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AURORA LOAN SERVICES, LLC v. SECURITY TITLE AGENCY, INC., 1 CA-CV 13-0027. (2014)

Court: Court of Appeals of Arizona Number: inazco20140204007 Visitors: 29
Filed: Feb. 04, 2014
Latest Update: Feb. 04, 2014
Summary: NOT FOR PUBLICATION UNDER ARIZ. R. SUP. CT. 111(c), THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED. MEMORANDUM DECISION JONES, Judge. 1 Aurora Loan Services, LLC (Appellant), appeals from the trial court's grant of summary judgment for Security Title Agency, Inc. (Appellee) and denial of its motion for new trial. For the following reasons, we affirm. Facts and Procedural History 1 2 This action arises from a series of real estate transactions.
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NOT FOR PUBLICATION

UNDER ARIZ. R. SUP. CT. 111(c), THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.

MEMORANDUM DECISION

JONES, Judge.

¶1 Aurora Loan Services, LLC (Appellant), appeals from the trial court's grant of summary judgment for Security Title Agency, Inc. (Appellee) and denial of its motion for new trial. For the following reasons, we affirm.

Facts and Procedural History1

¶2 This action arises from a series of real estate transactions. On January 6, 2005, Jerry and Pattie Craig obtained a loan of $998,000 from Spectrum Financial Group, Inc. (Spectrum).2 The loan was evidenced by a promissory note (Craig note) that was secured by a Deed of Trust (Craig DOT) executed on real property the Craigs owned in Scottsdale, Arizona. The Craig DOT listed the Craigs as borrowers, Spectrum as lender, and Mortgage Electronic Registration Systems, Inc. (MERS) as beneficiary, acting "solely as a nominee for Lender and Lender's successors and assigns."3

¶3 On April 2, 2005, the Craigs sold the Scottsdale property to Compass Development, Inc. (Compass). Appellee was engaged as the escrow agent for the sale. On April 12, escrow closed and, at the direction of Spectrum, Appellee paid $1,005,899.54 from the escrow account to a Spectrum controlled bank account. It is not disputed that at the time of the payment, Spectrum had already transferred the Craig note and no longer had an interest in either the note or the Craig DOT. It is likewise uncontested that neither Compass nor any other asserted successor in interest to the note or Craig DOT objected to the Spectrum payment at or around the time it was made.

¶4 Appellant's first appearance in these matters occurred on March 1, 2005, when it purportedly became the loan servicer on the Craig note. On February 24, 2011, approximately five years and eleven months after the sale of the property by the Craigs to Compass and payment of the sales proceeds to Spectrum, Appellant brought suit against Appellee. Within its complaint, Appellant asserted itself to be the servicing agent on the Craig note at the time Appellee made the payment to Spectrum. Appellant further contended that it was a third party beneficiary pursuant to specific provisions of the escrow instructions between the Craigs and Compass. As such, Appellant asserted two claims against Appellee: 1) breach of the escrow instructions; and 2) breach of a constructive trust.

¶5 Appellee answered the complaint and, thereafter, on July 7, 2011, moved for summary judgment on both of Appellant's claims. In its motion, Appellee asserted Appellant was not a party to the escrow or an express beneficiary of the escrow instructions.

¶6 Appellant responded to the motion and cross-moved for summary judgment, contending it was an intended third party beneficiary of the escrow instructions as the escrow was intended to satisfy the Craig note and it was the party, as the loan servicer, entitled to receive the payment.

¶7 In support of its contention, Appellant attached an affidavit from Elizabeth Santoro, a "contested default advocate" for Aurora Bank FSB (Aurora Bank), a sub-servicer of Appellant. Santoro averred, based upon her inspection of Aurora Bank's records, that Spectrum had no interest in the Craig note or Craig DOT after February 2005. She also stated, without further support or clarification, that Structured Asset Securities Corporation (SASC) became the owner of the note on March 1, 2005, U.S. Bank National Association had become the "custodian" of the note on behalf of SASC, and Appellant became the loan servicer for the Craig note pursuant to a Servicing Agreement dated March 1, 2005. Santoro also asserted that the Servicing Agreement gave Appellant the right to collect payments, initiate foreclosure, and perform any necessary tasks in connection with the servicing and administration of the Craig note, including the ability to prosecute any action related to the note.

