Weitz Co. v. Heth
233 Ariz. 442
| Ariz. Ct. App. | 2013Background
- First National Bank made a construction loan to Summit for a condominium project; a deed of trust secured the loan.
- The general contractor, The Weitz Company, performed work but was left unpaid for about $4 million and recorded a mechanic’s lien after commencing work.
- Summit sold 92 units during construction; various lenders financed purchasers and recorded deeds of trust after construction began.
- Weitz sued to foreclose its mechanic’s lien; the Lenders sought partial summary judgment arguing they were equitably subrogated into the bank’s construction-loan priority.
- The trial court granted summary judgment for Weitz, holding § 33-992(A) gives mechanics’ liens priority over subsequent encumbrances and equitable subrogation could not shift that priority.
Issues
| Issue | Weitz’s Argument | Lenders’ Argument | Held |
|---|---|---|---|
| Whether equitable subrogation can elevate later lenders’ liens above a perfected mechanic’s lien under A.R.S. § 33-992(A) | Statute unambiguously gives mechanics’ liens priority over all subsequent liens (except narrowly timed construction loans); equity cannot override statute | Equitable subrogation permits a later lender who funds payoff of a superior lien to step into that superior lien’s priority, so Lenders should leapfrog Weitz | The statute’s plain language controls; equitable subrogation cannot alter mechanics’ lien priority over subsequent encumbrances (affirmed) |
Key Cases Cited
- Sourcecorp, Inc. v. Norcutt, 229 Ariz. 270 (2012) (defines equitable subrogation and its purpose)
- Lamb Excavation, Inc. v. Chase Manhattan Mortgage Corp., 208 Ariz. 478 (2004) (applied equitable subrogation to challenge mechanic’s lien priority)
- Peterman-Donnelly Eng’rs & Contractors Corp. v. First Nat’l Bank of Ariz., 2 Ariz. App. 321 (1965) (earlier Court of Appeals decision applying equitable subrogation against mechanic’s lien)
- Calik v. Kongable, 195 Ariz. 496 (1999) (principle of applying clear statutory language)
- Fontainebleau Las Vegas Holdings v. 2, 289 P.3d 1199 (Nev. 2012) (Nevada Supreme Court holding equitable subrogation cannot override mechanics’ lien priority statute)