Justia Banking Opinion Summaries

The Supreme Court held that a defendant seeking an award of attorney fees and costs in a lawsuit filed by a married plaintiff does not need to join the plaintiff's spouse to later execute a judgment for fees and costs against the plaintiff's community assets.The trial court entered judgment judgment for Shamrock Materials, LLC and an LLC member and her husband (collectively, Shamrock) in this action brought by Kristi Lattin, "a married woman dealing with her own separate property." The court further awarded Shamrock attorney fees and costs as the prevailing party. Shamrock sought to garnish a bank account jointly owned by Lattin and her husband, Robert DeRuiter, a non-party. The trial court quashed Shamrock's garnishment on Wells Fargo Bank to pay funds held in the joint bank account because the judgment was not entered against DeRuiter. The Supreme Court affirmed, holding that Ariz. Rev. Stat. 25-215(D) did not require Shamrock to join DeRuiter in the case to execute its judgment for attorney fees and costs against community assets. View "Lattin v. Shamrock Materials LLC" on Justia Law

The Supreme Court held that a trial court should consider the totality of the circumstances surrounding a residential purchase loan and identify certain factors in determining whether a loan is a construction loan entitled to anti-deficiency protection or a home improvement loan not entitled to anti-deficiency protection.Homeowners borrowed money from Desert Hills Bank to renovate and expand their property. Later, Homeowners borrowed money from Helvetica Servicing Inc. to pay off the Desert Hills loan. Homeowners' property secured the deed of trust. After Homeowners defaulted on the Helvetica loan, Helvetica sued to judicially foreclose. The trial court entered judgment for Helvetica and entered a deficiency judgment. Homeowners appealed, arguing that the Helvetica loan was entitled to anti-deficiency protection. The trial court ultimately found that the Desert Hills loan was a home improvement loan not entitled to anti-deficiency protection because Homeowners did not build a new home from scratch. The Supreme Court remanded the matter, holding (1) the "built from scratch" standard does not further the legislative objectives of Arizona's anti-deficiency statutes; (2) courts should consider the totality of the circumstances surrounding a loan when determining whether it is a home improvement or construction loan; and (3) the trial court did not make an independent factual determination as to whether the Desert Hills loan was a construction loan or a home improvement loan. View "Helvetica Servicing, Inc. v. Pasquan" on Justia Law

At issue was when the statute of limitations commences on credit card debt subject to an optional acceleration clause.The Supreme Court held that Mertola LLC’s lawsuit seeking to collect an outstanding credit card debt from Alberto and Arlene Santos (together, Santos) was barred by the six-year statute of limitations pursuant to Ariz. Rev. Stat. 12-548(A)(2), despite the credit card agreement in this case giving the bank the option of declaring the debt immediately due and payable upon default.Santos defaulted on the credit card debt, and Mertola eventually acquired Santos’s debt. Mertola sued for breach of the account agreement, seeking the entire outstanding balance. The superior court granted summary judgment for Santos, concluding that the breaches alleged by Mertola occurred more than six years prior to the filing of this action. The court of appeals reversed, concluding that although the statute of limitations for a missed payment begins to run when the payment is due, the cause of action as to future installments does not accrue until the creditor exercises the acceleration clause. The Supreme Court vacated the court of appeals’ opinion and affirmed the trial court, holding that when a credit card contract contains an optional acceleration clause, a cause of action to collect the entire outstanding debt accrues upon default. View "Mertola, LLC v. Santos" on Justia Law

Canadian Imperial Bank of Commerce loaned Dobson Bay Club II DD, LLC and related entities (Dobson Bay) $28.6 million for Dobson Bay’s purchase of commercial properties. The loan was secured by a deed of trust encumbering the properties. Under the terms of a promissory note, as a consequence for any delay in payment, Dobson Bay was required to pay, in addition to regular interest, default interest and collection costs and a five percent late fee assessed on the payment amount. When Dobson Bay failed to make the required payments, La Sonrisa de Siena, LLC, which bought the note and deed of trust, noticed a trustee’s sale of the secured properties, arguing that Dobson Bay owed more than $30 million, including a nearly $1.4 million late fee. At issue during the ensuing trial was whether the note was an enforceable liquidated damages provision. The superior court concluded that the late fee was enforceable as liquidated damages. The court of appeals reversed. The Supreme Court vacated the court of appeals’ opinion and reversed the trial court’s partial summary judgment in favor of La Sonrisa on the liquidated damages claim, holding that an approximately $1.4 million late fee is unreasonable and an unenforceable penalty. View "Dobson Bay Club II DD, LLC v. La Sonrisa De Siena, LLC" on Justia Law

