Edmonds v. Lsref2 Cobalt

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
CAROL JEAN EDMONDS, trustee of the CJE Living Trust
Dated October 1, 2007, Plaintiff/Appellant,
v.
LSREF2 COBALT (IL), LLC, a Delaware limited liability company;
LSREF2 COBALT (AZ), LLC, a Delaware limited liability company,
Defendants/Appellees.
No. 1 CA-CV 18-0772
FILED 11-5-2019
Appeal from the Superior Court in Mohave County
No. L8015CV201607192
The Honorable Derek C. Carlisle, Judge
AFFIRMED
COUNSEL
Jaburg & Wilk PC, Phoenix
By David L. Allen, Nichole H. Wilk
Counsel for Plaintiff/Appellant
Quarles & Brady LLP, Phoenix
By Isaac M. Gabriel, Hannah R. Torres
Counsel for Defendants/Appellees
EDMONDS v. LSREF2 COBALT, et al.
Decision of the Court
MEMORANDUM DECISION
Judge Michael J. Brown delivered the decision of the Court, in which
Presiding Judge Jennifer B. Campbell and Judge Lawrence F. Winthrop
joined.
B R O W N, Judge:
¶1 Carol Jean Edmonds, as trustee of the CJE Living Trust dated
October 1, 2007 (“Edmonds”), appeals the superior court’s order dismissing
her claims for declaratory judgment and quiet title. For the following
reasons, we affirm.
BACKGROUND
¶2 Nace Land & Cattle Company, Inc. (“Nace Land”), owned
several parcels of land in Mohave County for the purpose of developing a
project known as Arizona Gateway. The project was subject to a deed of
trust in favor of ALC Financial Corporation, a Minnesota Corporation
(“ALC”). On November 12, 2008, Edmonds purchased one of the Arizona
Gateway parcels (“Property”) from Nace Land for $435,000 and received
title through a warranty deed. As part of the escrow, Chicago Title
Insurance Company forwarded payoff funds to ALC, but ALC neglected to
release the lien attached to the Property.
¶3 The deed of trust was ultimately assigned to LSREF2 Cobalt
(AZ), and a notice of trustee’s sale was recorded in September 2014.
Unbeknownst to Edmonds, the planned sale included the Property. The
sale was conducted in December 2014, and LSREF2 Cobalt (AZ) acquired
title to the Property after submission of its credit bid.1 After discovering
that she no longer owned the Property, Edmonds filed a lawsuit in 2016,
alleging claims for breach of contract/warranty, unjust enrichment, and
breach of the covenant of good faith and fair dealing against Nace Land;
failure to release a lien and negligence against ALC; and negligence, breach
of fiduciary duty, breach of contract, and breach of the covenant of good
faith and fair dealing against Chicago Title. Edmonds did not record a
1 Unless otherwise noted, we refer to LSREF2 Cobalt (AZ), LLC, and
LSREF2 Cobalt (IL), LLC, collectively as “Cobalt.”
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EDMONDS v. LSREF2 COBALT, et al.
Decision of the Court
notice of lis pendens, and in January 2018, LSREF2 Cobalt (AZ) sold the
Property to 9540, L.L.C.
¶4 Edmonds was granted leave to amend her complaint in
March 2018. The amended complaint alleged six counts against Cobalt:
failure to release a lien, negligence, wrongful foreclosure, declaratory
judgment, quiet title, and filing a false lien. Edmonds did not name, 9540,
L.L.C. (the current owner of the property), as a defendant.
¶5 Cobalt filed a motion to dismiss all six counts alleged against
it, asserting that each count failed as a matter of law under Arizona Rule of
Civil Procedure, (“Rule”) 12(b)(6). Cobalt argued in part that the quiet title
count must be dismissed because it no longer owned the Property nor did
it claim any right or interest in the Property.
¶6 As relevant here, the superior court dismissed each of the
claims alleged against Cobalt except for the quiet title claim. The court gave
Edmonds the opportunity to further amend the complaint to include the
allegation that she did not receive notice of the trustee’s sale, but she did
not seek permission to amend. The court then dismissed the quiet title
claim and issued a final order of dismissal pursuant to Rule 54(b). Edmonds
timely appealed.
