FEDERAL v. MCNEW

Annotate this Case

Download PDF

NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz.R.Sup.Ct. 111(c); ARCAP 28(c); Ariz.R.Crim.P. 31.24 DIVISION ONE FILED: 12/11/2012 IN THE COURT OF APPEALS RUTH A. WILLINGHAM, CLERK STATE OF ARIZONA BY: mjt DIVISION ONE FEDERAL HOME LOAN MORTGAGE ) No. 1 CA-CV 11-0517 CORPORATION, ) ) DEPARTMENT D Plaintiff/Appellee, ) ) MEMORANDUM DECISION v. ) (Not for Publication ) Rule 28, Arizona Rules of DAVID R. MCNEW, an individual, ) Civil Appellate Procedure) ) Defendant/Appellant. ) ) __________________________________) Appeal from the Superior Court in Maricopa County Cause No. CV2011-001188 The Honorable Michael L. Barth, Judge Pro Tempore AFFIRMED Malcolm Cisneros by Kevin Hahn Attorneys for Plaintiff/Appellee Irvine, CA Donald O. Loeb, P.L.C. by Donald O. Loeb Attorneys for Defendant/Appellant Scottsdale B R O W N, Judge ¶1 entered David in ( Freddie R. favor Mac ) McNew of appeals Federal finding him Home from Loan guilty of the summary Mortgage forcible judgment Corporation entry and detainer ( FED ) because he refused to vacate property sold at a trustee s sale and for which Freddie Mac held a trustee s deed. McNew contends that Mortgage Electronic Registration Systems, Inc. ( MERS ), which was named in the deed of trust as the beneficiary, was not the true beneficiary, that MERS transfer of the beneficial interest in the deed of trust and appointment of a successor trustee were therefore unauthorized, and that the successor trustee consequently had no authority to conduct a trustee s sale. As a result, McNew argues, purchaser Freddie Mac did not have a right to the premises superior to that of McNew. Because McNew s arguments raise issues of title, we affirm. BACKGROUND ¶2 On June 21, 2007, McNew executed a deed of trust on a parcel of property in Surprise, secure a note for $224,000. Arizona ( the Property ) to The deed of trust listed the lender as Wallick & Volk, Inc. and the trustee as Capital Title Agency. It identified MERS as acting solely as a nominee for Lender and as the beneficiary under this Security Instrument. The deed the of trust also explained that MERS, as nominee for lender, has the right . . . to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, 2 releasing and canceling this Security Instrument. partial interest in It further provided that the Note or a the Note (together with this Security Instrument) can be sold one or more times without prior notice to Borrower. ¶3 On March substitution of 24, 2009, Trustee, MERS executed appointing First a notice American of Title Insurance Company ( First American ) successor trustee under the deed of trust. The notice listed as beneficiary, Wells Fargo Home Mortgage. On April 23, 2009, MERS executed an assignment of the deed of trust to Wells Fargo Bank, N.A. ¶4 2010. A notice of trustee sale was issued on December 8, The notice listed MERS c/o Wells Fargo Home Mortgage as the beneficiary and First American as the trustee. A trustee s sale was held and Freddie Mac purchased the property by a credit bid. On March 14, 2011, the trustee transferred ownership to Freddie Mac by a trustee s deed upon sale. McNew was given notice to vacate the Property and did not do so. Freddie Mac then filed a verified FED complaint against McNew, asserting entitlement to possession of the premises, based on the trustee s deed upon sale. ¶5 In his answer to the FED complaint, McNew denied that Freddie Mac was the owner of the Property, contending that the true beneficiary never requested the trustee to conduct the sale, that the trustee that conducted the sale was not lawfully 3 appointed, and that Freddie Mac was not the beneficiary and thus had no right to purchase the Property with a credit bid. further alleged conclusive that evidentiary Freddie Mac presumption was of not entitled Arizona Revised McNew to the Statute ( A.R.S. ) section 33-811(B) (2007). Based on these contentions, McNew filed a motion to dismiss. ¶6 Freddie Mac then moved for summary judgment, asserting it had followed all the appropriate procedures and met all the requirements under Arizona law to acquire ownership property and the right to immediate possession. McNew s motion to dismiss, Freddie Mac of the In response to asserted McNew was raising issues pertaining to title, which could not be raised in an FED action. ¶7 In response, McNew argued Freddie Mac was not a purchaser for value without notice because it was a [large] government