Gold v. Helvetica Servicing, Inc. (4/3/2012)

April 11, 2012

Arizona Court of Appeals Division One Holds That (1) A.R.S. § 12-1566(C) Eliminates All Rights of Redemption When Any Debtor Applies for A Fair Market Value Determination.

In April 2009, the trial court granted partial summary judgment to Helvetica regarding its right to foreclose, and Helvetica subsequently bought the property at a sheriff’s sale.  Shortly thereafter, Michael filed an application for a fair market value (“FMV”) determination.  He filed the application without Kelly, although she and her counsel appear to have been aware of the application.  The trial court granted Michael’s application, ordered the parties to file briefs, and made a FMV determination on February 6, 2010. 

Prior to the FMV determination, on November 9, 2009, Kelly executed an assignment of redemption rights to Ronald Gold — who intended to redeem the property and allow Kelly to remain on it.  He recorded the assignment, delivered a check to the Maricopa County Sherriff’s Office, and filed a notice with the court of his intent to redeem the property. 

Gold filed a complaint in intervention, asking the trial court to quiet title by declaring that he had validly exercised the right to redeem the property.  Helvetica filed a motion to dismiss his complaint.  The trial court ultimately granted Helvetica’s motion to dismiss, and Gold timely appealed.  

The Court of Appeals affirmed. The right of redemption, a form of judgment-debtor protection, is found in A.R.S. § 12-1281.  The FMV determination, a second form of protection from unfair foreclosure sales, is provided for at A.R.S. § 12-1566.  The statute “spells out how these two forms of judgment – debtor protection — the right to seek an FMV determination and the right to redeem — relate to one another and to the judgment debtors.”  The Court held that the two statutory forms of protection are mutually exclusive and, with regards to individual judgment debtors, the request for an FMV determination means that “there shall be no right to redemption as to the real property sold.”

Gold, citing A.R.S. § 25-214(C)(3), argued on appeal that Michael, who was in the process of divorce, could not extinguish the right to redeem for both himself and Kelly.  The Court disagreed, noting that Michael did not “bind” the marital community.  Rather, his application as an individual judgment debtor extinguished the right of redemption.  The Court also noted had Gold been able to redeem the property, he and Kelly would have received a windfall — benefitting from the FMV determination and through the redemption of a property that was sold for far less than its market value. 

The Court affirmed the trial court and declined to award attorneys’ fees.

Judge Swann authored the opinion; Judges Brown and Thompson concurred