Bishara v. US Bank ( 2017 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
MENA BISHARA, et al., Plaintiffs/Appellants,
v.
US BANK NATIONAL ASSOCIATION, et al., Defendants/Appellees.
No. 1 CA-CV 16-0176
FILED 8-15-2017
Appeal from the Superior Court in Maricopa County
No. CV2015-054088
The Honorable Susan M. Brnovich, Judge
AFFIRMED
COUNSEL
Mena Bishara and Aida Aziz, Scottsdale
Plaintiffs/Appellants
Chernoff Law Firm, PLLC, Scottsdale
By Mark D. Chernoff, Patricia A. Premeau
Counsel for Defendant/Appellee US Bank
Tiffany & Bosco, P.A.
By Leonard J. McDonald
Counsel for Defendants/Appellees
BISHARA et al. v. US BANK et al.
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Randall M. Howe delivered the decision of the Court, in
which Vice Chief Judge Peter B. Swann and Judge Patricia A. Orozco1
joined.
H O W E, Judge:
¶1 Mena Bishara and Aida Aziz (collectively, “Appellants”)
challenge the trial court’s dismissal of their complaint on claim preclusion
grounds. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 Bishara entered into a loan agreement with US Bank National
Association (“US Bank”) in April 2008 to finance the purchase of a home.
US Bank recorded a deed of trust on the property that same month. Bishara
defaulted on the loan, however, and in May 2010, US Bank noticed a
trustee’s sale.
¶3 Bishara sued US Bank in May 2011 seeking to halt the trustee’s
sale (the “First Lawsuit”). Bishara later amended his complaint to allege
that his signature on the recorded deed of trust had been forged. He sought
an order staying any sale of the property, requiring the return of all past
payments on the loan, and ordering payment for significant emotional and
punitive damages.
¶4 US Bank removed the case to federal district court and
subsequently moved to dismiss Bishara’s amended complaint on several
grounds. Bishara opposed the motion and separately moved for leave to
amend his complaint again. His proposed second amended complaint
asserted a quiet title claim, sought damages for the fraudulent recording of
the allegedly forged deed of trust pursuant to A.R.S. § 33–420(A), and
alleged intentional infliction of emotional distress.
¶5 The federal district court dismissed Bishara’s amended
complaint with prejudice, finding that his claims arose from the alleged
1 Pursuant to Article VI, Section 3 of the Arizona Constitution, the
Arizona Supreme Court has designated the Honorable Patricia A. Orozco,
Retired Judge of the Court of Appeals, to sit in this matter.
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Decision of the Court
forgery but that he had “failed to connect th[e] alleged forgery to the relief
he is seeking.” The district court also denied Bishara’s motion for leave to
amend, finding that Bishara’s quiet title and A.R.S. § 33–420 claims were
time-barred and that he had failed to allege any extreme or outrageous
conduct necessary to support his intentional infliction of emotional distress
claim.
¶6 Bishara appealed the district court’s ruling to the Ninth
Circuit Court of Appeals. See Bishara v. U.S. Bank Home Mortg., 608 Fed.
Appx. 484 (9th Cir. 2015) (mem. decision). The Ninth Circuit affirmed,
finding that Bishara’s proposed second amended complaint was futile
because he had “admit[ted] entering into a loan agreement . . . for the same
real property where he currently resides and, thus, cannot possibly state a
claim for fraudulent recording.” Id.
¶7 Shortly after the Ninth Circuit’s 2015 ruling, Bishara
quitclaimed the security property to his mother Aziz, who then filed for
bankruptcy. Bishara and Aziz then filed a new lawsuit against US Bank and
the trustees involved in the trustee’s sale. Their complaint largely mirrored
Bishara’s proposed second amended complaint from the First Lawsuit; they
again sought quiet title to the property, damages under A.R.S. § 33–420(A)
for the alleged fraudulent recording of a false deed, and damages for
intentional infliction of emotional distress.
¶8 US Bank moved to dismiss the complaint pursuant to Arizona
Rule of Civil Procedure (“Rule”) 12(b)(6) for failing to state a claim for
which relief could be granted, alleging that the claims were barred by both
claim preclusion and issue preclusion. In its motion, US Bank also requested
its attorneys’ fees pursuant to A.R.S. § 12–341.01 and A.R.S. § 12–349. The
trustee defendants separately moved to dismiss the complaint under Rule
12(b)(5) for insufficient service of process. Upon receiving the trustee’s
motion, the trial court allowed Appellants an opportunity to amend their
service affidavit or hire a registered process server to re-serve the trustee
defendants. The trial court then dismissed the claims against US Bank,
finding that they were “all handled in federal court.” In its order, the trial
court granted US Bank’s request for attorneys’ fees.
