                                  IN THE
             ARIZONA COURT OF APPEALS
                               DIVISION ONE


   HELVETICA SERVICING, INC., a California corporation, formerly
 known as CRM VENTURE LAW, INC., dba THE HELVETICA GROUP,
           Plaintiff/Cross-Claimant/Appellee/Cross-Appellant,

                                      v.

JOSEPH J. GIRAUDO, Third-Party Defendant in interpleader/Appellant/Cross-
                             Appellee.

                            No. 1 CA-CV 15-0490
                              FILED 2-9-2017


           Appeal from the Superior Court in Maricopa County
               Nos. CV2008-050966 and CV2009-029276
                             (Consolidated)
                   The Honorable John Hannah, Judge

   AFFIRMED IN PART, REVERSED IN PART, AND REMANDED


                                 COUNSEL

Buchalter Nemer, PC, Scottsdale
By Roger W. Hall, Jason Edward Goldstein
Counsel for Plaintiff/Cross-Claimant/Appellee/Cross-Appellant

The Kozub Law Group, Scottsdale
By Daniel L. Kloberdanz
Counsel for Third-Party Defendant in interpleader/Appellant/Cross-Appellee
                          HELVETICA v. GIRAUDO
                            Opinion of the Court



                                   OPINION

Presiding Judge Peter B. Swann delivered the opinion of the Court, in which
Judge Patricia A. Orozco (retired) and Chief Judge Michael J. Brown joined.


S W A N N, Judge:

¶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 (App. 2012) [hereinafter Helvetica I]; Gold v. Helvetica Servicing, Inc., 229
Ariz. 328 (App. 2012) [hereinafter Helvetica II].1 In May 2003, Michael and
Kelly Pasquan purchased a home in Paradise Valley (“the Fanfol Property”)
with a cash payment and a $600,000 loan. Helvetica I, 229 Ariz. at 495, ¶ 2.
The Pasquans refinanced the original loan and took out additional loans
totaling about $2.1 million to cover the costs of demolishing most of the old
home and building a new one. Helvetica I, 229 Ariz. at 495, ¶¶ 2–4. In 2006,


1      The two opinions were decided around the same time by different
panels of this court in 2012. See Helvetica I, 229 Ariz. at 493, 502; Helvetica II,
229 Ariz. at 328, 330.


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                         HELVETICA v. GIRAUDO
                           Opinion of the Court

the Pasquans took out a $3.4 million loan serviced by Helvetica and secured
by a deed of trust against the Fanfol Property. Id. at 495, ¶ 5. The Helvetica
loan covered the cost of the interest payments on the Helvetica loan and
“improvements, landscaping, maintenance, taxes, utilities and marketing
fees for the house.” Id. Michael Pasquan contended in Helvetica I that the
Helvetica loan also refinanced the existing $2.1 million debt on the
property. Id. at 497, ¶ 12. In June 2007, Giraudo lent the Pasquans $200,000
secured by a recorded junior deed of trust on the Fanfol Property.

¶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.2 Helvetica obtained a judgment for over $3.6 million
against the Pasquans and the sheriff initiated a foreclosure sale. At the
foreclosure sale in July 2009, Helvetica was the sole bidder. It purchased
the Fanfol Property for $400,000.

¶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. 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. 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; 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. 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. However, we noted that



2      Because the junior lienholders were not joined in the foreclosure
proceedings, their interests were not defeated when the property was sold
at auction. Hummel v. Citizens’ Bldg. & Loan Ass’n, 38 Ariz. 54, 56 (1931). In
a motion before the trial court, Helvetica admitted that it deliberately chose
not to name any of the junior creditors to “invite[] junior lienholder
redemption.”


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                         HELVETICA v. GIRAUDO
                           Opinion of the Court

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 million3), not merely the
sale price at the foreclosure sale. Helvetica also asserted a counterclaim that
Giraudo filed a “groundless, false and invalid” redemption claim to the
detriment of Helvetica and sought actual and treble damages. In July 2010,
the superior court granted Helvetica’s motion to quash Giraudo’s
redemption but did not issue an appealable order. The superior court
reasoned that $3.4 million of the lien had survived the foreclosure sale as
“represented by its Deed of Trust.”4 In August 2012, Helvetica moved for
summary judgment against Giraudo. In light of our holding in Helvetica II,
Giraudo filed his second motion to reconsider the July 2010 ruling. The
superior court denied Giraudo’s motion and in June 2015 issued a final
order quashing Giraudo’s redemption filing and dismissing Helvetica’s
counterclaim. Giraudo appeals and Helvetica cross-appeals.

