Lynaugh v. Bmo

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

LINDA V. LYNAUGH, Plaintiff/Appellant,

v.

BMO HARRIS BANK NA, et al., Defendants/Appellees.

No. 1 CA-CV 18-0013
FILED 1-31-2019

Appeal from the Superior Court in Maricopa County
No. CV 2016-017960
The Honorable Daniel J. Kiley, Judge

AFFIRMED

APPEARANCES

Linda V. Lynaugh, Phoenix
Plaintiff/Appellant

Stinson Leonard Street LLP, Phoenix
By Jeffrey J. Goulder, Michael Vincent
Counsel for Defendants/Appellees
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MEMORANDUM DECISION

Judge Michael J. Brown delivered the decision of the Court, in which
Presiding Judge Diane M. Johnsen and Judge Jennifer M. Perkins joined.

B R O W N, Judge:

¶1 Linda Lynaugh appeals the superior court’s orders (1)
granting summary judgment in favor of BMO Harris Bank, Marshall &
Ilsley Bank (“M&I”), Leann Walters, Sean Mahoney, Folks & O’Connor
PLLC, Larry Folks, and Carmen Ruff (collectively “Defendants”); (2)
awarding Defendants their attorneys’ fees; and (3) denying her Arizona
Rule of Civil Procedure (“Rule”) 60 motion requesting relief from the
summary judgment ruling. Finding no reversible error, we affirm.

BACKGROUND

¶2 In October 2007, Lynaugh entered a Home Equity Credit
Agreement with M&I (“the Loan”), which authorized a line of credit up to
$172,000 and was secured by a deed of trust on rental property she owned
(“the Property”). The term of the Loan was one year, with a “Termination
Date” of October 10, 2008. The Termination Date would automatically
renew for successive one-year terms unless M&I terminated the loan by
giving Lynaugh at least 30 days’ notice before the end of the first year or
“the annual anniversary of such date.” In such a case, the unpaid balance
would be “due and payable in full on the Termination Date.”

¶3 In 2011, BMO Financial Group (“BMO”) acquired M&I and
sent a notice of acquisition to M&I customers, including Lynaugh. By April
2012, Lynaugh’s loan payment receipts indicated her payments were
received by M&I as “[a] part of BMO Financial Group” and by October
2012, the receipts named only BMO.

¶4 On May 29, 2015, BMO informed Lynaugh it would not renew
the Loan and “[o]n October 11, 2015, all amounts owed . . . will be due and
payable in full. You will need to refinance or repay your entire outstanding
balance.” The letter also offered assistance with alternative financing
options and included a phone number if Lynaugh needed a pay-off letter.
In response, Lynaugh contended she “did not negotiate and enter an equity
loan with BMO”; instead, she had a 30-year loan with M&I, and if BMO
bought that contract, it could not “unilaterally rescind . . . or demand a new

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contract be entered.” In reply, BMO provided Lynaugh a copy of the Loan,
explaining it was an annually renewable home equity line of credit that
BMO, pursuant to the Loan’s terms, had decided not to renew.

¶5 Lynaugh did not refinance or pay the balance due on the
account by October 11, 2015. On January 26, 2016, BMO sent Lynaugh a
notice of default and right to cure, informing her that she owed $97,650.32,
which included a late charge of $4,902.42, and if she did not cure the default
by February 17, 2016, BMO “may foreclose upon the collateral pledged to
secure such line of credit by a non-judicial trustee’s sale.” The notice further
provided that partial payments “may be accepted,” but BMO reserved its
right to foreclose if the entire amount was not paid by the due date.

¶6 When Lynaugh did not pay the balance of the Loan by the
deadline, BMO referred the matter to the law firm of Folks & O’Connor for
foreclosure proceedings. On February 22, 2016, attorney Larry Folks
recorded a substitution of trustee and a notice of trustee’s sale of the
Property to be held on May 24, 2016, at Folks & O’Connor. The notice of
trustee sale was mailed to Lynaugh at the Property address and her mailing
address of record. Folks also sent Lynaugh a “Statement of Breach or Non-
Performance,” which stated the principal balance due and the manner in
which she could dispute the debt, as well as a separate attachment stating
the following:

If this sale is postponed for any reason–it is your
responsibility to determine the actual date and time of any
postponed sale. You may do this by personally appearing at
the time and place set for the original sale date or the
postponed sale date. You may also call our office to
determine postponed dates. However, to be certain, you
should personally appear at each scheduled sale.

