Hall v. World Sav. and Loan Ass'n, 1
| Decision Date | 22 April 1997 |
| Docket Number | No. 1,CA-CV,1 |
| Citation | 189 Ariz. 495,943 P.2d 855 |
| Parties | Carson Craig HALL, Jr., d/b/a Kit Hall Arabians, Plaintiff-Appellee, v. WORLD SAVINGS AND LOAN ASSOCIATION, a Federal Savings and Loan Association, Defendant-Appellee, and Michele Anderson, Co-Trustee for the Bochat Revocable Trust, Defendant-Appellant. 96-0351. |
| Court | Arizona Court of Appeals |
Michele Anderson, Co-Trustee for the Bochat Revocable Trust, appeals from the trial court's grant of motions for summary judgment in favor of World Savings and Loan Association ("World") and Carson Craig Hall, Jr.
To better explain the legal issues, we summarize the more lengthy statement of facts below as follows: By quitclaim deed, Milton W. and Luella Bochat deeded their residence to an inter vivos trust. After Luella's death, Milton, as trustee, conveyed the residence to his second wife, Sharlene, in an attempt to protect it from his creditors. World later loaned money to Sharlene without actual notice that the conveyance to her was fraudulent and took a first deed of trust on the residence to secure the loan's repayment.
Hall, however, had already obtained a judgment in California against Milton but recorded it in Maricopa County after World had recorded its deed of trust. Hall could have foreclosed the lien of his recorded judgment or sought a general execution to enforce the judgment lien. Instead, Hall sued Milton, Sharlene, and World, to declare the conveyance to Sharlene void and to foreclose what he characterized as a judgment lien against Milton in the amount of the California judgment. 1 After the trial court granted summary judgment in favor of World and Hall, it entered a judgment of foreclosure, issued special execution, and ordered the residence to be sold, subject to World's first lien, to satisfy Hall's judgment.
This appeal presents two main issues. The first is whether World was a good-faith lender for value without constructive notice of a previous fraudulent conveyance. This requires us to determine whether Milton's deed to Sharlene, originally defective for failure to name the trustee as grantor but later superseded by a corrective deed, put World on inquiry notice of a fraudulent conveyance. The second issue is whether the lien of a recorded judgment--as distinguished from the judgment itself--may be renewed by the filing of an action on the judgment pursuant to A.R.S. section 12-1611.
We find that World had no notice of the fraudulent transfers and therefore affirm judgment in its favor. We reverse the judgment in favor of Hall because he failed to renew his judgment lien by affidavit as required by A.R.S. section 12-1612. Pursuant to A.R.S. section 12-1611, Hall's filing of an action on the California judgment renewed the judgment. The filing did not, however, renew the lien previously created by recording the California judgment with the Maricopa County Recorder. See A.R.S. § 33-961(A). Consequently, Hall's judgment lien had expired by the time the trial court entered judgment in this lawsuit. Execution of the judgment was therefore barred by A.R.S. section 12-1551(B). Additionally, we deny Hall's motion to dismiss the appeal as moot and briefly address his contention that the Bochat Revocable Trust was invalid.
Milton and Luella Bochat, husband and wife, created the Bochat Revocable Trust ("the Trust") dated July 15, 1983. 2 Also on July 15, they executed a "Certificate and Abstract of Trust Existence and Authority" ("the Certificate") for the Trust, which identifies Milton and Luella as the settlors; Milton as the trustee; and Milton, Luella, Michele Bochat Anderson, Jeffreys Bochat Barrett, and Robin Stone Barrett as the Trust beneficiaries. The Certificate states that the Trust agreement is irrevocable upon the death of either settlor. It was recorded in the Maricopa County Recorder's Office on August 17, 1983. By a quitclaim deed executed on August 16, 1983, and recorded the next day, Milton and Luella deeded their home at 2308 East Missouri Street in Phoenix, Arizona ("the residence") to the Trust.
