Hendrix v. Djl

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

HENDRIX PROPERTIES, LLC, Plaintiff/Counterdefendant/Appellee,

v.

DJL AZ INVESTMENTS, LLC, Defendant/Counterclaimant/Appellant.

No. 1 CA-CV 25-0830
FILED 06-10-2026

Appeal from the Superior Court in Mohave County
No. S8015CV202301923
The Honorable Eric Gordon, Judge

AFFIRMED

COUNSEL

Lang Thal King & Hanson, PC, Scottsdale
By George H. King, Max H. Beall
Counsel for Plaintiff/Counterdefendant/Appellee

Tyson & Mendes, LLP, Scottsdale
By Lynn M. Allen, Alexander Alvarnas
Counsel for Defendant/Counterclaimant/Appellant
HENDRIX v. DJL
Decision of the Court

MEMORANDUM DECISION

Judge Cynthia J. Bailey delivered the decision of the Court, in which
Presiding Judge Daniel J. Kiley and Judge D. Steven Williams joined.

B A I L E Y, Judge:

¶1 This is a commercial lender’s appeal from summary judgment
for the borrower on the borrower’s breach of contract claim and the lender’s
fraud counterclaim. The undisputed facts show that the lender improperly
retained loaned funds and failed to timely assert its counterclaim. We
therefore affirm.

FACTS AND PROCEDURAL HISTORY

¶2 In 2016, Laurin and Kimberly Hendrix acquired real property
(“the Property”) in Bullhead City subject to a deed of trust held by Arena
LLC (“Arena”). In 2017, with Arena’s consent, the Hendrixes agreed with
the City to subject the Property to twenty-two years of biannually levied
assessments, totaling about $2.5 million (interest included), for the Laughlin
Ranch Boulevard Improvement District (“LRBID”). The agreement
obligated any subsequent Property owner to pay the assessments as they
came due.

¶3 In 2018, a real estate agent began working with Donald
Laughlin, owner of the Riverside Resort and Casino (“Riverside”), to obtain
a loan for the Hendrixes to pay off Arena. Several Riverside employees
became involved in the transaction, including chief operating officer
Matthew Laughlin and executive director Malibu Diaz. A lender entity,
DJL AZ Investments LLC (“DJL Investments”), was formed to facilitate the
loan. The Donald J. Laughlin Family Trust, managed by Donald and
Matthew Laughlin, was DJL Investments’ sole member. For their part, the
Hendrixes transferred the Property to their entity Hendrix Properties LLC
(“Hendrix Properties”).

¶4 During the loan negotiations, the Hendrixes directed Chicago
Title Insurance Company (“Chicago Title”) to provide a title report, which
listed the Bullhead City Parkway Improvement District as an exception but
did not mention the LRBID. The parties dispute whether other information
exchanged during the negotiations nonetheless put DJL Investments on

2
HENDRIX v. DJL
Decision of the Court

notice of the LRBID agreement, and whether Hendrix Properties’
representatives lied about the encumbrance by omission or otherwise.

¶5 Ultimately, in December 2018, DJL Investments made
Hendrix Properties a $1.55 million non-recourse loan secured by a deed of
trust on the Property. The promissory note provided that DJL Investments
would “hold back $138,912.76 from the loan amount to be held in [DJL
Investments’] impound account for the payment of the real estate taxes and
the improvement district fees during the term of the note,” with Hendrix
Properties to “submit invoices for the real estate taxes and the improvement
district fees to [DJL Investments]” for DJL Investments to pay “directly to
the appropriate municipality on behalf of [Hendrix Properties].” (Cleaned
up.) The note specified that Hendrix Properties was to repay the $1.55
million loan, plus interest, via four interest installments in 2019 followed by
a balloon payment in 2020. The note included an acceleration clause
providing that the entire repayment amount would come due immediately
upon Hendrix Properties’ failure to make a scheduled payment.

¶6 Consistent with the promissory note, DJL Investments
opened a commercial checking account and deposited $138,912.76 in
February 2019. Several months later, in May 2019, Laurin Hendrix emailed
Diaz a $27,745.81 invoice from the City. Hendrix wrote that the invoice,
which itself referenced “LAUGHLIN RANCH IMPROVEMENT DIST.,”
was “the invoice for the improvement district on Section 7” for which “[t]he
funds were impounded and held by lender as part of loan agreement.”

