418 P.3d 1038
Ariz. Ct. App.2018Background
- Borrower executed a $1.94M note in 2006 secured by a deed of trust; borrower defaulted in 2008 and WAMU recorded a Notice of Trustee’s Sale in 2009 (which included acceleration).
- No trustee’s sale occurred in 2009; recorded Cancellation of Notice of Sale in 2012 and again in 2014, each containing language reciting that the beneficiary "rescinds, cancels and withdraws" the Declaration of Default/Notice and that the deed of trust obligations were "reinstated."
- HOA obtained a judgment for unpaid assessments and sold the property at a sheriff’s sale in March 2015; Miller bought the property and filed to enjoin Bank’s foreclosure.
- Superior court granted summary judgment for Miller, holding Bank’s lien unenforceable because the statute of limitations on foreclosure (A.R.S. § 33-816 tied to A.R.S. § 12-548) had run from the 2009 acceleration.
- Bank appealed, arguing (inter alia) Miller lacked standing to assert the statute-of-limitations defense, Bank had revoked acceleration by recorded cancellation notices, and the limitations period was therefore reset.
Issues
| Issue | Plaintiff's Argument (Miller) | Defendant's Argument (Bank) | Held |
|---|---|---|---|
| Standing to assert statute-of-limitations defense under § 33-816 | Miller lacked privity to Note/Deed/Borrower and thus could not raise the defense | Purchaser at execution sale acquires judgment debtor’s property rights and may assert limitation defenses tied to in rem actions | Held: Miller has standing — purchaser at sheriff’s sale acquires right to invoke § 33-816; no contractual privity required |
| Effect of 2009 acceleration on limitations | Acceleration in 2009 triggered six-year limitations and no timely trustee’s sale occurred, so foreclosure barred | Bank argued it revoked acceleration by recording 2012 and 2014 cancellation notices and by sending a Right-to-Cure notice, which restarted limitations | Held: Bank may unilaterally revoke acceleration by an affirmative act that communicates the revocation; the recorded cancellation notices containing explicit revocation language sufficed to revoke acceleration and reset the limitations period |
| Whether mere recording of cancellation revokes acceleration | Cancellation recording alone does not revoke acceleration; need clear communication of revocation | Miller relied on precedent that recording cancellation is not enough to revoke acceleration | Held: Recording alone is insufficient, but where the cancellation notice explicitly states the Declaration/Notice is rescinded and obligations are reinstated, that language is an affirmative revocation adequate as public notice |
| Remedy and outcome below | Miller obtained judgment declaring Bank’s lien unenforceable and attorneys’ fees | Bank sought reversal and remand; also sought consideration of tax/insurance advances argument | Held: Reversed and remanded for further proceedings; trial judgment and fee award vacated; appellate attorneys’ fees denied, Bank awarded taxable costs |
Key Cases Cited
- Baier v. Mayer Unified Sch. Dist., 224 Ariz. 433 (App. 2010) (standing and statutory‑interpretation principles reviewed de novo)
- Acad. Life Ins. Co. v. Odiorne, 165 Ariz. 188 (App. 1990) (statute-of-limitations defense is a personal privilege of debtor or one in privity)
- Stewart v. Underwood, 146 Ariz. 145 (App. 1985) (A.R.S. § 33-816 ties in rem foreclosure limitation to the contract action limitation)
- Manicom v. CitiMortgage, Inc., 236 Ariz. 153 (App. 2014) (deeds-of-trust statutory scheme and purchaser’s duty to search title for liens)
- Navy Fed. Credit Union v. Jones, 187 Ariz. 493 (App. 1996) (optional acceleration clause accrues when creditor exercises the option)
- Baseline Fin. Servs. v. Madison, 229 Ariz. 543 (App. 2012) (creditor must undertake an affirmative act to communicate acceleration)
- Prevo v. McGinnis, 142 Ariz. 298 (App. 1984) (commencement of foreclosure operates as an affirmative act of acceleration)
- Mid–Kansas Fed. Sav. & Loan v. Dynamic Dev. Corp., 167 Ariz. 122 (1991) (purchaser at junior-lien foreclosure sale takes subject to senior liens)
- Wheel Estate Corp. v. Webb, 139 Ariz. 506 (App. 1983) (absent acceleration, each missed installment gives rise to a separate cause of action)