336 P.3d 745
Ariz. Ct. App.2014Background
- Developers sought to build and sell condominiums in Phoenix; Plaintiffs paid earnest money and down payments under binding purchase contracts in 2005–2006.
- Corus Bank provided construction financing in 2006, with a loan commitment requiring pre-sales and earnest money to fund costs; contracts referencing earnest deposits.
- Corus Bank deed of trust secured the loan; FDIC later became receiver and assigned the loan documents to Corus Construction; trustee’s sale later transferred title to Marketing.
- Plaintiffs asserted vendees’ liens arising from their payments and contracts, seeking priority over the bank’s deed of trust; Marketing argued D’Oench, Duhme and §1823(e) shield the FDIC from such liens.
- Trial court denied Marketing’s summary judgment and later held Plaintiffs’ vendees’ liens valid and priority over Marketing’s interest; on appeal, Marketing challenged the liens’ validity, priority, and related defenses.
- Court affirmed: Plaintiffs’ vendees’ liens arise from equity, have priority over the Corus Bank deed of trust due to notice, and are not barred by D’Oench, Duhme or §1823(e); FHDC argument was not preserved.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of vendees’ liens by contract language | Plaintiffs did not waive lien rights by contract terms. | Purchase contracts provide sole remedies and potentially subordinate liens to bank. | No clear waiver; vendees’ liens not subordinated. |
| Priority of vendees’ liens vs. Corus Bank deed of trust | Vendees’ liens arose before the deed of trust and bank had notice. | Bank’s lien has priority as secured lender with the later financing. | Vendees’ liens have priority over the Corus Bank deed of trust. |
| D’Oench, Duhme doctrine and § 1823(e) applicability | Liens arise in equity, not from side agreements; doctrine does not bar them. | D’Oench, Duhme and §1823(e) protect the FDIC from unrecorded side agreements. | Doctrine and statute do not bar Plaintiffs’ claims. |
| FHDC (federal holder in due course) protection | FDIC could hold FHDC status to defeat liens. | FDIC/Marketing should have FHDC protection. | Issue not preserved for review; rejected as waived on appeal. |
Key Cases Cited
- Sundell, 106 Ariz. 137, 472 P.2d 6 (Ariz. 1970) (vendee’s lien arises from binding contract and payments; priority over later rights with notice)
- Pima Farms Co. v. Elliot, 32 Ariz. 342, 258 P. 304 (Ariz. 1927) (vendee’s lien arises to do justice; deposits may create equitable lien)
- D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447 (S. Ct. 1942) ( undisclosed side agreements barred against FDIC)
- FDIC v. Adams, 187 Ariz. 585, 931 P.2d 1095 (Ariz. App. 1996) ( §1823(e) codifies D’Oench protections; side agreements must be documented)
- Samsel v. Allstate Ins. Co., 199 Ariz. 480, 19 P.3d 621 (Ariz. App. 2001) (relation of contract and third-party rights; prerequisites for enforceability)
- Bell & Murphy & Associates v. InterFirst Bank Gateway, N.A., 894 F.2d 750 (5th Cir. 1990) (FDIC-related protections and remedies in holdings)
- FDIC v. Kasal, 913 F.2d 487 (8th Cir. 1990) (application of D’Oench, Duhme to protect FDIC from secret side agreements)