Manicom v. Citimortgage, Inc.

IN THE
ARIZONA COURT OF APPEALS
DIVISION TWO

MICHELE MANICOM AND DONALD CONRAD MANICOM,
WIFE AND HUSBAND,
Plaintiffs/Appellees,

v.

CITIMORTGAGE, INC., SUCCESSOR IN INTEREST BY MERGER TO
ABN AMRO MORTGAGE GROUP, INC.;
Defendant/Appellant.

No. 2 CA-CV 2014-0049
Filed October 28, 2014

Appeal from the Superior Court in Pinal County
No. S1100CV201300198
The Honorable Joseph R. Georgini, Judge

REVERSED AND REMANDED

COUNSEL

Burch & Cracchiolo, P.A., Phoenix
By James M. Stipe and Andrew Abraham
Counsel for Plaintiffs/Appellees

Gust Rosenfeld P.L.C., Phoenix
By Scott A. Malm
Counsel for Defendant/Appellant
 MANICOM v. CITIMORTGAGE, INC.
Opinion of the Court

OPINION

Chief Judge Eckerstrom authored the opinion of the Court, in which
Presiding Judge Miller and Judge Espinosa concurred.

E C K E R S T R O M, Chief Judge:

¶1 This appeal concerns a deed of trust in favor of the
defendant/appellant CitiMortgage, Inc. (Citi). The trial court
determined that an error in the legal description of the real property
in the deed made the plaintiffs/appellees Michele and Donald
Manicom bona fide purchasers without notice of Citi’s lien. The
court therefore granted summary judgment for the Manicoms on
this and other grounds, declaring the deed of trust invalid and
clearing their title to the property pursuant to A.R.S. § 33-420(B). We
reverse and remand for the reasons that follow.

Factual and Procedural Background

¶2 We view the record in the light most favorable to Citi,
the party against whom summary judgment was entered. See Hill-
Shafer P’ship v. Chilson Family Trust, 165 Ariz. 469, 472, 799 P.2d 810,
813 (1990). The subject property previously was owned by Ronnie
and Wanda Owens before they sold it to Robert Whyte, who in turn
sold it to the Manicoms. When the Owens purchased the property,
in 2005, they received a $252,000 loan that was secured by a
recorded deed of trust. That deed described the property as follows:

LOT 027, PHASE II PARCEL 26A AT
RANCHO EL DORADO, ACCORDING
TO THE PLAT OF RECORD IN THE
OFFICE OF THE COUNTY RECORDER
OF PINAL COUNTY, ARIZONA,
RECORDED IN CABINET D, SLIDE 168 . . .
which currently has the address of 21943
NORTH BACKUS DRIVE, MARICOPA,
Arizona 85239

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(emphasis added). The correct legal description of the property is
slide “166,” not slide “168.”

¶3 In 2006, the Owens obtained a second loan and
recorded a second deed of trust that correctly described the subject
property. When Whyte purchased the property, in March 2012, he
discovered and satisfied the second loan. A deed of release and
reconveyance was subsequently recorded for the second deed of
trust.

¶4 In May 2012, the Manicoms purchased the property
from Whyte without actual notice of the first deed of trust. When
Citi later provided the Manicoms with a notice of trustee sale
pursuant to the first deed of trust, they commenced the present
action. The parties then filed cross-motions for summary judgment.

¶5 The trial court denied Citi’s motion but granted the
Manicoms’ requests for declaratory relief finding that they were
bona fide purchasers for value (count one of the complaint) and
clearing title to the property in their favor (count four). The court
also granted “special action relief” pursuant to § 33-420(B) on count
five of the complaint, ordering the county recorder to record a
document clearing the Manicoms’ title. The court dismissed the
Manicoms’ remaining claims as alternative theories for relief, and it
entered a final judgment pursuant to Rule 54(c), Ariz. R. Civ. P. We
have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).