sponsored housing authority and one of the most sophisticated and knowledgeable participants in the residential mortgage lending industry. McNew contended Freddie Mac was therefore not entitled to the presumption of compliance with the requirements of the deed of trust and the law under A.R.S. § 33811(B). Additionally, McNew argued Freddie Mac failed to show that it was the beneficiary under the deed of trust, that it paid consideration for the property, and that First American was the successor trustee lawfully 4 appointed by the beneficiary. McNew argued MERS was never the holder of the note or the beneficiary and could not foreclose and could not appoint First American as the successor trustee, making First American s conduct of the sale invalid. ¶8 The judgment. court granted Freddie Mac s motion for summary McNew timely appealed. DISCUSSION ¶9 Summary judgment may be granted when there is no genuine issue as to any material fact and [] the moving party is entitled to judgment as a matter of law. 56(c). We determine de novo whether any Ariz. R. Civ. P. genuine issues of material fact exist and whether the trial court properly applied the law. Eller Media Co. v. City of Tucson, 198 Ariz. 127, 130, ¶ 4, 7 P.3d 136, 139 (App. 2000). inferences to favorable to be the drawn party from We view the facts and the those against facts whom in the judgment light was most entered. Prince v. City of Apache Junction, 185 Ariz. 43, 45, 912 P.2d 47, 49 (App. 1996). ¶10 One who acquires title to property through a trustee s sale may employ an FED action to remove anyone remaining in possession of the property after receiving a written demand for possession. A.R.S. § 12-1173.01(A)(1) (2003). The purpose of an FED action is to provide rightful owners with a summary, speedy, and adequate means to obtain possession. 5 Andreola v. Arizona Bank, 26 Ariz. App. 556, 557, 550 P.2d 110, 111 (1976). Thus, the only issue in an FED action is the right to possession; the court may not inquire into the merits of title. A.R.S. § 12-1177(A) (2003); Curtis v. Morris, 186 Ariz. 534, 534, 925 P.2d 259, 259 (1996). title may be brought in a Any dispute over the merits of separate proceeding. Mason v. Cansino, 195 Ariz. 465, 468, ¶ 8, 990 P.2d 666, 669 (App. 1999). The fact of title is admissible in an FED action and can be considered as incidental to proof of ownership, but no further inquiry is permitted. Taylor v. Stanford, 100 Ariz. 346, 349- 50, 414 P.2d 727, 730 (1966). evidence of ownership. ¶11 A deed presents prima facie Id. at 350, 414 P.2d at 730. When ownership is acquired through a deed of trust sale, the trustee s deed raises a presumption of compliance with the requirements of the deed of trust and the statutes related to the exercise of the power of sale and the conduct of the sale. Further, the deed is conclusive evidence of such compliance in favor of purchasers or encumbrancers for value without notice. A.R.S. § 33-811(B). Moreover, the trustor waives all defenses and objections to the sale not raised in an action resulting trustee s sale. ¶12 in injunctive relief granted prior to the A.R.S. § 33-811(C) . On appeal, McNew argues that MERS was not the true beneficiary and so did not have the authority to appoint First 6 American as the successor trustee, and therefore First American did not have the authority to conduct the sale that resulted in Freddie Mac acquiring the Property. McNew, Freddie Mac s purchase at Consequently, according to the sale was invalid and Freddie Mac did not have a right of possession superior to that of McNew. McNew also argues that MERS did not have the authority to transfer the beneficial interest in the deed of trust to Wells Fargo and therefore the note and deed of trust have been split, preventing First American from foreclosing on the deed of trust, thereby invalidating Freddie Mac s purchase at the sale. 1 1 Apparently for these reasons, McNew asserts that Freddie Mac s trustee s deed is not entitled to the conclusive presumption of A.R.S. § 33-811(B). In the trial court, McNew argued Freddie Mac was not entitled to the conclusive presumption on the grounds that it was not a purchaser for value and without actual notice by virtue of its status as a sophisticated and knowledgeable participant in the residential mortgage lending industry. On appeal, McNew has not renewed this argument. Instead, McNew states his position that Freddie Mac is not entitled to the presumption in a section heading, but then argues