Basmajian et al v. Compass Bank
Court Docket Sheet

District of Arizona

2:2017-cv-00696 (azd)

BILL OF COSTS by Compass Bank.

AO 133 (Rev. 12/09) Bill of Costs UNITED STATES DISTRICT COURT for the District __________ of Arizona District of __________ Steve A. Basmajian, et al., Plaintiffs,)) v.) Case No.: 2:17-cv-00696-BSB) Compass Bank, Defendant.) BILL OF COSTS Judgment having been entered in the above entitled action on 09/07/2017 against Plaintiffs, Date the Clerk is requested to tax the following as costs: Fees of the Clerk.................................................................. $ 400.00 Fees for service of summons and subpoena.............................................. Fees for printed or electronically recorded transcripts necessarily obtained for use in the case...... Fees and disbursements for printing.................................................... Fees for witnesses (itemize on page two)................................................... 0.00 Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case................................................. Docket fees under 28 U.S.C. 1923..................................................... Costs as shown on Mandate of Court of Appeals.......................................... Compensation of court-appointed experts............................................... Compensation of interpreters and costs of special interpretation services under 28 U.S.C. 1828..... Other costs (please itemize)............................................................. TOTAL $ 400.00 SPECIAL NOTE: Attach to your bill an itemization and documentation for requested costs in all categories. Declaration I declare under penalty of perjury that the foregoing costs are correct and were necessarily incurred in this action and that the services for which fees have been charged were actually and necessarily performed. A copy of this bill has been served on all parties in the following manner: ✔' Electronic service' First class mail, postage prepaid' Other: s/Attorney:/s/Bradley D. Pack Name of Attorney: Bradley D. Pack For: Compass Bank Date: 09/21/2017 Name of Claiming Party Taxation of Costs Costs are taxed in the amount of and included in the judgment. By: Clerk of Court Deputy Clerk Date 1 SCOTT B. COHEN, SBA #014377 BRADLEY D. PACK, SBA #023973 2 ENGELMAN BERGER, P.C. 3636 NORTH CENTRAL AVENUE, SUITE 700 3 PHOENIX, ARIZONA 85012 _____________ Ph: (602) 271-9090 4 Fax: (602) 222-4999 Email: sbc@eblawyers.com Email: bdp@eblawyers.com 5 _____________ 6 Attorneys for Compass Bank 7 UNITED STATES DISTRICT COURT 8 DISTRICT OF ARIZONA 9 Steve A. Basmajian, et al., Case No. 2:17-cv-00696-BSB 10 Plaintiffs, ITEMIZATION OF COSTS 11 v. 12 Compass Bank, 13 14 Defendant. 15 FEE FOR FILING NOTICE OF REMOVAL ……………………. $400.00 16 17 18 19 20 21 22 23 24 25 26 27 {0001537.0143/00797767.DOCX/}

RESPONSE to Motion re: [26] MOTION for Attorney Fees --Defendant's Motion for Award of Attorneys' Fees and Non-Taxable Costs filed by Steve A Basmajian, Deanna Daus, Mark Daus, International Sunprints II LLC, International Sunprints III LLC, International Sunprints IV LLC, International Sunprints V LLC, Rio Verde Investments LLC, Tucsany Properties LLC.

Case 2:17-cv-00696-BSB Document 28 Filed 10/05/17 Page 1 of 11 Wesley S. Loy (009188) 1 BROENING OBERG WOODS & WILSON, P.C. Post Office Box 20527 2 Phoenix, Arizona 85036 (602) 271-7700 3 wsl@bowwlaw.com 4 Bryan M. Knight Admitted pro hac vice 5 KNIGHT JOHNSON, LLC One Midtown Plaza 6 1360 Peachtree Street, Suite 1201 Atlanta, Georgia 30309 7 (404) 228-4822 bknight@knightjohnson.com 8 Attorneys for Plaintiffs 9 IN THE UNITED STATES DISTRICT COURT 10 IN AND FOR THE DISTRICT OF ARIZONA 11 Steve A. Basmajian; Mark Daus; Deanna 12 Daus; International Sunprints II, LLC; NO. 2:17-CV-00696-BSB International Sunprints III, LLC; 13 International Sunprints IV, LLC; PLAINTIFFS’ RESPONSE International Sunprints V, LLC; Rio TO DEFENDANT’S MOTION 14 Verde Investments, LLC; and Tucsany FOR AWARD OF Properties, LLC, ATTORNEYS’ FEES AND 15 NON-TAXABLE COSTS Plaintiffs, 16 vs. 17 Compass Bank, Defendant. 18 19 Plaintiffs Steve A. Basmajian, Mark Daus, Deanna Daus, International Sunprints II, 20 LLC, International Sunprints III, LLC, International Sunprints IV, LLC, International 21 Sunprints V, LLC, Rio Verde Investments, LLC, and Tuscany Properties, LLC (collectively, 22 23 "Plaintiffs") hereby file this brief in response to Defendant’s Motion for Award of Attorneys’ 24 Fees and Non-Taxable Costs (the "Motion"), respectfully showing the Court as follows: 25 26 Case 2:17-cv-00696-BSB Document 28 Filed 10/05/17 Page 2 of 11 I. INTRODUCTION 1 2 Defendant Compass Bank ("the Bank") is not entitled to attorneys’ fees in this case. 3 To support its Motion, the Bank mischaracterizes Plaintiffs’ Complaint as an action to enforce 4 certain loan agreements and guarantees. Plaintiffs, however, did not file the Complaint to 5 enforce those agreements. Rather, as set forth in the Complaint, Plaintiffs filed this action 6 7 based on the Bank’s breach of a separate agreement between Plaintiffs and the Bank whereby 8 the Bank agreed to release Plaintiffs from their obligations for certain loans in exchange for 9 Plaintiffs’ efforts to maintain, market, and sell the properties pledged as collateral. As a result, 10 the Bank’s reliance on various loan documents is misplaced. Nor is the Bank entitled to 11 12 attorneys’ fees pursuant to A.R.S. § 12-341.01, as an award under this statute is always 13 discretionary, and at least three (3) of the relevant factors favor denying the Bank’s Motion. 14 Furthermore, even if the Bank was entitled to attorneys’ fees, which it is not, it has not 15 shown that the fees requested are reasonable. To the contrary, the number of hours the Bank’s 16 17 counsel spent on this matter appears out of line for the few documents filed in this case. 18 II. RELEVANT BACKGROUND 19 Compass Bank made six loans (collectively, the "Loans") for which Plaintiffs were the 20 borrower(s) and/or guarantor(s). (Dkt. 1-1 ¶¶ 9-10.) The promissory notes, guarantees, deeds 21 22 of trust, and other document governing the Loans (collectively, the "Loan Documents") were 23 attached as exhibits to the Bank’s Motion to Dismiss. (Dkt. 17.) The relevant provisions of 24 the Loan Documents are substantially similar for each loan and are set forth in the Bank’s 25 Motion. (Dkt. 26 at pp. 3-5.) 26 2 Case 2:17-cv-00696-BSB Document 28 Filed 10/05/17 Page 3 of 11 On or about May 22, 2013, the Bank assigned all of its rights, title, and interest in the 1 2 Loans to RREF II CB Acquisitions, LLC who, in turn assigned the Loans to RREF II CB III-3 AZ ISI, LLC ("RREF II"). (Dkt. 1-1 at ¶¶ 18-20.) Thereafter, RREF II sued Plaintiffs for the 4 amounts due on the Loans. 5 On December 9, 2016, Plaintiffs filed this action to recover damages based on the 6 7 Bank’s breach of an agreement (the "Release Agreement") between Plaintiffs and the Bank 8 whereby the Bank agreed to release Plaintiffs from loan their obligations in exchange for 9 Plaintiffs’ efforts to maintain, market and sell the collateral. When Plaintiffs filed this action, 10 the Bank no longer held the Loans. Thus, Plaintiffs could not, and did not, sue to enforce the 11 12 Loan Documents but instead sued to enforce the separate Release Agreement. 13 III. ARGUMENT AND CITATION OF AUTHORITY 14 A. The Bank Is Not Entitled To Attorneys’ Fees Pursuant To The Loan Documents. 15 The Bank contends it is entitled to attorneys’ fees pursuant to the terms of the Loan 16 17 Documents. This contention is flawed because (1) the Loan Documents do not provide for 18 an award of attorneys’ fees in litigation concerning a separate agreement and (2) even if the 19 Loan Documents contained such a provision, the Bank assigned all of its rights under those 20 documents. 21 22 1. The Terms of the Loan Documents Do Not Support an Award of Attorneys’ 23 Fees in this Case. 24 The Bank claims it is entitled to attorneys’ fees under five provisions of the Loan 25 Documents. None of those provisions support such an award. 26 3 Case 2:17-cv-00696-BSB Document 28 Filed 10/05/17 Page 4 of 11 a. Business Loan/Construction Loan Agreements 1 2 The Bank refers the Court to the following provisions of the loan agreements: 3 Attorneys’ Fees; Expenses. Borrower agrees to pay upon demand all of 4 Lender’s costs and expenses, including Lender’s attorneys’ fees and Lender’s 5 legal expenses incurred in connection with the enforcement of this 6 Agreement. Lender may hire or pay someone else to help enforce this 7 Agreement, and Borrower shall pay the costs and expenses of such 8 enforcement. 9 10 Indemnification of Lender. Borrower agrees to indemnify, to defend, and to 11 save and hold Lender harmless from any and all claims, suits, obligations, 12 damages, losses, costs and expense (including, without limitation, Lender’s 13 attorneys’ fees)... of any nature whatsoever that may be asserted against or 14 incurred by Lender, its officers, directors, employees, and agents arising out 15 of, relating to, or in any manner occasioned by this Agreement and the 16 exercise of the rights and remedies granted Lender.... 17 (Dkt. 26 at p. 3 (emphasis added).) 18 19 The Bank’s reliance on these provisions is misplaced. First, both provisions provide 20 for the recovery of attorneys’ fees only when the fees are incurred in connection with the Loan 21 agreement. The fees at issue in this case were not. Rather, the Bank incurred the fees in 22 connection with Plaintiffs’ attempt enforce the separate Release Agreement. In addition, the 23 24 Bank cannot rely on these provisions because they provide for payment of fees only to the 25 Lender. Although the Bank was once the Lender for the Loans, the Bank transferred and 26 4 Case 2:17-cv-00696-BSB Document 28 Filed 10/05/17 Page 5 of 11 assigned all of its rights, title, and interest in the Loans. Upon doing so, the Bank’s assignee 1 2 became the Lender, leaving the Bank unable to collect fees pursuant to these provisions. 3 b. Promissory Notes 4 The Bank seeks to rely of the following provision of the Promissory Notes: 5 6 ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay someone else 7 to help collect this Note if Borrower does not pay. Borrower will pay 8 Lender that amount. This includes, subject to any limits under applicable law, 9 Lender’s attorneys’ fees and Lender’s legal expenses, whether or not there is a 10 lawsuit, including.... 11 (Dkt. 26 at p. 4 (emphasis added).) 12 By its plain language, the attorneys’ fees provision of the promissory notes does not 13 apply in this case. The provision limits the award of attorneys’ fees to instances where the 14 15 Lender pays someone to collect on the subject note, which is not what happened in this case. 16 Furthermore, as set forth above, the subject provision limits payment of attorneys’ fees to the 17 Lender, and the Bank, having assigned the Loans, is not the Lender referenced in that 18 paragraph. 19 20 c. Guarantees 21 The attorneys’ fees provision of the guarantees provides: 22 23 Guarantors shall pay attorney’s fees and other costs and expenses which are 24 incurred by Bank in connection with the enforcement of this Guaranty. 25 (Dkt. 17-1 at pp. 32, 90, 115; Dkt. 17-2 at p. 25; Dkt. 17-3 at pp. 6, 57 (emphasis added).) 26 5 Case 2:17-cv-00696-BSB Document 28 Filed 10/05/17 Page 6 of 11 The language of attorneys’ fees provision in the guarantees is clear and unambiguous: 1 2 the provision applies only to costs and expenses incurred by the Bank to enforce the 3 guarantees. As the fees the Bank seeks to recover were not incurred to enforce the guarantees, 4 this provision is not applicable. 5 d. Deeds of Trust 6 7 The attorneys’ fees provision in the deeds of trust provide, in relevant part: 8 Attorneys’ Fees; Expenses. If Lender institutes any suit or action to 9 enforce any of the terms of this Deed of Trust, Lender shall be entitled to 10 recover such sum as the court may adjudge reasonable as attorneys’ fees at 11 trial and upon any appeal. Whether or not any court action is involved, and to 12 the extent not prohibited by law, all reasonable expenses Lender incurs that in 13 Lender’s opinion are necessary at any time for the protection of its interest or 14 the enforcement of its rights shall become a part of the Indebtedness.... 15 16 (Dkt. 26, p. 4.) 17 As with the other provisions the Bank relies upon, its reliance on this provision is 18 misplaced. The provision, by its plain language, applies to attorneys’ fees incurred to protect 19 the Bank’s interests and rights pursuant to the deeds of trust. No such interest or right was at 20 21 issue in this case. In fact, the Bank, having assigned the Loan Documents, no longer has any 22 such interest. 23 2. The Bank Cannot Rely on Loan Documents It Assigned. 24 A critical issue in this litigation is the Bank’s assignment of the Loan Documents. In 25 26 or about May 2013, the Bank assigned all of its rights, title and interest in the Loans to RREF 6 Case 2:17-cv-00696-BSB Document 28 Filed 10/05/17 Page 7 of 11 II CB Acquisitions, LLC who, in turn assigned the Loans to RREF II. (Dkt. 1-1 at ¶¶ 18-20.) 1 2 This assignment was critical to the Court’s decision to grant the Bank’s Motion to Dismiss, 3 as the assignment rendered the Bank unable to specifically perform the Release Agreement. 4 The Bank cannot have it both ways. It cannot rely on its assignment of the Loan 5 Documents to avoid specific performance of a promise while simultaneously relying on the 6 7 documents it assigned to collect attorneys’ fees. As the Bank assigned its rights, title and 8 interest in the Loan Documents, it cannot obtain attorneys fees under those agreements. 9 B. The Court Should Not Award Fees Pursuant to A.R.S. § 12-341.01. 10 A.R.S. § 12-341.01 provides, in relevant part, that "[i]n any contested action arising 11 12 out of a contract, express or implied, the court may award the successful party reasonably 13 attorney fees." Such an award is at the Court’s discretion. Wagenseller v. Scottsdate Mem’l 14 Hosp., 147 Ariz. 370, 394 (Ariz. 1985). In determining whether to exercise its discretion to 15 award attorneys’ fees under A.R.S. § 12-341.01, a court may consider, among other factors: 16 17 (1) the merits of the unsuccessful parties’ claim or defense; (2) whether 18 litigation could have been avoided or settled; (3) whether assessing fees against 19 the unsuccessful party would cause extreme hardship; (4) whether the 20 successful party prevailed with respect to all of the relief sought; (5) the novelty 21 of the issues; and (6) whether the award will overly deter others from bringing 22 meritorious suits. 23 Lexington Ins. Co. v. Scott Homes Multifamily, Inc., No. CV-12-02119-PHX-JAT, 2016 WL 24 5118316 at *4 (D. Az. Sep. 21, 2016). "[N]o single factor can be determinative and the court 25 26 is to weigh all of the factors in exercising its discretion." Id. 7 Case 2:17-cv-00696-BSB Document 28 Filed 10/05/17 Page 8 of 11 Several of the factors weigh against an award of attorneys’ fees in this case: 1 2 • There is no evidence the litigation could have been avoided or settled. Plaintiffs 3 filed the litigation based on the Bank’s breach of an oral agreement. The Bank never 4 attempted to settle the matter with Plaintiffs or asked them to dismiss the suit before filing a 5 motion to dismiss. Thus, there was no opportunity to avoid or settle the litigation. 6 7 • An award of attorneys’ fees would impose a great hardship upon Plaintiffs. The 8 deficiency action RREF filed against Plaintiffs is still pending, and Plaintiffs have spent 9 several hundred thousand dollars in legal fees defending that case. (Dkt. 1-1 ¶ 22.) Plaintiffs 10 also face the possibility of a significant judgment in that case. As a result, Plaintiffs are in 11 12 critical financial straits that will only be made worse by an award of attorneys’ fees in this 13 case. 14 • An award of attorneys’ fees is likely to deter others from bringing meritorious 15 16 actions. Plaintiffs brought this action to enforce an oral agreement. Plaintiffs fully performed 17 their part of the agreement but the Bank did not. However, because the Bank not only reneged 18 on its promise but also assigned the Loans, Plaintiffs could enforce the Bank’s promise. 19 Nonetheless, Plaintiffs had a good faith basis for bringing this action, and did not bring it for 20 any improper purpose such as for leverage or harassment. An award of attorneys’ fees in this 21 22 case will deter other Plaintiffs from bringing good-faith claims. 23 C. The Bank’s Fee Request is Not Reasonable. 24 A prevailing party that seeks an award of attorneys’ fees must make a prima facie 25 showing the fees are reasonable. Geller v. Lest, 230 Ariz. 624, 628 (2012). "Once the 26 8 Case 2:17-cv-00696-BSB Document 28 Filed 10/05/17 Page 9 of 11 prevailing party makes a prima facie case that the fees requested are reasonable, the burden 1 2 shifts to the party opposing the fee request to establish that the amount requested is clearly 3 excessive." Id. To determine if requested fees are reasonable, "the Court looks to whether 4 the hourly rate is reasonable and whether the hours expended on the case are reasonable." 5 Lexington Ins. Co. v. Scott Homes Multifamily, Inc., No. CV-12-02119-PHX-JAT, 2016 WL 6 7 5118316 at *4 (D. Az. Sep. 21, 2016). 8 In its Motion, the Bank went to great lengths to show that its attorneys’ hourly rates 9 are reasonable. However, the Bank did not made a prima facie showing that the number of 10 hours billed to the case is reasonable. 11 12 The Bank seeks nearly 100 hours worth of legal fees. This amount appears excessive 13 for the limited number of documents its attorneys filed in this case. The Court disposed of 14 this case on the Bank’s motion to dismiss. To that point, the Bank filed: (1) a Notice of 15 Removal and Statement of Facts in support thereof; (2) a Certificate of Interested Persons; (3) 16 17 a Motion to Dismiss; and (4) a Reply in Support of the Motion to Dismiss. After the Court 18 granted the Bank’s Motion to Dismiss, the Bank filed a Notice of Lodging Proposed Separate 19 Judgment of Dismissal and the instant Motion for Attorneys’ Fees and Non-Taxable Costs. 20 Of the Bank’s six filings, three (the Notice of Removal, Certificate of Interested Persons, and 21 22 Notice of Lodging Proposed Separate Judgment Dismissal) are largely formulaic filings that 23 vary little with the facts of each case. 24 Considering that the only substantive briefing was done in connection with the Bank’s 25 Motion to Dismiss and Reply in support thereof and its current Motion, the 93.2 hours billed 26 9 Case 2:17-cv-00696-BSB Document 28 Filed 10/05/17 Page 10 of 11 appears excessive. Thus, while Plaintiffs do not believe the Bank is entitled to attorneys’ fees, 1 2 in the event the Court elects to award fees, the award should be reduced to a reasonable 3 amount more in line with the work done. 4 RESPECTFULLY SUBMITTED this 5th day of October, 2017. 5 6 KNIGHT JOHNSON, LLC 7 By s/Bryan M. Knight Bryan M. Knight 8 Admitted pro hac vice One Midtown Plaza 9 1360 Peachtree Street, Suite 1201 Atlanta, Georgia 30309 10 Telephone: (404) 228-4822 11 Attorneys for Plaintiffs 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 10 Case 2:17-cv-00696-BSB Document 28 Filed 10/05/17 Page 11 of 11 I hereby certify that on this 5th day of 1 October, 2017, I electronically transmitted the foregoing document to the Clerk's Office 2 using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to 3 the following CM/ECF registrants: 4 Scott B. Cohen Bradley D. Pack 5 Engelman Berger, P.C. 3636 North Central Avenue, Suite 700 6 Phoenix, Arizona 85012-1036 email: sbc@eblawyers.com 7 email: bdp@eblawyers.com Attorneys for Defendant 8 9 By s/Martin Kniep 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 11

REPLY to Response to Motion re: [26] MOTION for Attorney Fees --Defendant's Motion for Award of Attorneys' Fees and Non-Taxable Costs filed by Compass Bank.

Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 1 of 81 1 SCOTT B. COHEN, SBA #014377 BRADLEY D. PACK, SBA #023973 2 ENGELMAN BERGER, P.C. 3636 NORTH CENTRAL AVENUE, SUITE 700 3 PHOENIX, ARIZONA 85012 _____________ Ph: (602) 271-9090 4 Fax: (602) 222-4999 Email: sbc@eblawyers.com Email: bdp@eblawyers.com 5 _____________ 6 Attorneys for Compass Bank 7 UNITED STATES DISTRICT COURT 8 DISTRICT OF ARIZONA 9 Steve A. Basmajian, et al., Case No. 2:17-cv-00696-BSB 10 Plaintiffs, REPLY IN SUPPORT OF DEFENDANT’S MOTION FOR 11 AWARD OF ATTORNEYS’ FEES v. AND NON-TAXABLE COSTS 12 Compass Bank, 13 14 Defendant. 15 Hoping to turn their failure to repay their debts into a windfall at Compass’s expense, 16 the Plaintiffs took a shot at suing on an alleged oral contract that did not exist, and which (as 17 the Court held) is legally unenforceable anyway. Plaintiffs should not be permitted to foist all 18 of the risk of such meritless litigation onto Compass. They should be required to reimburse 19 Compass for its legal fees and costs in defending this action. 20 None of the Plaintiffs’ defenses to Compass’s claims for attorneys’ fees have merit. 21 Among other things, the loan documents require Plaintiffs to reimburse Compass for any fees 22 incurred in defending claims "arising out of, relating to, or in any manner occasioned by this 23 Agreement and the exercise of the rights and remedies granted Lender." Plaintiffs’ entire 24 claim is premised on the allegation that they made an agreement with Compass not to enforce 25 the loan documents, which was breached when RREF filed a lawsuit to enforce the loan 26 documents. Thus, there can be no rational argument that this lawsuit did not arise out of the 27 enforcement of the loan documents. See Bank of Am., N.A. v. Oberman, Tivoli & Pickert, Inc., {0001537.0143/00802537.DOCX/} Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 2 of 81 1 12 F. Supp. 3d 1092, 1099-1100 (N.D. Ill. 2014) (agreement requiring borrowers to reimburse 2 lender for fees incurred in "administration, enforcement, protection, waiver or amendment of 3 this Loan Agreement" applied to lender’s defense of borrower’s claims). 4 Compass is entitled to fees under these provisions notwithstanding its assignment of 5 the loan agreements to RREF. The loan sale agreement expressly excluded any rights related 6 to claims by borrowers or guarantors against Compass arising prior to the May 2013 loan sale. 7 Additionally, the loan documents define "Lender" as "Compass Bank, its successors and 8 assigns." Thus, Plaintiffs agreed that both Compass and its assignees may enforce the fee 9 provisions of the agreement. Bither v. Country Mut. Ins. Co., 226 Ariz. 198, 200, ¶ 10 (App. 10 2010) ("The word'and’ is a conjunction connecting words or phrases expressing the idea that 3636 North Central Avenue, Suite 700 ENGELMAN BERGER, P.C. 11 the latter is to be added or taken along with the first."). And, because Plaintiffs sought to hold Phoenix, Arizona 85012 12 Compass liable for RREF’s enforcement of the loan documents, they are estopped from 13 arguing that Compass lacks standing to recover its fees in an action that arises out of such 14 enforcement. See, e.g., City of Tucson v. Koerber, 82 Ariz. 347, 356 (1957). 15 Even if the Court determines that Compass is not entitled to fees under the loan 16 documents, it should award fees under A.R.S. § 12-341.01. A fee award is appropriate 17 because Plaintiffs’ claims were meritless, existing law barred their claims, and Compass was 18 100% successful. Plaintiffs’ argument that they would suffer "extreme hardship" from a fee 19 award because "[t]he deficiency action RREF filed against Plaintiffs is still pending" is false. 20 That suit was dismissed with prejudice, upon stipulation, on April 27, 2017. It is also 21 irrelevant, as it says nothing about Plaintiffs’ financial condition or ability to pay a fee award. 22 Finally, Plaintiffs have presented no evidence that any of the requested fees are 23 unreasonable. Their vague and general objection that the fees are too high violates the Local 24 Rules of this Court and does not suffice to demonstrate the unreasonableness of any requested 25 fees. Marvin Johnson, P.C. v. Shoen, 888 F. Supp. 1009, 1021 (D. Ariz. 1995) (finding time 26 spent by attorneys was reasonable where defendants made "no objections to any of the 27 specific time entries"); LRCiv 54.2(f) (party opposing fees "shall separately identify each and {0001537.0143/00802537.DOCX/} 2 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 3 of 81 1 every disputed time entry"). Compass’s fees are appropriate in light of the amount of work 2 required to successfully defend this case and the damages sought by Plaintiffs. 3 The Court should therefore award Compass its fees and costs incurred in defending 4 this action, including the $4,952.50 in additional fees incurred since filing its fee motion, as 5 set forth in the Supplemental Affidavit of Bradley D. Pack attached hereto. 6 MEMORANDUM OF POINTS AND AUTHORITIES 7 I. COMPASS IS ENTITLED TO AN AWARD OF FEES UNDER THE EXPRESS TERMS OF THE LOAN DOCUMENTS. 8 9 The fee provisions of the Loan Documents 1 are quoted at length in its Fee Motion. 10 Contrary to the Plaintiffs’ arguments, the fee provisions apply to Compass’s defense of this 3636 North Central Avenue, Suite 700 ENGELMAN BERGER, P.C. 11 matter, and Compass has standing to enforce them. Phoenix, Arizona 85012 12 A. This Action Arises Out of the Enforcement of the Loan Documents. 13 The Business Loan Agreements and Construction Loan Agreements that govern four 14 of the six loans at issue in this case 2 each require the borrowers to "indemnify, to defend and 15 to save and hold Lender harmless from any and all claims, suits, obligations, damages, losses, 16 costs and expense (including, without limitation, Lender’s attorneys’ fees) … that may be 17 asserted against or incurred by Lender … arising out of, relating to, or in any manner 18 occasioned by this Agreement and the exercise of the rights and remedies granted Lender." 19 Compass’s defense of this lawsuit falls squarely within the terms of this provision. 20 Plaintiffs’ Complaint alleges that Compass made an oral agreement to "release Plaintiffs from 21 1 Unless otherwise defined, all capitalized terms have the meaning given in Compass’s 22 Motion For Award Of Attorneys’ Fees And Non-Taxable Costs (the "Fee Motion") (Dkt. 26). 2 There is no separate business loan agreement or construction loan agreement for the 23 two loans to International Sunprints III (out of the six loans at issue in this case). (Dkt. 17-1, 24 Exhibits 9-17). However, the promissory notes, guarantees, and deeds of trust for the International Sunprints III loans do include their own attorneys’ fees provisions. Moreover, 25 the work done by counsel on this matter cannot be allocated on a loan by loan basis. Compass 26 would have incurred roughly the same amount of fees if Plaintiffs had not sued Compass for RREF’s alleged enforcement of all of the two loans to International Sunprints III, but did sue 27 for its enforcement of the loans to the other entities. {0001537.0143/00802537.DOCX/} 3 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 4 of 81 1 the outstanding balance [due under the Loan Documents] and not pursue any deficiency 2 claim." (Dkt 1-1 at p.6, ¶ 13). They contend that this agreement was breached when RREF 3 "filed a civil action against the Plaintiffs pursuing the outstanding loan balances owed on the 4 Loans" (Id. at p.7. ¶ 21). In other words, they allege that Compass breached an agreement not 5 to enforce the Loan Documents by selling the Loan Documents to RREF, which then 6 enforced the Loan Documents by suing the Plaintiffs. The present action cannot be read as 7 anything other than one "arising out of, relating to, or in any manner occasioned by" the Loan 8 Documents and "the exercise of the rights and remedies" thereunder. 9 The other Loan Documents also require payment of attorneys’ fees incurred in 10 connection with enforcement. For example, the guarantees provide that "Guarantors shall pay 3636 North Central Avenue, Suite 700 ENGELMAN BERGER, P.C. 11 attorney’s fees and all other costs and expenses which are incurred by Bank in connection Phoenix, Arizona 85012 12 with the enforcement of this Guaranty." The Deeds of Trust provide that "If Lender institutes 13 any suit or action to enforce any of the terms of this Deed of Trust, Lender shall be entitled to 14 recover such sum as the court may adjudge reasonable as attorneys’ fees at trial and upon any 15 appeal." And the promissory notes provide that "Lender may hire or pay someone else to help 16 collect this Note if Borrower does not pay. Borrower will pay Lender that amount." 17 This lawsuit could not have arisen but for the enforcement of the Loan Documents. It 18 is only as a result of the enforcement of the Loan Documents that Plaintiffs could allege a 19 breach of the purported agreement not to enforce them. It is only because the Loan 20 Documents were enforced that Plaintiffs can allege they suffered damages from their 21 enforcement. Thus, the fee provisions apply to this action. 22 Arguments that similar attorney fee provisions apply only to actions initiated by the 23 lender, rather than the lender’s defense of actions by the borrower, have been appropriately 24 rejected. Oberman, Tivoli & Pickert, 12 F. Supp. 3d at 1102 (denying motion to dismiss 25 lender’s suit to recover fees incurred in defending against borrower’s claims, where loan 26 agreement required payment of legal expenses "in connection with the preparation, execution, 27 administration, collection, enforcement, protection, waiver or amendment of this Loan {0001537.0143/00802537.DOCX/} 4 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 5 of 81 1 Agreement, the other Loan Documents and such other instruments or documents, and the 2 rights and remedies of [the lender] thereunder"); Ellipso, Inc. v. Mann, 594 F. Supp. 2d 40, 45 3 (D.D.C. 2009) (awarding fees for defense of borrower’s suit, where loan agreement required 4 payment of lender’s fees if "this Loan Agreement shall be successfully enforced by suit or 5 otherwise"); Wagner v. Benson, 161 Cal.Rptr. 516, 522 (Cal. App. 1980) ("Attorney’s fees 6 incurred by the Bank in defending against the fraud action are compensable under the attorney 7 fees provision of the promissory notes," which provided for "costs incurred in collecting the 8 balance due on the notes"). Like the lenders in these cases, Compass is entitled to a 9 mandatory award of fees under the express terms of the Loan Documents. 10 B. Compass May Enforce the Contractual Fee Provisions. 3636 North Central Avenue, Suite 700 ENGELMAN BERGER, P.C. 11 In May 2013, Compass sold most of its rights under the Loan Documents to RREF II Phoenix, Arizona 85012 12 CB Acquisitions, LLC. A redacted and excerpted copy of the Loan Sale Agreement is 13 attached hereto as Exhibit "A." But the sale did not effect a complete assignment of all of 14 Compass’s rights and liabilities. The agreement states that "on the Closing Date, Seller shall 15 sell, assign, and convey to Buyer, and Buyer shall purchase from Seller, all of Seller’s rights, 16 title and interest in and to the Loan Rights as well as all obligations and liabilities of any kind 17 related thereto, other than any Seller Retained Liability." Exh. A at p.8. "Loan Rights" is 18 defined as "including, all of Seller’s rights to principal, unpaid interest and fees now or 19 hereafter due thereunder but excluding any Seller Retained Liability." (Id. at p.5). "Seller 20 Retained Liability" is defined as "any Claims by Borrower, Guarantor or any other Person 21 relating to (a) any wrongful act or omission … governing the origination, ownership, 22 servicing or administration of the Loan Rights, occurring on or prior to the Closing Date, 23 and/or (b) any breaches by Seller of any of the Loan Documents occurring on or prior to the 24 Closing Date …." (Id. at p.7). 25 The Plaintiffs’ claims in this action arose from Compass’s alleged promise to release 26 them from liability, which Plaintiffs allege was made "[a]round the time of the [loan] 27 modifications that occurred "in 2009 and 2010," prior to the closing of the loan sale. (Dkt. 1-1 {0001537.0143/00802537.DOCX/} 5 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 6 of 81 1 at p.6, ¶¶ 12-13). Thus, Compass’s duty to defend the claims, and its right to attorneys’ fees 2 with respect to the claims, were excluded from the sale to RREF. 3 Even if the Seller Retained Liabilities had not been excluded from the loan sale, 4 Plaintiffs cite no legal authority in support of their argument that the sale divested Compass of 5 standing to enforce the attorney fee provisions of the Loan Documents. Instead, Plaintiffs rely 6 on the language of the Loan Documents themselves, arguing that "they provide for payment 7 of fees only to the Lender," and Compass was no longer "the Lender" under the Loan 8 Documents following the assignment to RREF. But this argument ignores the fact that the 9 Loan Documents define "Lender" as either "Compass Bank" or as "Compass Bank, its 10 successors and assigns." (Dkt. 17-1 at pp.10, 13, 28, 71, 86, 92, 107; 17-2 at pp.5, 20, 73, 88; 3636 North Central Avenue, Suite 700 ENGELMAN BERGER, P.C. 11 Dkt. 17-3 at pp.37, 52). 3 The business loan agreements and construction loan agreements also Phoenix, Arizona 85012 12 state that "This Agreement, the Note, all Security Agreement if any, and all Related 13 Documents are binding upon the signers thereof, as well as upon their successors, 14 representatives and assigns …." (Dkt. 17-1 at pp.6, 151; 17-2 at p.63; 17-3 at p.27). The 15 specific references to Compass Bank and the use of conjunctive words demonstrate that the 16 right to recover attorneys’ fees runs in favor of both Compass and its assignees. 17 Finally, Plaintiffs are estopped from arguing that Compass lacks standing to enforce 18 the attorney fee provisions of the Loan Documents. "Estoppel arises where one with 19 knowledge of the facts has acted in a particular manner so that he ought not to be allowed to 20 assert a position inconsistent with his former acts to the prejudice of others who have relied 21 thereon." Koerber, 82 Ariz. at 356. Here, Plaintiffs knew that Compass had assigned the Loan 22 Documents to RREF. Their claim arises out of the fact that RREF enforced the Loan 23 Documents by suing the Plaintiffs for the outstanding loan balances. But rather than pursuing 24 their claim that Compass agreed to release them from liability as a defense in RREF’s lawsuit 25 3 The Guarantees use the word "Bank" instead of Lender in describing who the guaranty 26 obligations run to, and define "Bank" as "Compass Bank, a bank organized under the laws of the State of Alabama." (Dkt. 17-1 at pp.31, 33, 35, 89, 114, 116, 118, 121; Dkt. 17-2 at pp.24, 27 26, 28, 30, 32; Dkt. 17-3 at pp.5, 56, 58, 60). {0001537.0143/00802537.DOCX/} 6 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 7 of 81 1 (which would have enabled them to seek recovery of their attorneys’ fees if they had been 2 successful), the Plaintiffs filed this lawsuit against Compass, alleging that Compass was liable 3 for RREF’s actions in suing them. Plaintiffs should not now be permitted to take the 4 inconsistent position that Compass is precluded from asserting its right to fees under the Loan 5 Documents for its defense of this action. 4 6 II. ALTERNATIVELY, THE COURT SHOULD AWARD FEES PURSUANT TO A.R.S. § 12-341.01. 7 If the Court declines to award fees under the terms of the Loan Documents, it should 8 exercise its discretion to award fees under A.R.S. § 12-341.01. Plaintiffs do not dispute 9 Compass’s eligibility for an award under the statute, as this case arises out of contract and 10 3636 North Central Avenue, Suite 700 Compass was the prevailing party. They also do not dispute that many of the factors that ENGELMAN BERGER, P.C. 11 Phoenix, Arizona 85012 inform the Court’s discretion as to whether to award fees favor Compass. See Associated 12 Indem. Corp. v. Warner, 143 Ariz. 567, 570 (1985) (listing factors to be considered). 13 Plaintiffs do not deny that Compass prevailed with respect to all of the relief sought, as each 14 of Plaintiffs’ claims were dismissed with prejudice. They do not deny that existing case law 15 precluded their claims, or that their claims were otherwise unmeritorious. Rather, they argue 16 that assessing fees would cause them "extreme hardship," that their claims could have been 17 settled, and that a fee award would "overly deter others from bringing meritorious suits." 18 None of these arguments are valid. 19 Plaintiffs present no evidence of "extreme hardship," such as copies of financial 20 statements or other information demonstrating that a fee award would render it impossible for 21 4 22 Plaintiffs accuse Compass of taking inconsistent positions, erroneously arguing that "This assignment was critical to the Court’s decision to grant the Bank’s Motion to Dismiss, 23 as the assignment rendered the Bank unable to specifically perform the Release Agreement." 24 But that was not the basis of the Court’s rejection of the Plaintiffs’ "part performance" argument. Rather, the Court explained that Plaintiffs did not seek specific performance in 25 their Complaint, and it would be unavailable as a remedy anyway because money damages 26 would have provided an adequate remedy. (Dkt. 22 at pp.8-11). It also held that specific performance would be unavailable because Plaintiffs failed to name RREF as a party in this 27 action. (Id. at 10). Compass is not responsible for Plaintiffs’ deficient pleadings. {0001537.0143/00802537.DOCX/} 7 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 8 of 81 1 them to meet their living or business expenses. They state only that RREF’s deficiency action 2 against them "is still pending," and that they "face the possibility of a significant judgment in 3 that case." This is demonstrably false, as that lawsuit was settled and dismissed with prejudice 4 months ago. A copy of the notice of settlement and order of dismissal in that case are attached 5 hereto as Exhibits "B" and "C," respectively. 6 Contrary to Plaintiffs’ argument that "there was no opportunity to avoid or settle the 7 litigation," they could have avoided this lawsuit simply by not filing their Complaint. 8 Plaintiffs offer no evidence that they tried to settle, or that they even made any pre-suit 9 demand on Compass. Prior to filing their Complaint in this case, however, Plaintiffs took 10 three depositions of Compass’s officers and employees, including its current Chief Credit 3636 North Central Avenue, Suite 700 ENGELMAN BERGER, P.C. 11 Risk Officer for Commercial Banking (and former Phoenix City President), in connection Phoenix, Arizona 85012 12 with the RREF deficiency lawsuit. See Notices of Deposition and subpoenas attached hereto 13 as Exhibit "D." While those depositions did not yield any evidence that would support 14 Plaintiffs’ claims, they filed this lawsuit anyway. 15 The Court should not impose on Compass the burden of offering to pay Plaintiffs 16 something to settle a lawsuit that Compass believes was both factually and legally meritless. 17 Forcing defendants to offer to settle meritless claims as a condition to recovering fees 18 incurred in defending them will only encourage more baseless litigation, as the filing of 19 unfounded lawsuits would be perceived as a risk-free way to obtain coercive settlements. 20 For similar reasons, a fee award would not unduly deter others from filing meritorious 21 claims. Because Plaintiffs’ claims were not meritorious, a fee award in this case should have 22 no effect on litigants pursuing viable claims. Additionally, the amount of the fees requested in 23 this case is not so substantial as to chill the filing of valid lawsuits. 24 Thus, all of the factors identified by the Arizona courts as bearing on whether the 25 Court should award attorneys’ fees under A.R.S. § 12-341.01 weigh in Compass’s favor. 26 27 {0001537.0143/00802537.DOCX/} 8 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 9 of 81 III. DEFENDANTS HAVE NOT PRODUCED ANY EVIDENCE THAT 1 COMPASS’S FEES ARE UNREASONABLE. 2 Plaintiffs argue that the approximately 93 hours of attorney and paralegal time that 3 Compass’s counsel expended in defending the Complaint "appears excessive for the limited 4 number of documents" filed. Such vague and conclusory arguments are insufficient to sustain 5 an objection to a fee request supported by detailed, contemporaneous time records. Rather, the 6 party opposing fees must "separately identify each and every disputed time entry." LRCiv 7 54.2(f); see also Marvin Johnson, P.C., 888 F. Supp. at 1021. Plaintiffs have failed to identify 8 a single, specific time entry with which they take issue. 9 Plaintiffs also understate the amount of work required to defend this case, which 10 involved: (a) six separate loans with a combined principal amount of over $3.38 million; (b) 3636 North Central Avenue, Suite 700 ENGELMAN BERGER, P.C. 11 38 separate loan and security agreements, involving eleven borrowers and/or guarantors; and Phoenix, Arizona 85012 12 (c) documents filed in three separate courts: this Court; the Maricopa County Superior Court 13 (with respect to the RREF litigation); and the Arizona Bankruptcy Court (with respect to the 14 bankruptcy of International Sunprints III). And while Plaintiffs’ claims were unmeritorious, 15 defending them still required substantial research and drafting. As set forth in the affidavits 16 accompanying Compass’s fee motion, all of the attorneys’ fees requested were reasonable and 17 justified and could not have been performed by non-lawyers. 18 Finally, the amount of fees requested is not disproportionate to fees awarded in other 19 cases where the complaint was dismissed for failure to state a claim. See, e.g., Cabrera v. 20 First Nat. Bank of Wheaton, 753 N.E.2d 1138, 1554-55 (2001) ($68,594.25); Tancredi v. 21 Metro. Life Ins. Co., 2003 WL 22299203, at *6 (S.D.N.Y. Oct. 7, 2003) (awarding $30,000 of 22 requested fees and costs of $258,770.75, where plaintiffs presented substantial evidence of 23 financial hardship). 24 IV. THE COURT SHOULD AWARD COMPASS’S FEES INCURRED AFTER FILING THE FEE MOTION. 25 26 Since filing the Fee Motion, Compass has incurred an additional $4,530 in attorneys’ 27 fees, including time spent trying to settle this matter and in drafting the Reply. See {0001537.0143/00802537.DOCX/} 9 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 10 of 81 1 Supplemental Affidavit of Bradley Pack attached hereto as Exhibit "E" and itemization of 2 fees attached hereto as Exhibit "F." Compass respectfully requests that the Court include 3 these additional fees in any award to Compass. 4 V. CONCLUSION 5 Compass respectfully requests that the Court enter an order requiring the Plaintiffs to 6 pay Compass’s attorneys’ fees in the total amount of $34,014.50 (the $29,062 requested in the 7 Fee Motion and $4,952.50 incurred after filing the Fee Motion) and non-taxable litigation 8 expenses in the amount of $535.30. 9 DATED this 12th day of October, 2017. 10 ENGELMAN BERGER, P.C. 3636 North Central Avenue, Suite 700 ENGELMAN BERGER, P.C. 11 By/s/Bradley D. Pack Phoenix, Arizona 85012 Scott B. Cohen 12 Bradley D. Pack 3636 North Central Avenue, Suite 700 13 Phoenix, Arizona 85012 Attorneys for Compass Bank 14 15 COPY of the foregoing served 16 via automatic ECF notification and e-mail this 12th day of October 2017 to: 17 18 Wesley Loy (wsl@bowwlaw.com) BROENING OBERG WOODS & WILSON, P.C. 19 1122 E. Jefferson Street Post Office Box 20527 20 Phoenix, Arizona 85036 21 Bryan M. Knight (bknight@knightjohnson.com) 22 Knight Johnson 23 One Midtown Plaza 1360 Peachtree Street, Suite 1201 24 Atlanta, Georgia 30309 Attorneys for Plaintiffs 25 26/s/Kathleen J. Stephens 27 {0001537.0143/00802537.DOCX/} 10 EXHIBIT "A" Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 12 of 81 LOAN SALE AGREEMENT (PORTFOLIO) THIS LOAN SALE AGREEMENT (this "Agreement"), entered into as ofthis 16th day ofMay, 2013 ("Effective Date"), is by and between COMPASS BANK, an Alabama banking corporation, on behalf of itself or its subsidiaries and affiliates (collectively, the "Seller"), and RREF II CB ACQUISITIONS, LLC, a Delaware limited liability company (the "Buyer"). RECITALS WHEREAS, Seller made the Loans listed on Exhibit A evidenced and/or secured by the Loan Documents listed on Exhibit B; and WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, Seller's rights, title, and interest in and to the Loan Rights on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual promises herein set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer hereby agree as follows: ARTICLE 1 DEFINITIONS For purposes of this Agreement, including, without limitation, the Recitals, the terms defined in this Article have the meanings indicated, unless the context clearly requires otherwise. As used herein and except as the context otherwise requires, the singular form of a defined term includes the plural form and vice versa. "Additional Documents" means any instruments or documents listed on Exhibit B to this Agreement, other than any Notes or Collateral Documents, that set forth any material terms or conditions of the Loans, including, without limitation, any supplements, amendments, or modifications thereto or renewals or extensions thereof "Affiliated Relationship" means with respect to any specified Person, a relationship of any kind in which any other Person directly or indirectly controls, is controlled by or is under common control with such specified Person. "Affiliated Relationship" also includes any written or oral understanding, arrangement, or agreement between or among two or more Persons. "Assigned Litigation" shall have the meaning assigned in Article 3(7)(e)(i) of this Agreement. "Bid Percentage" means the fraction represented by the Purchase Price of the applicable Loan divided by the UPB of such Loan as of the Payment Cut-Off Date. RREF-ISP005545 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 13 of 81 "Bid Summary Sheet" means that certain summary of Loan Rights that Buyer is purchasing pursuant to this Agreement, including an allocation of the Purchase Price for each Loan. The Bid Summary Sheet, attached hereto as Schedule 1, is incorporated herein by reference and made a part hereof with the same force and effect as if set forth herein at length. "Borrower" means any Person that is currently obligated to pay and to perform the obligations to be paid and performed under a Note, provided, that "Borrower" does not include any Guarantor. "Business Day" means any day other than a Saturday, Sunday, or holiday observed by the United States government, New York Stock Exchange or the Federal Reserve. "Buyer-Related Parties" means Buyer's affiliates and Buyer's and its affiliates' directors, officers, employees, managers, members, partners, representatives or agents, including, without limitation, their attorneys, consultants, lenders, potential investors and financial advisors. "Claim" means any claim, demand, assertion, legal proceeding, cause of action (whether tort, contract or any other basis), loss, penalty, fine, forfeiture, order or decree in any legal or administrative proceedings (including, without limitation, bankruptcy and foreclosure proceedings). "Closing" means the closing of the sale of the Loan Rights pursuant to this Agreement. "Closing Date" means the date on which the Closing will occur, which date shall be no later than 12:00 p.m. Central Standard Time, time on May 22, 2013. "Closing Date UPB" shall have the meaning assigned m Article 6(2)(d) of this Agreement. "Closing Documents" shall have the meaning assigned in Article 3(4) of this Agreement. "Collateral" means any tangible or intangible or mixed property securing or pledged to secure repayment of a Loan. "Collateral Documents" means any of the following documents listed on Exhibit B to this Agreement as applicable to each Loan: security agreement, Mortgage, guaranty, pledge agreement, contract for the sale of real property, pledged certificate of title, assignment of rents or leases, Collateral agreement, stock power, assignment, title insurance policies, fire or casualty insurance policies, or other agreement or document of any kind, whether similar to or different from those enumerated, securing in any manner the performance or payment by any Borrower or Guarantor of its obligations or the obligations of any other borrower or guarantor pursuant to any of the Loans or the Loan Documents, including, without limitation, any supplements, amendments, modifications, commitments, endorsements, renewals or extensions thereof "Commission" shall have the meaning assigned in Article 13(2) of this Agreement. "Contract for Deed" means an executory contract with a third party to convey real property to such third party upon payment of the amounts set forth therein or the performance of 2 RREF-ISP005546 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 14 of 81 any other obligations described therein, including, without limitation, any installment land contract. "Control" or "Controlled" shall have the meaning assigned in Article 5(1)(h) of this Agreement. "Defective Asset" shall have the meamng assigned m Article 11(1)(b) of this Agreement. "Deficiency Balance" means the balance of any Loan remammg outstanding or otherwise due and owing by any Borrower or Guarantor following completion of any foreclosure action. "Deposit" means the earnest money deposit amount required to be made by Buyer. Except as expressly set forth in this Agreement or on the Bid Summary Sheet, the Deposit is equal to ten percent (10%) of the Purchase Price and is non-refundable, except as expressly provided in this Agreement. The Deposit must be received by Escrow Agent by 12:00 p.m. Central Standard Time, time on the next Business Day following the Effective Date. "Designee" means a Person that controls, is controlled by, or is under common control with Buyer. "Due Diligence Materials" means the Loan Sale Portfolio Memorandum, the Loan Documents and any other materials relating to the marketing and sale of the Loans, which materials and files Sale Advisor distributed or made available to Buyer (by electronic means or otherwise), as well as any supplemental materials and documents relating to the Loans that later come to Seller's knowledge and are delivered or made available (by electronic means or otherwise) to Buyer by Seller or Sale Advisor. "Effective Date" means the date that this Agreement is fully executed by both parties. "Escrows" means, collectively, with respect to each Loan, the balance of funds, if any, held by or on behalf of Seller for taxes, insurance, capital improvements, repairs, replacements, debt service, and other similar accounts, impounds or reserves held by or on behalf of Seller pursuant to the Loan Documents. The outstanding Escrows for each Loan are set forth on Schedule 2 of this Agreement. "Escrow Agent" means Republic Title of Texas, Inc. "Escrow Agreement" shall have the meaning assigned m Article 2(2)(a)(i) of this Agreement. "Excluded Documents" shall have the meamng assigned m Article 2(3) of this Agreement. "Foreign Collateral or Loan Documents" shall have the meaning assigned in Article 6(2) of this Agreement. 