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Helvetica Servicing, Inc. v. Giraudo

Court of Appeals of Arizona, First Division

February 9, 2017

HELVETICA SERVICING, INC., a California corporation, formerly known as CRM VENTURE LAW, INC., dba THE HELVETICA GROUP, Plaintiff/Cross-Claimant/Appellee/Cross-Appellant,
JOSEPH J. GIRAUDO, Third-Party Defendant in interpleader/Appellant/Cross-Appellee.

         Appeal from the Superior Court in Maricopa County Nos. CV2008-050966 and CV2009-029276 (Consolidated) The Honorable John Hannah, Judge


          Buchalter Nemer, PC, Scottsdale By Roger W. Hall, Jason Edward Goldstein Counsel for Plaintiff/Cross-Claimant/Appellee/Cross-Appellant

          The Kozub Law Group, Scottsdale By Daniel L. Kloberdanz Counsel for Third-Party Defendant in interpleader/Appellant/Cross-Appellee

          Presiding Judge Peter B. Swann delivered the opinion of the Court, in which Judge Patricia A. Orozco (retired) and Chief Judge Michael J. Brown joined.


          SWANN, Judge:

         ¶1 This is the third appeal stemming from a 2009 judicial foreclosure sale of a house. Joseph J. Giraudo appeals from a summary judgment ruling that the amount he must pay as a junior lienholder to redeem the property includes the total value of the foreclosing senior lien and not merely the sale price at the foreclosure sale. The Helvetica Group cross-appeals a summary judgment dismissing its claims that Giraudo recorded a document claiming an interest in property that he knew or should have known was groundless or invalid. For the following reasons, we affirm the dismissal of the counterclaim and reverse in part the superior court's determination of the redemption price and remand for further proceedings to determine the redemption price.

         ¶2 We hold that the junior lienholder who redeems a property after a foreclosure sale must pay (1) the purchase price at the sale, plus eight percent, and (2) any portion of the lien that survives the lawsuits between the foreclosing creditor and the mortgage debtor that must be initiated before the junior lienholder's right to redeem ripens.


         ¶3 The facts in this case are largely undisputed, and portions of it have already come before us. Helvetica Servicing, Inc. v. Pasquan, 229 Ariz. 493 (App. 2012) [hereinafter Helvetica I]; Gold v. Helvetica Servicing, Inc., 229 Ariz. 328 (App. 2012) [hereinafter Helvetica II].[1]In May 2003, Michael and Kelly Pasquan purchased a home in Paradise Valley ("the Fanfol Property") with a cash payment and a $600, 000 loan. Helvetica I, 229 Ariz. at 495, ¶ 2. The Pasquans refinanced the original loan and took out additional loans totaling about $2.1 million to cover the costs of demolishing most of the old home and building a new one. Helvetica I, 229 Ariz. at 495, ¶¶ 2-4. In 2006, the Pasquans took out a $3.4 million loan serviced by Helvetica and secured by a deed of trust against the Fanfol Property. Id. at 495, ¶ 5. The Helvetica loan covered the cost of the interest payments on the Helvetica loan and "improvements, landscaping, maintenance, taxes, utilities and marketing fees for the house." Id. Michael Pasquan contended in Helvetica I that the Helvetica loan also refinanced the existing $2.1 million debt on the property. Id. at 497, ¶ 12. In June 2007, Giraudo lent the Pasquans $200, 000 secured by a recorded junior deed of trust on the Fanfol Property.

         ¶4 The Pasquans defaulted on the Helvetica loan, and in March 2008 Helvetica initiated foreclosure proceedings but did not join any of the junior lienholders.[2] Helvetica obtained a judgment for over $3.6 million against the Pasquans and the sheriff initiated a foreclosure sale. At the foreclosure sale in July 2009, Helvetica was the sole bidder. It purchased the Fanfol Property for $400, 000.

         ¶5 The Pasquans divorced in October 2009. Under A.R.S. § 12- 1566, Michael Pasquan filed an application to determine the fair market value of the Fanfol Property, and in February 2010 the superior court determined it to be just over $2.2 million. See Helvetica II, 229 Ariz. at 330, ¶¶ 5, 16. In April 2010, Helvetica attained a revised deficiency judgment of almost $2 million, based on the fair market value determination. Helvetica I, 229 Ariz. at 495, ¶ 7. In March 2012, we vacated the deficiency judgment because we held that Helvetica's loan was at least in part a purchase money loan subject to the anti-deficiency statutes and remanded the case to the superior court to determine, inter alia, what portion of the loan was entitled to anti-deficiency protection. Id. at 499, 502, ¶¶ 23, 38; see also A.R.S. § 33-729.

         ¶6 During the proceedings and before the appeal in Helvetica I, Kelly Pasquan attempted to assign her right to redeem the property to a third party, Ronald Gold, who then intervened in the proceeding. Helvetica II, 229 Ariz. at 330, ¶ 12. We held in Helvetica II that Michael Pasquan's request for a fair market value determination extinguished Kelly Pasquan's right to redeem the property. Id. at 332, ¶ 26. However, we noted that junior lienholders could still exercise their redemption rights. Id. at ¶ 24 n.2.

         ¶7 On September 1, 2009, Giraudo filed a notice of his intent to redeem the Fanfol Property with the Maricopa County Recorder's office and furnished a $432, 000 cashier's check. About two weeks later, the sheriff filed an interpleader action against Giraudo and Helvetica in response to Helvetica's emergency motion to stop Giraudo's redemption. In December 2009, the superior court granted Gold's unopposed motion to consolidate the interpleader action and the original foreclosure.

         ¶8 Helvetica moved to quash Giraudo's redemption arguing in part that Giraudo had to pay the full value of Helvetica's original lien (which at that time had a balance due of over $3.7 million[3]), not merely the sale price at the foreclosure sale. Helvetica also asserted a counterclaim that Giraudo filed a "groundless, false and invalid" redemption claim to the detriment of Helvetica and sought actual and treble damages. In July 2010, the superior court granted Helvetica's motion to quash Giraudo's redemption but did not issue an appealable order. The superior court reasoned that $3.4 million of the lien had survived the foreclosure sale as "represented by its Deed of Trust."[4] In August 2012, Helvetica moved for summary judgment against Giraudo. In light of our holding in Helvetica II, Giraudo filed his second motion to reconsider the July 2010 ruling. The superior court denied Giraudo's motion and in June 2015 issued a final order quashing Giraudo's redemption filing and dismissing Helvetica's counterclaim. Giraudo appeals and Helvetica cross-appeals.


         ¶9 We review summary judgment rulings de novo. Aranki v.RKP Investments, Inc.,194 Ariz. 206, 208, ¶ 6 (App. 1999), as corrected (May 3, 1999). Because Helvetica's counterclaim alleges that Giraudo does not have a right to redeem the Fanfol Property based ...

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