                     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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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


     LAUGHLIN LAND, LLC, an Arizona limited liability company,
                      Plaintiff/Appellee,

                                        v.

                  DAVID W. LORDS, Defendant/Appellant.

                             No. 1 CA-CV 14-0193
                               FILED 7-7-2015


           Appeal from the Superior Court in Mohave County
                        No. S8015CV20080624
               The Honorable Lee Frank Jantzen, Judge

                                  AFFIRMED


                                   COUNSEL

Premier Legal Group, Las Vegas
By Andrew H. Pastwick
Counsel for Plaintiff/Appellee

Dessaules Law Group, Phoenix
By Jonathan A. Dessaules, Douglas C. Wigley
Counsel for Defendant/Appellant
                      LAUGHLIN LAND v. LORDS
                         Decision of the Court



                      MEMORANDUM DECISION

Presiding Judge Randall M. Howe delivered the decision of the Court, in
which Judge Andrew W. Gould and Judge Peter B. Swann joined.


H O W E, Judge:

¶1            David W. Lords appeals the trial court’s orders (1) allowing
Laughlin Land, LLC, (“Laughlin”) to substitute for Consolidated Mortgage,
LLC, now known as CM Capital services, LLC, (“CM”) in the underlying
deficiency action and (2) concluding that he owed a deficiency judgment
based on the court’s findings of the property’s fair market value as $18
million and the amount owed as $22,411,605.88. For the following reasons,
we affirm.

                FACTS AND PROCEDURAL HISTORY

¶2             In 2006, CM, a mortgage broker, packaged a $17,250,000 loan
for a pool of private investors (“the loan”). Each investor signed a “loan
servicing agreement” and “special power of attorney” agreement naming
CM as the investor’s attorney-in-fact for purposes of servicing the loan. As
relevant here, the servicing agreements provided that if the borrower
defaulted on the loan, CM would “attempt to collect the payment by,
among other things, . . . taking foreclosure steps, and obtaining legal
representation for the Lender in litigation and bankruptcy proceedings.” If
CM pursued foreclosure proceedings, it could enter a credit bid “for the
Property securing such Loan on behalf of the Lender.” Further, if CM
purchased the property on behalf of the lenders by credit bid, then CM
could create a “Special Purpose Entity” (“SPE”) “for the purpose of taking
such title.” The SPE “shall be owned by all of the Lenders on the Loan, with
each Lender owning a fractional interest in proportion to that Lender’s
Fractional Interest in the Loan.”

¶3            In June 2006, L.U.R.E. I, LLC, (“LURE”) executed a
promissory note and first deed of trust for the loan in favor of
“Consolidated Mortgage L.L.C. FBO See Exhibit ‘A.’” “FBO” means “for the
benefit of.” Lords executed a commercial guaranty for the repayment of the
loan, plus interest, costs, fees, and charges also to “Consolidated Mortgage
L.L.C. FBO See Exhibit ‘A.’” As relevant here, the guaranty contract
provided that Lords “absolutely and unconditionally guarantee[d] full and


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                      LAUGHLIN LAND v. LORDS
                         Decision of the Court

punctual payment and satisfaction of the Indebtedness of [LURE] to [CM
FBO See Exhibit ‘A’].” “Indebtedness” included the principal amount
outstanding at any one or more times and accrued unpaid interests:

      [A]ll of the principal amount outstanding from time to time
      and at any one or more times, accrued unpaid interests
      thereon and all collection costs and legal expenses related
      thereto permitted by law, attorneys’ fees, arising from any
      and all debts, liabilities and obligations that [LURE]
      individually and collectively or interchangeably with others,
      owes or will owe [CM FBO See Exhibit “A”] under the Note
      and Related Documents and any renewals, extensions,
      modifications, refinancing, consolidations and substitutions
      of the Note and Related Documents.

The contract further provided that it would take effect and “continue in full
force until all Indebtedness shall have been fully and finally paid and
satisfied and all of Guarantor’s other obligations under this Guaranty shall
have been performed in full.”

