Nui v. Kdl

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

NUI HUI, LP, Plaintiff/Appellee,

v.

KDL INVESTMENTS, LLC, Defendant/Appellant.

No. 1 CA-CV 23-0507
FILED 05-23-2024

Appeal from the Superior Court in Maricopa County
No. CV2021-092684
The Honorable Rodrick J. Coffey, Judge

AFFIRMED

COUNSEL

Anderson Clarkson Brown PLLC, Mesa
By Nat Clarkson
Counsel for Plaintiff/Appellee

Denton Peterson Dunn, PLLC, Mesa
By Brad A. Denton
Counsel for Defendant/Appellant
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Decision of the Court

MEMORANDUM DECISION

Judge Jennifer M. Perkins delivered the decision of the Court, in which
Presiding Judge Andrew M. Jacobs and Judge David D. Weinzweig joined.

P E R K I N S, Judge:

¶1 KDL Investments, LLC (“KDL”) appeals the superior court’s
grant of summary judgment in favor of Nui Hui, LP (“Nui Hui”). We
affirm.

FACTS AND PROCEDURAL HISTORY

¶2 Mary Ann Hearn manages two partnerships, Nui Hui and
Makana L.P. (“Makana”). Both Nui Hui’s and Makana’s partnership
agreements give Hearn the sole and exclusive right to manage the business
and affairs of the partnerships. Hearn and her family use Makana to make
donations to BYU Hawaii and Deseret Trust; Nui Hui benefits Hearn and
her family members.

¶3 In 2017, Nui Hui loaned $1.25 million to Voila Mattress
(“Voila”), memorialized by a security agreement and a promissory note
(the “note”). The note and security agreement contained conflicting
provisions on the loan’s transferability; the note required consent from
Voila before the loan could be transferred, but the security agreement
allowed Nui Hui to assign the loan without restriction.

¶4 Nui Hui obtained three guaranties, each for a discrete portion
of the loan, including one (the “Guaranty”) from KDL. The Guaranty
defines Nui Hui as “the Lender.” And the Guaranty authorizes the Lender
to assign the Guaranty in whole or in part without restriction.

¶5 Voila quickly defaulted on the loan, with the total principal
due on the loan at $1.25 million. Under the terms of the Guaranty, KDL
owes the Lender $375,000.

¶6 In 2018, Nui Hui met with BYU Hawaii to discuss a transfer
of assets between Makana and Nui Hui (the “macroswap”), to ensure the
assets Makana owns for the benefit of BYU Hawaii align with BYU Hawaii’s
goals. As part of the macroswap, Nui Hui assigned the Voila loan and the
Guaranty to Makana pursuant to a purchase agreement. In exchange, Nui

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Hui received an interest in a deed of trust and the deed’s related payment
stream. Nui Hui has not received payments from its interest in the deed of
trust.

¶7 In 2020, noticing the discrepancy between the assignment
provisions in the note and security agreement, Nui Hui and Makana
entered into a “Rescission Agreement” to revert the note, security
agreement, and guaranties to Nui Hui. Makana’s limited partners,
including BYU Hawaii, were made aware of the rescission and agreed with
Hearn’s managerial decisions. Nui Hui assured BYU Hawaii that it would
receive any proceeds generated from the claims against Voila, KDL, and the
other guarantors.

¶8 Nui Hui then brought this action against Voila, KDL, and the
other guarantors. KDL refused to fulfill its obligation under the Guaranty,
insisting that Makana is the proper plaintiff because Nui Hui has no
damages. KDL claimed that Hearn was attempting to double dip by giving
her family the benefit of the transfer with Makana while leaving BYU
Hawaii with nothing. KDL also moved to dismiss for lack of personal
jurisdiction, overlooking clear language in the Guaranty consenting to
jurisdiction in Arizona.