¶7 Diaz forwarded Hendrix’s email to Matthew Laughlin and
the two summarily agreed that it had nothing to do with them.
Nonetheless, Frank Tokas, Riverside’s director of finance and the person
responsible for paying taxes and assessments on the Property, endorsed a
check to the City to pay the invoice. He used a “D.J. Laughlin” account (not
the DJL Investments account) and although Diaz countersigned the check,
she did not realize it was for Hendrix’s invoice (which she had not provided
to Tokas). Tokas died before he could be asked how he obtained the invoice
and why he signed the check.

¶8 In June 2019, Hendrix Properties failed to pay an interest
installment when it came due. Based on that default, the parties agreed in
July 2019 to a deed in lieu of foreclosure under which DJL Investments
received the Property subject to taxes and assessments, and Hendrix
Properties received a release from liability on the promissory note plus
$5,000. The deed in lieu of foreclosure made no reference to the impounded
loan funds or to the LRBID.

3
HENDRIX v. DJL
Decision of the Court

¶9 Nearly two years passed. Then, in June 2021, a City
representative called Diaz and informed her that past-due LRBID
assessments were owed on the Property. The representative explained that
the City had been invoicing Hendrix Properties for the assessments but then
independently learned of DJL Investments’ ownership. Diaz relayed this
information to Matthew Laughlin, investigated the City’s claim, and
discovered the LRBID agreement. In February 2022, DJL Investments paid
the nearly $300,000 in past-due LRBID assessments.

¶10 DJL Investments sued Chicago Title for breach of contract and
the covenant of good faith, and Chicago Title brought a third-party
complaint against the Hendrixes. DJL Investments and Chicago Title
ultimately settled for $1.55 million.

¶11 In December 2023, Hendrix Properties brought this action
against DJL Investments. Asserting claims for conversion, breach of
fiduciary duty, and breach of contract, Hendrix Properties alleged that DJL
Investments unlawfully retained impounded loan funds. DJL Investments
asserted a counterclaim for fraud based on the acts and omissions of
Hendrix Properties’ representatives during the loan negotiations.

¶12 The superior court granted summary judgment for DJL
Investments on limitations grounds as to Hendrix Properties’ conversion
and fiduciary-duty claims. Hendrix Properties then moved for summary
judgment on its contract claim as well as on DJL Investments’ counterclaim.
After oral argument, the superior court granted Hendrix Properties’
summary-judgment requests. The court entered judgment for Hendrix
Properties in the amount of $111,166.95 (the original impound amount
minus the May 2019 payment), plus pre-judgment interest dating from July
2019, post-judgment interest, and attorneys’ fees and costs.

¶13 DJL Investments timely appealed. We have jurisdiction
under Arizona Revised Statutes (“A.R.S.”) § 12-2101(A)(1).

DISCUSSION

¶14 Summary judgment is appropriate “if the moving party
shows that there is no genuine dispute as to any material fact and the
moving party is entitled to judgment as a matter of law.” Ariz. R. Civ. P.
56(a). A plaintiff who moves for summary judgment on its claim must
show not only the absence of a genuine dispute of material fact, but also
that the undisputed admissible evidence compels findings in the plaintiff’s
favor on each element of the claim. Wells Fargo Bank, N.A. v. Allen, 231 Ariz.
209, 213, ¶¶ 16-18 (App. 2012).

4
HENDRIX v. DJL
Decision of the Court

¶15 We review the grant of summary judgment de novo, viewing
the facts in the light most favorable to the non-moving party. Andrews v.
Blake, 205 Ariz. 236, 240, ¶ 12 (2003). We also review questions of contract
interpretation de novo, id., giving effect to plain contractual language as the
best indicator of the parties’ intent, Grosvenor Holdings, L.C. v. Figueroa, 222
Ariz. 588, 593, ¶ 9 (App. 2009). We will affirm if the superior court’s ruling
is correct for any reason. Glaze v. Marcus, 151 Ariz. 538, 540 (App. 1986).

I. Hendrix Properties was entitled to summary judgment on its
breach of contract claim.

¶16 DJL Investments first contends that genuine disputes of
material fact precluded summary judgment on Hendrix Properties’ breach
of contract claim. We disagree. To prevail on summary judgment, Hendrix
Properties had to show undisputed evidence of a contract, its breach, and
damages. See Wells Fargo Bank, 231 Ariz. at 213, ¶¶ 16-18; Graham v. Asbury,
112 Ariz. 184, 185 (1975). Hendrix Properties met that burden.

