masons Loc. No. 395 Pension Tr. Fund, 201 Ariz. 474,
490, ¶ 59 (2002). When analyzing whether a party breached the implied
covenant, “the relevant inquiry always will focus on the contract itself, to
determine what the parties did agree to.” Rawlings v. Apodaca, 151 Ariz. 149,
154 (1986).

¶11             Whether a party breached the covenant is usually a question
of fact for the jury, but summary judgment is proper when no reasonable
juror could find a breach occurred based on the evidence presented. See Keg
Rests. Ariz., Inc. v. Jones, 240 Ariz. 64, 77, ¶ 45 (App. 2016); see also Wells Fargo
Bank, 201 Ariz. at 20, ¶ 14.

¶12             Hargrave asserts Select breached the covenant “when it made
false representations and strung [Hargrave] along for nine months” and
offered an unaffordable payment plan. Hargrave does not, however, point
to anything in the loan agreement to argue that these actions denied her any
benefits of the loan agreement. She argues only that a jury, not the superior
court, should have decided the breach question. But Hargrave presented no
evidence from which a reasonable juror could find Select violated the terms
of the loan agreement or denied Hargrave of any of the loan agreement’s
benefits. See, e.g., Ramos v. Wells Fargo Home Mortg., No. CV-17-00316-PHX-
GMS, 2017 WL 3978701, at *3 (D. Ariz. Sept. 11, 2017) (lender defendant
“could not have breached the covenant of good faith and fair dealing
during negotiations for a [mortgage loan] modification absent the presence
of a contract that included, at the least, an implied right to subsequent
modification as a benefit of the contract”).

¶13          In fact, the loan agreement did not require Select to offer
Hargrave a payment plan that would decrease her monthly payments.
Select, and Hargrave’s previous lender, promised only to evaluate
Hargrave’s eligibility for such a program. And Select did just that when it
worked with Hargrave to cure her default, reviewed her financial
documents, offered her the opportunity to explain her hardship, and
presented her a way out of default via a structured repayment plan.

¶14          Hargrave also argues that Select’s alleged instruction to cease
making payments breached the implied covenant because she changed her
position and Select harmed her by presenting a plan that substantially
increased her monthly payments. None of these facts, however, created a
genuine issue of material fact sufficient to survive summary judgment.

                                         4
               HARGRAVE v. SELECT PORTFOLIO, et al.
                      Decision of the Court

Even assuming her allegation to be true, the superior court found Hargrave
did not present admissible evidence that Select’s instruction deprived her
of any benefit of the loan agreement. The court also found Hargrave
presented no evidence that she was financially capable of preventing the
home foreclosure, even if she kept making partial payments.

¶15           The superior court did not err by entering summary judgment
on Hargrave’s claim for breach of the implied covenant of good faith and
fair dealing. Both parties request attorneys’ fees under A.R.S. § 12-341.01.
We award Select reasonable attorneys’ fees on appeal upon its compliance
with ARCAP 21.

                              CONCLUSION

¶16          We affirm.

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

                                        5