Court Opinion

ID: 4670516
Source: CourtListenerOpinion
Date Created: 2021-03-23 16:02:25.100711+00
Date Added: 2024-06-11T08:02:01.097599
License: Public Domain

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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

      ARIZONA HOME FORECLOSURE PREVENTION FUNDING

                      CORPORATION, et al., Appellants,

                                         v.

                         MARICOPOLY LLC, Appellee.

                              No. 1 CA-CV 20-0254
                                FILED 3-23-2021

            Appeal from the Superior Court in Maricopa County
                           No. CV2017-092698
                  The Honorable David J. Palmer, Judge

                       VACATED AND REMANDED

                                    COUNSEL

Arizona Attorney General’s Office, Phoenix
By Valerie Love Marciano
Counsel for Appellant Arizona Home Foreclosure Prevention Funding
Corporation

Windtberg & Zdancewicz PLC, Tempe
By Marc Windtberg
Counsel for Appellant Gerardo Macias

Law Offices of Kyle A. Kinney PLLC, Scottsdale
By Kyle A. Kinney
Counsel for Appellee
                    AZ HOME, et al. v. MARICOPOLY
                         Decision of the Court

                      MEMORANDUM DECISION

Judge Michael J. Brown delivered the decision of the Court, in which
Presiding Judge David B. Gass and Judge David D. Weinzweig joined.

B R O W N, Judge:

¶1             Arizona Home Foreclosure Prevention Funding Corporation
(“AZ Home”) and Gerardo Macias challenge the superior court’s judgment
awarding excess proceeds from a judicial foreclosure sale to Maricopoly,
LLC (“Maricopoly”). We vacate the judgment and remand for further
proceedings because, even assuming a senior lienholder could properly
claim the excess proceeds under A.R.S. § 33-727(B), Maricopoly did not
establish it received an equitable assignment of any senior lien rights.

                              BACKGROUND

¶2           Trails at Amber Ridge Homeowners Association (the
“Association”) sued to judicially foreclose on a home owned by Gerardo
Macias for unpaid assessments. The complaint named Macias and two
junior lienholders, AZ Home and Community Housing Resources of
Arizona (“CHR”), as defendants. The complaint noted that Wells Fargo
Bank, N.A. (“Wells Fargo”) held “a valid first deed of trust pursuant to
statute.”

¶3            Both AZ Home and CHR stipulated that their liens were
junior to the Association’s lien. The Association obtained a default
judgment against Macias, and Maricopoly purchased the property at a
sheriff’s sale for $77,100. The sheriff deposited $59,819.17 in excess
proceeds with the clerk of the court after satisfying the Association’s lien.

¶4             Approximately four months later, Maricopoly moved to
intervene, asserting its interest would not be protected by Wells Fargo,
which was not a party to the case, and thus the excess proceeds should be
paid to Maricopoly. AZ Home applied for release of the excess proceeds,
arguing its lien was “the first priority lien to receive Surplus Proceeds after
the Sheriff’s Sale.” AZ Home also opposed Maricopoly’s intervention
request, contending the excess proceeds “are to be paid to subsequent
lienholders . . . and ultimately—if any proceeds remain—then to Gerardo

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                    AZ HOME, et al. v. MARICOPOLY
                         Decision of the Court

Macias.” Macias applied to receive whatever excess proceeds remained
once AZ Home’s lien was satisfied, but CHR did not make a request.

¶5              The superior court denied AZ Home’s and Macias’
applications and allowed Maricopoly to intervene, finding Maricopoly “has
a title interest . . . subject to the Wells Fargo first position Deed of Trust”
and “therefore has an interest in the disposition of the proceeds at issue that
it paid to acquire.” Citing A.R.S. § 33-727(B), the court also concluded “that
excess proceeds remaining from this judicial foreclosure flow up, in this
instance going to Wells Fargo.”

¶6             Maricopoly filed an amended application a few months later,
attaching the settlement statement from its July 2019 sale of the property to
a third party and contending it was entitled to the excess proceeds because
it had “acquired an equitable assignment by paying off the senior lien[] in
full.” Maricopoly also noted that Wells Fargo had previously assigned the
senior lien to US Bank, N.A. (“US Bank”). After the superior court ordered
the clerk of the court to release the excess funds to Maricopoly and entered
a final judgment, AZ Home and Macias timely appealed.