After Luella's death in December 1986, Milton remarried, and ownership of the residence was transferred pursuant to a series of recorded transactions. First, by warranty deed executed on April 11 and recorded on April 14, 1989, Milton, as "sole owner," conveyed to his new wife, Sharlene S. Bochat, the residence as her share of community property. Second, in January 1991, Milton executed a warranty deed to correct the April 1989 warranty deed. As trustee and surviving settlor, he conveyed the residence to Sharlene for $10.00 and other valuable considerations. The deed was recorded and then re-recorded to show the names of the Trust beneficiaries, to complete the notary acknowledgment, and to show Sharlene as Milton's wife. Finally, on July 24, 1991, Milton, as husband of Sharlene, executed a quitclaim deed by which he quitclaimed the residence to Sharlene for $10.00 and other valuable considerations. This deed was recorded on August 27, 1991.
Meanwhile, on May 24, 1989, Hall had obtained a judgment in a California federal district court against Milton for the principal amount of $91,844.99 plus costs, attorney's fees, and interest. Hall docketed the judgment in the district court of Arizona on June 7, 1989, and recorded it with the Maricopa County Recorder's Office on February 23, 1993. He then filed a complaint in April 1993 against Milton, Sharlene, and World.
Two months before Hall filed suit, however, World had loaned Sharlene $107,000.00 to refinance an existing loan. To secure the loan, Sharlene executed a deed of trust on the residence to World. Prior to closing on the loan, World had obtained a preliminary title report that showed that title to the residence was vested in "Sharlene S. Bochat, wife of Milton Bochat, as her sole and separate property."
Milton died on March 21, 1994, while Hall's suit and separate bankruptcy proceedings involving Milton's partnership were pending. On February 15, 1995, the bankruptcy court entered an amended judgment finding that the three conveyances of the residence by Milton to Sharlene were null and void. The court declared that title to the residence be "vested in the Bochat Trust ... or such other party in interest as is entitled under applicable non-bankruptcy law."
Michele Bochat Anderson, Co-Trustee of the Trust, filed a counterclaim against Hall and a cross-claim against Sharlene, World, and others not parties to this appeal. She alleged that after the Trust became irrevocable, Milton's attempted transfers of the residence violated the Trust and were without fair consideration. She sought an order quieting title to the residence in the Trust.
World then filed a motion for summary judgment. World's motion argued that under Arizona's Uniform Fraudulent Transfer Act, World was a good-faith lender for value without knowledge that the transfers to Sharlene were fraudulent. According to World, its lien was not voidable but was superior to all other liens on the residence.
Anderson cross-moved for summary judgment against World, arguing that World had a duty to investigate the chain of title to determine the validity of Sharlene's title. Because it had failed to do so, Anderson asserted, World was not entitled to protection as a good-faith lender. She also moved for summary judgment against Hall on the ground that the Trust was valid and had title to the residence. In response, Hall's cross-motion for summary judgment contended that the Trust had no interest in the residence because the recorded memorandum was insufficient to satisfy the statute of frauds and the settlors had not treated the residence as a Trust asset.
The trial court denied Anderson's motions and granted summary judgment in favor of World and in favor of Hall against all defendants except World. The court found that World was a good-faith lender for value based on the parties' knowledge at the time of the loan transaction, that Milton and Luella failed to satisfy the statute of frauds in creating the Trust, and that Milton's actions concerning the Trust were "inherently inconsistent and insupportable."
Anderson moved for reconsideration, arguing for the first time that because Hall's judgment lien had expired and had not been renewed, Hall had no right to execute upon the residence. The court denied reconsideration and entered a "Judgment and Decree of Foreclosure and Order of Sale" declaring that World had a valid first priority lien on the residence and that Hall had a valid second priority lien; it ordered that the property be sold at public auction, that the lien be paid with the proceeds, and that any surplus be presented to the court for further order.
Anderson timely appealed from the judgment granting World's motion for summary judgment and the denials of her motion for reconsideration and motions for summary judgment.
In reviewing a grant of summary judgment, we take the facts and evidence in the light most favorable to the nonmoving party. Anderson v. Country Life Ins. Co., 180 Ariz. 625, 628, 886 P.2d 1381, 1384 (App.1994). We are not bound by the trial court's rulings on issues of law, however, and may vacate a summary judgment awarded erroneously. Id.
Anderson argues that whether World reasonably inquired into the chain of title of the residence and/or had constructive notice of the fraudulent transfers to Sharlene are disputed issues of fact. World responds that even if the transfers to Sharlene were fraudulent,...
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