US BANK v. GRUNINGER

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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 IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE US BANK NATIONAL ASSOCIATION AS TRUSTEE FOR CREDIT SUISSE FIRST BOSTON 2004-AR4, Appellant, v. R. GRUNINGER, Appellee. ) ) ) ) ) ) ) ) ) ) ) ) DIVISION ONE FILED: 07/10/2012 RUTH A. WILLINGHAM, CLERK BY: sls No. 1 CA-CV 11-0608 DEPARTMENT E MEMORANDUM DECISION (Not for Publication Rule 28, Arizona Rules of Civil Appellate Procedure) Appeal from the Superior Court in Maricopa County Cause No. CV 2011-012747 The Honorable James Morrow, Commissioner AFFIRMED Tiffany & Bosco, P.A. by Leonard J. McDonald David W. Cowles Attorneys for Appellee Phoenix Law offices of Kevin Jensen, PLLC by Kevin Jensen Attorneys for Appellant Gilbert H A L L, Judge ¶1 R. Wayne Gruninger appeals the judgment for US Bank National Association detainer. (US Bank) on its claim of forcible For the following reasons, we affirm. FACTS AND PROCEDURAL BACKGROUND1 ¶2 On June 3, 2011, US Bank filed a forcible detainer action alleging that Gruninger was occupying and refusing to surrender possession of a property trustee's sale in April 2010. US Bank purchased in a US Bank attached a copy of the trustee's deed to its complaint. ¶3 In his answer, Gruninger asserted that the trustee's sale was "invalid," and therefore "to the extent [US Bank] actually purchased the property at a Trustee's Sale[,] it was illegally sold and purchased[.]" Specifically, Gruninger alleged that the "Substitution of Trustee is void on its face because the individual who signed had no authority" and, as a result, the "Notice of Trustee's Sale" and the "Trustee's Deed Upon Sale" are also void. Gruninger further claimed that US Bank "has no pecuniary or beneficial interest in the property" and therefore "is not the real party in interest and cannot proceed 1 with [the] action." Gruninger explained that he "We view the facts in the light most favorable to sustaining the trial court's judgment." Southwest Soil Remediation, Inc. v. City of Tucson, 201 Ariz. 438, 440, ¶ 2, 36 P.3d 1208, 1210 (App. 2001). 2 believed his "mortgage was securitized and sold to investors on Wall Street." ¶4 US Bank filed a motion for judgment on the pleadings arguing that the trustee's deed upon sale conveying the property to US Bank "unequivocally demonstrates that [US entitled to immediate possession of the Property." Bank] is Gruninger opposed the motion and reasserted his claim that "there are issues of fact for a jury to decide" relating to whether US Bank is the real party in interest and whether the trustee's sale was legally conducted. ¶5 The trial court held a hearing on US Bank's motion for judgment on the pleadings. US Bank argued that its purchase of the property at a trustee's sale entitled it to take possession of the property. trustee's deed that Gruninger US argued Bank relied that upon the to copy of the demonstrate its purchase is hearsay and that US Bank is not a real party in interest because it is not the original beneficiary under the deed of trust Gruninger signed. In response, US Bank countered that it could provide a self-authenticating certified copy of the trustee's deed upon sale. The trial court denied the motion for judgment on the pleadings, stating: "You'll have to give me the authenticated copy." ¶6 The case then proceeded to trial. US Bank submitted a certified copy of the trustee's deed upon sale recorded on April 3 8, 2010. US Bank's process server also testified that he served notice of the demand for possession on May 18, 2011. Bank concluded its presentation of evidence, After US counsel for Gruninger called US Bank's attorney, Leonard J. McDonald, Jr., as a witness. calling court When the trial court questioned the purpose in McDonald that he as a wanted witness, to defense question counsel McDonald informed the regarding "his knowledge about obtaining this trustee's deed upon sale." The court explained that it would not permit Gruninger to delve into whether the trustee's deed was properly issued and denied defense counsel's request to call McDonald as a witness. ¶7 At the close of the trial, the court signed a judgment finding Gruninger guilty of forcible detainer and terminating his right to possession of the property. We have jurisdiction pursuant to This appeal followed. Arizona Revised Statutes (A.R.S.) section 12-2101(A)(1) (Supp. 2012). DISCUSSION ¶8 On appeal, Gruninger primarily argues that there was insufficient evidence to support the finding that US Bank has the right to possess the property. ¶9 A person is guilty of forcible detainer if he retains possession of possession trustee s a and sale property the under real a after receiving property deed of 4 has trust written been sold pursuant to demand of through a title 33, chapter 6.1. A.R.S. § 12-1173.01(A)(2) (2003). Under such circumstances, the person entitled to possession may institute a summary forcible detainer immediately restored. proceeding to have the premises A.R.S. §§ 12-1175, -1176 (2003 & Supp. 2011). ¶10 The purpose of a forcible detainer action is to afford a summary, speedy and adequate remedy for obtaining possession of withheld