Parkway Bank & Trust Co. v. Zivkovic
232 Ariz. 286
| Ariz. Ct. App. | 2013Background
- Parkway loaned $894,703.85 to Equinox; deed of trust with anti-deficiency waiver; 2009 promissory note named Joseph Zivkovic as borrower and Illinois law chosen; Equinox guaranteed obligations; 2010 trustee’s sale occurred with Parkway the successful bidder; Parkway seeks deficiency under Illinois law per note; Arizona § 33-814(G) prohibits deficiencies for certain residential properties; dispute over whether Arizona public policy prevents contractual waiver of anti-deficiency protections; court must apply Restatement (Second) of Conflict of Laws §§187–188 to determine applicable law; on remand, Restatement factors weighed as of 2009 note execution; multiple related factual changes between 2006 and 2009 notes keyed to Restatement analysis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Arizona law bars prospective waivers of anti-deficiency protections. | Zivkovics: Arizona public policy prohibits waiver. | Parkway: Illinois law allows waiver via contract. | Waiver cannot be prospectively waived under Arizona public policy. |
| Which state’s law governs the deficiency action under Restatement §188 and §187 as applied to the 2009 note. | Arizona factors favor Arizona law for the 2009 note. | Factors favor Illinois law as chosen in contract, or mixed results. | Remand to weigh §188 factors as of 2009; determine local law accordingly. |
| If Arizona law governs, does §33-814(G) bar the deficiency action? | Arizona statute bars deficiency on qualifying property. | Illinois law governs due to choice-of-law provision. | Dependent on remand weight of §188 factors; potential bar under Arizona law. |
Key Cases Cited
- San Francisco Securities Corp. v. Phoenix Motor Co., Inc., 25 Ariz. 531 (1923) (statutory protections are public policy-based and not waivable when for public benefit)
- Tanque Verde Anesthesiologists, L.T.D. Profit Sharing Plan v. Proffer Group, Inc., 172 Ariz. 311 (App. 1992) (indefault negotiations; not directly supporting waivers of anti-deficiency protections)
- Cadle Co. II v. Harvey, 83 Cal.App.4th 927 (Cal.App. 2000) (public policy preventing private waiver of statutory benefits)
- Helvetica Servicing, Inc. v. Pasquan, 229 Ariz. 493 (App. 2012) (anti-deficiency statutes protect consumers and allocate risk to lenders)
- Swanson v. The Image Bank, Inc., 206 Ariz. 264 (2003) (choice-of-law framework under Restatement §187)
- Cardon v. Cotton Lane Holdings, Inc., 173 Ariz. 203 (1992) (substantive law governs deficiency action; Restatement guides choice of law)
- ABF Capital Corp. v. Osley, 414 F.3d 1061 (9th Cir. 2005) (substantial relationship in choice of law; public policy considerations for §187(2))