MRH Sub I, LLC v. Pilat, 1 CA-CV 14-0573

• Decision Date: 23 February 2017
• Docket Number: No. 1 CA-CV 14-0573,1 CA-CV 14-0573
• Parties: MRH SUB I, LLC, as successor-in-interest to CitiMortgage, Inc., Plaintiff/Appellee, v. PETER M. PILAT and SHEILA PILAT, Defendants/Appellants.
• Court: Arizona Court of Appeals

MRH SUB I, LLC, as successor-in-interest to CitiMortgage, Inc., Plaintiff/Appellee, v. PETER M. PILAT and SHEILA PILAT, Defendants/Appellants.

No. 1 CA-CV 14-0573

ARIZONA COURT OF APPEALS DIVISION ONE

February 23, 2017

NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

Appeal from the Superior Court in Maricopa County

No. CV2010-016616

The Honorable Katherine M. Cooper, Judge

AFFIRMED

COUNSEL

Tiffany & Bosco, Phoenix

By Leonard J. McDonald, Jr., Kevin P. Nelson, Michael J. Rogers

Counsel for Plaintiff/Appellee

Peter M. Pilat, Sheila Pilat, Mesa

Defendants/Appellants

MEMORANDUM DECISION

Judge Patricia K. Norris delivered the decision of the Court, in which Presiding Judge Kenton D. Jones and Judge Paul J. McMurdie joined.

NORRIS, Judge:

¶1 In this appeal, Defendants/Appellants Peter and Sheila Pilat argue the superior court should not have entered a judgment in favor of the predecessor in interest to Plaintiff/Appellee MRH Sub I, LLC ("MRH") because they timely exercised their rescission rights under the Truth in Lending Act ("TILA"), 15 U.S.C.A. § 1601 et seq. The Pilats also challenge several post-judgment orders entered by the superior court. Because the Pilats did not appeal the judgment we do not have jurisdiction to address their first argument and neither the record nor applicable law support their challenges to the post-judgment orders. Accordingly, we affirm the superior court's post-judgment orders.

FACTS AND PROCEDURAL BACKGROUND

¶2 On January 5, 2006, Peter Pilat executed a promissory note secured by a deed of trust on residential real property in Maricopa County, Arizona. The lender identified in the note and deed of trust subsequently assigned its interest to CitiMortgage, Inc. ("CitiMortgage"). After Peter defaulted on his obligations under the note and deed of trust, CitiMortgage sued to judicially foreclose the deed of trust and Peter's interest in the property. Peter answered and counterclaimed. Although Peter was the sole borrower identified in the promissory note and deed of trust, Sheila filed a separate counterclaim.

¶3 In both counterclaims the Pilats alleged, in part, that Peter had exercised his right of rescission under the TILA because he had sent CitiMortgage a rescission letter on January 2, 2009—within the TILA's three-year rescission period—and, thus, had rescinded the "loan transaction," more specifically, the promissory note and deed of trust. See 15 U.S.C.A. § 1635 (2011); Jesinoski v. Countrywide Home Loans, Inc., ___ U.S. ___, 135 S. Ct. 790, 792, 190 L. Ed. 2d 650 (2015) (under 15 U.S.C.A. § 1635(f) of the TILA, borrower has a conditional right to rescind for three years after the date of the consummation of the transaction or sale of the property, whichever comes first, if the lender does not satisfy the TILA's disclosurerequirements; borrower has no right to rescind after three year period expires); McOmie-Gray v. Bank of Am. Home Loans, 667 F.3d 1325, 1328 (9th Cir. 2012) (15 U.S.C.A. § 1635(f) is three year statute of repose). The Pilats further alleged they were entitled to damages because CitiMortgage had "failed to release the security on [Peter's] property, and return all of his payments" as required by the TILA. See 15 U.S.C.A. § 1635(b).

¶4 CitiMortgage moved for summary judgment on its complaint and the counterclaims filed by the Pilats arguing, in part, that Peter was not entitled to rescission under the TILA. The Pilats jointly opposed the motion, arguing that because they had exercised their right of rescission, under the TILA "the lien and security [interest] ceased as an operation of law" and thus they were entitled to quiet the title to the property.

¶5 The superior court granted CitiMortgage's motion for summary judgment on the complaint and counterclaims. On October 16, 2012, the superior court entered a judgment in favor of CitiMortgage ("2012 judgment"). The 2012 judgment awarded CitiMortgage judgment in the principle sum of $479,800.00, foreclosed Peter's interest in the property, foreclosed the lien created by the deed of trust, declared CitiMortgage's interest superior to all other liens, and authorized the Maricopa County Sheriff to sell the property pursuant to a writ of special execution.

