Court of Appeals of Arizona, First Division, Department A
Appeal from the Superior Court in Maricopa County Cause No. CV2011-005567 The Honorable Katherine M. Cooper, Judge The Honorable Colleen L. French, Judge Pro Tempore.
Gordon Silver Phoenix By Ronald E. Warnicke Robert C. Warnicke Loren A. Morris Attorneys for Plaintiffs/Appellants.
Snell & Wilmer, LLP Phoenix By Gregory J. Marshall Andrew M. Jacobs Michael J. Coccaro Attorneys for Defendant/Appellee U.S. Bank National Association.
Tiffany & Bosco, P.A. Phoenix By Leonard J. McDonald, Jr. David W. Cowles And Wright, Finlay & Zak, LLP Newport Beach, CA By Bradford E. Klein Co-counsel Attorneys for Defendants/Appellees First American Title Insurance Company and First American Trustee Servicing Solutions, LLC.
¶1 Karl and Fabiana Stauffer (collectively, Stauffers) appeal the trial court's dismissal of their special action complaint. The court dismissed the complaint after it found that (1) a Notice of Trustee Sale, a Notice of Substitution of Trustee, and an Assignment of Deed of Trust (collectively, Recorded Documents) were not liens, encumbrances or interests under Arizona Revised Statutes (A.R.S.) section 33-420.A (2007), (2) the Stauffers could not clear title to their property because § 33-420.B applies only to liens, and (3) the Stauffers were not owners or beneficial title holders under the statute. For the following reasons, we affirm the portion of the trial court's ruling that determined that § 33-420.B applies only to liens; however, we reverse the court's determination that the Recorded Documents are not interests and the Stauffers are not owners under § 33-420.A. We remand to the trial court for additional proceedings consistent with this opinion.
FACTUAL AND PROCEDURAL BACKGROUND
¶2 On September 22, 2005, the Stauffers executed a promissory note that was secured by a deed of trust on a parcel of property in Scottsdale, Arizona (Property). The deed of trust listed Premier Service Mortgage, LLC (Premier) as the lender and Stewart Title and Trust of Phoenix, Inc. as the trustee, and it identified Mortgage Electronic Registration Systems, Inc. (MERS) as "acting solely as a nominee for Lender" and as "the beneficiary under this Security Instrument." Additionally, Premier executed an Endorsement Allonge to the promissory note, endorsing the note to Ohio Savings Bank.
¶3 On September 17, 2010, First American Title Insurance Company (FATCO) executed a Notice of Trustee Sale, giving notice of its intent to sell the Property; however, FATCO was not appointed as substitute trustee until MERS executed the Notice of Substitution of Trustee on September 20, 2010. Both documents were recorded on September 20, 2010. FATCO subsequently notified the Stauffers that they had breached their obligations under the note by failing to make monthly installment payments since April 2010. MERS later executed an Assignment of Deed of Trust on October 1, 2010, assigning all beneficial interest under the deed of trust to U.S. Bank National Association (U.S. Bank), in its capacity as trustee for CSMC Mortgage-Backed Pass-Through Certificates, Series 2006-3.
¶4 The Stauffers filed a special action complaint against FATCO, First American Trustee Servicing Solutions, LLC (FATSS), Premier, and U.S. Bank. In the complaint, the Stauffers alleged that FATCO, FATSS, and U.S. Bank (collectively, Appellees) caused the recording of the Recorded Documents, all of which contained false statements. The Stauffers contended that the Recorded Documents violated A.R.S. § 33-420, which prohibits recording false or fraudulent documents that assert an interest in, or a lien or encumbrance against, a property. The Stauffers also sought an order quieting title in the Property in their favor and against Appellees and Premier.
¶5 Appellees filed a motion to dismiss, and the trial court granted the motion. It found that (1) the Recorded Documents did not constitute documents that asserted an interest in, or a lien or encumbrance against, real property, as is required under A.R.S. § 33-420.A; (2) the Stauffers could not clear title under § 33-420.B because that subsection can be used only when false or fraudulent liens have been recorded, which the Stauffers had not alleged; and (3) the Stauffers lacked standing to clear title because they were neither owners nor beneficial title holders under § 33-420.B.
¶6 The Stauffers timely appealed. We have jurisdiction pursuant to A.R.S. §§ 12-120.21.A.1 (2003) and -2101.A.1 (Supp. 2012).
¶7We review the dismissal of a complaint under Arizona Rule of Civil Procedure 12(b)6 de novo. Coleman v. City of Mesa, 230 Ariz. 352, 355, ¶ 7, 284 P.3d 863, 866 (2012). We accept the facts alleged in the complaint as true and will affirm the dismissal only if, as a matter of law, the plaintiff would not be entitled to relief under any interpretation of the facts. Bunker's Glass Co. v. Pilkington PLC, 202 ...