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Pacific Western Bank v. Mark Wallace Castleton

Court of Appeals of Arizona, First Division

December 27, 2018

PACIFIC WESTERN BANK, et al., Plaintiffs/Appellants,
v.
MARK WALLACE CASTLETON, et al., Defendants/Appellees.

          Appeal from the Superior Court in Maricopa County No. CV2016-016455 The Honorable Dawn M. Bergin, Judge.

          Fredenberg Beams LLC, Phoenix By Daniel E. Fredenberg, Christian C.M. Beams Counsel for Plaintiffs/Appellants

          Gust Rosenfeld PLC, Phoenix By Scott A. Malm, Mina C. O'Boyle Counsel for Defendants/Appellees

          Judge Maria Elena Cruz delivered the opinion of the Court, in which Presiding Judge Jennifer B. Campbell and Judge Diane M. Johnsen joined.

          OPINION

          CRUZ, JUDGE.

         ¶1 Pacific Western Bank and Coastline Re Holdings Corp. (collectively, "PWB") appeal from the superior court's entry of a preliminary injunction enjoining the sale of a home owned by the Castleton Revocable Trust (the "Castleton Trust"). Because a judgment creditor may not attach a judgment lien to homestead property, but instead may execute on its judgment only by way of a forced sale of the property under Arizona Revised Statutes ("A.R.S.") § 33-1105, we affirm the superior court's preliminary injunction.

         FACTS AND PROCEDURAL HISTORY

         ¶2 In 2002, Berislav and Djurdjica Sepic purchased a home in Mesa (the "Home") to use as their primary residence. In 2007, they borrowed $937, 500 from Washington Mutual Bank, secured by a deed of trust on the Home. The deed of trust was later assigned to Chase Bank.

         ¶3 In a separate transaction, the Sepics borrowed money to purchase an apartment complex in Phoenix. That loan was later assigned to PWB. After the Sepics stopped paying on the apartment loan, PWB sued them for breach of contract and obtained a default judgment for $5.2 million (the "Judgment"). PWB recorded the Judgment in 2011, then timely renewed it.

         ¶4 After losing their apartment complex to foreclosure, the Sepics defaulted on the loan secured by their Home. At their request, Chase approved a short sale of the Home. As part of the short sale process, the Sepics conveyed the Home to the Fairbrook Revocable Family Trust ("Fairbrook Trust"). A few weeks later, in February 2013, the Fairbrook Trust sold the Home to the Castleton Trust for $535, 000.[1] Meanwhile, the Judgment remained unpaid.

         ¶5 More than three years after the sale, PWB sued the Castleton Trust, seeking declaratory relief and to quiet title, asserting that the Judgment remained an enforceable lien against the Home.[2] PWB obtained a writ of general execution, and the Maricopa County Sheriff noticed a sale of the Home. The Castleton Trust then moved to enjoin the sale.

         ¶6 Following an evidentiary hearing, the superior court entered findings of fact and conclusions of law and a preliminary injunction enjoining the sale. PWB timely appeals, and we have jurisdiction pursuant A.R.S. § 12-2101(A)(5)(b).

         DISCUSSION

         ¶7 Because the grant of a preliminary injunction rests within the sound discretion of the superior court, we review its decision for an abuse of discretion. See Fin. Assocs., Inc. v. Hub Properties, Inc.,143 Ariz. 543, 545 (App. 1984). This appeal, however, requires us to analyze the intersection of Arizona's judgment lien and homestead statutes. See A.R.S. §§ 33-961 -964 (judgment liens on real property), 33-1101 to -1105 (homesteads and homestead exemption). We review this question of law de novo. See Rogone v. Correia,236 Ariz. 43, 49, ΒΆ 17 (App. 2014). We construe the ...


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