premises. Ariz. 347, 351, ¶ United Effort Plan Trust v. Holm, 209 21, 101 P.3d 641, 645 (App. 2004). Accordingly, the validity of a plaintiff's claim of title may not be litigated in a forcible detainer action. A.R.S. § 12- 1177(A) (2003) ("[T]he only issue shall be the right of actual possession and the merits of title shall not be inquired into."); see also Curtis v. Morris, 186 Ariz. 534, 535, 925 P.2d 259, 260 (1996) (Curtis II). not assert counterclaims, As a corollary, a defendant may off-sets, or cross-complaints as a defense or for affirmative relief in a forcible detainer action. Curtis II, 186 Ariz. at 535, 925 P.2d at 260; Holm, 209 Ariz. at 351, ¶ 21, 101 P.3d at 645. ¶11 bar Because a summary forcible detainer action "does not subsequent proceedings between the parties to determine issues other than the immediate right to possession, [issues regarding the validity of title] are better resolved in proceedings designed to allow full exploration of the issues 5 involved." Curtis v. Morris, 184 Ariz. 393, 398, 909 P.2d 460, 465 (App. 1995) (Curtis I). When a forcible detainer action directly involves a genuine dispute as to the merits of title, the action cannot be maintained. ¶¶ 21, 24, 101 P.3d at 645. See Holm, 209 Ariz. at 351, Nonetheless, a defendant may not avoid a forcible detainer proceeding simply by denying that a plaintiff has valid title. RREEF Mgmt. Co. v. Camex Prods., Inc., 190 Ariz. 75, 79, 945 P.2d 386, 390 (1997). Rather, a defendant must demonstrate that a "genuine dispute" as to title exists. Id. In general, defendants may dispute the merits of plaintiff's title in a forceable detainer action only if they can demonstrate that the foreclosure sale was void based on "fraud, misrepresentation, or concealment." See Main I Ltd. P'ship v. Venture Capital Const. & Dev. Corp., 154 Ariz. 256, 260, 741 P.2d 1234, 1238 (App. 1987); see also In re Hills, 299 B.R. 581, 586 (Bankr. D. Ariz. 2002) (identifying grounds to challenge the presumption of validity of a trustee's deed). ¶12 Pursuant deed upon sale to A.R.S. "shall § 33-811(B) constitute (2007), conclusive a trustee's evidence of the meeting of [the statutory requirements of the deed of trust] in favor of purchasers actual notice." or encumbrancers for value and The statute further provides that "[k]nowledge of the trustee shall not be imputed to the beneficiary." § 33-811(B). without Thus, the statute 6 creates an A.R.S. irrebuttable presumption that "a beneficiary of the trust deed who purchases for value and without actual notice" of any alleged defect in the trustee's sale holds good title. Ariz. at 260, 741 P.2d at 1238. Main I Ltd. P'ship, 154 Indeed, as recently explained by the supreme court in BT Capital, LLC v. TD Service Co., of Arizona, 229 Ariz. 299, __, ¶ 10, 275 P.3d 598, __ (2012), under A.R.S. § 33-811, "a person who has defenses or objections to a properly noticed trustee's sale has one avenue for challenging the sale: filing for injunctive relief." ¶13 Applying A.R.S. § 33-811 here, US Bank, as the purchaser for value without any knowledge of actual defects in the trustee's sale, holds valid title to the subject property and is therefore entitled to possession. Gruninger's claim that the foreclosure of his property and subsequent trustee's sale were not valid does not provide a defense to US Bank's claim for possession. Although Gruninger argued in the trial court that the trustee's sale was void "because it was based on fraud, misrepresentation, and concealment," those allegations related to an asserted lack of "authority to hold a Trustee's Sale." See BT Capital, (explaining that 229 a Ariz. party at __, subject ¶ to 11, 275 A.R.S. § P.3d 33-811 at __ cannot challenge a completed trustee's sale "based on pre-sale defenses or objections"). there were Even assuming, as Gruninger contends, that improprieties on the 7 part of the trustee, such improprieties would not invalidate US Bank's title because, pursuant to statute, a trustee's knowledge is not imputed to the beneficiary. See A.R.S. § 33-811(B). Gruninger did not allege that US Bank had actual knowledge of any alleged improprieties or defects associated with the trustee's sale, and, in the absence of such a claim, the statutory presumption of good title controls. Therefore, because Gruninger's arguments regarding title are not triable in a forcible detainer action, the trial court did not err in granting judgment in favor of US Bank.2 CONCLUSION ¶14 For the foregoing reasons, we affirm. _/s/______________________________ PHILIP HALL, Judge CONCURRING: _/s/___________________________________ MAURICE PORTLEY, Presiding Judge _/s/___________________________________ DIANE M. JOHNSEN, Judge 2 Likewise, the trial court did not err by denying Gruninger's request to call US Bank's attorney as a witness because Gruninger intended to elicit testimony regarding the merits of title. We similarly conclude that the trial court did not err by rejecting Gruninger's argument that US Bank does not have standing as a real party in interest because this argument is predicated on the claim that US Bank did not obtain good title through the trustee's sale. 8

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