Opinion
No. 1 CA-CV 11-0440
03-21-2013
WCRSI, L.L.C. dba WEST COAST SERVICING, INC., a foreign corporation, Plaintiff/Appellant, v. COREY T. WELLS, an Arizona resident, Defendant/Appellee.
LaPerna Law Office By Dean M. LaPerna Attorneys for Plaintiff/Appellant Goodman Law Office By Clint G. Goodman Attorneys for Defendant/Appellee
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED
EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
Ariz. R. Crim. P. 31.24
MEMORANDUM DECISION
Not for Publication
(Rule 28, Arizona Rules
of Civil Appellate Procedure)
Appeal from the Superior Court in Maricopa County
Cause No. CV2010-022661
The Honorable Sam J. Myers, Judge
AFFIRMED
LaPerna Law Office
By Dean M. LaPerna
Attorneys for Plaintiff/Appellant
Phoenix Goodman Law Office
By Clint G. Goodman
Attorneys for Defendant/Appellee
Mesa GEMMILL, Judge ¶1 Plaintiff/Appellant WCRSI, L.L.C. dba West Coast Servicing, Inc. ("WCRSI") appeals the superior court's judgment in favor of Defendant/Appellee Corey Wells on WCRSI's claim for a deficiency judgment. The superior court ruled that anti-deficiency protection under Arizona Revised Statutes ("A.R.S.") section 33-729(A) (2007) extends to a home equity line of credit obligation when the borrowed funds are applied toward an original purchase money obligation. For the reasons that follow, we affirm the judgment.
Unless otherwise specified, we cite current versions of statutes when no material revisions have been enacted since the events in question.
FACTS AND PROCEDURAL BACKGROUND
¶2 Wells purchased a home in Scottsdale in July 2005. The entire purchase price of $490,000 was financed by Homecoming Financial Network and secured by a deed of trust on the property. In March 2006, Wells refinanced the initial purchase money loan with two loans from Greenpoint Mortgage Funding: a primary loan of $444,000 and a secondary loan of $52,450 in the form of a Home Equity Line of Credit (the "HELOC Loan"). Greenpoint recorded deeds of trust on the property to secure the loans. Thereafter, Greenpoint assigned the HELOC Loan to WCRSI. This appeal concerns only the HELOC Loan obligation. ¶ 3 In 2009, the Scottsdale house was sold at a trustee's sale. The proceeds from the foreclosure sale were less than Wells' indebtedness on the primary deed of trust, and thus WCRSI remained unpaid for the balance of the HELOC Loan. ¶4 WCRSI filed this action claiming $52,450 for breach of contract arising out of Wells' failure to pay the HELOC Loan as agreed. WCRSI moved for summary judgment. Wells cross-moved for summary judgment on grounds that the HELOC Loan qualified as purchase money and the corresponding obligation was entitled to full protection from deficiency judgment under A.R.S. § 33-729(A). ¶5 The superior court found the HELOC Loan qualified as a purchase money obligation entitled to anti-deficiency protection and granted summary judgment to Wells. WCRSI timely appeals, and we have jurisdiction pursuant to A.R.S. § 12-2101(A)(1) (Supp. 2012).
Although WCRSI claims an unpaid principal balance of $52,450, Wells claims to have made payments after obtaining the HELOC Loan, thereby reducing the principal balance. We need not resolve this dispute.
