PART TWO OF TWO PART SERIES (PART ONE CAN BE FOUND HERE)
CASE EXAMPLE - SEEKING TO CONSOLIDATE THE UNLAWFUL DETAINER CASE WITH THE CIVIL CASE AND/OR SEEKING TO HAVE THE COMPLAINT DISMISSED:
FACTS: In one case we filed the following memorandum of points and authorities challenging the eviction complaint where the Defendant-Homeowner brought the loan current prior to the foreclosure sale (thereby reinstating her loan). The trustee thereafter agreed not to sell the property and put it on "hold" after seeing Plaintiff's receipt for the cashier's check but yet sold the property anyway to a third party flipper who had knowledge that the sale was subject to Plaintiffs reinstatement and yet they took their chances anyway.
SUMMARY OF LEGAL ARGUMENT: Under the terms of the Deed of Trust, we argued (1) Homeowner brought her loan current and was not therefore a "tenant at sufferance," and the complaint must be dismissed because the FED statutes didn't apply; (2) The issue of curing of the default under the deed of trust was a issuing requiring more than a summary FED action, and therefore the complaint must be dismissed, and (3) in the alternative, that the Court should allow the issue of right (entitlement) to actual possession to go to the jury.
NOTE: We first tried to get the judge to consolidate the eviction action with the Civil Case (Quiet Title and Wrongful Foreclosure) that we had immediately filed.
Here is how we teed up the argument:
LEGAL ARGUMENT
- THE FORCIBLE ENTRY AND DETAINER ACTION SHOULD BE CONSOLIDATED WITH THE CIVIL QUIET TITLE ACTION FILED BY PLAINTIFF AND/OR STAYED UNTIL THE CONCLUSION OF THE CIVIL CASE.
Ariz. R. Civ. P. 42 governs consolidation and separation of civil cases for trial. Cases involving common questions of law or fact may be consolidated for joint hearing or trial of some or all of the issues. The trial court is vested with broad discretion in determining whether to consolidate actions; this discretion allows the court the flexibility necessary to reach a just result without "harassing a defendant with multiple actions." See Reed v. Frey, 10 Ariz. App. 292, 458 P.2d 386 (1969).
There is persuasive legal precedence for consolidating an unlawful detainer action with a Civil case involving the same issues. In Asuncion v. Superior Court (1980) 108 Cal.App.3d 141, 166 Cal.Rptr. 306, the California Court of Appeal held that, consistent with due process guarantees, homeowners cannot be evicted without being permitted to raise affirmative defenses which, if proved, would maintain their possession and ownership. The court concluded that title to the property was in issue and that the unlawful detainer action exceeded the municipal court's jurisdiction. The Court of Appeal stated that there are situations where it may be appropriate to stay the eviction proceedings until after the trial of the fraud action or, in the alternative, to consolidate the actions.
In this case, a lending company filed an unlawful detainer action in the municipal court based on a deed it had recorded as part of what it asserted had been the sale of the property. The homeowner filed a civil action against the lending company in the superior court complaining the deed had been obtained through fraud and unfair business practices. The municipal court transferred its case to the superior court who attempted to re-transfer it to the municipal court. In setting aside the re-transfer order, the appellate court stated that because both cases involved the right of possession the superior court properly should "retain jurisdiction over the matter so long as substantive issues of ownership remain to be litigated.
Likewise, in the present case, Defendant-homeowner reinstated her loan in full, and the full amount was accepted by the beneficiary (Bank of America) who informed Plaintiff her default had been cured and to consider herself current. She relied on this, and informed the auctioneer/trustee of this fact only to have the trustee sell the property to a third party, who was on notice of the cured loan. Plaintiff has filed a civil action to quiet title on these grounds, and to rescind Plaintiff's purported Trustee's Deed, which they had to go to Court to get the Trustee to convey following these issues. Under these circumstances, Plaintiff has no valid title, and Defendant should be allowed to either stay these proceedings pending the outcome of the civil case, or else consolidate this case with the Civil action in the interests of justice and due process.
- THE DEFENDANT-HOMEOWNER'S INTEREST HAS NEVER TERMINATED UNDER THE TERMS OF THE DEED OF TRUST BECAUSE THE LOAN WAS RE-INSTATED IN FULL. AS SUCH, DEFENDANT IS NOT A "TENANT AT WILL" OR A "TENANT AT SUFFERANCE" UNDER A.R.S. 12-1173 AND THE ARIZONA FORCIBLE ENTRY AND DETAINER STATUTE DOES NOT APPLY. PLAINTIFF'S COMPLAINT MUST BE DISMISSED.
