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Mae v. Laruffa

United States District Court, D. Arizona

February 20, 2015

Fannie Mae, Plaintiff,
v.
Anthony P. Laruffa, et al., Defendants.

ORDER

RANER C. COLLINS, Chief District Judge.

Before the Court are Magistrate Judge Bruce G. Macdonald's Reports and Recommendations ("R&R") (Docs. 170-171). Defendants have both objected to (Doc. 170) and Defendant Grassia[1] has also objected to (Doc. 171). Pursuant to LR Civ. 72.2(a) and F.R.Civ. P. Rule 72, and after conducting a de novo review, the Court accepts and modifies the Magistrate Judge's Recommendations as follow.

Summary Judgment (Doc. 171)

Defendant Grassia objects to the Magistrate Judge's Report and Recommendation (Doc. 171) granting in part and denying in part Plaintiff's Motion for Summary Judgment (Doc. 146). For the purposes of addressing this portion of the objections, the Court hereby adopts the Factual Background provided in (Doc. 171). The Court considered (Doc. 146), (Docs. 151-152), (Docs. 154-155), (Docs. 156-157), (Doc. 158), (Doc. 169), (Doc. 171) and (Doc. 174) in coming to the following determination.

Plaintiff avers that Magistrate Judge Macdonald erred when he disregarded Defendant Grassia's conflicting statement of facts. Specifically, Defendant Grassia argues that the following facts and arguments create genuine issues of material fact precluding a grant of summary judgment. Defendant Grassia argues that: 1) the Deed of Trust secured a non-recourse loan, meaning Defendant Grassia is not liable for the mere non-payment of the loans; 2) Defendant LaRuffa lacked the authority to transfer assets such that, as a legal nullity, the transfer is not an "Event of Default"; and 3) Defendant Grassia's bankruptcy filings are not an "Event of Default."

Pursuant to F.R.Civ.P. Rule 72(b)(3), the Court "must determine de novo any part of the magistrate judge's disposition that has been properly objected to. The district judge may accept, reject, or modify the recommended disposition." Here, upon performing a de novo review of Defendant Grassia's arguments, the Court accepts the Magistrate Judge's Report and Recommendation on the issue of summary judgment and finds that:

1) Defendant Grassia assumed the obligations of the 2002 and 2007 Loan Documents as a "New Key Principal." See Pls.'s SOF (Doc. 147), Exh. "I" at 4-10. Defendant Grassia executed the 2007 Note which contained an "Acknowledgement and Agreement of Key Principal to Personal Liability for Exceptions to Non-Recourse Liability." See Pls.'s SOF (Doc. 147), Exh. "D" at 10-12. This document included language demonstrating the intention of the parties to hold Defendant Grassia liable for the full amount of the loans. Accordingly, the Court finds that there was a valid and enforceable contract between the parties.

2) The Borrower[2] transferred the Deed of Trust to Larry Todt; this transfer was recorded on December 15, 2011. The transfer of the deed of trust constitutes an "Event of Default" under the 2002 and 2007 Deeds of Trust, triggering personal liability under the Loan Documents. As such, the Court finds that there has been a breach of the contract.

3) Finding that the transfer of the deed of trust constitutes a breach of contract, the Court need not reach whether Defendant Grassia's bankruptcy filings are an "Event of Default."

As such, the Court adopts the Magistrate Judge's recommendation to grant Plaintiff summary judgment to the extent that there is a contract between the parties, and a breach thereof. Further, the Court adopts Magistrate Judge's recommendation to deny Plaintiff summary judgment to the extent that there is a question of material fact regarding the fair market value of the property at the time of the trustee's sale.

Expert Evidence Issues (Doc. 170)

Both Defendants object to (Doc. 170) the Magistrate Judge's R&R addressing the preclusion of factual and expert witnesses. (Doc. 171). Further, Defendants ask for clarification as to who can testify and in which manner.

For the purposes of addressing this portion of the objections, the Court hereby adopts the Factual Background provided in (Doc. 170). The Court considered (Doc. 129), (Doc. 168) and (Doc. 171) in coming to the following determination.

In (Doc. 129), Plaintiff moved this Court to preclude Defendants' witnesses from testifying and or presenting expert evidence after Defendants failed to comply with the F.R.Civ.P. Rules 16, 26(a)(2), ...


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