ANALYSIS
¶6 Summary judgment is appropriate when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Ariz. R. Civ. P. 56(c). "Summary judgment should be granted 'if the facts produced in support of the claim or defense have so little probative value, given the quantum of evidence required, that reasonable people could not agree with the conclusion advanced by the proponent of the claim or defense.'" Armenta v. City of Casa Grande, 205 Ariz. 367, 369, ¶ 5, 71 P.3d 359, 361 (App. 2003) (quoting Orme School v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000, 1008 (1990)). In reviewing a summary judgment, we determine de novo whether any genuine issues of material fact exist and whether the trial court correctly applied the law. L. Harvey Concrete, Inc. v. Agro Constr. & Supply Co. , 189 Ariz. 178, 180, 939 P.2d 811, 813 (App. 1997). We view the facts in the light most favorable to the party against whom summary judgment was entered and give that party the benefit of all favorable inferences fairly arising from the evidence. Id. ¶7 The issue in this case is whether an obligation to repay a home equity loan retains its purchase money character for anti-deficiency judgment protection when the borrowed funds are utilized to refinance an existing home loan secured by a deed of trust. The parties agree that A.R.S. § 33-729(A) is the applicable anti-deficiency statute in this case. Further, WCRSI concedes that all of the requirements for the HELOC Loan obligation to receive anti-deficiency protection under § 33-729(A) are satisfied except for the loan funds' retention of purchase money character. Accordingly, the issue tendered by the parties to this court is whether the HELOC Loan obligation was clothed with "purchase money" character. This question is essentially resolved by Helvetica Servicing, Inc. v. Pasquan, 229 Ariz. 493, 277 P.3d 198 (App. 2012), which was decided after the appellate briefing herein. ¶8 In Helvetica, we recognized that the anti-deficiency legislation reflects a public policy decision to protect consumers and place the risk of inadequate security on lenders, rather than on borrowers. 229 Ariz. at 496, ¶ 9, 277 P.3d at 201; see also Baker v. Gardner, 160 Ariz. 98, 101, 770 P.2d 766, 769 (1989). Anti-deficiency protection "is intended to discourage purchase money lenders from over-valuing real property by requiring them to look solely to the collateral for recovery in the event of foreclosure." Helvetica, 229 Ariz. at 496, ¶ 9, 277 P.3d at 201. ¶9 In this case, Wells applied the entire draw amount ($52,450) on the HELOC Loan to repay a portion of his obligation on the original purchase money loan from Homecoming. The superior court found that the HELOC Loan was a purchase money loan and therefore the anti-deficiency statute applied. WCRSI argues the court improperly extended the anti-deficiency protection by adopting an "overbroad definition" of purchase money that includes refinanced loan packages. ¶10 In Bank One, Arizona, N.A. v. Beauvais, we concluded that the character of purchase money remains the same after it is refinanced. 188 Ariz. 245, 249-50, 934 P.2d 809, 813-14 (App. 1997). We further clarified in Helvetica that a "change in the lender's identity does not, standing alone, alter the nature of the underlying purchase money debt." 229 Ariz. at 498, ¶ 19, 277 P.3d at 203. To hold otherwise would disregard the legislative intent to "abolish the personal liability of persons who give trust deeds encumbering properties that fit within the statutory definition." Id. (citing Bank One, 188 Ariz. at 249, 934 P.2d at 813). ¶11 As recognized in Helvetica, although Wells refinanced his original purchase money loan with a new lender, the anti-deficiency protection remained. Additionally, the funds Wells received from the HELOC Loan were applied toward the original purchase money loan. On these facts and this record, Wells' HELOC Loan obligation was entitled to anti-deficiency protection. ¶12 The superior court's ruling, although issued prior to Helvetica, is consistent with Helvetica with regard to refinancing loans retaining purchase money character. Because Wells applied the HELOC Loan proceeds to his original purchase money obligation, he is entitled to the anti-deficiency protection.
At the time of payment, the deed of trust originally held by Homecoming had been transferred to Peelle Management Corp.
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CONCLUSION
¶13 We affirm the superior court's judgment. Both parties requested an award of attorneys' fees on appeal, but neither party stated any substantive authority in support of an award of fees. We therefore deny any award of fees. See Best v. Miranda, 229 Ariz. 246, 249, ¶ 15, 274 P.3d 516, 519 (App. 2012) (denying request for attorneys' fees on appeal when party "failed to cite any authority in support of his request"). As the prevailing party, however, Wells is entitled to reimbursement of his taxable costs upon compliance with Arizona Rule of Civil Appellate Procedure 21(a).
_________________
JOHN C. GEMMILL, Presiding Judge
CONCURRING: _________________
PETER B. SWANN, Judge
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ANDREW W. GOULD, Judge