Court Opinion

ID: 4285749
Source: CourtListenerOpinion
Date Created: 2018-06-19 15:07:58.042588+00
Date Added: 2024-06-11T14:08:27.400213
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

             MATT STEINMETZ, PLLC, Defendant/Appellant,

                                        v.

               EVERYONE WINS, LLC, Intervenor/Appellee.

                             No. 1 CA-CV 17-0549
                               FILED 6-19-2018

           Appeal from the Superior Court in Maricopa County
                          No. CV2015-096542
            The Honorable Margaret Benny, Judge Pro Tempore

                                  AFFIRMED

                                   COUNSEL

McCarthy Holthus & Levine, P.C., Scottsdale
By Paul M. Levine
Counsel for Defendant/Appellant

Daniel Kloberdanz, PLC, Scottsdale
By Daniel L. Kloberdanz
Counsel for Intervenor/Appellee
                    STEINMETZ v. EVERYONE WINS
                         Decision of the Court

                      MEMORANDUM DECISION

Presiding Judge Maria Elena Cruz delivered the decision of the Court, in
which Judge Jennifer B. Campbell and Judge James P. Beene joined.

C R U Z, Presiding Judge:

¶1            Matt Steinmetz, PLLC (“Steinmetz”), appeals the superior
court’s judgment granting Everyone Wins, LLC’s (“Everyone Wins”)
motion to intervene and application for excess proceeds. For the following
reasons, we affirm.

               FACTUAL AND PROCEDURAL HISTORY

¶2            Steinmetz owned real property located in Phoenix, Arizona
(“Residence”). In connection with his purchase of the Residence, Steinmetz
obtained a loan from Frank West Capital, LLC (“Frank West”) that was
secured by a first position purchase money deed of trust.

¶3             Approximately two years later, Discovery at Villa De Paz
Homeowners’ Association (“Villa De Paz”) filed a complaint against
Steinmetz seeking recovery of unpaid dues and assessments and to
foreclose its contractual and statutory lien. Two months later, the court
entered a default judgment against Steinmetz, awarding Villa De Paz
damages and ordering that “all such sums are secured by a lien against the
[Residence] and the lien is a valid lien on the [Residence] . . . .” The
judgment further provided that the “lien is hereby foreclosed and a special
execution is hereby issued . . . directing [the Maricopa County Sheriff] to
seize and sell the [Residence] under execution in satisfaction of all amounts
dues [sic] to [Villa De Paz]” pursuant to the terms of the judgment.

¶4            Jarvis Holdings, LLC, (“Jarvis”) purchased the Residence at
the September 2016 Sheriff’s sale, and the Sheriff deposited excess proceeds
of $31,444.99 with the Maricopa County Clerk. Everyone Wins purchased
the beneficial interest in the Deed of Trust from Frank West in February
2017. A month later, Jarvis moved to intervene and applied for the excess
proceeds, but the court denied the motion and application with prejudice.
Steinmetz also moved for the excess proceeds, but the court denied the
application without prejudice and noted that adequate notice had not been
given to a priority lienholder, Everyone Wins, and Everyone Wins had not

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                     STEINMETZ v. EVERYONE WINS
                          Decision of the Court

been properly noticed of the hearing. It provided Everyone Wins’ address
to the parties and stated the court’s minute entry would serve to inform
Everyone Wins as to the events in the matter. Everyone Wins then moved
to intervene and applied for excess proceeds, and the court granted both
the motion and the application.

¶5          Steinmetz timely appealed. We have jurisdiction pursuant to
Arizona Revised Statutes (“A.R.S.”) section 12-2101(A).

                                DISCUSSION

¶6             Steinmetz argues the superior court erred by distributing the
excess proceeds to Everyone Wins pursuant to A.R.S. § 33-727. He argues:
(1) the excess proceeds from the sheriff’s sale of a residence on 2.5 acres or
less are payable to the owner where there are no junior liens or
encumbrances; (2) A.R.S. § 33-727 does not permit payment of the excess
proceeds to senior lien holders in connection with the foreclosure of a
statutory homeowners’ association loan; and (3) Everyone Wins purchased
the beneficial interest in the Deed of Trust at its own risk.

¶7            We review issues of law and of statutory interpretation de
novo. Bank of America, N.A. v. Felco Bus. Servs., Inc. 401(K) Profit Sharing Plan,
243 Ariz. 150, 154, ¶ 11 (App. 2017). Our task in statutory construction is to
effectuate the text if it is clear and unambiguous. State v. Burbey, 243 Ariz.
145, 147, ¶ 7 (2017). “Words in statutes should be read in context in
determining their meaning.” Stambaugh v. Killian, 242 Ariz. 508, 509, ¶ 7
(2017). “We consider individual sections of a statute in the context of the
whole statute, and construe statutory provisions in light of the entire
statutory scheme so they may be harmonious and consistent.” Cypress on
Sunland Homeowner’s Ass’n v. Orlandini, 227 Ariz. 288, 297, ¶ 30 (App. 2011)
(internal quotations and citations omitted).

¶8           Steinmetz argues Arizona’s anti-deficiency statutes, A.R.S.
§§ 33-729 and 33-814(G), forbid the distribution of excess proceeds to a
superior lien holder pursuant to A.R.S. § 33-727(B). However, close
examination of these statutes indicates that neither is applicable in this case.

