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Whitmor Capital Management, LLC v. Park

Court of Appeals of Arizona, First Division, Department C

July 9, 2013

sWHITMOR CAPITAL MANAGEMENT, LLC, a Massachusetts limited liability company, Plaintiff/Appellant,
JAE S. PARK and HOLLIE H. PARK, husband and wife, Defendants/Appellees.

(Not for Publication – Rule 28, Arizona Rules of Civil Appellate Procedure)

Appeal from the Superior Court in Maricopa County Cause No. CV2010-028122 The Honorable Lisa Daniel Flores, Judge.

Ryley Carlock & Applewhite Phoenix by Kara A. Ricupero Kevin R. Heaphy Attorneys for Plaintiff/Appellant.

Pak & Moring PLC Scottsdale by James L. Pak Thomas S. Moring Attorneys for Defendants/Appellees



¶1 Whitmor Capital Management, LLC ("Whitmor") appeals from the trial court's dismissal of Whitmor's complaint for breach of contract against Jae S. Park and Hollie H. Park ("the Parks"). Whitmor contends that the court erred in dismissing the complaint and abused its discretion in awarding attorneys' fees to the Parks. For the following reasons, we affirm.


¶2 In 2008, the Parks executed a Construction Loan Note for $1, 170, 000 in future advances through GMAC Mortgage LLC (f/k/a GMAC Mortgage Corporation) ("GMAC"). The Parks obtained the loan to pay off an existing loan they used to purchase property located in Scottsdale, Arizona (the "property") and to construct a home on that property. The Parks secured the loan with a deed of trust on the property. The Parks defaulted on the loan before they began construction on the home.

¶3 On February 26, 2010, GMAC assigned its interest under the deed of trust and the loan to Whitmor. The trustee then conducted a duly noticed trustee's sale under the terms of the deed of trust and Arizona law, conveying the property to Whitmor, which made a credit bid. Whitmor then filed a complaint against the Parks for the deficiency balance, claiming breach of contract. The Parks answered the complaint and then filed a third-party complaint against GMAC for breach of contract and breach of covenant of good faith and fair dealing.

¶4 In December 2011, this Court issued an opinion in M & I Marshall & Ilsley Bank v. Mueller, 228 Ariz. 478, 269 P.3d 1135 (App. 2011), interpreting Arizona's anti-deficiency statute, Arizona Revised Statutes ("A.R.S.") section 33-814(G) (West 2013).[1] This Court held that the statute's requirement that property be "limited to and utilized for either a single one-family or a single two-family dwelling" is satisfied if the borrower purchased the property with the intent of constructing a dwelling and occupying it when completed. See A.R.S. § 33-814(G); M & I Marshall, 228 Ariz. at 480, ¶ 11, 268 P.3d at 1137. Based on this decision, the Parks moved to dismiss Whitmor's complaint, arguing that § 33-814(G) barred Whitmor's deficiency claim. The Parks asserted that they took out a loan intending to build a dwelling and occupy it upon its completion. In support, the Parks cited the loan documents Whitmor referenced in the complaint and attached to their motion a copy of the Loan Application, which indicated the residence would be the Parks' primary residence upon completion. Whitmor agreed that the M & I Marshall decision disposed of its claim, but moved to stay the proceedings pending review of the M & I Marshall decision.

¶5 On May 31, 2012, the trial court denied Whitmor's motion to stay and dismissed its complaint with prejudice. The court found that pursuant to M & I Marshall, "the anti-deficiency provisions of A.R.S. § 33-814 preclude recovery for any alleged deficiency owed."

¶6 After the court dismissed Whitmor's complaint, the Parks submitted their Application for Attorneys' Fees and Costs. In their application, the Parks contended that all the factors courts consider in awarding attorneys' fees favored awarding fees. Specifically, the Parks argued that Whitmor's claim had no merit, they had prevailed on Whitmor's only claim, Whitmor had not presented a novel issue, and granting fees would not discourage other parties from bringing valid claims. Whitmor responded that its claim had merit and the remaining factors weighed against awarding the Parks their attorneys' fees. Based on the Parks' application, the court awarded them $7, 955 in attorneys' fees. However, the court did not allow the Parks the fees associated with their third-party complaint against GMAC.

¶7 Whitmor timely appeals. We have jurisdiction under A.R.S. ยง ...

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