Aurora v. Gienko

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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 AURORA LOAN SERVICES, LLC, their successors and assigns, ) ) ) Plaintiff/Appellee, ) ) v. ) ) GREGORY A. GIENKO and KIMBERLY ) A. GIENKO, ) ) Defendants/Appellants. ) ) ) __________________________________) DIVISION ONE FILED: 05/08/2012 RUTH A. WILLINGHAM, CLERK BY: sls 1 CA-CV 11-0478 DEPARTMENT A MEMORANDUM DECISION (Not for Publication Rule 28, Arizona Rules of Civil Appellate Procedure) Appeal from the Superior Court in Maricopa County Cause No. CV2011-010379 The Honorable Michael L. Barth, Commissioner AFFIRMED Rick D. Sherman Attorney at Law By Rick D. Sherman Attorneys for Plaintiff/Appellee Molever Connelly, PLLC By Loren Molever And Scott M. MacMillian Attorneys for Defendants/Appellants G O U L D, Judge Phoenix Scottsdale ¶1 trial Gregory and Kimberly Gienko ( the Gienkos ) appeal the court s granting of forcible detainer action. judgment on the pleadings in this For the following reasons, we affirm. Factual and Procedural Background ¶2 Aurora Loan Services ( Aurora ) filed a forcible detainer action alleging that the Gienkos were occupying property Aurora had recently purchased in a trustee s sale, and that the Gienkos were refusing to surrender possession of this property. Aurora attached a copy of the trustee s deed to the complaint. ¶3 The Gienkos filed an answer asking the court to dismiss the complaint. In their answer, the Gienkos alleged that the trustee s sale never occurred on the date it had been set and noticed. More specifically, the Gienkos alleged that when Mrs. Gienko appear[ed] at the time and place on the notice of sale to redeem or otherwise announcement or any bid on other the property, indicia of a there was no postponement or continuance of the sale. ¶4 Aurora moved for judgment on the pleadings and the court granted this motion, entering judgment in Aurora s favor and directing the Gienkos to vacate the property. The Gienkos timely to appealed. We have jurisdiction pursuant Arizona Revised Statutes ( A.R.S. ) sections 12-120.21(A)(1) (2003) and 12-2101(A)(1) (Supp. 2011). 2 Discussion ¶5 The Gienkos main argument on appeal is that they should have been allowed to litigate whether the trustee sale occurred before the court rendered its judgment. As a result, the Gienkos contend that the case should be remanded for trial. ¶6 A plaintiff is entitled to judgment on the pleadings if the complaint sets forth a claim for relief and the answer does not contain a legally cognizable defense or does not effectively deny material allegations. Pac. Fire Rating Bureau v. Ins. Co. of N. Am., 83 Ariz. 369, 376, 321 P.2d 1030, 1035 (1958); Walker v. Estavillo, 73 Ariz. 211, 215, 240 P.2d 173, 176 (1952). When reviewing a judgment on the pleadings, the allegations of the complaint are viewed as true, but conclusions of law are not admitted. Giles v. Hill Lewis Marce, 195 Ariz. 358, 359, 988 P.2d 143, 144 (App. 1999). ¶7 afford The a purpose summary, of a speedy forcible and detainer adequate remedy possession of premises withheld by tenants. action for is to obtaining Olds Bros. Lumber Co. v. Rushing, 64 Ariz. 199, 204-05, 167 P.2d 394, 397 (1946); see also Curtis v. Morris, 184 Ariz. 393, 398, 909 P.2d 460, 465 (App. 1995) frustrated ( Curtis if the I ). full This spectrum purpose of quiet would title be entirely issues permitted to be litigated in the forcible detainer action. 3 were Olds Bros., 64 Ariz. at 205, 167 P.2d at 397; Curtis I, 184 Ariz. at 398, 909 P.2d at 465. ¶8 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. ); Curtis v. Morris, 186 Ariz. 534, 534, 925 P.2d 259, 259 (1996) ( Curtis inquiring into II ) the (holding merits of that the title under prohibition § against 12-1177(A) in a forcible detainer action is alive and well ); Andreola v. Ariz. Bank, 26 Ariz. App. 556, 557, 550 P.2d 110, 111 (1976) (same). As Curtis I makes clear, permitting an inquiry into the validity of title in an FED [forcible entry and detainer] action would pose substantial difficulties for the parties because [t]he short time permitted before trial would render adequate discovery in actions involving potentially complex issues . . . nearly impossible. 