Christakis v. Mortg. Elec. Registration Sys., Inc.

• Decision Date: 22 October 2014
• Docket Number: No. 2 CA-CV 2013-0127,2 CA-CV 2013-0127
• Parties: JOHN CHRISTAKIS, Plaintiff/Appellant, v. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendant/Appellee.
• Court: Arizona Court of Appeals

JOHN CHRISTAKIS, Plaintiff/Appellant,
v.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., Defendant/Appellee.

No. 2 CA-CV 2013-0127

ARIZONA COURT OF APPEALS DIVISION TWO

October 22, 2014

THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
NOT FOR PUBLICATION
See Ariz. R. Sup. Ct. 111(c); Ariz. R. Civ. App. P. 28(c).

Appeal from the Superior Court in Pima County
No. C20103885
The Honorable Leslie Miller, Judge

AFFIRMED

COUNSEL

John Christakis, Mesa
In Propria Persona

Wright, Finlay & Zak, LLP, Phoenix
By Kim R. Lepore, Phoenix
and Brad E. Klein, Newport Beach, California
Counsel for Defendant/Appellee

Page 2

MEMORANDUM DECISION

Judge Espinosa authored the decision of the Court, in which Presiding Judge Miller and Judge Vásquez concurred.

ESPINOSA, Judge:

¶1 Appellant John Christakis appeals from the trial court's grant of summary judgment in favor of Appellee Mortgage Electronic Systems, Inc. (MERS). Christakis argues the court erred by either incorrectly applying A.R.S. § 33-811(C)¹ to find his claims waived, or by failing to find genuine issues of material fact precluding summary judgment. Alternatively, he contends the court's application of A.R.S. § 33-811(C) violated his constitutional due process rights. Christakis lastly claims summary judgment was inappropriate because MERS "committed the post-sale tort of wrongful foreclosure."² For the following reasons, we affirm.

Page 3

Factual and Procedural Background

¶2 In August 2006, Christakis executed a promissory note (Note) in favor of Corstar Financial, Inc. (Corstar) for a loan of $180,000 to purchase a property on West Saint Claire Street in Tucson. He also signed a deed of trust (Deed of Trust), later recorded, that secured the Note and designated MERS a nominee for Corstar, its successors and assigns, and also as the beneficiary. Christakis lastly executed a notice of assignment transferring the servicing of his loan from Corstar to GMAC Mortgage Corporation as of October 2006. After multiple endorsements, the Note was apparently transferred to a securitized trust with HSBC Bank USA, N.A. as trustee.

¶3 In January 2009, Christakis stopped making regular monthly payments on the Loan and, over the next year, paid only sporadically, making his last payment in December 2009. In January 2010, GMAC informed Christakis he was in default and requested payment of $5,007.84 within thirty days. Christakis failed to respond, and GMAC sent him another letter in February informing him it intended to foreclose on the property.

¶4 In February 2010, MERS substituted Executive Trustee Services, LLC (ETS), as the trustee under the Deed of Trust. ETS then recorded a Notice of Trustee's Sale scheduled for May 20, 2010. Christakis did not cure his default, and the residence was sold to a third party.

¶5 On May 18, 2010, two days before the trustee's sale, Christakis filed the present lawsuit and recorded a Notice of Lis Pendens but he did not attempt to obtain an order enjoining the trustee's sale. On June 1, he filed an amended complaint alleging claims of quiet title, breach of contract, lack of authority to enforce

Page 4

the Note, violation of A.R.S. § 33-801, et seq., and wrongful trustee sale. MERS filed an answer on September 7.

¶6 In March 2013, MERS filed a motion for summary judgment on all claims. Following a hearing on the motion, the trial court granted it without explanation in an unsigned minute entry. Christakis filed a notice of appeal in June 2013. In October 2013, the court entered judgment for MERS.³ We have jurisdiction over Christakis's appeal pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1).

Summary Judgment

¶7 "In reviewing a summary judgment, our task is to determine de novo whether any genuine issues of material fact exist and whether the trial court incorrectly applied the law." Parkway Bank & Trust Co. v. Zivkovic, 232 Ariz. 286, ¶ 10, 304 P.3d 1109, 1112 (App. 2013). We view the facts and their reasonable inferences in a light most favorable to the party opposing the motion. Ochser v. Funk, 228 Ariz. 365, ¶ 11, 266 P.3d 1061, 1065 (2011). But we will affirm a court's grant of summary judgment if the result is correct for any reason. City of Tempe v. Outdoor Sys., Inc., 201 Ariz. 106, ¶ 14, 32 P.3d 31, 36 (App. 2001).