Summary Judgment

¶6 A trial court is required to grant summary judgment
when “there is no genuine dispute as to any material fact and the
moving party is entitled to judgment as a matter of law.” Ariz. R.
Civ. P. 56(a); see Orme Sch. v. Reeves, 166 Ariz. 301, 309, 802 P.2d 1000,
1008 (1990). “We independently determine whether questions of
material fact exist and whether the superior court properly applied
the law.” DeSilva v. Baker, 208 Ariz. 597, ¶ 10, 96 P.3d 1084, 1087
(App. 2004).

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Opinion of the Court

Deed of Trust: Validity, Notice, BFP

¶7 As noted, the trial court found the first deed of trust
invalid because it erroneously described the property and therefore
failed to provide notice to the Manicoms, making them bona fide
purchasers without notice who took the property free of the lien
pursuant to A.R.S. §§ 33-411(A) and 33-412(A).1 We disagree with
these legal conclusions.

¶8 Arizona’s Deeds of Trust Act, A.R.S. §§ 33-801 through
33-821, “is a comprehensive set of statutes governing the execution
and operation of deeds of trust.” In re Bisbee, 157 Ariz. 31, 33, 754
P.2d 1135, 1137 (1988). A deed of trust recorded under the act
provides constructive notice of the deed’s contents to “all persons,”
including subsequent purchasers. § 33-818; Main I Ltd. P’ship v.
Venture Cap. Constr. & Dev. Corp., 154 Ariz. 256, 259, 741 P.2d 1234,
1237 (App. 1987). Constructive notice contrasts with actual notice,
Onekama Realty Co. v. Carothers, 59 Ariz. 416, 424, 129 P.2d 918, 921-
22 (1942), and is defined as knowledge of a fact or circumstance that
is imputed by operation of law. Main I, 154 Ariz. at 259, 741 P.2d at
1237; Black’s Law Dictionary 1227 (10th ed. 2014).

¶9 As the trial court correctly observed below, a deed of
trust is a creature of statute, Binder v. Fruth, 150 Ariz. 21, 22, 721 P.2d
679, 680 (App. 1986), and must contain “the legal description of trust
property.” § 33-802(A). But our supreme court has rejected “a
theory of strict statutory construction” that would hold any defect in
such an instrument as fatal to providing constructive notice to third
parties. Bisbee, 157 Ariz. at 32-33, 754 P.2d at 1136-37; accord Watson
Constr. Co. v. Amfac Mortg. Corp., 124 Ariz. 570, 575, 606 P.2d 421, 426
(App. 1979) (finding deed of trust provided constructive notice
despite omission of two pages containing foreclosure clauses).

1Although the court also determined that other instruments
attempting to modify or “re-record[]” the original deed of trust were
invalid, these determinations have not been challenged on appeal,
and we therefore do not disturb them.

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Opinion of the Court

¶10 Instead, the court in Bisbee reiterated the rule that “an
instrument is constructive notice of the rights claimed thereunder if
it is of a character which the recording statutes permit to be recorded
and if it sufficiently apprises third parties of the rights claimed by
it.” 157 Ariz. at 35, 754 P.2d at 1139; see Carley v. Lee, 58 Ariz. 268,
272, 119 P.2d 236, 238 (1941); cf. § 33-808(E) (stating erroneous legal
description of trust property does not invalidate trustee sale “if
considered as a whole the information provided is sufficient to
identify the trust property”). Arizona is thus in accord with the
general rule that when “a part of the land description is incorrect or
omitted, such as a boundary or block number, but the balance
appears to relate to the property involved, a title examiner is placed
on inquiry and the record constitutes constructive notice.” Joyce
Palomar, Patton and Palomar on Land Titles, § 81 (3d ed. 2003); see, e.g.,
Wheeler Perry Co. v. Mortg. Bond Co., 41 Ariz. 247, 250-51, 17 P.2d 331,
332 (1932) (upholding homestead exemption despite omission of
block number in description of land). “‘Notice of facts and
circumstances which would put a [person] of ordinary prudence
and intelligence on inquiry is . . . equivalent to knowledge of all of
the facts a reasonably diligent inquiry would disclose.’” Hall v.
World Sav. & Loan Ass’n, 189 Ariz. 495, 500-01, 943 P.2d 855, 860-61
(App. 1997), quoting Maricopa Utils. Co. v. Cline, 60 Ariz. 209, 214, 134
P.2d 156, 158 (1943) (omission in Hall).

