Court Opinion

ID: 5141764
Source: CourtListenerOpinion
Date Created: 2021-12-30 18:01:49.394193+00
Date Added: 2024-06-11T08:24:30.644727
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                       9540, LLC, Complainant/Appellee,

                                        v.

               CAROL JEAN EDMONDS, trustee of the
      CJE Living Trust Dated October 1, 2007, Defendant/Appellant.

                             No. 1 CA-CV 21-0157
                              FILED 12-30-2021

           Appeal from the Superior Court in Mohave County
                        No. L8015CV201607192
           The Honorable Charles W. Gurtler Jr., Judge, Retired

                                  AFFIRMED

                                   COUNSEL

Musgrove Drutz Kack & Flack PC, Prescott
By Mark W. Drutz, Jeffrey Gautreaux
Counsel for Complainant/Appellee

Jaburg & Wilk PC, Phoenix
By David L. Allen, Kathi M. Sandweiss
Counsel for Defendant/Appellant
                             EDMONDS v. 9540
                            Decision of the Court

                      MEMORANDUM DECISION

Judge Brian Y. Furuya delivered the decision of the Court, in which
Presiding Judge Randall M. Howe and Judge Michael J. Brown joined.

F U R U Y A, Judge:

¶1            Carol Jean Edmonds appeals the superior court’s grant of
summary judgment regarding her quiet title action against 9540, LLC.
(“9540”). For the following reasons, we affirm.

                 FACTS AND PROCEDURAL HISTORY

¶2            Nace Land & Cattle Company, Inc. (“Nace”) owned multiple
parcels of land in Mohave County subject to a deed of trust in favor of ALC
Financial Corporation, a Minnesota Corporation (“ALC”). In 2008,
Edmonds purchased one of Nace’s parcels (the “Property”) for $435,000
and received title by warranty deed. During escrow, Chicago Title
Insurance Company forwarded Edmonds’ payoff funds to ALC, but ALC
did not release the lien attached to the Property.

¶3             The deed of trust was ultimately assigned to LSREF2 Cobalt
(AZ) (“Cobalt AZ”), and a notice of trustee’s sale was recorded in
September 2014. The trustee’s sale was conducted in December 2014, and
Cobalt AZ appeared at this sale to make a credit bid. Accepting the credit
bid, the trustee shortly thereafter issued a trustee’s deed conveying title to
the Property to Cobalt AZ. After discovering she no longer owned the
Property, Edmonds filed a lawsuit in 2016. Edmonds did not record a notice
of lis pendens regarding the Property, and in January 2018, Cobalt AZ sold
the Property to 9540. In March 2018, Edmonds was granted leave to amend
her complaint. The amended complaint alleged claims against Cobalt AZ
and LSREF2 Cobalt (IL) (“Cobalt IL”) for failure to release a lien, negligence,
wrongful foreclosure, declaratory judgment, quiet title, and filing a false
lien. This amended complaint did not initially name 9540 as a defendant.

¶4              The superior court dismissed each of the claims except for the
quiet title claim. The court gave Edmonds the opportunity to amend the
complaint to include an allegation that she did not receive notice of the
trustee’s sale. When Edmonds did not amend, the court dismissed her quiet
title claim.

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                             EDMONDS v. 9540
                            Decision of the Court

¶5            Edmonds appealed the court’s dismissal of her claims for
declaratory judgment and quiet title. She argued that at the time of sale,
Cobalt IL was the named beneficiary of the deed of trust and that Cobalt
AZ submitted an invalid credit bid. Edmonds v. LSREF2 Cobalt (IL), LLC, 1
CA-CV 18-0772, 2019 WL 5701802, at *2, ¶ 8 (Ariz. App. Nov. 5, 2019) (mem.
decision).

¶6            In that first appeal, we held Edmonds’ claim for declaratory
judgment to find the sale void was simply an alternative method of
pursuing a wrongful foreclosure claim, which the superior court properly
recognized is not a cognizable claim under Arizona law. Id. at ¶ 9 (citing
Zubia v. Shapiro, 243 Ariz. 412, 417, ¶ 29 (2018)).

¶7             We also upheld dismissal of Edmonds’ claim for quiet title
because Cobalt AZ no longer claimed “any right or interest in the
Property,” having already sold the Property to 9540, and therefore,
Edmonds could not prevail on a quiet title claim “by asserting that a
trustee’s sale error occurred without naming the party who currently owns
the Property.” Id. at ¶¶ 10–12. However, we did not address “whether the
trustee’s sale could be deemed invalid based on the credit bid discrepancy.”
Id. at ¶ 12.