¶8 Christakis first appears to argue the trial court erred by misapplying § 33-811(C) to his defenses and objections to the sale of his property, contending its waiver provision affects only the requirements set out in § 33-811(B).⁴ Section 33-811(C), A.R.S.,

Page 5

provides "[t]he trustor . . . shall waive all defenses and objections to the sale not raised in an action that results in the issuance of [an injunction against the sale]."⁵ Our supreme court has stated: "Under [§ 33-811(C)], a person who has defenses or objections to a properly noticed trustee's sale has one avenue for challenging the sale: filing for injunctive relief." BT Capital, LLC v. TD Serv. Co. of Ariz., 229 Ariz. 299, ¶ 10, 275 P.3d 598, 600 (2012). When the sale is complete "a person subject to § 33-811(C) cannot later challenge the sale based on pre-sale defenses or objections." Id. ¶ 11; see also Sitton v. Deutsche Bank Nat'l Trust Co., 233 Ariz. 215, ¶ 12, 311 P.3d 237, 240 (App. 2013) ("If a trustor fails to obtain injunctive relief and a trustee's sale is completed, she waives all claims to title of the property."). The only defense remaining is lack of notice of the sale.⁶ Steinberger v. McVey ex rel. Cnty. of Maricopa, 234 Ariz. 125, ¶ 42, 318 P.3d 419, 430 (App. 2014); cf. In re Hills, 299 B.R. 581, 586 (Bankr. D. Ariz. 2002) ("A foreclosure sale is void if there are grounds for

Page 6

equitable relief based on serious sale defects, including deliberate notice failure, fraud, misrepresentation, or concealment.").

¶9 Christakis argues his contractual rights under the Deed of Trust were not waived, pointing to a provision in the Deed of Trust stating:

22. Acceleration; Remedies. Lender shall give notice to Borrower prior to acceleration . . . . The notice shall further inform Borrower of the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense of Borrower to acceleration and sale.

He asserts MERS breached this provision by "s[elling his] property before he could exercise his right to bring court action." Under § 33-811(C), however, this court has determined that all pre-sale defenses and objections to the sale are waived, including tort claims. See Madison v. Groseth, 230 Ariz. 8, ¶ 15, 279 P.3d 633, 638 (App. 2012) (trustor of deed of trust waived claims against foreclosure sale purchasers for conversion and fraud/deceit where trustor did not obtain injunction prior to trustee's sale as required by § 33-811(C)). Thus, as a pre-sale defense to the sale, Christakis's contract claim was waived. Additionally, as MERS observes, the contractual provision cited by Christakis gives the borrower the right to "bring a court action" but does not also include the right to a resolution of the action before a sale.

¶10 Christakis next claims MERS was not a beneficiary authorized to foreclose on the loan, the note was unenforceable because note and deed were split, and he was not in default, all defenses to the sale which he raised below.⁷ However, although

Page 7

Christakis filed an action for relief two days before the trustee's sale, he did not obtain or seek to obtain injunctive relief to enjoin the sale. ⁸ By failing to do so as required by A.R.S. § 33-811(C), Christakis waived his pre-sale claims for relief against MERS.

Page 8

Constitutional Challenge

¶11 Christakis also appears to challenge the constitutionality of § 33-811(C), asserting "because a borrower owning a rental property should only suffer financial damages and cannot be granted a preliminary injunction by the trial court, then, via an unconstitutional statute, a borrower is deprived of its property without due process of law." We note that Christakis only tangentially raised this argument below⁹ and failed to fulfill his obligation to notify state authorities of his constitutional claim as required by A.R.S. § 12-1841.¹⁰ In our discretion, we nevertheless consider it. See Marco C. v. Sean C., 218 Ariz. 216, ¶ 6, 181 P.3d 1137, 1140 (App. 2008); State v. Gilfillan, 196 Ariz. 396, n.4, 998 P.2d 1069, 1074 n.4 (App. 2000).

¶12 "Statutes are presumed constitutional and the burden of proof is on the opponent of the statute to show it infringes upon a constitutional guarantee or violates a constitutional principle." State v. Casey, 205 Ariz. 359, ¶ 11, 71 P.3d 351, 354 (2003), quoting State v. Wagstaff, 164 Ariz. 485, 494, 794 P.2d 118, 127 (1990); see In re Maricopa Cnty. Juv. Action No. JT9065297, 181 Ariz. 69, 81, 887 P.2d 599, 611 (App. 1994) (burden on challenger). Constitutional challenges are subject to our de novo review because they involve

Page 9

questions of law. Duarte v. State ex rel. Lewis, 193 Ariz. 167, ¶ 4, 971 P.2d 214, 216 (App. 1998).

A.R.S. § 33-811(C) and Due Process

¶13 Christakis argues this court...