Sakthiveilv. Capital Fund ( 2020 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
THIRUSELVAM SHOSUN SHONI SAKTHIVEIL, Plaintiff/Appellant,
v.
CAPITAL FUND I, LLC, Defendant/Appellee.
No. 1 CA-CV 19-0114
FILED 2-6-2020
Appeal from the Superior Court in Maricopa County
No. CV2017-012495
The Honorable Daniel J. Kiley, Judge
AFFIRMED
APPEARANCES
Thiruselvam Shosun Shoni Sakthiveil, Phoenix
Plaintiff/Appellant
Gammage & Burnham, PLC, Phoenix
By Cameron C. Artigue
Counsel for Defendant/Appellee
SAKTHIVEIL v. CAPITAL FUND
Decision of the Court
MEMORANDUM DECISION
Judge Michael J. Brown delivered the decision of the Court, in which
Presiding Judge Maria Elena Cruz and Judge Kent E. Cattani joined.
B R O W N, Judge:
¶1 Thiruselvam Shosun Shoni Sakthiveil (“T.S.”) appeals the
superior court’s grant of summary judgment on his claims against Capital
Fund I, LLC (“Capital”) and the court’s award of attorneys’ fees. This is
T.S.’s second appeal arising from the same underlying facts. See Capital
Fund II LLC v. Sakthiveil, 1 CA-CV 17-0228 (Ariz. App. Feb. 22, 2018) (mem.
decision) (“Sakthiveil I”). Finding no genuine dispute of material fact
precluding summary judgment, we affirm.
BACKGROUND
¶2 T.S. was a “professional real estate investor” and landlord of
multiple rental properties. After consulting with a broker from AJG
Financial Corp. about a possible loan, T.S. agreed to borrow approximately
$4,260,000 from Capital, a private short-term commercial lender. The loans
were confirmed by promissory notes signed by T.S., each of which were
secured by deeds of trust on 24 of T.S.’s properties.1 T.S. signed the loan
documents, which included the pertinent promissory notes and deeds of
trust. Each loan contained a cross-default and cross-collateralization
provision. T.S. would later assert that he did not understand the
documents, that they conflicted with earlier discussions, and that someone
from Capital or the title company should have been at the closing to explain
the terms to him.
¶3 T.S. defaulted in July 2015, and Capital accelerated each of his
loans. He filed for Chapter 11 bankruptcy protection in October 2015. See
1 T.S. obtained the following loans from Capital: (1) $3,300,000,
secured by 22 rental properties in the Phoenix metro area; (2) $360,000,
secured by the sole Sedona property; (3) $760,000, a refinance of the
$360,000 loan, secured by both the Sedona property and what was
apparently T.S.’s residence (“79th Avenue”); and (4) $200,000, secured in a
junior position on the 22 rental properties.
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SAKTHIVEIL v. CAPITAL FUND
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In re Sakthiveil, No. 2:15-bk-12978-BKM (Bankr. D. Ariz. filed Oct. 9, 2015).
The bankruptcy court found that T.S. grossly mismanaged the properties
that secured the loans. Sakthiveil I, 1 CA-CV 17-0228 at *1, ¶ 3. In April
2016, the bankruptcy court lifted the automatic stay provision of 11 U.S.C.
§ 362 so the superior court could appoint a receiver to take possession of
and foreclose on T.S.’s collateral properties. Id. After discussions with
Capital over his potential ability to bring in investors to pay off the loans,
T.S. voluntarily dismissed his bankruptcy.
¶4 The superior court appointed a receiver, but several weeks
later T.S. requested that the receivership be dissolved, or alternatively, that
the court issue an order addressing alleged mismanagement of the
properties. The court denied both requests and a short time later 23 of the
properties were sold at trustee’s sales. Those sales, along with an agreed-
upon sale of the 79th Avenue property to a third party, grossed a total of
$5,475,520. A deficiency of at least $307,764.50 remained, but Capital
decided not to pursue a deficiency judgment.
