¶ 1 This is the third appeal stemming from a 2009 judicial foreclosure sale of a house. Joseph J. Giraudo appeals from a summary judgment ruling that the amount he must pay as a junior lienholder to redeem the property includes the total value of the foreclosing senior lien and not merely the sale price at the foreclosure sale. The Helvetica Group cross-appeals a summary judgment dismissing its claims that Giraudo recorded a document claiming an interest in property that he knew or should have known was groundless or invalid. For the following reasons, we affirm the dismissal of the counterclaim and reverse in part the superior court's determination of the redemption price and remand for further proceedings to determine the redemption price.
¶ 2 We hold that the junior lienholder who redeems a property after a foreclosure sale must pay (1) the purchase price at the sale, plus eight percent, and (2) any portion of the lien that survives the lawsuits between the foreclosing creditor and the mortgage debtor that must be initiated before the junior lienholder's right to redeem ripens.
FACTS AND PROCEDURAL HISTORY
¶ 3 The facts in this case are largely undisputed, and portions of it have already come before us. Helvetica Servicing, Inc. v. Pasquan, 229 Ariz. 493, 277 P.3d 198 (App. 2012) [hereinafter Helvetica I]; Gold v. Helvetica Servicing, Inc., 229 Ariz. 328, 275 P.3d 627 (App. 2012) [hereinafter Helvetica II].
¶ 4 The Pasquans defaulted on the Helvetica loan, and in March 2008 Helvetica initiated foreclosure proceedings but did not join any of the junior lienholders.
¶ 5 The Pasquans divorced in October 2009. Under A.R.S. § 12-1566, Michael Pasquan filed an application to determine the fair market value of the Fanfol Property, and in February 2010 the superior court determined it to be just over $2.2 million. See Helvetica II, 229 Ariz. at 330, ¶¶ 5, 16, 275 P.3d 627. In April 2010, Helvetica attained a revised deficiency judgment of almost $2 million, based on the fair market value determination. Helvetica I, 229 Ariz. at 495, ¶ 7, 277 P.3d 198. In March 2012, we vacated the deficiency judgment because we held that Helvetica's loan was at least in part a purchase money loan subject to the anti-deficiency statutes and remanded the case to the superior court to determine, inter alia, what portion of the loan was entitled to anti-deficiency protection. Id. at 499, 502, ¶¶ 23, 38, 277 P.3d 198; see also A.R.S. § 33-729.
¶ 6 During the proceedings and before the appeal in Helvetica I, Kelly Pasquan attempted to assign her right to redeem the property to a third party, Ronald Gold, who then intervened in the proceeding. Helvetica II, 229 Ariz. at 330, ¶ 12, 275 P.3d 627. We held in Helvetica II that Michael Pasquan's request for a fair market value determination extinguished Kelly Pasquan's right to redeem the property. Id. at 332, ¶ 26, 275 P.3d 627. However, we noted that junior lienholders could still exercise their redemption rights. Id. at ¶ 24 n.2.
¶ 7 On September 1, 2009, Giraudo filed a notice of his intent to redeem the Fanfol Property with the Maricopa County Recorder's office and furnished a $432,000 cashier's check. About two weeks later, the sheriff filed an interpleader action against Giraudo and Helvetica in response to Helvetica's emergency motion to stop Giraudo's redemption. In December 2009, the superior court granted Gold's unopposed motion to consolidate the interpleader action and the original foreclosure.
¶ 8 Helvetica moved to quash Giraudo's redemption arguing in part that Giraudo had to pay the full value of Helvetica's original lien (which at that time had a balance due of over $3.7 million
¶ 9 We review summary judgment rulings de novo. Aranki v. RKP Investments, Inc., 194 Ariz. 206, 208, ¶ 6, 979 P.2d 534 (App. 1999), as corrected (May 3, 1999). Because Helvetica's counterclaim alleges that Giraudo does not have a right to redeem the Fanfol Property based on the terms of his deed of trust, we address the counterclaim first.
I. GIRAUDO HAD A RIGHT TO REDEEM THE PROPERTY, AND THE SUPERIOR COURT PROPERLY DISMISSED HELVETICA'S COUNTERCLAIM.
¶ 10 Helvetica claims Giraudo knew his notice of intent to redeem was "groundless, contain[ed] material misstatements, contain[ed] false claims and [was] otherwise invalid." See A.R.S. § 33-420(A) (awarding damages and attorney's fees to anyone who "causes a document asserting [a] claim to be recorded in the office of the county recorder, knowing or having reason to know that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid"). Helvetica argues that Giraudo is not a creditor, because his deed of trust listed Mortgage Electronic Registration Systems, Inc. ("MERS") as "the beneficiary," which Helvetica argues made MERS the only entity with redemption rights.