¶6 Even though the superior court had granted CitiMortgage the relief it had requested, on March 29, 2013, the superior court dismissed the case without prejudice for lack of prosecution. Almost a year later, on March 13, 2014, MRH moved to reinstate the case ("reinstatement motion"). It explained it had acquired the 2012 judgment from CitiMortgage and asked the court to reinstate the case so it could obtain a writ of special execution and proceed with the Sheriff's sale. MRH also simultaneously moved to become the real party in interest ("substitution motion") pursuant to Arizona Rule of Civil Procedure 25, and to substitute counsel on an ex parte basis ("ex parte motion").¹ The superior court granted the ex parte motion and, over the Pilats' objections, granted the reinstatement motion and the substitution motion.

¶7 As discussed in more detail below, the Pilats filed six post-judgment motions, and one of the motions extended their time to appeal. The superior court denied the motions in six unsigned orders. OnNovember 21, 2014, however, the superior court signed the six orders and the Pilats timely appealed the orders in December 2014.

DISCUSSION

I. The 2012 Judgment

¶8 On appeal, the Pilats raise a number of arguments challenging the merits of the 2012 judgment dismissing their TILA allegations even though they acknowledge they failed to list the 2012 judgment in their December notices of appeal. Because the Pilats failed to appeal the 2012 judgment we do not have jurisdiction to address their arguments challenging the 2012 judgment. See Lee v. Lee, 133 Ariz. 118, 124, 649 P.2d 997, 1003 (App. 1982) (court of appeals acquires no jurisdiction to review matters not contained in a notice of appeal) (citation omitted). Nevertheless, the Pilats argue we do have jurisdiction to review the 2012 judgment because "the intent of [the] notice[s] of appeal was of course to appeal everything that was appealable." Our supreme court has held an appellate court may deem a defective notice of appeal sufficient when the record "discloses" that the appellant intended to appeal the judgment and the defect in the notice of appeal neither misleads nor prejudices the appellees. Hill v. City of Phoenix, 193 Ariz. 570, 572-73, ¶ 10, 975 P.2d 700, 702-03 (1999) (quotations and citation omitted). Here, the record fails to show the Pilats intended to appeal the 2012 judgment.

¶9 After the superior court entered the 2012 judgment, the Pilats filed a timely motion under Arizona Rule of Civil Procedure 59(l). That motion therefore extended the Pilats' time to appeal the 2012 judgment. See ARCAP 9. Thus, after the superior court entered a signed minute entry on November 21, 2014, denying that motion, the Pilats still could have appealed the 2012 judgment when they appealed in December 2014. See supra ¶ 7.

¶10 The Pilats filed two notices of appeal in December 2014. Neither notice identified the 2012 judgment. Instead, the two notices of appeal identified the six signed orders denying the Pilats' six post-judgment motions—none of which raised any argument concerning the TILA and instead were focused on delaying or avoiding the Sheriff's sale.²

Thus, the post-judgment orders entered by the superior court were not part of and related to the substantive basis of its ruling rejecting the Pilats' TILA arguments. Cf. Desert Palm Surgical Group, P.L.C., v. Petta, 236 Ariz. 568, 576-77, ¶¶ 17-19, 343 P.3d 438, 446-47 (App. 2015) (appellant's failure to include amended final judgment in notice of appeal did not mislead or prejudice appellee; final judgment and post-judgment orders were included in notice of appeal and amended judgment "[was] part of the same determination on the same claims"). In short, given their actions, nothing in the record demonstrates the Pilats intended to appeal the merits of the 2012 judgment. Accordingly, we do not have jurisdiction to consider the Pilats' challenges to the 2012 judgment.

¶11 The Pilats also argue that because they timely exercised their right of rescission under the TILA³, see 15 U.S.C.A. § 1635(f), and CitiMortgage neither challenged the rescission nor complied with the statutory requirements of the TILA, both the note and deed of trust were void and, therefore, the superior court lacked subject matter jurisdiction to enter the 2012 judgment. Thus, the Pilats reason that because subject matter jurisdiction can be raised at any time, see State v. Buckley, 153 Ariz. 91, 93, 734 P.2d 1047, 1049 (App. 1987), this court has jurisdiction to consider the merits of their TILA arguments challenging the 2012 judgment. We reject this argument.

¶12 Jurisdiction is a question of law that we review de novo. Ader v. Estate, 240 Ariz. 32, 43, ¶ 37, 375 P.3d 97, 108 (App. 2016) (citation omitted). Here, whether the Pilats had a valid rescission claim under the TILA did not affect the superior court's subject matter jurisdiction to rule on the merits of CitiMortgage's claim and the Pilats' counterclaims. See id. at 44, ¶ 43, 35 P.3d at 109 ("[S]ubject matter jurisdiction refers to a court's statutory or constitutional power to hear and determine a particular type of case.") (quotations and citations omitted).

¶13 Additionally, as other courts have recognized, 15 U.S.C.A. § 1635(f) does not impose a jurisdictional bar. See McOmie-Gray, 667 F.3d at 1329 (15 U.S.C.A. § 1635(f) is a statute of repose that creates three year right of rescission that although mandatory and enforceable is not a jurisdictionalbar); Doss v. Clearwater Title Co., 551 F.3d 634, 638 (7th Cir. 2008) (rejecting lender's argument district court lacked subject matter jurisdiction because borrower sold property before...