3 RREF-ISP005547 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 15 of 81 "Good Funds" means United States federal funds that are transferred via wire transfer. "Guaranty" means a guaranty of any kind in support of a Loan listed on Exhibit B to this Agreement. "Guarantor" means any Person that executed a Guaranty, thereby becoming obligated to repay amounts that a Borrower fails to repay or obligated to perform any other obligations as may be set forth in the Guaranty that remain unsatisfied under a Note for such Loan. "Implied Consent" shall have the meaning assigned in Article 4(3) of this Agreement. "Indemnified Claim" shall have the meaning assigned in Article 12(3) of this Agreement. "Indemnified Party" shall have the meamng assigned m Article 12(3) of this Agreement. "Indemnifying Party" shall have the meamng assigned m Article 12(3) of this Agreement. "Interest Reserve" means, with respect to any Loan, an amount that is set aside to pay interest due and owing on the Loan; provided, however, that "Interest Reserve" does not include any amounts that were withheld and unfunded by Seller as part of the Loan. The aggregate Interest Reserve amount for each Loan is set forth on Schedule 2 of the Agreement. "IRS" shall have the meaning assigned in Article 3(7)(±) of this Agreement. "Liability" shall have the meaning assigned in Article 11(1)(a) of this Agreement. "Loans" means the loan obligations that Buyer is purchasing pursuant to this Agreement and that are set forth as the loan obligations (including all Claims and all Proceeds arising therefrom) identified on Schedule 1 of the Bid Summary Sheet, attached hereto, and any loan into which any listed loan is refinanced or modified, and includes, without limitation, with respect to each such obligation: (i) any obligation evidenced by a Note, including, without limitation, all principal, unpaid interest and fees now due or hereafter due under the Loan Documents and all Interest Reserves; (ii) all rights, powers or Claims of Seller in or under the Collateral and Collateral Documents; (iii) all rights of Seller pursuant to any Contract for Deed and in or to the real property that is subject to any such Contract for Deed; (iv) all rights of Seller pursuant to any lease and in or to the related leased property; (v) all guaranties, warranties, indemnities and similar rights in favor of Seller with respect to any of the Loans; (vi) all rights of Seller to any Deficiency Balances, (vii) all rights of Seller to the Loan Documents all other loan documents, if any, with respect to any of the Loans that would meet the definition of Loan Documents but for any reason are not described on Exhibit B to the Agreement; (viii) all rights of Seller to and under all existing insurance (including, but not limited to, title insurance) policies, commitments and/or binders with respect to any Collateral or Loans to the extent existing and assignable; and (ix) all judgments and demands of any nature awarded to, available to or being pursued by or for the benefit of Seller with respect to any of the Loan Documents, the 4 RREF-ISP005548 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 16 of 81 Collateral or the ownership, use function, value or other rights pertaining thereto, to the extent Seller has an assignable right in such items. "Loan Documents" collectively means the Notes, the Collateral Documents and the Additional Documents, each as Modified. "Loan Rights" means all of Seller's right, title, and interests in and to the Loans and the Loan Documents, including, all of Seller's rights to principal, unpaid interest and fees now or hereafter due thereunder but excluding any Seller Retained Liability. "Loan Sale Portfolio" means all of the Loans that Seller offered for sale pursuant to the Loan Sale Portfolio Memorandum. "Loan Sale Portfolio Memorandum" means that certain marketing material regarding for the Loan distributed by the Sale Advisor on March 26, 2013. "Marks" means all trademarks, internet domain names, web addresses, telephone numbers, trade dress, service marks and/or trade names (including, without limitation, logos and slogans) which identify or distinguish a party or the goods, services or products of a party, including but not limited to, with respect to Seller, "BBVA Compass", "Compass Bank", "Compass Bancshares" or any other similar name. "Master Omnibus Assignment of Loans and Loan Documents" shall have the meaning assigned in Article 3(4)(i) of this Agreement. "Modification" means any extension, renewal, substitution, replacement, supplement, amendment or modification of any agreement, certificate, document, instrument or other writing with regard to the Loan Documents. "Modify" and "Modifies" have correlative meanings. "Monetary Representation or Warranty" shall have the meaning assigned in Article 7(3)(a) of this Agreement. "Mortgage" means a mortgage, deed of trust, trust deed, or any similar instrument that secures repayment of a Loan by taking a security interest in real property, as each of the preceding may be Modified from time to time. "Non-Monetary Representation or Warranty" shall have the meaning assigned m Article 7(3)(a) of this Agreement. "Note" means any promissory note, loan agreement, or other evidence of a Borrower's indebtedness for a Loan, as the preceding may be amended, renewed, extended or modified from time to time. "OFAC" shall have the meaning assigned in Article 5(1)(h) of this Agreement. "Payment Cutoff Date" means the last date that the unpaid principal balances for the loans were calculated, which date is April 30, 2013. 5 RREF-ISP005549 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 17 of 81 "Person" means an individual, a corporation, a partnership, a limited liability company, a trust, an unincorporated association, a joint venture (formal or informal) or any other entity. "Post Closing Payments" shall have the meaning assigned in Article 3(7)(c) of this Agreement. "Proceeds" means any cash or other liquid assets held by Seller as a result of the voluntary or involuntary conversion of any of the Collateral, including, without limitation, insurance proceeds and condemnation awards. "Prohibited Person" shall have the meamng assigned m Article 5(1)(h) of this Agreement. "Purchase Price" means the sum paid by Buyer to Seller in consideration of Seller's sale of the Loan Rights and as more fully set forth in Article 2(2)(a), which Purchase Price shall be adjusted by Seller on the Closing Date pursuant to the provisions of Article 2(2)(a)(ii). "Real Property" means all Collateral that is real property. "Related Parties" means all Persons that control, are controlled by, or are under common control of the applicable Person, together with all directors, officers, employees, agents, counsel and other representatives of such Persons. "Relationship" means the Loan or pool of Loans identified on the Bid Summary Sheet which were made to the respective Borrower or Borrowers corresponding to each such Loan or pool of Loans as identified on the Bid Summary Sheet. "Residential Loans" means those certain Loans identified on Schedule 6. "Repurchase Notice" shall have the meaning assigned in Article 12(3) of this Agreement. "Repurchase Price" means, with respect to each Relationship being repurchased, the price to be paid by Seller for such Relationship if repurchased from Buyer pursuant to the terms of this Agreement, which shall be computed as follows: (a) the Purchase Price, as adjusted at Closing, for such Relationship paid by Buyer; minus (b) all amounts paid by any Person to Buyer or otherwise received or collected by Buyer in respect of such Relationship between the Closing Date and the repurchase date (whether characterized as principal, interest, principal and interest, fees, expenses, proceeds and any other payment of every kind and nature), which amounts shall be evidenced and certified by Buyer to Seller as true, accurate and complete; minus (c) any amounts received by Buyer, or allowed to be received by Buyer, as a result of a foreclosure sale, or any other disposition of collateral, associated with such Relationship (in the event that the Buyer is the winning bidder at a foreclosure sale, the 6 RREF-ISP005550 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 18 of 81 Buyer's credit bid shall be deemed the amount received), which amounts shall be evidenced and certified by Buyer to Seller as true, accurate and complete; minus (d) any diminution in value of such Relationship or the applicable Collateral since the Closing Date attributable to the gross negligence or willful misconduct of Buyer; plus (e) all (i) commercially reasonable amounts paid by Buyer in good faith to third parties to collect or attempt to collect principal, interest and other amounts due under such Relationship; and (ii) commercially reasonable advances made by Buyer to third parties in order to protect the security of the Collateral for such Relationship and other advances made by Buyer pursuant to the Collateral Documents for such Relationship, in each case from the Closing Date to the repurchase date (as evidenced by invoices and canceled checks). "Retained Relationship" shall have the meamng assigned m Article 5(2)±) of this Agreement. "Sale Advisor" means Mission Capital Advisors, L.L.C. "Seller's knowledge" or "to Seller's knowledge" means the actual knowledge, without additional research or investigation, of Seller's employees who are employed by Seller at the time of Closing and who have primary responsibility for servicing and monitoring the applicable Loan, solely in the capacity as an employee of Seller. "Seller Released Parties" means Seller, Sale Advisor and each Related Party of Seller and Sale Advisor. "Seller Retained Liabilities" means any Claims by Borrower, Guarantor or any other Person relating to (a) any wrongful act or omission or violation of any applicable laws, rules and regulations governing the origination, ownership, servicing or administration of the Loan Rights, occurring on or prior to the Closing Date, and/or (b) any breaches by Seller of any of the Loan Documents occurring on or prior to the Closing Date; provided, however, in each case Seller shall not be liable to Buyer for such Claims except as determined by a court of competent jurisdiction or regulatory or supervisory agency that has authority over Seller. "Servicing-Released Basis" means the method or basis for the sale of Loans whereby all rights, obligations, liabilities, and responsibilities in connection with the servicing and administration of the Loans are released, relinquished, transferred, conveyed and assigned by Seller to Buyer. "Servicing Transfer Date" shall have the meaning assigned in Article 4(2)(a) of this Agreement. "Substitution of Parties and Counsel" shall have the meamng assigned m Article 3(7)(e) of this Agreement. 7 RREF-ISP005551 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 19 of 81 "UPB" means the unpaid principal balance of a Loan as of the Payment Cutoff Date according to the Seller's records kept in the ordinary course of business and does not include any interest fees, advances or other charges against such Loan; provided, however, that UPB might include protective advances (including, without limitation, collection fees or tax amounts paid by Seller on behalf of a Borrower) that are capitalized in the principal balance of the Loan. ARTICLE2 PURCHASE AND SALE OF LOAN RIGHTS (1) Sale and Purchase of Loan Rights. (a) For the consideration as set forth in Article 2(2), and subject to the terms and conditions of this Agreement, on the Closing Date, Seller shall sell, assign, and convey to Buyer, and Buyer shall purchase from Seller, all of Seller's rights, title and interest in and to the Loan Rights as well as all obligations and liabilities of any kind related thereto, other than any Seller Retained Liability. (b) The sale of the Loan Rights is on a whole-loan, Servicing-Released Basis. Except as set forth in Article 4(2) with respect to the Residential Loans, Seller has no servicing obligations whatsoever following the Closing Date as defined herein. (c) Except as expressly set forth in this Agreement, the sale of Loan Rights and the transfer and assignment of the Loan Documents is made WITHOUT RECOURSE TO SELLER OR SELLER RELEASED PARTIES AND WITHOUT ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY. Without limiting the preceding sentence, Seller shall not be liable to Buyer, or Buyer-Related Parties, should a Borrower fail to perform any of such Borrower's obligations under the Loan Documents or otherwise, unless such failure results from Seller having breached any of the representations and warranties contained in Article 6 of this Agreement. As of the Closing Date, one or more defaults and/or events of default by a Borrower may have occurred and may be continuing under the Loan Documents. Except as expressly set forth in this Agreement, Buyer is purchasing the Loan Rights (i) subject to all defaults and events of default that have occurred and which will exist as of the Closing Date, and (ii) AS IS AND WITH ALL FAULTS, DEFAULTS AND EVENTS OF DEFAULT. Except as expressly set forth in this Agreement, Seller expressly disclaims any oral or written representations, warranties, guarantees, promises or assurances regarding or in any way relating to the following: (i) the collectability of any Loan; (ii) the value, condition, profitability or amount necessary to rehabilitate the Collateral; (iii) the accuracy or completeness of the Due Diligence Materials; (iv) title or ownership to or of the Collateral, or any portion or part thereof; (v) compliance with any environmental protection, pollution or land use laws, including, without limitation, those pertaining to the use, handling, generating, treating, storing or disposing of any hazardous waste, hazardous substance, petroleum product, storage tank, or other container therefor, asbestos or any other substance controlled or otherwise governed by applicable laws; (vi) laws and any other governmental restrictions applicable to the Collateral; (vii) ownership of or obligations with respect to any entitlements or other similar rights or benefits 8 RREF-ISP005552 attributable to, burdening, or otherwise pertaining to the Collateral; (viii) any claims by a Borrower against Seller or claims by third parties against a Borrower, Guarantor, or Seller; or (ix) the creditworthiness or ability of a Borrower or Guarantor to fulfill its obligations or to pay its respective debts as they mature. Under no circumstances, the Seller selling, conveying or assigning to the Buyer, or is the Buyer purchasing from the Seller, any real estate owned property of the Seller. (d) Upon and after Closing, Buyer shall be the owner of the Loan Rights as well as the UPB owed thereunder, and, except as specifically provided herein, Buyer shall have all rights, powers, privileges, obligations and liabilities with respect thereto, other than the Seller Retained Liabilities. Buyer will assume and, upon Closing, shall be deemed to have assumed all of Seller's rights, title and interest in and to the Loan Rights, as well as all obligations and liabilities of any kind related thereto, including but not limited to those Escrows or Interest Reserves transferred to the Buyer pursuant to the terms of this Agreement, other than Seller Retained Liability. Except as expressly set forth in this Agreement, upon and after the Closing, Seller shall have no further responsibility or liability for the Loans and all risk of loss or damage with respect to the Loan Rights shall be assumed and borne by Buyer. Upon the Closing, Buyer shall be solely responsible for the existence of any and all insurance, including, without limitation, casualty and liability insurance coverage relating to the Collateral. (2) Purchase Price. (a) The Buyer shall pay to the Seller for the Loan Rights, in accordance with the requirements of this Agreement. The Purchase Price shall be paid as follows: (i) Except as otherwise expressly set forth in this Agreement or on the Bid Summary Sheet, Buyer will deliver the Deposit of Good Funds in the amount of on the next Business Day following the Effective Date to the Escrow Agent, who shall deposit and retain the Deposit in accordance with an escrow agreement in the form annexed as Exhibit E hereto (the "Escrow Agreement"); and (ii) On the Closing Date, Buyer shall pay to the Escrow Agent by wire transfer in immediately available Good Funds, the amount of the Purchase Price: (1) less the Deposit then being held by Escrow Agent; (2) less any Escrows or Interest Reserve retained by Seller relating to the Loans set forth on Schedule 2 hereto (Buyer will not receive a credit for such amounts or accounts that have been identified on Schedule 2 as being transferred to Buyer at Closing, and such amounts or accounts are thereafter transferred to Buyer at Closing pursuant to Article 3(4)(a)(v)); (3) plus any protective advances made by Seller between the Payment Cutoff Date and the Closing Date set forth on Schedule 4 hereto or which are otherwise made with the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed. If the UPB of any Loan changes or if Seller receives any amounts paid by any Person or otherwise received or collected by Seller in respect of the Loans (whether characterized as 9 RREF-ISP005553 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 21 of 81 principal, interest, fees, expenses, escrows, proceeds and any other payment of every kind and nature) between the Payment Cutoff Date and the end of the Business Day immediately prior to Closing, then the Purchase Price shall be adjusted dollar for dollar to reflect any such change or payment. Any credit for any Escrows or Interest Reserve pursuant to Article 2(a)(ii)(2) above shall be deemed to be a transfer of such Escrows or Interest Reserve by the Seller to the Buyer, and Buyer shall assume and be solely responsible for all obligations as escrow agent for such funds and as otherwise required by the Loan Documents on and after the Closing Date. Buyer acknowledges that Seller has provided Buyer with a payment history for each Loan effective as of the Payment Cut-Off Date reflecting all payments received with respect to each Loan and Buyer acknowledges receipt thereof; and, on or before June 12, 2013, Seller shall provide Buyer with a further reconciliation reflecting all payments received, if any, with respect to each Loan between the Payment Cut-off Date and the Servicing Transfer Date. (iii) The amount of the Purchase Price allocated for the Residential Loans will be held by the Escrow Agent in accordance with the terms of the Escrow Agreement until the Servicing Transfer Date. (3) Excluded Documents. Buyer acknowledges that certain documents concerning the Loan Rights are not included in the Loan Documents that are described in Exhibit B. These documents, referred to herein as "Excluded Documents", may include material information which, if known to Buyer, could have a material influence upon Buyer's assessment of the (i) value, (ii) merits, (iii) risks, and (iv) hazards inherent with the Loan Rights, and Buyer accepts such risks by entering into this Agreement and such risks shall be borne solely by Buyer. The Excluded Documents are not sold, transferred, assigned or conveyed by Seller to Buyer, and Buyer shall not request or be provided access to any of the Excluded Documents. Moreover, in no event shall Buyer at any time be entitled to review or have access to the Loans' internal approval requests, assessments of the Loans, assessments of the Collateral, attorney-client privileged materials, materials covered by any confidentiality agreement binding on Seller or internal communications or strategies of Seller for the Loans. ARTICLE3 CLOSING (1) Buyer's Closing Obligations. On the Closing Date, Buyer will pay the balance of the Purchase Price due to Seller in such manner as described in Article 2(2). Buyer expressly understands and acknowledges that TIME IS OF THE ESSENCE and that Seller must receive the Purchase Price on or before 12:00 p.m. Central Standard Time, on the Closing Date. The amount of the Purchase Price allocated for the Residential Loans will be held by the Escrow Agent in accordance with the terms of the Escrow Agreement until the Servicing Transfer Date. (2) Buyer's Closing Deliveries. On or before the Closing Date, Buyer shall deliver to Seller the balance of the Purchase Price due to Seller in such manner as described in Article 2(2). 10 RREF-ISP005554 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 22 of 81 (3) Seller's Closing Obligations. Upon Seller's receipt of the Purchase Price, Seller will execute the Closing Documents (hereinafter defined) for all Loans, thereby assigning, conveying and transferring to Buyer all of Seller's rights, title and interest in and to the Loan Rights as well as all obligations and liabilities of any kind related thereto, other than any Seller Retained Liability. Seller also will execute any other endorsements, assignments, documents or instruments that are reasonably required to evidence the sale and transfer of the Loan Rights; provided, however, that in no event shall any of the foregoing (a) increase Seller's obligations or liabilities hereunder, (b) decrease Seller's rights hereunder or (c) postpone the Closing Date. Except as expressly set forth in this Agreement or any Closing Document, all such endorsements, assignments, documents or instruments of conveyance shall be made WITHOUT RECOURSE TO SELLER OR SALE ADVISOR AND WITHOUT REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY TYPE, KIND OR CHARACTER. The Closing Documents associated with the Residential Loans will be held by the Escrow Agent until the Servicing Transfer Date. (4) Seller's Closing Deliveries. Upon Seller's receipt of the Purchase Price and in connection with the sale, transfer and assignment described in Article 3(3), Seller will make the Closing Documents for all Loans except those Closing Documents associated with the Residential Loans available for pickup or, if Buyer so elects, will deliver via overnight courier, by the Closing Date, the following documents and instruments (the "Closing Documents"): (a) The original executed promissory note related to each of the Loan Rights for each Loan or, if the original is not available, a copy thereof along with a lost note certificate signed by Seller substantially in the form attached hereto as Exhibit H; (b) An Assignment of the Loan Documents for each of the Loans substantially in the form attached as Exhibit C signed by Seller; (c) An allonge endorsing each operative Note without recourse, representation or warranty substantially in the form attached as Exhibit D, signed by Seller; provided that such disclaimer of recourse, representation or warranty in the allonge (or in any lost note certificate or assignment of any other Loan Document) shall not affect any representations and warranties, covenants or obligations of Seller or any rights of Buyer pursuant to this Agreement; (d) Any other documents, whether originals or copies thereof, that are expressly set forth on Exhibit B for each Loan as documents that are required to be delivered at Closing; (e) Any Escrows or Interest Reserves held by Seller in connection with the Loans as of Closing (unless such amounts or accounts are applied as credits against the Purchase Price pursuant to Article 2(2)(a)(ii)(2)) and any other pledged collateral including cash, cash equivalents and securities including arrangements satisfactory to Seller and Buyer for those items requiring transfer of physical possession or a control account agreement for the secured party to have and maintain perfection of such collateral, but excluding the right to any accounts maintained with the Seller which have 11 RREF-ISP005555 not been expressly pledged as Collateral for any of the Loan Rights or for which Buyer receives a credit against the Purchase Price in accordance with Article 2(2)(a)(ii)(2); (f) If required under applicable law within sixty (60) calendar days of the Closing Date, an original Assignment of Mortgage, Leases and Rents ("Assignment of Mortgages, Leases and Rents") for each Loan, executed by Seller and prepared by Buyer, but in form and content reasonably acceptable to Seller and Buyer; (g) A closing statement reflecting all financial aspects of the transaction, executed by Seller; (i) A Notice of Assignment of the Loans ("Notice of Assignment of the Loans") for each Borrower, executed by Seller in the form attached as Exhibit F. (h) On the Servicing Transfer Date and in connection with the sale, transfer and assignment described in Article 3(3), Seller will make the Closing Documents for all Residential Loans available for pickup or, if Buyer so elects, will deliver via overnight couner. (i) A Master Omnibus Assignment of Loans and Loan Documents ("Master Omnibus Assignment of Loans and Loan Documents") in the form attached as Exhibit G. (5) Transfers and Recording. (a) Other than the Closing Documents, Buyer is responsible for (i) preparing all assignments of financing statements (UCC-3) relating to the Loans and (ii) preparing all transfer and other documents that are necessary to evidence, secure, perfect or otherwise reflect the transfer of the Loan Rights to Buyer. (b) Buyer is responsible for recording all Closing Documents (and all costs associated therewith) and any other documents that are necessary to evidence, secure, perfect, or otherwise reflect the transfer of the Loan Rights to Buyer. IN NO EVENT SHALL SELLER OR ANY SELLER RELEASED PARTY BE LIABLE FOR BUYER'S FAILURE TO PREPARE OR PROPERLY RECORD ANY DOCUMENT THAT IS NECESSARY TO EVIDENCE, SECURE OR OTHERWISE REFLECT BUYER'S RIGHT, TITLE AND INTEREST IN AND TO THE LOAN RIGHTS. (c) Buyer acknowledges that Seller is not responsible for obtaining (nor shall Seller be deemed to be responsible or otherwise obligated to obtain) any estoppels or other confirmations of the outstanding amount of the Loans or any other information regarding the Loans, the Loan Documents or the Collateral from any Person, including without limitation a Borrower or Guarantor. 