¶9 Frustrated by KDL’s refusal to honor its obligation under the
Guaranty, Nui Hui and Makana entered into a memorandum of agreement
to reinforce the assignment of the Guaranty to Nui Hui and assure that all
proceeds from the claims would go to Makana. Nui Hui moved for
summary judgment. KDL responded and also moved for summary
judgment.

¶10 The court granted summary judgment in favor of Nui Hui,
finding that “regardless of whether the assignment and recission were a
good deal or a terrible deal for Makana,” Nui Hui is entitled to enforce the
Guaranty against KDL. KDL timely appealed, and we have jurisdiction.
A.R.S. § 12-2101(A)(1).

DISCUSSION

¶11 We review the superior court’s grant of summary judgment
de novo. Urias v. PCS Health Sys., Inc., 211 Ariz. 81, 85, ¶ 20 (App. 2005). KDL
argues the superior court erred in granting summary judgment for Nui Hui
because Nui Hui has no damages under the Guaranty. Excising the context
of the larger macroswap between Nui Hui and Makana, KDL asserts that
assigning the Guaranty back to Nui Hui without transferring some
equivalent consideration to Makana leaves Nui Hui with no recoverable

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damages. KDL acknowledges that Nui Hui was free to assign its rights
under the guaranty. But pointing to discrepancies in Nui Hui and Makana’s
accounting records, KDL proposes the rescission of that assignment was not
“recognized as an actual event.”

¶12 KDL does not provide any legal authority to support its
conclusion that Nui Hui has no damages. KDL insists these omissions are
so obvious that case citations are unnecessary. Although the element of
breach of contract damages is so well settled that a citation need not be
required, see Ong Hing v. Ariz. Harness Raceway, Inc., 10 Ariz. App. 380, 384
(1969), KDL’s argument is not so simple: it hinges on the analysis of
multiple contracts, vague accusations of fraud, and the mutual rescission of
an assignment. KDL did not analyze any of these aspects of its argument
with any relevant authority. See Adams v. Valley Nat’l Bank of Ariz., 139 Ariz.
340, 342 (App. 1984) (we are not required to carry “the banner on behalf of
the ill-advised appellant”).

¶13 Nui Hui assigned the note, security agreement, and
guaranties to Makana in exchange for an interest in a deed and has not
received payment from that interest. Makana then assigned the note,
security agreement, and guaranties back to Nui Hui in exchange for a
promise that Nui Hui would pay Makana any proceeds from subsequent
claims against Voila and the guarantors, including KDL. Without legal
authority guiding us differently, we have no reason to question the validity
of these underlying transactions. And if the transactions are valid, then Nui
Hui did incur damages under the Guaranty.

¶14 KDL has violated ARCAP 13 because it does not cite to the
applicable standard of review and its brief does not contain a statement of
this Court’s jurisdiction. ARCAP 13(a)(4), (7). Beyond that, KDL does not
provide a single case that is useful to this Court in analyzing its arguments.
ARCAP 13(a)(7). Based on these violations, we could have dismissed KDL’s
appeal as a sanction, but we prefer to resolve cases on their merit, not their
procedural shortcomings. See Adams, 139 Ariz. at 342.

¶15 The language in the Guaranty demands KDL fulfill its
obligation to Nui Hui. KDL provides no authority which helps it escape this
reality. We affirm the court’s grant of summary judgment in favor of Nui
Hui.

ATTORNEY FEES AND COSTS ON APPEAL

¶16 Nui Hui requests its reasonable attorney fees and costs on
appeal pursuant to the “Attorneys’ Fees” clause in the Guaranty and A.R.S.

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§ 12-341.01. Nui Hui also asks this court to grant fees as a sanction pursuant
to ARCAP 25 because the appeal is frivolous and merely meant to delay.
We grant Nui Hui its reasonable attorney fees and costs pursuant to the
Guaranty upon compliance with ARCAP 21, but we decline to award the
same fees to Nui Hui as a sanction under ARCAP 25.

CONCLUSION

¶17 We affirm.

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

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