In Andreola v. Arizona Bank, 26 Ariz.App. 556, 558, 550 P.2d 110, 112 (1976). the Court discussed when the Arizona Unlawful Detainer statute applies:
"A.R.S. s 12-1173 expressly provides that there is a forcible detainer when a tenant ‘at will or by sufferance' refuses to surrender possession ‘for five days after demand in writing.' One who remains in possession of property after termination of his interest under a deed of trust is a tenant at will or sufferance. This is in accord with the general definition of an estate at sufferance contained in the Restatement of the Law of Property Section 22 at 53 (1936) which states:
‘An estate at sufferance is an interest in land which exists when a person who had a possessory interest in land by virtue of an effective conveyance, wrongfully continues in the possession of the land after the termination of such interest, but without asserting a claim to a superior title......‘To constitute a tenancy by sufferance there need not have been any prior contract of letting; all that is necessary is that the tenant should have entered into possession of the premises lawfully and shall continue to hold after the termination of his right . . ..' 3 Thompson on Real Property s 1023 at 57 (1959 Replacement).
Here, the Defendant-Homeowner is NOT in wrongful possession of the property, but rather, in rightful possession after the loan default was cured and accepted in full by the beneficiary charged with enforcing the Deed of Trust. In fact, the beneficiary continues to accept such loan payments, which are current. See also Curtis v. Morris ("Curtis II"), 186 Ariz. 534, 925 P.2d 259, (1996) which held:
"Nor is our understanding new. Long before A.R.S. § 12-1173.01 was adopted, the court of appeals held that A.R.S. § 12-1173 was broad enough to authorize a forcible detainer action to obtain possession of property after an occupant's interest had been terminated pursuant to a nonjudicial sale because "one who remains in possession of property after termination of his interest under a deed of trust is a tenant at will or sufferance."
- THE ISSUE OF WHETHER OR NOT PLAINTIFF HAS REINSTATED HER LOAN IS AN ISSUE PRE-REQUISITE TO THE ISSUE OF ENTITLEMENT TO POSSESSION AND SUCH ISSUE CANNOT BE RESOLVED IN A SUMMARY FASHION, REQUIRING THAT THE COMPLAINT BE DISMISSED.
A genuine dispute exists that can only be resolved beyond the limitations of a summary forcible-detainer action and in the context of a conventional civil action." (THE GENUINE ISSUE BEING WHETHER PLAINTIFF'S RIGHTS HAVE TERMINATED UNDER THE TERMS OF THE DEED OF TRUST). THE PLAINTIFF'S COMPLAINT MUST BE DISMISSED AS THIS ISSUE CANNOT BE RESOLVED IN A SUMMARY PROCEEDING. Arizona authority for this proposition is two-fold:
(A) United Effort Plan Trust v. Holm, (Ariz. Ct. of Appeals - Division One), 209 Ariz. 347 (2004) - "A genuine dispute exists that can only be resolved beyond the limitations of a summary forcible-detainer action and in the context of a conventional civil action."
(B) Colonial Tri-City Ltd. Partnership v. Ben Franklin Stores, Inc 179 Ariz. 428, 880 P.2d 648, Ariz.App. Div. 1,1993.. In this case the court discussed that some issues are a PREREQUISITE to determining whether a person is entitled to possession. Namely, whether or not their was a lease creating a landlord/tenant relationship. Specifically the court held:
"Whether plaintiff and defendant had a valid lease is not a question incident to the right of possession, but rather an issue whose resolution is a prerequisite to determining which party is entitled to possession. In other words, before the court in a forcible entry and detainer action can determine whether the landlord is entitled to possession because the tenant has breached the terms of the lease, it must be undisputed that a lease exists between the parties. If the latter question is disputed, that dispute must be resolved in a general civil action and not in a summary proceeding under section 33-361."
The Colonial court continued:
"The policy behind our holding is obvious; the summary proceedings authorized by section 33-361 and the forcible entry and detainer statutes do not furnish all of the procedural safeguards provided in a general civil action. "In order to provide an expeditious means of recovering possession, the forcible entry and detainer statutes provide for streamlined procedures." 2 Richard R. Powell, Powell On Real Property § 246[3] (1993). "Notice periods are short, pleadings are restricted, triable issues are limited, discovery is generally unavailable, and the judgment is promptly operative." Id. Here, defendant was denied its right to discover the identities of plaintiff's potential witnesses, to depose those witnesses, to obtain answers to interrogatories, and to utilize any other discovery methods provided under the Arizona Rules of Civil Procedure."
Similarly, in the present case, there is a pre-requisite issue as to whether or not Defendant cured their default as permitted by the Deed of Trust, and therefore, whether the Arizona unlawful detainer statutes have any application, and if not, certainly there can be no entitlement or right to possession. Defendants should be permitted more than a summary proceeding to establish these facts, and conduct discovery to prove its case. The Plaintiff's complaint should be dismissed on this ground.
- IT IS FUNDAMENTAL UNDER THE ARIZONA FORCIBLE ENTRY AND DETAINER STATUTES THAT THE PLAINTIFF MUST BE "ENTITLED TO POSSESSION" AND SINCE DEFENDANT REINSTATED HER LOAN, AND DEFENDANT KNEW ABOUT IT, SUCH ATTEMPT TO ACQUIRE POSSESSION IS NOT PROPER.