12 RREF-ISP005556 (6) Costs. (a) Each party hereto will pay its own costs and legal fees incurred in connection with the transactions contemplated herein as well as in connection with the negotiation, execution and delivery of this Agreement and the Closing Documents. (b) Notwithstanding the terms in Article 3(6)(a), Buyer will pay all documentary fees, transfer fees, title company charges, recording costs, and all other charges or costs incurred in connection with the transfer of ownership of the Loan Rights from Seller to Buyer. (7) Post-Closing Obligations. (a) Obligations. From and after Closing, Seller shall have no obligation of any kind concerning the Loans nor shall Seller have any obligation to Buyer of any kind concerning the Loans, except for the Seller Retained Liability and except as otherwise specifically agreed in writing by the parties. (b) Post-Closing Swap Termination. Within thirty (30) calendar days after the Closing Date, Seller shall terminate any remaining or outstanding interest rate swaps previously entered into between Seller and a Borrower with respect to any Loan, forbear from collecting any early termination fees in connection with any such termination and shall provide Buyer with copies of any executed termination letters with respect to same. (c) Post-Closing Payments. Any and all Loan payments received by Seller on and after the Closing Date ("Post-Closing Payments") shall belong to Buyer. All Post-Closing Payments received by Seller shall be remitted to Buyer within ten (1 0) calendar days of Seller's receipt of such payment. (d) Post-Closing Cooperation Related to Closing Documents. For a period of sixty (60) calendar days following the Servicing Transfer Date and upon the reasonable request of Buyer, Seller will execute, acknowledge and deliver any additional assignments, transfers and confirmations that are reasonably required to evidence or confirm the assignment and transfer of the Loan Rights and Loan Documents to Buyer, including, without limitation, assignments of any Mortgage or Mortgage-related documents or judgments, if any, for each Loan in recordable form and without representation or warranty of any kind from Seller except as set forth in this Agreement; provided, however, that in no event shall any of the foregoing (a) increase Seller's obligations or liabilities hereunder or (b) decrease Seller's rights hereunder. All assignments, transfers and confirmations requested by Buyer pursuant to this Article 3(7)(d) shall be substantially completed by Buyer and shall be in a form that is reasonably acceptable to Seller and Buyer. Buyer will reimburse Seller for Seller's reasonable out-of-pocket expenses (including, without limitation, reasonable attorneys' fees) incurred in complying with this Article 3(7)(d). The parties obligations under the Master Omnibus Assignment of Loans and Loan Documents executed in conjunction with this Agreement shall be subject to the time limitations expressly stated in this Article 3(7)(d). Notwithstanding any time limitations herein, the Seller will continue to 13 RREF-ISP005557 reasonably cooperate with Buyer to provide evidence of the transfer and assignment of Loans in those exceptional circumstances where the transfer and assignment of Loans has been challenged in a court of law or where evidence has been presented that directly contradicts the transfer and assignment of Loans. (e) Assignment ofLitigation. (i) At Closing, Seller shall be deemed to have assigned to Buyer and Buyer shall be deemed to have assumed full responsibility and liability for any and all litigation related to the Loan Rights and involving the Seller in any way, whether now existing or hereafter commenced, including, but not limited to, the litigation listed on Schedule 3 attached hereto (the "Assigned Litigation"); provided, however, that in no event shall such assignment and/or assumption of the Assigned Litigation by Buyer include any assumption of responsibility or liability for the Seller Retained Liabilities, and Seller shall retain and remain solely responsible for (a) the Assigned Litigation that solely relates to any Seller Retained Liabilities and (b) the portion or causes of action contained in any other Assigned Litigation that relate to Seller Retained Liabilities or alleged Seller Retained Liabilities. Seller shall use commercially reasonable good faith efforts to include a list of all such Assigned Litigation on Schedule 3 attached hereto. Upon the Closing, Buyer shall assume sole responsibility and liability for the prosecution and/or defense of the Assigned Litigation and any and all other claims concerning the Loan Rights (except relating to the Seller Retained Liabilities), whether now existing or hereafter commenced, that are asserted in the Assigned Litigation against Seller or any of the Seller Released Parties concerning the Loan Rights. Except for the Seller Retained Liabilities, Buyer shall and does hereby indemnify and hold the Seller Released Parties harmless from and against the Assigned Litigation (INCLUDING WITHOUT LIMITATION ANY LOSS CAUSED BY THE NEGLIGENCE OR STRICT LIABILITY OF A SELLER RELEASED PARTY). No later than thirty (30) calendar days after the Closing Date, Buyer shall file substitutions of parties and counsel, in form and content consistent with the rules of the court exercising jurisdiction over the matter (the "Substitutions of Parties and Counsel"), with all appropriate courts and duly serve the Substitutions of Parties and Counsel on all counsel of record and other appropriate Persons. Contemporaneously with such filing and service, Buyer shall provide to Seller evidence that all Substitutions of Parties and Counsel have been duly prepared and filed in accordance with the requirements of this Article. Seller shall request its counsel in the Assigned Litigation to cooperate reasonably with Buyer. Nothing contained in this Agreement shall preclude Buyer from retaining the same attorney retained by Seller to handle such litigation with respect to the Loans, provided that Buyer's interest is not adverse to Seller's interest and no conflict of interest exists. Seller shall reasonably cooperate in the defense of any such claim or action to the extent its interests are not in conflict with Buyer's and shall use commercially reasonable efforts to work with Buyer to resolve or settle such claims or action in a manner that is mutually agreeable and in their respective best interests. If Buyer fails to strictly comply with the requirements of this Article, Seller shall have no responsibility or liability to 14 RREF-ISP005558 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 26 of 81 Buyer for Buyer's failure to timely receive pleadings or other papers served in any of the Assigned Litigation (or Seller's failure to forward pleadings or other papers served on Seller) after the date which is thirty (30) calendar days after Closing. (ii) Seller shall reasonably cooperate with Buyer in the transfer and assumption of the Assigned Litigation and Buyer's prosecution or defense of the Assigned Litigation, including executing and delivering such additional instruments and taking such further actions as Buyer may, from time to time, reasonably request, although Seller shall have no obligation pursuant to this Article 3(7)(e) after the expiration of the period provided in Article 3(7)(d). (f) Reporting. Between the Payment Cutoff Date and the Servicing Transfer Date, the Buyer is responsible for reporting to the Internal Revenue Service ("IRS") any reportable interest payments received during this time. (8) Liquidated Damages. Buyer and Seller understand that it would be impractical and difficult to determine the minimum detriment that Seller will suffer if Buyer breaches any representation or warranty herein prior to Closing or for any reason Buyer is unable or fails to consummate the transactions herein contemplated. In such event, Seller shall be entitled to retain Buyer's Deposit as its sole and exclusive remedy because such remedy represents a reasonable estimate of the minimum detriment that Seller may suffer from, among other things, short-term market fluctuations and perceived or actual impairments to the market value of the Loans resulting from Buyer's breach or failure to consummate the transactions herein contemplated. The payment and performance of the remedy in this Article 3(8) is not intended to be a forfeiture or penalty within the meaning of applicable law. ARTICLE 4 SERVICING (1) Servicing Prior to the Closing Date. (a) Between the Effective Date and the Closing Date, Seller will service and administer each Loan in conformity with Seller's past pattern and practice with respect to such Loan; provided, however, that Seller will not, and shall not enter into any letter of intent or agreement to, without the prior written consent of Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), except as otherwise required by the Loan Documents (as in effect on the Effective Date): (i) amend or modify any term or condition of a Loan or Loan Document; (ii) accept any discounted payoff of any Loan; (iii) release any Collateral, Borrower or Guarantor from liability in connection with a Loan, or satisfy, waive, rescind, cancel or subordinate any Collateral Document, unless such Loan (including, without limitation, all amounts due and payable under the Loan Documents) is paid in full; (iv) compromise or settle any Claims; (v) initiate or otherwise take any action with respect to a foreclosure against any Collateral, except to the extent that such actions are necessary or appropriate in Seller's reasonable judgment as a 15 RREF-ISP005559 continuation of actions taken prior to the Effective Date; or (vi) sell or encumber any Loan. (b) If Seller complies in good faith with the provisions of Article 4(1)(a), then (i) except as otherwise provided in this Agreement, Seller shall have no liability to Buyer with respect to its servicing of the Loans in accordance with Article 4(1)(a) between the Effective Date and the Closing Date; and (ii) Buyer shall be bound by Seller's actions, if any, taken during such interim servicing period, provided such actions are taken in compliance with Article 4(1)(a). (2) Servicing After the Closing Date. (a) Except for the Residential Loans, the Loan Rights are being sold, transferred, conveyed, and assigned to Buyer on the Closing Date a Servicing-Released Basis.The Residential Loans will continue to be serviced by Seller on behalf of Buyer thereafter until the Servicing Transfer Date. On a date on or before June 7, 2013 (the "Servicing Transfer Date"), and all rights, interests, obligations, liabilities (other than Seller Retained Liabilities), and responsibilities with respect to the servicing and administration of all Residential Loans will be assumed and undertaken by Buyer on the Servicing Transfer Date, and Seller will be discharged and released from all such obligations, liabilities (other than Seller Retained Liabilities) or responsibilities therefor. (b) With respect to the Residential Loans, between the Closing Date and the Servicing Transfer Date, Seller will service and administer each Residential Loan in accordance with Seller's past pattern and practice with respect to such Residential Loan; provided, however, that Seller will not, and shall not enter into any letter of intent or agreement to, without the prior written consent of, except as otherwise required by the Loan Documents (as in effect on the Closing Date) or applicable laws, rules or regulations: (i) amend or modify any material term or condition of a Residential Loan or Loan Document; (ii) accept any discounted payoff of a Residential Loan; (iii) release any Collateral, Borrower or Guarantor from liability in connection with a Residential Loan, or satisfy, waive, rescind, cancel or subordinate any Collateral Document, unless such Residential Loan (including, without limitation, all amounts due and payable under the Loan Documents) is paid in full; (iv) compromise or settle any Claims; (v) initiate or otherwise take any action with respect to a foreclosure against any Collateral; or (vi) sell or encumber any Residential Loan. (c) As of the end of the Business Day on the Servicing Transfer Date, Buyer will be solely responsible and liable for complying with all applicable laws, rules and regulations governing the ownership, servicing and administration of the Residential Loans, including, without limitation, the obligation to notify Borrowers, Guarantors, or other sureties regarding the transfer of the Residential Loans and the transfer of servicing rights for such Residential Loans from Seller to Buyer; provided that pursuant to Article 3(4)(a)(viii), Seller shall also execute a Notice of Assignment of Loans for each Residential Loan. 16 RREF-ISP005560 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 28 of 81 (d) Notwithstanding the Buyer's obligations set forth in Article 4(2)(b), Seller is permitted to also notify the Borrower, Guarantors or other sureties regarding the transfer of the Loan Rights and the transfer of the servicing rights from Seller to Buyer. (e) If Seller complies in good faith with the provisions of Article 4(2)(b), then (i) Seller shall have no liability to Buyer with respect to its servicing of the Residential Loans between the Servicing Transfer Date and the Closing Date; and (ii) Buyer shall be bound by Seller's actions, if any, taken during the interim servicing period specified in Article 4(2)(a). (3) Limitations. Under no circumstances will Seller be a fiduciary of Buyer with respect to the Loans. Seller has no liability to Buyer for deficiencies with regard to servicing the Loans, except that Seller shall be liable for the Seller Retained Liabilities or Seller's conduct constituting gross negligence, willful misconduct and/or failure to comply in good faith with the provisions of either Article 3(7)(e), 4(1)(a) or Article 4(2)(b) BUT NOT SELLER'S NEGLIGENCE OR STRICT LIABILITY. Without limiting the foregoing, Seller also shall have no liability for actions taken at the request of (or with the implied or express consent of) Buyer, and no such action or inaction will limit in any way Buyer's obligation to purchase the related Loans. For purposes of this Article 4(3), "implied consent" means Buyer's affirmative consent represented by Buyer's failure to respond in writing within three (3) Business Days after Buyer's actual receipt of Seller's written request to take or to actively refrain from taking any of the actions specified in Article 4(1)(a) or Article 4(2)(b). ARTICLE 5 BUYER'S REPRESENTATIONS, WARRANTIES, COVENANTS AND ACKNOWLEDGMENTS (1) Representations, Warranties Covenants and Acknowledgments of Buyer. Buyer hereby represents and warrants to Seller that, as of the date hereof and as of the Closing Date, the following are true and accurate statements: (a) Authority. Buyer is in good standing in the jurisdiction of its formation, is duly and legally authorized to enter into this Agreement, and is a "United States person" within the meaning of Paragraph 7701(a)(30) of the Internal Revenue Code, as amended. Buyer has taken all necessary action to authorize the execution, delivery and performance of this Agreement and has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder. Buyer has complied with all laws, rules, regulations, charter provisions and bylaws necessary to enter into this Agreement, to consummate the transactions contemplated hereby, and to purchase and service the Loans. Buyer's representative is authorized to act on behalf of and bind Buyer to the terms of this Agreement. No litigation exists against Buyer that would have a material adverse effect on the ability of Buyer to consummate the transactions contemplated by this Agreement. (b) Approval. Buyer has complied with all applicable federal and state laws, rules, regulations, charter provisions and bylaws necessary to consummate the 17 RREF-ISP005561 transactions contemplated herein and to purchase and service the Loans. No further state or federal approval is required for Buyer to purchase and service the Loans. (c) Enforceability. Assuming due authorization, execution and delivery by Seller, this Agreement (and all of the obligations of Buyer hereunder) are the legal, valid and binding obligations of Buyer, enforceable against Buyer in accordance with the terms of this Agreement and subject to applicable bankruptcy, insolvency, reorganization, moratorium laws or similar laws or equitable principles generally affecting or limiting the rights of contracting parties. (d) Sophisticated Buyer. Buyer is a sophisticated investor and, except as otherwise provided in this Agreement, Buyer's decision to enter into this Agreement is made solely from Buyer's own investigation of the Loans, the Loan Documents, the Due Diligence Materials, Borrowers (and, if applicable, the Guarantors), and the Collateral. (e) Financial Condition. Buyer represents and warrants that Buyer has sufficient liquid assets, capital and net worth to deliver the Deposit to Seller without any contingencies. Buyer further represents and warrants that Buyer will have sufficient liquid assets, capital and net worth to deliver the balance of the Purchase Price to Seller without any contingencies and to otherwise fulfill its obligations under this Agreement. (f) Confidentiality Agreement. Buyer acknowledges that it signed a confidentiality agreement that runs exclusively in favor of Seller. Buyer has complied with all of the terms and conditions of such confidentiality agreement, including, without limitation, the terms and provisions that prohibit Buyer from contacting any Person identified in the Loan Documents without the prior written consent of Seller. (g) Buyer Is Not Affiliated with Borrower. Except as provided on Schedule 5, Buyer does not have actual knowledge of an Affiliated Relationship with any Borrower or Guarantor identified in the Loans or Loan Documents. Buyer has no understanding, arrangement, or agreement (oral or otherwise) with any Person identified in the Loans or Loan Documents, the purpose of which understanding, arrangement, or agreement is (i) to pledge, hypothecate, transfer or sell any or all of Buyer's interest in or to the Loans or the Loan Documents to any Borrower or Guarantor identified in the Loans or Loan Documents (or any Person with whom a Borrower or Guarantor has an Affiliated Relationship); or (ii) to restate, supplement or otherwise modify the Loan Documents; or (iii) to release, forebear, forgive, or extend any Borrower's obligations under the Loan Documents. (h) Prohibited Person. Buyer represents, warrants and covenants that: (i) Buyer is not, nor is it owned (directly or indirectly) or Controlled by, any person, group, entity or nation named on any list issued by the Office of Foreign Assets Control of the United States Department of the Treasury ("OFAC") pursuant to Executive Order 13224 or any similar list or any law, order, rule or regulation or any Executive Order of the President of the United States as a terrorist, "Specially Designated National and Blocked Person" or other banned or blocked person (any such person, group, entity or nation being hereinafter referred to as a "Prohibited Person"); (ii) Buyer is not (nor is it owned 18 RREF-ISP005562 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 30 of 81 (directly or indirectly) or Controlled by any person, group, entity or nation which is) acting directly or indirectly for or on behalf of any Prohibited Person; and (iii) Buyer has not (nor is it owned (directly or indirectly) or Controlled by any person, group, entity or nation which has) purposefully conducted business or engaged in any transaction or dealing with any Prohibited Person in violation of the USA PATRIOT Act ("Patriot Act") or any OF AC rule or regulation, including without limitation, the making or receiving of any contribution of funds, goods or services to, or for the benefit of or from, a Prohibited Person in violation of the Patriot Act or any OF AC rule or regulation. Notwithstanding anything contained herein to the contrary, for the purposes of this Article 5(1)(h), the phrase "owned (directly or indirectly) or Controlled by, any person, group, entity or nation" and all similar such phrases shall not include any holder of a direct or indirect interest in a publicly traded company whose shares are listed and traded on a U.S. national stock exchange. For purposes of this Article 5(1)(h), "Control" or "Controlled" means, with respect to a Person, the power to direct the actions or policies of such Person by ownership of voting securities, as its general partner, manager or managing member, by contract, or by other means. (i) Accounting Treatment. Buyer represents and warrants that it intends that the conveyance of the Loan Rights to Buyer pursuant to this Agreement is and shall be treated as an absolute sale and not as a secured loan by Buyer to Seller for accounting purposes under generally accepted accounting principles. Buyer covenants that the computers, books and records and the tax returns of Buyer will be prepared and maintained consistent with such intent. G) Accredited Investor. Buyer represents to Seller that it is an "Accredited Investor" as that term is defined in Regulation D promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended from time to time, as required pursuant to the transfer of the McDonough Properties, LLC Loan. (2) Buyer's Representations, Warranties, Covenants and Acknowledgment as to the Loans. With respect to each Loan being purchased by Buyer hereunder, Buyer hereby represents and warrants to Seller that, as of the date hereof and as of the Closing Date, the following are true and accurate statements: (a) Examination of Loans Being Purchased. Buyer has examined, investigated and reviewed all documents and records that Buyer deems necessary and appropriate in making its decision to purchase the Loan Rights. Buyer acknowledges that, except as expressly set forth in this Agreement, Seller has not made any representations or warranties regarding or in any way relating to (i) the collectability of the Loans or the value of the Collateral; or (ii) the content, accuracy, or completeness of the Due Diligence Materials. (b) Independent Evaluation. Buyer has made and relied upon its own evaluation and decision to purchase the Loan Rights, and Buyer has not relied upon any oral or written information or statements from either Seller, Seller Released Party or Sale Advisor, other than as expressly set forth in this Agreement. Buyer expressly acknowledges that Seller urged, invited, directed, and provided an opportunity for Buyer 19 RREF-ISP005563 to independently investigate and examine the Due Diligence Materials, and any other records that are available to the public from local, county, state, and federal authorities, courts and record-keeping offices. (c) Acknowledgements. Buyer acknowledges that, except as expressly set forth in this Agreement: (i) Buyer is solely responsible for its own independent investigation of the Due Diligence Materials; (ii) all information and records have been provided to Buyer as an accommodation and for informational purposes only; therefore, the risk of any inaccuracy, incompleteness, or deficiency in any part of such information and records shall be borne exclusively by Buyer; (iii) the Excluded Documents and other material information and documentation might be missing from the Due Diligence Materials, which documentation, if known to Buyer, could have an impact upon the perceived, apparent or actual value, merits, risk of a Loan, or hazards inherent with the Loan Rights, and Buyer accepts such risks by entering into this Agreement and such risks shall be borne solely by Buyer; and (iv) portions of the records might have been prepared by parties other than Seller, and, except as otherwise expressly set forth herein, neither Seller nor a Seller Released Party has made an independent investigation or verification of any such records. (d) Fair Collection Practices Indemnity. The Buyer will not violate any laws relating to fair debt collection practices in connection with the Loans. (e) Compliance. Upon later of the Closing or the Servicing Transfer Date, as applicable, Buyer acknowledges that the Seller shall have no further responsibility or liability for complying with the terms of the Loan Documents and all applicable laws, rules and regulations governing the ownership, servicing and administration of the Loans. (f) Retained Relationships. Buyer acknowledges that Seller may now have or may hereafter enter into a credit, depository, trust or other banking relationship with a Borrower, Guarantor, or any of their respective agents, employees or affiliates (each such relationship, excluding any Loan Rights being transferred under this Agreement, being a "Retained Relationship"). All documents and instruments relating to a Retained Relationship are not assigned and shall not be deemed to be disclosed, transferred or assigned to Buyer pursuant to this Agreement, it being understood that Buyer is acquiring only the Loan Rights herein described. In no event shall Buyer be entitled to review any documents or other information of Seller pertaining to any Retained Relationship. To the extent that, as part of a Retained Relationship, Seller has a security interest in Collateral to secure a Retained Relationship it may maintain such security interest but the Seller shall release and waive its interest in any security interest in the Collateral that secures a Loan being acquired by Buyer as of the Closing Date. If a security interest in the collateral securing the payment of a Retained Relationship is created by documents other than the Loan Documents, Buyer shall be deemed to release and waive its interest in such security interest in the collateral as of the Closing Date. Buyer and Seller shall execute and deliver such other documents as are reasonably necessary to evidence and affect the releases of security interests in the collateral described herein. Seller shall not be required to notify Buyer of any default now existing or hereafter arising under any Retained Relationship. 