¶8              Meanwhile, 9540 intervened in the action before the superior
court, filing a third-party complaint against Edmonds, who filed an answer
and counterclaim against 9540 in turn, with both parties seeking to quiet
title as to the Property. Following our decision in the first appeal, the
superior court granted summary judgment in favor of 9540. The court
found Edmonds’ claims for wrongful foreclosure and declaratory judgment
based on the credit bid discrepancy had been litigated and Edmonds had
no interest in the Property. Although we had not addressed the quiet title
count directly, the superior court found that the “very same factual and
legal argument” of the credit bit discrepancy “was litigated at both the trial
court level and on appeal” and was therefore precluded. Following
resolution of a dispute concerning attorneys’ fees, the court entered final
judgment in 9540’s favor. Edmonds timely appealed, and we have
jurisdiction pursuant to Arizona Revised Statutes (“A.R.S.”) §§ 12-
120.21(A)(1) and -2101(A)(1).

                               DISCUSSION

¶9           We review the superior court’s grant of summary judgment
de novo, and we view the evidence in the light most favorable to the non-
moving party. Lee v. M & H Enters., Inc., 237 Ariz. 172, 175, ¶ 10 (App. 2015).

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                              EDMONDS v. 9540
                             Decision of the Court

“We will affirm summary judgment if it is correct for any reason supported
by the record, even if not explicitly considered by the superior court.” KB
Home Tucson, Inc. v. Charter Oak Fire Ins. Co., 236 Ariz. 326, 329, ¶ 14 (App.
2014). We review issues of statutory interpretation de novo with the goal to
effectuate legislative intent. Ariz. Chapter of the Associated Gen. Contractors of
Am. v. City of Phx., 247 Ariz. 45, 47, ¶ 7 (2019) (citations omitted).

¶10            In the instant matter—her second appeal concerning the
Property—Edmonds again argues that, because it occurred at the time of
sale, the credit bid discrepancy is not subject to the pre-sale injunction
requirement of A.R.S. § 33-811(C). In support of this argument, Edmonds
relies on BT Capital, LLC v. TD Serv. Co. of Ariz., 229 Ariz. 299, 301, ¶ 11
(2012). She notes that “a person subject to § 33-811(C) cannot later challenge
the sale based on pre-sale defenses or objections.” Id. (emphasis added).
Seizing upon the BT Capital Court’s use of this descriptor, Edmonds argues
that even if a person who has not complied with the requirements of A.R.S.
§ 33-811(C) is deemed to have waived any defenses or objections to pre-sale
matters, such a person would not be barred from asserting defenses or
objections to post-sale defects. However, this argument is unavailing.

¶11            Edmonds’ case did not involve post-sale conduct, nor did it
interpret or apply the wavier provisions of A.R.S. § 33-811(C) to deficient
post-sale conduct. Id. at 299–300, ¶¶ 1–8. Thus, BT Capital does not stand for
the proposition for which Edmonds employs it. To the contrary, a fair
reading of the case clarifies that “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.” Id. at 301, ¶ 10 (citation omitted). Therefore, all
defenses and objections to properly noticed trustee’s sales must be
challenged pursuant to § 33-811(C). See id. Taken in context, the BT Capital
Court’s reference to “pre-sale” matters is merely descriptive of the facts
under review in that case and not intended to be exclusive or otherwise
limiting to the application of § 33-811(C). Id. at ¶ 11. This interpretation is
consistent with the wording of A.R.S. § 33-811(C) itself, which contains no
restrictive language that limits its provisions concerning waiver by a
covered party to only pre-sale defenses or objections.

¶12            This reading of BT Capital also aligns with the Zubia decision.
In that case, our supreme court reasoned the language of A.R.S. § 33-811(C)
“requires enjoining the sale as a prerequisite to any claim arising out of the
sale.” Zubia, 243 Ariz. at 415, 418, ¶¶ 16, 31 (observing, further, that to
survive preclusion due to waiver pursuant to A.R.S. § 33-811(C), a claim
must “not depend on whether a trustee’s sale occurred”) (citation omitted)
(emphasis added).

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                             EDMONDS v. 9540
                            Decision of the Court

¶13          Edmonds argues that because the facts supporting her
objections—allegedly arising the day of the sale and thereafter—could not
be known in time for her to file for an injunction, the waiver provisions of
A.R.S. § 33-811(C) must not apply to post-sale defects. This argument is
likewise unavailing.

¶14           “The deed of trust scheme is a creature of statutes.” BT
Capital, 229 Ariz. at 300, ¶ 9 (citing In re Vasquez, 228 Ariz. 357, 359, ¶ 4
(2011)). “Although . . . statutes pertaining to deeds of trust must be strictly
construed in favor of the borrower, we must give effect to § 33-811(C)’s
express language, which requires enjoining the sale as a prerequisite to any
claim arising out of the sale.” Zubia, 243 Ariz. at 415, ¶ 16 (internal citations
omitted) (emphasis added). Further, “[w]hen a statute is clear and
unambiguous, we apply its plain language and need not engage in any
other means of statutory interpretation.” Kent K. v. Bobby M., 210 Ariz. 279,
283, ¶ 14 (2005) (citation omitted).