¶9 US Bank subsequently filed its statement of costs and
requisite affidavit and itemized billing statements. The court then entered
final judgment “as to all defendants, all claims, in its entirety.” In doing so,
the trial court also awarded US Bank $9,287.30 in attorneys’ fees and $273
in costs. Bishara and Aziz timely appealed.
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Decision of the Court
DISCUSSION
¶10 Appellants argue that the trial court improperly dismissed
their complaint. We review the dismissal of a complaint under Rule 12(b)(6)
de novo. Coleman v. City of Mesa, 230 Ariz. 352, 355 ¶ 7 (2012). We accept all
well-pleaded facts as true and give Appellants the benefit of all inferences
arising therefrom. Botma v. Huser, 202 Ariz. 14, 15 ¶ 2 (App. 2002). We will
affirm the dismissal only if Appellants would not have been entitled to
relief under any facts susceptible of proof in their complaint. Coleman, 230
Ariz. at 356 ¶ 8. Because Appellants are not entitled to relief under any facts
they could prove, the trial court did not err by dismissing Appellants’
complaint.
1. Claim Preclusion
¶11 Appellants argue first that the trial court erred by dismissing
their complaint for claim preclusion because that doctrine does not apply.
We review the trial court’s application of claim preclusion de novo.
A. Miner Contracting, Inc. v. Toho-Tolani Cty. Imp. Dist., 233 Ariz. 249, 253
¶ 11 (App. 2013). The court did not erroneously apply claim preclusion
here.
¶12 Under claim preclusion, a judgment on the merits in a prior
suit involving the same parties or their privies bars a second suit based on
the same causes of action. Stearns v. Ariz. Dep’t of Revenue, 231 Ariz. 172, 177
¶ 25 (App. 2012). Claim preclusion bars litigation not only of those facts that
were actually litigated but also those facts which might have been raised in
the earlier suit. Id. To establish a claim preclusion defense, a moving party
must show (1) an identity of claims in the suit in which a judgment was
entered and the current litigation, (2) a final judgment on the merits in the
previous litigation, and (3) identity or privity between parties in the two
suits. In re Gen. Adjudication of All Rights to Use Water in Gila River Sys. &
Source, 212 Ariz. 64, 69–70 ¶ 14 (2006).
1a. Identity of Claims
¶13 Appellants first challenge the identity of claims element.
Arizona follows the “same evidence” test; identity of claims is present if no
additional evidence would be needed to prevail in the second action than
in the first. Pettit v. Pettit, 218 Ariz. 529, 532 ¶ 8 (App. 2008); Phx. Newspapers,
Inc. v. Dep’t of Corr., 188 Ariz. 237, 241–42 (App. 1997).
¶14 Appellants do not show that their current claims would have
required any additional or different evidence than that needed to prove the
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claims that Bishara alleged in his proposed second amended complaint.
Indeed, the two complaints state the same causes of action supported by
essentially the same factual allegations. Thus, sufficient identity of claims
exists for claim preclusion purposes.
1b. Final Judgment on the Merits
¶15 We look to federal law to determine the preclusive effect of a
federal district court judgment. Howell v. Hodap, 221 Ariz. 543, 546 ¶ 17
(App. 2009). Generally, a ruling denying leave to amend triggers claim
preclusion under federal law. See, e.g., Mpoyo v. Litton Electro-Optical Sys.,
430 F.3d 985, 989 (9th Cir. 2005); EFCO Corp. v. U.W. Marx, Inc., 124 F.3d
394, 399–400 (2d Cir. 1997). But Appellants contend that the Ninth Circuit
stripped the district court’s judgment of any preclusive effect because, they
argue, the court found that “the cloud of title is perpetual, [and the] US
Bank foreclosure request is moot.” Appellants have misread the Ninth
Circuit’s ruling. The circuit court affirmed the district court’s ruling
denying leave to amend and specifically found that Bishara’s A.R.S.
§ 33–420 and quiet title claims were futile. Bishara, 608 Fed. Appx. at 484.
