Vasquez v. Saxon Mortg., Inc.

• Decision Date: 18 November 2011
• Docket Number: No. CV–11–0091–CQ.,CV–11–0091–CQ.
• Citation: 228 Ariz. 357,266 P.3d 1053,621 Ariz. Adv. Rep. 22
• Parties: Julia V. VASQUEZ, Debtor,Julia V. Vasquez, Plaintiff, v. Saxon Mortgage, Inc.; Saxon Mortgage Services Inc.; Deutsche Bank National Trust Company as Trustee for Saxon Asset Securities Trust 2005–3, Defendants.
• Court: Arizona Supreme Court

228 Ariz. 357

266 P.3d 1053

621 Ariz. Adv. Rep. 22

Julia V. VASQUEZ, Debtor,Julia V. Vasquez, Plaintiff,

v.Saxon Mortgage, Inc.; Saxon Mortgage Services Inc.; Deutsche Bank National Trust Company as Trustee for Saxon Asset Securities Trust 2005–3, Defendants.

No. CV–11–0091–CQ.

Supreme Court of Arizona, En Banc.

Nov. 18, 2011.

Southern Arizona Legal Aid, Inc. By Beverly B. Parker, Anthony L. Young, Tucson, Attorneys for Julia V. Vasquez.

Greenberg Traurig LLP By Robert A. Mandel, Gil Rudolph, E. Jeffrey Walsh, Julie Barton, Phoenix, Attorneys for Saxon Mortgage, Inc., Saxon Mortgage Services Inc. and Deutsche Bank National Trust Company as Trustee for Saxon Asset Securities Trust 2005–3.

Lori Angus Wilson, Esq. By Lori Angus Wilson, and Vince Rabago, Esq. By Vincent L. Rabago, Tucson, Attorneys for Amici Curiae Southwest Fair Housing Council, The National Association of Consumer Bankruptcy Attorneys, and The National Consumer Law Center.Gordon Silver By Ronald E. Warnicke, Phoenix, and Johnson, Findsen & Kinney PLLC By Beth K. Findsen, Scottsdale, Attorneys for Amici Curiae Karl Stauffer, Fabiana Stauffer, Mariusz Buchna, and Julita Buchna.Koeller Nebeker Carlson & Haluck, LLP By William A. Nebeker, Valerie R. Edwards, Phoenix, Attorneys for Amicus Curiae Arizona Multi–District Litigation.Thomas C. Horne, Arizona Attorney General By Carolyn R. Matthews, Assistant Attorney General, Dena R. Epstein, Assistant Attorney General, Donnelly A. Dybus, Assistant Attorney General, Phoenix, Attorneys for Amicus Curiae State of Arizona.Quarles & Brady LLP By C. Bradley Vynalek, Brian A. Howie, Michael S. Catlett, Susan G. Boswell, Phoenix, Attorneys for Amici Curiae Arizona Bankers Association and The Greater Phoenix Chamber of Commerce.McCarthy Holthus Levine By Paul M. Levine, Scottsdale, Attorney for Amicus Curiae United Trustees Association.Fennemore Craig, P.C. By Timothy Berg, Carrie Pixler Ryerson, Theresa Dwyer–Federhar, Phoenix, and K & L Gates LLP By Phoebe S. Winder, Amy Pritchard Williams, Robert W. Sparkes, III, Charlotte, NC, Attorneys for Amicus Curiae Mortgage Bankers Association.Gust Rosenfeld P.L.C. By Richard A. Segal, Kent E. Cammack, Scott A. Malm, Phoenix, Attorneys for Amicus Curiae Land Title Association of Arizona.

OPINION

HURWITZ, Vice Chief Justice.

¶ 1 Pursuant to A.R.S. §§ 12–1861 to –1867 (2003) and Supreme Court Rule 27, we accepted jurisdiction of two questions certified by the United States Bankruptcy Court for the District of Arizona:

1. Is the recording of an assignment of deed of trust required prior to the filing of a notice of trustee's sale under A.R.S. § 33–808 when the assignee holds a promissory note payable to bearer?

2. Must the beneficiary of a deed of trust being foreclosed pursuant to A.R.S. § 33–807 have the right to enforce the secured obligation?

¶ 2 The Bankruptcy Court's certification order stated the relevant facts as follows:

In September 2005, Plaintiff [Julia V. Vasquez] refinanced her home by executing a promissory note (“Note”) (Ex. A) in favor of Saxon Mortgage, Inc. (“Saxon”) and a deed of trust (“DOT”) (Ex. B). The DOT named Saxon as beneficiary and Ticor Title as trustee. The DOT was recorded on September 16, 2005.

On September 29, 2005, Saxon assigned the Note to Deutsche Bank National Trust Company as Trustee for Saxon Asset Securities Trust 2005–3 (“Deutsche Bank”) (the “Assignment”) by endorsing the Note in blank and without recourse to Saxon. The Assignment was not recorded.

The Plaintiff defaulted under the Note. On August 29, 2008, Deutsche Bank executed a substitution of trustee pursuant to A.R.S. § 33–804 removing the title company as trustee under the DOT and appointing Michael A. Bosco, Jr. of Tiffany and Bosco (“Tiffany and Bosco”) as the substituting trustee (Ex. C). The substitution was recorded on September 12, 2008. On the same date, Tiffany and Bosco recorded a notice of trustee's sale naming “Deutsche Bank/2005–3” as the current beneficiary in “care of” Saxon Mortgage Services, Inc. c/o Fidelity National Foreclosure Solutions of Mendota Heights, Minnesota (Ex. D).

