Hogan v. Washington Mutual Bank, N.A.
230 Ariz. 584
| Ariz. | 2012Background
- Hogan sued to enjoin trustee sales on two parcels in Yavapai County based on alleged lack of note ownership by the beneficiaries.
- Each parcel secured by a deed of trust executed in 2004, with Long Beach Mortgage Company as initial lender; WaMu and Deutsche Bank later became beneficiaries.
- Delinquency began in 2008, prompting non-judicial foreclosure proceedings and notices of sale naming WaMu for the first parcel and Deutsche Bank for the second.
- Foreclosure notices were recorded under Arizona's deed-of-trust statutes; Hogan challenged whether the beneficiaries must prove they own or can enforce the underlying notes before foreclosures.
- Superior court dismissed Hogan’s complaints; Arizona Court of Appeals affirmed, concluding no obligation to “show the note” before initiating non-judicial foreclosures.
- This Court granted review to decide whether a trust beneficiary must demonstrate authority or ownership of the note prior to non-judicial foreclosure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Must the beneficiary show the note before non-judicial foreclosure | Hogan asserts the note ownership must be proven | Trustee foreclosures proceed without showing the original note | No requirement to show the note; statutes permit foreclosure with basis for authority. |
| Whether the deed of trust and note must be construed together | Note and deed should be construed together | They are distinct instruments serving different purposes | Note and deed are distinct; foreclosure may proceed under deed-of-trust authority. |
| Applicability of UCC to trustee’s authority to foreclose | Trustee must demonstrate authority under UCC § 47-3301 | UCC does not govern real-property liens; trust deeds govern foreclosures | UCC does not govern these foreclosures; trust-deed statutes control. |
| Effect of anti-deficiency and fiduciary duties on foreclosure rights | Foreclosure may create issues of deficiency and fiduciary duties | Statutory process balances interests; anti-deficiency provisions protect borrowers | Anti-deficiency provisions apply; trustee owes fiduciary duties; not a basis to require note presentation. |
Key Cases Cited
- Transamerica Fin. Servs., Inc. v. Lafferty, 175 Ariz. 310 (Ariz. App. 1993) (trustee's notice and authority under deed-of-trust statutes)
- In re Vasquez, 228 Ariz. 357 (Ariz. 2011) (non-judicial foreclosures under deed-of-trust statutes)
- In re Weisband, 427 B.R. 13 (Bankr. D. Ariz. 2010) (foreclosures may be conducted without presenting original note)
- Hill v. Favour, 52 Ariz. 561 (Ariz. 1938) (notes and mortgage-like interests and enforceability principles)
- Mansour v. Cal-Western Reconveyance Corp., 618 F. Supp. 2d 1178 (D. Ariz. 2009) (statutory framework does not require note presentation)
- Rodney v. Ariz. Bank, 172 Ariz. 221 (Ariz. App. 1992) (UCC not controlling for real-property liens)
- Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034 (9th Cir. 2011) (foreclosure rights under deed of trust)
- Patton v. First Fed. Sav. & Loan Ass'n of Phoenix, 118 Ariz. 473 (Ariz. 1978) (fiduciary duties of trustees in foreclosures)