¶7 At BMO’s direction, Folks postponed the trustee’s sale six
times between May 24, 2016, and December 13, 2016, while BMO and
Lynaugh exchanged numerous e-mails and letters discussing refinancing
options. Each time the sale was postponed, Folks gave notice by “public
declaration.” See Ariz. Rev. Stat. (“A.R.S.”) § 33-810(B) (“The person
conducting the sale may postpone or continue the sale . . . by giving notice
of the new date, time and place by public declaration at the time and place
last appointed for the sale.”).

¶8 Lynaugh never executed a new loan with BMO and stopped
responding to BMO communications after October 26, 2016. Consequently,

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BMO instructed Folks to move forward with the December 13 trustee’s sale,
and the Property was sold to a third party. Several hours after the sale,
Lynaugh filed a motion for temporary restraining order (“TRO”).1
Lynaugh then filed a complaint in the superior court alleging the following
causes of action against Defendants2: (1) “Frauds 1–7”; (2) “Fraud by
Concealment”; (3) Accounting; (4) Wrongful Trustee Sale; (5) Setting Aside
the Trustee’s Sale; (6) Slander of Title; (7) Quiet Title; and (8) “Further
Counts.”

¶9 Defendants filed a motion for summary judgment on all
claims. Lynaugh countered with her own motion, but the court struck it
for noncompliance with page limitations. Shortly thereafter, she filed a
response to Defendants’ motion. The superior court granted Defendants’
motion, finding in favor of Defendants on all claims. Lynaugh then filed
another motion for summary judgment that complied with page
limitations, as well as a motion to amend her complaint. The court denied
both motions because her request for summary judgment was moot and
amendment to her complaint would be futile. The court awarded
Defendants attorneys’ fees under the deed of trust and A.R.S. § 12-349.

¶10 Lynaugh appealed but then obtained a stay from this court to
pursue a Rule 60 motion challenging the summary judgment ruling based
on new evidence. The superior court denied the motion, stating that it
essentially argued no valid foreclosure process had taken place, an
argument barred under A.R.S. § 33-811(C). Lynaugh timely filed an
amended notice of appeal.

DISCUSSION

A. Summary Judgment

¶11 We review the superior court’s grant of summary judgment
de novo, viewing the evidence in the light most favorable to the non-

1 As far as the record reveals, no ruling was issued on Lynaugh’s
motion. Instead, in granting Defendants’ motion for summary judgment,
the superior court explained that Lynaugh “did not . . . deliver a copy of
[the TRO motion] to this Division or undertake any other action to obtain a
timely hearing on the merits of her request for injunctive relief. As a result,
no request . . . was ever presented . . . for consideration.”

2 12th Street Property Trust, the entity that acquired the Property as a
result of the trustee’s sale, was a named defendant but is not a party to this
appeal.

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moving party. Lee v. M & H Enters., Inc., 237 Ariz. 172, 175, ¶ 10 (App. 2015).
Summary judgment is appropriate if the moving party demonstrates that
“there is no genuine dispute as to any material fact and [it] is entitled to
judgment as a matter of law.” Ariz. R. Civ. P. 56(a). We review a court’s
decision denying a motion to amend a complaint for an abuse of discretion.
Hall v. Romero, 141 Ariz. 120, 124 (App. 1984).

¶12 Lynaugh argues the superior court prematurely granted
summary judgment because discovery had not been completed. The plain
language of Rule 56 allows parties other than the plaintiff to “move for
summary judgment at any time after the action is commenced.” Ariz. R.
Civ. P. 56(b)(2). Furthermore, Rule 56(d) permits a party to request
additional time for discovery if it “cannot present evidence essential to
justify its opposition,” but the request must include an affidavit

establishing specific and adequate grounds for the request
and addressing, if applicable, . . . (i) the particular evidence
beyond the party’s control; (ii) the location of the evidence;
(iii) what the party believes the evidence will reveal; (iv) the
methods used to obtain it; (v) an estimate of the time the
additional discovery will require; and . . . a good faith
consultation certificate.

Ariz. R. Civ. P. 56(d)(1)(A)-(B). Because Lynaugh did not request
additional time pursuant to Rule 56(d), she has waived her argument
that the summary judgment ruling was premature. Edwards v. Bd. of
Supervisors, 224 Ariz. 221, 224–25, ¶ 19 (App. 2010).