¶8 Within its response to Appellant's statement of facts, Appellee moved to strike Santoro's affidavit based upon its lack of foundation, arguing the affidavit did not demonstrate Santoro's competence to testify to the information contained within the affidavit. Appellee further asserted that Santoro's representations, based upon an unproduced Servicing Agreement, were hearsay.

¶9 Appellant responded to the motion to strike and moved to supplement the affidavit. In its motion to supplement, Appellant produced another affidavit by Santoro, which reaffirmed her first affidavit. The supplemental affidavit also provided quotes from portions of the Servicing Agreement that allegedly controlled the Craig note and had, attached to it, three pages of the Servicing Agreement upon which Santoro was relying. Appellee objected to the supplemental affidavit, arguing it did not correct the deficiencies of the first, the hearsay problem remained, and the three pages of the Servicing Agreement lacked foundation.

¶10 On March 6, 2012, the trial court granted Appellee's motion to strike Ms. Santoro's affidavit and motion for summary judgment, and denied Appellant's cross motion for summary judgment. Appellant timely moved for a new trial, which the trial court denied. Appellant then timely filed this appeal. We have jurisdiction pursuant Arizona Revised Statutes (A.R.S.) section 12-2101(A)(1), (5)(a) (2013).

Standards of Review

¶11 We review a trial court's ruling on cross-motions for summary judgment de novo. Nelson v. Phx. Resort Corp., 181 Ariz. 188, 191, 888 P.2d 1375, 1378 (App. 1994). Our review is limited to the record before the trial court at the time it considered the motion for summary judgment. See GM Dev. Corp. v. Comm. Am. Mortg. Corp., 165 Ariz. 1, 4, 795 P.2d 827, 830 (App. 1990). Summary judgment is proper if the facts produced in support of a claim "have so little probative value, given the quantum of evidence required, that reasonable people could not agree with the conclusion advanced by the proponent of the claim." Orme Sch. v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990). If the evidence would allow a trier of fact to resolve a material issue in favor of either party, summary judgment is improper. United Bank of Ariz. v. Allyn, 167 Ariz. 191, 195, 805 P.2d 1012, 1016 (App. 1990).

¶12 We review the denial of a motion for new trial for an abuse of discretion. Boatman v. Samaritan Health Servs., Inc., 168 Ariz. 207, 212, 812 P.2d 1025, 1030 (App. 1990).

Discussion

I. Third Party Beneficiary Standing

¶13 In granting Appellee's motion for summary judgment, the trial court explained that Appellant was not a party to the promissory note or escrow and that, under the factual circumstances before it, Appellant had failed to establish it was a third party beneficiary of the escrow between the Craigs and Compass. It is undisputed that Appellant was not a party to the escrow agreement. However, Appellant contends the trial court erred because there was a question of fact regarding its status as a third party beneficiary. We disagree.4

A. Appellant is not an express beneficiary

¶14 In Arizona, for a person to recover as a third party beneficiary of a contract, the intent to benefit the person must be found in the contract itself. Norton v. First Fed. Savings, 128 Ariz. 176, 178, 624 P.2d 854, 856 (1981) (citing Irwin v. Murphey, 81 Ariz. 148, 302 P.2d 534 (1956)). The contemplated benefit must be both intentional and direct. Id. It is not enough that a contract may operate to a person's benefit, but it "must appear that the parties intended to recognize the [person] as the primary party in interest and as privy to the promise." Sherman v. First Am. Title Ins., 201 Ariz. 564, 567, ¶ 6, 38 P.3d 1229, 1232 (App. 2002) (citation omitted) (emphasis in original); Tanner Cos. v. Ins. Mktg. Servs., Inc., 154 Ariz. 442, 444, 743 P.2d 951, 953 (App. 1987) (stating a party may not recover as a third party beneficiary "if it is merely an incidental beneficiary . . . rather than one for whose express benefit the [contract] was made"). Whether a person is an incidental or direct beneficiary is a question of construction. Maganas v. Northroup, 135 Ariz. 573, 575, 663 P.2d 565, 567 (1983).