20 RREF-ISP005564 (g) Taxes. Buyer shall be responsible for and pay any and all federal, state, local, and other taxes, other than Seller's income or franchise taxes, as well as related penalties and interest, resulting from, imposed upon, or related to the sale of the Loan Rights. In addition, Buyer shall be responsible for all IRS reporting related to or resulting from its efforts to acquire, collect on, or otherwise service the Loan Rights, including without limitation, any obligation to report information on IRS Form 1099. (h) Release. Buyer shall and does hereby fully release, remise, and forever discharge the Seller Released Parties, from and against any and all claims, liens, demands, causes of action, controversies, offsets, obligations, losses, damages and liabilities of every kind and character arising from or relating to a Borrower, or the Loan Rights founded either in tort, contract or otherwise and the duties arising thereunder, that Buyer had in the past, or now has, or which may hereafter accrue (except those arising under this Agreement) INCLUDING, WITHOUT LIMITATION, THOSE ARISING FROM SELLER RELEASED PARTIES' NEGLIGENCE AND/OR STRICT LIABILITY. (i) Use of Name of Seller. Buyer shall not (i) institute any enforcement or legal action or proceeding in the name of Seller; (ii) refer to Seller in any correspondence to or discussion with a Borrower or Guarantor regarding enforcement or collection of the Loan except as is reasonably required to evidence Buyer's ownership of the Loan Rights; (iii) misrepresent, mislead, deceive, or otherwise fail to adequately disclose to a Borrower or Guarantor the identity of Buyer and its ownership of the Loan Rights; or (iv) use Seller's name, or any name derived from or confusingly similar with the name of Seller in connection with Buyer's enforcement, collection, or management of the Loan Rights, except as required to evidence Buyer's purchase of the Loan Rights. Buyer acknowledges that there may be no adequate remedy at law for a violation of the terms of this Article 5(2)(i), and Seller shall have the right to seek the entry of an order by a court of competent jurisdiction enjoining any violation hereof G) Release of Seller. In connection with any settlement, whether judicial or non-judicial, by Buyer and a Borrower or Guarantor which includes a release of Buyer or its successors or assigns, Buyer shall include a release of Seller and the Seller Released Parties for any such claims pertaining to the Loan Rights. (k) Further Assurances. Buyer shall execute and deliver, at its sole expense, such additional instruments and take such further actions as Seller may, from time to time, reasonably request, in order to effectuate the purpose and to carry out the terms of this Agreement. (1) Notice of Inaccuracy. Buyer shall notify Seller promptly if Buyer discovers that any of the representations set forth in Article 5 hereof become inaccurate prior to the Closing Date. 21 RREF-ISP005565 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 33 of 81 ARTICLE 6 SELLER'S REPRESENTATIONS AND WARRANTIES (1) Representations and Warranties of Seller. Seller hereby represents and warrants to Buyer that, as of the date hereof and as of the Closing Date, the following are true and accurate statements in all material aspects: (a) Organization; Existence. Seller is duly formed and validly existing in the jurisdiction of its formation, and Seller is in good standing under the laws of the jurisdiction of its formation or organization. Seller is duly and legally authorized to enter into this Agreement and the other documents required to be delivered by Seller in connection with the Closing, and Seller's representative is authorized to act on behalf of and bind Seller to the terms of this Agreement and the other documents required to be delivered by Seller in connection with the Closing. (b) Authority. Seller has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the other documents required to be delivered by Seller in connection with the Closing, and Seller has the power and authority to execute and deliver this Agreement and the other documents required to be delivered by Seller in connection with the Closing as well as to perform its obligations hereunder. (c) Accounting Treatment. Seller represents and warrants that it intends that the conveyance of the Loan Rights to Buyer pursuant to this Agreement is and shall be treated as an absolute sale and not as a secured loan by Buyer to Seller for accounting purposes under generally accepted accounting principles. Seller covenants that the computers, books and records and the tax returns of Seller will be prepared and maintained consistent with such intent. (2) Representations and Warranties of Seller as to the Loans. Except for any Collateral in Mexico or certain Loan Documents written soley in Spanish ("Foreign Collateral or Loan Documents") as related to the Loans set forth on Schedule 7, with respect to each Loan being purchased by Buyer hereunder, Seller hereby represents and warrants to Buyer that, as of the date hereof and as of the Closing Date, the following are true and accurate statements in all material aspects: (a) Right to Sell. Seller has full right and authority to sell, assign and transfer the Loan Rights to Buyer. Except for the Assigned Litigation, Seller is not aware of any action, suit or proceedings pending or, to Seller's knowledge, threatened against Seller in any court or by or before any other governmental agency or instrumentality that would affect the ability of Seller to carry out the transactions contemplated by this Agreement. (b) Sole Ownership. Either the Seller is the sole owner and rightful holder of the Loan Rights, and the Notes or, at Closing, Seller will be the sole owner and rightful holder of the Loan Rights. (c) Sale, Transfer and Assignment. The sale of the Loan Rights and the transfer and assignment of Loan Rights are free and clear of any participation interest. 22 RREF-ISP005566 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 34 of 81 (c) Sale, Transfer and Assignment. The sale of the Loan Rights and the transfer and assignment of Loan Rights are free and clear of any participation interest. (d) Loan UPB. As of the Payment Cutoff Date, the UPB of each Loan is the amount set forth in the Bid Summary Sheet. The UPB of each Loan as of the Closing Date (the "Closing Date UPB") shall be provided to Buyer within twenty (20) Business Days of the Closing Date. The UPB of any Loan as determined by a court of law shall not materially differ from the Closing Date UPB. As used herein, the term "materially differ" shall mean the actual UPB of any such Loan as determined by a court of law shall not be less than the Closing Date UPB by an amount equal to the greater of 10% of the Closing Date UPB or $25,000. Notwithstanding anything to the contrary in Article 1, Seller makes no representation or warranty whatsoever with respect to any protective advances (including, without limitation, tax amounts paid by Seller to a municipality on behalf of a Borrower), or any other fees, expenses or any other amounts (other than unpaid principal), that have been, could have been or should have been capitalized into the principal balance of the Loan pursuant to the terms of the Loan Documents or otherwise. (e) Notice of Inaccuracy. Seller shall notify Buyer promptly if Bill Douning has actual knowledge, without investigation, that any of the representations set forth in this Article 6 hereof become inaccurate prior to the Closing Date. ARTICLE 7 REMEDIES FOR BREACH OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION PROCEDURES (1) Limited Damages. It is expressly understood that each party's representations and warranties are made as of the date hereof and as of the Closing Date and any limitation of damages is expressly set forth in this Agreement. (2) Seller's Remedies for Breach by Buyer. Seller, as its sole and exclusive remedy, shall be entitled to the remedy set forth in Article 3(8) if Buyer breaches any representation, warranty or agreement herein prior to the Closing Date or otherwise fails for any reason to consummate the transaction contemplated herein, except as provided in Article 8(3). (3) Buyer's Remedies for Breach by Seller. The remedies set forth in this Article 7(3) shall be the exclusive remedies of Buyer for any breach by Seller of a Non-Monetary Representation or Warranty or a Monetary Representation or Warranty, whichever might be applicable, or if Seller fails for any reason to consummate the transaction contemplated herein. Except as expressly set forth herein, including Article ll(b), Buyer shall not be entitled to any other rights, remedies or other relief, at law or in equity, for Seller's breach of any Non-Monetary Representation or Warranty or any Monetary Representation or Warranty set forth in this Agreement. In no event shall Buyer be entitled to receive consequential, punitive, speculative or other damages. Buyer expressly waives any right to specific performance of this Agreement. 23 RREF-ISP005567 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 35 of 81 (a) Definitions of Monetary and Non-Monetary Representations or Warranties. As used herein and except as the context otherwise clearly requires, the singular form of the following terms includes the plural form and vice versa. As used in this Agreement, "Monetary Representation or Warranty" means a representation or warranty set forth in Article 6(2)(d). As used in this Agreement, "Non-Monetary Representation or Warranty" means any representation or warranty in Article 6 other than a Monetary Representation or Warranty. (b) Remedy for Breach of Non-Monetary Representations or Warranties. The Buyer will use commercially reasonable efforts to timely discover whether a breach exists as to any of the Seller's Non-Monetary Representations or Warranties as set forth in this Agreement. To the extent such a breach does exist, the Buyer's remedies will be controlled by Article 11 (b). (c) Sole Remedy for Breach of Monetary Representation or Warranties. If within ninety (90) calendar days after the Closing Date, Buyer discovers that Seller breached a Monetary Representation or Warranty set forth in this Agreement, Buyer shall give written notice to Seller within ten (10) Business Days of discovery of such breach (provided, however, that any failure by Buyer to give written notice within such ten (1 0) Business Day period shall not affect or impair Buyer's right or ability to bring a claim against Seller for any such breach so long as Buyer notifies Seller of such breach within ninety (90) calendar days after the Closing Date and provided that Buyer's failure to provide notice of such breach within such ten (10) Business Day period does not prejudice or adversely affect in any material respect Seller's ability to cure such breach), and Seller shall have the right to review such monetary breach during a period of fifteen (15) calendar days following Seller's receipt of such notice. If such monetary beach is confirmed by the Seller, the Seller will notify the Buyer that the monetary breach is confirmed and cure such monetary breach during a period of fifteen (15) calendar days following Seller's receipt of such confirmation. Within such fifteen (15) day period, Seller will pay to Buyer an amount equal to the difference between the Bid Percentage multiplied by the originally stated UPB and the Bid Percentage multiplied by the actual UPB as a result of Seller's breach of a Monetary Representation or Warranty. (d) Limitations. Seller shall not be deemed to be in breach of this Agreement or the representation and warranty set forth in Article 6(2)(d) if the UPB changes between the Payment Cutoff Date and the Closing Date. In such event, however, Seller will deliver to Buyer a closing statement on the Closing Date, which closing statement reflects the UPB as of the Closing Date as well as a revised Purchase Price that is adjusted pursuant to Article 2(2)(a)(ii). ARTICLE 8 CONDITIONS PRECEDENT TO CLOSING (1) Conditions Precedent to Buyer's Obligations. Notwithstanding anything to the contrary in this Agreement and unless waived by Buyer, Buyer's obligation to purchase the Loan Rights shall be subject to and conditioned upon the satisfaction by Seller of the following 24 RREF-ISP005568 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 36 of 81 conditions precedent: (a) all of the representations and warranties of Seller set forth herein are true and correct in all material respects as of the date hereof and as of the Closing Date, except as affected by the taking of any action permitted hereunder; and (b) Seller's performance or tender of performance of its obligations under this Agreement in all material aspects. (2) Conditions Precedent to Seller's Obligations. Notwithstanding anything to the contrary in this Agreement and unless waived by Seller, Seller's obligation to sell the Loan Rights and transfer and assign the Loan Documents shall be subject to and conditioned upon the satisfaction by Buyer of the following conditions precedent: (a) all of the representations and warranties of Buyer set forth herein are true and correct in all material respects as of the date hereof and as of the Closing Date, except as affected by the taking of any action permitted hereunder; and (b) Buyer's performance or tender of performance of its obligations under this Agreement in all material aspects, including, without limitation, payment of the Purchase Price. (3) Failure or Waiver of Conditions Precedent. In the event that any condition set forth in Articles 8(1) or 8(2) is not fulfilled or otherwise waived, the party benefited by such condition may, by written notice to the other party, terminate this Agreement in accordance with Article 10. Either party may, in its sole discretion and by providing written notice to the other party, waive its own benefit of the conditions set forth in this Agreement. ARTICLE 9 SELLER'S RETENTION OF LOANS (1) Retention of Loans. If prior to the Closing Date, Seller, in its sole discretion, determines that Seller is unable to sell any Loan Rights due to a court or regulatory order or due to Seller's knowing inability to satisfy its representations of this Agreement with respect to such Loan Rights (so long as Seller did not know that such representations were untrue as of the date originally made), then, notwithstanding anything in this Agreement to the contrary, Seller, in its sole and absolute discretion, may withdraw the applicable Relationship related to the Loan Rights from this Agreement; provided, however, that the Purchase Price then shall be reduced by the applicable Purchase Price attributable to such withdrawn Relationship. ARTICLE 10 TERMINATION OF AGREEMENT (1) Termination by the Parties. This Agreement may be terminated by the parties with the effects stated in Article 10(2) in any of the following ways: (a) by either party in writing at any time on or prior to the Closing Date if the other party has, in any material respect, breached any representation, warranty, covenant or undertaking contained herein, and such breach cannot reasonably be cured prior to the Closing Date; or (b) by either party in writing at any time after any regulatory authority has denied an application for approval of the transactions contemplated hereby, if and to the extent that such application is required, and the time period for an appeal has run. 25 RREF-ISP005569 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 37 of 81 (2) Effect of Termination. If this Agreement is terminated for any reason provided in Article 10(1), neither party shall have any further liability or obligation with respect to this Agreement, except for the indemnification obligations, which specifically survive termination of this Agreement. If for any reason Buyer breaches any term or provision herein or otherwise is unable or fails to consummate the transactions contemplated hereby, other than as provided in Article 8(3), then, pursuant to Articles 3(8) and 10(1)(a), Seller, as its sole remedy, shall be entitled to retain Buyer's Deposit upon termination of this Agreement; provided, however, that, if the failure to consummate the Closing is the direct result of Seller's prior breach or misrepresentation (and Buyer is not otherwise in default), then Seller immediately shall return the full amount of the Deposit to Buyer, as Buyer's sole remedy. If Buyer terminates this Agreement pursuant to Article 10(1)(a), then Buyer shall be entitled to an immediate return of the Deposit (unless Buyer is in prior breach). If either party terminates this Agreement pursuant to Article 10(1)(b), Seller shall immediately authorize the return of the Deposit to Buyer. Upon such termination of this Agreement, neither Seller nor Buyer shall have any further rights, obligations or liabilities under this Agreement, except for those rights, obligations and liabilities which expressly survive the termination of this Agreement. ARTICLE 11 LIMITATION OF LIABILITY (1) Limitation of Liability. (a) Should Seller for any reason ever become liable to Buyer under any circumstances arising under or resulting from this Agreement, for any claim, loss, cost, damage, judgment, expense or other liability of any kind, including, without limitation, reasonable attorneys' fees (collectively, a "Liability"), then Buyer's recourse against Seller for such Liability shall be limited to the lesser of: (i) the Purchase Price, less principal payments received by Buyer in respect to the Loan Rights giving rise to such Liability, including, without limitation, the amount realized and realizable from any Collateral for only such Loans giving rise to such Liability; and (ii) the actual loss or damage sustained by Buyer. Seller's liability to Buyer, and Buyer's recourse against Seller, shall be limited to the extent that Seller is prejudiced in any material respect by any action taken, or omitted to be taken, by Buyer the consequence of which is to materially alter or amend, or to compromise, impair or otherwise adversely affect, any of the Loan Rights giving rise to such Liability. Without in any way limiting the exclusive remedies of Buyer set forth in herein, Buyer shall under no circumstance have any right of rescission relative to the transactions that are the subject of this Agreement with respect to either all or any of the Loans and Loan Rights. (b) Notwithstanding anything to the contrary in Article 11(1)(a), if and only if it is determined by final court decision (that is no longer subject to appeal, rehearing or reconsideration), or Seller admits that Seller breached any, Non-Monetary Representation or Warranty, or any representation made in a lost note certificate with respect to any Note for which the Seller is unable to locate the original, with respect to any particular Loan or interest transferred under this Agreement, including the Loan Rights, that is adversely affected by any such breach by Seller (each, a "Defective Asset, at Seller's sole 26 RREF-ISP005570 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 38 of 81 option, in Seller's absolute discretion, Buyer's sole remedy shall be one of the following, as elected by Seller in its sole and absolute discretion: (i) cure of the breach by or on account of Seller for any such Defective Asset in a manner reasonably acceptable to Buyer no later than fifteen (15) calendar days after the date of any such final court decision; (ii) payment of appropriate monetary compensation, as reasonably determined by Seller and agreed upon by Buyer, by Seller to Buyer to fairly compensate Buyer for such breach of any such Defective Asset; or (iii) rescission of the sale as to any such Relationship associated with a Defective Asset with Seller. In the event of any such appropriate rescission for any such Defective Asset, Seller shall pay to Buyer (or any ultimate transferee) an amount equal to the Repurchase Price for such Relationship. In no event shall Seller be liable to Buyer for any damages (including consequential damages) Buyer may incur or claim to incur in connection with such Defective Asset. Further, in the event that a sale is rescinded as to any Relationship associated with a Defective Asset, Buyer shall defend, indemnify and hold harmless each Seller Released Party from and against any and all losses, causes of action, liabilities, claims, demands, obligations, damages, costs and expenses, including without limitation reasonable attorneys' fees and costs, to which a Seller Released Party may become subject on account of, arising out of, or related to any act, omission, conduct or activity of Buyer or any of its officers, directors, members, employees or agents with respect to such Relationship associated with such Defective Asset during Buyer's period of ownership of such Relationship associated with such Defective Asset. Without limiting the generality of the foregoing, to the extent that any act, omission, conduct or activity of Buyer or any of its officers, directors, members, employees or agents (i) causes, directly or indirectly, any diminution in the value of such Relationship associated with such Defective Asset, whether by reason of releasing any obligor or collateral or the use, ownership, control or operation of the collateral or otherwise, or (ii) increases Seller's costs and expenses in collecting the amounts due under the Relationship associated with such Defective Asset, Buyer shall pay to Seller an amount equal to such diminution in value or increased costs and expenses of collection. If the sale of the Relationship associated with such Defective Asset is rescinded, Buyer will make, at a minimum, substantially the same representations and warranties that Seller is making to Buyer in this Agreement with respect to the Loan but such representations and warranties shall only apply with respect to Buyer's period of ownership of the Relationship associated with such Defective Asset and otherwise shall be subject to the same limitations and qualifications as are applicable to Seller's representations and warranties hereunder; provided, that (i) Buyer shall not be liable for any breach by Seller of any of Seller's representations and warranties hereunder and (ii) the foregoing shall not limit (nor shall it be construed to limit) the addition of any representations and warranties agreed to by Buyer with respect to the Loan in such repurchase agreement. Notwithstanding anything in this Agreement to the contrary, Buyer shall have no right of rescission, and no other remedy or recourse against Seller whatsoever, with respect to any breach or default by Seller under any representation, warranty or covenant set forth in this Agreement or in a lost note certificate, if Buyer fails to provide written notice to Seller of such breach or default within the time periods contemplated in this Article 11 (1)(b). This Article 11 shall expressly survive the Closing or the earlier termination of this Agreement. 27 RREF-ISP005571 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 39 of 81 ARTICLE 12 INDEMNIFICATION & OPTION TO REPURCHASE (1) Indemnification of Seller by Buyer. Buyer agrees to indemnify, defend, and hold the Seller Released Parties, and each of them, harmless from and against any and all losses, causes of action, liabilities, Claims, demands, obligations, damages, costs and expenses (including, without limitation, reasonable attorneys' and accountants' fees and costs) that first arise after Closing (and which relate to the period from and after Closing) to which Seller or any of the Seller Released Parties may become subject on account of, arising out of, or related to (A) any breach of Buyer of its obligations, warranties or covenants under this Agreement, (B) actions or omissions by Buyer, its agents, affiliates, or assignees in connection with or related to the Loan Rights, the Loan Documents, the Collateral, or otherwise, including without limitation, causes of action or remedies commenced, prosecuted or otherwise claimed against Borrower, Guarantors, or any other obligor with respect to obligations related to the Loan Rights or the Collateral described in the Loan Documents, (C) Seller's actions in cooperating with Buyer pursuant to Article 3(7)(d) of this Agreement, (D) actions by Buyer, a Person in an Affiliated Relationship with Buyer, or any of its affiliates or agents of Buyer related to the Loan or the Collateral, (E) any Claim made by a Borrower, any Guarantor, Buyer, or any state, federal, local, or other taxing authority, in each case for any taxes, whether federal, state, local, or otherwise, excepting only Seller's income or franchise taxes, as well as related penalties and interest, resulting from, imposed upon, or related to the sale of the Loan Rights, or (F) actions undertaken by Seller or any of the Seller Released Parties in enforcing their respective rights and remedies hereunder against Buyer. This indemnity by Buyer is an irrevocable, absolute, continuing indemnity that may be enforced by any one or more of the Seller Released Parties, and shall not be discharged by the assignment or sale of all or any part of the Loan Rights. (2) Indemnification of Buyer by Seller. Seller agrees to indemnify and hold harmless Buyer, its subsidiaries, Persons in an Affiliated Relationship with Buyer, and Buyer's officers, directors, members, shareholders, employees, agents, representatives and attorneys, from and against any and all losses, causes of action, liabilities, Claims, demands, obligations, damages, costs and expenses (including, without limitation, reasonable attorneys' and accountants' fees and costs) directly or indirectly arising out of, based upon, resulting from or otherwise relating to (a) any commissions, finder's fees or similar fees due or claimed by any broker, agent or salesperson claimed against Buyer as a result of an agreement entered into by Seller and (b) the Seller Retained Liabilities. Except for Seller's obligations under Article 12(2)(b) which shall expire on the date which is thirteen (13) months after the Servicing Transfer Date for any claim for which Seller has not been notified as of such date, Seller's obligations under this Article 12 shall survive the Closing indefinitely, and shall not be subject to any expiration or other time limits set forth elsewhere in this Agreement or the other Closing Documents. For purpose of clarity, to the extent Buyer notifies Seller that Buyer has a reasonable basis for an indemnity claim related to a Seller Retained Liability on or before the date which is thirteen (13) months after the Closing Date, such claim shall survive (subject to applicable law). (3) Indemnification Procedures. If a party (the "Indemnifying Party") owes the other party (the "Indemnified Party") any indemnification under this Agreement, the Indemnifying Party will have the right at any time to assume and thereafter conduct the defense 28 RREF-ISP005572 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 40 of 81 of such third party claim with counsel of its choice; provided, however, that the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to a third party Claim without the prior written consent of the Indemnified Party (not to be unreasonably withheld, conditioned or delayed), unless the judgment or proposed settlement (1) involves only the payment of money damages against which the Indemnified Party is indemnified by Indemnifying Party (and provided Indemnifying Party provides the Indemnified Party with reasonable evidence that Indemnifying Party has funds sufficient to pay such settlement), (2) does not impose an injunction or other equitable relief upon the Indemnified Party and (3) does not involve a finding or admission of any violation of applicable law or other wrongdoing by the Indemnified Party. If the Indemnifying Party elects to assume the defense of a third party claim, the Indemnified Party will cooperate in all reasonable respects with Indemnifying Party and its attorneys in such defense. Promptly after receipt by an Indemnified Party of written notice of the commencement or threatened commencement of any civil, criminal, administrative or investigative action or proceeding involving a Claim for which the Indemnified Party requests and may be entitled to indemnification under this Agreement (an "Indemnified Claim"), written notice of such will be conveyed to the Indemnifying Party pursuant to Article 13(4) of this Agreement. However, no failure or delay to notify the Indemnifying Party of an Indemnified Claim will relieve the Indemnifying Party of its obligations under this Article 12 or otherwise under this Agreement unless such failure or delay materially and adversely affects Indemnifying Party's ability to defend or settle the Indemnified Claim. Unless and until the Indemnifying Party assumes the defense of the Claim, the Indemnified Party shall defend against the Claim in any manner it may reasonably deem appropriate, and the Indemnifying Party may be bound by any final determination with respect to such third party claim prior to such assumption; provided, however, that the Indemnified Party may not agree to any settlement of a third party claim without the consent of the Indemnifying Party, which consent will not be unreasonably withheld, conditioned or delayed. (4) Option to Repurchase. Should Seller become a named party in any litigation with a Borrower with respect to any Relationship or Loan Rights, including any alleged Seller Retained Liability, within twenty-four (24) months after the Servicing Transfer Date, Seller shall have the right, but not the obligation, to repurchase any such Relationship or Loan Rights from Buyer (or any affiliate of Buyer that is a successor in interest to Buyer) for the Repurchase Price. In order to exercise its option to repurchase, Seller must give notice (the "Repurchase Notice") to Buyer (or such affiliate of Buyer that is a successor in interest to Buyer) of its election to exercise its option to repurchase any or all such Relationship or Loan Rights within sixty (60) days of being named in any such litigation, and thereafter must repurchase all such Relationships or Loan Rights within sixty (60) days following the delivery of such Repurchase Notice and the Repurchase Price shall be paid and the subject Relationships and Loan Rights shall be transferred as set forth in Article 11(1)(b). 