98 F. Supp. 3d 1037
D. Ariz.2015Background
- Plaintiffs owned residential property in Tucson subject to a first mortgage and a second deed of trust originally owed to GMAC; Trinity (defendant) is the assignee of the second deed of trust.
- Plaintiffs ceased payments on the GMAC/second loan in 2005; the last payment was either pre-March 2007 (by the bankruptcy trustee) or earlier.
- Trinity recorded a Notice of Trustee’s Sale in October 2014 and scheduled a non‑judicial foreclosure; Plaintiffs sought to stop the sale and demanded cancellation.
- Plaintiffs sued in state court (wrongful foreclosure and breach), defendant removed to federal court asserting diversity jurisdiction, and Plaintiffs moved for a preliminary injunction to halt the foreclosure sale (sale stayed by agreement until April 2, 2015).
- Plaintiffs filed a First Amended Complaint adding a laches theory; the Court heard oral argument and denied the motion for a preliminary injunction.
- Court’s disposition: Plaintiffs did not show likelihood of success on the merits or serious questions on (1) statute‑of‑limitations grounds (accrual of installments/acceleration) or (2) laches; stay of sale remained in place until the agreed date but the injunction was denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the six‑year statute of limitations bars foreclosure | Plaintiffs: no payments >6 years so foreclosing is time‑barred | Trinity: each installment accrues separately; it exercised acceleration in Oct 2014 so foreclosure is timely | Court: Plaintiffs unlikely to succeed; some installments are time‑barred but overall cause of action on unpaid/installments not time‑barred because accrual rules for installments and optional acceleration apply |
| Whether laches bars the foreclosure sale | Plaintiffs: equitable laches prevents enforcement after long delay and prejudice | Trinity: laches is an affirmative defense; Plaintiffs had notice and did not tender payment; lender acted promptly on record notice | Court: Plaintiffs unlikely to succeed; Arizona authority (Manicom and Schwertner) disfavors using laches to defeat a valid recorded deed of trust absent payment |
Key Cases Cited
- Mazurek v. Armstrong, 520 U.S. 968 (1997) (preliminary injunction is extraordinary remedy; movant must clearly show entitlement)
- Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008) (four‑part test for preliminary injunction: likely success, irreparable harm, balance of equities, public interest)
- Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir. 2011) (sliding scale approach: serious questions + balance tipping sharply may suffice)
- De Anza Land & Leisure Corp. v. Raineri, 137 Ariz. 262, 669 P.2d 1339 (Ariz. Ct. App. 1983) (statute of limitations for foreclosure tied to underlying debt)
- Navy Fed. Credit Union v. Jones, 187 Ariz. 493, 930 P.2d 1007 (Ariz. Ct. App. 1996) (installment contracts: limitations run on each installment when due; optional acceleration affects unmatured installments)
- Manicom v. CitiMortgage, Inc., 236 Ariz. 153, 336 P.3d 1274 (Ariz. Ct. App. 2014) (laches generally cannot be used to defeat sale under valid recorded deed of trust; successor must generally satisfy debt to quiet title)
- Provident Mut. Bldg.-Loan Ass’n v. Schwertner, 15 Ariz. 517, 140 P. 495 (Ariz. 1914) (equity will not remove a cloud caused by an unsatisfied mortgage without payment of the debt)