DISCUSSION
¶7 We review de novo the grant of a motion to dismiss a
complaint under Rule 12(b)(6). Zubia v. Shapiro, 243 Ariz. 412, 414, ¶ 13
(2018). In reviewing a trial court’s decision to dismiss a complaint for
failure to state a claim, we assume the facts alleged in the complaint are true
and will affirm the dismissal only if the plaintiff “would not be entitled to
relief under any interpretation of the facts susceptible of proof.” Id.2 We
2 Cobalt’s motion to dismiss included four exhibits: the ALC deed of
trust held as a lien on the Property; the warranty deed showing LSREF2
Cobalt (AZ) conveyed the property to 9540, LLC; the notice of trustee’s sale;
and the corrective recording of LSREF2 Cobalt (AZ)’s warranty deed.
Because the exhibits are matters of public record, the superior court could
properly consider the motion to dismiss without converting it to a summary
judgment motion. See Strategic Dev. & Const., Inc. v. 7th & Roosevelt Partners,
LLC, 224 Ariz. 60, 64, ¶ 13 (App. 2010) (explaining that “a Rule 12(b)(6)
motion that presents a document that is a matter of public record need not
be treated as a motion for summary judgment.”).
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EDMONDS v. LSREF2 COBALT, et al.
Decision of the Court
will affirm the court’s ruling if it is correct for any reason. Dube v. Likins,
216 Ariz. 406, 417, ¶ 36 n. 3 (App. 2007).
¶8 On appeal, Edmonds challenges only the superior court’s
dismissal of Count 13 (declaratory judgment) and Count 14 (quiet title).
LSREF2 Cobalt (AZ) was the entity that submitted a credit bid at the
trustee’s sale, but at the time LSREF2 Cobalt (IL) was actually the named
beneficiary of the deed of trust. Edmonds therefore contends that because
the credit bid purchaser was not the beneficiary of the deed of trust, the sale
is invalid.
¶9 Edmonds argues the superior court’s dismissal of her
declaratory judgment claim was improper because the trustee’s sale was
invalid. What she fails to acknowledge, however, is that she did not dispute
Cobalt’s argument that her claim was “simply an alternative method of
pursuing the wrongful foreclosure claim.” Because the court properly
recognized that wrongful disclosure is not a cognizable claim under
Arizona law, see Zubia, 243 Ariz. at 418, ¶ 29, her declaratory judgment
claim fails as a matter of law.
¶10 Relating to the quiet title claim, Edmonds alleged that because
the trustee’s sale was “wrongfully done” based on an improper credit bid
by LSREF2 Cobalt (AZ), she is “entitled to ownership of the Property.” She
requested that the superior court declare that LSREF2 Cobalt (AZ) has no
estate or interest in the Property at issue and that the deed of trust issued to
LSREF2 Cobalt (AZ) is null and void. Relying on those allegations, she
argues on appeal that because “the sale was held in contradiction to the
statutory procedure it is invalid.” Cobalt counters, inter alia, that the quiet
title claim was properly dismissed because Cobalt has no ownership
interest in the Property.
¶11 A quiet title action may be brought against any person who
claims an interest in real property. A.R.S. § 12–1101. In such an action, a
plaintiff requests that a “defendant be barred and forever estopped from
having or claiming any right of title to the premises adverse to the plaintiff.”
A.R.S. § 12–1102(5).
¶12 Edmonds does not dispute that (1) more than three months
before she filed her amended complaint, LSREF2 Cobalt (AZ) conveyed the
Property to 9540, L.L.C. and (2) Edmonds did not record a notice of lis
pendens, which would have alerted any potential buyer of the pending
litigation. See A.R.S. § 12–1191(B). Edmonds’s quiet title claim fails as a
matter of law because the only defendant she named in Count 14 (LSREF2
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EDMONDS v. LSREF2 COBALT, et al.
Decision of the Court
Cobalt (AZ)) does not claim any right or interest in the Property. Edmonds
cannot prevail on a quiet title claim merely by asserting that a trustee’s sale
error occurred without naming the party who currently owns the Property.
See Steinberger v. McVey ex rel. Cty. of Maricopa, 234 Ariz. 125, 140, ¶ 65 (App.
2014) (“A plaintiff pursuing a quiet title action must allege he holds title to
the property; he cannot seek to quiet title solely based on the alleged
weaknesses of his adversary’s title.”). Simply put, the superior court did
not err in dismissing the quiet title claim because Edmonds failed to include
any allegations that would permit the superior court to divest the current
non-party owner of right, title, and interest in the Property and award
Edmonds title to the Property. Thus, we need not address whether the
trustee’s sale could be deemed invalid based on the credit bid discrepancy.
CONCLUSION
¶13 We affirm the superior court’s order granting Cobalt’s motion
to dismiss and award taxable costs to Cobalt subject to compliance with
ARCAP 21.
AMY M. WOOD • Clerk of the Court
FILED: AA
5