¶11 In this case, the deed of trust contained an incorrect
legal description insofar as it referred to slide “168” rather than slide
“166.” Otherwise, however, the legal description of the trust
property was accurate. The deed also correctly identified the subject
property by its street address, and it correctly listed the trustors’
names.

¶12 The Deeds of Trust Act clearly contemplates that legal
descriptions sometimes will be incorrect and that information such
as street addresses may then assist in identifying the property at
issue, even though such addresses ordinarily are not an acceptable
substitute. See § 33-808(C)(2) (requiring notice of sale to contain “the
street address . . . as well as the legal description of the trust
property”), (E) (“Any error in the legal description of the trust
property shall not invalidate a trustee’s sale if considered as a whole

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the information provided is sufficient to identify the trust property
being sold.”). Section 33-815 also specifically requires a county
recorder to index the trustor of a deed of trust in the same manner as
a mortgagor, thereby providing a means other than a legal
description for discovering a lien on real property. See A.R.S. §§ 11-
462, 11-463 (requiring recorder to maintain alphabetical indices by
grantor and grantee).

¶13 Here, the correct address was sufficient to identify the
trust property in question. And, as in Bisbee, 157 Ariz. at 35, 754 P.2d
at 1139, the erroneous legal description did not affect the indexing of
the deed of trust by the trustor. Such proper indexing gives
“constructive notice to the world” of the substance of a recorded
deed. Watson, 124 Ariz. at 576, 606 P.2d at 427.

¶14 Thus, when we consider the present circumstances
together with these features of the overall act, see Bisbee, 157 Ariz. at
33, 754 P.2d at 1137, we cannot agree that the deed of trust in this
case was invalid or failed to provide constructive notice. Given the
totality of the information in the deed, it adequately identified the
subject property and alerted a reasonably prudent person to the
erroneous legal description. Cf. Hamilton v. Wash. Mut. Bank FA (In
re Colon), 563 F.3d 1171, 1173 (10th Cir. 2009) (concluding incorrect
lot number in description of otherwise accurate mortgage did not
invalidate instrument); Valley Nat’l Bank of Ariz. v. Educ. Credit
Bureau, Inc., 23 Ariz. App. 148, 151-52, 531 P.2d 193, 196-97 (1975)
(finding writ gave constructive notice of property subject to lien,
notwithstanding incorrect lot number in otherwise accurate
description). Despite the single-digit error in the legal description,
the deed of trust “sufficiently apprise[d] third parties of the rights
claimed by it.” Bisbee, 157 Ariz. at 35, 754 P.2d at 1139. Accordingly,
the recorded deed provided constructive notice of the lien and
thereby denied the Manicoms the status of bona fide purchasers
without notice pursuant to § 33-412(A). See § 33-818.

¶15 In reaching the opposite conclusion, the trial court
determined the Manicoms had no constructive notice of the deed of
trust because they had no duty to search the grantor index for any
lien created by an owner before their immediate predecessor. The
court further concluded that even had they engaged in such an

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undertaking, a reasonably diligent search “would not put a person
on notice of anything” due to the defective legal description in the
deed. The Manicoms urge these same conclusions on appeal,
asserting more broadly that they had no duty to search the grantor
index. We reject this argument and disagree with the court’s legal
determinations.

¶16 The specific requirement in § 33-815 that deeds of trust
be indexed by trustor, or grantor, is not a gratuitous provision with
no legal effect. See § 33-801(11) (defining trustor as one who conveys
property by trust deed). We do not interpret statutes to be
meaningless or trivial. See St. Paul Fire & Marine Ins. Co. v. Gilmore,
168 Ariz. 159, 165, 812 P.2d 977, 983 (1991). The plain purpose of this
indexing provision is to provide notice to third parties and potential
purchasers of the “content” of a recorded deed under § 33-818. “A
recorded deed provides constructive notice ‘to those who are bound
to search for it,’” State ex rel. Darwin v. Arnett, 235 Ariz. 239, ¶ 25, 330
P.3d 996, 1000 (App. 2014), quoting Lowe v. Pima County, 217 Ariz.
642, ¶ 21, 177 P.3d 1214, 1219 (App. 2008), and “[a] purchaser is
charged with such knowledge as a proper examination of the record
would reveal even though he does not in fact examine the record.”
Davis v. State, 1 Ariz. App. 264, 268, 401 P.2d 749, 753 (1965).