                               DISCUSSION

¶9             We review summary judgment rulings de novo. Aranki v.
 RKP Investments, Inc., 194 Ariz. 206, 208, ¶ 6 (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.




3      The balance was net of the $400,000 sales price at auction.

4     Giraudo’s first motion to reconsider argued that the deed of trust
was no longer a lien against the property after the foreclosure sale. The
superior court summarily denied the motion.


                                      4
                          HELVETICA v. GIRAUDO
                            Opinion of the Court

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].”5 The term “creditor”
does not appear anywhere in the deed. The deed gives Giraudo the right
to repayment of the loan, and provides that in the event of foreclosure he
may “do and pay for whatever is reasonable or appropriate to protect [his]
interests . . . include[ing], but [] not limited to, . . . paying any sums secured
by a lien which has priority over this security instrument.” Giraudo’s
discretion under the deed includes the right to redeem, and it is irrelevant
that the deed referred to Giraudo as a “lender” instead of a “creditor.”6 We


5       Helvetica relies on a single sentence from Bank One, Arizona, N.A. v.
Beauvais, 188 Ariz. 245 (App. 1997). There we said, “the [Baker v. Gardner,
160 Ariz. 98 (1988)] court concluded that if a deed of trust beneficiary
chooses to foreclose judicially, as is done with a mortgage, the creditor can
elect to waive the security . . . and sue on the note.” Bank One, 188 Ariz. at
249. It argues that “beneficiary” and “creditor” were used interchangeably,
and therefore only a beneficiary or creditor (not a lender) could redeem.

6      Helvetica’s reliance on Sitton v. Deutsche Bank Nat’l Trust Co. is
misplaced. There we decided that listing a defunct company as a lender
was not a material misrepresentation in a deed of trust where MERS was
the trust’s beneficiary and lender’s nominee. 233 Ariz. 215, 221, ¶¶ 27–28
(App. 2013). In that case, we found the borrower’s rights were not affected,
because MERS had the authority to assign the lender’s rights to a new party
or act on the lender’s behalf, as it can here. Id. Giraudo is not a defunct
lender and retains his rights under the deed of trust.


                                        5
                           HELVETICA v. GIRAUDO
                             Opinion of the Court

conclude Giraudo was a creditor for purposes of § 12-1281 and was eligible
to redeem the Fanfol Property.

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
       DETERMINIATION, OR ELIMINATED BY THE ANTI-
       DEFICENCY 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 whether the mortgage debtor’s request for a fair market
value determination affects the redemption price. And finally, we must
determine whether the anti-deficiency statutes, which prevent the
foreclosing lender from obtaining a deficiency judgment against the
mortgage debtor, affect a junior lienholder’s redemption price.

¶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:

       Any judgment debtor against whom a judgment has been
       entered . . . may, not later than thirty days after sale of the real
       property, file a written application with the court for
       determination of the fair market value of the real property
       which has been sold. . . . If an application has been filed, there
       shall be no right to redemption as to the real property
       sold . . . , except creditors having a junior lien to the lien foreclosed
       may redeem by five day successive periods as provided in § 12-1282,
       subsection C, commencing sixty days after the sale of the real
       property. The redemption price shall be calculated on the sales price
       of the real property.

(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:

       If the [judgment debtor’s] redemption . . . is not made, the
       senior creditor having a lien . . . upon the premises sold . . .
       subsequent to the judgment under which the sale was made,


                                          6
                         HELVETICA v. GIRAUDO
                           Opinion of the Court

       may redeem within five days after expiration of the
       [judgment debtor’s right to redeem], and each subsequent
       creditor having a lien in succession, according to priority of
       liens, within five days after the time allowed the prior
       lienholder, respectively, may redeem by paying the amount for
       which the property was sold and all liens prior to his own held by
       the person from whom redemption is made, together with the eight
       per cent added to the amount as provided in § 12-1285.