184 Ariz. at 398, 909 P.2d at 465. Given the fact that an FED action does not bar subsequent proceedings between the parties to determine issues other than the immediate right to possession, those issues are better resolved in proceedings designed to allow full exploration of the issues involved. 1 1 Id. The most obvious example of such a subsequent proceeding would be a quiet title action. The Gienkos have filed a quiet title action based on the subject trustee s sale, and any 4 ¶9 As a result, a necessary predicate to any forcible detainer action is that the merits of title are undisputed. Andreola, 26 Ariz. App. at 557, 550 P.2d at 111; see See also Colonial Tri-City Ltd. v. Ben Franklin Stores, Inc., 179 Ariz. 428, 433, detainer 880 action dispute as maintained. to P.2d 648, 653 (App. directly and inextricably the merits of 1993). title, When a involves the action forcible a genuine cannot be United Effort Plan Trust v. Holm, 209 Ariz. 347, 351, ¶ 21, 101 P.3d 641, 645 (App. 2004). For example, parties cannot use forcible detainer actions to establish the existence of a landlord/tenant relationship, or to litigate their contract rights under a real estate contract. RREEF Mgmt. Co. v. Camex Prods., Inc., 190 Ariz. 75, 77-79, 945 P.2d 386, 388-90 (1997) (dispute over the existence of a lease could not be litigated in a forcible detainer action); Colonial, 179 Ariz. at 433, 880 P.2d at 653 (landlord establish the could existence not of use a forcible detainer landlord/tenant action to relationship); Taylor v. Stanford, 100 Ariz. 346, 348-49, 414 P.2d 727, 729-30 (1966) (plaintiff litigate validity could and not rights use forcible under an detainer executory action real to estate exchange contract). improprieties regarding the sale may be raised in their pending quiet title action. 5 ¶10 However, not every defendant can avoid a forcible detainer proceeding simply by denying that a plaintiff has valid title. RREEF Mgmt., 190 Ariz. at 79, 945 P.2d at 390. A defendant must establish that there is a genuine dispute as to title. Id. Generally, defendants may dispute the merits of plaintiff s title only if they can show that the foreclosure sale was void based on fraud, misrepresentation, or concealment. Main I Ltd. P ship v. Venture Capital Const. & Dev., 154 Ariz. 256, 260, 741 P.2d 1234, 1238 (App. 1987); accord In re Hills, 299 B.R. 581, 586 (Bankr. D. Ariz. 2002) (citing as grounds to challenge the deliberate presumption notice of validity failure, fraud, of a trustees misrepresentation, deed or concealment. ). ¶11 Pursuant to A.R.S. § 33-811(B), a Trustee s deed creates a presumption of compliance and conclusive evidence that a foreclosure sale was conducted regularly in accordance with the required statutory notice. 2 2 In re Hills, 299 B.R. at A.R.S. § 33-811(B) provides: 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 6 586 (citing Triano v. First Am. Title Ins. Co., 131 Ariz. 581, 583, 643 P.2d 26, 28 (App. 1982)); accord Main I, 154 Ariz. at 260, 741 P.2d at 1238. Additionally, [k]nowledge of the trustee shall not be imputed to the beneficiary. (2007). purchaser3 Based is on held this to evidentiary hold good presumption, title trustee s deed issued in its favor. A.R.S. § 33-811(B) by means a of bona fide having a In re Hills, 299 B.R. at 586; BAM Invs., Inc. v. Roberts, 172 Ariz. 602, 604, 838 P.2d 1363, 1365 (App. 1992). ¶12 Pursuant to A.R.S. § 33-811(B), Aurora, as the holder of the trustee s deed, is presumed to hold good title to the subject property and is entitled to possession. The Gienkos allegation that there was no trustee s sale does not, as a matter of law, provide a legally cognizable defense to Aurora s claim for possession. The Gienkos did not allege that Aurora obtained the deed by fraud, misrepresentation or concealment, nor did they allege that Aurora had notice of any defect in the trustee s sale. purchasers or encumbrancers without actual notice. 3 for value and A bona fide purchaser is one who purchases property for value without actual notice of any alleged defect in the notice of sale. First Am. Title Ins. Co. v. Action Acquisitions, LLC, 218 Ariz. 394, 398, ¶ 12, 187 P.3d 1107, 1111 (2008). 