Aurora Loan Servs., LLC v. Gienko
| Decision Date | 08 May 2012 |
| Docket Number | 1 CA-CV 11-0478 |
| Parties | AURORA LOAN SERVICES, LLC, their successors and assigns, Plaintiff/Appellee, v. GREGORY A. GIENKO and KIMBERLY A. GIENKO, Defendants/Appellants. |
| Court | Arizona Court of Appeals |
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
(Not for Publication - Rule 28, Arizona Rules of Civil Appellate Procedure)
The Honorable Michael L. Barth, Commissioner
AFFIRMED
Rick D. Sherman Attorney at Law
By Rick D. Sherman
Attorneys for Plaintiff/Appellee
Phoenix
Molever Connelly, PLLC
By Loren Molever
And Scott M. MacMillian
Attorneys for Defendants/Appellants
GOULD, Judge ¶1 Gregory and Kimberly Gienko ("the Gienkos") appeal the trial court's granting of judgment on the pleadings in this forcible detainer action. For the following reasons, we affirm.
¶2 Aurora Loan Services ("Aurora") filed a forcible detainer action alleging that the Gienkos were occupying property Aurora had recently purchased in a trustee's sale, and that the Gienkos were refusing to surrender possession of this property. Aurora attached a copy of the trustee's deed to the complaint.
¶3 The Gienkos filed an answer asking the court to dismiss the complaint. In their answer, the Gienkos alleged that the trustee's sale never occurred on the date it had been set and noticed. More specifically, the Gienkos alleged that when Mrs. Gienko "appear[ed] at the time and place on the notice of sale to redeem or otherwise bid on the property," there was no "announcement or any other indicia of a postponement or continuance of the sale."
¶4 Aurora moved for judgment on the pleadings and the court granted this motion, entering judgment in Aurora's favor and directing the Gienkos to vacate the property. The Gienkos timely appealed. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") sections 12-120.21(A)(1) (2003) and 12-2101(A)(1) (Supp. 2011).
¶5 The Gienkos' main argument on appeal is that they should have been allowed to litigate whether the trustee sale occurred before the court rendered its judgment. As a result, the Gienkos contend that the case should be remanded for trial.
¶6 A plaintiff is entitled to judgment on the pleadings if the complaint sets forth a claim for relief and the answer does not contain a legally cognizable defense or does not effectively deny material allegations. Pac. Fire Rating Bureau v. Ins. Co. of N. Am., 83 Ariz. 369, 376, 321 P.2d 1030, 1035 (1958); Walker v. Estavillo, 73 Ariz. 211, 215, 240 P.2d 173, 176 (1952). When reviewing a judgment on the pleadings, "the allegations of the complaint are viewed as true, but conclusions of law are not admitted." Giles v. Hill Lewis Marce, 195 Ariz. 358, 359, 988 P.2d 143, 144 (App. 1999).
¶7 The purpose of a forcible detainer action is "to afford a summary, speedy and adequate remedy for obtaining possession of premises withheld by tenants." Olds Bros. Lumber Co. v. Rushing, 64 Ariz. 199, 204-05, 167 P.2d 394, 397 (1946); see also Curtis v. Morris, 184 Ariz. 393, 398, 909 P.2d 460, 465 (App. 1995) ("Curtis I"). This purpose would be "entirely frustrated" if the full spectrum of quiet title issues were permitted to be litigated in the forcible detainer action. OldsBros. , 64 Ariz. at 205, 167 P.2d at 397; Curtis I, 184 Ariz. at 398, 909 P.2d at 465.
¶8 Accordingly, the validity of a plaintiff's claim of title may not be litigated in a forcible detainer action. A.R.S. § 12-1177(A) (2003) (); Curtis v. Morris, 186 Ariz. 534, 534, 925 P.2d 259, 259 (1996) ("Curtis II") (); Andreola v. Ariz. Bank, 26 Ariz. App. 556, 557, 550 P.2d 110, 111 (1976) (same). As Curtis I makes clear, "permitting an inquiry into the validity of title in an FED [forcible entry and detainer] action would pose substantial difficulties for the parties" because "[t]he short time permitted before trial would render adequate discovery in actions involving potentially complex issues . . . nearly impossible." 184 Ariz. at 398, 909 P.2d at 465. Given the fact that "an FED action does not bar subsequent proceedings between the parties to determine issues other than the immediate right to possession, those issues are better resolved in proceedings designed to allow full exploration of the issues involved."1 Id. ¶9 As a result, a necessary predicate to any forcible detainer action is that the merits of title are undisputed. See Andreola, 26 Ariz. App. at 557, 550 P.2d at 111; see also Colonial Tri-City Ltd. v. Ben Franklin Stores, Inc. , 179 Ariz. 428, 433, 880 P.2d 648, 653 (App. 1993). When a forcible detainer action directly and inextricably involves a genuine dispute as to the merits of title, the action cannot be maintained. United Effort Plan Trust v. Holm, 209 Ariz. 347, 351, ¶ 21, 101 P.3d 641, 645 (App. 2004). For example, parties cannot use forcible detainer actions to establish the existence of a landlord/tenant relationship, or to litigate their contract rights under a real estate contract. RREEF Mgmt. Co. v. Camex Prods., Inc. , 190 Ariz. 75, 77-79, 945 P.2d 386, 388-90 (1997) (); Colonial, 179 Ariz. at 433, 880 P.2d at 653 (); Taylor v. Stanford, 100 Ariz. 346, 348-49, 414 P.2d 727, 729-30 (1966) ().
