Opinion
No. 1 CA-CV 15-0809
12-06-2016
BARRY HESS, et al., Plaintiffs/Appellants, v. JP MORGAN CHASE BANK, N.A., et al., Defendants/Appellees.
COUNSEL Barry Hess, Glendale Plaintiff/Appellant Gina Kynast, Glendale Plaintiff/Appellant Bryan Cave, LLP, Phoenix By Robert W. Shely, Gregory B. Iannelli Counsel for Defendants/Appellees
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. Appeal from the Superior Court in Maricopa County
No. CV2015-050221
The Honorable John R. Hannah, Judge
AFFIRMED
COUNSEL Barry Hess, Glendale
Plaintiff/Appellant Gina Kynast, Glendale
Plaintiff/Appellant Bryan Cave, LLP, Phoenix
By Robert W. Shely, Gregory B. Iannelli
Counsel for Defendants/Appellees
MEMORANDUM DECISION
Judge Charles W. Gurtler, Jr. delivered the decision of the Court, in which Presiding Judge Diane M. Johnsen and Judge Jon W. Thompson joined. GURTLER, Judge:
The Honorable Charles W. Gurtler, Jr., Judge of the Arizona Superior Court, has been authorized to sit in this matter pursuant to Article VI, Section 3 of the Arizona Constitution.
¶1 Barry Hess and Gina Kynast appeal from the dismissal of their complaint against JP Morgan Chase Bank ("Chase") to quiet title to residential real property. Appellants argue the trustee did not provide proper notice of the trustee's sale and the trial court erred in determining their claims were barred by Arizona Revised Statutes ("A.R.S.") section 33-811(C). For the following reasons, we affirm.
FACTS AND PROCEDURAL BACKGROUND
¶2 Appellants owned residential real property subject to a deed of trust originally held by EMC Mortgage. After disputing the terms of the loan secured by the deed of trust, appellants stopped making payments to EMC Mortgage in January 2008. In April 2008, EMC Mortgage, through Quality Loan Service Corporation ("QLS"), mailed a notice of sale to the appellants. However, the sale was postponed by QLS from month to month, with notice being mailed to the appellants each month. Subsequently, the deed of trust was assigned to Chase, which similarly postponed the sale each month, giving notice to appellants. In May 2012 Chase recorded another notice of trustee's sale, but continued to postpone the sale until June 2015.
¶3 When the sale was not postponed, appellants sought to enjoin the sale and filed this action on June 16, 2015. Appellants alleged that Chase's claim for breach was barred by the statute of limitations set forth in A.R.S. § 33-816. Although the court granted the temporary restraining order the morning of June 18, the date the sale was to take place, appellants failed to post the required bond before Chase proceeded with the trustee's sale. Chase purchased the property and recorded a trustee's deed upon completion of the sale.
Appellants' original complaint also included a request for additional damages related to withheld insurance funds, however they voluntarily waived this claim as moot in their reply to Chase's motion to dismiss.
A.R.S. § 33-816 sets forth a limitation as "prescribed by law for the commencement of an action on the contract secured by the trust deed." A.R.S. § 12-548(A) sets this time period at six years.
¶4 Chase subsequently moved to dismiss appellants' complaint, arguing their claims were barred under A.R.S. § 33-811(C), which provides that "all defenses and objections" to a trustee's sale are deemed waived if not raised in an action resulting in an injunction prior to the sale. Chase contended that after the sale took place, § 33-811(C) barred the arguments made in appellants' complaint.
¶5 The trial court granted Chase's motion finding that, pursuant to A.R.S. § 33-811(C), the appellants' claims did not survive the trustee's sale. Appellants timely appealed.
DISCUSSION
¶6 We review a decision granting a motion to dismiss de novo. Coleman v. City of Mesa, 230 Ariz. 352, 355, ¶ 7 (2012). We review well-pled facts alleged in the complaint as true, Jeter v. Mayo Clinic Ariz., 211 Ariz. 386, 389, ¶ 4 (App. 2005) (citation omitted), and we resolve all reasonable inferences in favor of the plaintiff. McDonald v. City of Prescott, 197 Ariz. 566, 567, ¶ 5 (App. 2000). Our review is based on the pleadings and documents attached to and referenced therein, as well as public records cited by the parties. See Strategic Dev. & Constr., Inc. v. 7th & Roosevelt Partners, L.L.C., 224 Ariz. 60, 63-64, ¶¶ 10-13 (App. 2010).
I. Appellants' Claim Was Waived
¶7 Chase argues, and the trial court concluded, A.R.S. § 33-811(C) barred the appellants' claim that A.R.S. § 33-816 prohibited Chase from exercising its power of sale. Section 33-811(C) provides that a trustor waives all defenses and objections to a trustee's sale not raised in an action resulting in an injunction issued by the last business day before the sale. Specifically, "a trustor who fails to enjoin a trustee's sale waives his claims to title of the property upon the sale's completion, and also waives any claims that are dependent on the sale." Morgan AZ Fin., L.L.C. v. Gotses, 235 Ariz. 21, 23-24, ¶ 7 (App. 2014) (citing BT Capital, LLC v. TD Serv. Co. of Ariz., 229 Ariz. 299, 301, ¶ 10 (2012) (waiver of claims to title); Madison v. Groseth, 230 Ariz. 8, 13, ¶ 15 (App. 2012) (waiver of claims dependent upon the sale)). A trustor who fails to enjoin a sale does not waive claims that are independent of the sale. Morgan, 235 Ariz. at 24, ¶¶ 8-10.