¶5 T.S. then moved to reinstate his bankruptcy and “reverse” the
foreclosures, stating that his dismissal of the Chapter 11 proceedings was
in reliance on a promise by Capital to delay foreclosure and accept offers
from investors T.S. had lined up to pay off the outstanding loans. The
bankruptcy court denied his motion, finding that the proposed sales prices
would not satisfy the entire outstanding debt and that T.S.’s claim of
reliance on a promise by Capital to forego foreclosures was not credible.
¶6 Several weeks later, T.S. filed a motion to reverse the
foreclosures. The superior court denied his motion and he appealed to this
court. We affirmed the court’s orders appointing the receiver and denying
T.S.’s motion to set aside the trustee’s sales. Sakthiveil I, 1 CA-CV 17-0228 at
*3, ¶ 16.
¶7 Before we issued our decision in Sakthiveil I, T.S. filed the
complaint in this case, alleging breach of contract, breach of the duty of
good faith and fair dealing, fraud, and consumer fraud against Capital―all
arising from the same underlying facts and documents. T.S. also claimed
that Capital’s loans were “illegal in many respects,” contending, inter alia,
(1) the loan documents did not have all the financial terms previously
agreed to; (2) Capital required him to use his personal home as collateral,
contrary to an earlier agreement; (3) Capital failed to work with him in the
bankruptcy action; (4) Capital sold the properties for more than they
credited him for; (5) he did not understand the cross-collateralization terms;
and (6) the Dodd Frank Act, 12 U.S.C. § 5536, had been violated.
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SAKTHIVEIL v. CAPITAL FUND
Decision of the Court
¶8 Capital filed an answer, followed by a motion for summary
judgment as to all claims. The motion included copies of the signed
documents and the declaration of its chief operating officer, Noah Brocious,
authenticating those documents. Capital asserted that T.S.’s claims were
“contrary to signed loan documents and controlling legal principles,”
pointing to the “unambiguous written contract terms” that T.S. “consented
to” by signing the documents.
¶9 T.S. responded to the motion for summary judgment and the
statement of facts. He included several exhibits in support of his
contravening statement of facts. Finding no genuine dispute of material
fact, the superior court ruled in favor of Capital on all four counts. The
court also awarded attorneys’ fees to Capital and T.S. timely appealed.
DISCUSSION
¶10 T.S. argues the superior court erred in granting summary
judgment and provides a laundry list of purported errors. The errors
primarily concern alleged conflicts between what the signed documents
admitted into evidence explicitly say and purported representations made
in advance of the loans by Capital or T.S.’s broker. T.S. also questions
whether res judicata bars any of his claims.
¶11 Summary judgment is properly granted when no genuine
dispute of material fact exists, and the moving party is entitled to judgment
as a matter of law. Ariz. R. Civ. P. 56(a). We view the facts in the light most
favorable to T.S., and determine de novo whether genuine issues of material
fact existed and whether the superior court properly applied the law. See
Slaughter v. Maricopa County, 227 Ariz. 323, 325, ¶ 7 (App. 2011); Eller Media
Co. v. City of Tucson, 198 Ariz. 127, 130, ¶ 4 (App. 2000). Litigants
representing themselves are held to the same standard as if they were
represented by counsel. See Smith v. Rabb, 95 Ariz. 49, 53 (1963).