¶15 Appellant contends that, as a third-party beneficiary, the escrow instructions demonstrate it is entitled to the funds intended to pay off the Craig Note. Although Appellant references the escrow number of the transaction at issue, the escrow instructions were not provided to the trial court and are not a part of the record on appeal. As such, Appellant did not produce any documentary evidence for consideration by the trial court illustrating it to be an expressly intended third party beneficiary of the escrow agreement between the Craigs as sellers, Compass as buyer, and Appellee as the escrow agent.

¶16 Appellant cites Tanner Companies v. Insurance Marketing Services, Inc. for the proposition that it need not be specifically named within a contract to recover as a third-party beneficiary. Appellant argues that the unproduced escrow instructions and related agreements illustrate it was entitled to the funds Appellee disbursed attempting to pay off the Craig note.

¶17 In Tanner, Tanner Companies entered a contract to provide labor, materials and supplies for street improvements in certain Yuma County subdivisions. 154 Ariz. at 443, 753 P.2d at 952. As required by statute, the lender and subdivider for the improvements executed an assurance bond. Id. Tanner Companies made the improvements and the lender released funds to the subdivider without first receiving proof of the company's payment from the subdivider. Id. Eventually, Tanner Companies filed suit against the lender, seeking recovery against the assurance bond as a third-party beneficiary. Id. The court, citing Irwin v. Murphey, 81 Ariz. 148, 153, 302 P.2d 534, 537 (1956), found the company was a third-party beneficiary, although not specifically named in the bond, as it was a member of the group of primary beneficiaries that was specified in the bond. Id. at 445-46, 743 P.2d at 954-55.

¶18 Appellant's reliance on Tanner is misplaced. Although the court found Tanner Companies was an intended beneficiary even though it was not specifically named in the bond it was suing upon, it based its conclusion upon the bond's own language through which the intent to benefit a specific group of beneficiaries was made manifest. As previously noted, the controlling escrow instructions for the case at bar were not provided to the trial court. Therefore, there was no competent evidence before the trial court illustrating that Appellant was to be a primary beneficiary through the provisions of those escrow instructions.

¶19 Appellant's reliance on Maganas v. Northroup is equally unpersuasive for the same reason. In Maganas, Thomas Maganas brought suit against two real estate brokers and an escrow agent after escrow instructions, which specifically provided Maganas was entitled to a portion of the broker's commission from a real estate sale, were amended to exclude him from the commission proceeds without his knowledge and consent. 135 Ariz. at 574-75, 663 P.2d at 566-57. The Supreme Court found Maganas was an intended beneficiary because "on its face the contract indicated the parties' intent to recognize him as a direct beneficiary of the escrow agreement." Id. at 576, 633 P.2d at 568. Further, the court noted "[t]he contract manifest[ed] the parties' intent to confer a direct benefit on Maganas." Id.

¶20 Appellant correctly asserts that Maganas indicates a non-party to the escrow may be an intended beneficiary if the escrow instructions and related documents illustrate a party is to receive a direct benefit from the contracting parties. However, the Maganas court found Maganas was a third-party beneficiary, like the Tanner court, based upon the express language of the contract. Although a non-party to the escrow agreement may be an intended primary party in interest to the escrow, the escrow instructions must still expressly state the non-party is intended to be the primary party in interest. See Maganas, 135 Ariz. at 576, 663 P.2d at 668. In this case, the escrow instructions are not in the record; therefore, Appellant is unable to demonstrate that the instructions reflect an intent to recognize it as a direct beneficiary of the escrow.

¶21 Last, Appellant relies upon Sherman v. First American Title for the proposition that it is a third party beneficiary because there are no restrictions on its ability to receive a direct payment on the Craig note. In Sherman, the plaintiff was a real estate salesperson on several real estate transactions. Id. at 566, ¶ 1, 38 P.3d at 1231. The original escrow instructions relevant to the transactions made the commission checks payable to the plaintiff. Id. However, the instructions further stated that the only person authorized to receive the checks was the salesperson's broker and specifically restricted sales associates from receiving the checks directly. Id. at 567-68, ¶ 7, 38 P.3d at 1232-33. Before the checks were distributed, the plaintiff left her employer and the employer subsequently amended the instructions to make the commission checks payable to itself, and did so without plaintiff's consent. Id. at 566, ¶ 1, 38 P.3d at 1231. The Sherman court found that the plaintiff was merely an incidental beneficiary of the escrow instructions because the instructions, and Arizona law, precluded the escrow agents from paying the commissions directly to the plaintiff. Id. at 568, ¶¶ 10-11, 38 P.3d at 1233.

