M & I Marshall & Ilsley Bank v. Mueller
228 Ariz. 478
| Ariz. Ct. App. | 2011Background
- Muellers purchased vacant land in 2005 and borrowed $444,000 in 2006 to build a home for their own use; construction began March 2007.
- Muellers discovered contractor delays/defects and requested loan disbursements; M & I declined, causing Muellers to abandon the Property and default.
- M & I foreclosed non-judicially in September 2009 and sought a deficiency of $68,196.91.
- Trial court dismissed the deficiency claim, holding Muellers were protected by ARS § 33-814(G).
- M & I appealed, arguing Mid Kansas controls; Muellers contended they intended to occupy the dwelling upon completion, triggering protection.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ARS 33-814(G) bars deficiency where the property is not utilized as a dwelling. | Muellers intended to occupy; Mid Kansas supports protection. | Property not utilized as a dwelling; Mid Kansas controls. | Yes, protection applies. |
| Whether Muellers’ occupancy intention satisfies the “utilized” requirement for anti-deficiency protection. | Intention to occupy upon completion satisfies utilization. | Unoccupied property cannot be utilized as a dwelling. | Yes, Muellers are protected. |
Key Cases Cited
- Mid Kansas Fed. Sav. & Loan Ass'n v. Dynamic Development Corp., 167 Ariz. 122 (Ariz. 1991) (limits anti-deficiency protection to homeowners cases where property is unfinished or not intended for occupancy)
- Baker v. Gardner, 160 Ariz. 98 (Ariz. 1989) (protects homeowners under anti-deficiency statutes)
- Northern Arizona Props., v. Pinetop Props. Grp., 151 Ariz. 9 (App. 1986) (investment condo utilization as a dwelling)