A. Absence of Material Disputed Facts
¶12 The material facts underlying these claims are relatively
simple. T.S. signed loan documents with express legal terms that allowed
Capital to foreclose on his real property in the event of a default. He
defaulted, and Capital foreclosed on all collateral except the 79th Avenue
property. T.S. asserts the superior court misunderstood the underlying
factual circumstances. He argues there were “numerous material facts at
issue” and credibility determinations that should have been presented to a
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jury. However, T.S. does not dispute that he signed the loan documents,
which set forth the loan terms that were later enforced when he defaulted.2
¶13 Although T.S.’s contravening statement of facts broadly
addressed each of Capital’s assertions, it contained little or no relevant
supporting evidence. T.S.’s affidavit centers on circumstances that are
irrelevant because they (1) occurred prior to the signing of the loan
documents, or (2) have no bearing on a genuine issue of material fact.3 The
other pieces of evidence he offered were either unrelated to a genuine fact
in dispute (such as Exhibit 2―an affidavit from his ex-wife) or inconclusive
(such as Exhibit 7―text messages).4
¶14 A party must indicate the facts that preclude summary
judgment in favor of the movant. Ariz. R. Civ. P. 56(c)(3)(B)(ii). Moreover,
these facts must be supported by admissible evidence. Ariz. R. Civ. P.
2 While T.S. generally does not dispute he signed loan documents, in
places he seems to allege the Capital copies, among other things, “do not
match his signature[s].” Because he did not previously contest the
authenticity of the documents, T.S. has waived this issue. See Airfreight
Express, Ltd., v. Evergreen Air Ctr., 215 Ariz. 103, 112, ¶ 26 (App. 2007).
3 For example, T.S.’s statements that he had previously refinanced
mortgages on more favorable terms is not evidence of a genuine issue of
material fact―it does not change that he also signed these loan documents.
“A ‘genuine’ issue is one that a reasonable trier of fact could decide in favor
of the party adverse to summary judgment on the available evidentiary
record.” Martin v. Schroeder, 209 Ariz. 531, 534, ¶ 12 (App. 2005).
4 In his complaint, T.S. alleged that Capital agreed the 79th Avenue
property, his personal residence, would not be included on any of the loans
but that Capital changed the nature of the loans, thereby “requiring [his]
home to be used as collateral.” T.S. has not directed us to any evidence in
the record showing that Capital agreed not to use that property as collateral;
the record confirms just the opposite based on the agreements T.S. signed
in that the loan documents for the $760,000 plainly stated the 79th Avenue
property would be used as collateral, along with the Sedona property. T.S.
also signed an agreement certifying he would not be occupying the 79th
Avenue property and the loan was for a commercial purpose. On appeal,
he appears to suggest he was wrongfully denied a homestead exemption
for the 79th Avenue property. See A.R.S. § 33-1103(A). But nothing in our
record shows T.S. raised this issue in the superior court. It is therefore
waived. See Airfreight Express, 215 Ariz. at 112, ¶ 26.
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Decision of the Court
56(c)(4), (5). T.S.’s own self-serving statements are insufficient to prevent
summary judgment. See Florez v. Sargeant, 185 Ariz. 521, 526 (1996).
“Allegations in pleadings are not evidence; they are statements of facts
which the pleader must prove unless admitted by the opposing party.”
Bank of Yuma v. Arrow Constr. Co., 106 Ariz. 582, 585 (1971). T.S. offered no
admissible evidence controverting Capital’s material facts; therefore, the
facts submitted by Capital are presumed to be true. See Tilley v. Delci, 220
Ariz. 233, 237, ¶ 11 (App. 2009). Under these circumstances, the superior
court properly granted summary judgment. See Ariz. R. Civ. P. 56(e).
B. Binding Loan Documents
¶15 “A general principle of contract law is that where parties bind
themselves by a lawful contract and the terms of the contract are clear and
unambiguous, a court must give effect to the contract as written.” Estes Co.
v. Aztec Constr., Inc., 139 Ariz. 166, 168 (App. 1983). The superior court
found that even if it were true that T.S. did not understand the documents,
he could not avoid summary judgment. See Pac. W. Const. Co. v. Indus.
Com’n of Ariz., 166 Ariz. 16, 20 (App. 1990) (“Failure to read an agreement
reduced to writing and signed by a party precludes recovery for fraud or
misrepresentation concerning oral statements made about the contents of
the agreement.”); Nationwide Res. Corp. v. Massabni, 134 Ariz. 557, 565 (App.
1982) (“The contract clearly referred to a written document which
apparently the [defendants] did not read. Under such circumstances they
cannot claim the defense of mistake.”).