29 RREF-ISP005573 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 41 of 81 ARTICLE 13 MISCELLANEOUS (1) Timing. TIME IS OF THE ESSENCE UNDER THE TERMS OF THIS AGREEMENT. The transactions contemplated herein must be completed by the date and time specified herein. (2) Brokerage Commissions and Finder's Fees. Each party to this Agreement represents and warrants to the other that no Person is entitled to any commission, finder's fee, acquisition fee or other brokerage-type compensation (collectively, a "Commission") based upon the acts of that party with respect to the transactions contemplated by this Agreement, other than Sale Advisor who shall be paid exclusively by Seller. Each party hereby agrees to indemnify, defend and hold harmless the other party from and against any and all loss, cost, liability or expense (including, without limitation, commissions and attorneys' fees) resulting from any claim for a Commission by any other Person based upon such acts. (3) Rights Cumulative; Waivers. The rights of each of the parties under this Agreement are cumulative and may be exercised as often as any party considers appropriate, subject to the time limitations set forth in this Agreement and by applicable law. The rights of each of the parties hereunder shall not be capable of being waived or varied except by an express waiver or variation in writing and signed by both parties. Any failure to exercise or any delay in exercising any such rights shall not operate as a waiver or variation of that right or any other right. Any defective or partial exercise of any such rights shall not preclude any other or further exercise of that right or any other right. No act or course of conduct or negotiation on the part of any party shall in any way preclude such party from exercising any right or otherwise constitute a suspension or any variation of any such right. (4) Notices. Unless otherwise provided for herein, all notices, requests, demands and other communications required or permitted hereunder shall be in writing and shall be deemed conclusively to have been duly given if personally delivered, sent by overnight courier, or mailed by registered mail, postage prepaid, and return receipt requested or transmitted by facsimile and confirmed by a similar mailed writing: If to Seller: Compass Bank Attn: ARMS Group-Mike Halter 15 South 20th Street Birmingham, AL 35233 Telephone: (205) 297-7151 and Compass Bank Attn: Scott Haller 15 South 20th Street Birmingham, AL 35233 Telephone: (205) 297-7151 30 RREF-ISP005574 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 42 of 81 With copy to: Thompson & Knight LLP Attn: Andrew Ingrum 1722 Routh Street, Suite 1500 Dallas, Texas 75201 Telephone: (214) 969-1700 If to Buyer: RREF II CB Acquisitions, LLC c/o Rialto Partners GP, LLC Attn: Cheryl Baizan 790 NW 107th Avenue, 4th Foor Miami FL 33172 Telephone: (305) 485-2053 Facsimile: (305) 553-4013 With copy to: Steven D. Lear Bilzin Sumberg Baena Price & Axelrod LLP 1450 Brickell Avenue, 23rd Floor Miami, Florida 33131-3456 Telephone: (305) 350-2390 Facsimile: (305) 351-2232 and MarkR. King Rialto Capital Management, LLC c/o Lennar Corporation 750 Hammond Drive Building 6 Atlanta GA 30328 Telephone: (404) 443-3600 x3601 Facsimile: (404) 443-3625 or to such other Person or address as either party shall furnish the other party in writing. (5) No Assignment Except as Expressly Set Forth Herein. Prior to Closing, Buyer shall not directly or indirectly assign its right, title or interest in or to this Agreement or the Loan 31 RREF-ISP005575 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 43 of 81 Rights to any Person, other than a wholly-owned subsidiary of, or an entity controlled by, either Rialto Real Estate Fund II, LP, a Delaware limited partnership, or Lennar Corporation, a Delaware corporation, each of which entity is a Designee); however, notwithstanding such assignment, Buyer and Designee shall be jointly and severally liable to Seller for any breaches or failure to perform hereunder. Any such assignment prior to Closing must be made and executed in a form of assignment and assumption of Loan Sale Agreement approved by Seller. Except as expressly provided in this Article 13(5) or pursuant to any writing mutually executed by Buyer and Seller, Buyer is prohibited from directly or indirectly assigning this Agreement (or any of Buyer's right, title or interest in or to this Agreement) to any Person at any time. Prior to Closing, Seller shall not assign its right, title or interest in or to this Agreement to any Person without the prior written approval of Buyer in its sole discretion. (6) No Third-Party Beneficiary; Successors Bound. The terms and conditions of this Agreement, express or implied, exist only for the benefit of the parties to this Agreement and their respective successors and permitted assigns. No other Person is (or shall be deemed to be) a third-party beneficiary of this Agreement. This Agreement (including, without limitation, all exhibits and schedules hereto) and the terms, covenants, conditions, provisions, obligations, undertakings, rights and benefits hereof shall be binding upon, and shall inure to the benefit of, the undersigned parties and their respective heirs, executors, administrators, representatives, successors, and permitted assigns. (7) Assistance of Third Parties. Buyer hereby acknowledges, confirms and understands that Seller has no responsibility or liability whatsoever to Buyer arising out of or related to any third parties' failure to assist or cooperate with Buyer. Seller is not liable for the potential failure or refusal of third parties to assist or cooperate with Buyer or Seller in the effective transfer, assignment, and conveyance of the purchased Loan and the Loan Documents. (8) Publicity. Neither party will use the other party's name, Marks or refer to the other party directly or indirectly in any media release, public announcement or public disclosure relating to this Agreement or its subject matter to the extent the materials in such media release, announcement or disclosure have not previously been made publicly available without obtaining consent from the other party for each such use or release (including, consent to the form and content of the release). This restriction includes, but is not limited to, any promotional or marketing materials, customer lists or business presentations (but not including any announcement intended solely for internal distribution by a party or any disclosure required by legal, accounting or regulatory requirements beyond the reasonable control of a party). (9) Governing Law and Consent to Jurisdiction. This Agreement shall be construed, and the rights and obligations of Seller and Buyer hereunder determined, in accordance with the internal laws of the State of Texas, without regard to the principles of such laws respecting conflicts of laws. Buyer and Seller consent and submit to jurisdiction in any Texas State court sitting in Dallas County, and any Federal court of the United States sitting in Dallas County in the State of Texas. Each party irrevocably waives any objection that it might now or hereafter have to such venue or jurisdiction of any suit, action or proceeding arising out of or relating to this Agreement. 32 RREF-ISP005576 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 44 of 81 (10) WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY W AlVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING HEREUNDER OR UNDER ANY DOCUMENT, INSTRUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS ARTICLE WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. (11) INDEMNITY AND RELEASE PROVISIONS. BUYER ACKNOWLEDGES THAT THIS AGREEMENT CONTAINS PROVISIONS RELEASING EACH SELLER RELEASED PARTY FROM LIABILITY AND/OR INDEMNIFYING AND HOLDING HARMLESS EACH SELLER RELEASED PARTY FOR, AMONG OTHER THINGS, SELLER RELEASED PARTY'S STRICT LIABILITY AND ITS OWN NEGLIGENCE. BUYER AGREES THAT THE RELEASE AND/OR INDEMNITY PROVISIONS CONTAINED IN THIS AGREEMENT CLEARLY IDENTIFY THE RELEASE AND/OR INDEMNITY PROVISIONS AND, THEREFORE, ARE SO CONSPICUOUS THAT BUYER HAS FAIR NOTICE OF THE EXISTENCE AND CONTENTS OF SUCH PROVISIONS. (13) Prior Understandings. This Agreement supersedes any and all prior discussions and agreements between Seller and Buyer with respect to the purchase of the Loans Rights, and this Agreement contains the sole and entire understanding between the parties hereto with respect to the transactions contemplated herein. (14) Integrated Agreement. This Agreement (including, without limitation, the Bid Summary Sheet, and all other exhibits and schedules hereto) constitutes the final, complete expression of the parties' intent and understanding with respect to the subject matter hereof This Agreement (including, without limitation, the Bid Summary Sheet, and all other exhibits and schedules hereto) shall not be altered, modified or amended, except by a subsequent writing that is signed by Buyer and Seller. (15) Survival; Expiration of Remedies. Each and every covenant, representation and warranty by Buyer or Seller in this Agreement is made only as of the date hereof and as of the Closing Date, and Seller's covenants, representations and warranties shall not merge into the closing documents but instead shall be independently enforceable. THE BUYER'S REMEDIES FOR SELLER'S BREACH OF ITS REPRESENTATIONS AND WARRANTIES SHALL EXPIRE IN ACCORDANCE WITH THE PERIODS SPECIFIED IN ARTICLES 7(3)(b) AND 33 RREF-ISP005577 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 45 of 81 (7)(3)(c), AFTER WHICH RESPECTIVE PERIODS, NO CLAIM FOR MONETARY OR NON-MONETARY BREACHES OF SELLER'S REPRESENTATIONS OR WARRANTIES MAYBE MADE. (16) Severability. Each part of this Agreement is intended to be severable. If any term, covenant, condition or provision hereof is held to be unlawful, invalid, or unenforceable for any reason whatsoever, and such illegality, invalidity, or unenforceability does not affect the remaining parts of this Agreement, then all such remaining parts hereof shall be valid and enforceable and shall have full force and effect as if the invalid or unenforceable part had not been included. (17) Headings. The headings of the articles and sections contained in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any provision hereof (18) Counterparts; Facsimile Signatures. This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same instrument, and any party hereto may execute this Agreement by signing any such counterpart. This Agreement may be executed by facsimile or scanned signatures; any signed Agreement or signature page to this Agreement that is transmitted by facsimile or in the portable document format (.pdf) shall be treated in all manners and respects as an original Agreement or signature page. (19) Interpretation. The terms "hereof," "herein," "hereby" and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement. References herein to the "date hereof' shall mean the Effective Date. Each Exhibit, Schedule, Article, Section and paragraph reference is to the Exhibits, Schedules, Articles, Sections and paragraphs to this Agreement. The term "dollars" or "$" means United States Dollars. Unless the context otherwise provides, the term "or" shall not be exclusive and shall mean "or, and, or both." The Exhibits and Schedules to this Agreement are incorporated and made a part hereof and are an integral part of this Agreement as if set forth in full herein. Any capitalized terms used in any Schedule but not otherwise defined therein shall be defined as set forth in this Agreement. This Agreement will in all events be construed as a whole, according to its fair meaning; any undefined or ambiguous words, clause or phrases shall be given a fair meaning in the context and nature of the agreement between the parties. [remainder ofpage intentionally blank; signature page follows} 34 RREF-ISP005578 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 46 of 81 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and date first above written. SELLER: BUYER: COMPASS BANK RREF II CB ACQUISITONS, LLC ~~.:~~4.~6-By: _________________________ Name: _________________________ Title:.:SI?/JioL vic.&: efii5i1Jt;;.Nr Title:------------------------Date: _ _5_-_J7~-I-~-----Date:______________________ i· ' RREF-ISP005579 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 47 of 81 tN WITNESS WHEHEOF, the parties hereto have c.\ceutcd this Agreement as of the day and date first above written. SELLER: BUYER: COMPASS BANK By: _ _ _ _ _ _ _ _ _ _ _ _ __ Name: _ _ _ _ _ _ _ _ _ _ _ _ __ Title: _ _ _ _ _ _ _ _ _ _ _ _ __ Date:---------------Date:----------------RREF-ISP005580 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 48 of 81 SCHEDULE 1-LOANS BID SUMMARY SHEET Relationship loan Number loan Name Balance Purchase Price Balance 0018 *INTERNATIONAL SUN PRINTS $738,088.09 $2,268,639.06 0042 *INTERNATIONAL SUN PRINTS $390,601.77 0034 *INTERNATIONAL SUN PRINTS IV $374,695.99 0018 *TUCSANY PROPERTIES LLC $220,378.63 0083 *INTERNATIONAL SUN PRINTS II $209,241.25 0042 *RIO VERDE INVESTMENTS LLC $172,633.33 0026 *RIO VERDE INVESTMENTS LLC $163,000.00 36 Additional pages intentionally omitted RREF-ISP005581 EXHIBIT "B" Michael K Jeanes, Clerk of Court Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 50 ***ofElectronically 81 Filed *** E. Hailes, Deputy 4/25/2017 3:10:00 PM Filing ID 8282090 1 JACOB L. SHERRARD #021594 KELLEY B. SUCHER #027167 2 JOSEPH WM. KRUCHEK #010332 KUTAK ROCK LLP 3 8601 North Scottsdale Road, Suite 300 Scottsdale, AZ 85253-2742 4 (480) 429-5000 Jacob.sherrard@kutakrock.com 5 kelley.sucher@kutakrock.com Joe.Kruchek@kutakrock.com 6 Attorneys for Plaintiff 7 8 IN THE SUPERIOR COURT OF THE STATE OF ARIZONA 9 IN AND FOR THE COUNTY OF MARICOPA 10 RREF II CB III-AZ ISI, LLC, an Arizona limited NO.: CV2013-055525 11 liability company, 12 Plaintiff, NOTICE OF FINAL v. SETTLEMENT AND 13 STIPULATION TO DISMISS INTERNATIONAL SUNPRINTS II, LLC, an WITH PREJUDICE 14 Arizona limited liability company; INTERNATIONAL SUNPRINTS III, LLC, an 15 Arizona limited liability company; INTERNATIONAL SUNPRINTS IV, LLC, an 16 Arizona limited liability company; INTERNATIONAL SUNPRINTS V, LLC, an 17 Arizona limited liability company; RIO VERDE INVESTMENTS, LLC, an Arizona limited liability 18 company; TUCSANY PROPERTIES, LLC, an Arizona limited liability company; EDWIN 19 BUCKMASTER and YOSHIKO BUCKMASTER, individually, and as husband and wife; STEVE A. 20 BASMAJIAN; MARK DAUS and DEANNA DAUS, individually, and as husband and wife, 21 Defendants. 22 23 Pursuant to Ariz. R. Civ. P., Rules 5.1(d) and 41(a), Plaintiff, RREF II CB III-AZ ISI, 24 LLC ("RREF"), and Defendants International Sunprints II, LLC, International Sunprints III, 25 LLC, International Sunprints IV, LLC, International Sunprints V, LLC, Rio Verde 26 Investments, LLC, Tucsany Properties, LLC, Edwin and Yoshiko Buckmaster, Steve A. 27 Basmajian, and Mark and Deanna Daus (collectively, "Defendants"), hereby provide this 28 Notice of Final Settlement and Stipulation to Dismiss the above-captioned action with 4813-1368-6846.1 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 51 of 81 1 prejudice as between RREF and Defendants, with each party to bear its own attorneys’ fees 2 and costs incurred in this action. The parties have finalized the separate settlement 3 agreement referenced in their "Notice of Conditional Settlement" filed December 14, 2016, 4 and the conditions precedent to the effectiveness of such settlement agreement have been 5 satisfied. The parties’ separate settlement agreement obviates any further need for the 6 above-captioned matter to continue as between RREF and Defendants. A proposed form of 7 Order has been lodged contemporaneously herewith for the Court’s convenience. This 8 Stipulation to Dismiss is only between Plaintiff RREF and the Defendants and thus this 9 Stipulation shall have no effect on any remaining legal disputes or proceedings (including 10 any appeals) involving the Defendants and non-party Compass Bank. 11 RESPECTFULLY SUBMITTED this 25th day of April, 2017. 12 KUTAK ROCK LLP 13 By/s/Kelley B. Sucher 14 Jacob L. Sherrard, Esq. Kelley B. Sucher, Esq. 15 Joseph Wm. Kruchek, Esq. 8601 North Scottsdale Road, Suite 300 16 Scottsdale, Arizona 85253-2742 Attorneys for Plaintiff 17 JENNINGS, STROUSS & SALMON, P.L.C. 18 19 By__/s/Garrett J. Olexa (with permission)__ Garrett J. Olexa, Esq. 20 16150 N. Arrowhead Fountains Center Dr. Suite 250 21 Peoria, AZ 85382 Attorney for Defendants 22 23 _/s/Mark Daus (with permission)__________ Mark Daus 24 7315 W. Crabapple Drive Peoria, AZ 85383 25 26 _/s/Deanna Daus (with permission)________ Deanna Daus 27 7315 W. Crabapple Drive Peoria, AZ 85383 28 2 4813-1368-6846.1 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 52 of 81 1 ORIGINAL of the foregoing filed via 2 e-filing procedures, this 25th day of _April, 2017, with: 3 4 Clerk of the Court Maricopa County Superior Court 5 COPY of the foregoing emailed this 6 25th day of April, 2017, to: 7 Garrett J. Olexa, Esq. (golexa@jsslaw.com) JENNINGS, STROUSS & SALMON, P.L.C. 8 16150 N. Arrowhead Fountains Center Drive Suite 250 9 Peoria, AZ 85382 Attorney for Defendants 10 Mark and Deanna Daus 11 7315 W. Crabapple Drive Peoria, AZ 85383 12 Pro Per Defendants 13 14/s/Mary Zoe Kremer 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 4813-1368-6846.1 EXHIBIT "C" GrantedCase 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 54 of 81 as Submitted Michael K Jeanes, Clerk of Court ***See eSignature page*** *** Electronically Filed *** A. Wood, Deputy 4/27/2017 8:00:00 AM 1 JACOB L. SHERRARD #021594 Filing ID 8286125 KELLEY B. SUCHER #027167 2 JOSEPH WM. KRUCHEK #010332 KUTAK ROCK LLP 3 8601 North Scottsdale Road, Suite 300 Scottsdale, AZ 85253-2742 4 (480) 429-5000 Jacob.sherrard@kutakrock.com 5 kelley.sucher@kutakrock.com Joe.Kruchek@kutakrock.com 6 Attorneys for Plaintiff 7 IN THE SUPERIOR COURT OF THE STATE OF ARIZONA 8 IN AND FOR THE COUNTY OF MARICOPA 9 RREF II CB III-AZ ISI, LLC, an Arizona limited NO.: CV2013-055525 liability company, 10 Plaintiff, ORDER GRANTING 11 v. STIPULATION TO DISMISS WITH PREJUDICE 12 INTERNATIONAL SUNPRINTS II, LLC, an Arizona limited liability company; 13 INTERNATIONAL SUNPRINTS III, LLC, an Arizona limited liability company; 14 INTERNATIONAL SUNPRINTS IV, LLC, an Arizona limited liability company; 15 INTERNATIONAL SUNPRINTS V, LLC, an Arizona limited liability company; RIO VERDE 16 INVESTMENTS, LLC, an Arizona limited liability company; TUCSANY PROPERTIES, 17 LLC, an Arizona limited liability company; EDWIN BUCKMASTER and YOSHIKO 18 BUCKMASTER, individually, and as husband and wife; STEVE A. BASMAJIAN; MARK 19 DAUS and DEANNA DAUS, individually, and as husband and wife, 20 Defendants. 21 Having considered the Notice of Final Settlement and Stipulation to Dismiss with 22 Prejudice, and good cause appearing, 23 IT IS HEREBY ORDERED, that the above captioned matter is hereby dismissed with 24 prejudice as between RREF and Defendants, with each side to bear its own attorneys’ fees and 25 costs incurred in this action. 26///27///28 4848-0888-3010. 15524913v1(65196.3) Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 55 of 81 1///2 SO ORDERED this ____ day of ________________, 2017. 3 4 Superior Court Judge 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 4848-0888-3010. 15524913v1(65196.3) Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 56 of 81 eSignature Page 1 of 1 Filing ID: 8286125 Case Number: CV2013-055525 Original Filing ID: 8282090 _______________________________________________________________________________ Granted as Submitted/S/Aimee Anderson Date: 4/26/2017 _____________________________ Judicial Officer of Superior Court Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 57 of 81 ENDORSEMENT PAGE CASE NUMBER: CV2013-055525 SIGNATURE DATE: 4/26/2017 E-FILING ID #: 8286125 FILED DATE: 4/27/2017 8:00:00 AM GARRETT OLEXA JOSEPH WM KRUCHEK BANK OF AMERICA N A 800 SAMOSET DR NEWARK DE 19713 DEANNA DAUS 7315 W CRABAPPLE DR PEORIA AZ 85383 MARK DAUS 7315 W CRABAPPLE DR PEORIA AZ 85383 EXHIBIT "D" Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 59 of 81 1 Garrett J. Olexa-016685 golexa@jsslaw.com 2 JENNINGS, STROUSS & SALMON, P.L.C. A Professional Limited Liability Company 3 16150 N. Arrowhead Fountains Center Drive, Suite 250 4 Peoria, Arizona 85382-4754 Telephone: (623) 878-2222 5 MinuteEntries@j sslaw.com 6 Attorneys for Defendants International Sunprints II, LLC, International Sunprints IV, LLC, 7 International Sunprints V, LLC, Rio Verde Investments, LLC, Tuscany Properties, LLC, 8 Steve A. Basmajian, Mark and Deanna Daus 9 IN THE SUPERIOR COURT OF THE STATE OF ARIZONA 10 IN AND FOR THE COUNTY OF MARICOPA 11 RREF II CB III-AZ ISI, LLC, an Arizona No. CV 2013-055525 limited liability company, 12 Plaintiff, 13 VS. NOTICE OF DEPOSITION OF DOUG HAWES 14 INTERNATIONAL SUNPRINTS II, LLC, an Arizona limited liability company; 15 INTERNATIONAL SUNPRINTS III, LLC, an Arizona limited liability company, 16 INTERNATIONAL SUNPRINTS IV, (Assigned to the Honorable Robert C. LLC, an Arizona limited liability company; Hauser) 17 INTERNATIONAL SUNPRINTS V, LLC, an Arizona limited liability company; RIO 18 VERDE INVESTMENTS, LLC, an Arizona limited liability company; 19 TUSCANY PROPERTIES, LLC, an Arizona limited liability company; EDWIN 20 BUCKMASTER and YOSHIICO BUCKMASTER, individually, and as 21 husband and wife; STEVE A. BASMAJIAN; MARK DAUS and 22 DEANNA DAUS, individually, and as husband and wife, 23 Defendants. 24 25 YOU ARE HEREBY NOTIFIED that the deposition will be taken upon oral 26 examination of the persons whose names and addresses are stated below at the time and 27 place stated below before an officer authorized by law to administer oaths. RCP 26, 30. 28 PERSONS TO BE EXAMINED: Doug Hawes 5201005vl(65196.3) Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 60 of 81 1 DATE AND TIME OF DEPOSITION: February 23, 2016 at 9:00 a.m. 2 PLACE OF DEPOSITION: Jennings, Strouss & Salmon, P.L.C. 16150 N. Arrowhead Fountains Center Drive, 3 Suite 250 Peoria, Arizona 85382-4754 4 COPIES MAILED and E-MAILED pursuant to RCP 5 this date to these persons, in 5 these capacities and at these addresses: 6 Joseph Kruchek, Esq. Joe.Kruchek@KutakRock.com Jacob Sherrard, Esq. Jake, Sherrard@KutakRock.com Kelly B. Sucher, Esq. Kcllev.Sucher@KutakRock.com 8 KUTAK ROCK, LLP 8601 N. Scottsdale Road, Suite 300 9 Scottsdale, AZ 85253-2742 Attorneys for Plaintiff 10 Henry Timmerman, Esq. HTimmerman@cavanaghlaw.com 11 Bradley Johnston, Esq. BJohnston@cavanaghlaw.com Bellamy Brown, Esq. BBrown@cavanaghlaw.com 12 THE CAVANAGH LAW FIRM, Esq. 1850 N. Central Ave., Suite 2400 13 Phoenix Arizona 85004-4527 Attorneys for Defendants Buckmaster 14 Traci Heisig 15 Desert Hills Court Reporting 2415 E. Camelback Road, Suite 700 • 16 Phoenix, Arizona 85016 Court Reporters 17 18 DATED this 5th day of February, 2016. 19 JOININGS, STROCSS & SALMON, P.L.C./20 21 By.-""' Garrett J. Olexa X «-V 16150 N. Arrowhead Fountains Center Dr., #250 22 Peoria, AZ 85382-4754 Attorneys for Defendants International Sunprints 23 II, LLC, International Sunprints IV, LLC, International Sunprints V, LLC, Rio Verde 24 Investments, LLC, Tuscany Properties, LLC, Steve A. Basmajian, Mark Daus and Deanna Daus 25 26 27 28 5201005vl(65196.3) 2 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 61 of 81 ¦f/WL-® STAN STANART A ¦K, COUNTY CLERK, HARRIS COUNTY, TEXAS t'UittY CIVIL COURTS DEPARTMENT Docket Number: 1075077 Receipt Number: OOC No Sheriff/Constable Fee Collected RREF II CB III-AZ ISI, LLC, ET AL In The County Civil Court At Law No. Two (2) VS. 201 Caroline/Suite 517 INTERNATIONAL SUNPRINTS II, LLC, ET AL Houston, Harris County, Texas 77002 THE STATE OF TEXAS WITNESS SUBPOENA DEPOSTION IN CASE NO. 1075077-LETTER ROGATORY TO ANY SHERIFF OR CONSTABLE OF THE STATE OF TEXAS OR OTHER PERSON AUTHORIZED TO SERVE SUBPOENAS UNDER RULE 178 T.R.C.P. YOU ARE HEREBY COMMANDED TO SUMMON: LYNNE HERN DON xjfc Address: 1 225 Ripple Creek. Drive. Houston. Texas 77057&. In HARRIS County, Texas, who is represented to reside within one hundred miles of the Court House of Harris County, Texas, in which the above suit is pending or who may be found within such distance at the time of taking the deposition, to appear before Notary Public or Court reporter to be held in the offices' oTD'epoTexas Deposition Services. 13101 NW Freeway, Suite 210, Houston. TX 77040 jn TEXAS on (die 30th day of March, 2016 aN10:00 a.m. (Texas)/8:00 a.m. (Arizona), to testify as a witness in the behalf of the DEFF.NDANT~in-the above stvlcdjCivil Action, to attend from day to day; until lawfully discharged; And that he or she bring with them and produce the following: SEE ATTACHED Issued at the instance of DEFENDANT by PHILLYMAN ANTONY HYLTON DO NOT FAIL to return this writ to said Court, with return thereon, showing the manner of execution. Witness my official signature, this 17th day of March, 2016. (SEAL) STAN STANART, County Clerk County Civil Court at Law No. Two (2) 201 Caroline, Suite 300 Harris Countv»Texas PHILLY M A FrANTON Y HYLTON Deputy County Clerk REQUESTED BY: RREF II CB III AZ ISI LLC C/O JEFFREY GARDENER 16150 NORTH ARROWHEAD FOUNTAINS SUITE 250 PEORIA, ARIZONA 85382 < & Docket Number: 1075077 C.3 5 oo \ km OFFICERS RETURN PO Box 1525 * Houston, TX 77251-1525 • (713) 755-6421 Form No. H-01-40 (Rev 09/13/201 1) WWW.CCLERK.HCTX.NET Page 1 of 2 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 62 of 81 CAME TO HAND on the day of, at o'clock.M,, and executed by delivering a copy of this subpoena to the within-named, in person at, in County, Texas on the day of j at o'clock.M., and tendered to the witness a fee of $ in cash. Not executed as to the witness for the following reasons: Sheriff/Constable County, Texas ACCEPTANCE OF SERVICE OF SERVICE OF SUBPOENA BY WITNESS PER RULE 178 T.R.C.P. I hereby accept service of the attached subpoena and will appear in said court on said date and time directed in this subpoena. Witness Date By Deputy/or By Person who is not a party and is not less than 1 8 years of age. Per Rule 178 T.R.C.P. Fee: P.O. Box 1525 * Houston, TX 77251-1525 • (713)755-6421 www.cc i FRK.iif i x.ni: r Page 2 of 2 Form No. H-01-40 (Rev. 09/13/201 1) Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 63 of 81 FILED 3/15/2016 3:58:25 PM Stan Stanart County Clerk Harris County SUBPOENA COPY THE STATE OF TEXAS IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA RREF II CB III-AZ ISI, LLC, an Arizona no. 1075077 limited liability company, CCCL#2 Plaintiff, vs. INTERNATIONAL SUNPRINTS II, LLC, an Arizona limited liability company; INTERNATIONAL SUNPRINTS III, LLC, an SUBPOENA FOR WITNESS Arizona limited liability company, DEPOSITION PURSUANT TO TEXAS INTERNATIONAL SUNPRINTS IV, LLC, an RULES OF CIVIL PROCEDURE 176 Arizona limited liability company; AND 201 INTERNATIONAL SUNPRINTS V, LLC, an Arizona limited liability company; RIO VERDE INVESTMENTS, LLC, an Arizona limited liability company; TUCSANY PROPERTIES, LLC, an Arizona limited liability company; EDWIN BUCKMASTER and YOSIIIKO BUCKMASTER, individually, and as husband and wife; STEVE A. BASMAJIAN; MARK DAUS and DEANNA DAUS, individually, and as husband and wife, Defendants. TO ANY SHERIFF OR CONSTABLE OF THE STATE OF TEXAS OR OTHER PERSON AUTHORIZED TO SERVE AND EXECUTE SUBPOENAS AS PROVIDED IN TEXAS RULE OF CIVIL PROCEDURE 176 YOU ARE HEREBY COMMANDED TO SUMMON: Lynne Herndon 1225 Ripple Creek, Drive Houston, Texas 77057 to appear at the offices of DepoTexas Deposition Services, 13101 NW Freeway, Suite 210, Houston, TX 77040, on Wednesday, March 30, 2016 at 10:00 a.m. and give testimony at a deposition that will be taken via telephone, Skype, or by other videoconferencing service by counsel fori Defendants in the above-referenced matter. Attached hereto as Exhibit A is the underlying subpoena issued by the Superior Court of Arizona. SUBPOENA to LYNN HERNDON-Page 1 5229958v2(65196.3) Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 64 of 81 Party securing subpoena: Counsel fojr Defendants-International Sunprints II, LLC; International Sunprints IV, LLC; International Sunprints V, LLC; Verde Investments, LLC; Tucsany Properties, LLC; Steve A. Basmajian; Mark Daus and Deanna Daus Garrett J. Olexa Arizona State Bar No. 016685 Chase A. Bales-030099 Jennings Siirouss & Salmon, PLC 16.150 North Arrowhead Fountains, Center Drive, Suite 250 Peoria, AZ 85382 (602) 262-5863 golexa@j ssjlaw.com Failure byl any person without adequate excuse to obey a subpoena served upon that person may be deemed a contempt of tlie court from which the subpoena is issued or a district court in the county in which the subpoena is served, and may be punishable by fine or confinement, or both. Date of Issuance: March I S", 2016 Personj Issuing Subpoena: Mfrey Gardener Jennings, Strouss & Salmon, PLC OFFICER'S RETURN Carrie to hand the day of j 2016, at A.M./P.M., and executed by delivering a copy of this subpoena to the within named witness at the following date, time and place, along with a ten dollar ($10.00) witness fee, to wit: See attached Affidavit of Service. or not executed as to the witness for the following reason: SUBPOENA to LYNN HERNDON-Page 2 5229958v2(65196.3) EXHIBIT A Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 66 of 81 1 Garrett J. Olexa-016685 ORIGINAL golexa@isslaw.com 2 Chase A. Bales-03 0099 chales@isslaw.com 3 JENNINGS, STROUSS & SALMON, P.L.C. A Professional Limited Liability Company 4 161 50 IK-Arrowhead Fountains Center Drive, Suite 250 5 Peoria, 'Arizona 85382-4754 Telephone: (623) 878-2222 6 MinuteEntnes@iss law.com 7 Attorneys for Defendants International Sunprints II, LLCj, International Sunprints IV, LLC, 8 Internaljional Sunprints V, LLC, Rio Verde Investments, LLC, Tucsany Properties, LLC, 9 Steve A. Basmajian, Mark and Deanna Daus 10 IN THE SUPERIOR COURT OF THE STATE OF ARIZONA 1 1 IN AND FOR THE COUNTY OF MARICOPA 12 RREF II CB III-AZ ISI, LLC, an Arizona No. CV 2013-055525 limited liability company, 13 Plaintiff, 14 vs. SUBPOENA FOR TELEPHONIC OR VIDEO CONFERENCE 15 INTERNATIONAL SUNPRINTS II, LLC, DEPOSITION OF LYNNE an Arizona limited liability company; HERNDON 16 INTERNATIONAL SUNPRINTS III, LLC, an Arizona limited liability company, 17 INTERNATIONAL SUNPRINTS IV, LLC. an Arizona limited liability company; 18 INTERNATIONAL SUNPRINTS V, LLC, (Assigned to the Honorable Aimee an Arizona limited liability company; RIO Anderson) 19 VERDE INVESTMENTS, LLC, an Arizona limited liability company; 20 TUCSANY PROPERTIES, LLC, an Arizona) limited liability company; EDWIN 21 BUCKMASTER and YOSHIKO BUCKMASTER, individually, and as 22 husband and wife; STEVE A. BASM/jJIAN; MARK DAUS and 23 DEANNA DAUS, individually, and as husband and wife, 24 Defendants. 