Bridges v. Nationstar ( 2020 )

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
LAVELLE BRIDGES, Plaintiff/Appellee,
v.
NATIONSTAR MORTGAGE, L.L.C., a Delaware corporation,
Defendant/Appellant.
No. 1 CA-CV 19-0556
FILED 9-29-2020
Appeal from the Superior Court in Maricopa County
No. CV2016-000605
The Honorable Hugh Hegyi, Judge (Retired)
The Honorable Danielle J. Viola, Judge
REVERSED AND REMANDED
COUNSEL
Law Office of Nathaniel P. Nickele PLLC, Peoria
By Nathaniel Nickele
Counsel for Plaintiff/Appellee
Akerman LLP, Denver, CO
By Justin D. Balser, Erin E. Edwards
Counsel for Defendant/Appellant
BRIDGES v. NATIONSTAR
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Randall M. Howe delivered the decision of the Court, in
which Judge Kent E. Cattani and Judge Cynthia J. Bailey joined.
H O W E, Judge:
¶1 Nationstar Mortgage, L.L.C. appeals the trial court’s order
granting Lavelle Bridges summary judgment and denying its own
summary judgment motion. For the following reasons, we reverse and
remand for further proceedings.
FACTS AND PROCEDURAL HISTORY
¶2 Bridges worked as a branch manager for a mortgage
company. In 2007, he obtained a $500,000 mortgage loan from his company
secured by a deed of trust against his property. The deed of trust contained
an optional acceleration clause if Bridges defaulted on the loan. To invoke
the acceleration clause, the lender had to send a notice to Bridges stating,
“(a) the default; (b) the action required to cure the default; (c) a date . . . by
which the default must be cured; and (d) that failure to cure the default
. . . may result in acceleration . . . and sale of the [p]roperty.”
¶3 Bridges defaulted on the loan in 2008, and has not made any
loan payments since. A notice of default was sent to Bridges but the notice
did not state that failing to cure the default may result in acceleration of the
loan, as required by the deed of trust. Along with the notice of default, two
notices of trustee’s sales were recorded in January 2009 and May 2009.
Neither notice invoked or referred to the optional acceleration clause and
no sale was held. The deed of trust and loan were later assigned to a bank
and Nationstar started servicing the loan on behalf of the bank around 2011.
¶4 Meanwhile, Bridges petitioned for bankruptcy twice, once in
January 2011, and once in March 2014, staying Nationstar’s ability to
foreclose on the property each time. Between January 2012, and January
2016, Bridges intermittently applied for five loan modifications and applied
to participate in Nationstar’s short sale program twice. The short sale
program allowed a debtor who already had a short sale offer to sell the
property while Nationstar waived any deficiency judgment. While
reviewing Bridges’ loan modification and short sale applications,
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BRIDGES v. NATIONSTAR
Decision of the Court
Nationstar stopped the foreclosure process as proscribed by its internal
policy until it had rejected each of his applications.
¶5 In January 2016, Bridges sued Nationstar for declaratory
relief, asserting that Nationstar was barred from foreclosing on his property
because the six-year statute of limitations proscribed under A.R.S.
§ 12–548(A)(1) had run. Bridges moved for, and the court granted, a
temporary restraining order to prevent Nationstar from foreclosing on the
property. Bridges also moved for a preliminary injunction to stop the
foreclosure of his property, but the court denied his motion in July 2016.
¶6 Bridges then moved for summary judgment arguing that the
notices of trustee’s sales accelerated the debt, thereby triggering the statute
of limitations, and that the statute of limitations had run by January 2015,
or May 2015. Nationstar responded and moved for summary judgment
arguing that the notices of trustee’s sales did not accelerate the debt and
that Bridges presented no evidence that Nationstar intended to accelerate
the debt. It further argued that even if the debt was accelerated, Bridges’
bankruptcies and equitable estoppel tolled the statute of limitations.
¶7 The court granted Bridges summary judgment, finding that
the notices of trustee’s sales accelerated the debt. The court further found
that, based on Bridges’ pleadings, the statute of limitations was not tolled.
Nationstar timely appealed.
DISCUSSION
¶8 Nationstar argues that Bridges’ debt was not accelerated by
the notices of trustee’s sales. We review an order granting summary
judgment de novo and view the facts in the light most favorable to the party
against whom summary judgment was granted. Andra R Miller Designs LLC
v. US Bank NA, 244 Ariz. 265, 268 ¶ 9 (App. 2018).
¶9 An action to collect a debt evidenced by a written contract
shall be commenced within six years after the cause of action accrues. A.R.S.
§ 12–548(A)(1). When a creditor has the power to accelerate a debt, the
six-year statute of limitations begins to run on the date the creditor exercises
that power. Andra R Miller Designs, 244 Ariz. at 270 ¶ 15. To exercise its
option to accelerate a debt, the creditor “must undertake some affirmative
act to make clear to the debtor it has accelerated the obligation.” Baseline Fin.
Servs. v. Madison, 229 Ariz. 543, 544 ¶ 8 (App. 2012).