that MERS was not the beneficiary with the authority to appoint the trustee or to transfer the note. To the extent McNew is claiming that this is a basis for finding that the presumption does not apply, we reject the argument. Deed of trust sales are based on a contract theory. In re Krohn, 203 Ariz. 205, 208, ¶ 8, 52 P.3d 774, 777 (2002). McNew s assertion that MERS was not the beneficiary under the deed of trust is refuted by the language of the document. The deed of trust, signed by McNew, expressly states in the Definitions section, in bold letters, that MERS is the beneficiary under this Security Instrument. In a section titled, Transfer of Rights in the Property, it states The beneficiary of this Security Instrument is MERS, and provides 7 ¶13 These arguments can be viewed as raising issues challenging Freddie Mac s title to the property or as claims of noncompliance with statutory requirements or impropriety in the conduct of the sale. In either case, these arguments are not properly raised in an FED action. ¶14 Matters of title are statutorily precluded from review in an FED action. be claiming the A.R.S. § 12-1177(A). sale was not To the extent McNew may properly conducted, McNew as trustor has waived all defenses and objections to the sale by not having raised them injunctive relief. prior to the sale in an action for A.R.S. § 33-811(C); BT Capital, LLC v. TD Serv. Co. of Arizona, 229 Ariz. 299, 301, ¶ 11, 275 P.3d 598, 600 (2012); Madison v. Groseth, 230 Ariz. 8, 13, ¶ 15, 279 P.3d 633, 638 (App. 2012). ¶15 McNew contends issues of fact exist as to the fact of title, precluding entry of summary judgment. He argues Freddie Mac was required to allege in its complaint not only that it had obtained a trustee s deed upon sale, but that it had also at some time been in possession of the Property. lacks merit. This argument Freddie Mac brought its FED action pursuant to A.R.S. § 12-1173.01(A), which authorizes one that obtains title to property through a trustee s sale to employ a forcible that MERS had the right to exercise the interests of the lender. McNew agreed to these contractual terms. 8 detainer action to remove a party who retains possession of the property after receiving written demand for possession. plain language of the statute does not require the The showing asserted by McNew and to impose such a requirement would be illogical. ¶16 McNew further argues Freddie Mac had the burden to prove and the trial court should have required it to prove that First American had authority from the actual lender, to conduct the sale. true beneficiary or McNew argues Freddie Mac produced no proof that First American or its principal ordering the sale was the holder of the note with the right to enforce it. We disagree. ¶17 First, McNew the-note theory. is essentially asserting the show-me- Our supreme court has rejected that argument. See Hogan v. Washington Mut. Bank, N.A., ___ Ariz. ___, ___, ¶ 6, 277 P.3d 781, 783 (2012) (finding Arizona statutes do not require beneficiary under deed of trust to prove rights or to prove ownership foreclosure). of note prior to conducting non-judicial Second, to require proof of chain of title would violate the prohibition against inquiring into title in an FED action. See A.R.S. § 12-1177(A). ¶18 Freddie Mac acquired title at a trustee s sale and attached the trustee s deed demonstrating fact of title. upon sale to its FED complaint, The deed raises the presumption of 9 compliance with the terms of the deed of trust and the statutory requirements regarding the sale of the Property. 811(B). claim A.R.S. § 33- It conveyed to Freddie Mac the title, interest and of the trustee, the trustor, the beneficiary, their respective successors in interest and all persons claiming the trust property sold by or through them[.] A.R.S. § 33-811(E). If McNew had evidence of any improprieties in the conduct of the sale with respect to the beneficiary or the trustee such as the defenses raised in this action, injunction prior to the sale. he could have sought an Having failed to do so, he has waived any defenses and objections to the sale. A.R.S. § 33- 811(C). CONCLUSION ¶19 For the foregoing reasons, we affirm the trial court s judgment. /S/ _________________________________ MICHAEL J. BROWN, PRESIDING JUDGE, CONCURRING: /S/ ________________________________ ANDREW W. GOULD, JUDGE /S/ ________________________________ DONN KESSLER, JUDGE 10

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.