7 ¶13 If, as the Gienkos contend, the sale was improperly continued by the Trustee, this fact would have no bearing on Aurora s title because the Trustee s knowledge shall imputed to the beneficiary according to the statute.4 § 33-811(B). not be A.R.S. To overcome this statutory presumption, the Gienkos would have had to allege that Aurora had actual knowledge of the improper notice and/or continuance of the trustee s sale. There is no such allegation in the Gienkos answer. ¶14 The Gienkos contend that the statutory presumption does not protect Aurora because [h]ere, it is the lender that claims to have purchased notice. that the property, not a third party without However, nothing in the statutory language suggests purchaser or encumbrancer without actual notice would exclude a lender without such notice, and we decline to create such a rule. A.R.S. § 33-811(B); see New Sun Bus. Park, L.L.C. v. Yuma Cnty., 221 Ariz. 43, 47, ¶ 16, 209 P.3d 179, 183 (App. 2009) ( Our Legislature did not choose this particular language, however, and we are not at liberty to rewrite the statute under the guise of judicial interpretation. ) (quoting State v. Patchin, 125 Ariz. 501, 502, 610 P.2d 1062, 1063 (App. 1980)). 4 While it may be true that such an error, if proved, could potentially invalidate Aurora s deed during a quiet title action, it is not the type of error a court may consider in a forcible detainer action, whose sole purpose is to provide a summary and speedy means for the holder of a deed to take possession of the property. See Olds Bros., 64 Ariz. at 204-05, 167 P.2d at 397. 8 Moreover, whatever happened between Aurora and the Gienkos before this action was filed (i.e., whether Aurora in fact was Gienkos lender who foreclosed on the property) is not part of the pleadings and therefore may not be considered by the court when issuing a judgment on the pleadings. Ariz. R. Proc. Evict. Acts. ( RPEA ) 9(d) ( The court shall not consider matters outside the pleadings when ruling on a motion for judgment on the pleadings. ).5 ¶15 The Gienkos mistakenly cite Triano, 131 Ariz. 581, 643 P.2d 26, for the proposition that evidence can be introduced to show that a sale was flawed and that, therefore, the resulting deed is flawed in this forcible detainer action. However, Triano involved a quiet title action, not a forcible detainer action. 131 Ariz. at 582, 643 P.2d at 27 (explaining that review was sought for a suit seeking to quiet title to certain real property ). Moreover, Triano s analysis did not consider the statutory language providing that the deed constitutes conclusive evidence that the requirements have been met because argument apparently was not made by the Triano parties. I, 154 Ariz. at 260, 741 P.2d at 1238. quiet title actions, the portion of this See Main Accordingly, even for Triano suggesting that evidence may still be presented to prove that the trustee did not 5 The Rules of Procedure for Eviction Actions apply to forcible detainer actions. RPEA 1. 9 strictly comply with statutory requirements has been rejected by this court as dicta. Id. (rejecting this interpretation of Triano and calling that portion of Triano dicta ). ¶16 The Gienkos also misinterpret Andreola, 26 Ariz. App. at 557, 550 P.2d at 111, which stated that the merits of title may not be litigated, although the fact of title may be proved as a matter owner. incidental to showing a right of possession by an In making this statement, Andreola cites Taylor for the proposition that plaintiffs in a forcible detainer action may, as an evidentiary fact in support of their right to possession, introduce proof that they possess title to the property. Taylor, 100 Ariz. at 349-50, 414 P.2d at 730. Andreola compliance notes with there may statutory be situations foreclosure See Moreover, although when the proceedings issue of may be litigated in a forcible detainer action, Andreola affirms the general rule that a trial court may not litigate the merits of title in a forcible detainer action. 557-58, 550 P.2d at 111-12. 10 Andreola, 26 Ariz. App. at Conclusion ¶17 judgment. For the foregoing reasons, we affirm the trial court s Because the Gienkos arguments regarding title are not triable in a forcible detainer action, the trial court did not err in granting judgment on the pleadings. /S/ _______________________________ ANDREW W. GOULD, Judge CONCURRING: /S/ ____________________________________ MAURICE PORTLEY, Presiding Judge /S/ ____________________________________ ANN A. SCOTT TIMMER, Judge 11

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