¶22 However, even the ability to receive a direct payment is not, by and of itself, enough to determine a party is a third party beneficiary. The Sherman decision rested upon the reasoning that although the plaintiff was named in the original escrow instructions, the restrictions upon her payment illustrated "[the instructions] did not `both intentionally and directly' benefit her." Id. at 569, ¶ 13, 38 P.3d at 1234 (quoting Norton v. First Fed. Savings, 128 Ariz. 176, 178, 624 P.2d 854, 856 (1981)). Had there been no restrictions, the court would have necessarily found plaintiff to be a third party beneficiary because the instructions otherwise conferred upon her a direct and intentional benefit. Here, the instructions having not been provided, Appellant lacks evidence showing it was an intended beneficiary of the contract, and therefore lacks the ability to maintain an action on the escrow instructions.

B. Third Party Beneficiary by Admission

¶23 Appellant also argues there is an issue of fact regarding its standing to bring suit as a third party beneficiary because of Appellee's admission during discovery that it intended to pay off the Craig note with its payment to Spectrum, and that at the time of the payment it was the loan servicer entitled to collect payments on the Craig note. However, Appellant cites no authority for the proposition that third party beneficiary status may be garnered in such fashion, and appears to conflate the entitlements of a third party beneficiary with the expectations of a servicing agent entitled to the transitory receipt of payments.

¶24 As stated supra ¶ 14, the Arizona rule regarding third party beneficiaries requires that the contract itself expressly indicate the contracting parties' intent to recognize a person as a third party beneficiary. Further, even had the parties stipulated to Appellant's third-party beneficiary status, that is not conclusive of the issue or binding upon the court. Sherman, 201 Ariz. at 567, ¶ 6 n.3, 38 P.3d at 1232 n.3 ("`Parties cannot stipulate as to the law applicable to a given state of facts and bind the court.'") (quoting Word v. Motorola, Inc., 135 Ariz. 517, 520, 662 P.2d 1024, 1027 (1983)).

¶25 Therefore, the trial court did not error in finding, based upon the evidence presented, that Appellant was not a third party beneficiary of the escrow instructions.

C. The Trial Court Did Not Abuse its Discretion by Disregarding Santoro's Second Affidavit5

¶26 In support of its cross-motion for summary judgment, Appellant submitted the first Santoro affidavit. Appellee moved to strike and Appellant thereafter moved to supplement the original affidavit with a second affidavit from Santoro, which had appended to it three pages of the purported Servicing Agreement Santoro relied upon. Appellee objected to the second affidavit, arguing it was based upon inadmissible hearsay and Santoro had not demonstrated she was a competent witness to testify to the matters stated. In its minute entry granting summary judgment, the trial court granted Appellee's motion to strike the first Santoro affidavit and noted that it disregarded the second Santoro affidavit because "[t]he statements were inadmissible hearsay, and the underlying documents she interpreted have not been produced or authenticated."6

¶27 Appellant argues the trial court erred by disregarding the second Santoro affidavit because her statements were not based upon inadmissible hearsay and that the affidavit creates at least a question of fact regarding its third party beneficiary status. We review a trial court's evidentiary rulings for an abuse of discretion. Larsen v. Decker, 196 Ariz. 239, 241, ¶ 6, 995 P.2d 281, 283 (App. 2000).

¶28 Appellant initially contends Santoro's statements regarding the Servicing Agreement were not hearsay because she was not offering into evidence a statement made by an out of court declarant, as a written contract is "merely a memorandum of an understanding between parties." We disagree.

¶29 Hearsay is a statement, written or oral, made at a time when there was no opportunity to cross-examine the declarant and that is offered into evidence to prove the truth of the matter asserted in the statement. Ariz. R. Evid. 801(a), (c)(1)-(2); U.S. Fid. & Guar. Co. v. Davis, 3 Ariz.App. 259, 261, 413 P.2d 590, 592 (1966). Santoro offered quotations from the Servicing Agreement to prove Appellant was the servicing agent for the Craig note. As such, her statements were based upon inadmissible hearsay unless one of the exceptions to the hearsay rule applies. Villas at Hidden Lakes Condos. Ass'n v. Geupel Constr. Co., 174 Ariz. 72, 82, 847 P.2d 117, 127 (App. 1992).