¶ 11 We find no merit in this argument. The deed lists Giraudo as the "lender" and the Pasquans as the "borrower[s]."
II. THE REDEMPTION PRICE INCLUDES THE PORTION OF THE FORECLOSING CREDITOR'S LIEN THAT IS NOT SATISFIED BY THE SALE PRICE, REDUCED BY THE FAIR MARKET VALUE DETERMINATION, OR ELIMINATED BY THE ANTI-DEFICIENCY STATUTES.
¶ 12 The only issue Giraudo raises on appeal is whether the redemption price for a junior lienholder includes the value of the foreclosing party's lien. The resolution of this question requires us to consider three issues. First, we must determine whether the redemption statutes require a redeeming junior lienholder to pay the value of the lien of a foreclosing senior lienholder who is also the purchaser at auction. Then we must determine
¶ 13 We begin by looking at several of the redemption statutes. A.R.S. § 12-1566(C) addresses the effect of a request for a fair market value hearing on redemption rights. The statute provides in relevant part:
(Emphasis added.) A.R.S. § 12-1282(C) defines the priority of redemption rights when the property owner does not redeem the property after a foreclosure sale. The statute provides:
(Emphasis added.) And finally, A.R.S. § 12-1285 provides the overall structure of the redemption price calculation:
¶ 14 Each of these three statutes, standing alone, might suggest an answer to the question posed by this appeal. But because they are part of a cohesive overall scheme, we must interpret each statute to avoid rendering "any of its language mere surplusage, and instead give meaning to each word, phrase, clause, and sentence so that no part of the statute will be void, inert, redundant, or trivial." In re Estate of Zaritsky, 198 Ariz. 599, 603, ¶ 11, 12 P.3d 1203 (App. 2000) (internal quotations, citations, and modifications omitted).
¶ 15 Giraudo argues he should only have to pay the sale price. He bases this contention on the last sentence of § 12-1566(C), which he reads to set the redemption price at the foreclosure sale price.
¶ 16 A.R.S. § 12-1285(B) does define the calculation: "If the purchaser is also a creditor having a prior lien to that of the redemptioner, other than the judgment lien, the redemptioner shall pay, in addition, the amount of such creditor's lien with interest." Under this provision, Giraudo's redemption price would be "calculated on the sales price," as § 12-1566(C) requires, and the amount of the senior lien would be "in addition" to that amount. This reading gives meaning to both §§ 12-1566 and -1285. We then must determine the amount of the senior lien.
¶ 17 In situations where a senior lienholder forecloses on the property, §§ 12-1282 and -1566 provide that a junior lienholder may redeem the property only after the mortgage debtor's opportunity to redeem or request a fair market value determination has expired. Thus, by the time a junior lienholder's right to redeem ripens, the lien's value may have changed. We hold that the redemption price includes only the portion of the lien that survives any actions between the foreclosing creditor and the mortgage debtor that must be commenced before the junior lienholder's right to redeem ripens.
¶ 18 Giraudo argues that the phrase "other than the judgment lien" in § 12-1285(B) means that a junior lienholder seeking to redeem must pay all the liens senior to his own except the one that was foreclosed. We disagree because the foreclosed senior mortgage lien is not a "judgment lien."
¶ 19 "Judgment liens do not exist at common law, they exist only by statute.... As a result, strict compliance with the statutory requirements is necessary to perfect a valid judgment lien." Sysco Ariz., Inc. v. Hoskins, 235 Ariz. 164, 165, ¶ 8, 330 P.3d 354 (App. 2014) (citations omitted); see generally, Arizona Revised Statutes Title 33, Chapter 7, Article 5 (Judgment Liens on Real Property). Judgments on foreclosed mortgages differ from judgment liens in two important respects. First, there is no requirement that a foreclosure judgment be separately recorded before the sale. Cf. A.R.S. § 33-961 ("Failure to substantially comply with this section and § 33-967, results in the judgment not becoming a lien."). To the contrary, a judgment of foreclosure must include an order that the property be sold, and recordation under § 33-961 would be superfluous. See A.R.S. § 33-725. In short, there is no requirement that a foreclosure judgment be treated as a new "judgement lien" separate from the mortgage lien it forecloses.