¶17 Although an alphabetical list of grantors or mortgagors
is admittedly “not as efficient or accurate as a tract index,” it
nevertheless allows a chain of title to be traced from a known owner,
with “mortgages and other encumbrances” then ascertained through
an examination of “the grantor indices . . . for the period that said
party owned the premises.” Palomar, supra, § 67. Sections 33-815
and 33-818 of the Deeds of Trust Act thus work together to give
constructive notice to “all persons” by creating a duty to search
grantor and grantee indices for potential liens, at least for the
relevant six-year limitation period provided for sales and
foreclosures under deeds of trust.2 See § 33-816 (limiting action or

2 Although the Manicoms submitted an affidavit of a
purported expert from a title and trust company offering opinions
about their duty, this evidence is legally irrelevant, as common
industry practices neither determine the duty imposed by law nor

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sale of trust property); Stewart v. Underwood, 146 Ariz. 145, 150, 704
P.2d 275, 280 (App. 1985) (noting specific limitation period); see also
Colon, 563 F.3d at 1180-81 (recognizing duty to search grantor index);
Adaven Mgmt., Inc. v. Mountain Falls Acquisition Corp., 191 P.3d 1189,
1195 (Nev. 2008) (same).

¶18 Here, the alphabetical grantor index maintained by the
county recorder contained an entry for the trustor, Ronnie R. Owens,
and a reference to the 2005 deed of trust, which was identified by its
specific “fee number.” The deed of trust available through that
index, in turn, identified the lien on the Manicoms’ property
through its street address and a mostly accurate legal description, as
noted above. Under § 33-818, a person has constructive notice of the
contents of every instrument in a chain of title. Cf. Colon, 563 F.3d at
1180-81 (discussing similar Kansas statute). And constructive notice
exists despite the fact that an instrument may be difficult or
cumbersome to locate. See Stephen v. Patterson, 21 Ariz. 308, 312-13,
188 P. 131, 133 (1920) (holding instrument creating equitable
mortgage gave notice of lien on mines to subsequent purchasers
despite being recorded in “Miscellaneous” book rather than book for
mortgages).

¶19 In its written ruling, the trial court did not address
Bisbee or utilize its “sufficiently apprises” standard. 157 Ariz. at 35,
754 P.2d at 1139.3 Rather, the court relied on a pair of cases from this

affect the operation of constructive notice. See Colon, 563 F.3d at
1180-81 & 1181 n.3; see also Palomar, supra, § 53 (noting abbreviated
searches beginning with the last insured conveyance are not
necessarily reasonable, even if commonplace). To the extent the
Manicoms did not search the grantor-grantee indices at all, did not
extend such a search beyond the seller in their transaction, or relied
solely on the recorder’s indices rather than examining the contents
of the recorded items in the chain of title, this would constitute
negligence as a matter of law. See Colon, 563 F.3d at 1180.
3Although the parties did not cite Bisbee below, they did cite
Carley, 58 Ariz. at 272, 119 P.2d at 238, which promulgated the
“sufficiently apprises” standard and served as the basis of the Bisbee
decision.

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court—3502 Lending, LLC v. CTC Real Estate Serv., 224 Ariz. 274, 229
P.3d 1016 (App. 2010), and Phipps v. CW Leasing, Inc., 186 Ariz. 397,
923 P.2d 863 (App. 1996)—to conclude the deed of trust was invalid
and “must be” treated as unrecorded.

