First Financial Bank, N.A. v. Claassen
238 Ariz. 160
| Ariz. Ct. App. | 2015Background
- Claassen obtained a construction-centered loan (originally up to $5.5M) secured by a deed of trust for a single-family residence; construction was never completed and payments stopped after Oct 2009.
- Bank (successor lender) judicially foreclosed after default; at complaint time debt exceeded $3,056,144.59.
- At bench trial (Claassen absent), court entered foreclosure and found a non-purchase, non-construction deficiency of $1,119,676.67, composed of: $706,270.78 accrued interest, $158,132.46 late fees, $50,000 HOA construction deposit, and $205,273.43 reserve interest payments.
- Trial court credited the property’s fair market value ($710,000) against the deficiency, and awarded Bank $255,753.72 in attorneys’ fees and costs.
- Claassen moved for new trial arguing the challenged sums were purchase-money (thus protected by A.R.S. § 33-729(A)); trial court found he waived those arguments for failing to raise them at trial and denied relief.
- On appeal, the court examined whether interest, late fees, and the mandatory HOA deposit were protected as purchase-money and whether Claassen had waived the arguments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether accrued interest, late fees, and HOA construction deposit are non-purchase-money (thus subject to deficiency) | Bank: such loan-related costs are non-purchase-money and thus recoverable in deficiency | Claassen: these items are purchase-money (part of the refinanced/rolled loan) and protected by A.R.S. § 33-729(A) | Court: Interest, late fees, and the $50,000 deposit are purchase-money items — not recoverable as non-purchase deficiency (reversed as to $914,403.33) |
| Whether Claassen waived his statutory anti-deficiency arguments by not raising them at trial | Bank: Claassen failed to preserve arguments and thus waived them | Claassen: statutory protections cannot be waived and can be raised post-trial | Court: Waiver cannot defeat a statutory protection; anti-deficiency protections under § 33-729(A) cannot be waived — trial court erred in finding waiver |
Key Cases Cited
- Helvetica Servicing, Inc. v. Pasquan, 229 Ariz. 493 (App. 2012) (refinanced purchase-money and traceability of non-purchase sums under anti-deficiency statute)
- Bank One, Arizona v. Beauvais, 188 Ariz. 245 (App. 1997) (refinancing does not change character of purchase-money obligation)
- State Consol. Pub. Co. v. Hill, 39 Ariz. 163 (1931) (court must apply correct law; parties cannot stipulate law to bind court)
- CSA 13-101 Loop, LLC v. Loop 101, LLC, 233 Ariz. 355 (App. 2013) (public policy limits waiver of certain statutory protections)