## Facts

- El Dorado Hotel Properties, Ltd. sold the El Dorado Country Club property to Bruce and Linda Mortensen and their co-purchasers (collectively, the buyers).
- The sale closed on January 25, 1982, for $2,200,000.
- The buyers paid $300,000 and executed a $1,900,000 promissory note for the balance, secured by a purchase-money deed of trust.
- United Bank of Arizona was also a plaintiff; it held a security interest in the note.
- The next installment on the note was $400,000 plus interest, due March 1, 1982.
- The deed of trust contained a partial-release provision stating that, “[u]pon payment” of the March 1 installment, the trustors would be entitled to have released “free and clear” 70,000 square feet of the property (and necessary easements).
- The parties agreed the buyers could make the $400,000 payment by noon on March 5, 1982, without being in default.
- On March 3, Mortensen gave notice that he would deliver documents identifying the parcel to be released and asked for the release to be processed with the installment payment.
- The sellers responded that they would not review the release documentation before receiving payment, stating there was not enough time.
- On March 4, Mortensen delivered additional documentation describing the parcel and related release materials.
- On March 5, Mortensen delivered a cashier’s check for $400,000 to the title company and instructed it to disburse the funds after the deed of release (and related instruments) were recorded.
- El Dorado instructed the title company to refuse the tender because the disbursement instructions made the payment conditional on recordation of the release.
- El Dorado and the bank filed a foreclosure action the same day.
- The trial court granted summary judgment for El Dorado and the bank, awarded money on the note, and foreclosed the deed of trust, reasoning that the release could not be completed at the same time as the payment.
- The buyers appealed.

## Issues

1. Whether the deed-of-trust provision entitling the buyers to a partial release “upon payment” of the March 1 installment required payment first, or instead allowed (or required) a concurrent exchange of payment and a recorded release through the title company.
2. Whether the trial court erred in granting summary judgment by treating the buyers’ escrow-style tender as a default and by ruling, as a matter of law, that simultaneous performance was not contemplated.

## Decision

- The Arizona Court of Appeals (Division Two) reversed and set aside the summary judgment and remanded for further proceedings.
- The court held the trial court erred by construing the release provision to bar simultaneous performance as a matter of law.
- The phrase “upon payment” did not, by itself, compel a strict sequence in which payment had to be completed before any duty to release arose.
- Because the release obligation and the installment payment were part of the same exchange, the law generally treats them as concurrent unless the contract language or circumstances clearly require a different order.
- On that view, the buyers’ tender through the title company—authorizing disbursement upon recordation of the release—could constitute a proper tender consistent with concurrent performance, making foreclosure and judgment on the note improper on summary judgment.

## Legal Principles

- When an agreement calls for an exchange of performances and fixes a time for one party’s performance but not the other’s, the other performance is generally due at the same time, absent contract language or circumstances requiring a different sequence.
- Contract language such as “upon payment” may permit a concurrent exchange; it does not automatically require that payment be completed before the other party must perform.
- In real-estate secured transactions, using a title company to coordinate payment and recordation can be an accepted method of concurrent performance.
- Summary judgment is improper when the court applies an incorrect rule of law to interpret an exchange-of-performance clause, or when the contract reasonably supports a reading that would make the nonmoving party’s tender sufficient to avoid default.

## Conclusion

The Court of Appeals reversed the summary judgment for El Dorado and United Bank because the deed-of-trust release clause granting a parcel release “upon payment” could allow (and under general contract rules could require) concurrent payment and recordation of the release through the title company; treating the buyers’ escrow-style tender as a default and foreclosing as a matter of law was error, so the case was remanded.


El Dorado Hotel Properties, Ltd. v. Mortensen, 136 Ariz. 292, 665 P.2d 1014 (1983)