CSA 13-101 LOOP, LLC, AN OKLAHOMA LIMITED LIABILITY COMPANY, Plaintiff/Appellant,
LOOP 101, LLC, AN ARIZONA LIMITED LIABILITY COMPANY; PAUL S. ANTON AND VALERIE J. CHRISTIE, HUSBAND AND WIFE; OSCAR E. SWANKY AND HELEN L. SWANKY, AS CO-TRUSTEES OF THE OSCAR E. SWANKY AND HELEN L. SWANKY REVOCABLE FAMILY TRUST, CREATED JULY 19, 1997, AS AMENDED, Defendants/Appellees
Appeal from the Superior Court in Maricopa County. The Honorable John A. Buttrick, Judge (Ret.). No. CV2009-034774. Opinion of the Court of Appeals, Division One, 233 Ariz. 355, 312 P.3d 1121 (App. 2013) .
Sean K. McElenney (argued), J. Alex Grimsley, Gregory B. Iannelli, Bryan Cave LLP, Phoenix, for CSA 13-101 Loop, LLC.
Timothy Berg (argued), Carrie Pixler Ryerson, Kevin M. Green, Fennemore Craig, P.C., Phoenix, for Loop 101, LLC; Paul S. Anton and Valerie J. Christie; and Oscar E. Swanky and Helen L. Swanky, et al.
Scott B. Cohen, Bradley D. Pack, Engelman Berger, P.C., Phoenix, for Amicus Curiae Arizona Bankers Association.
CHIEF JUSTICE BALES authored the opinion of the Court, in which VICE CHIEF JUSTICE PELANDER and JUSTICES BERCH, BRUTINEL, and TIMMER joined.
[236 Ariz. 411] BALES, CHIEF JUSTICE.
[¶1] When a deed of trust secures a promissory note and the trust property is sold at a trustee's sale, A.R.S. § 33-814(A) entitles judgment debtors, including guarantors, to have the fair market value of the property credited against the amount owed on the note. We hold that parties may not prospectively waive this provision.
[¶2] Loop 101, LLC (" Loop" ) borrowed $15.6 million from MidFirst Bank in February 2007 to construct an office building. The promissory note was secured by a deed of trust and payment was guaranteed by four individuals. The promissory note, deed of trust, and guarantee all expressly waived the fair market value provision of A.R.S. § 33-814(A).
[¶3] Loop defaulted on the loan in June 2009, and MidFirst began a non-judicial foreclosure under the deed of trust. At the time, nearly $11.2 million remained outstanding on the loan. MidFirst assigned its rights under the loan and deed of trust to CSA 13-101 Loop, LLC (" CSA" ), which bought the property at a trustee's sale for a credit bid of $6.15 million. CSA then sued Loop and the guarantors for a deficiency judgment of approximately $5 million plus interest. Loop and the guarantors counterclaimed against CSA and filed a third-party claim against MidFirst for breach of the implied covenant of good faith and fair dealing.
[¶4] CSA and MidFirst moved to dismiss the claims on the ground that Loop and the guarantors had waived their right under A.R.S. § 33-814 to a fair market value determination. The superior court denied the motion, ruling that the parties could not waive this statutory right. After holding an evidentiary hearing, the court found the fair market value of the property to be $12.5 million. On cross-motions for summary judgment, the court ruled that no deficiency existed because the property's fair market value exceeded the amount owed on the note.
[¶5] The court of appeals affirmed. CSA 13-101 Loop, LLC v. Loop 101, LLC, 233 Ariz. 355, 362, ¶ 24, 312 P.3d 1121, 1128 (App. 2013). We granted review because whether A.R.S. § 33-814(A)'s fair market value provision may be waived is a recurring issue of statewide importance. We have jurisdiction pursuant to Article ...