¶20 While those decisions do not cite Bisbee, they neither
conflict with our supreme court’s precedent nor alter our conclusion
here. See Myers v. Reeb, 190 Ariz. 341, 342, 947 P.2d 915, 916 (App.
1997) (recognizing court of appeals cannot ignore, overrule, or
modify supreme court’s decisions). In fact, we recognized in 3502
Lending the principle that a defective deed of trust nonetheless
provides constructive notice if it sufficiently apprises third parties of
the nature and substance of the rights claimed therein. 224 Ariz.
274, ¶ 17, 229 P.3d at 1019. Our further observation that a “defective
instrument may be treated as one that was unrecorded,” id. n.1
(emphasis added), is inapposite to situations such as the one here,
where a deed of trust is in fact recorded and is legally sufficient
despite its defect.

¶21 Phipps, which concerned a right of first refusal, is
similarly distinguishable. 186 Ariz. at 399, 923 P.2d at 865. In that
case, we observed that such an instrument is required by § 33-411 to
be acknowledged in order to be “‘deemed lawfully recorded.’” Id. at
401, 923 P.2d at 867, quoting § 33-411(B). We further noted that the
same statute contains a provision that expressly cures “any defect,
omission or informality in the certificate of acknowledgment” under
certain circumstances. Id., quoting § 33-411(C). Because the right of
refusal in that case both lacked the necessary acknowledgement and
did not fall within the exceptions provided by statute, we concluded
it failed to give constructive notice. Id. at 401-02, 923 P.2d at 867-68;
see also W.W. Planning, Inc. v. Clark, 10 Ariz. App. 86, 88, 456 P.2d
406, 408 (1969) (“Before an instrument will be deemed to be lawfully
recorded and to impart constructive notice it must have been
acknowledged.”). Here, we are not concerned with the distinct
statutory requirement of acknowledgement or with an instrument
that cannot be deemed lawfully recorded because it falls outside an
express savings clause. Under the Deeds of Trust Act, constructive
notice is specifically conditioned upon an instrument being

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“acknowledged as provided by law.” § 33-818. Yet no equivalent
condition exists for legal descriptions.

¶22 The Manicoms nevertheless suggest that a correct legal
description should be an essential element of a deed of trust,
because § 33-802(A) specifically provides “the legal description” as
the means of identifying trust property. They further assert that a
contrary interpretation would render this statutory requirement
“pointless.” We agree that a legal description is essential, but we
reject their all-or-nothing argument for at least two reasons. First,
there is a meaningful distinction between partial errors, such as the
incorrect legal description here, and wholesale omissions. See, e.g.,
Phipps, 186 Ariz. at 402 n.1, 923 P.2d at 868 n.1 (distinguishing
mistakes in acknowledgment from failure to obtain any
acknowledgment). Second, we must remain cognizant of the fact
that our supreme court in Bisbee upheld a deed of trust that had
omitted a trustee. 157 Ariz. at 34, 754 P.2d at 1138. A designated
trustee is a definitional element of a deed of trust, § 33-801(8), and is
therefore equally essential, as a matter of a statutory prescription, as
a legal description of trust property.

¶23 Bisbee instructs us, moreover, that we do not strictly
enforce every element of a deed of trust; rather, we examine the
Deeds of Trust Act “as a whole” to determine whether the
legislature intended for a defect to be fatal. 157 Ariz. at 33, 754 P.2d
at 1137; see Phipps, 186 Ariz. at 401, 923 P.2d at 867 (“Statutes must
be given a sensible construction which accomplishes the legislative
intent behind them and which avoids absurd results.”). As
indicated above, we can find no language in the Deed of Trusts Act
suggesting the legislature intended a relatively minor error in a legal
description to destroy the constructive notice imparted to “all
persons” of the “content” of a recorded deed of trust. § 33-818.
Although a legal description is certainly necessary and is the
preferred method of identifying trust property, the statutory scheme
indicates that what is essential is that the property be “identified
with a sufficient certainty in the public record.” Valley Nat’l Bank, 23
Ariz. App. at 150, 531 P.2d at 195. The “sufficiently apprises”
standard in Bisbee, 157 Ariz. at 35, 754 P.2d at 1139, furthers rather
than undermines the legislative intent manifested in the act and

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avoids the absurd and unintended consequences that would
generally flow from a strict-construction standard.