¶4            Moreover, Lords “agree[d] to pay upon demand all of
Lender’s costs and expenses, including Lender’s attorneys’ fees and
Lender’s legal expenses, incurred in connection with the enforcement of
this Guaranty.” “Costs and expenses include Lenders’ attorneys’ fees and
legal expenses whether or not there is a lawsuit, including attorneys’ fees
and legal expenses for bankruptcy proceedings . . . and any anticipated
post-judgment collection services.” Lords further “waive[d] any and all
rights or defenses based on suretyship or impairment of collateral
including, but not limited to . . . any disability or other defense of [LURE]
. . . or by reason of the cessation of [LURE’s] liability from any cause
whatsoever, other than payment in full legal tender, of the indebtedness[.]”
The note, guaranty contract, and deed of trust all included the same
“Exhibit A,” which was a list of the pool of private investors. The loan was
a purchase money loan for a 640-acre parcel (“the property”).

¶5             LURE defaulted on the note and subsequently filed for
Chapter 11 bankruptcy protection. In its bankruptcy petition, LURE listed
CM as having an unliquidated $17,250,000 secured claim. Pursuant to the
servicing agreements, CM retained counsel to represent the investors’
interests in the bankruptcy proceedings. CM also commenced foreclosure
proceedings on the property. Before the trustee’s sale, however, CM created
an SPE, Laughlin, on January 2, 2008.




                                     3
                       LAUGHLIN LAND v. LORDS
                          Decision of the Court

¶6             Laughlin’s operating agreement provided that its manager
was CM and members were “lenders set forth at Exhibit ‘A.’” “Exhibit A”
was the list of the pool of private investors as included in the note, guaranty,
and deed of trust. Laughlin’s purpose was to hold “title to real property
obtained through foreclosure proceedings and [authorize] [CM] to manage,
operate, improve, rent and sell such real property.” The agreement further
elaborated on the relationship between CM, Laughlin, LURE, the loan, and
the property: “WHEREAS, the third-party borrower [LURE] defaulted on
the Loan and, pursuant to the terms of the Loan Servicing Agreement,
LAUGHLIN LAND, LLC, was formed by [CM] and has obtained title to the
Property through foreclosure proceedings[.]”

¶7                At the trustee’s sale on January 18, 2008, CM made a credit
bid of $10 million. Soon after, CM filed a proof of claim in LURE’s
bankruptcy proceedings, which stated, “On or about June 7, 2006, Debtor
LURE I, LLC (‘Debtor’) executed a promissory note (‘Note’) in favor of
Consolidated Mortgage, LLC for the benefit of its investors. . . . The
principal amount of the Note was $17,250,000.” The proof of claim also
stated that the “outstanding principal balance and interest of the Note owed
by [LURE] on July 13, 2007, the date [LURE] filed its Chapter 11 bankruptcy
petition . . . , was $18,414,375,” the sum of the principal balance ($17,250,000)
and “interest from 02/01/2007 to 07/13/2007 ($1,164,375).” The
incorporated exhibit stated that the payoff amount also included “interest
from 7/14/2007 at $7,187.50 per day” to the date CM received payment.

¶8            On June 2, 2008, the trustee issued a recorded trustee’s deed
for the property to “Consolidated Mortgage, LLC, FBO” and listing the
private investors, along with Exhibit “A.” Two days later, the investors,
identified as “Exhibit A,” quitclaimed to Laughlin all their “right, title and
interest in and to the property.” The accompanying affidavit of property
value provided that “Consolidated Mortgage, LLC as Attorney in Fact FBO
Private Investors” sold to “Laughlin Land, LLC,” the property for $10
million. The affidavit also stated that the relationship between CM and
Laughlin as: “Transfer into a newly formed LLC.”

¶9            Within 90 days of the trustee’s sale, CM, as “attorney-in-fact
and servicing agent for private investors,” filed suit against Lords under
A.R.S. § 33–814(A) to recover the alleged loan deficiency plus fees and costs.
In 2009, CM moved for partial summary judgment on whether a contract
existed between Lords and CM. The trial court granted the motion “on the
issue that there [was] in fact a contract; that there [was] in fact, a failure to
perform on that contract or a breach of the contract.” But the court left open
the issue of damages, if any existed.


                                       4
                      LAUGHLIN LAND v. LORDS
                         Decision of the Court

¶10          In 2011, CM resigned as attorney-in-fact and manager of
Laughlin and was replaced by Laughlin Investors, LLC, an entity with
50.03% ownership interest in Laughlin. The members of Laughlin, that is,
the private investors, then sought substitution in as plaintiffs in the
underlying deficiency action against Lords. The motion stated that CM was
not a member of Laughlin, it was not entitled to any damages that may be
awarded in the suit, and Laughlin was the real party in interest. After oral
arguments, the trial court granted the motion, and Laughlin filed an
amended complaint substituting itself for CM.