¶30 Appellant alternatively asserts that the Servicing Agreement pages attached to the affidavit, and relied upon by Santoro, fall within the business record hearsay exception. A record is not excluded by the rule against hearsay, provided:

1. The record was made at or near the time by—or from information transmitted by—someone with knowledge; 2. The record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit; 3. Making the record was a regular practice of that activity; 4. All these conditions are shown by the testimony of the custodian or another qualified witness. . .; and 5. Neither the source of information nor the method or circumstances of preparation indicate a lack of trustworthiness.

Ariz. R. Evid. 803(6)(A)-(E). In her affidavit,7 Santoro averred she was a "contested default advocate" of Aurora Bank, a sub-servicer of Aurora, and as such, she had access to Aurora Bank's business records, including those related to the Craig note. She also claimed that the records are kept and maintained in the course of Aurora Bank's regularly conducted business activities, and "are made at or near the time of the event, by or from information transmitted by a person with knowledge."

¶31 Although her affidavit mimics the requirements of Rule 803(6), it provides no facts from which a trial court could determine the validity or trustworthiness of the document, which of course is the central premise upon which the business record exception is based. The affidavit does not describe when Aurora Bank received the document from Appellant, by whom the document was created, or even how or where the document is maintained or kept.

¶32 Even more importantly, the pages of the Servicing Agreement provided to the trial court contain zero indicia they govern the Craig note. Santoro averred the owner of the Craig note was Structured Asset Securities Corporation (SASC), yet the provided pages list Lehman Brothers Holdings, Inc. as the "seller" and makes no mention of SASC. Nor is there evidence in the record illustrating when or how SASC became the holder of the Craig note. Further, there is no reference to the Craigs or the Craig note contained within the provided Servicing Agreement pages that would illustrate this particular agreement in fact controlled the Craig note. Therefore, the affidavit failed to establish the Servicing Agreement's admissibility under the business records exception to the hearsay rule.

¶33 Moreover, the affidavit was also insufficient under Arizona Rule of Civil Procedure 56(e). Rule 56(e)(1) provides that "[a]n affidavit used to support or oppose a motion shall be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify to the matters stated." Santoro does not provide any facts — such as her training, job responsibilities, or duties — that would illustrate her competency to testify to the matters stated within the affidavit.

¶34 Also, as noted above, the Santoro statements based upon the provided, but unauthenticated, pages of the Servicing Agreement are inadmissible as hearsay, and the affidavit does not even attest to the provided pages being a true and correct copy. See Ariz. R. Civ. P. 56(e)(1) ("If a paper or part of a paper is referred to in an affidavit, a properly authenticated copy shall be attached to or served with the affidavit.").

¶35 Therefore, the affidavit was sufficient neither to invoke the business records exception nor to support or oppose the cross-motions for summary judgment. There being no competent evidence in the record to support Appellant's third party beneficiary status, the trial court did not err in granting Appellee's motion for summary judgment on this claim.8

II. Constructive Trust

¶36 Appellant also asserts the trial court erred in granting summary judgment on its constructive trust claim. Specifically, Appellant argues a constructive trust was created when Appellee received the purchase proceeds in escrow and that it breached its duty as trustee to pay the party entitled to the funds.

¶37 The imposition of a constructive trust is an equitable remedy that arises by operation of law to prevent one person from being unjustly enriched at the expense of another. Turley v. Ethington, 213 Ariz. 640, 643, ¶¶ 8-9, 146 P.3d 1282, 1285 (App. 2006) (citations omitted). "A court may impose a constructive trust whenever title to property has been obtained through actual fraud, misrepresentation, concealment, undue influence, duress or through any other means which render it unconscionable for the holder of legal title to continue to retain and enjoy its beneficial interest." Id. at ¶ 9. It is a remedial device used to compel one who unfairly holds a property interest to convey it to the person to whom it justly belongs. Harmon v. Harmon, 126 Ariz. 242, 244, 613 P.2d 1298, 1300 (App. 1980). Here, a constructive trust was not otherwise imposed; also, there is no evidence that Appellee was unjustly enriched by the transaction in question and it is undisputed that they no longer have possession of the funds at issue. See Burch & Cracchiolo, P.A. v. Pugliani, 144 Ariz. 281, 286, 697 P.2d 674, 679 (1985) ("A general claim for money damages will not give rise to a constructive trust."). As such, the trial court did not err by granting summary judgment for Appellee on this claim.