¶24 Finally, although the trial court correctly observed that
constructive notice is a policy-based imputation of knowledge, see
Main I, 154 Ariz. at 259, 741 P.2d at 1237, the constructive notice
given by a recorded deed is given to “all persons.” § 33-818.
Constructive notice from recorded instruments is thus a matter of
general public policy and cannot be averted based on “policy”
considerations unique to the particular parties in the action.

Alternative Grounds

¶25 The trial court also granted summary judgment to the
Manicoms on a variety of alternative grounds, namely laches,
waiver, equitable estoppel, and the equitable theory that, as between
two innocent parties who have suffered a loss from the wrongdoing
of a third, the one who made the loss possible should bear it. See
Newman v. Fid. Sav. & Loan Ass’n, 14 Ariz. 354, 360, 128 P. 53, 55
(1912). Again, we review de novo the trial court’s granting of
summary judgment. See DeSilva, 208 Ariz. 597, ¶ 10, 96 P.3d at 1087.
“Similarly, the determination of whether equitable relief is available
and appropriate is subject to our de novo review.” Andrews v. Blake,
205 Ariz. 236, ¶ 12, 69 P.3d 7, 11 (2003).

¶26 Preliminarily, we agree with Citi that the trial court
“erroneously relied on equity to circumvent constructive notice”
insofar as the court found the Manicoms were “unsuspecting
purchasers” who could not have discovered the deed of trust and
were not responsible for knowing its contents. The court was not
authorized to grant the Manicoms the relief they would be entitled
to as bona fide purchasers without notice, pursuant to § 33-412(A),
when they were, in fact, charged with constructive notice of the
recorded deed of trust by § 33-818. “When rights are clearly
established and defined by a statute, equity has no power to change
or upset such rights.” Valley Drive-in Theatre Corp. v. Superior Court,
79 Ariz. 396, 399, 291 P.2d 213, 214 (1955); accord McDermott v.
McDermott, 129 Ariz. 76, 77, 628 P.2d 959, 960 (App. 1981) (noting
“equity follows the law”). The Manicoms therefore cannot be

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deemed innocent parties who suffered harm as a result of a third
party’s wrongdoing.

¶27 The theory of equitable estoppel is similarly unavailing.
To be entitled to summary judgment on the question of estoppel, the
Manicoms “had to show the absence of any factual conflict and the
right to judgment as a matter of law.” Villas at Hidden Lakes Condos.
Ass’n v. Geupel Constr. Co., 174 Ariz. 72, 78, 847 P.2d 117, 123 (App.
1992). “The three elements of equitable estoppel are . . . (1) the party
to be estopped commits acts inconsistent with a position it later
adopts; (2) reliance by the other party; and (3) injury to the latter
resulting from the former’s repudiation of its prior conduct.”
Valencia Energy Co. v. Ariz. Dep’t of Rev., 191 Ariz. 565, ¶ 35, 959 P.2d
1256, 1267-68 (1998). The party seeking estoppel must establish both
its actual reliance on the other party’s act and “that such reliance
was reasonable under the circumstances.” Id. ¶ 37.

¶28 The record does not show any inconsistent acts on Citi’s
part that are “absolute and unequivocal” in establishing equitable
estoppel. Knight v. Rice, 83 Ariz. 379, 381, 321 P.2d 1037, 1038 (1958).
Nor does the record establish any actual reliance by the Manicoms.
As Citi points out, the record reveals that it received a payoff request
for the second mortgage on the subject property and that Citi
subsequently transmitted a payoff statement for a “Second
Mortgage” in March 2012 to the Manicoms’ immediate predecessor
during his transaction with the Owens. See A.R.S. § 33-715(C).
These actions concerning the second mortgage were not necessarily
inconsistent with Citi later asserting its rights under the first. In
addition, there is no indication that the Manicoms relied on any
communications made during the sale between the Owens and
Whyte.

