Karl v. US Bank National Ass'n
233 Ariz. 22
| Ariz. Ct. App. | 2013Background
- In 2005 the Stauffers executed a promissory note secured by a deed of trust; MERS was named nominee/beneficiary and Premier was the original lender.
- In September–October 2010 a Notice of Trustee Sale, a Notice of Substitution of Trustee (appointing FATCO), and an Assignment of Deed of Trust (to U.S. Bank) were recorded (the "Recorded Documents").
- The Stauffers alleged the Recorded Documents contained false statements (e.g., improper authority, pre-dated signatures) and sued under A.R.S. § 33-420 seeking damages and to quiet title.
- The trial court dismissed, holding (1) the Recorded Documents were not liens/encumbrances/interests under § 33-420.A, (2) § 33-420.B authorizes quiet-title relief only for liens, and (3) the Stauffers were not "owners" or "beneficial title holders" with standing under § 33-420.B.
- The court of appeals affirmed that § 33-420.B applies only to liens, reversed the trial court on (1) — holding the Recorded Documents do assert an "interest" under § 33-420.A — and (2) held the Stauffers are owners with standing; remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Recorded Documents are a "lien, encumbrance, or interest" under A.R.S. § 33-420.A | The Recorded Documents assert liens/encumbrances/interests because they derive from the deed of trust and assert rights against the property | The statute should cover only documents that create a lien or interest, not documents that merely assert one | The Recorded Documents are not liens but do assert an "interest" (e.g., right to sell/foreclose) and fall within § 33-420.A |
| Whether § 33-420.B authorizes a special-action quiet-title remedy for recorded interests (not just liens) | § 33-420.B should be read to cover interests/encumbrances to avoid inconsistency with § 33-420.A | Subsection B refers only to "liens," so it should be limited to liens and not expanded by the court | § 33-420.B is limited to liens; but an owner may still join a quiet-title special action with a damages action under § 33-420.A for false-recorded interests |
| Whether the Stauffers are "owner[s]" or "beneficial title holder[s]" with standing to sue under § 33-420 | The Stauffers, as trustors/mortgagors, retain ownership rights (possession, use, convey) and have been injured by clouds on title | Defendants argued trustors who default are not "owners" or "beneficial title holders" for § 33-420 and that plaintiffs lack a distinct injury | The court held the Stauffers are "owners" for § 33-420 purposes and have standing because false-recorded interests can cloud title and cause injury |
Key Cases Cited
- Wyatt v. Wehmueller, 167 Ariz. 281 (1991) (purpose of § 33-420 includes deterring groundless lis pendens filings)
- Evergreen W., Inc. v. Boyd, 167 Ariz. 614 (App. 1991) (§ 33-420 permits expeditious removal of groundless lis pendens)
- Santa Fe Ridge Homeowners' Ass'n v. Bartschi, 219 Ariz. 391 (App. 2009) (lis pendens provides constructive notice and asserts an interest affecting title)
- Hatch Cos. Contracting, Inc. v. Arizona Bank, 170 Ariz. 553 (App. 1992) (discusses beneficiary as beneficial title holder under certain facts)
- Richey v. Western Pacific Dev. Corp., 140 Ariz. 597 (App. 1984) (construed "owner" as record title holder in a different trust context)