¶17 Under the parties’ promissory note, DJL Investments
“promise[d] to pay” Hendrix Properties $1.55 million dollars but “hold
back $138,912.76 from the loan amount” in an “impound account for the
payment of the real estate taxes and the improvement district fees during
the term of the note” on Hendrix Properties’ “behalf.” (Cleaned up.) In
return, Hendrix Properties promised to repay the full loan amount—
including the impounded portion—plus interest. In accord with the note,
and as DJL Investments itself asserted in connection with its motion for
summary judgment, the impounded funds were disbursed to DJL
Investments and deposited in a dedicated account. But although DJL
Investments controlled the funds, they were part of the loan given to
Hendrix Properties, to be used by DJL Investments solely to protect the loan
security during the loan’s duration by ensuring Hendrix Properties’
payment of all tax and improvement district obligations. The fact that the
funds were placed in a holding account rather than given directly to the
borrower did not alter the fact that they were part of the loan under the
parties’ agreement.

¶18 Under the plain language of the note, DJL Investments was
required to use the impounded funds only to pay taxes and improvement
district fees, and only “during the term of the note.” DJL Investments met

5
HENDRIX v. DJL
Decision of the Court

that obligation when it paid one of the LRBID assessments. 1 But after
Hendrix Properties defaulted, the parties ended their obligations under the
note by entering the deed in lieu of foreclosure, which made no mention of
the impounded funds or any improvement-district obligations. By the
deed, Hendrix Properties’ duty to repay the loan proceeds ended and so
did DJL Investments’ authority to control the impounded portion thereof.

¶19 DJL Investments argues that a reasonable factfinder could
conclude that the note’s acceleration clause permitted DJL Investments to
retain the impounded funds upon Hendrix Properties’ default.2 But
nothing in the acceleration clause allowed DJL Investments to unilaterally
collect by retaining loaned funds it held on Hendrix Properties’ behalf.
Further, because the loan was non-recourse and unaccompanied by any
guaranty, DJL Investments was limited to executing on the Property. See
Provident Nat’l Assur. Co. v. Sbrocca, 180 Ariz. 464, 467 (App. 1994).

¶20 DJL Investments relies on Pioneer Plumbing Supply Co. v.
Southwest Savings & Loan Ass’n, 102 Ariz. 258 (App. 1967). But Pioneer
Plumbing is distinguishable. In Pioneer Plumbing, the parties specifically
agreed that a construction loan would be disbursed in installments
contingent on construction progress, and that the lender could keep “the
undisbursed loan funds to offset its losses” if the borrower defaulted. Id. at
260. Here, by contrast, the impounded funds were part of the loan made at
the outset, without qualification. Further, the parties nowhere agreed, in
either the note or in the deed in lieu of foreclosure, that the impounded
funds could revert to DJL Investments to offset default damages.

¶21 Once the deed in lieu of foreclosure ended the parties’
obligations under the note, DJL Investments had no ongoing contractual
authority to control the loan proceeds. The superior court correctly entered
summary judgment for Hendrix Properties on its breach of contract claim.

1 Hendrix Properties does not dispute that the assessment payment, made
by Riverside employees from a non-DJL Investments account, should be
credited to DJL Investments as a payment from the impounded funds.

2 DJL Investments took a contrary position in a discovery response,
asserting that it did “not contend it had the right to apply the money in the
impound account to the amounts owed by Hendrix Properties under the
Promissory Note and/or that it did apply the money in the impound
account to the amounts owed by Hendrix Properties under the Promissory
Note.”

6
HENDRIX v. DJL
Decision of the Court

II. Hendrix Properties was entitled to summary judgment on DJL
Investments’ fraud counterclaim.

¶22 DJL Investments next contends that the superior court erred
by entering summary judgment for Hendrix Properties on the fraud
counterclaim. DJL Investments alleged that Hendrix Properties’
representatives fraudulently induced the loan by making deceptive
statements and omissions about the LRBID agreement. The superior court
found that the undisputed evidence showed no false statements, reasonable
reliance, or damages as required to establish fraud. See Echols v. Beauty Built
Homes, Inc., 132 Ariz. 498, 500 (1982) (listing the elements of fraud).
Alternatively, the court concluded that the counterclaim was time-barred.

