In re the Matter of: JEAN M. MONROE, Plaintiff/Appellee,
ARIZONA ACREAGE LLC, et al., Defendants/Appellants. BOYD FAMILY PARTNERSHIP and JEAN M. MONROE, Plaintiffs/Appellees,
SUNNY LAKES RANCHOS LLC, et al., Defendants/Appellants.
from the Superior Court in Mohave County Nos.
S8015CV201400668 S8015CV201400669 The Honorable Lee Frank
Lundberg & Elias, PLLC, Bullhead City By T'shura-Ann
Elias Counsel for Plaintiffs/Appellees
Johnson & Gubler, P.C, Las Vegas, Nevada By Matthew L.
Johnson, Russell G. Gubler Counsel for Defendants/Appellants
Presiding Judge Lawrence F. Winthrop delivered the opinion of
the Court, in which Judge Maria Elena Cruz and Chief Judge
Samuel A. Thumma joined.
These consolidated appeals arise from two class action
lawsuits to foreclose on real property in Mohave County,
Arizona. Defendants Arizona Acreage LLC ("AZ
Acreage") and Sunny Lakes Ranchos LLC ("Sunny
Lakes") (collectively "Appellants") appeal the
superior court's denial of their cross-motions for
partial summary judgment and grant of partial summary
judgment in favor of representative plaintiffs Jean M. Monroe
and Boyd Family Partnership (collectively
"Appellees"). Co-defendant Leonard Mardian
("Mardian") also appeals the superior court's
grant of judgment on the pleadings in favor of Appellees. For
the following reasons, we hold: (1) the six-year statute of
limitations in Arizona Revised Statutes ("A.R.S.")
section 47-3118(A) (2019)controls the underlying debts, the deeds
of trust, and the guaranties signed by Mardian; (2) Appellees
had standing to seek foreclosure of the deeds of trust; (3)
the certification of each class satisfied the requirements
for initiating a foreclosure action as outlined in the deeds
of trust; and (4) Nevada Revised Statutes
("N.R.S.") section 645B.340 did not apply to bar
Appellees' claims. We further reject Appellants'
arguments concerning issue and claim preclusion. Because
Appellees properly demonstrated they were entitled to
judgment as a matter of law, we affirm the judgments entered.
AND PROCEDURAL HISTORY
In September 2006, Sunny Lakes executed a promissory note in
favor of multiple lenders in exchange for $5, 000, 000. Over
one hundred individuals and entities contributed money to the
Sunny Lakes loan, and no lender contributed more than
fourteen percent of the total loan value. The note was
secured by a deed of trust encumbering several acres of
undeveloped land in Mohave County ("Plot A"). In
addition to the note and deed of trust, Mardian executed a
guaranty agreement, promising to repay the loan in the event
Sunny Lakes failed to do so. The execution of the promissory
note was conditioned on Mardian providing a personal guaranty
on the note.
In August 2007, AZ Acreage executed a promissory note in
favor of multiple lenders in exchange for $4, 000, 000. Over
eighty individuals and entities - many of whom contributed to
the Sunny Lakes loan-contributed money to the AZ Acreage
loan. The loan was secured by a deed of trust
encumbering another plot of undeveloped land in Mohave County
("Plot B"). No lender contributed more than
twenty-one percent to the total loan value. Mardian also
executed a guaranty agreement as a material condition for
execution of the AZ Acreage loan.
Both Sunny Lakes and AZ Acreage made payments on their
respective notes until July 2008, when both companies stopped
making payments. In late June 2014, believing the statute of
limitations was just days from expiration, Appellees filed
two class action lawsuits to foreclose on Plot A and Plot B
and recover any resulting deficiency. Although many of the
investors contributed money to both promissory notes, some
contributed towards one note but not the other - resulting in
two different classes. Sunny Lakes and Mardian were named
defendants in one lawsuit (the "Boyd
Case"); and AZ Acreage and Mardian were named defendants
in the other lawsuit (the "Monroe Case").
Appellants moved to dismiss each case pursuant to Arizona
Rule of Civil Procedure ("Rule") 12(b)(6), arguing
that the four-year statute of limitations under A.R.S. §
12-544(3) applied and had expired and that Appellees lacked
standing because they did not obtain the requisite fifty-one
percent ("51%") majority agreement outlined in the
deeds of trust to declare a default and bring a judicial
foreclosure action. The superior court denied Appellants'
motions and later certified the classes.