¶29 Moreover, equitable estoppel is unavailable here given
that it was unreasonable, as a matter of law, for the Manicoms to
rely on Citi’s earlier actions as disclaiming all its interests in the
subject property. Reliance is not reasonable or justified when a
person is on notice to make further inquiries. See Valencia, 191 Ariz.
565, ¶ 37, 959 P.2d at 1268. As we explained above, the information
available in the public record gave the Manicoms constructive notice

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of the first deed of trust. Hence, they cannot invoke equitable
estoppel here.

¶30 To support its conclusions regarding both estoppel and
waiver, the trial court found that Citi had made a “decision that it
was not going to pursue whatever lien rights it had” when it issued
the payoff statement for the “Second Mortgage” during the sale
from the Owens to Whyte. “Waiver is either the express, voluntary,
intentional relinquishment of a known right or such conduct as
warrants an inference of such an intentional relinquishment.” Am.
Cont’l Life Ins. Co. v. Ranier Constr. Co., 125 Ariz. 53, 55, 607 P.2d 372,
374 (1980). However, under the proper standard of review, “the
facts and all reasonable inferences therefrom” must be viewed “in a
light most favorable to the party opposing the motion for summary
judgment.” Amfac Distrib. Corp. v. J.B. Contractors, Inc., 146 Ariz. 19,
23, 703 P.2d 566, 570 (App. 1985). By this standard, the record does
not demonstrate that Citi intended to relinquish or forego its
entitlement to pursue the lien securing the first mortgage loan.
Instead, the record suggests that Citi was responding to a specific
request for the second mortgage, as its payoff statement indicated.
The deed of release and reconveyance that subsequently was
recorded likewise referred to the second deed of trust related to the
second mortgage, not the first.

¶31 A trier of fact nonetheless could conclude, as the
Manicoms insist, that Citi’s acceptance of money from Whyte
designated as payment for the “first mortgage” indicated that all
debts on the property were deemed satisfied and that Citi intended
at that time to waive its interests from the first deed of trust, which
Citi might have viewed as invalid. But the question of waiver
involves disputed matters of fact and inference that preclude the
entry of summary judgment. See Santiago v. Phx. Newspapers, Inc.,
164 Ariz. 505, 508, 794 P.2d 138, 141 (1990) (“The court may grant
summary judgment only if no dispute exists as to any material facts,
if only one inference can be drawn from those facts, and if the
moving party is entitled to judgment as a matter of law.”).

¶32 Laches also is unavailable to the Manicoms. “Laches is
the ‘equitable counterpart to the statute of limitations, designed to
discourage dilatory conduct. Laches will generally bar a claim when

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the delay is unreasonable and results in prejudice to the opposing
party’ even where the applicable statute of limitations has not yet
expired.” In re Indenture of Trust Dated January 13, 1964, 235 Ariz. 40,
¶ 22, 326 P.3d 307, 315 (App. 2014), quoting Sotomayor v. Burns, 199
Ariz. 81, ¶ 6, 13 P.3d 1198, 1200 (2000) (citation omitted). The trial
court found that Citi had “no excuse” for waiting to assert its lien
rights until the Manicoms had purchased the property and that
relief was appropriate to prevent prejudice to them and avoid an
“unjust result.”

¶33 We note that the Manicoms have not provided any
Arizona authority to directly support the proposition that laches
may be used to prevent a sale under a valid deed of trust. In fact,
there is some authority for the view that laches cannot be employed
simply to avoid the constructive notice provided by a recorded
instrument. See Warren v. Whitehall Income Fund 86, 170 Ariz. 241,
245, 823 P.2d 689, 693 (App. 1991) (rejecting laches argument that
would defeat purpose of lis pendens to provide constructive notice
to potential buyers).

