408 P.3d 1248
Ariz.2018Background
- Maria Zubia and Jose Pena owned a house as joint tenants; Pena executed a $150,000 note and deed of trust in 2008 that list both Pena and Zubia as signatories; Zubia alleges her signatures were forged and first learned of the deed of trust in 2013.
- The loan defaulted; the lender interests were assigned to Shapiro, a trustee substitution and notice of trustee’s sale were recorded, and a sale was scheduled for February 2014 (later held in January 2015).
- Zubia separately filed (pro se) to quiet title alleging forgery but did not seek a pre-sale injunction; that action was dismissed for lack of prosecution; the trustee’s sale proceeded and Shapiro purchased and recorded a trustee’s deed.
- After the sale, Zubia sued asserting (1) the Note and DOT were forged, (2) the trustee’s deed was falsely recorded in violation of A.R.S. § 33-420(A), and (3) wrongful foreclosure; she sought damages and to quiet title.
- Defendants moved to dismiss under A.R.S. § 33-811(C), arguing Zubia waived objections by failing to obtain an injunction before the sale; the trial court and court of appeals agreed; this Court granted review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether failure to obtain an injunction under A.R.S. § 33-811(C) waives post-sale damages that depend on the sale's validity | Zubia: damages under § 33-420(A) and quiet title claims are allowable even without a pre-sale injunction because damage claims do not necessarily seek to undo the sale | Shapiro: § 33-811(C) requires injunctive relief before the sale; failure to do so waives all defenses/objections to the sale, including dependent damage claims | Held: Waiver applies. Claims dependent on the sale (including § 33-420(A) damages and quiet title) are barred absent a pre-sale injunction. |
| Whether § 33-811(B) (notice/defects), rather than (C), governs because defendant had notice of alleged forgery | Zubia: § 33-811(B) should apply because Shapiro had notice | Shapiro: § 33-811(B) doesn’t apply because Zubia did not allege noncompliance with DOT or foreclosure statutes; (C) controls | Held: (C) controls; (B) not applicable on these facts. |
| Whether a wrongful foreclosure tort should be recognized and if it applies here | Zubia: Court should recognize wrongful foreclosure and allow claim | Shapiro: Arizona has not recognized such a tort; even if recognized, Zubia’s claim is precluded by § 33-811(C) and Shapiro is not the trustee/mortgagee | Held: Court declines to recognize wrongful foreclosure here; in any event Zubia’s wrongful foreclosure allegations are barred by § 33-811(C). |
| Whether claims independent of the sale remain available after a completed trustee’s sale | Zubia: N/A (she sought not to pursue independent claims here) | Shapiro: § 33-811(C) doesn’t bar claims independent of the sale | Held: Confirmed — claims independent of the sale survive; only claims that depend on invalidating the sale are waived. |
Key Cases Cited
- BT Capital, LLC v. TD Serv. Co. of Ariz., 229 Ariz. 299 (Arizona 2012) (interpreting deed-of-trust statutory scheme and enforcing § 33-811(C) as requiring injunction to challenge a trustee’s sale)
- Morgan AZ Fin., L.L.C. v. Gotses, 235 Ariz. 21 (App. 2014) (distinguishing claims dependent on the sale from those independent; § 33-811(C) bars sale-dependent claims)
- Madison v. Groseth, 230 Ariz. 8 (App. 2012) (holding tort claims that require invalidating the sale are waived when no pre-sale injunction is obtained)
- Sitton v. Deutsche Bank Nat’l Tr. Co., 233 Ariz. 215 (App. 2013) (holding defenses/claims independent of the sale, such as certain post-sale deficiency defenses or claims based on earlier misrecorded documents, are not barred by § 33-811(C))
- Coleman v. City of Mesa, 230 Ariz. 352 (Arizona 2012) (standard of review for Rule 12(b)(6) dismissal: de novo review)
- Patton v. First Fed. Sav. & Loan Ass’n of Phx., 118 Ariz. 473 (Arizona 1978) (statutes governing deeds of trust construed in favor of borrowers, but courts must still give effect to statutory language)