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BMO Harris Bank N.A. v. Wildwood Creek Ranch, LLC

Court of Appeals of Arizona, First Division

January 16, 2014

BMO HARRIS BANK N.A., as Successor to M&I Marshall & Ilsley Bank, Plaintiff/Appellant,
v.
WILDWOOD CREEK RANCH, LLC; SHAUN F. RUDGEAR, and KRISTINA B. RUDGEAR, as husband and wife, Defendants/Appellees.

Appeal from the Superior Court in Maricopa County No. CV2011-021586 The Honorable Colleen French, Judge Pro Tempore

Stinson Morrison Hecker LLP, Phoenix By Jeffrey J. Goulder Counsel for Plaintiff/Appellant

Kercsmar & Feltus PLLC, Scottsdale By Geoffrey S. Kercsmar, William T. Luzader and Julia A. Guinane Counsel for Defendants/Appellees

Presiding Judge Andrew W. Gould delivered the opinion of the Court, in which Judge Michael J. Brown joined and Judge Donn Kessler specially concurred.

OPINION

GOULD, Judge

¶1 BMO Harris Bank ("BMO") appeals the trial court's grant of partial summary judgment in favor of Wildwood Creek Ranch, LLC ("Wildwood"), and Shaun and Kristina Rudgear ("the Rudgears"). In making its ruling, the trial court relied on M&I Marshall & Ilsley Bank v. Mueller, 228 Ariz. 478, 268 P.3d 1135 (App. 2011), and concluded the Rudgears' intent to build a home on the Property protected them from a deficiency judgment under Arizona Revised Statute ("A.R.S.") section 33-814(G) (Supp. 2012).[1] Because we find that A.R.S. § 33-814(G) does not apply to vacant land, we reverse and remand to the trial court for entry of partial summary judgment in favor of BMO.

FACTUAL AND PROCEDURAL HISTORY

¶2 In March 2006, Wildwood obtained a $296, 200 loan ("the Loan") through BMO's predecessor in interest, M&I Marshall and Ilsley Bank. The Loan was secured by a deed of trust on an unimproved, vacant lot ("the Property"). The Rudgears personally signed the mortgage note, apparently on behalf of Wildwood, a limited liability company of which they are the sole members. The Rudgears also personally guaranteed the Loan.

¶3 The Loan was renewed in 2009, extending its maturity date to 2011. However, in April 2011, both Wildwood and the Rudgears defaulted on their obligations. BMO foreclosed on the Property through a trustee's sale and thereafter sued Wildwood and the Rudgears to obtain a deficiency judgment in the amount of the unpaid balance of the Loan.

¶4 Significantly, at no time was there any construction on the Property; it remained vacant throughout the term of the Loan until the time of the trustee's sale.

¶5 The parties cross-moved for partial summary judgment on all issues relating to the Rudgears' deficiency liability. The Rudgears argued that as a matter of law BMO was precluded from recovering the deficiency because they intended to build a single one-family dwelling on the Property. The Rudgears submitted affidavits avowing it was their intent to build a home on the Property and occupy it as their primary residence. In response, BMO offered evidence that the Rudgears owned three separate parcels, each of which they purportedly intended to use as their "primary residence."

¶6 The trial court granted summary judgment for Appellants. Relying on Mueller, the court determined that no material evidence contradicted the Rudgears' affidavits, and that summary judgment was appropriate because the affidavits showed that the Rudgears intended to utilize the vacant Property as a single one-family dwelling. BMO timely appealed. We have jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution and A.R.S. § 12-2101(A)(1) (Supp. 2012).

STANDARD OF REVIEW

¶7 Summary judgment is appropriate if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Ariz. R. Civ. P. 56(a). We review a grant of summary judgment de novo and "view[] the evidence and reasonable inferences in the light most favorable to the party opposing the motion." Andr ...


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