¶11            Lords moved to dismiss the amended complaint and for
summary judgment, arguing that Laughlin was not the proper plaintiff, but
the trial court denied both motions. After a bench trial, the court concluded
that the property’s fair market value on January 18, 2008, was $18 million,
the amount owed on that date was $22,411,605.88,1 and hence, the
deficiency was $4,411,605.88. The court also awarded Laughlin attorneys’
fees and costs. Lords moved for a new trial, but the court denied it.
Although Lords appealed before the court entered a final judgment on its
denial of his motion for a new trial, the appeal was reinstated after that
judgment was finalized.

                              DISCUSSION

¶12           As relevant to our resolution of this appeal, Lords argues that
the trial court erred by allowing Laughlin to substitute for CM in the
deficiency action and in determining the property’s fair market value, the
amount Lords owed, and the deficiency.2 For the reasons discussed below,

1      The amount owed was the sum of the principal balance; the amount
of interest, including February 2007 interest, March 2007 interest for 7 days
at $6,028.22 per day at 13%, March 2007 interest for 24 days at $6,955.65 per
day at 15%, April through December 2007 interest at $215,625 per month
(15%), and January 2008 for 18 days at $6,955.65 per day; and fees and costs,
including written demand for payoff, trustee fee, default fee, foreclosure
fees, past maturity fee for March, June, and September 2007, and past
maturity fee for December 2007 prorated.

2      Lords also appeals the trial court’s orders awarding Laughlin
attorneys’ fees and costs and denying his motions to dismiss, for summary
judgment, and for a new trial. But Lords has waived these issues because
he presented no arguments about them on appeal. See Ariz. R. Civ. App. P.
13(a)(6) (providing that the opening brief “must set forth” an argument,



                                     5
                       LAUGHLIN LAND v. LORDS
                          Decision of the Court

the trial court did not err in allowing the substitution or in determining the
fair market value, amount owed, or deficiency.

              1. Substitution of Laughlin for CM

¶13           Lords argues that the trial court erred by allowing Laughlin
to substitute for CM in the deficiency action pursuant to Arizona Rule of
Civil Procedure 17(a). We interpret Rule 17(a), the real party in interest rule,
in conjunction with the law of standing. Strawberry Water Co. v. Paulsen, 220
Ariz. 401, 406 ¶ 8, 207 P.3d 654, 659 (App. 2008). In Arizona, a party has
standing to sue “if, under all circumstances, the party possesses an interest
in the outcome of the litigation.” Id. (citation omitted). We review de novo
whether a party has standing, In re Indenture of Trust Dated Jan. 13, 1964, 235
Ariz. 40, 44 ¶ 5, 326 P.3d 307, 311 (App. 2014), and the meaning and effect
of a procedural rule, Preston v. Kindred Hosps., L.L.C., 225 Ariz. 223, 225 ¶ 8,
236 P.3d 450, 452 (App. 2010).

¶14            Arizona Rule of Civil Procedure 17(a) provides in pertinent
part that “[e]very action shall be prosecuted in the name of the real party in
interest.” “No action shall be dismissed on the ground that it was not
prosecuted in the name of the real party in interest until a reasonable time
has been allowed after objection for . . . substitution of[] the real party in
interest.” Ariz. R. Civ. P. 17(a). Rule 17(a) allows for substitution of the real
party in interest as the plaintiff to avoid dismissal of an ordinary civil
action. Further, a party “with whom or in whose name a contract has been
made for the benefit of another” “may sue in that person’s own name
without joining the party for whose benefit the action is brought.” Ariz. R.
Civ. P. 17(a).

¶15           Here, the trial court properly allowed Laughlin to substitute
for CM because both were representatives of the real party in interest, the
private investors listed in Exhibit “A.” The record shows that within 90
days of the trustee’s sale, CM, acting as attorney-in-fact and servicing agent
for the private investors, filed suit against Lords for a deficiency judgment


which “must contain . . . contentions concerning each issue presented for
review, with supporting reasons for each contention, and with citations of
legal authorities and appropriate references to the portions of the record on
which the appellant relies”); State v. Felkins, 156 Ariz. 37, 38 n.1, 749 P.2d
946, 947 n.1 (App. 1988) (claim abandoned when not supported by sufficient
authority). Regardless of the waiver, because Lords’ arguments to the trial
court asserted no considerations mandating a review of the denials of his
motions, we decline to do so.