¶9            Section 33-729(A) provides in part:

       [I]f a mortgage is given to secure the payment of the balance
       of the purchase price, or to secure a loan to pay all or part of
       the purchase price, of a parcel of real property of two and one-
       half acres or less which is limited to and utilized for either a
       single one-family or single two-family dwelling, the lien of

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                     STEINMETZ v. EVERYONE WINS
                          Decision of the Court

       judgment in an action to foreclose such mortgage shall not
       extend to any other property of the judgment debtor, nor may
       general execution be issued against the judgment debtor to
       enforce such judgment, and if the proceeds of the mortgaged real
       property sold under special execution are insufficient to satisfy the
       judgment, the judgment may not otherwise be satisfied out of
       other property of the judgment debtor, notwithstanding any
       agreement to the contrary.

(Emphasis added.) Here, the proceeds of the mortgaged real property sold
under special execution were not insufficient to satisfy the judgment of the
junior lienholder, so by its plain language, A.R.S. § 33-729(A) is
inapplicable.

¶10           Section 33-814(G) provides:

       If trust property of two and one-half acres or less which is
       limited to and utilized for either a single one-family or a single
       two-family dwelling is sold pursuant to the trustee’s power of
       sale, no action may be maintained to recover any difference
       between the amount obtained by sale and the amount of the
       indebtedness and any interest, costs and expenses.

(Emphasis added.) Here, A.R.S. § 33-814(G) does not apply because the
Residence was not sold pursuant to the trustee’s power of sale. Therefore,
like A.R.S. § 33-729(A), A.R.S. § 33-814(G) is inapplicable by its plain
language.

¶11           Furthermore, neither A.R.S. § 33-814(G) nor A.R.S. § 33-729
apply because Everyone Wins did not foreclose on its own deed of trust or
sue Steinmetz directly on the promissory note. See Long v. Corbet, 181 Ariz.
153, 157-58 (App. 1994) (providing that the anti-deficiency statute
applicable to a trustee’s sale, A.R.S. § 33-814, does not apply to a secured
creditor’s receipt of excess proceeds generated by another creditor’s
foreclosure).

¶12            Steinmetz cites Midyett v. Rennat Properties, Inc., 171 Ariz. 492
(App. 1992), in support of his argument that the excess proceeds from the
sheriff’s sale of a residence on 2.5 acres or less are payable to the owner
where there are no junior liens or encumbrances. However, Midyett does
not support Steinmetz’ position. In Midyett, the Midyetts filed an action
against Williams pursuant to A.R.S. § 33-748 for breach of contract and the
foreclosure of their lien. Id. at 493. Judgment was entered in favor of the
Midyetts, and, at a sale to satisfy the judgment subject to a prior lien, Rennat

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                    STEINMETZ v. EVERYONE WINS
                         Decision of the Court

became the purchaser. Id. Rennat argued on appeal that the Midyetts, the
foreclosing judgment creditors, were obligated to take the proceeds from
the foreclosure sale and pay off a senior lien on the property. Id. Thus, the
holding of Midyett would only apply if Jarvis, the purchaser at the sheriff’s
sale, had argued that the foreclosing homeowners’ association was
obligated to take the sale proceeds from its own sheriff’s sale and pay off
the first deed of trust before paying its own judgment. Because these are
not the facts at hand, Midyett is inapplicable.

¶13          Steinmetz next argues the superior court erred by applying
A.R.S. § 12-1562(A) because the foreclosure involved a writ of special
execution rather than general execution.

¶14            We disagree that A.R.S. § 12-1562(A) is inapplicable because
the foreclosure involved a writ of special execution. Section 12-1562(A)
provides that in a general execution, “[a]ny excess in the proceeds over the
judgment and costs shall be returned to the judgment debtor unless
otherwise directed by an order of the court.” (Emphasis added.) However,
pursuant to A.R.S. § 12-1562(C), “[a]n officer shall execute the special
execution . . . by enforcing the collection of damages and costs as in a
general execution.” Accordingly, the court properly applied A.R.S. § 12-
1562(A) to the foreclosure in this case.

¶15          Next, Steinmetz argues A.R.S. § 33-727 does not apply
because the foreclosure in this case was not a foreclosure of a mortgage.
Section 33-727(B) provides in relevant part as follows:

      If there are other liens on the property sold, or other payments
      secured by the same mortgage, they shall be paid in their
      order, and if the money secured by any such lien is not yet
      due, a rebate of interest, to be ascertained by the court, shall
      be made by the holder, or his lien on such property will be
      postponed to those of a junior date, and if there are no other
      liens the balance shall be paid to the mortgagor.

¶16           Although A.R.S. § 33-727 refers to a “mortgage,” A.R.S. § 33-
1807(A) provides that a homeowners “association’s lien for assessments, for
charges for late payment of those assessments, for reasonable collection fees
and for reasonable attorney fees and costs incurred with respect to those
assessments may be foreclosed in the same manner as a mortgage on real
estate[.]” The court accordingly did not err in applying A.R.S. § 33-727.

¶17         Everyone Wins seeks its attorneys’ fees and costs pursuant to
A.R.S. §§ 12-341.01 and 12-1101 and the mandatory attorneys’ fees

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                    STEINMETZ v. EVERYONE WINS
                         Decision of the Court

provisions contained in the deed of trust and promissory note.1 Because
Everyone Wins is the successful party and the action arose out of contract,
we award Everyone Wins its reasonable attorneys’ fees and costs pursuant
to A.R.S. § 12-341.01, upon its compliance with Arizona Rule of Civil
Appellate Procedure 21. See A.R.S. § 12-341.01.

                                CONCLUSION

¶18           For the foregoing reasons, we affirm.

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

1       Steinmetz also seeks an award of attorneys’ fees and costs pursuant
to the deed of trust and A.R.S. § 12-341.01, but it did not raise this request
in its opening brief. “We will not consider arguments made for the first
time in a reply brief.” Dawson v. Withycombe, 216 Ariz. 84, 111, ¶ 91 (App.
2007).

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