The Arizona Statutes require that Eviction only be permitted where "one is ENTITLED to actual possession." See Heywood v. Ziol, 91 Ariz. 309, 372 P.2d 200 (1962) which held:
"In this jurisdiction the action of forcible entry and detainer is a statutory proceeding, the object of which is to provide a summary, speedy and adequate means for obtaining possession of premises by one entitled to actual possession. Cannon v. Arizona Game and Fish Commission,; Olds Bros. Lumber Co. v. Rushing, 64 Ariz. 199, 167 P.2d 394; Crismon v. Christmann, 44 Ariz. 201, 36 P.2d 257. Our statute on this subject provides hat the only issue in such an action is the right of actual possession. A.R.S. § 12-1177, subd. A. This issue can only be determined after a presentation of the facts and attending circumstances upon which the right to possession is claimed. However, in the course of such determination it often becomes necessary to resolve both subsidiary issues of fact and law in order to determine who is entitled to possession and these issues are also res judicata."
Here, Plaintiff is simply not entitled to possession of the property irrespective of the Trustees Deed it now possesses. The beneficiary under the Deed of Trust accepted full payment and reinstated Plaintiff's loan, and the Trustee under the Deed of Trust agreed not to foreclose. Plaintiff was aware of this and was informed of such at the foreclosure auction and chose to purchase the property at the foreclosure auction anyway. Under these circumstances, Plaintiff "took their chances" and cannot claim they are now ENTITLED to actual possession of the property, and Plaintiff's complaint should be dismissed or in the alternative, this issue should go to the jury.
- PLAINTIFF IS NOT ENTITLED TO HIDE BEHIND A.R.S. SECTION 33-811 BECAUSE PLAINTIFF HAD ACTUAL KNOWLEDGE THAT PLAINTIFF HAD REINSTATED HER LOAN, AND PLAINTIFF CHOSE TO PURCHASE THE PROPERTY AT THE FORECLOSURE AUCTION, THUS THERE CAN BE NO CONCLUSIVE PRESUMPTION THAT THE TITLE IS VALID.
A.R.S. 33-811 does not confer "conclusive evidence" of Plaintiff's right to evict or the right and entitlement to possession in that Plaintiff "took its chances" at the foreclosure auction (and had actual notice) that Plaintiff had reinstated her loan, curing her default as permitted under the Terms of the Deed of Trust, and as otherwise permitted by law and so no conclusive presumption arises. The relevant section relied upon by Plaintiff is as follows:
"B. The price bid shall be paid at the office of the trustee or the trustee's agent, or any other reasonable place designated by the trustee. The payment of the bid price may be made at a later time if agreed upon in writing by the trustee. The trustee shall execute and deliver the trustee's deed to the purchaser within seven business days after receipt of payment by the trustee or the trustee's agent made in a form that is satisfactory to the trustee. The recording of the trustee's deed upon sale may also constitute delivery of the deed to the purchaser. The trustee is not liable for any damages resulting from the failure to record the trustee's deed upon sale after physical delivery of the deed to the purchaser. The trustee's deed shall raise the presumption of compliance with the requirements of the deed of trust and this chapter relating to the exercise of the power of sale and the sale of the trust property, including recording, mailing, publishing and posting of notice of sale and the conduct of the sale. A trustee's deed shall constitute conclusive evidence of the meeting of those requirements in favor of purchasers or encumbrancers for value and without actual notice. Knowledge of the trustee shall not be imputed to the beneficiary."
Plaintiff's actual notice and risk-taking as a speculator at the foreclosure auction defeats its right to claim conclusive status as to a right of possession.
CONCLUSION
Plaintiff reinstated her loan prior to the foreclosure sale and the beneficiary of the loan accepted such payment and informed Plaintiff that her default was cured and to continue making payments as scheduled under the agreement. In fact Plaintiff continues to make payments and her loan is current with this same beneficiary who was refused to set aside the foreclosure sale. At the auction of the property, the Trustee was informed that the loan was brought current and provided a copy of the cashier's check. The Trustee put the sale on "hold" and informed Defendant that the house would not be sold, but that if it was, any potential bidders would be informed that Plaintiff had re-instated her loan. Plaintiff was aware that Plaintiff had reinstated her loan but they bid on the property anyhow, taking risks as an investor, and with actual knowledge of such reinstatement. As such, no conclusive presumption as to valid title arises. In addition, the issues of whether or not the default was cured under the terms of the Deed of Trust is an issue requiring more than a quick summary adjudication. Plaintiff is entitled to prove her claim and the present complaint should be dismissed and/or consolidated with the Civil action currently filed by Defendant in Maricopa County Superior Court where a quiet title action is pending and where these important issues can be addressed.
PART TWO OF TWO PART SERIES (PART ONE CAN BE FOUND HERE)
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