515 P.3d 1270
Ariz.2022Background
- In 2007 Bridges executed a promissory note secured by a deed of trust with an optional acceleration clause; the note required notice of acceleration and the deed required notice describing default, cure steps, a cure date, and that failure to cure may result in acceleration and sale.
- Bridges defaulted in 2008; the lender sent a default notice that did not mention acceleration, and Bridges did not cure.
- Notices of trustee’s sale were recorded in January and May 2009, but neither notice invoked the deed’s acceleration clause or stated the lender had accelerated the loan; no sale occurred.
- Nationstar began servicing the loan in 2011. In 2016 Bridges sued for declaratory relief, arguing the 2009 notices had accelerated the debt and therefore the six-year statute of limitations had run.
- The trial court granted Bridges summary judgment that the notices accelerated the debt; the court of appeals reversed. The Arizona Supreme Court granted review.
- The Supreme Court held recording a notice of trustee’s sale, standing alone and without express acceleration or other evidence of intent, does not accelerate the debt; it reversed the trial court and directed summary judgment for Nationstar.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether recording a notice of trustee's sale accelerates the loan as a matter of law | Recording a notice signals intent to sell and collect the entire debt, triggering the statute of limitations | Optional acceleration requires express notice or other affirmative act; §33-813(A) permits reinstatement by paying the amount then due and notices here did not reference acceleration | Recording a notice of trustee's sale, by itself, does not accelerate the debt; absent express acceleration language or other evidence of intent, debt remains subject to reinstatement by paying amount then due |
Key Cases Cited
- Dabush v. Seacret Direct LLC, 250 Ariz. 264 (2021) (standard of review for summary judgment)
- Prevo v. McGinnis, 142 Ariz. 298 (App. 1984) (distinguishing automatic acceleration on default)
- In re Krohn, 203 Ariz. 205 (2002) (deed of trust interpreted under statutory scheme favoring borrower protections)
- Schaeffer v. Chapman, 176 Ariz. 326 (1993) (courts should interpret deed-of-trust language according to its plain meaning)
- Baseline Fin. Servs. v. Madison, 229 Ariz. 543 (App. 2012) (repossession as an affirmative act of acceleration)
- Mertola, LLC v. Santos, 244 Ariz. 488 (2018) (discussing Baseline and acceleration in secured-debt contexts)
- Puryer v. HSBC Bank USA, 419 P.3d 105 (Mont. 2018) (analogous statute interpreted to hold notice of sale does not accelerate entire debt when reinstatement may be effected by paying amount then due)