(Emphasis added.) And finally, A.R.S. § 12-1285 provides the overall
structure of the redemption price calculation:

       A.     In redeeming property the judgment debtor shall pay the
       amount of the purchase price with eight per cent added
       thereto, together with the amount of any assessments or taxes
       which the purchaser has lawfully paid thereon after purchase,
       and interest on such amount.

       B.      Each subsequent redemptioner shall pay the aggregate
       of such amounts plus the amount of the lien thereon of the
       ones who may have redeemed the property theretofore. 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. . . .

(Emphases added.)

¶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 (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.7 Section 12-1566(C)

7      His primary argument is that this issue was already decided in
Helvetica II when we said “[w]e recognize that after a judgment debtor



                                       7
                         HELVETICA v. GIRAUDO
                           Opinion of the Court

provides that “[t]he redemption price shall be calculated on the sales price
of the real property.” (Emphasis added.) But the section does not provide
that the redemption price shall be the sales price, and it does not define the
remainder of the calculation. If § 12-1566(C) ended the analysis, then §§ 12-
1282 and -1285 would be largely unnecessary — a consequence our
interpretive canons forbid.

¶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,


applies for [a fair market value] determination, the right of redemption can
still be exercised by ‘creditors having a junior lien.’” 229 Ariz. at 332, ¶ 24
n.2 (quoting § 12-1566(C)). He argues that by quoting and citing to § 12-
1566(C) we have already held that it controls the redemption price for junior
lienholders. But in Helvetica II we noted only that junior lienholders retain
a right to redeem. We did not decide the redemption price because it was
not at issue in that appeal.


                                       8
                         HELVETICA v. GIRAUDO
                           Opinion of the Court

235 Ariz. 164, 165, ¶ 8 (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 (1985). Helvetica’s reading
of Kries fails to account for the whole of the court’s opinion. The court went
on to explain:

       We believe that our legislature’s purpose was and is clear:
       bids not reflecting the true value of the property bid on are to
       be discouraged. It follows that the redemptioner takes the



                                      9
                         HELVETICA v. GIRAUDO
                           Opinion of the Court

       property free of the debt. If the redemptioner is the judgment
       debtor, then . . . the creditor may execute on the property again.

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.8
Had the property been sold to a third party, the lien would have been
extinguished. We see nothing in Arizona law that would allow the
foreclosing lien to survive after the property is sold at auction.

¶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:

       if a mortgage is given to secure the payment of the balance of
       the purchase price, or to secure a loan to pay all or part of the
       purchase price, of a parcel of real property of two and one-


8      Helvetica’s reading of § 12-1285(B) would mean that the value of the
foreclosed senior lien is unaffected by the foreclosure sale at all. This would
allow the foreclosing senior creditor to exact its below-market-value bid,
plus eight percent, plus the full balance of its lien from a junior lienholder.
Here, Helvetica would net $432,000 more than was due on the deed of trust.
Rather than discouraging senior creditors from making low bids at the
foreclosure sale, this approach would create a windfall at the expense of
junior lienholders. We see nothing in the language or purpose of the
redemption statutes to support such a result.


                                      10
                          HELVETICA v. GIRAUDO
                            Opinion of the Court

       half acres or less which is limited to and utilized for either a
       single one-family or single two-family dwelling, the lien of
       judgment in an action to foreclose such mortgage shall not extend
       to any other property of the judgment debtor, nor may general
       execution be issued against the judgment debtor to enforce
       such judgment, and if the proceeds of the mortgaged real property
       sold under special execution are insufficient to satisfy the judgment,
       the judgment may not otherwise be satisfied out of other property of
       the judgment debtor, notwithstanding any agreement to the
       contrary.

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
judgment debtor. But the portion of the lien that cannot be enforced against
the judgment debtor is equally unenforceable against a redeeming junior
lienholder.

¶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. 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.

                                CONCLUSION

¶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



                                        11
                        HELVETICA v. GIRAUDO
                          Opinion of the Court

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.




                         AMY M. WOOD • Clerk of the Court
                         FILED: AA




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