¶13 Lynaugh also contends the superior court improperly denied
her motion for leave to amend her complaint. In denying the motion, the
court concluded the amended complaint was futile because it “simply re-
urges claims that have already been resolved against [Lynaugh] as a matter
of law.” See First-Citizens Bank & Trust Co. v. Morari, 242 Ariz. 562, 567, ¶ 12
(App. 2017) (“A court does not abuse its discretion by denying a request to
amend if the amendment would be futile.”). Lynaugh asserts her amended
complaint would have cured deficiencies in her pleadings, but she does not
direct us to any specific allegations in the proposed amended complaint nor
explain how such allegations would have defeated summary judgment;
thus, this argument is waived. See MT Builders, L.L.C. v. Fisher Roofing, Inc.,
219 Ariz. 297, 304, ¶ 19 n.7 (App. 2008) (noting that arguments not
developed on appeal are generally waived). Moreover, as a practical
matter, Lynaugh’s motion to amend the complaint was moot because the

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court had already ruled that summary judgment in favor of Defendants was
proper, and Lynaugh offers no authority suggesting otherwise.

¶14 Addressing the merits, Lynaugh generally asserts the court
erred in granting summary judgment to Defendants because they “failed to
make a prima facie case, as they omitted critical evidence and even submitted
evidence that conflicted with their claimed rights to judgment.” Lynaugh
further asserts the court “selectively evaluat[ed] the case” and failed to
draw inferences in favor of Lynaugh even when the evidence she presented
“completely contradicted” the facts Defendants relied on. To the extent
Lynaugh’s briefing raises any specific assertions of error, we address them
below. 3

¶15 Lynaugh contests the superior court’s ruling on her claims for
wrongful trustee sale, setting aside the trustee’s sale, slander of title, and
quiet title. The court concluded that A.R.S. § 33-811(C) barred these claims
and granted summary judgment in favor of Defendants. Pursuant to § 33-
811(C), a trustor waives “all defenses and objections to the sale” if it fails to
obtain an injunction “before 5:00 p.m. . . . on the last business day before
the scheduled date of the sale.” Although Lynaugh claimed she obtained a
TRO “before the trustee’s sale deed was transferred on December 22, 2016,”
the statute mandates that a TRO must be obtained before the “scheduled
date of the sale.” A.R.S. § 33-811(C). The undisputed evidence plainly
shows that Lynaugh did not obtain a pre-sale injunction; thus, the court
correctly found A.R.S. § 33-811(C) bars these claims because they each
contest the sale’s validity. See Zubia v. Shapiro, 243 Ariz. 412, 415, ¶ 18
(2018); Morgan AZ Fin., L.L.C. v. Gotses, 235 Ariz. 21, 23–24, ¶ 7 (App. 2014)
(“Under A.R.S. § 33-811(C), a trustor who fails to enjoin a trustee’s sale
waives his claim to title of the property upon the sale’s completion, and also
waives any claims that are dependent on the sale.”) (citations omitted).

¶16 Lynaugh next argues the superior court erred in granting
summary judgment in favor of Defendants on her “fraud by concealment”

3 In her supplemental opening brief, Lynaugh argues the court erred
because “clear evidence and admissions [made by 12th Street]” contained
in her motion to stay judgment demonstrate that BMO made an
intentionally “false claim that Defendant 12th Street was the ‘highest
bidder’ at [the] trustee’s sale.” We agree with the superior court’s finding
that even assuming the validity of this point, “Defendant 12th Street is not
a party to the 54(b) Judgment. The Court fails to see how ‘new evidence’
relating to [12th Street] could have any effect on the validity of a partial
judgment to which [12th Street] is not a party anyway.”

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claim because the court “overlook[ed]” her “allegations that the bank was
withholding the actual balance” due. Lynaugh’s argument appears to be
that the Defendants committed fraud by conducting the trustee’s sale after
withholding pay-off information from her. Lynaugh does not direct us to
any evidence in the record supporting her claim that she affirmatively
asked for a pay-off amount and was denied such information, but even
presuming such evidence exists, summary judgment was proper because
this claim, like the others, effectively challenges the validity of the trustee’s
sale and is barred by A.R.S. § 33-811(C). Zubia, 243 Ariz. at 415, ¶ 18
(explaining that the statute bars all objections to the trustee’s sale and that
a claim is an objection if its success “would effectively result in a legal
determination that the sale was defective”); see also Glaze v. Marcus, 151
Ariz. 538, 540 (App. 1986) ("We will affirm the trial court’s decision if it is
correct for any reason, even if that reason was not considered by the trial
court.”).

¶17 Lynaugh further contends summary judgment was improper
because the court did not make all inferences in her favor. She suggests the
court erred by failing to analyze the language of the Loan, claiming it
established that BMO did not have the authority to find her in default and
move forward with foreclosure proceedings. Section § 33-811(C) bars these
contentions. Supra ¶¶ 15–16.