¶ 20 Second, judgment liens do not apply to homestead property. A.R.S. § 33-964(B) provides that "[a]ny person entitled to a homestead on real property as provided by law holds the homestead property free and clear of the judgment lien." And A.R.S. § 33-1103(A) provides that a homestead is exempt from sale under a "judgment or lien" but is not exempt from sale under "[a] consensual lien, including a mortgage or deed of trust...." By distinguishing consensual liens from other judgments and liens, the legislature permits consensual lienholders to foreclose on homestead property but not judgment lienholders. Because the legislature has expressly defined "judgment liens" in § 33-964, and treated them differently from "consensual liens," we hold that the term "judgment lien" as used in § 12-1285(B) does not include a judgment on a foreclosed mortgage.
¶ 21 Next, we must determine whether Michael Pasquan's request for a fair market value determination, which reduced the deficiency judgment by about $2.2 million, affects the redemption price of junior lienholders. Helvetica argues that the redemption amount is the sale price, plus eight percent, plus the original, full value of the foreclosed lien. It contends that when it purchased the property at auction, it kept its $3.4 million lien on the property. In support, Helvetica relies on language in Kries v. Allen Carpet, Inc.: "Arizona, in amending its statute, did not follow California's lead in providing that judgment liens are extinguished after the sale of the subject property." 146 Ariz. 348, 351, 706 P.2d 360
Id. (emphasis added). We find no support in Kries for Helvetica's contention that a mortgage lender can purchase property at auction at an artificially low price and still maintain the balance owed on its deed of trust as a lien on the property once the property is redeemed by another creditor.
¶ 22 The redemption price includes the value of the foreclosing lien not because the lien remains attached to the property, but because the redemption statutes require its inclusion. The value of the lien is determined by the deficiency judgment after the foreclosure sale. Redeeming junior lienholders must only pay the value of the foreclosed senior lien that survives the post-auction proceedings between the foreclosing lienholder and the mortgage debtor. The mortgage debtor's only opportunity to request a fair market value determination or redeem the property is before the junior lienholder's redemption right begins. A.R.S. § 12-1566(C). We therefore hold that when the judgment debtor requests a fair market value determination, the junior lienholder's redemption price is reduced to the extent the deficiency judgment is reduced by the fair market value proceedings.
¶ 23 Because we hold that the redeeming junior lienholder must pay the lien as it exists when its right to redeem ripens, we must also determine whether the junior lienholder's redemption price is affected by the anti-deficiency statutes. The relevant statute reads:
A.R.S. § 33-729(A) (emphases added). Reading the redemption and anti-deficiency statutes together, we conclude they allow the junior lienholder to make the senior lienholder whole by paying the outstanding value of its allowable deficiency judgment. By rendering a portion of the debt unenforceable against the judgment debtor, the anti-deficiency statutes effectively reduce the lien value immediately upon the sale of the property. When a deficiency judgment is smaller than the loan balance because of the anti-deficiency statute, the redemption price is likewise reduced.
¶ 24 Though the language of the anti-deficiency statute implies that the deficiency judgment could be enforceable against someone other than the judgment debtor, it is the redemption statutes, not the anti-deficiency statutes, that determine the redemption price. The anti-deficiency statutes might be enforceable against someone other than the
¶ 25 We are unable to determine from this record what portion of the lien is subject to anti-deficiency protection or how much of the deficiency judgment is still unpaid. See Helvetica I, 229 Ariz. at 502, ¶¶ 38-39, 277 P.3d 198. If the full value of the lien is canceled by the fair market value determination and the anti-deficiency statute, then Giraudo's redemption was proper and he is entitled to title of the Fanfol Property. If any part of the lien value is still enforceable against the Pasquans, then the price of redemption must include that amount.
¶ 26 For the forgoing reasons, we affirm the superior court's dismissal of Helvetica's counterclaim. We affirm the ruling that the redemption price includes the value of Helvetica's lien but reverse the determination that the redemption price is the face value of Helvetica's lien as it existed immediately following the foreclosure sale. We hold that the redemption price is the sales price at auction, plus eight percent, plus the value of the deficiency judgment that is enforceable against the mortgage debtors when the junior lienholder's redemption right ripens. We remand for further proceedings to determine the redemption price.