¶15           It is true that Edmonds could not have known about any
objection or defense arising from alleged discrepancies occurring on the
day of the sale itself or after its completion, therefore making it impossible
to timely comply with the prerequisites to avoid waiver under A.R.S. § 33-
811(C). However, as already noted above, the express language of. § 33-
811(C) makes no exceptions to the requirements for its waiver provision
regarding post-sale objections or defenses to the conduct of the trustee’s
sales. The language of A.R.S. § 33-811(C) is not ambiguous in this regard.
Thus, we interpret the statute as the legislature’s intent to disallow technical
or procedural post-sale objections or defenses related to trustee’s sales, such
as those presented by Edmonds in this case, where proper notice was given,
and which do not implicate fraud or similar equitable claims. Such an
interpretation furthers the goals of finality and certainty of title following
transfers from completion of trustee’s sales. Though Edmonds argues for a
different construction—one that preserves a path to reclaim title to the
Property at this late date—it is not our place, or within our power, to inject
a provision, exemption, or right into a statute that is not provided for by its
language. Cf. In re Martin M., 223 Ariz. 244, 247, ¶ 9 (App. 2009) (“[I]t is not
within either the trial court’s or this court’s authority to amend a statute to
correct what appears to have been legislative oversight.”).

¶16            By not timely seeking injunctive relief as required by A.R.S.
§ 33-811(C), Edmonds waived all objections and defenses to the validity of
the sale itself. See Zubia, 243 Ariz. at 414, ¶ 14. As such, any claims that
depend upon the conduct of the sale are barred, including her quiet title

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                             EDMONDS v. 9540
                            Decision of the Court

claim arising from objections to alleged post-sale defects with the credit bid
for the Property. See id. at 418, ¶ 31.

¶17           The absence of any proper claim to title to the Property
further raises concerns about Edmonds’ standing here. Arizona courts
impose a rigorous standing requirement. Fernandez v. Takata Seat Belts, Inc.,
210 Ariz. 138, 140, ¶ 6 (2005). “In general, a party establishes standing by
showing a personal, palpable injury.” Home Builders Ass’n of Cent. Ariz. v.
Kard, 219 Ariz. 374, 377, ¶ 10 (App. 2008) (citing Bennett v. Napolitano, 206
Ariz. 520, 524, ¶ 16 (2003)). Where one cannot point to an injury personal to
oneself caused by conduct of another, one generally lacks standing to insert
themselves in a claim that cannot provide them redress, and is therefore not
their own.

¶18           Finally, Edmonds argues that a trustee’s sale may be void “if
there are grounds for equitable relief based on serious sale defects,
including deliberate notice failure, fraud, misrepresentation, or
concealment.” In re Hills, 299 B.R. 581, 586 (Bankr. D. Ariz. 2002). This may
be true in a general sense, in that the court’s equitable powers may form a
proper basis for challenging a trustee’s sale as void in the face of an
applicable equitable claim. Indeed, our supreme court has recognized
limited equitable oversight in deed of trust sales. See In re Krohn, 203 Ariz.
205, 210, 212–14, ¶¶ 18, 29–32, 38 (2002) (setting aside a deed of trust sale
on the basis that the bid price was grossly inadequate). Be that as it may,
the validity of such claims is not properly before us in this case because
Edmonds did not advance any such equitable claims in this case. Nor did
she present any evidence on this record that would sustain them. And, we
cannot say that voiding the trustee’s sale would serve public policy, a
component of qualifying for equitable relief. See id. at 214, ¶ 36.

¶19            Further, the record in this case does not establish that
Edmonds suffered any inequity as a result of technical errors as to the party
making the credit bid or as to any other alleged defects with the procedures
of the trustee’s sale, regardless of the timing of their occurrence. Rather, any
unfairness concerning Edmonds’ situation resulted from the failure to
release the lien on the Property after her purchase in 2008. Thus, permitting
Edmonds to proceed in litigating the credit bid issue does not serve the
interests of equity, but would instead only create “an end-run around the
§ 33-811(C) waiver provision.” See Zubia, 243 Ariz. at 415, ¶ 18.

¶20         Just as Edmonds could not bring a claim for declaratory
judgment as an alternative method to pursue wrongful foreclosure, see
Edmonds, 1 CA-CV 18-0772, at *2, ¶ 9, Edmonds likewise may not litigate

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                            EDMONDS v. 9540
                           Decision of the Court

the credit bid discrepancy to restore defenses and objections that have been
waived by failure to comply with the limitations imposed by A.R.S. § 33-
811(C). The opportunity to raise those objections and defenses is long past.
Thus, the superior court’s grant of summary judgment was appropriate.

                              CONCLUSION

¶21          For the foregoing reasons, we affirm.

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

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