Fleming v. Tanner

          Appeal from the Superior Court in Maricopa County No. CV2015-007971 The Honorable Lori Horn Bustamante, Judge

          Stein and Stein, PC, Mesa By Henry M. Stein, Amy R. Wilson Counsel for Plaintiffs/Appellants/Cross-Appellees

          Joshua Carden Law Firm, PC, Scottsdale By Joshua W. Carden Counsel for Defendant/Appellee/Cross-Appellant

          Richter Law, PLLC, Scottsdale By Shawn Richter Counsel for Defendant/Appellee

          Judge Kent E. Cattani delivered the opinion of the Court, in which Acting Presiding Judge Paul J. McMurdie and Judge Samuel A. Thumma joined.

          OPINION

          CATTANI, Judge

         ¶1 This case involves a disagreement over an $800, 000 loan by Hayden R. and LaDonna M. Fleming to their daughter Jessica Tanner and her then-husband, Glen Tanner.^[1] The Flemings settled their dispute with their daughter but pursued this breach of contract case against Glen. The Flemings sought damages of $50, 000 in principal and $184, 721.92 in accumulated interest, plus attorney's fees and costs.

         ¶2 Following a bench trial, the superior court awarded the Flemings $50, 000, but denied their claim for interest and their request for attorney's fees. The Flemings appeal from that ruling. Glen cross-appeals, challenging the $50, 000 award as well as the superior court's rejection of his statute of limitations defense and his counterclaim seeking an offset for the amount Jessica paid on the loan. We conclude that the superior court correctly denied the Flemings' claim for interest because the original oral agreement between the Flemings and the Tanners contemplated no interest at all. As to Glen's cross-appeal, we vacate the award of $50, 000 payable by Glen to the Flemings because Jessica already paid enough to satisfy the debt in full. We affirm in all other respects.

         FACTS AND PROCEDURAL BACKGROUND

         ¶3 In May 2007, the Flemings agreed to loan the Tanners $800, 000 to assist them with the purchase of a home in Maricopa County. The agreement was not in writing, and there was no discussion of interest on the loan or a specified repayment schedule. The Tanners agreed to repay the loan at some point in the future, and the parties agreed that the loan would be due and payable upon demand by the Flemings.

         ¶4 The Tanners made three payments to the Flemings totaling $340, 000 between November 2008 and May 2011, sometimes in response to the Flemings' request for partial repayment. In May 2009, Glen transferred title to another property (the "Terravita House") to the Flemings, subject to a deed of trust and $360, 000 promissory note. When the Flemings sold the Terravita House in 2013, Glen released the deed of trust and the Flemings credited a $360, 000 payment on the loan. All told, the Flemings credited the Tanners with having paid a total of $700, 000.

         ¶5 In July 2015, the Flemings sued both Glen and Jessica (who by then were divorced), seeking the remaining principal balance of $100, 000 and 10% interest for the life of the loan.^[2] In June 2016, the Flemings and Jessica entered a written settlement agreement, with Jessica agreeing to pay, as relevant here, what they characterized as $50, 000.00 in principal and $110, 567.76 in interest on the loan. The Flemings and Jessica subsequently signed a written addendum, amending their settlement agreement to provide that if the court were to conclude that interest was not awardable on the loan, the Flemings would refund the interest portion of the settlement amount.

         ¶6 Glen filed an answer asserting that the Flemings' suit was barred by the statute of limitations. He also included a cross-claim against Jessica seeking indemnity for her half of the loan and a counterclaim against the Flemings related to the promissory note on the Terravita House. After granting the Flemings' motion for summary judgment on Glen's counterclaim, the superior court conducted a two-day bench trial, addressing the Flemings' claim for breach of contract and interest on the loan, Glen's statute of limitations defense, and Glen's cross-claim against Jessica. The superior court found that the loan was payable on demand and that demand was made in April 2015, that Glen breached by failing to repay the loan following the demand, that Glen was not entitled to any credit for principal paid by Jessica, and that the Flemings were entitled to $50, 000-the amount of unpaid principal. The court also ruled that Glen was not entitled to relief on his cross-claim against Jessica. The court declined to award interest to the Flemings, concluding that the parties had not agreed that the loan would bear interest. Additionally, the court declined to award the Flemings attorney's fees.

         ¶7 The Flemings moved for a new trial regarding the denial of their claim for interest and the denial of their request for attorney's fees under A.R.S. § 12-341.01. The court clarified that the Flemings were awarded taxable costs, but otherwise denied the Flemings' motions. In September 2017, the court entered final judgment in favor of the Flemings for $50, 000 and in favor of Jessica on Glen's cross-claim.

         ¶8 The Flemings timely appealed, and Glen timely cross- appealed. We have jurisdiction under ...