Mardian then moved for summary judgment in both cases,
arguing the four-year statute of limitations period in A.R.S.
§ 12-544(3) barred the claim against him for enforcement
of the guaranty contracts. Both sides briefed the issue and
presented oral argument, and the court denied the motions.
Thereafter, Appellees moved for partial summary judgment to:
(1) establish the dollar amount due under each note; (2)
establish that the classes were entitled to payment under the
notes; (3) order a sheriff's sale of Plot A and Plot B;
and (4) establish liability against each defendant for
payment of any deficiency that may arise. Appellants each
cross-moved for summary judgment, again arguing the claims
were barred by a four-year statute of limitations and
Appellants had failed to bring the actions in accordance with
the terms of the deeds of trust and controlling Nevada law.
In July 2018, the court granted the Appellees' motions in
part-reserving the issue of Mardian's liability to pay a
deficiency until after the properties were sold and a fair
market value hearing could be held. In its Rule 54(b) order,
the court determined Sunny Lakes owed $13, 870, 277.75 on its
promissory note plus interest, and AZ Acreage owed $10, 933,
666.62 on its promissory note plus interest. Sunny Lakes and
AZ Acreage timely appealed the superior court's order in
August 2018, and the appeals were consolidated.
While the first two appeals were pending, Plot A and Plot B
were sold at a sheriffs sale in September 2018. Appellants
and Mardian did not contest the sale price for either
property, and the court vacated the fair market value
hearing. Plot A sold for $80, 000, resulting in a deficiency
for Sunny Lakes. Plot B sold for $195, 000, resulting in a
deficiency for AZ Acreage.
A week later, Appellees moved for judgment on the pleadings,
arguing Appellants and Mardian admitted all the material
facts in the complaints and failed to show any viable defense
to their claims. Appellants and Mardian opposed the motions.
The court ultimately granted the motions and entered final
Rule 54(c) judgments in favor of Appellees. Mardian appealed
the judgments, and those appeals have been consolidated with
the previous appeals. We have jurisdiction pursuant to A.R.S.
The promissory notes, deeds of trust, and guaranties were all
executed in Nevada and include choice-of-law provisions
designating Nevada law as governing the agreements. We
therefore review the substantive issues according to the laws
of Nevada but apply Arizona law to resolve any procedural
issues. Ross v. Ross, 96 Ariz. 249, 251-52 (1964)
("Matters respecting the remedy, such as the bringing of
suits, admissibility of evidence, [and] statutes of
limitation, depend upon the law of the place where the suit
is brought.") (internal quotation omitted).
Appellants and Mardian raise three main arguments on appeal:
(1) the Appellees' claims are barred by the doctrines of
issue and claim preclusion; (2) the Appellees' claims are
governed by a four-year statute of limitations and,
accordingly, are untimely; and (3) the Appellees' claims
are barred because they failed to obtain written consent of
51% of the lenders before filing the lawsuits, as required by
the deeds of trust and by N.R.S. § 645B.340. We review
each issue below. I. Issue Preclusion and Claim
Preclusion Do Not Apply
Appellants argue the holding in related litigation,
Karayan v. Mardian, 690 Fed.Appx. 996 (9th
Cir. 2017) (mem. decision), under the doctrines of issue and
claim preclusion bars both class action lawsuits. Before the
superior court, however, Appellants only argued that the
Karayan decision should preclude one class member,
the Karayan Family Trust, from participating in the class.
Appellants never argued that Appellees as class
representatives should be barred from bringing suit, and we
will not consider the argument for the first time on appeal.
ARCAP 13(a)(7)(B); In re MH 2008-002659, 224 Ariz.
25, 27, ¶ 9 (App. 2010).
Statutes of Limitations
We review the application of each statute of limitations
de novo. Broadband Dynamics, LLC v. SatCom
Mktg., Inc., 244 Ariz. 282, 285, ¶ 5 (App. 2018).
We discuss the applicable limitations period for the deeds of
trust and guaranty agreements separately. A. The Judicial
Foreclosure Claims Were Timely Filed
Appellants failed to make payments on the notes starting in
July 2008. The subject lawsuits were filed on June 27, 2014.
Appellants contend the superior court erred by denying their
cross-motions for summary judgment, arguing that the
four-year limitations period under A.R.S. § 12-544(3)
applies to bar Appellees' claims. Appellees assert the