Appeal
from the Superior Court in Maricopa County No. CV2015-005125
The Honorable Douglas Gerlach, Judge
Gust
Rosenfeld PLC, Phoenix By Scott A. Malm, Charles W. Wirken
Counsel for Plaintiff/Appellant
Robert
Stewart & Associates PC, Phoenix By Robert L. Stewart,
Jr., Sid A. Horwitz Counsel for Defendant/Appellee
Judge
Randall M. Howe delivered the opinion of the Court, in which
Presiding Judge James P. Beene and Judge Kent E. Cattani
joined.
OPINION
HOWE,
JUDGE
¶1
Deutsche Bank National Trust Company (the "Bank")
sued Pheasant Grove LLC seeking a reformation of a deed of
trust ("DOT") secured by Pheasant Grove's
property and a declaratory judgment that it holds a superior
interest in the property. The trial court granted Pheasant
Grove summary judgment, ruling that the Bank had filed its
suit outside the applicable statute of limitations' time
period.
¶2
The Bank has appealed that ruling, raising several claims of
error. Its primary argument, however, is that although its
reformation claim may be barred by the applicable statute of
limitations, its declaratory judgment claim-that the
Bank's interest in the property was superior to Pheasant
Grove's interest under a constructive notice or
replacement mortgage theory-was within the statute of
limitations applicable to an action to collect a debt. We
reject all of the Bank's claims of error, and we
specifically hold that when a claim for reformation is
time-barred, a request for declaratory judgment seeking
substantively the same relief as the reformation claim is
also time-barred.
FACTS
AND PROCEDURAL HISTORY
¶3
This action involves the real property known as 40660 N.
109th Place, Scottsdale, Arizona (the "Property").
The Property includes a residence built across two adjoining
parcels, described as Lots 8 and 9, Desert Mountain Phase II
Unit Six. Lot 8 is assigned Maricopa County Assessor's
Parcel Number ("APN") 219-56-205 and Lot 9 is
assigned APN 219-56-206.
¶4
Brian Pellowski and Debra Peterson (collectively, the
"Homeowners") bought the Property in 2000 and
obtained a $1.26 million loan secured by a recorded DOT in
favor of Washington Mutual Bank, FA that encumbered Lots 8
and 9. The Homeowners refinanced the loan in 2001 and 2002.
Both times the Homeowners recorded a new DOT in Washington
Mutual's favor, encumbering Lots 8 and 9; both times
Washington Mutual released the prior DOT.
¶5
The Homeowners refinanced the loan again in 2003. They
recorded a DOT in Washington Mutual's favor (the
"2003 DOT"), and Washington Mutual released the
prior DOT. Although the 2003 DOT referenced the address of
40660 N. 109th Place, Scottsdale, Arizona, the 2003 DOT
legally described the collateral as only "Lot 8, DESERT
MOUNTAIN PHASE II, UNIT SIX." JP Morgan Chase Bank NA
("Chase") acquired the beneficial interest in the
2003 DOT from Washington Mutual. Chase assigned its
beneficial interest in the 2003 DOT to the Bank in November
2012; the assignment described the collateral as "LOT 8,
DESERT MOUNTAIN PHASE II, UNIT SIX."
¶6
Meanwhile, the Homeowners borrowed $800, 000 from First
National Bank of Omaha ("FNB") in September 2006
and secured that loan with a DOT in FNB's favor that
encumbered Lots 8 and 9. The Homeowners defaulted on the
loan, and FNB bought the Property in a trustee's sale in
July 2010. FNB later quitclaimed the Property to Pheasant
Grove in December 2011.
¶7
The Homeowners subsequently defaulted on the promissory note
secured by the Bank's 2003 DOT, and the Bank learned that
Pheasant Grove had obtained the Property without satisfying
the 2003 DOT. In August 2015, the Bank filed a three-count
"Verified Complaint for Quiet Title" against
Pheasant Grove. Count One sought reformation of the 2003 DOT
to include Lot 9 in the legal description. Count Two was
denominated quiet title; it sought a determination pursuant
to Arizona's quiet title statute, A.R.S. § 12-1101,
that the Bank "has a superior interest in Lots 8 and 9
of the Property and that Pheasant Grove's interest in the
Property is subject to [the Bank's] interest under the
Deutsche Bank DoT." Count Three was denominated
declaratory relief; it sought a declaration under A.R.S.
§ 12-1101 that "Plaintiff's interest under the
Deutsche Bank DoT encumbers both Lots 8 and 9 of the Property
and is superior to any other encumbrances currently existing
against the property and that Pheasant Grove's interest
in the Property is subject to Plaintiff's interest under
the Deutsche Bank DoT."
¶8
Pheasant Grove moved for summary judgment, arguing that (1)
the reformation claim was barred under the applicable statute
of limitations and (2) the quiet title and declaratory relief
claims failed as a matter of law because the Bank did not
hold title to either Lot 8 or 9. In response, the Bank argued
that (1) the statute of limitations did not apply to a
reformation claim and (2) the declaratory relief claim sought
a determination that Pheasant Grove had constructive notice
of the 2003 DOT, which had priority over FNB's DOT, or
alternatively, that the 2003 DOT was a replacement DOT for
the 2000, 2001, and 2002 DOTs. Additionally, the Bank moved
under Arizona Rules of Civil ...