¶18 Finally, Lynaugh asserts the superior court erred by refusing
to acknowledge that “the only noticed sale was cancelled by . . . BMO
themselves.” In her Rule 60 motion, Lynaugh reiterated her contention that
the sale was canceled, but added that even if it was not canceled, the sale
was not properly noticed or postponed because the Arizona Attorney
General found that the notary who certified the documents did not record
certain required information in her journal log books.4 The court denied
the motion because Lynaugh’s “request for relief amounts to a challenge to
the validity of the trustee’s sale held on December 13, 2016. Such a
challenge is precluded.” We review the court’s denial for an abuse of
discretion. Vortex Corp. v. Denkewicz, 235 Ariz. 551, 555, ¶ 8 (App. 2014).

¶19 The court erred to the extent it concluded that Lynaugh’s
notice argument was precluded by A.R.S. § 33-811(C) because the statute

4 This notarization argument is waived on appeal because Lynaugh
cites no authority supporting her assertion that a properly delivered notice
or postponement of trustee’s sale is void because the notary public did not
comply with notary regulations. See MT Builders, L.L.C., 219 Ariz. at 304,
¶ 19 n.7.

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does not bar such claims. BT Capital, LLC v. TD Serv. Co. of Ariz., 229 Ariz.
299, 301, ¶ 10 (2012) (“Under this statute, a person who has defenses or
objections to a properly noticed trustee’s sale has one avenue for challenging
the sale: filing for injunctive relief.”) (emphasis added); Steinberger v. McVey
ex rel. Cty. of Maricopa, 234 Ariz. 125, 136, ¶ 42 (App. 2014) (“[O]nce a non-
judicial foreclosure sale has taken place, the only defense that may be raised
is lack of notice of the sale.”). However, the error is harmless because the
uncontroverted evidence establishes that Lynaugh received proper notice
of the sale by the trustee, and Lynaugh does not contend the trustee
canceled the sale. See City of Phoenix v. Geyler, 144 Ariz. 323, 330 (1985)
(explaining that appellate courts will affirm the trial court’s decision even
if the court “reached the right result for the wrong reason”); see also A.R.S.
§ 33-803.01 (stating a trustee cannot delegate its duties to, inter alia, prepare
and execute notice of the cancellation of the sale); § 33-813(F) (requiring a
trustee to record a cancellation of sale “[i]f the trust deed is paid in full or if
the sale is not held or is not properly postponed”); cf. Kelly v. NationsBanc
Mortg. Corp., 199 Ariz. 284, 289, ¶ 25 (App. 2000) (“The initial notice of the
trustee’s sale . . . complied with [§] 33–808, and the Kellys do not argue that
NationsBanc failed to comply with [§] 33–310 when it postponed the sale.
Thus, it became the Kellys’ burden to stay apprised of the new sale dates.”).

B. Attorneys’ Fees

¶20 Lynaugh also appeals the superior court’s award of attorneys’
fees to Defendants, which we review for an abuse of discretion. In re
Indenture of Trust Dated Jan. 13, 1964, 235 Ariz. 40, 51, ¶ 41 (App. 2014). The
court awarded attorneys’ fees pursuant to Section 16 of the deed of trust
and A.R.S. § 12-349. Lynaugh argues the court erred in its interpretation of
the deed of trust and there was no reasonable basis for its award pursuant
to A.R.S. § 12-349. Section 16 of the deed of trust provides as follows: “To
the extent not prohibited by law, Trustor shall pay all reasonable costs and
expenses before and after judgment, including without limitation,
attorneys’ fees, . . . incurred by Beneficiary in protecting or enforcing its
rights under this Deed.” The court found that because Defendants’ “fees
were incurred ‘protecting or enforcing its rights under [the] Deed of Trust,”
the court lacked discretion to deny the request because it was “contractually
authorized.” See Chase Bank of Ariz. v. Acosta, 179 Ariz. 563, 575 (App. 1994).
The court did not abuse its discretion because “[a] contractual provision for
attorneys’ fees will be enforced according to its terms.” Id. Thus, we need
not address the court’s alternative reliance on A.R.S. § 12-349.

¶21 On appeal, Defendants request reasonable fees pursuant to
the deed of trust, or alternatively A.R.S. §§ 12-349 and -341.01. Because

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Defendants have successfully protected their rights under the deed of trust,
we grant the request in an amount to be determined, upon compliance
with ARCAP 21.

CONCLUSION

¶22 For the reasons stated above, we affirm.

AMY M. WOOD • Clerk of the Court
FILED: AA

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