III. Motion for New Trial

¶38 Appellant contends the trial court abused its discretion in denying its motion for new trial in several respects: 1) the trial court failed to review its ruling on Appellee's motion to strike, 2) the trial court failed to consider the evidence Appellant presented with its motion for new trial, and 3) the trial court employed the wrong standard when it granted summary judgment for Appellee. For the following reasons, we find the trial court did not abuse its discretion.

A. The Trial Court's Review of Evidentiary Rulings

¶39 Appellant contends the trial court erred by not reviewing its evidentiary ruling regarding Santoro's second affidavit as required by Arizona Rule of Civil Procedure 59. Rule 59(a)(6) states that a new trial may be granted if there was an error in the rejection of evidence that materially affects the aggrieved party's rights. Rule 59(c)(2) requires a trial court to review all rulings on objections to evidence if a party moves for a new trial upon the general ground the trial court erred in rejecting evidence. The trial court's minute entry denying Appellant's motion for new trial does not specifically state that it reviewed its ruling regarding the motion to strike Ms. Santoro's first affidavit in full or its decision to disregard the supplemental affidavit. However, the minute entry states the trial court received and considered Appellant's motion for new trial, Appellee's response and Appellant's subsequent reply. As Appellant and Appellee both addressed the trial court's ruling on Appellant's affidavits, the trial court necessarily reviewed its rulings and, ultimately, found its decision had not changed. Therefore, there was no abuse of discretion by the trial court.

B. The Trial Court's Review of Newly Attached Evidence to Appellant's Motion for New Trial

¶40 Appellant also argues the trial court abused its discretion by failing to review the evidence submitted with its motion for new trial. To its motion, Appellant attached: 1) another affidavit by Ms. Santoro; 2) a copy of the Craig note; 3) an undated allonge to the Craig note illustrating the Craig note's chain of title from Spectrum to Lehman Brothers Holdings, Inc.; 4) a computer generated print-out by Appellant called a DLQ1 form; 5) a trust agreement listing SASC as depositor and Appellant as Master Servicer for the Structured Adjustable Rate Mortgage Loan Trust Series 2005-7; 6) a full copy of a servicing agreement showing Appellant as Servicer and Lehman Brothers Holdings, Inc. as Seller for Structured Adjustable Rate Mortgage Loan Trust Series 2005-7; and 7) the Craig DOT.

¶41 Initially, we note again the trial court acknowledged that it reviewed and considered the pleadings related to Appellant's motion for new trial, to which the above listed documents were attached as exhibits, and stated that its reasoning for finding against Appellant had not changed. Further, Rule 59(a)(4) allows for a new trial in the event the aggrieved party produces "material evidence, newly discovered, which with reasonable diligence could not have been discovered and produced at trial." Appellant does not argue that the evidence attached to its motion for new trial was newly discovered or otherwise unavailable at the time the summary judgment motions were initially considered. Accordingly, we find no abuse of discretion in the trial court's ruling.

C. The Trial Court Applied the Proper Standard in its Motion for Summary Judgment Ruling

¶42 Appellant contends the trial court erred by failing to view the facts in the light most favorable to Appellant as the non-moving party. See Nat'l Bank of Ariz. v. Thruston, 218 Ariz. 112, 116, ¶ 17, 180 P.3d 977, 981 (App. 2008) ("[A] court must view the evidence in a light most favorable to the non-moving party and draw all justifiable inferences in its favor."). However, within its ruling, the trial court stated that it must view the facts and all reasonable inferences from those facts in the light most favorable to the party opposing summary judgment, and that based on "these factual circumstances" Appellee was entitled to judgment. The trial court's obligation to view evidence in a light most favorable to the non-moving party should not be confused with an abstract anticipation that the court might ignore either the law or uncontested facts before it in order to reach an otherwise unwarranted conclusion. As such, we find no error in the standard employed by the trial court.

IV. Attorneys' Fees

¶43 Appellee requests its attorneys' fees on appeal pursuant to A.R.S. § 12-341.01 (2013). In our discretion, we grant Appellee's request for an award of its reasonable attorneys' fees, subject to compliance with Arizona Rule of Civil Appellate Procedure 21.