                               DISCUSSION

¶7             Homeowners’ association liens “may be foreclosed in the
same manner as a mortgage on real estate.” A.R.S. § 33-1807(A). Generally,
such liens have priority over other liens except for (1) liens recorded before
recordation of the declaration, (2) a recorded first mortgage or deed of trust,
and (3) real estate tax liens and other governmental assessments or charges.
A.R.S. § 33-1807(B). The parties agree the lien previously held by Wells
Fargo and US Bank has priority over the Association lien, but the AZ Home
lien does not.

       A.     Equitable Assignment

¶8             While the parties raise numerous issues on appeal, we need
only address one: whether Maricopoly received an equitable assignment of
the lien first held by Wells Fargo and then by US Bank. Generally, the
parties’ intent determines whether an equitable assignment has been made.
Morton v. Rogers, 20 Ariz. App. 581, 586–87 (1973). “[A]ny language which
shows an intention of an owner of a chose in action to transfer it so that it
will be the property of the transferee will amount to an equitable
assignment if sustained by a sufficient consideration.” Webster v. USLife
Title Co., 123 Ariz. 130, 134 (App. 1979).

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                    AZ HOME, et al. v. MARICOPOLY
                         Decision of the Court

¶9            The only evidence Maricopoly offered to show it received an
assignment was a settlement statement from its July 2019 sale of the
property, which it contended shows US Bank “released its lien and gave
Maricopoly all interests that it had in the Property by way of its senior lien.”
While the record indicates US Bank released the lien on or about August 12,
2019, the settlement statement says nothing about any alleged intent to
assign the lien.

¶10            Maricopoly does not explain how US Bank could both release
and assign the lien; it instead argues US Bank never objected to the
Maricopoly’s amended application. But Maricopoly did not serve its
amended application on US Bank and did not file it until seven days after
US Bank released the senior lien. As such, even if US Bank was aware of
the application, it had no reason to object to it. US Bank’s inaction does not
establish any intent to assign its senior lien rights, assuming without
deciding those rights could still exist once the lien was released. See Supplies
for Indus., Inc. v. Christensen, 135 Ariz. 107, 109 (App. 1983) (stating “the
three requirements of an equitable assignment—intent to assign, intent to
receive and valuable consideration”); Morton, 20 Ariz. App. at 585–86
(requiring “words or transactions which show an [i]ntention on the one side
to assign and an intention on the other side to receive, if there is a valuable
consideration” to create an equitable assignment).

¶11            Because the record does not support Maricopoly’s contention
that it received an equitable assignment of US Bank’s senior lien rights, we
vacate the superior court’s order directing payment of the excess proceeds
to Maricopoly and remand for further proceedings. We need not reach the
parties’ contentions as to whether (1) A.R.S. § 33-727(B) applies to
homeowners’ association foreclosures, (2) a senior lienholder may receive
excess proceeds in a homeowners’ association foreclosure case under that
statute, or (3) the court erred in denying AZ Home’s request for a stay
pending appeal.

       B.     Attorneys’ Fees on Appeal

¶12            Maricopoly and Macias request their attorneys’ fees incurred
in this appeal under A.R.S. § 12-341.01(A), which permits a discretionary
award to the successful party in an action arising out of a contract. Macias
contends this dispute arises out of the contract Maricopoly entered into to
buy Macias’ home at the sheriff’s sale. The parties to this appeal do not
dispute Maricopoly’s purchase; they dispute who is entitled to receive the
excess proceeds from that purchase. We therefore deny Macias’ fee request.
See, e.g., Marcus v. Fox, 150 Ariz. 333, 335 (1986) (“[A]ttorney’s fees are not

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                    AZ HOME, et al. v. MARICOPOLY
                         Decision of the Court

appropriate based on the mere existence of a contract somewhere in the
transaction”).

¶13            Maricopoly contends it may recover attorneys’ fees because
Macias signed a contract “assigning any rights he may have to excess
proceeds to Maricopoly.” That contract is between Macias and Central
Holdings LLC, and the superior court did not address it. Moreover, when
a legal proceeding is based on a statute rather than a contract, like the case
before us, “the peripheral involvement of a contract does not support the
application of [§ 12-341.01(A)].” Hanley v. Pearson, 204 Ariz. 147, 151, ¶ 17
(App. 2003). And even assuming § 12-341.01(A) applies, we deny
Maricopoly’s request because it has not prevailed on appeal. As the
successful parties on appeal, AZ Home and Macias are awarded taxable
costs subject to their compliance with ARCAP 21.

                               CONCLUSION

¶14          We vacate the superior court’s order directing the clerk of the
court to pay the excess proceeds to Maricopoly and remand for further
proceedings. On remand, the court must order Maricopoly to return the
excess proceeds to the clerk of the court.

                        AMY M. WOOD • Clerk of the Court
                        FILED: AA

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