2019 [Part 2] Arizona Case Law Affecting Commercial Real Estate and Lending

Harle and Williams had been partners in a real estate venture. Harle sued Williams and others in 2010 for a breach in their partnership agreement. Harle and Williams agreed to a settlement in May 2011 requiring Williams to pay $50,000 in $500 month-to-month installments and to waive his interest insure real estate. The agreement settlement accredited Harle to go into a $150,000 stipulated judgment in opposition to Williams but blanketed a covenant no longer to file or execute at the judgment as long as Williams timely made his monthly installment payments. The court docket entered the stipulated judgment in May 2011. Williams defaulted below the agreement agreement in November 2014. In March 2016, Harle recorded the judgment and sought to garnish certain belongings of Williams.
Some time in or after June 2017, Williams contended that Harle’s judgment had expired due to the fact Harle had no longer timely renewed it. (At that point, Arizona law allowed a celebration five years from the date a judgment turned into entered to put into effect it unless the birthday celebration renewed it inside the 5-yr duration, which would enlarge the enforcement period some other five years [the five-year periods referenced in this sentence were recently changed to ten years].) The trial court decided that the judgment remained enforceable due to the fact the length of enforceability changed into tolled while Harle turned into legally barred from enforcing the judgment, and decided that the judgment might stay in complete pressure and effect until November 2019 (the five-12 months anniversary of Williams’ breach).
The Court of Appeals held that the statutory enforcement length does now not start to run in opposition to a judgment if it is not “suable,” and that the judgment was now not usable until Williams breached the agreement agreement in November 2014 (as Harle became contractually prohibited from executing on the judgment till that time). Therefore, the enforcement duration changed into tolled until November 2014 and Harle had no need to resume the judgment before starting collection complaints in 2016.
Lender takeaway. If a lender enters a settlement that includes a covenant now not to document or execute at the judgment till a breach takes place, consider along with an express acknowledgment that the statute of boundaries may be tolled until the judgment debtor defaults beneath the agreement and the lender publicizes that default to existing in writing.