Southwest Savings and Loan Association v. SunAmp Systems, Inc

In Southwest Savings and Loan Association v. SunAmp Systems, Inc., 172 Ariz. 553, 558-59, 838 P.2d 1314, 1319-20 (App. 1992), the Court considered whether a lender acted in bad faith when it froze and later terminated a borrower's line of credit upon realizing the primary guarantor had invalidly bound community assets. Id. at 554-55, 838 P.2d at 1315-16. Recognizing that our supreme court had found "in a variety of contexts that a contracting party may exercise a retained contractual power in bad faith," the Court characterized the issue as: Whether the jury might reasonably have found that the lender wrongfully exercised its contractual power "for a reason beyond the risks" that the borrower assumed in its loan agreement or for a reason inconsistent with the borrower's "justified expectations." Id. at 559, 838 P.2d at 1320. Thereafter, the Court noted the evidence was undisputed that the lender acted solely out of a financial interest, not "out of spite, ill will, or any other non-business purpose." Id. Thus, the Court concluded the lender did not act contrary to the borrower's justified expectations. Id. at 561, 838 P.2d at 1322. Finding the jury's verdict was not supported by sufficient evidence, we remanded the case for entry of JMOL in favor of the lender on the borrower's bad faith claim. Id. at 563, 838 P.2d at 1324.