¶10 Bridges’ debt was not accelerated by the notice of trustee’s
sale, however, because before his debt could be accelerated, the deed of
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Decision of the Court
trust required notification that if he failed to cure the default, his debt might
be accelerated. Because Bridges’ default notice did not state that his debt
might be accelerated, the notice of trustee’s sale, by itself, did not accelerate
the debt. See Andra R Miller Designs, 244 Ariz. at 267 ¶ 3 (default notice
referred to the acceleration clause); see also Meadowbrook Gardens, Ltd. v.
WMFMT Real Estate Ltd. P’ship, 980 S.W.2d 916, 919 (Tex. App. 1998)
(finding that a notice of intent to accelerate combined with a notice of
trustee’s sale was sufficient to accelerate the debt). Therefore, Bridges’ debt
was never accelerated.
¶11 The plain language of A.R.S. § 33–813(A) supports this
interpretation. Under that statute, when “all or a portion of a principal sum
. . . becomes due or is declared due by reason of breach or default[,]” the
debtor can “reinstate by paying . . . the entire amount then due” the day
before the trustee’s sale is held. A.R.S. § 33–813(A) (emphasis added). If
recording a notice of trustee’s sale automatically accelerated the debt, then
the phrase “or a portion of a principal sum” would be rendered superfluous
because the entire principal sum would always be declared due. See Puryer
v. HSBC Bank USA, Nat'l Ass'n for holders of Ace Sec. Corp. Home Equity Loan
Tr., Asset Backed Pass-Through Certificates, series 2006-CW1, 419 P.3d 105,
110-111 ¶ 16 (Mont. 2018) (finding that a notice of trustee’s sale did not
accelerate the debt because a similar statute gave the debtor the right to cure
the default by paying the amount then owed and not the principal amount);
see also Cty. of Cochise v. Faria, 221 Ariz. 619, 622 ¶ 9 (App. 2009) (“Each word
or phrase of a statute must be given meaning so that no part is rendered
void, superfluous, contradictory or insignificant.”) (citation omitted).
¶12 Bridges argues that this Court’s decision in Andra R Miller
Designs compels the conclusion that the notice of trustee’s sale in this case
established that Nationstar had accelerated the debt. But in Andra R Miller
Designs, the notice of default specifically referred to the acceleration clause,
and neither party argued that the notice did not accelerate the debt. 244
Ariz. at 267, 270 ¶¶ 3, 16. And the court reversed a grant of summary
judgment to the debtor because the creditor had sent cancellation notices
expressly revoking its acceleration of the debt. Id. at 271 ¶ 20. Because this
Court held that to revoke the debt’s acceleration, “the notice of cancellation
must also contain a statement that the acceleration of the debt has been
withdrawn[,]” the notice of trustee’s sale itself similarly must contain a
statement that the debt was being accelerated.
¶13 The notice of default here did not refer to the acceleration
clause and Bridges did not present any other evidence establishing that he
could not have forestalled a trustee’s sale by any means other than payment
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of the entire “accelerated” debt. Moreover, the conduct of the parties in fact
suggests that both the debtor and creditor understood that payment of
something less than the full accelerated amount could forestall the trustee’s
sale, since Bridges submitted, and the creditor considered, several loan
modification applications after the initial notice of trustee’s sale was sent.
¶14 Bridges cites additional cases for the proposition that the
commencement of foreclosure constitutes an affirmative act of acceleration.
But those cases are also distinguishable from this case. Those cases involved
a judicial foreclosure seeking the principal amount, Barnett v. Hitching Post
Lodge, Inc., 101 Ariz. 488, 492 (1966), or an acceleration clause that was
automatically invoked when the debtor defaulted, Prevo v. McGinnis, 142
Ariz. 298, 302 (App. 1984). The deed of trust here contained an optional
acceleration clause that was not invoked according to its terms.
¶15 Bridges also argues that at the summary judgment hearing,
Nationstar admitted that a notice of trustee’s sale “is essentially an
announcement to the borrower that the lender intends to foreclose for the
entire balance due.” While Nationstar stated that the end goal of a trustee’s
sale is to seek the full amount due, it argued that because Bridges had the
right to reinstate the loan by paying only the amount due, the loan would
not accelerate until Bridges could no longer reinstate the loan. Therefore,
Nationstar’s argument does not affect whether the notice of trustee’s sale
accelerated the debt.
¶16 Because Bridges received a default notice that did not invoke
the acceleration clause under the terms of the deed of trust, the notice of
trustee’s sale did not accelerate the debt. Therefore, the statute of limitations
never started to run and we need not address Nationstar’s remaining
arguments. Nationstar is not barred from foreclosing on the property and
the trial court erred by granting Bridges’ summary judgment motion.
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CONCLUSION
¶17 For the foregoing reasons, we reverse the trial court’s grant of
summary judgment and remand for the court to enter summary judgment
in favor of Nationstar. As the prevailing party, Nationstar is entitled to its
costs incurred on appeal upon compliance with Arizona Rule of Civil
Appellate Procedure 21.
AMY M. WOOD • Clerk of the Court
FILED: AA
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