                                       6
                        LAUGHLIN LAND v. LORDS
                           Decision of the Court

for the benefit of the investors. Further, CM entered into the underlying
note, guaranty, and deed of trust for the benefit of the investors; CM was
merely their agent. As CM conceded throughout the proceedings, it had no
ownership interest in the property or interest in the litigation and was
acting solely for the benefit of the investors. Thus, when CM resigned as the
investors’ agent, the investors accordingly moved under Rule 17(a) to
substitute CM with Laughlin, another agent, to continue to pursue their
deficiency action against Lords. Finally, the rule’s purpose was served here
because the record shows that Lords was able to present the same evidence
and maintain the same defenses that he had against CM, which in effect
was the private investors. See Colorado Cas. Ins. Co. v. Safety Control Co., Inc.,
230 Ariz. 560, 565 ¶ 11, 288 P.3d 764, 769 (App. 2012) (“The purpose of [Rule
17(a)] is to enable the defendant to avail himself of the evidence and
defenses that he has against the real party in interest. . . .”) (internal
quotation marks and citation omitted).

¶16             But Lords counters that a deficiency action is a claim for
breach of contract, and because Laughlin was not a party to the note or
guaranty, Laughlin must first prove that it was either a third-party
beneficiary or assignee of the documents to enforce them against Lords. But
Arizona’s non-judicial foreclosure statutes do not require a purported note
holder to possess the original negotiable instrument in order to enforce it.
See A.R.S. § 33–807(A) (“A power of sale is conferred upon the trustee of a
trust deed under which the trust property may be sold . . . after a breach of
default. . . .”). That is, Laughlin need not present the note or guaranty in
order to pursue the deficiency action, see Hogan v. Washington Mut. Bank,
N.A., 230 Ariz. 584, 587 ¶¶ 11–12, 277 P.3d 781, 784 (2012) (allowing a trustee
to proceed with a non-judicial foreclosure without first requiring the
beneficiary to prove ownership of the underlying note), especially because
Laughlin was enforcing the action as an agent and for the benefit of the
private investors, whose names and fractional interests are listed in the
note, guaranty, deed of trust, and all other relevant documents.

¶17            Lords further counters that even if the substitution was valid,
Laughlin’s claim cannot relate back because Laughlin did not exist when
CM filed the action. The gist of Lords’ argument is that Laughlin’s claim is
untimely because it failed to file the action within the 90-day timeline as
prescribed in A.R.S. § 33–814(A). But when an agent of the real party in
interest is substituted for an original plaintiff that was also an agent of the
real party in interest with identical claims, Rule 17(a) provides that the
“substitution shall have the same effect as if the action had been
commenced in the name of the real party in interest.” Ariz. R. Civ. P. 17(a);
see also Preston v. Kindred Hosps. W. L.L.C., 226 Ariz. 391, 393–94 ¶ 12, 249


                                        7
                        LAUGHLIN LAND v. LORDS
                           Decision of the Court

P.3d 771, 773–74 (2011). Consequently, because Rule 17(a) allows Laughlin
to substitute for CM and for relation back of the claim, the trial court did
not err.

              2. The Deficiency Judgment

                      2a. The Fair Market Value

¶18            Lords next argues that the trial court erred in determining the
property’s fair market value. A deficiency judgment is “the sum of the total
amount owed the beneficiary as of the date of the sale . . . less the fair market
value of the trust property on the date of the sale . . . or the sale price at the
trustee’s sale, whichever is higher.” A.R.S. § 33–814(A). “In determining a
property’s fair market value, a trial court may adopt portions of the
evidence from different witnesses, and this Court will sustain a result
anywhere between the highest and lowest estimate which may be arrived
at by using the various factors appearing in the testimony in any
combination which is reasonable.” CSA 13-101 Loop, LLC v. Loop 101, LLC,
233 Ariz. 355, 362–63 ¶ 25, 312 P.3d 1121, 1128–29 (App. 2013) (internal
quotation marks and citation omitted). “When a ruling is based on
conflicting testimony, we will not disturb the court’s ruling by reweighing
the evidence.” Id.