25 26 TO: LYNNE HERNDON 1(225 Ripple Creek Drive 27 Houston, TX 77057 28 YOU ARE COMMANDED to appear via telephone, Skype, or other 5229972vi(65196.3) Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 67 of 81 l videoconferencing system at the place, date and time specified below to testify at the \ 2 taking of a deposition in the above cause: 3 Place of Deposition: DepoTexas Deposition Services 4 Address: 13101 NW Freeway Suite 210 5 Houston, TX 77040 6 Date: March 30, 2016 7 Time: 10:00 a.m. (Texas)/8:00 a.m. (Arizona) 8 Method of Recording: Stenography and Videography 9 Your Duties in Responding To This Subpoena]0 Attendance at a Trial If this subpoena commands you to appear at a trial, you li must appear at the place, date and time designated in the subpoena unless you file a 12 timely motion with the court and the court quashes or modifies the subpoena. See Rule 13 45(b)(5) and Rule 45(e)(2) of the Arizona Rules of Civil Procedure. See also "Your Right 14 To Object To This Subpoena" section below. Unless a court orders otherwise, you are 15 required to travel to any part of the state to attend and give testimony at a trial. See Rule 16 45(b)(3)(A) of the Arizona Rules of Civil Procedure. 17 Attendance at a Hearing or Deposition. If this subpoena commands you to appear 18 at a hearing or deposition, you must appear at the place, date and time designated in this 19 subpoena unless either: (1) you file a timely motion with the court and the court quashes 20 or modifies the subpoena; or (2) you are not a party or a party's officer and this subpoena 21 commands you to travel to a place other than: (a) the county in which you reside or you 22 transact business in person; or (b) the county in which you were served with the subpoena 23 or withih forty (40) miles from the place of service; or (c) such other convenient place 24 fixed b)l a court order. See Rule 45(b)(3)(B) and Rule 45(e)(2)(A)(ii) of the Arizona 25 Rules of Civil Procedure. See also "Your Right To Object To This Subpoena" section 26 below. 27 Production of Documentary Evidence or Inspection of Premises. If this 28 5229972vli(65196.3) 2 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 68 of 81 l subpoena commands you to produce and permit inspection, copying, testing or sampling 2 of designated documents, electronically stored information, or tangible things, you must 3 make the items available at the place, date and time designated in this subpoena, and in 4 the case of electronically stored information, in the form or forms requested, unless you 5 provide a good faith written objection to the party or attorney who served the subpoena. 6 See Rule 45(c)(5) of the Arizona Rules of Civil Procedure. See also "Your Right To 7 Object To This Subpoena" section below. Similarly, if this subpoena commands you to 8 make certain premises available for inspection, you must make the designated premises 9 available for inspection on the date and time designated in this subpoena unless you 10 provide I a good faith written objection to the party or attorney who served the subpoena. 11 See Rule 45(c)(5) of the Arizona Rules of Civil Procedure. See also "Your Right to 12 Object tjo This Subpoena" section below. 13 You should note that a command to produce certain designated materials, or to 14 permit the inspection of premises, may be combined with a command to appear at a trial, 15 hearing 'or deposition. See Rule 45(b)(2) of the Arizona Rules of Civil Procedure. You do 16 not, however, need to appear in person at the place of production or inspection unless the 17 subpoena also states that you must appear for and give testimony at a hearing, trial or 18 deposition. See Rule 45(c)(3) of the Arizona Rules of Civil Procedure. 19 If the subpoena commands you to produce documents, you have the duty to 20 produce: the designated documents as they are kept by you in the usual course of business, 21 or you may organize the documents and label them to correspond with the categories set 22 forth in the subpoena. See Rule 45(c)(4) of the Arizona Rules of Civil Procedure. 23 Your Right To Object To This Subpoena 24 Generally. If you have concerns or questions about this subpoena, you should first 25 contact the party or attorney who served the subpoena. The party or attorney serving the 26 subpoena has a duty to take reasonable steps to avoid imposing an undue burden or 27 expense on you. The superior court enforces this duty and may impose sanctions upon the 28 party or attorney serving the subpoena if this duty is breached. See Rule 45(e)(1) of the 5229972vl (65196.3) 3 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 69 of 81 1 Arizona Rules of Civil Procedure. 2 Procedure for Objecting to a Subpoena for Attendance at a Hearing, Trial or 3 Deposition. If you wish to object to a subpoena commanding your appearance at a 4 hearing, trial or deposition, you must file a motion to quash or modify the subpoena with 5 the court to obtain a court order excusing you from complying with this subpoena. See 6 Rules 45(b)(5) and 45(e)(2) of the Arizona Rules of Civil Procedure. The motion must be 7 filed in the superior court of the county in which the case is pending or in the superior 8 court of the county from which the subpoena was issued. See Rule 45(e)(2)(A) and (B) of 9 the Arizona Rules of Civil Procedure. The motion must be filed before the time specified 10 for corripliance or within 14 days after the subpoena is served, whichever is earlier. See 11 Rule 45(e)(2)(D) of the Arizona Rules of Civil Procedure. You must send a copy of any 12 motion to quash or modify the subpoena to the party or attorney who served the 13 subpoena. See Rules 45(e)(2)(E) of the Arizona Rules of Civil Procedure. 14 The court must quash or modify a subpoena: 15 (1) if the subpoena does not provide a reasonable time for compliance; 16 (2) unless the subpoena commands your attendance at a trial, if you are not a 17 party or a party's officer and if the subpoena commands you to travel to a place other 18 than: (a) the county in which you reside or transact business in person; (b) the county in 19 which you were served with a subpoena, or within forty (40) miles from the place of 20 service; or (c) such other convenient place fixed by a court order; or 21 (3) if the subpoena requires disclosure of privileged or other protected matter, 22 if no exception or waiver applies; or 23 (4) if the subpoena subjects you to undue burden. 24 See Rule 45(e)(2)(A) of the Arizona Rules of Civil Procedure. 25 The court may quash or modify a subpoena: 26 (1) if the subpoena requires you to disclose a trade secret or other confidential 27 research, development or commercial information; 28 (2) if you are an unretained expert and the subpoena requires you to disclose 5229972vl(65196.3) 4 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 70 of 81 l your opinion or information resulting from your study that you have not been requested 2 by any party to give on matters that are specific to the dispute; 3 4 (3) if you are not a party or a party's officer and the subpoena would require 5 you to incur substantial travel expense; or 6 (4) if the court determines that justice requires the subpoena to be quashed or 7 modifiejd. 8 See Rule 45(e)(2)(B) of the Arizona Rules of Civil Procedure. 9 In these last four circumstances, a court may, instead of quashing or modifying a 10 subpoena, order your appearance or order the production of material under specified 11 conditions if: (1) the serving party or attorney shows a substantial need for the testimony 12 or material that cannot be otherwise met without undue hardship; and (2) if your travel 13 expenses or the expenses resulting from the production are at issue, the court ensures that 14 you will be reasonably compensated. See Rule 45(e)(2)(C) of the Arizona Rules of Civil 15 Procedure. 16 Procedure for Objecting to Subpoena For Production of Documentary 17 Evidence, If you wish to object to a subpoena commanding you to produce documents, 18 electronically stored information or tangible items, or to permit the inspection of 19 premises, you may send a good faith written objection to the party or attorney serving the 20 subpoena that objects to: (1) producing, inspecting, copying, testing or sampling any or 21 all of the materials designated in the subpoena; (2) inspecting the premises; or 22 (3) producing electronically stored information in the form or forms requested. You must 23 send your written objection to the party or attorney who served the subpoena before the 24 time specified for compliance or within 14 days after the subpoena is served, whichever 25 is earlier. See Rule 45(c)(5)(A)(ii) of the Arizona Rules of Civil Procedure. I 26 If you object because you claim the information requested is privileged, protected, 27 or subject to protection as trial preparation material, you must express the objection 28 clearly, and support each objection with a description of the nature of the document, 5229972 vl (65 196. 3) 5 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 71 of 81 l communication or item not produced so that the demanding party can contest the claim. 2 See Rule 45(c)(5)(C) of the Arizona Rules of Civil Procedure. 3 4 If you object to the subpoena in writing, you do not need to comply with the 5 subpoena until a court orders you to do so. It will be up to the party or attorney serving 6 the subpoena to first personally consult with you and engage in good faith efforts to 7 resolve your objection and, if the objection cannot be resolved, to seek an order from the 8 court to compel you to provide the documents or inspection requested, after providing 9 notice to you. See Rule 45(c)(5)(B) of the Arizona Rules of Civil Procedure. 10 If you are not a party to the litigation, or a party's officer, the court will issue an 11 order to protect you from any significant expense resulting from the inspection and 12 copying commanded. See Rule 45(c)(6)(B) of the Arizona Rules of Civil Procedure. 13 Instead of sending a written objection to the party or attorney who served the 14 subpoena, you also have the option of raising your objections in a motion to quash or 15 modify the subpoena. See Rule 45(e)(2) of the Arizona Rules for Civil Procedure. The 16 procedure and grounds for doing so are described in the section above entitled 17 "Procedure for Objecting to a Subpoena for Attendance at a Hearing, Trial or 18 Deposition." 19 If the subpoena also commands your attendance at a hearing, trial or deposition, 20 sending a written objection to the party or attorney who served the subpoena does not 21 suspend or modify your obligation to attend and give testimony at the date, time and 22 place specified in the subpoena. See Rule 45(c)(5)(A)(iii) of the Arizona Rules of Civil 23 Procedure. If you wish to object to the portion of this subpoena requiring your attendance 24 at a hearing, trial or deposition, you must file a motion to quash or modify the subpoena 25 as described in the section above entitled "Procedure for Objecting to a Subpoena for 26 Attendance at a Hearing, Trial or Deposition." See Rule 45(b)(5) and 45(c)(5)(iii) of the 27 Arizona Rules of Civil Procedure. 28 5229972vl(65196.3) 6 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 72 of 81 l ADA Notification 2 Requests for reasonable accommodation for persons with disabilities must be 3 made to the court by parties at least 3 working days in advance of a scheduled court 4 proceeding. MAR 1 4 2016 5 SIGNED AND date: 6 MICHAEL K. JEANES, Clerk 7 sic' JSdMs I By: 8 Deputy Cler] 9 Co>py of the foregoing mailed'^ an d e-mailed March, 2016 to: 10 Joseph Kruchek, Esq. 11 Jacob Sherrard, Esq. Kelley B. Sucher, Esq. 12 KUTAK ROCK, LLP 8601 N. Scottsdale Road, Suite 300 13 Scottsdale, AZ 85253-2742 Attorneys for Plaintiff 14 Henry Timmerman, Esq. 15 Bradley Johnston, Esq. Bellamy Brown, Esq. 16 THE CAVANAGH LAW FIRM, Esq. 1850 N. Central Ave., Suite 2400 17 Phoenix Arizona 85004-4527 Attorneys for Defendants Buckmaster 18 Scott Cohen, Esq. 19 Engelman Berger, P.C. 3636 North Central Ave., Suite 700 20 Phoenix, Arizona 85012 Counselfor Compass Bank 21 Holly Andrews 22 23 24 25 26 27 28 5229972V 1(65 196.3) 7 Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 73 of 81 1 Garrett J. Olexa-016685 golexa@jsslaw.com 2 JENNINGS, STROUSS & SALMON, P.L.C. A Professional Limited Liability Company 3 16150 N. Arrowhead Fountains Center Drive Suite 250 4 Peoria, Arizona 85382-4754 Telephone: (623) 878-2222 5 MinuteEntries@i sslaw.com 6 Attorneys for Defendants International Sunprints II, LLC, International Sunprints IV, LLC, International 7 Sunprints V, LLC, Rio Verde Investments, LLC, Tucsany Properties, LLC, Steve A. Basmajian, 8 Mark and Deanna Daus 9 IN THE SUPERIOR COURT OF THE STATE OF ARIZONA 10 IN AND FOR THE COUNTY OF MARICOPA 11 RREF II CB III-AZ ISI, LLC, an Arizona No. CV 2013-055525 limited liability company, 12 Plaintiff, 13 vs. THIRD AMENDED NOTICE FOR RULE 30(b)(6) DEPOSITION(S) OF 14 INTERNATIONAL SUNPRINTS II, LLC, an BBVA COMPASS BANK Arizona limited liability company; 15 INTERNATIONAL SUNPRINTS III, LLC, an Arizona limited liability company, 16 INTERNATIONAL SUNPRINTS IV, LLC, an Arizona limited liability company; (Assigned to the Hon. Aimee Anderson) 17 INTERNATIONAL SUNPRINTS V, LLC, an Arizona limited liability company; RIO 18 VERDE INVESTMENTS, LLC, an Arizona limited liability company; TUCSANY 19 PROPERTIES, LLC, an Arizona limited liability company; EDWIN BUCKMASTER 20 and YOSHIKO BUCKMASTER, individually, and as husband and wife; STEVE A. 21 BASMAJIAN; MARK DAUS and DEANNA DAUS, individually, and as husband and wife, 22 Defendants. 23 TO: BBVA COMPASS BANK 24 c/o Scott Cohen, Esq. Engelman Berger, P.C 25 3636 N. Central Ave., Ste. 700 Phoenix, AZ 85012 26 YOU ARE HEREBY NOTIFIED that pursuant to Rule 30(b)(6), Arizona Rules of Civil 27 Procedure, the deposition will be taken upon oral examination of the person whose name and 28 5237871vl (65196.3) Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 74 of 81 1 address is stated below at the time and place stated below before an officer authorized by law to 2 administer oaths. If the name is not known, a general description sufficient to identify the person 3 or the particular class or group to which the person belongs is given below: 4 PERSON TO BE EXAMINED: Compass employee and/or any other representative or 5 representatives of BBVA Compass Bank ("Compass") who are the most knowledgeable on the following 6 topics: 7 1. All written and verbal communications made by and directed to 8 Compass employee Lynne B. Herndon regarding or in any way relating to any loans (including amendments and restructured loans) (collectively 9 referred to as "the subject loans.") once made by Compass to International Sunprints II, LLC, International Sunprints IV, LLC, Rio 10 Verde Investments, LLC ("the borrowers"). 11 2. All written and verbal communications made by and directed to Compass employee Lynne B. Herndon regarding the sale (or short sale) 12 of the real property that was used to collateralize the subject loans ("the subject properties"). 13 3. All written and verbal communications between Compass employee 14 Lynne B. Herndon and the borrowers and/or guarantors on the subject loans related to or regarding any representations, assertions or 15 agreements by Compass not to pursue a deficiency against the borrowers or guarantors, debt restructuring, debt forgiveness, and/or discounted 16 payoffs of any loans made to International Sunprints II, LLC, International Sunprints IV, LLC, Rio Verde Investments, LLC. 17 4. All verbal communications made by and directed to Compass employee 18 Lynne B. Herndon when she met with Steve Basmajian at a restaurant at the Desert Ridge Marketplace. 19 5. Lynne B. Herndon's understanding of any policies and procedures of 20 Compass Bank had in place between 2009 and 2013 related to debt cancellation, debt forgiveness, debt restructuring, short sales and/or 21 discounted payoffs. 22 6. All written and verbal communications made by and directed to Compass employee Jeff Gunter regarding or in any way relating to any 23 loans (including amendments and restructured loans) (collectively referred to as "the subject loans") once made by Compass to 24 International Sunprints II, LLC, International Sunprints IV, LLC, Rio Verde Investments, LLC ("the borrowers"). 25 7. All written and verbal communications made by and directed to 26 Compass employee Jeff Gunter regarding the sale (or short sale) of the real property that was used to collateralize the subject loans ("the subject 27 properties"). 28 8. All written and verbal communications between Compass employee Jeff 2 5237871 vl(65196. 3) Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 75 of 81 1 Gunter and the borrowers and/or guarantors on the subject loans related to or regarding any representations, assertions or agreements by 2 Compass not to pursue a deficiency against the borrowers or guarantors, debt restructuring, debt forgiveness, and/or discounted payoffs of any 3 loans made to International Sunprints II, LLC, International Sunprints IV, LLC, Rio Verde Investments, LLC. 4 9. Any and all policies and procedures Compass Bank had in place between 5 2009 and 2013 related to debt cancellation, debt forgiveness, debt restructuring, short sales and/or discounted payoffs. 6 10. Sworn Declaration of Jeff Gunter dated January 28, 2016 attached hereto as 7 Exhibit A. 8 11. The benefits received by Compass Bank from: (i) the short sales of the properties that were collateral for the subject loans; (ii) the sale/assignment of 9 the notes and guaranties to RREF II CB III-AZ ISI, LLC (and/or Rialto Capital Advisors); (iii) not foreclosing on the subject properties. 10 12. All communications between RREF II CB III-AZ ISI, LLC and/or Rialto 11 Capital Advisors concerning the sale/assignment of the notes and guaranties at issue in this case, any due diligence performed prior to the sale/assignment, 12 and any negotiations with regard to the same. 13 DATE AND TIME OF DEPOSITION: March 31, 2016 at 10:30 a.m. 14 PLACE OF DEPOSITION: Jennings, Strouss & Salmon, PLC 16150 North Arrowhead Fountains Center Drive, 15 Suite 250 Peoria, AZ 85382-4754 16 DATED this 18th day of March, 2016. 17;^TROUSR& SALMON, P.L.C. 18 SJU 19 B Garrett J. Olexa 20 16150 N. Arrowhead Fountains Center Dr., #250 Peoria, AZ 85382-4754 21 Attorneys for Defendants International Sunprints II, LLC, International Sunprints IV, LLC, International 22 Sunprints V, LLC, Rio Verde Investments, LLC, Tuscany Properties, LLC, Steve A. Basmajian, Mark 23 Daus and Deanna Daus 24 Original of the foregoing mailed and e-mailed March 18, 2016 to: 25 Scott Cohen, Esq. 26 Engelman Berger, P.C. 3636 N. Central Avenue, suite 700 27 Phoenix, AZ 85012 Attorneys for BBVA Compass Bank 28 3 5237871vl(65196.3) Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 76 of 81 1 COPY of the foregoing was mailed and e-mailed February 16, 2016 to: 2 Joseph Kruchek, Esq. 3 Jacob Sherrard, Esq. Kelly B. Sucher, Esq. 4 KUTAKROCK, LLP 8601 N. Scottsdale Road, Suite 300 5 Scottsdale, AZ 85253-2742 Attorneys for Plaintiff 6 Henry Timmerman, Esq. 7 Bradley Johnston, Esq. Bellamy Brown, Esq. 8 THE CAVANAGH LAW FIRM, Esq. 1850 N. Central Ave., Suite 2400 9 Phoenix Arizona 85004-4527 Attorneys for Defendants Buckmaster 10 11/s/Debra Villa 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 5237871vl(65196.3) EXHIBIT "E" EXHIBIT "F" Case 2:17-cv-00696-BSB Document 29 Filed 10/12/17 Page 81 of 81 Engelman Berger, P.C. Security Title Plaza, Suite 700 3636 North Central Avenue Phoenix, Arizona 85012 Date: Page: Invoice submitted to: BBVA Compass-Camelback Regarding: Date Description Hours Rate Amount ANALYSIS/STRATEGY 09/26/2017 SBC Communicate (with client) emails to Jeff Gunter re position of the 0.7 375 $262.50 Plaintiff and emails from Jeff Gunter giving EB direction/instruction; 09/26/2017 SBC Review/analyze strengths and weaknesses of various issues 0.6 375 $225.00 asserted Basmajian that have been threatened on appeal, if taken; SUBTOTAL: 1.3 $487.50 SETTLEMENT/NON-BINDING ADR 09/26/2017 BDP Review/analyze settlement proposal and email to client re same 0.4 325 $130.00 09/26/2017 BDP Research performance exception to statute of frauds and 0.4 325 $130.00 effect of delivery of default notices to Plaintiffs in July 2013 on statute of limitations argument in connection with settlement offer 09/27/2017 SBC Communicate (with client) telephone call Jeff Gunter re settlement 0.3 375 $112.50 offer; 09/27/2017 SBC Communicate (with client) telephone call with Steve Geisler re 0.2 375 $75.00 settlement; 09/27/2017 SBC Communicate (other external) emailed opposing counsel response to 0.4 375 $150.00 settlement; SUBTOTAL: 1.7 $597.50 POST-TRIAL MOTIONS AND SUBMISSIONS 10/05/2017 BDP Review/analyze plaintiffs' response to motion for attorney fee award 0.5 325 $162.50 10/06/2017 BDP Research re whether assignment of contract divests lender of right to 1 325 $325.00 enforce contractual attorneys' fee provision 10/10/2017 BDP Research whether judgment on merits entered prior to fee award is 0.5 325 $162.50 final and appealable 10/10/2017 BDP Draft reply in support of motion for fees 4.5 325 $1,462.50 10/11/2017 BDP Draft reply in support of motion for attorneys' fees and Pack affidavit 4.7 325 $1,527.50 in support of same 10/12/2017 BDP Finalize reply in support of motion for attorneys' fees and exhibits 0.7 325 $227.50 SUBTOTAL: 11.9 $3,867.50 14.9 $4,952.50 TOTAL FEES:

Taxation Judgment in amount of $400.00 against plaintiff. Signed by Chief Deputy Clerk Michael O'Brien on 10/16/2017.

Case 2:17-cv-00696-BSB Document 30 Filed 10/16/17 Page 1 of 1 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 Steve A Basmajian, et al., No. CV-17-00696-PHX-BSB 9 Plaintiff 10 v. JUDGMENT ON TAXATION OF COSTS 11 Compass Bank, 12 Defendant 13 14 Final Judgment having been entered, defendant filed a Bill of Costs on September 15 21, 2017, seeking the taxation of $400.00. No objection was filed. The matter has been 16 reviewed and all costs have been awarded. 17 18 The costs are hereby taxed for the defendant and against the plaintiff in the amount 19 of $400.00. 20 21 DATED this 16th day of October, 2017 22 BRIAN D. KARTH, CLERK 23 24 By: 25 26 27 28

ORDER: IT IS ORDERED that Defendant Compass Bank's Motion for Attorneys' Fees and Non-Taxable Costs (Doc. [26]) is GRANTED, in part, to the extent Defendant's request for attorneys' fees is granted and Defendant is awarded $34,014.50 in attorneys' fees. IT IS FURTHER ORDERED that Defendant Compass Bank's Motion for Attorneys' Fees and Non-Taxable Costs (Doc. [26]) is DENIED, in part, to the extent Defendant's request for an award of non-taxable expenses is denied [see attached Order for details]. Signed by Magistrate Judge Bridget S Bade on 3/20/18.

2 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Steve A Basmajian, et al., No. CV-17-00696-PHX-BSB 10 Plaintiffs, ORDER 11 v. 12 Compass Bank, 13 Defendant. 14 15 This matter is before the Court on Defendant Compass Bank's Motion for Award 16 of Attorneys' Fees and Non-Taxable Costs pursuant to Rule 54(d) of the Federal Rules of 17 Civil Procedure and Ariz. Rev. Stat. § 12-341.01(A). (Doc. 26.) The Court previously 18 granted Defendant's Rule 12(b)(6) motion to dismiss for failure to state a claim, 19 dismissed Plaintiffs' claims, and entered judgment in Defendant's favor.1 (Doc. 22.) 20 Therefore, Defendant asserts that it is entitled to an award of reasonable attorneys' fees 21 and non-taxable costs as the prevailing party in this matter. (Doc. 26.) 22 Plaintiffs have filed a response in opposition to the motion for attorneys' fees and 23 costs and do not dispute that Defendant is the prevailing party, but argue that Defendant 24 is not contractually entitled to an award of attorneys' fees and costs and that the Court 25 should exercise its discretion to deny an award of attorneys' fees and costs under Ariz. 26 1 Plaintiffs Steve A. Basmajian, Marc Daus, Deanna Daus, International Sunprints 27 II, LLC (ISP II), International Sunprints III, LLC (ISP III), International Sunprints IV, LLC (ISP IV), International Sunprints V, LLC (ISP V), Rio Verde Investments, LLC 28 (Rio Verde), and Tuscany Properties, LLC (Tuscany), are referred to collectively as Plaintiffs. 2 1 Rev. Stat. § 12-341.01(A). (Doc. 28.) Defendant has filed a reply in support of its 2 motion and requests additional fees incurred after filing the motion for attorneys' fees 3 and costs. (Doc. 29.) As set forth below, the Court grants Defendant's motion to the 4 extent it seeks attorneys' fees, but denies the motion to the extent it seeks non-taxable 5 costs. 6 I. Rule 54(d) and LRCiv. 54.2 7 Rule 54(d) provides that the prevailing party in an action may be entitled to 8 attorneys' fees and should be allowed costs.2 Fed. R. Civ. P. 54(d). Plaintiffs do not 9 dispute that Defendant is the prevailing party and may seek attorneys' fees and costs. 10 Because Defendant prevailed on its motion to dismiss and the Court dismissed Plaintiffs' 11 claims, the Court finds that Defendant is the prevailing party. In addition, Rule 54.2 of 12 the Local Rules of Civil Procedure provides the requirements for a motion for attorneys' 13 fees and costs. See LRCiv. 54.2. Plaintiffs do not argue that Defendant's motion fails to 14 comply with these requirements, and the Court finds that Defendant has complied with 15 these requirements. Therefore, the Court determines whether Defendant is entitled to an 16 award of attorneys' fees and non-taxable costs in this case. 17 II. Attorneys' Fees under Contract 18 A federal court sitting in diversity applies state law in deciding whether to allow 19 attorneys' fees because state laws regarding attorneys' fees are generally considered 20 substantive law. Northon v. Rule, 637 F.3d 937, 938 (9th Cir. 2011); Price v. Seydel, 961 21 F.2d 1470, 1475 (9th Cir. 1992). Under Arizona law, a contractual provision for 22 attorneys' fees will be enforced to its terms. Chase Bank of Ariz. v. Acosta, 880 P.2d 23 1109, 1121 (Ariz. Ct. App. 1994). When parties contractually agree that the prevailing 24 party will be awarded attorneys' fees, the court's discretion is more narrowly 25 circumscribed. McDowell Mountain Ranch Cmty. Ass'n, Inc. v. Simons, 165 P.3d 667, 26 27 2 The Supreme Court has held that a "prevailing party" is one who has been awarded some relief by a court. Buckhannon Bd. & Care Home, Inc. v. W. Virginia 28 Dep't of Health & Human Res., 532 U.S. 598, 598 (2001). This relief must amount to a "material alteration of the legal relationship of the parties." Id. -2- 2 1 672 (Ariz. Ct. App. 2007). The court "lacks discretion to refuse to award fees under a 2 contractual provision." Id. at 670 (quoting Chase, 880 P.2d at 1121).) However, "a 3 contractual provision providing for an award of unreasonable attorneys' fees will not be 4 enforced." McDowell Mountain Ranch Cmty. Ass'n, 165 P.3d at 671 (citing Elson Dev. 5 Co. v. Ariz. Sav. & Loan Ass'n, 407 P.2d 930 (Ariz. 1965).) The opposing party bears the 6 burden of proving that the fees requested are excessive after the party seeking the fees 7 has established that the fees are reasonable. McDowell Mountain Ranch Cmty. Ass'n, 8 165 P.3d at 672. Additionally, the court has discretion to determine if a party is eligible 9 for recovery of non-taxable costs under the contract terms. Ahwatukee Custom Estates 10 Mgmt. Ass'n, Inc. v. Bach, 973 P.2d 106, 109 (Ariz. 1999). 11 Defendant argues it is eligible for an award of attorneys' fees because it prevailed 12 on all claims that Plaintiffs asserted, Plaintiffs' claims arose out of loan agreements 13 between Plaintiffs and Defendant, and the relevant contracts expressly provided for an 14 award of Defendant's fees. (Doc. 26 at 2-5, 7-9.) Defendant relies upon various 15 provisions for attorneys' fees in the bank loan agreements/construction loan agreements, 16 promissory notes, guarantees, and deeds of trust. (Id. at 3-5; Docs. 17-1, 17-2, 17-3.) 