Delo v. Gmac Mortgage, LLC, U.S. Bank, N.A.
232 Ariz. 133
| Ariz. Ct. App. | 2013Background
- In September 2005, Andersons borrowed $200,000 secured by a Deed of Trust with MERS named as nominee and as beneficiary and title holder for the lender.
- EquiFirst endorsed the Note to Wells Fargo and servicing rights to GMAC, which later funded a trust and appointed U.S. Bank as trustee.
- In February 2007, Pinal County sold a tax lien; Delo paid the taxes and acquired the lien, later foreclosing in June 2010.
- Delo filed a tax-lien foreclosure action but did not name GMAC Parties or MERS, though a lis pendens was recorded.
- ETS, under MERS instruction, commenced a non-judicial foreclosure; GMAC, via U.S. Bank, bid and ETS issued a Trustee’s Deed to U.S. Bank in September 2010.
- Delo filed a quiet title suit in December 2010 and the trial court granted summary judgment in Delo’s favor, which this court reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether due process required naming all interest holders in tax-lien foreclosures. | Delo argues lis pendens and failure to name GMAC/MERS violated due process. | GMAC/MERS contends their interests were vested and protected, and need not be named if notice through other means exists. | No; due process required naming or notice to those with interests; court remanded for summary judgment for GMAC/MERS. |
| Whether MERS’s recorded interests gave GMAC priority over Delo’s lis pendens. | Delo claims priority due to lis pendens before GMAC interests. | GMAC/MERS’s interests, recorded or identified, protected by MERS; lis pendens ineffective to defeat prior interests. | GMAC/MERS interests predated Delo; lis pendens did not defeat those interests; vacate judgment for GMAC. |
| Whether Delo was obligated to join MERS as a party in the tax-lien foreclosure action. | Delo did not name MERS; argued no need due to agency. | MERS was the lender’s nominee and holder of the interest; notice via Delo’s lis pendens should suffice. | Delo failed to join MERS; due process required notice to MERS; reversal of summary judgment. |
| Whether unrecorded interests of GMAC Parties were invalid against Delo as a bona fide purchaser. | Delo contends unrecorded interests were invalid against him as BFP. | Constructive notice includes information in the Deed of Trust; MERS’s interests protected GMAC’s interests. | Delo was not a bona fide purchaser; constructive notice to MERS gave GMAC protection; reversal warranted. |
Key Cases Cited
- Roberts v. Robert, 158 P.3d 899 (Ariz. App. 2007) (due process requires joining or notice to those with interests in property)
- Ticktin v. Western Savings & Loan Ass’n, 442 P.2d 886 (Ariz. App. 1968) (lis pendens rule depends on when interests arise relative to foreclosure action)
- Hall v. World Sav. & Loan Ass’n, 943 P.2d 855 (Ariz. App. 1997) (constructive notice principles for purchasers)
- Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (U.S. 1950) (due process notice requirements applied to notices in actions)
- Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034 (9th Cir. 2011) (explains MERS structure and notice implications)
- Roberts v. Robert, 215 Ariz. 176 (Ariz. 2007) (heirs and nonparties not bound absent proper joinder)