The second claim preclusion element therefore is satisfied. See Prof’l Mgmt.
Assocs., Inc. v. KPMG LLP, 345 F.3d 1030, 1032 (8th Cir. 2003) (stating that
under federal law “denial of leave to amend constitutes res judicata on the
merits of the claims which were the subject of the proposed amended
pleading . . . even when denial of leave to amend is based on reasons other
than the merits, such as timeliness”).
1c. Identity of Parties
¶16 Appellants also challenge the identity of parties element by
pointing out that Aziz was not a party in the earlier case. But claim
preclusion applies to those who acquire an interest in the subject matter
affected by the earlier judgment through or under one of the parties after
judgment is entered. Hall v. Lalli, 191 Ariz. 104, 106 (App. 1997). Bishara
quitclaimed the property to Aziz in 2015, after the district court entered
judgment. 2 The parties are therefore the same. Because all three claim
2 Appellants contend for the first time on appeal that Bishara deeded
some portion of the property to Aziz in 2009. They offer no evidence to
support this contention. Moreover, issues raised for the first time on appeal
are waived. Barkhurst v. Kingsmen of Route 66, Inc., 234 Ariz. 470, 476 ¶ 22
(App. 2014).
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preclusion elements are met, the trial court did not err by dismissing
Appellants’ complaint.
2. Claims Against Trustee Defendants
¶17 Appellants also challenge the dismissal of their claims against
the trustee defendants on the merits. The trial court did not dismiss these
claims on their merits but rather for insufficient service of process, having
first given Appellants an opportunity to file an amended service affidavit
or retain a registered process server to re-serve the trustee defendants.
¶18 The record lacks any evidence to suggest Appellants did
either of these things. We therefore do not reach Appellants’ contentions.
See Postal Instant Press, Inc. v. Corral Rests., Inc., 187 Ariz. 487, 488 (1997)
(stating that incomplete service deprives the trial court of jurisdiction).
3. Attorneys’ Fees in the Trial Court
¶19 Appellants appeal finally the trial court’s granting of US
Bank’s attorneys’ fees. We review the reasonableness of an award of
attorneys’ fees for an abuse of discretion. ABC Supply, Inc. v. Edwards, 191
Ariz. 48, 52 (App. 1996). We will not disturb the trial court’s award if any
reasonable basis supports the amount of attorneys’ fees awarded. Id. The
court here did not err.
¶20 Appellants argue that the trial court erred by granting fees
generally under A.R.S. § 12–1103(B). However, US Bank requested, and the
trial court granted, US Bank’s attorneys’ fees pursuant to A.R.S. § 12–341.01,
not A.R.S. § 12–1103(B). Appellants’ substantive arguments under the latter
are therefore irrelevant. Appellants also argue generally that the court erred
by granting US Bank over $9,000 in attorneys’ fees because that amount
represents an “unrealistic” number of hours “to write and file [its] motion
to dismiss.” But a party does not meet its burden of demonstrating
unreasonableness of attorneys’ fees by stating simply “that the hours
claimed are excessive and the rates submitted too high.” Nolan v. Starlight
Pines Homeowners Ass’n, 216 Ariz. 482, 491 ¶ 38 (App. 2007). Thus, no error
occurred.
4. Attorneys’ Fees and Costs on Appeal
¶21 US Bank requests attorneys’ fees and costs incurred on appeal
under the note and deed of trust, A.R.S. §§ 12–341, –341.01(A), and –349.
Generally, we enforce a contractual attorneys’ fees provision according to
its terms. Berry v. 352 E. Virginia, L.L.C., 228 Ariz. 9, 13 ¶ 17 (App. 2011). We
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retain discretion, however, to limit the award to a reasonable amount.
McDowell Mountain Ranch Cmty. Ass’n v. Simons, 216 Ariz. 266, 270 ¶ 16
(App. 2007). We therefore will award US Bank reasonable attorneys’ fees
and costs incurred in this appeal upon compliance with Arizona Rule of
Civil Appellate Procedure 21. US Bank also requests that this Court order
sanctions pursuant to Arizona Rule of Civil Appellate Procedure 25. We
decline to award sanctions under either that rule or A.R.S. § 12–349.
CONCLUSION
¶22 For the foregoing reasons, we affirm.
AMY M. WOOD • Clerk of the Court
FILED: AA
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