Conclusion

¶44 The trial court's grant of summary judgment in favor of Appellee and denial of Appellant's motion for new trial are affirmed.

FootNotes


1. "When reviewing a grant of summary judgment, we view the facts in the light most favorable to the non-moving party." Wells Fargo Bank, N.A. v. Allen, 231 Ariz. 209, 213, ¶ 14, 292 P.3d 195, 199 (App. 2012).
2. At the time in question, Jerry Craig was Spectrum's Chairman of the Board of Directors and CEO. Pattie Craig was Spectrum's Corporate Secretary.
3. MERS is a private corporation that administers a national electronic registry that tracks the transfer of ownership interests and servicing rights in mortgage loans. Members of the registry assign their interest to MERS, and MERS becomes the mortgagee of record. Upon the transfer of interest between members, MERS privately tracks the assignment within its systems and remains the mortgagee of record. The lenders retain the promissory notes and servicing rights to the mortgages, and are able to sell those interests without having to publicly record the transaction. Sitton v. Deutsche Bank Nat. Trust Co., 233 Ariz. 215, ¶ 3 n.1, 311 P.3d 237, 238 (App. 2013); Stauffer v. U.S. Bank Nat'l Ass'n, 233 Ariz. 22, ¶ 2 n.1, 308 P.3d 1173, 1175 (App. 2013).
4. The trial court also found that Appellant lacked standing to pursue its claim because it had not provided admissible evidence that it possessed the rights of a holder for the Craig note pursuant to A.R.S. § 47-3412 (2013). Appellant contends the trial court erred because several jurisdictions have found loan servicers have standing to sue in similar circumstances. See CW Capital Asset Management, LLC v. Chicago Props., LLC, 610 F.3d 497, 501-02 (7th Cir. 2010); ECF N. Ridge Assocs., L.P. v. ORIX Capital Markets, L.L.C., 336 S.W.3d 400, 406 (Tex. App. 2011). However, as Appellant's complaint brings only a claim for breach of contract under a third party beneficiary theory, and Appellant's failure to produce evidence demonstrating a question of fact regarding its standing as a third party beneficiary is dispositive of the claim, we do not reach this issue.
5. The trial court's decision to strike the first affidavit is not contested by Appellant on appeal, and we therefore do not address it.
6. Appellant argues the trial court also erred because it did not rule on its Motion to Supplement and did not specify which affidavit, the first or the second, it had disregarded or its reasoning for doing so. Appellant further argues the trial court either erred in failing to consider the second affidavit or in striking it. Although not specified, it is clear from the proceedings that the trial court struck the first affidavit and disregarded the second. If the trial court truly had just ignored Santoro's second affidavit, there would have been no reason for it to state in a footnote that it had disregarded a stricken affidavit. Even though the trial court did not rule on Appellant's Motion to Supplement, it properly decided to disregard the second affidavit following Appellee's objection to its lack of foundation and hearsay issues in its response to the Motion to Supplement. See Sitton v. Deutsche Bank Nat. Trust Co., 233 Ariz. 215, ¶ 22 n. 5, 311 P.3d 237, 242 n.5 (App. 2013) (noting that an objection in a response to a motion "is all that is necessary to alert [a trial court] to the need to disregard legally infirm evidence, and such evidence should be disregarded — not stricken from the record"). As Appellee properly objected to the second Santoro affidavit, and did not move to strike it, the trial court correctly disregarded the legally infirm evidence.
7. Her second affidavit "reaffirmed" the first, which contained the only foundational assertions offered.
8. Appellant also argues the trial court erred by disregarding the affidavit in its entirety, rather than disregarding just those statements it deemed inadmissible. For example, Appellant asserts Santoro, based upon her knowledge as an Aurora employee, was capable of testifying to the bare fact that Appellant was the servicer of the Craig note. However, any personal knowledge Santoro would have had about the specific type of contractual relationship that existed between Appellant and the holder of the Craig note would necessarily have derived from her review and analysis of unproduced and unauthenticated documents. The remaining statements contained within the affidavit were irrelevant to the issues before the trial court or were asserted elsewhere in the record. Therefore, the trial court did not err by disregarding the second affidavit in its entirety.
Source:  Leagle

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