¶34 Ultimately, however, we are bound by our supreme
court’s decision in Provident Mutual Building-Loan Ass’n v.
Schwertner, 15 Ariz. 517, 140 P. 495 (1914). In that case, the court
held that when a property owner brings suit to remove a cloud on
his title caused by an unsatisfied mortgage from his predecessor, he
first must pay off the predecessor’s debt. Id. at 517, 519, 140 P. at
495, 496. The court reasoned that “equity will not grant relief, except
upon condition that the debtor pay or tender payment of the debt
secured.” Id. at 519, 140 P. at 496. Thus, since our early statehood,
we have followed the rule that “the statutory action to quiet title
cannot be sustained as against a mortgage debt confessedly unpaid.”
Id.; accord Farrell v. West, 57 Ariz. 490, 491, 114 P.2d 910, 911 (1941);
Sec. Trust & Sav. Bank v. McClure, 29 Ariz. 325, 333, 241 P. 515, 517
(1925). While we may be inclined to qualify this statement, making
an equitable exception for situations in which the successor to a
mortgagor has paid money for the property that could have satisfied
the undiscovered debt, it is the role of our supreme court, not this
court, to limit or modify the principle announced in Schwertner to
accommodate such circumstances. See State v. Bejarano, 219 Ariz.

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Opinion of the Court

518, ¶ 6, 200 P.3d 1015, 1017 (App. 2008) (“[W]e may not disregard
or modify the law as articulated by the Arizona Supreme Court.”).

Conclusion

¶35 In sum, we conclude the trial court erred as a matter of
law in determining the first deed of trust was invalid, deeming it
unrecorded, and designating the Manicoms as bona fide purchasers
for value without notice. The first deed of trust is valid and
provided constructive notice of the lien to the Manicoms. The court
also erred in granting summary judgment to the Manicoms on the
basis of laches, equitable estoppel, and the equitable theory that they
were innocent parties harmed by a third party’s wrongdoing. The
question of whether Citi waived its interests in the first deed of trust
involves a disputed matter of fact and inference that remains to be
resolved by the trier of fact.

¶36 The trial court erred in granting summary judgment to
the Manicoms on counts one, four, and five of their complaint with
respect to the first deed of trust. Although the disputed factual
question of waiver precludes the entry of summary judgment on
counts four and five, the court is directed to enter summary
judgment in favor of Citi on count one of the Manicoms’ complaint
with respect to the first deed of trust. See Hilb, Rogal & Hamilton Co.
of Ariz. v. McKinney, 190 Ariz. 213, 215-16, 946 P.2d 464, 466-67 (App.
1997) (recognizing ability of court of appeals to direct entry of
summary judgment when facts uncontroverted).

¶37 We do not address the other claims raised in the
Manicoms’ complaint, which the trial court dismissed as moot
without discussion. Because the denial of a motion for summary
judgment is not itself an appealable order, see In re 1996 Nissan
Sentra, 201 Ariz. 114, ¶ 16, 32 P.3d 39, 44 (App. 2001); Bothell v. Two
Point Acres, Inc., 192 Ariz. 313, ¶ 7, 965 P.2d 47, 50 (App. 1998), and
because the trial court did not address these claims below, see
Stewart v. Mut. of Omaha Ins. Co., 169 Ariz. 99, 108, 817 P.2d 44, 53
(App. 1991), we decline to address them in the first instance on
appeal. We further note that the record lacks a clear ruling on the
Manicoms’ motion for leave to amend the complaint by adding
another claim for relief.

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Opinion of the Court

Attorney Fees

¶38 Citi requests an award of its appellate attorney fees
pursuant to A.R.S. § 12-341.01(A). See Phillips v. Superior Court, 143
Ariz. 189, 195, 692 P.2d 1038, 1044 (App. 1984) (granting award in
action involving deed of trust). An award of attorney fees is
permissive under this provision, not mandatory, Charbonneau v. Blue
Cross of Wash. & Alaska, 130 Ariz. 160, 164, 634 P.2d 972, 976 (App.
1981), and we deny Citi’s request in the exercise of our discretion.
See Deutsche Credit Corp. v. Case Power & Equip. Co., 179 Ariz. 155,
164, 876 P.2d 1190, 1199 (App. 1994).

Disposition

¶39 For the foregoing reasons, we reverse the trial court’s
judgment, including its award of attorney fees and costs, and
remand for further proceedings consistent with this opinion. We
grant Citi’s request for costs on appeal, subject to its compliance
with Rule 21, Ariz. R. Civ. App. P.

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