¶23 We agree that summary judgment on the fraud counterclaim
was warranted on limitations grounds and therefore need not address
whether it also was warranted based on the elements of the tort. Fraud is
subject to a three-year limitations period, A.R.S. § 12-543, that begins to run
“when the [claimant] by reasonable diligence could have learned of the
fraud, whether or not he actually learned of it,” Coronado Dev. Corp. v.
Superior Court (Gesky), 139 Ariz. 350, 352 (App. 1984). Where the claimant
receives information that would allow one exercising reasonable diligence
to discover the basis for liability, the claimant’s negligence, indifference, or
inattention to that information will not toll the limitations period. Guerin v.
Am. Smelting & Refining Co., 28 Ariz. 160, 170 (1925).

¶24 Here, the limitations period began to run, at the very least, in
May 2019 when Matthew Laughlin and Diaz received Laurin Hendrix’s
email about an assessment invoice.3 Hendrix attached the invoice, which
referenced the “LAUGHLIN RANCH IMPROVEMENT DIST.,” and he
wrote that it was “the invoice for the improvement district on Section 7” for
which “[t]he funds were impounded and held by lender as part of loan
agreement.” Based on this email, Matthew Laughlin and Diaz were put on
notice that the Property might be subject to a previously unknown
improvement district, and they were given information sufficient to enable
them to discover, with reasonably diligent efforts, the LRBID agreement.4

3 We need not address whether earlier events started the limitations period

because even this later event placed the counterclaim outside the
timeframe.

4 At oral argument on appeal, DJL Investments asserted that the email did
not make clear that it concerned the Property. But the Property was

7
HENDRIX v. DJL
Decision of the Court

Accordingly, the limitations period began to run from the date of the email.
The fact that Matthew Laughlin and Diaz summarily disregarded the email,
and that Diaz did not act knowingly when she later helped a co-worker pay
the invoice, had no tolling effect.

¶25 DJL Investments relies on an unpublished decision, Chatha v.
Marwah, 1 CA-CV 23-0400, 2024 WL 3829635 (Ariz. App. Aug. 15, 2024)
(mem. decision), to argue that the May 2019 email did not necessarily create
notice of a need to investigate. Chatha is distinguishable. In Chatha, the
plaintiffs alleged that their business partner fraudulently induced them to
pay him for his falsely claimed loss in selling his joint-venture interest to
settle a lawsuit. See id. at *1-2, ¶¶ 2-13. We held that emails informing the
plaintiffs that their joint-venture interests were worth “around 8-10
million” based on a “multiple of earnings approach that is how [the
defendant’s] interest was acquired” were insufficient to establish as a
matter of law that the plaintiffs should have investigated. See id. at *4,
¶¶ 22-23. We emphasized that the emails did not plainly refute the
defendant’s express misrepresentations about the sale because they did not
specify what he was paid or what multiple of earnings was used. See id.
Here, by contrast, Hendrix’s email was clear and complete. He plainly
informed DJL Investments that he expected an improvement district
invoice for the Property, which referenced a partial version of the LRBID’s
name (which was wholly dissimilar to the name of the district listed in the
title report), to be paid from the impounded loan funds. Unlike in Chatha,
it is inarguable that the email put DJL Investments on notice to investigate.

¶26 Hendrix’s email started the limitations period in May 2019.
DJL Investments did not assert its fraud counterclaim until January 2024,
more than three years later. The superior court correctly entered summary
judgment for Hendrix Properties on limitations grounds.

CONCLUSION

¶27 We affirm the grant of summary judgment for Hendrix
Properties on the breach of contract claim and on the fraud counterclaim.
In exercise of our discretion, we deny Hendrix Properties’ request for
attorneys’ fees on appeal under A.R.S. § 12-341.01. Under A.R.S. § 12-341,

described in the parties’ deed of trust in terms of “Section 7.” Further, as
DJL Investments also emphasized at oral argument, Donald Laughlin was
not in the business of making loans. The email cannot reasonably be read
as referring to anything other than the loan and property at issue.

8
HENDRIX v. DJL
Decision of the Court

Hendrix Properties is entitled to recover its costs on appeal upon its
compliance with Arizona Rule of Civil Appellate Procedure 21.

MATTHEW J. MARTIN • Clerk of the Court
FILED: JR

9