¶19            Here, the trial court did not err in determining that the
property’s fair market value was $18 million. In reaching its decision, the
court explained that based on the evidence, the ranch where the property
was located was “burgeoning, growing, expanding” and “that speculation
was high obviously from 2002 to 2007.” The property’s appraisal in 2005
was $30 million and in August 2007 was $19.2 million. In fall 2007, the
market value at the ranch was going down, and accordingly, the property’s
value could not be the same as two years earlier at $30 million or as the
bankruptcy value of $27 million or as high as the appraisal in August 2007.
Ultimately, the court found the property’s value in January 2008, on the
date of the trustee’s sale, as $18 million, a result between Lords’ appraised
value, $20,900,000, and Laughlin’s appraised value, $12,800,000. Because
the trial court used various factors appearing in testimony in a reasonable
combination to reach its fair market value determination and because the
result was between the highest and lowest estimates, the court did not err.

                      2b. The Amount Owed

¶20           Lords next argues that the trial court erred in determining the
amount owed. He contends that under the guaranty contract, his obligation
is capped at $18,414,375, without any post-petition accrual of interest and


                                        8
                       LAUGHLIN LAND v. LORDS
                          Decision of the Court

fees, because the contract provided that his liability is “coexistent with
LURE [sic] (i.e., the amount that LURE ‘owes or will owe’).” We review de
novo contract and statutory interpretation issues. Tenet Healthsystem TGH,
Inc. v. Silver, 203 Ariz. 217, 219 ¶ 5, 52 P.3d 786, 788 (App. 2002). The nature
and extent of a guarantor’s liability depends on the terms of the guaranty
contract. First Credit Union v. Courtney, 233 Ariz. 105, 108 ¶ 12, 309 P.3d 929,
932 (App. 2013). Although we generally construe a guaranty to limit a
guarantor’s liability, we must give effect to its clear and unambiguous
terms. Tenet, 203 Ariz. at 220 ¶ 7, 52 P.3d at 789.

¶21            Here, the terms of the guaranty contract are clear that Lords’
potential liability is greater than LURE’s potential liability. Under the
contract, Lords agreed to pay all of LURE’s indebtedness, which broadly
defined included all (1) principal amount outstanding at any one or more
times; (2) accrued unpaid interest thereon; and (3) collection costs and legal
expenses related to the debt, liabilities, and obligations, until LURE’s
indebtedness was paid in full and Lords’ other obligations under the
contract was performed in full. Additionally—and beyond LURE’s
“indebtedness”—Lords agreed to pay (4) all Lenders’ costs and expenses,
including attorneys’ fees and legal expenses incurred in connection with
enforcing the contract, bankruptcy proceedings, and any post-judgment
collection services. Thus, contrary to Lords’ contention, the contract
provided for greater liability for Lords than LURE. See Arizona Bank & Trust
v. James R. Barrons Trust, 713 Ariz. Adv. Rep. 25, 4 ¶ 14 (May 28, 2015)
(providing that a guaranty contract may provide for greater liability than
that of the principal debtor); Provident Nat’l Assurance Co. v. Sbrocca, 180
Ariz. 464, 466, 885 P.2d 152, 154 (App. 1994) (concluding that guarantors of
a nonrecourse loan could be held liable to a lender based on their agreement
to unconditionally guarantee what would otherwise be a nonrecourse
promissory note).

¶22           Moreover, under the contract, Lords waived cessation of
LURE’s liability from “any cause whatsoever, other than payment in full
legal tender, of the indebtedness” as a defense; Lords’ liability continued
despite LURE’s bankruptcy. The record indicates that neither Lords nor
LURE paid any part of LURE’s indebtedness on the date of the trustee’s
sale. Accordingly, Lords as guarantor owed LURE’s indebtedness as
defined by the terms of the guaranty contract to Laughlin. The record shows
that on the date of the trustee’s sale, Lords owed $22,411,605.88, the sum of
the unpaid principal, amount of interest accrued before the payoff date,
amount of interest accrued after the payoff date at the default rate, and
various fees and costs. The amount owed minus the fair market value is



                                       9
                      LAUGHLIN LAND v. LORDS
                         Decision of the Court

$4,411,605.88, and consequently, the trial court did not err in determining
the three amounts.

             3. Attorneys’ Fees and Costs

¶23           Both Laughlin and Lords request awards of attorneys’ fees
and costs pursuant to A.R.S. §§ 12–341 and –341.01 and the guaranty
contract. Because Laughlin is the successful party, we grant its request, but
deny Lords’ request.

                              CONCLUSION

¶24          For the foregoing reasons, we affirm.




                                :ama




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