Bekelian v. JP Morgan Chase Bank Na

246 Ariz. 352

439 P.3d 811

Kevork BEKELIAN, et al., Applicants/Appellants,

v.JP MORGAN CHASE BANK NA, Claimant/Appellee.

No. 1 CA-CV 18-0360

Court of Appeals of Arizona, Division 1.

FILED March 19, 2019

LaBenz Law PLLC, Sedona, By Julie A. LaBenz, Counsel for Applicants/Appellants

Tiffany & Bosco P.A., Phoenix, By Leonard J. McDonald, Jr., Michael F. Bosco, Counsel for Claimant/Appellee

Presiding Judge Paul J. McMurdie delivered the opinion of the Court, in which Judge Randall M. Howe and Judge Jennifer B. Campbell joined.

McMURDIE, Judge:

¶1 Kevork and Christiane Bekelian appeal the superior court’s order releasing the excess proceeds from a trustee’s sale to JP Morgan Chase Bank NA ("Chase Bank"). We hold if a junior claimant files an application for excess proceeds resulting from a trustee’s sale, and the superior court has reason to know a senior claimant may exist, the court may not issue an order releasing the proceeds until at least 180 days from the date the complaint is filed. See Ariz. Rev. Stat. ("A.R.S.") § 33-812(G), (J). In so holding, we reject the argument that A.R.S. § 33-812(J) imposes a 180-day deadline for applying for excess proceeds. Accordingly, we affirm.

FACTS AND PROCEDURAL BACKGROUND

¶2 The Bekelians owned real property in Scottsdale. In 2003 and 2007, they executed deeds of trust against the property. Chase Bank is the beneficiary of the 2007 deed of trust. In November 2016, a trustee sold the property at a trustee’s sale for $375,100 based on the 2003 deed of trust. After satisfaction of the debt owed to the foreclosing beneficiary and payment of the trustee’s attorney’s fees and costs, excess proceeds totaling $167,031.42 remained. At the time of the trustee’s sale, Chase Bank’s principal payoff balance was $220,000.

¶3 On January 9, 2017, the trustee deposited the excess proceeds with the county treasurer, filed a civil complaint, and was discharged from the proceedings. See A.R.S. § 33-812(C), (D). On July 10, 2017, the Bekelians applied for release of the excess proceeds. See A.R.S. § 33-812(G). Approximately three weeks later, Chase Bank filed a response and separately applied for release of the excess proceeds, arguing that as the second lien holder it was entitled to the excess proceeds. In response, the Bekelians argued Chase Bank’s application was untimely.

¶4 Chase Bank moved for entry of judgment. The parties stipulated to material facts, including that the complaint identified Chase Bank’s second lien as having priority over the Bekelians' interest. The superior court awarded Chase Bank the excess proceeds, finding it timely responded to the Bekelians' application and had a superior claim to the proceeds. The Bekelians appealed, and we have jurisdiction under A.R.S. § 12-2101(A)(1).

DISCUSSION

¶5 The Bekelians argue the superior court erred by releasing the excess proceeds to Chase Bank. They contend A.R.S. § 33-812(J) establishes a 180-day deadline for applying for excess proceeds and any response. Accordingly, they argue they timely filed their application, while Chase Bank untimely filed its application and response. Therefore, the court should have awarded the Bekelians the excess proceeds. The text of A.R.S. § 33-812, however, does not support the argument.

¶6 Statutory interpretation presents a question of law, which we review de novo . In re Estate of Bradley , 244 Ariz. 431, 432, ¶ 7, 420 P.3d 215, 216 (App. 2018). Our primary goal when interpreting a statute is to give effect to the legislature’s intent. J.D. v. Hegyi , 236 Ariz. 39, 40, ¶ 6, 335 P.3d 1118, 1119 (2014). "If a statute’s language is clear and unambiguous, it is the best indicator of that intent, and we apply it as written without resorting to other methods of statutory interpretation." State v. Kemmish , 244 Ariz. 314, 316, ¶ 10, 418 P.3d 1087, 1089 (App. 2018). "When possible, we seek to harmonize statutory provisions and avoid interpretations that result in contradictory provisions." Premier Physicians Grp., PLLC v. Navarro , 240 Ariz. 193, 195, ¶ 9, 377 P.3d 988, 990 (2016) ; see also State v. Seyrafi , 201 Ariz. 147, 150, ¶ 14, 32 P.3d 430, 433 (App. 2001) (statutory provisions must be "construed in context with related provisions and in light of their place in the statutory scheme"). "We presume the legislature did not intend to write a statute that contains a void, meaningless, or futile provision," and when possible, we interpret a statute to give meaning to every word or phrase. State v. Pitts , 178 Ariz. 405, 407, 874 P.2d 962, 964 (1994).