On October 29, 2008, an agent of Saxon executed an assignment of the DOT, assigning all its beneficial interest to Deutsche Bank (Ex. E). The assignment of the DOT was recorded on November 7, 2008 and indicated it was retroactive to August 11, 2008.

(footnote omitted). See A.R.S. § 12–1863(2); Ariz. R. Sup.Ct. 27(a)(3)(B) (requiring certification order to state the facts relevant to the presented questions).

I.

A.

¶ 3 The first certified question is whether “the recording of an assignment of deed of trust [is] required prior to the filing of a notice of trustee's sale under A.R.S. § 33–808 when the assignee holds a promissory note payable to bearer.” The answer is no; Arizona law imposes no such requirement.

¶ 4 We are mindful of the human costs attendant to home foreclosures. Our task today, however, is simply to answer two purely legal questions certified to us by the Bankruptcy Court. Because the “deed of trust scheme is a creature of statutes,” In re Krohn, 203 Ariz. 205, 208 ¶ 9, 52 P.3d 774, 777 (2002), our role is entirely one of statutory construction.¹ Put differently, we are called upon not to determine whether there ought to be a law providing relief to Vasquez, but what current Arizona statutes provide regarding the certified questions.

¶ 5 Trustee's sales are governed by A.R.S. § 33–808. That statute expressly requires that a notice of trustee's sale be recorded. A.R.S. § 33–808(A)(1). The statute, however, does not require that an assignment of a deed of trust be recorded before recording the notice of trustee's sale. ²

¶ 6 The recording statutes are designed to protect interests in property against claims of subsequent purchasers or creditors without notice. See, e.g., Buerger Bros. Supply Co. v. El Rey Furniture Co., 45 Ariz. 1, 6, 40 P.2d 81, 83 (1935) (“[I]t is the policy of the law of this state ‘that assignments of mortgages must be recorded as instruments affecting real estate in order to protect the holder of such assignment against subsequent purchasers without notice.’ ” (quoting Newman v. Fidelity Sav. & Loan Ass'n, 14 Ariz. 354, 358–59, 128 P. 53, 55 (1912))); Eardley v. Greenberg, 164 Ariz. 261, 265, 792 P.2d 724, 728 (1990) (“[A]ny person who receives an assignment of beneficial interest and does not record it is in jeopardy of having the assignment declared invalid as against a subsequent purchaser for value without notice.”).

¶ 7 Consistent with this general purpose, Arizona law expressly provides that “[u]nrecorded instruments, as between the parties and their heirs ... shall be valid and binding.” A.R.S. § 33–412(B). Thus, while the failure to record an assignment of a deed of trust might leave an assignee unprotected against claims by some purchasers or creditors, it does not affect a deed's validity as to the obligor. In light of § 33–412(B), it would be anomalous to read § 33–808 as preventing foreclosure of a valid deed of trust simply because an assignment has not been recorded.

¶ 8 Arizona law also expressly provides that the transfer of a contract secured by a deed of trust “shall operate as a transfer of the security for such contract.” A.R.S. § 33–817. When the note signed by Vasquez was assigned to Deutsche Bank in 2005, the deed of trust was therefore also transferred by operation of law. Because § 33–817 does not require separate documentation of an assignment of the deed of trust when the secured note is transferred, it would make no sense to imply into § 33–808 a requirement that the assignment be recorded.

¶ 9 Vasquez nonetheless argues that this Court implicitly required recording of assignments of deeds of trust in Newman, by stating that parties have “the right to presume that public records speak the truth and to act thereon in all matters affected by instruments required by law to be recorded.” 14 Ariz. at 357, 128 P. at 54. But Newman imposed no recording requirement beyond those set forth in our statutes. Rather, the Court simply announced the consequences of failing to record an instrument that is “required by law to be recorded.” Id.

B.

¶ 10 Vasquez asserts that even if § 33–808 does not require an assignment of a deed of trust to be recorded as a prerequisite to a trustee's sale, A.R.S. § 33–411.01 imposes such a requirement. That statute states:

Any document evidencing the sale, or other transfer of real estate or any legal or equitable interest therein, excluding leases, shall be recorded by the transferor in the county in which the property is located and within sixty days of the transfer. In lieu thereof, the transferor shall indemnify the transferee in any action in which the transferee's interest in such property is at issue, including costs, attorney's fees and punitive damages.

¶ 11 Vasquez argues that the first sentence of § 33–411.01 mandates recording an assignment of the beneficial interest in a deed of trust. But this argument ignores the second sentence of the statute.

¶ 12 Read in its entirety, § 33–411.01 does not impose a recording requirement. Nor does § 33–411.01 suggest that notice of a trustee's sale on a previously assigned deed of trust is valid only if the assignment was recorded. Rather, the statute presents a transferor of a real property interest with options and consequences—either record a document evidencing the transfer or indemnify the transferee in any action in which the transferee's interest is at issue. The statute is not designed to shield the original obligor on a deed of trust from a trustee's sale, but rather to protect transferees from subsequently arising claims.³

¶ 13 The Attorney General argues as amicus curiae that recording of an assignment of the beneficial interest in a deed of trust is necessary to give effect to A.R.S. § 33–807.01, which requires lenders to “explore options” with borrowers at least thirty days before recording a notice of trustee's sale. The...