429 P.3d 558
Ariz. Ct. App.2018Background
- Owners (Pellowski and Peterson) bought two adjoining lots (Lots 8 & 9) with a residence. Multiple refinances occurred; Washington Mutual recorded DOTs in 2000–2003. The 2003 DOT described only Lot 8, though the property address referenced both lots.
- Chase acquired the 2003 DOT and assigned its interest to Deutsche Bank in 2012; the assignment described the collateral as Lot 8 only.
- First National Bank of Omaha (FNB) recorded a DOT encumbering Lots 8 and 9 in 2006, foreclosed in 2010, and conveyed the property to Pheasant Grove in 2011.
- Deutsche Bank sued Pheasant Grove in 2015 seeking reformation of the 2003 DOT to include Lot 9, quiet title, and declaratory relief that its DOT encumbered both lots and was superior to Pheasant Grove’s interest.
- The trial court granted summary judgment for Pheasant Grove, holding the reformation claim time-barred; the court denied Deutsche Bank’s Rule 56(f) discovery request and motion to amend. Deutsche Bank appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Denial of Rule 56(f) request for more discovery | Deutsche Bank needed two months to complete discovery and evidence to oppose SJ | Pheasant Grove argued DB had ample time and the request was moot | No abuse of discretion: court effectively gave the two months and DB failed to show need for more discovery |
| Whether declaratory judgment seeking priority is governed by 6‑year debt statute (A.R.S. §12‑548) or barred | DB: declaratory claim seeks enforcement of DOT against Pheasant Grove and accrues when Pheasant Grove obtained title in 2011, so filed within six years | Pheasant Grove: claim is substantively a reformation claim and thus subject to the shorter reformation limitations period | Held: Declaratory claim is substantively a reformation (seeking identical relief) and is time‑barred under the three‑year reformation limitations period |
| Applicability of replacement‑mortgage doctrine to preserve priority | DB: alternatively, 2003 DOT was a replacement mortgage maintaining priority over intervening interests | Pheasant Grove: FNB’s 2006 DOT was not an intervening interest between the recorded 2002 and 2003 DOTs | Held: Replacement doctrine inapplicable because there was no intervening lien; doctrine requires an intervening interest |
| Denial of leave to amend complaint to clarify declaratory theory | DB: amendment would clarify constructive notice / replacement theory and avoid statute‑bar issue | Pheasant Grove: amendment would be futile because claim is time‑barred | Held: Denial not an abuse of discretion; amendment would be futile because declaratory claim is barred |
Key Cases Cited
- Simon v. Safeway, Inc., 217 Ariz. 330 (Ariz. Ct. App.) (Rule 56(f) standards; ensure reasonable opportunity for discovery)
- Orme Sch. v. Reeves, 166 Ariz. 301 (Ariz. 1990) (summary judgment standard)
- Parkway Bank & Trust Co. v. Zivkovic, 232 Ariz. 286 (Ariz. Ct. App.) (de novo review for summary judgment and law application)
- Cook v. Town of Pinetop-Lakeside, 232 Ariz. 173 (Ariz. Ct. App.) (statute of limitations accrual reviewed de novo)
- Canyon del Rio Inv’rs, L.L.C. v. City of Flagstaff, 227 Ariz. 336 (Ariz. Ct. App.) (substance-over-form test to determine limitations period for declaratory relief)
- Transam. Ins. Co. v. Trout, 145 Ariz. 355 (Ariz. Ct. App.) (reformation limitations period)
- Cont’l Lighting & Contracting, Inc. v. Premier Grading & Utilities, LLC, 227 Ariz. 382 (Ariz. Ct. App.) (replacement mortgage doctrine explained)
- Brimet II, LLC v. Destiny Homes Mktg., LLC, 231 Ariz. 457 (Ariz. Ct. App.) (effect of replacement mortgage on intervening lienholders)