¶7 After a property is sold at a trustee’s sale, A.R.S. § 33-812(A)"governs the trustee’s application of the sale proceeds and specifies the order of priority to be given." PNC Bank v. Cabinetry By Karman, Inc. , 230 Ariz. 363, 365, ¶ 7, 284 P.3d 874, 876 (App. 2012). "Rather than distribute the funds, the trustee may elect to deposit the balance of the proceeds with the county treasurer and commence a civil action." Id. (citing A.R.S. § 33-812(C)–(D) ). In a complaint commencing a civil action, the trustee must include a "narrative description of the liens and encumbrances [on the property], including an analysis of the apparent priority of potential claimants." Id. (citing A.R.S. § 33-812(D)(4) ). Once the trustee fulfills the obligations outlined in A.R.S. § 33-812, including mailing a copy of the complaint to any "person known by the trustee to have an interest of record in the property at the time of the sale," A.R.S. § 33-812(D), the trustee is discharged without prejudice from the action, A.R.S. § 33-812(F).

¶8 Any person with a "legal interest in the property at the time of the sale may apply for the release of the proceeds by filing an application for distribution in the civil action." A.R.S. § 33-812(G). The applicant must acknowledge "any apparent lien, encumbrance or interest that could have priority." A.R.S. § 33-812(J) ; PNC Bank , 230 Ariz. at 365, ¶ 9, 284 P.3d at 876. The applicant must also mail a copy of the application to every interested party. A.R.S. § 33-812(G). Then, "[a]ny person who receives the application or who claims a right to the proceeds may file a response to the application within forty-five days of the latest mailing of the application." A.R.S. § 33-812(I).

¶9 Under A.R.S. § 33-812(J), the superior court must issue an order releasing the excess proceeds "to the party entitled to receive them" based on the priorities delineated by A.R.S. § 33-812(A). If competing claims to the proceeds are filed, the court must hold a hearing to determine who has the superior right to the funds. A.R.S. § 33-812(J). Further, "[i]f the court finds that a person other than an applicant or respondent has a superior right to receive the proceeds, the court shall not issue an order on the proceeds until one hundred eighty days from the date the complaint was filed ." A.R.S. § 33-812(J) (emphasis added); see also PNC Bank , 230 Ariz. at 366, ¶ 11, 284 P.3d at 877 ("[W]here the court has information regarding potential priority lien holders, the requirements set forth in § 33-812(J) must be followed."). Any time before the 180-day period expires, "an applicant or respondent may move for a hearing to determine whether the claimed superior right is valid or enforceable and whether the claim is entitled to receive priority over the claim of the applicant or respondent." A.R.S. § 33-812(J). "If a response is not filed within the one hundred eighty day period by the person found by the court to have a superior right to receive the proceeds, the court shall enter an order in favor of any applicant or respondent entitled to the proceeds." Id. ¶10 Contrary to the Bekelians' argument, the 180-day period referenced in A.R.S. § 33-812(J) is not a deadline. Instead, it is the earliest possible date the superior court may issue an order releasing the proceeds if it has information that a claim superior to an applicant’s claim may exist. See PNC Bank , 230 Ariz. at 366, ¶ 10, 284 P.3d at 877 ("Because the court had information regarding a lien superior to the applicant’s, it should not have issued an order on the proceeds until 180 days from the date the complaint was filed."). To hold that A.R.S. § 33-812(J) imposes a 180-day deadline for filing any applications and responses would render other provisions of A.R.S. § 33-812 meaningless, which we will not do. See PNC Bank , 230 Ariz. at 365, ¶ 8, 284 P.3d at 876 ("We must read the statute as a whole and give meaningful operation to all of its provisions.").

¶11 Under A.R.S. § 33-812(L), "[e]xcess proceeds ... are presumed abandoned if the monies remain with the treasurer for at least two years from the date of deposit and there is no pending application for distribution." Therefore, claimants have two years from the date the trustee deposits the funds with the county treasurer to apply. If a senior claimant applies, the superior court may issue an order releasing the proceeds after the 45-day response period has run. And the court may do so before the 180-day period expires.

¶12 If, however, a junior claimant applies, A.R.S. § 33-812(J) ’s requirements must be followed. See PNC Bank , 230 Ariz. at 366, ¶ 11, 284 P.3d at 877. If a junior claimant files an application, and the court has reason to know a senior claimant may exist, the court may not issue an order releasing the proceeds until at least 180 days from the date the complaint is filed. A.R.S. § 33-812(J) ; PNC Bank , 230 Ariz. at 366, ¶ 10, 284 P.3d at 877 (superior court had information a senior lienholder may have existed and erred by releasing the proceeds to a junior lienholder before 180 days from the date the complaint was filed, despite the senior lienholder failing to respond to the junior lienholder’s application within 45 days). Under A.R.S. § 33-812, the superior court must also allow potential respondents 45 days to respond, even if the response time extends beyond 180 days from the date the complaint is filed. See PNC Bank , 230 Ariz. at 365,...