¶16 The superior court’s legal analysis is correct. While the
transactions may have been “large and complicated,” T.S. cannot properly
complain of changes in the terms of the loan documents where those
changes, if any, were in the documents he signed. The burden was on T.S.
to secure advice on the documents, if necessary, or to be bound to the terms.
See Teran v. Citicorp Person-to-Person Fin.Ctr., 146 Ariz. 370, 375 (App. 1985).
Although the financial loss suffered by T.S. was severe, the assertions he
makes do not create genuine issues of material fact preventing summary
judgment.
C. Asserted Legal Errors/Preclusion
¶17 The superior court found that T.S.’s complaint impermissibly
attempted to relitigate mismanagement by the receiver, alleged promises in
bankruptcy court leading to wrongful foreclosure, and the applicability of
A.R.S. § 33-811(C), which states that a trustor waives all objections to a
trustee’s sale by failing to obtain an injunction. T.S. asserts that Sakthiveil I
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Decision of the Court
suggested “that any underlying claims of misconduct would be addressed
in a different forum”―such as this new complaint. He therefore disputes
that any of his claims in this case are precluded because they were not
litigated beyond “the immediate Receivership issues” and whether A.R.S.
§ 33-811(C) applied to the properties in receivership.
¶18 Sakthiveil I addressed two issues: (1) his receivership claims,
including alleged mismanagement, and (2) the applicability of A.R.S. § 33-
811(C). Analyzing the trustee sales, we held:
In any event, Sakthiveil waived any objection to the trustee’s
sales by failing to enjoin the sales. See A.R.S. § 33-811(C)
(2018). “Where, as here, a trustee’s sale is completed, a person
subject to § 33-811(C) cannot later challenge the sale based on
pre-sale defenses or objections.” BT Capital, 229 Ariz. at 301,
¶ 11.
Sakthiveil I, 1 CA-CV 17-0228 at * 3, ¶ 15. The decision is final in Sakthiveil I,
as T.S. did not file a petition for review with our supreme court.
¶19 Because “[p]ublic policy is against deciding cases piecemeal,”
appeals are generally “limited to final judgments which dispose of all
claims and all parties.” Musa v. Adrian, 130 Ariz. 311, 312 (1981); see A.R.S.
§ 12-2101(A). “The doctrine of res judicata will preclude a claim when a
former judgment on the merits was rendered by a court of competent
jurisdiction and the matter now in issue between the same parties or their
privities was, or might have been, determined in the former action.” Hall v.
Lalli, 194 Ariz. 54, 57, ¶ 7 (1999) (citations omitted). Therefore, the
receivership issues, any promise to delay foreclosure, and the applicability
of A.R.S § 33-811(C) have been conclusively decided and are not open for
re-litigation.
D. Attorneys’ Fees Award
¶20 In the superior court, Capital requested attorneys’ fees in the
amount of $46,245, citing the fee-shifting provisions of the loan documents
and A.R.S. § 12-341.01. T.S. contends that because the case was resolved
without discovery, Capital’s fee request was excessive, and the court should
have considered all relevant factors, including those listed in Associated
Indem. Corp. v. Warner, 143 Ariz. 567, 570 (1985). But the court’s detailed
minute entry specifically addressed the Warner factors. And even though
T.S. did not object with specificity to any particular charges, the court
reduced the award by more than half, to $22,395.50, based on instances of
vague billing, an unsuccessful motion, and the extreme hardship an award
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Decision of the Court
would cause T.S. We find no abuse of discretion. See id. at 570–71
(recognizing trial judges have broad discretion to determine fee requests).
CONCLUSION
¶21 We affirm the superior court’s grant of summary judgment
and the related award of attorneys’ fees. Pursuant to the loan documents,
we award Capital its reasonable attorneys’ fees and costs incurred on
appeal subject to compliance with ARCAP 21.
AMY M. WOOD • Clerk of the Court
FILED: AA
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