¶10 However, not every defendant can avoid a forcible detainer proceeding simply by denying that a plaintiff has valid title. RREEF Mgmt. , 190 Ariz. at 79, 945 P.2d at 390. A defendant must establish that there is a genuine dispute as to title. Id. Generally, defendants may dispute the merits of plaintiff's title only if they can show that the foreclosure sale was void based on "fraud, misrepresentation, or concealment." Main I Ltd. P'ship v. Venture Capital Const. & Dev., 154 Ariz. 256, 260, 741 P.2d 1234, 1238 (App. 1987); accord In re Hills, 299 B.R. 581, 586 (Bankr. D. Ariz. 2002) ().
¶11 Pursuant to A.R.S. § 33-811(B), a "Trustee's deed creates a 'presumption of compliance' and 'conclusive evidence' that" a foreclosure sale "was conducted regularly in accordance with the required statutory notice."2 In re Hills, 299 B.R. at586 (citing Triano v. First Am. Title Ins. Co., 131 Ariz. 581, 583, 643 P.2d 26, 28 (App. 1982)); accord Main I, 154 Ariz. at 260, 741 P.2d at 1238. Additionally, "[k]nowledge of the trustee shall not be imputed to the beneficiary." A.R.S. § 33-811(B) (2007). Based on this evidentiary presumption, a bona fide purchaser3 is held to hold good title by means of having a trustee's deed issued in its favor. In re Hills, 299 B.R. at 586; BAM Invs., Inc. v. Roberts, 172 Ariz. 602, 604, 838 P.2d 1363, 1365 (App. 1992).
¶12 Pursuant to A.R.S. § 33-811(B), Aurora, as the holder of the trustee's deed, is presumed to hold good title to the subject property and is entitled to possession. The Gienkos' allegation that there was no trustee's sale does not, as a matter of law, provide a legally cognizable defense to Aurora's claim for possession. The Gienkos did not allege that Aurora obtained the deed by fraud, misrepresentation or concealment, nor did they allege that Aurora had notice of any defect in the trustee's sale.
¶13 If, as the Gienkos contend, the sale was improperly continued by the Trustee, this fact would have no bearing on Aurora's title because the Trustee's knowledge "shall not be imputed to the beneficiary" according to the statute.4 A.R.S. § 33-811(B). To overcome this statutory presumption, the Gienkos would have had to allege that Aurora had actual knowledge of the improper notice and/or continuance of the trustee's sale. There is no such allegation in the Gienkos' answer.
¶14 The Gienkos contend that the statutory presumption does not protect Aurora because "[h]ere, it is the lender that claims to have purchased the property, not a third party without notice." However, nothing in the statutory language suggests that purchaser or encumbrancer without actual notice would exclude a lender without such notice, and we decline to create such a rule. A.R.S. § 33-811(B); see New Sun Bus. Park, L.L.C. v. Yuma Cnty., 221 Ariz. 43, 47, ¶ 16, 209 P.3d 179, 183 (App. 2009) () (quoting State v. Patchin, 125 Ariz. 501, 502, 610 P.2d 1062, 1063 (App. 1980)).Moreover, whatever happened between Aurora and the Gienkos before this action was filed (i.e., whether Aurora in fact was Gienkos' lender who foreclosed on the property) is not part of the pleadings and therefore may not be considered by the court when issuing a judgment on the pleadings. Ariz. R. Proc. Evict. Acts. ("RPEA") 9(d) ().5
¶15 The Gienkos mistakenly cite Triano, 131 Ariz. 581, 643 P.2d 26, for the proposition that "evidence can be introduced to show that a sale was flawed and that, therefore, the resulting deed is flawed" in this forcible detainer action. However, Triano involved a quiet title action, not a...
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