Scannell v. JP Morgan Chase Bank, N.A. (In re Scannell)

505 B.R. 523
CourtUnited States Bankruptcy Court, D. Arizona
DecidedJanuary 24, 2014
DocketBankruptcy No. 08-18329-DPC; Adversary No. 13-302
StatusPublished

This text of 505 B.R. 523 (Scannell v. JP Morgan Chase Bank, N.A. (In re Scannell)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Scannell v. JP Morgan Chase Bank, N.A. (In re Scannell), 505 B.R. 523 (Ark. 2014).

Opinion

ORDER SETTING PRIORITY OF LIENS

DANIEL P. COLLINS, Bankruptcy Judge.

The parties present an issue of first impression, namely, which has priority in Arizona: a restitution lien or a purchase money deed of trust? The Court concludes that a purchase money deed of trust against real property has priority over an earlier recorded restitution lien.

I. Facts

The essential facts are undisputed. They occurred prepetition.

On December 15, 2004, the Pima County Attorney’s Office1 filed a restitution lien in the original principal amount of $2,070,550 against the Debtor pursuant to Arizona Revised Statutes (“A.R.S.”) § 13-806 (“Restitution Lien”). The Restitution Lien was recorded in the Official Records of the Maricopa County Recorder (“Recorder”) on January 25, 2005.2 The Restitution Lien listed Deborah Polmanteer, among others, as a party to which restitution is due.

In December 2005, the Debtor purchased the property at 4727 East Lafayette, Unit 216, Phoenix, Arizona (“Lafayette Property”). To finance the purchase, the Debtor obtained a purchase money loan from Vista Mortgage Services (“Vis[525]*525ta”) for $94,500. Vista recorded a deed of trust with the Recorder on December 7, 2005 (“RCS Deed of Trust”). The money loaned by Vista was not used to pay off any existing hens against the Lafayette Property. In January 2011, Mortgage Electronic Registration Systems, Inc., as beneficiary, assigned the RCS Deed of Trust to Residential Credit Solutions, Inc. (“RCS”).

In January 2007, the Debtor purchased the property at 6711 E. Camelback Rd. # 8, Scottsdale, Arizona (“Camelback Property”) for $1,210,000. To finance the purchase, the Debtor obtained a purchase money loan for $960,000 from Bear Stearns Residential Mortgage Corporation (“Bear Stearns”). The money loaned by Bear Stearns was not used to pay off any existing liens against the Camelback Property.3 Bear Stearns recorded a deed of trust on February 6, 2007 (“Chase Deed of Trust”; Chase Deed of Trust and RCS Deed of Trust together “Deeds of Trust”). In March 2007, the Chase Deed of Trust was assigned to Wells Fargo Bank, National Association as Trustee for the Certificate holders of Structured Asset Mortgage Investments II Inc., Bear Stearns Mortgage Funding Trust 2007-AR3 Mortgage Pass-Through Certificates, Series 2007-AR3, with JP Morgan Chase Bank, N.A. as the authorized servicing agent (“Chase”).

The matter comes before the Court on motions for summary judgment filed by Chase and RCS. The State did not respond, but instead filed a statement of position. The Court gave all parties an opportunity to weigh in on the issue through responsive and supplemental briefing.

II. Question Presented.

Does a purchase money lien against Arizona residential real property have priority over an earlier recorded restitution lien?

III. Analysis.

A Summary Judgment Standard

Summary judgment shall be granted where no genuine dispute of material fact exists and the moving party is entitled to a judgment as a matter of law. Fed. R.Civ.P. 56(a); Fed. R. Bankr.P. 7056(a). “[T]he mere existence of some alleged factual dispute ... will not defeat [a] ... motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (emphasis omitted). A genuine issue of material fact exists when “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id. at 248, 106 S.Ct. 2505. The moving party bears the initial burden of demonstrating to the court that no genuine issue of material fact exists and to further show that the moving party is entitled to judgment in their favor as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The burden then shifts to the nonmoving party to show that there are specific facts creating a genuine issue for trial. Id. at 324, 106 S.Ct. 2548. When the nonmoving party bears the burden of proof, however, “the burden on the moving party may be discharged by ‘showing’ — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party’s case.” Id. at 325, 106 S.Ct. 2548. When the facts are uncontested, summary judgment can [526]*526be granted if the movant is entitled to judgment as a matter of law. In re Proxim Corp., 369 B.R. 812, 813 n. 3 (Bankr.D.Del.2007). Additionally, upon notice and an opportunity to respond, the court may “grant summary judgment for a nonmov-ant.” Fed.R.Civ.P. 56(f)(1); Fed. R. Bankr.P. 7056(f)(1).

B. The Statutes

Two Arizona Statutes must be interpreted to answer the question presented. A.R.S. § 13-806(F) (enacted 1986) reads:

The filing of a restitution lien under this section is notice to all persons dealing with the person or property identified in the lien of the state’s or victim’s claim. The lien created in favor of the state or the victim in accordance with this section is superior and prior to the claims or interests of any other person, except a person possessing any of the following:
1. A valid lien perfected before the filing of the restitution lien.
2. In the case of real property, an interest acquired and recorded before the filing of the restitution lien.
3. In the case of personal property, an interest acquired before the filing of the restitution lien.

A.R.S. § 33-705 (enacted 1996) reads:

A mortgage or deed of trust that is given as security for a loan made to purchase the real property that is encumbered by the mortgage or deed of trust has priority over all other liens and encumbrances that are incurred against the purchaser before acquiring title to the real property.

C. Rules of Statutory Interpretation— Plain Meaning

“The touchstone to the interpretation of a statute is to determine the intent of the Legislature in enacting the statute.” Members of Bd. of Educ. Of Pearce Union High School Dist. v. Leslie, 112 Ariz. 463, 543 P.2d 775, 777 (1975).4 A court must apply the plain meaning of the text unless it would lead to absurd results. Lamie v.

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Cite This Page — Counsel Stack

Bluebook (online)
505 B.R. 523, Counsel Stack Legal Research, https://law.counselstack.com/opinion/scannell-v-jp-morgan-chase-bank-na-in-re-scannell-arb-2014.