Court of Appeals of Arizona, Second Division, Department B
LOUIS L. JOHNSON, JR., dba BUTCH JOHNSON FARMS, Plaintiff/Appellee/ Cross-Appellant,
ROBERT M. BINKLEY and TAMMY L. BINKLEY, husband and wife, Defendants/Appellants/ Cross-Appellees.
Not for Publication Rule 28, Rules of Civil Appellate Procedure.
APPEAL FROM THE SUPERIOR COURT OF COCHISE COUNTY Cause No. CV201000228 Honorable James L. Conlogue, Judge.
Scott MacMillan Baker, P.C. By Scott MacMillan Baker Tucson Attorneys for Plaintiff/Appellee/ Cross-Appellant.
Stachel & Associates, P.C. By Robert D. Stachel, Jr. and Jennie McLaughlin Sierra Vista Attorneys for Defendants/Appellants/Cross-Appellees.
KELLY, Presiding Judge.
¶1 Robert and Tammy Binkley appeal from the trial court's judgment in favor of Louis Johnson, Jr., in which the court concluded the Binkleys had converted property belonging to Johnson after their purchase of three contiguous parcels of farmland (the Farm) at a trustee's sale. The Binkleys argue the court erred by concluding: (1) the deed of trust did not encumber personal property other than fixtures, (2) Johnson had not abandoned property left on the Farm, (3) storage containers, a fuel system, and fertilizer tanks were not fixtures, (4) Johnson owned corn grown by a tenant and stored on the land, and (5) the amount of corn converted was 420 tons. On cross-appeal, Johnson argues the trial court erred by: "analyzing the grain bins, elevator, and truck scale as a single unit" to conclude the granary was a fixture; concluding the grain bins, elevator, and truck scale were fixtures; and failing to award him attorney fees pursuant to A.R.S. § 12-341.01. We affirm.
Factual and Procedural Background
¶2 "We view the facts in the light most favorable to upholding the trial court's ruling." Hammoudeh v. Jada, 222 Ariz. 570, ¶ 2, 218 P.3d 1027, 1028 (App. 2009). In 2005, Johnson executed a promissory note in favor of J.P. Morgan Chase Bank secured by a deed of trust conveying Johnson's interest in the Farm. Thereafter, Chase Bank foreclosed on the property, and in December 2009, a trustee's sale was conducted, and the Binkleys purchased the bank's interest in the Farm.
¶3 In March 2010, Johnson filed a complaint alleging the Binkleys had converted machinery, equipment, and corn that remained on the Farm after the Binkleys had denied him access to the property. In response, the Binkleys alleged the disputed property no longer belonged to Johnson, citing language in the trustee's deed and bill of sale. Johnson filed a motion for summary judgment on the conversion claim and requested an evidentiary hearing. The court granted the motion, concluding the deed of trust and the trustee's sale had "conveyed no personal property other than fixtures." The court set an evidentiary hearing on damages.
¶4After a three-day trial, the court found that the Binkleys had permitted Johnson to remain on the Farm for approximately one month following the sale and that the parties had discussed personal property issues during that time. The court also found "the parties' relationship became strained when [Johnson] removed personal property from the Johnson Farm without authorization from . . . Robert Binkley. Plaintiff was thereafter excluded from the Johnson Farm." The court concluded Johnson had not abandoned any property by leaving the Farm, and further concluded he had not "abandon[ed] any personal property through any discussions he had with . . . Robert Binkley."
¶5 The trial court found, inter alia, that two storage containers, three bulk fuel tanks, and multiple steel and polyethylene ("poly") fertilizer tanks were personal property, and not fixtures. It found the Farm's granary, including its constituent parts, was a fixture. The court also found Johnson was the owner of approximately 420 tons of corn that had been left in grain bins on the Farm, with a value of $170.00 per ton.
¶6 The trial court entered final judgment in Johnson's favor for the converted corn and personal property. It denied Johnson's request for attorney fees.
I. Deed of Trust
¶7 The Binkleys first argue the trial court erred by concluding as a matter of law that the bank "had no interest in personal property under the Deed of Trust and the trustee sale conveyed no personal property other than fixtures." They contend the deed's reference to "a security interest in the rent and personal property" and its definition of "personal property" establish the deed encumbered "all fixtures and personal property." We review issues of contract interpretation de novo. Miller v. Hehlen, 209 Ariz. 462, ¶ 5, 104 P.3d 193, 196 (App. 2005).
¶8 The deed of trust included the following language:
Cross-Collateralization. . . . Trustor grants to Lender a Uniform Commercial Code security interest in the Personal Property and Rents.
Security Agreement. This instrument shall constitute a Security Agreement to the extent any of the Property constitutes fixtures, and Lender shall have all of the rights of a secured party under the Uniform Commercial Code as amended from time to time.
Definitions. . . . The words "Personal Property" mean all equipment, fixtures, and other articles of personal property now or hereafter owned by Trustor, and now or hereafter attached or affixed to the Real Property . . . .
¶9 Our purpose in interpreting a contract is to determine and enforce the intent of the parties. Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 152, 854 P.2d 1134, 1138 (1993). To determine intent, we look first to the plain meaning of the words in the context of the agreement as a whole. Grosvenor Holdings, L.C. v. Figueroa, 222 Ariz. 588, ¶ 9, 218 P.3d 1045, 1050 (App. 2009). When a provision is susceptible to only one reasonable interpretation, we will apply it according to its terms. IB Prop. Holdings, LLC v. Rancho Del Mar Apartments Ltd P'ship, 228 Ariz. 61, ¶ 16, 263 P.3d 69, 74-75 (App. 2011).
¶10 The parties do not dispute the trial court's finding that the deed of trust contained the only security agreement between Johnson and Chase Bank. We agree the language in the document did not create a security interest in personal property other than fixtures. The Binkleys propose that the definition of personal property in the deed (and identical language used in the subsequent trustee's deed and bill of sale to the Binkleys) should be interpreted to create a security interest in "personal property 'now or hereafter owned by Trustor, ' and personal property 'now or hereafter attached or affixed to the Real Property.'" However, that interpretation would conflict with the deed's security agreement provision, which provides the deed "shall constitute a Security Agreement to the extent any of the Property constitutes fixtures." We must harmonize the definition of "personal property, " as it applies to the creation of a security interest, with the security agreement's express statement that it encumbers only fixtures. See ...