First American Title Insurance Company issued two title insurance policies to Johnson Bank for two properties that secured the Bank’s loans. The policies failed to disclose encumbrances that allegedly affected the value of the property and thwarted its intended use. The property owners defaulted on their loan obligations to the Bank. Based on the undisclosed encumbrances, the owners successfully sued First American to recover damages under their owners’ title insurance policies. Johnson Bank purchased the properties and notified First American of claims under its lender’s title insurance policies. The parties disagreed on the date for calculating the diminution in value of the two properties - whether the date of the loans or the foreclosure date. The superior court granted summary judgment for First American, concluding that the foreclosure date should be used to calculate damages. The Supreme Court reversed, holding (1) when an undisclosed title defect prevents the known, intended use of the property and causes the borrower to default on the loan, the lender’s diminution-in-value loss should be calculated as of the policy-issuance date; and (2) because the record in this case did not establish that the title defect caused the borrowers’ default and the Bank’s subsequent foreclosure, the cause must be remanded for further proceedings on that issue. View "First Am. Title Ins. Co. v. Johnson Bank" on Justia Law

These consolidated cases involved two properties purchased by John Hogan. Each parcel became subject to a deed of trust when Hogan took out loans from Long Beach Mortgage Company. Hogan was delinquent on both loans, which triggered foreclosure proceedings. A notice of trustee's sale recorded for the first parcel identified Washington Mutual Bank as the beneficiary and Deutsche Bank as the beneficiary for the second parcel. Hogan filed lawsuits seeking to enjoin the trustees' sales unless the beneficiaries proved they were entitled to collect on the respective notes. The superior court dismissed the cases. The court of appeals affirmed, holding that Arizona's non-judicial foreclosure statute (Statute) does not require presentation of the original note before commencing foreclosure proceedings. The Supreme Court affirmed the superior court's orders dismissing Hogan's complaints and vacated the court of appeals, holding that the Statute does not require the beneficiary to prove its authority or show the note before the trustee may commence a non-judicial foreclosure. View "Hogan v. Washington Mut. Bank, N.A." on Justia Law

These consolidated cases involved two properties purchased by John Hogan. Each parcel became subject to a deed of trust when Hogan took out loans from Long Beach Mortgage Company. Hogan was delinquent on both loans, which triggered foreclosure proceedings. The trustee recorded a notice of sale for the first parcel, naming Washington Mutual Bank (WaMu) as the beneficiary. A notice of trustee's sale recorded for the second parcel identified Deutsche Bank as the beneficiary. Hogan filed lawsuits seeking to enjoin the trustees' sales unless the beneficiaries proved they were entitled to collect on the respective notes. The superior court granted the defendants' motions to dismiss. The court of appeals affirmed, holding that Arizona's non-judicial foreclosure statute did not require presentation of the original note before commencing foreclosure proceedings. The Supreme Court vacated the court of appeals and affirmed the superior court's orders, holding that Hogan was not entitled to relief because the deed of trust statutes impose no obligation on the beneficiary to "show the note" before the trustee conducts a non-judicial foreclosure. View "Hogan v. Washington Mut. Bank. N.A." on Justia Law

Dean and Stacey Norcutt bought a home for cash and satisfied the existing first mortgage held by Zions National Bank. They later discovered the home was also subject to a judgment lien obtained by Sourcecorp, Inc. that far exceeded the property's value. Sourcecorp subsequently initiated a sheriff's sale to foreclose on its judgment lien, and the Norcutts sued to enjoin the sale. The trial court granted relief to the Norcutts, and the court of appeals reversed. On remand, the trial court entered summary judgment for Sourcecorp. The Court of appeals reversed, holding that the Norcutts were equitably subrogated to the position of Zions Bank in priority over Sourcecorp. The Supreme Court affirmed, holding that the Norcutts were equitably subrogated to the mortgage lien's priority for the amount they paid to satisfy the mortgage. Remanded. View "Sourcecorp, Inc. v. Norcutt" on Justia Law