¶8 The appellants argue that A.R.S. § 33-816, which limits the period of time in which a trustee's sale can be made to six years as incorporated through A.R.S. § 12-548(A), should have prevented the sale conducted by Chase on June 18, 2015. In support the appellants cite De Anza Land & Leisure Corp. v. Raineri, which found that an action to foreclose real property was barred when the statute of limitations on the underlying obligation had run. 137 Ariz. 262, 266 (App. 1983). However, such a claim is clearly related to the deed, and as such cannot move forward if the sale was not enjoined. See Madison, 230 Ariz. at 13, ¶ 15. As a result, the limitation to the trustee's sale provided by A.R.S. § 33-816 is barred as a challenge to the sale under A.R.S. § 33-811(C). See BT Capital, LLC, 229 Ariz. at 301, ¶ 10 ("[A] person who has defenses or objections to a properly noticed trustee's sale has one avenue for challenging the sale: filing for injunctive relief.").
¶9 Finally, appellants argue that even if A.R.S. § 33-811(C) is applicable, it is merely "ministerial" and therefore A.R.S. § 33-816 should control. However, appellants cite no authority to support this claim. See ARCAP 13(a)(7) (stating that appellant's contentions must contain citation to legal authorities). The process for a non-judicial foreclosure of a deed of trust is a statutory mechanism created by the legislature. Section 33-811 specifically applies to trustee's sales and therefore can hardly be dismissed as "ministerial." When a claim concerns a challenge to a trustee's sale, the court is bound to apply the conditions set forth under § 33-811(C). See Morgan, 235 Ariz. at 23-24, ¶ 7. See also Sitton v. Deutsche Bank Nat. Tr. Co., 233 Ariz. 215, 218, ¶¶ 12-14 (App. 2013); BT Capital, LLC, 229 Ariz. at 300-01, ¶¶ 9-12; Madison, 230 Ariz. at 12-13, ¶¶ 9-15 (all applying § 33-811(C) to claims against trustee's sales). Accordingly, the appellants' claim under A.R.S. § 33-811(C) was waived.
II. Appellants Were Given Sufficient Notice
¶10 Appellants also assert that A.R.S. § 33-811(C) cannot be applied to them because they were not properly notified of the trustee's sale under A.R.S. §§ 33-808 or 33-809. However, § 33-811(C) does not require service on the trustor in accordance with § 33-809. See Madison, 230 Ariz. at 12, ¶¶ 11-12 (stating the waiver provision only requires notice sufficient to obtain a preliminary injunction). And while this court has recognized that § 33-811(C) may deprive a trustor of due process if the trustor is not given sufficient notice of the sale in time to obtain an injunction, the facts here do not give rise to such a deprivation. Madison, 230 Ariz. at 12, ¶ 12.
¶11 In Madison we held the trustor had notice of the pending sale in time to file an action to enjoin the sale. See Madison, 230 Ariz. at 12, ¶ 12. Appellants concede in their opening brief that they received monthly notice of the continuing sale in accordance with A.R.S. § 33-810(B). Furthermore, appellants clearly had notice sufficient to obtain a preliminary injunction because their complaint admits notice of the trustee's sale at that time, and they were able to file for a temporary restraining order before the sale was completed.
¶12 Appellants argue that Chase cancelled other sales of the property, but they point to no evidence in the record to support such a cancellation of the June 18 sale. Consequently, the application of waiver pursuant to § 33-811(C) did not deprive appellants of due process.
III. Appellants' Other Claims Rely On Facts Not Alleged in The Complaint
¶13 The appellants' claims of fraud, promissory estoppel, and bad faith, raised for the first time in their motion for reconsideration, were based upon facts that were not alleged in the original complaint. Arizona courts "look only to the pleading itself" when considering whether a party has stated a claim upon which relief can be granted. See Ariz. R. Civ. P. 8; Cullen v. Auto-Owners Ins. Co., 218 Ariz. 417, 419, ¶ 7 (2008). Claims of fraud require further particularity. See Ariz. R. Civ. P. 9(b); Linder v. Brown & Herrick, 189 Ariz. 398, 404-05 (App. 1997) (explaining a claimant must "plead all the essential elements of . . . fraud" in the complaint). As a result, we decline to consider these additional claims not based upon facts pled in the complaint. All of the evidence raised in the motion to reconsider was available to the appellants at the time of filing their complaint and should have been alleged at that time.
Even if these arguments were properly raised, none of them relate to the trustee's sale and therefore none of them rebut the presumption under A.R.S. § 33-811(C). --------
CONCLUSION
¶14 For the foregoing reasons, we affirm the trial court's dismissal of the appellants' claims.