17 In particular, Defendant relies upon the indemnification provision in the bank loan 18 agreements/construction loan agreements, which required the borrowers [Plaintiffs] to 19 "indemnify, to defend and to save and hold Lender [Defendant] harmless from any and 20 all claims, suits, obligations, damages, losses, costs and expenses, (including without 21 limitation Lender's attorneys' fees) . . . that may be asserted against or incurred by 22 Lender. . . arising out of, relating to, or in any manner occasioned by this Agreement and 23 the exercise of the rights and remedies granted Lender." (Doc. 26 at 3; Doc. 29 at 3 24 (quoting Doc. 17-1 at 9, Doc. 17-2 at 68-69, Doc. 17-3 at 32-33).) Defendant also relies 25 on the provisions in the guarantees, deeds of trust, and promissory notes that require the 26 payment of Defendant's attorneys' fees incurred enforcing the loans. (Doc. 26 at 3-5 27 (citing Doc. 17-1 at 14, 24-25, 31-32, 72, 82-83, 89-90, 93, 103-04, 114-15; Doc. 17-2 at 28 6, 16-17, 24-25, 74, 85; Doc. 17-3 at 5-6, 38, 49, 56-57); Doc. 29 at 4.) -3- 2 1 Plaintiffs do not dispute the terms of the loan agreements, but argue that 2 Defendant is not eligible to recover any attorneys' fees based on these agreements. (Doc. 3 28 at 2.) Plaintiffs assert that Defendant mischaracterizes this matter as an action to 4 enforce the loan agreements, but they assert that they did not file their complaint seeking 5 to enforce those loan agreements. (Id.) Instead, Plaintiffs assert they filed this action 6 based on Defendant's breach of a separate oral agreement between Plaintiffs and 7 Defendant. (Id.) In their complaint, Plaintiffs alleged that in this separate agreement, 8 which the parties entered around 2009 and 2010, Defendant agreed to release Plaintiffs 9 from their obligations under the loan agreements in exchange for Plaintiffs' efforts to 10 maintain, market, and sell the property pledged as collateral for the loans. (Id.; see also 11 Doc. 1, Ex. B at ¶ 12-13.) 12 Plaintiffs further argue that Defendant is not entitled to an award of attorneys' fees 13 under the loan agreements because in May 2013 Defendant assigned all of its rights in the 14 loans to RREF II CB Acquisitions, LLC, which then assigned the loans to RREF II CB 15 III-AZ ISI, LLC (RREF). (Doc. 28 at 3, 6-7.) RREF sued Plaintiffs for the amounts due 16 on the loans. (Id. at 3) 17 As Defendant argues, the loan agreements provide for an award of attorneys' fees 18 for any matter "arising out of, relating to, or in any manner occasioned by" the 19 agreements and Defendant's "exercise of the rights and remedies granted under" the 20 agreements. (Doc. 29 at 1, 3-4.) Defendant states that "Plaintiffs' entire claim is 21 premised on the allegations that they made an agreement with [Defendant] not to enforce 22 the loan documents, which was breached when RREF filed a lawsuit to enforce the loan 23 documents." (Id. at 1.) Thus, Defendant argues that Plaintiffs' claims in this matter arise 24 out of the enforcement of the loan documents. (Id.) The Court agrees. In their 25 complaint, Plaintiffs alleged that Defendant breached an agreement not to enforce the 26 loan documents by selling the loans to RREF, which then sought to enforce the loan 27 documents by suing Plaintiffs. These claims are related to and arising out of the 28 enforcement of the loan agreements. -4- 2 1 Furthermore, Defendant's assignment of the loan agreements to RREF in 2013 in 2 a loan sale agreement does not preclude Defendant's claim for contractual attorneys' 3 fees. The loan sale agreement expressly excluded from the sale any rights, obligations, or 4 liabilities related to claims by borrowers or guarantors arising prior to the 2013 loan sale. 5 (Doc. 29 at 5, Ex. A.) The loan sale agreement provided that Defendant conveyed to 6 RREF all of Defendant's rights, title and interest in the loans, and all obligations and 7 liabilities, "other than [s]eller [r]etained [l]iability." (Id.) These retained liabilities 8 included, in part, any claims relating to "any wrongful act or omission. . . governing the 9 origination, ownership, servicing or administration of the [l]oan rights, occurring on or 10 prior to the closing date" of the loan sale agreement. (Id.) 11 In this matter, Plaintiffs alleged that Defendant breached its 2009 or 2010 12 agreement to release them from liability under the loan agreements by selling the loan 13 rights to RREF, which then sued Plaintiffs to enforce the loan agreements. Thus, 14 Plaintiffs' claims arise out of an alleged release agreement that modified the original loan 15 agreement prior to the 2013 loan sale, and Defendant's potential liability and rights to 16 attorneys' fees with respect to these claims were excluded from the sale to RREF. 17 Therefore, Defendant is entitled to an award of its attorneys' fees. 18 III. Attorneys' Fees under Ariz. Rev. Stat. § 12-341.01(A) 19 In the alternative, Defendant argues it is entitled to attorneys' fees under Ariz. 20 Rev. Stat. § 12-341.01(A). (Doc. 26 at 9-10.) A successful party in an action arising out 21 of a contract is eligible for an award of reasonable attorneys' fees pursuant to Ariz. Rev. 22 Stat. § 12–341.01(A). See Sparks v. Republic Nat. Life Ins. Co., 647 P.2d 1127, 1141 23 (Ariz. 1982). A successful party may recover "a reasonable attorney's fee for every item 24 of service which, at the time rendered, would have been undertaken by a reasonable and 25 prudent lawyer to advance or protect his client's interest." Schweiger v. China Doll 26 Restaurant, Inc., 673 P.2d 927, 932 (Ariz. Ct. App. 1983). Such services include 27 preparing post-decision motions, including a motion for attorneys' fees. Id. 28 -5- 2 1 Plaintiffs do not challenge Defendant's eligibility for an award of attorneys' fees 2 under the statute. (Doc. 28 at 7.) Rather, they argue the Court should exercise its 3 discretion and refuse to award attorneys' fees under the statute. (Doc. 28 at 7-8); see 4 Associated Indem. Corp. v. Warner, 694 P.2d 1181, 1183-84 (Ariz. 1985) (holding that 5 § 12-341.01(A) vests discretion in the court to determine the circumstances appropriate 6 for an award of attorneys' fees and expressly rejecting the argument that an award of fees 7 is mandatory under the statute); Biltmore Assocs., L.L.C. v. Twin City Fire Ins. Co., 2007 8 WL 496766, at *1 (D. Ariz. Feb. 12, 2007) ("an award of attorneys' fees pursuant to 9 [§ 12-341.01(A)] is discretionary in nature, and no presumptions arise in favor of the 10 prevailing party.") 11 The Court considers the following factors to determine if attorneys' fees are 12 appropriate: (1) the merits of the claim or defense the unsuccessful party presented; 13 (2) whether the parties could have avoided or settled the litigation and whether "the 14 successful party's efforts were completely superfluous in achieving the result"; 15 (3) whether assessing fees against the unsuccessful party will cause an extreme hardship; 16 (4) whether the successful party prevailed on all relief sought; (5) the novelty of the legal 17 questions presented and whether the claims or defenses have been previously adjudicated 18 in Arizona; and (6) whether an award of fees would discourage other parties with tenable 19 claims or defenses from litigating or defending legitimate contract issues for fear of 20 incurring liability for substantial amounts of attorneys' fees. Associated Indem. Corp., 21 694 P.2d at 1184. 22 In opposition to Defendant's request for an award of statutory attorneys' fees 23 Plaintiffs address three of these factors and argue that there was no opportunity to avoid 24 or settle litigation, an award of attorneys' fees would impose hardship on Plaintiffs, and 25 an award of attorneys' fees would likely deter others from bringing meritorious actions. 26 (Doc. 28 at 8.) To support their arguments under these factors, Plaintiffs assert that: 27 (1) Defendant never attempted to settle the matter with Plaintiffs and never asked 28 Plaintiffs to dismiss the suit before filing the motion to dismiss; (2) Plaintiffs have spent -6- 2 1 several hundred thousand dollars in legal fees defending the deficiency action RREF filed 2 and there is a possibility of a significant judgment in that case; and (3) Plaintiffs fully 3 performed their part of the agreement and Defendant did not and Plaintiffs brought this 4 action with a good faith basis. (Id.) 5 In its reply, Defendant argues that: (1) Plaintiffs offer no evidence they tried to 6 settle; (2) Plaintiffs present no evidence of "extreme hardship," and the deficiency 7 lawsuit against Plaintiffs was settled and dismissed with prejudice; and (3) Plaintiffs 8 claims were both factually and legally meritless so denying Defendant's request for 9 attorneys' fees would only encourage more baseless litigation. (Doc. 29 at 8.) The Court 10 considers these factors below and finds that the first, third, fourth, fifth and sixth factors 11 weigh in favor of awarding attorneys' fees. 12 The first factor―the merits of Plaintiffs' claims―weighs in favor of awarding 13 Defendant's attorneys' fees. The Court granted Defendant's Rule 12(b)(6) motion to 14 dismiss for failure to state a claim and found that Plaintiffs did not state legally sufficient 15 claims. Thus, the merits of Plaintiffs' claims were minimal. 16 With respect to the second factor, Plaintiffs assert that there is no evidence that 17 litigation could have been avoided or that the case could have settled, and that Defendant 18 never attempted to settle and never asked Plaintiffs to dismiss the case before it filed a 19 motion to dismiss. (Doc. 28 at 8.) However, Plaintiffs initiated the litigation with 20 insufficient claims and presented no evidence that they attempted to settle with Defendant 21 before or after filing their complaint. Therefore, it does not appear that either party 22 attempted to avoid litigation or settle this matter. Thus, this factor does not favor either 23 party. 24 Plaintiffs claim that an award of attorneys' fees would impose a hardship upon 25 them because the deficiency action against Plaintiffs is still pending and they could 26 possibly face a significant judgment. (Id.) Additionally, Plaintiffs claim that they have 27 collectively spent several hundred thousand dollars in legal fees defending the RREF 28 lawsuit. (Doc. 28 at 8; Doc. 1, Ex. B at ¶ 24.) Therefore, Plaintiffs assert that under the -7- 2 1 third factor the Court should deny Defendant's request for attorneys' fees. However, the 2 RREF lawsuit has been settled and was dismissed with prejudice on April 27, 2017. 3 (Doc. 29, Ex. C; see Doc 29, Ex. B.) While Plaintiffs may face hardship if attorneys' 4 fees are awarded against them, Plaintiffs' claim of hardship based on their assertion that 5 the RREF lawsuit is continuing and they risk of a significant judgment in that matter does 6 not support their arguments on attorneys' fees. Plaintiffs have presented no other basis 7 for the Court to conclude that an award of attorneys' fees would result in extreme 8 hardship. Thus, this factor weighs in favor of awarding Defendant's attorneys' fees. 9 The fourth and fifth factors also favor an award of attorneys' fees. Defendant 10 prevailed with respect to all of the relief sought in its motion to dismiss and the Court 11 dismissed all of Plaintiffs' claims. (Doc. 22.) Thus, the fourth factor weighs in favor of 12 awarding Defendant its attorneys' fees. Plaintiffs' claims (fraud, punitive damages, 13 breach of contract, and promissory estoppel) did not present unique or novel issues. The 14 Court applied settled Arizona law to grant Defendant's motion to dismiss. Therefore, the 15 fifth factor supports an award of Defendant's attorneys' fees. 16 Finally, applying the sixth factor, the Court finds that awarding Defendant's 17 attorneys' fees will not discourage other parties with tenable claims or defenses from 18 litigating or defending legitimate contract issues. Plaintiffs' claims were dismissed 19 because they did not meet relevant legal standards under the statute of frauds, the 20 heightened pleading requirement for a fraud claim, and the availability of punitive 21 damages. Additionally, the amount of the fees requested in this case is not so substantial 22 as to deter the filing of valid lawsuits. Thus, this factor weighs in favor of awarding 23 attorneys' fees. 24 Therefore, after considering the relevant factors, the Court finds that a 25 discretionary award of attorneys' fees under § 12-341.01(A) is appropriate under the 26 circumstances of this case. Because Defendant has established that it is entitled to an 27 award of attorneys' fees under the relevant contracts and statute, the Court considers the 28 reasonableness of Defendant's requested fees. -8- 2 1 VI. Reasonableness of Fees 2 Plaintiffs argue that although Defendant went to great lengths to show that its 3 attorneys' hourly rates are reasonable, Defendant has not made a prima facie showing 4 that the number of hours billed in the case is reasonable. (Doc. 28 at 9.) However, "[a] 5 fee award calculated by a lodestar method—multiplying a reasonable hourly rate by the 6 number of hours expended—is presumptively reasonable." Flood Control Dist. of 7 Maricopa Cty v. Paloma Inv. Ltd. P'ship, 279 P.3d 1191, 1212 (Ariz. Ct. App. 2012). 8 The Arizona Court of Appeals has explained that if the prevailing party makes a prima 9 facie case that its requested fees are reasonable, then the opposing party must establish 10 that the requested fees are clearly excessive: 11 Once the prevailing party makes a prima facie case that the fees requested are reasonable, the burden shifts to the party 12 opposing the fee request to establish that the amount requested is clearly excessive. If that party fails to make such 13 a showing of unreasonableness, the prevailing party is entitled to full payment of the fees. If, however, the party opposing 14 the award shows that the otherwise prima facie reasonable fee request is excessive, the court has discretion to reduce the 15 fees to a reasonable level. 16 Geller v. Lesk, 285 P.3d 972, 976 (Ariz. Ct. App. 2012) (internal citations omitted). 17 When analyzing the reasonableness of a requested fee award, the Court begins by 18 determining the billing rate charged by the attorneys who worked on the case. Schweiger 19 673 P.2d at 931. Defendant's attorneys' fees total $34,014.50.00 for 108.10 hours of 20 work (including preparing the motion for fees and reply), and $535.30 non-taxable 21 litigation expenses. (Doc. 26 at 1.) Defendant's attorneys were Scott B. Cohen and 22 Bradley D. Pack. (Doc. 26, Ex. A at ¶ 6.) Cohen's hourly billing rate is $375. (Id.) 23 Pack's hourly billing rate is $325. (Id.) In their response, Plaintiffs do not object to 24 Defendant's attorneys' hourly rates. (Doc. 28 at 9-10.) Therefore, because Plaintiffs do 25 not argue that the hourly rates charged were too high, they are presumptively reasonable. 26 See Massage Envy Franchising LLC v. Doc Mktg. LLC, No. CV-15-02129-PHX-DLR, 27 2016 WL 5464594, at *2 (D. Ariz. Sept. 29, 2016) (finding the hourly rates ranging from 28 $225 to $639.60 for plaintiffs' six attorneys to be reasonable because defendant only -9- 2 1 challenged the reasonableness of the overall fee award while assuming that the hourly 2 rates charged by plaintiff's attorneys' were reasonable). 3 After analyzing the hourly billing rates charged, the court must consider "whether 4 the number of hours expended is reasonable." Id. A reasonable attorneys' fee award 5 compensates for "item[s] of service which, at the time rendered, would have been 6 undertaken by a reasonable and prudent lawyer to advance or protect his client's 7 interest. . . ." Schweiger, 673 P.2d at 932 (quoting Twin City Sportservice v. Charles O. 8 Finley & Co., 676 F.2d 1291, 1313 (9th Cir. 1982)). The party seeking a fee award must 9 submit an affidavit indicating "the type of legal services provided, the date the service 10 was provided, the attorney providing the service. . ., and the time spent providing the 11 service." Schweiger, 673 P.2d at 932. 12 Once a party establishes its entitlement to fees and submits a sufficiently-detailed 13 affidavit, "the burden shifts to the party opposing the fee award to demonstrate the 14 impropriety or unreasonableness of the requested fees." Nolan v. Starlight Pines 15 Homeowners Ass'n, 167 P.3d 1277, 1286 (Ariz. Ct. App. 2007) (citing State ex rel. 16 Corbin v. Tocco, 845 P.2d 513, 520 (Ariz. Ct. App. 1992)). The opposing party must 17 "present specific objections to the reasonableness of the fees requested." Nolan, 167 P.3d 18 at 1286. Generic assertions that the fees "are inflated and that much of counsel's work 19 was unnecessary. . . are insufficient as a matter of law." Id. at 1285-86. 20 Defendant submitted billing records that include a description of the legal services 21 provided, the date each service was provided, the attorney providing the service, and the 22 time spent providing the service. (Doc 26, Ex. B; Doc. 29, Ex. F.) Plaintiffs argue that 23 Defendant's request for fees is unreasonable because the hours billed "appears excessive 24 for the limited number of documents its attorneys filed in this case." (Doc. 28 at 9.) A 25 party opposing a fee award does not meet their burden "by asserting broad challenges." 26 State ex rel. Corbin, 845 P.2d at 520 (quoting Arizona v. Maricopa Cty. Med. Soc'y, 578 27 F. Supp. 1262, 1264 (D. Ariz.1984)). It is not enough for the opposing party to simply 28 state "that the hours claimed are excessive and the rates submitted too high." Corbin, 845 - 10 - 2 1 P.2d at 520; see also LRCiv. 54.2(f) (the responsive memorandum in opposition to a 2 motion for attorneys' fees "shall identify with specificity all disputed issues of material 3 fact and shall separately identify each and every disputed time entry or expense item."). 4 Therefore, because Plaintiffs only listed the documents that Defendant filed and 5 stated that such filings were "largely formulaic," but did not submit specific and detailed 6 objections, the Court finds that the number of hours Defendant billed is reasonable. 7 Corbin, 845 P.2d at 520. 8 V. Non-Taxable Expenses 9 Defendant also seeks an award of non-taxable expenses in the amount of $535.30.3 10 (Doc. 26.) Plaintiffs do not directly address this issue. (Doc. 28.) Local Rule 54.2 11 requires Defendant to "identify each related non-taxable expense with particularity" and 12 "attach copies of applicable invoices, receipts and/or disbursement instruments." 13 LRCiv. 54.2(e)(3). "Failure to itemize and verify costs may result in their disallowance 14 by the court." Id. Although Defendant submitted an itemized list of its non-taxable 15 expenses, totaling $535.30, it did not attach any invoices, receipts, or disbursement 16 instruments. (Doc. 26, Ex. B.) Therefore, Defendant did not comply with the local rule 17 and the Court denies Defendant's request for an award of $535.30 in non-taxable 18 expenses. Med. Protective Co. v. Pang, 25 F. Supp. 3d 1232, 1249 (D. Ariz. 2014) 19 (defendants did not receive an award for their non-taxable expenses because they failed 20 to attach copies of applicable invoices, receipts, or disbursement instruments and without 21 such documentation the court could not verify the expenses). 22 VI. Conclusion 23 The Court finds that Defendant is entitled to attorneys' fees as the prevailing party 24 and by the terms of the contracts underlying this matter. In the alternative, the Court 25 finds that Defendant is entitled to a discretionary award of attorneys' fees under Ariz. 26 Rev. Stat. § 12-341.01(A), and the factors relevant to determining whether an award of 27 3 Under Ariz. Rev. Stat. § 12-341.01(A), Defendant is not entitled to an award of 28 non-taxable expenses. Non-taxable expenses are not recoverable as part of a statutory attorneys' fees award. Bach, 973 P.2d at 109. - 11 - 2 1 attorneys' fees is appropriate under the statute. Furthermore, the Court finds that 2 Defendant's attorneys' fees are reasonable. However, the Court denies Defendant's 3 request for non-taxable expenses. 4 Accordingly, 5 IT IS ORDERED that Defendant Compass Bank's Motion for Attorneys' Fees 6 and Non-Taxable Costs (Doc. 26) is GRANTED, in part, to the extent Defendant's 7 request for attorneys' fees is granted and Defendant is awarded $34,014.50 in attorneys' 8 fees. 9 IT IS FURTHER ORDERED that Defendant Compass Bank's Motion for 10 Attorneys' Fees and Non-Taxable Costs (Doc. 26) is DENIED, in part, to the extent 11 Defendant's request for an award of non-taxable expenses is denied. 12 Dated this 20th day of March, 2018. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 12 -

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Description
1
03/08/2017
NOTICE OF REMOVAL from Maricopa County Superior Court, case number CV2016-017443. Filing fee received: $ 400.00, receipt number 0970-13994907 filed by Compass Bank. (Submitted by Scott Cohen)
1
Exhibits
2
Statement of Facts in Support of Defendant&#039;s Notice of Removal
3
Civil Cover Sheet
4
Supplemental Civil Cover Sheet) (LAD
4 Attachments
2
03/08/2017
Corporate Disclosure Statement by Compass Bank identifying Corporate Parent Banco Bilbao Vizcaya Argentaria SA, Other Affiliate BBVA Compass Bancshares Incorporated for Compass Bank. (Submitted by Scott Cohen)
3
03/08/2017
* NOTICE TO PARTY RE: CORPORATE DISCLOSURE STATEMENT: Pursuant to FRCiv 7.1 and LRCiv 7.1.1 the attached Corporate Disclosure Statement form must be filed by all nongovernmental corporate parties with their first appearance. A supplemental statement must be filed upon any change in the information. In addition, if not already filed, the Corporate Disclosure Statement should be filed within 14 days. Corporate Disclosure Statement Deadline set as to International Sunprints II LLC, International Sunprints III LLC, International Sunprints IV LLC, International Sunprints V LLC, Rio Verde Investments LLC, Tucsany Properties LLC. (LAD) * Modified to correct text on 3/8/2017
4
03/08/2017
Filing fee paid, receipt number 0970-13994907. This case has been assigned to the Honorable Bridget S Bade. All future pleadings or documents should bear the correct case number: CV-17-00696-PHX-BSB. Magistrate Election form attached. PLEASE NOTE: Plaintiff(s) and defendants that have already appeared in this case are required to return the attached Magistrate Election form, in paper, within FOURTEEN (14) days of this filing. Please read attached instructions.
1
Instructions) (LAD
1 Attachment
5
03/13/2017
AMENDED DOCUMENT by Compass Bank. Amendment to 2 Corporate Disclosure Statement.
6
03/13/2017
Agreement to Magistrate Judge Jurisdiction. Party agrees to Magistrate Judge Jurisdiction. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.
7
03/21/2017
Corporate Disclosure Statement by International Sunprints II LLC.
8
03/21/2017
Corporate Disclosure Statement by International Sunprints III LLC.
9
03/21/2017
Corporate Disclosure Statement by International Sunprints IV LLC.
10
03/21/2017
Corporate Disclosure Statement by International Sunprints V LLC.
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03/21/2017
Corporate Disclosure Statement by Rio Verde Investments LLC.
12
03/21/2017
Corporate Disclosure Statement by Tucsany Properties LLC.
13
03/21/2017
*Agreement to Magistrate Judge Jurisdiction. Party agrees to Magistrate Judge Jurisdiction. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry. *Modified on 3/22/2017 to Reflect Consent forms are not to be E-Filed (MAP)*.
14
03/22/2017
NOTICE OF DEFICIENCY re: 13 Notice (Other) filed by Rio Verde Investments LLC, Mark Daus, Steve A Basmajian, Deanna Daus, Tucsany Properties LLC, International Sunprints V LLC, International Sunprints IV LLC, International Sunprints II LLC, International Sunprints III LLC. Pursuant to Administrative Policies and Procedures, Consent forms are to be filed in paper form with the Clerks Office. DO NOT REFILE. The deficiency has been addressed by the clerk. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.
15
03/22/2017
Minute Order: In accordance with 28 USC 636(c), all parties have voluntarily consented to have Magistrate Judge Bridget S. Bade conduct all further proceedings in this case, including trial and entry of final judgment, and conduct all post-judgment proceedings, with direct review by the Ninth Circuit Court of Appeals, if an appeal is filed. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry.
16
03/23/2017
NOTICE of Errata re: 1 Notice of Removal by Defendant Compass Bank.
17
03/23/2017
MOTION to Dismiss for Failure to State a Claim by Compass Bank.
1
Exhibit 1 through 18
2
Exhibit 19 through 28
3
Exhibit 29 through 38
3 Attachments
18
03/29/2017
MOTION for Admission Pro Hac Vice as to attorney Bryan Moy Knight on behalf of Steve A Basmajian, Deanna Daus, Mark Daus, International Sunprints II LLC, International Sunprints III LLC, International Sunprints IV LLC, International Sunprints V LLC, Rio Verde Investments LLC, and Tucsany Properties LLC.
03/29/2017
PRO HAC VICE FEE PAID. $ 35, receipt number PHX183729 as to Bryan M Knight. This is a TEXT ENTRY ONLY. There is no PDF document associated with this entry. (Text entry; no document attached.)
19
03/29/2017
ORDER pursuant to General Order 09-08 granting 18 Motion for Admission Pro Hac Vice. Per the Court's Administrative Policies and Procedures Manual, applicant has five (5) days in which to register as a user of the Electronic Filing System. Registration to be accomplished via the court's website at www.azd.uscourts.gov. Counsel is advised that they are limited to two (2) additional e-mail addresses in their District of Arizona User Account. (BAS) (This is a TEXT ENTRY ONLY. There is no.pdf document associated with this entry.)
20
04/06/2017
RESPONSE to Motion re: 17 MOTION to Dismiss for Failure to State a Claim filed by Steve A Basmajian, Deanna Daus, Mark Daus, International Sunprints II LLC, International Sunprints III LLC, International Sunprints IV LLC, International Sunprints V LLC, Rio Verde Investments LLC, Tucsany Properties LLC.
21
04/12/2017
REPLY to Response to Motion re: 17 MOTION to Dismiss for Failure to State a Claim filed by Compass Bank.
22
08/28/2017
ORDER: Defendant's motion to dismiss 17 is GRANTED. Signed by Magistrate Judge Bridget S Bade on 8/28/2017.
23
09/01/2017
NOTICE re: Lodging by Compass Bank Proposed Separate Judgment of Dismissal.
24
09/07/2017
CLERK'S JUDGMENT - Pursuant to the Court's Order filed August 28, 2017, judgment is entered in favor of defendant Compass Bank and against plaintiffs. Plaintiffs to take nothing, and the complaint and action are dismissed.
25
09/07/2017
ORDER: Defendant's "notice of lodging proposed separate judgment of dismissal" (Doc. 23), construed as a motion to enter judgment, is DENIED as moot. Signed by Magistrate Judge Bridget S Bade on 9/07/2017.
26
09/21/2017
MOTION for Attorney Fees --Defendant's Motion for Award of Attorneys' Fees and Non-Taxable Costs by Compass Bank.
27
09/21/2017
BILL OF COSTS by Compass Bank.
28
10/05/2017
RESPONSE to Motion re: [26] MOTION for Attorney Fees --Defendant's Motion for Award of Attorneys' Fees and Non-Taxable Costs filed by Steve A Basmajian, Deanna Daus, Mark Daus, International Sunprints II LLC, International Sunprints III LLC, International Sunprints IV LLC, International Sunprints V LLC, Rio Verde Investments LLC, Tucsany Properties LLC.
29
10/12/2017
REPLY to Response to Motion re: [26] MOTION for Attorney Fees --Defendant's Motion for Award of Attorneys' Fees and Non-Taxable Costs filed by Compass Bank.
30
10/16/2017
Taxation Judgment in amount of $400.00 against plaintiff. Signed by Chief Deputy Clerk Michael O'Brien on 10/16/2017.
31
03/20/2018
ORDER: IT IS ORDERED that Defendant Compass Bank's Motion for Attorneys' Fees and Non-Taxable Costs (Doc. [26]) is GRANTED, in part, to the extent Defendant's request for attorneys' fees is granted and Defendant is awarded $34,014.50 in attorneys' fees. IT IS FURTHER ORDERED that Defendant Compass Bank's Motion for Attorneys' Fees and Non-Taxable Costs (Doc. [26]) is DENIED, in part, to the extent Defendant's request for an award of non-taxable expenses is denied [see attached Order for details]. Signed by Magistrate Judge Bridget S Bade on 3/20/18.
32
08/13/2018
Application for Writ
33
08/13/2018
Application for Writ
34
08/13/2018
Additional Attachments to Main Document
35
08/13/2018
Additional Attachments to Main Document
36
08/13/2018
Writ of Garnishment
37
08/13/2018
Writ of Garnishment
38
08/21/2018
Answer to Writ of Garnishment
39
08/21/2018
Answer to Writ of Garnishment
40
08/21/2018
Answer to Writ of Garnishment
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08/21/2018
Answer to Writ of Garnishment
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08/21/2018
Answer to Writ of Garnishment
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08/21/2018
Answer to Writ of Garnishment
44
08/21/2018
Answer to Writ of Garnishment
45
08/21/2018
Answer to Writ of Garnishment
46
08/21/2018
Answer to Writ of Garnishment
47
08/21/2018
Answer to Writ of Garnishment
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