                     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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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


  BMO HARRIS BANK, N.A., as legal successor to M&I MARSHALL &
               ILSLEY BANK, Plaintiff/Appellee,

                                        v.

  EMILIE ANNE REID, Personal Representative for the ESTATE OF
ARTHUR MURRAY REID, THE ESTATE OF ARTHUR MURRAY REID,
                    Defendants/Appellants.

                             No. 1 CA-CV 14-0013
                               FILED 4-16-2015


           Appeal from the Superior Court in Maricopa County
                          No. CV2011-019281
                The Honorable Michael J. Herrod, Judge

                                  AFFIRMED


                                   COUNSEL

Sacks Tierney P.A., Scottsdale
By Brian E. Ditsch, James W. Armstrong
Counsel for Defendants/Appellants

The Cavanagh Law Firm, P.A., Phoenix
By Philip G. Mitchell, Henry L. Timmerman, William F. Begley
Counsel for Plaintiff/Appellee
                                BMO v. REID
                             Decision of the Court



                        MEMORANDUM DECISION

Judge Maurice Portley delivered the decision of the Court, in which
Presiding Judge Andrew W. Gould and Judge Jon W. Thompson joined.


P O R T L E Y, Judge:

¶1            This is an appeal from a judgment for breach of promissory
note. The Estate of Arthur Murray Reid and Emilie Reid, the Estate’s
personal representative (collectively, “the Estate”), contend that the
superior court erred by finding the Estate liable to BMO Harris Bank, N.A.
(“BMO”) because BMO did not file a notice of claim within two years of
Arthur Reid passing away and, as a result, the nonclaim statute, Arizona
Revised Statutes (“A.R.S.”) section 14-3803,1 barred any deficiency
judgment. Because we find that the Arizona probate provisions are
inapplicable, we affirm the judgment.

              FACTUAL AND PROCEDURAL BACKGROUND

¶2            Arthur Reid, a Canadian, bought 16.85 acres of undeveloped
land in Cave Creek in 2005 as his sole and separate property. He financed
the purchase by borrowing $2,562,000 from M&I Bank and gave the bank a
promissory note secured by a deed of trust on the property. According to
his son-in-law, Arthur planned to build custom and semi-custom homes on
the property, but “the real estate market collapse halted those plans.”
Arthur passed away in Phoenix on January 1, 2009.

¶3           Arthur’s widow, Emilie Reid, filed a probate action in
Alberta, Canada. She was appointed the personal representative pursuant
to Arthur’s will by the Canadian court in December 2009. Emilie, by her
lawyers, advised M&I Bank of Arthur’s death. Emilie then filed a proof of
foreign personal representative in the Maricopa County Superior Court’s
Probate Court and recorded it with the Maricopa County Recorder’s Office
in February 2010. The proof of authority stated that Emilie was filing the
document to allow her “as the domiciliary foreign Personal Representative
to exercise, as to assets in this state, all powers of a local Personal



1   We cite to the current version of the statute unless otherwise noted.



                                        2
                              BMO v. REID
                           Decision of the Court

Representative.”2 The probate matter continued in Canada, was resolved
in September 2010, and the estate property was distributed to Emilie.

¶4            The bank, however, continued to send monthly statements
addressed to Arthur and received monthly payments that were credited
towards Arthur’s note until August 2011. After giving notice of default on
August 9, 2011, BMO, as the successor to M&I Bank, filed this lawsuit
against the Estate for breach of contract. BMO also noticed a trustee’s sale
and subsequently purchased the Cave Creek property at the trustee’s sale
with a credit bid of $750,000. The Estate answered the complaint and
alleged that BMO’s claim was barred because a claim had not been filed
within two years of Arthur’s death, all the property of the estate had been
distributed and that any amount from the trustee’s sale would reduce any
amount due on the note.

¶5             Both parties moved for summary judgment. The Estate
argued that BMO’s claim was barred because BMO had not filed a claim
against the Estate within two years of Arthur’s death and, as a result, A.R.S.
§ 14-3803(C) barred the deficiency action. The Estate also argued that
because BMO had not formally amended its complaint to allege a deficiency
within ninety days after the trustee’s sale it was precluded from pursuing
its deficiency under A.R.S. § 33-814. BMO, on the other hand, argued it was
entitled to judgment because the Estate made payments on the note after
Arthur’s death and breached its obligation by failing to continue to make
payments on or after August 1, 2011.

¶6             After oral argument, the superior court granted partial
summary judgment for BMO. The court found that the nonclaim statute
was inapplicable, the fact that the estate may have been closed did not bar
recovery against any proceeds of the estate for debts and that the lawsuit
was timely under existing case law. As a result, the court ruled that the
Estate was liable to BMO for the deficiency, but that the amount of any
deficiency would have to be determined after a fair-market-value hearing.
In lieu of an evidentiary hearing, the parties mediated the fair market value
of the property and stipulated to its value, which the court approved.

¶7             The Estate subsequently filed two motions for new trial on the
issue of liability, which were denied. The court then resolved the issue of


2 The proof of authority was the only document filed in In re Arthur Murray
Reid, PB 2010-000393 (Maricopa Cnty. Sup. Ct. 2010). The language in the
proof of authority combines the statutory language in A.R.S. §§ 14-4204 and
-4205.


                                      3
                               BMO v. REID
                            Decision of the Court

attorneys’ fees and costs, entered judgment, and the Estate appealed. We
have jurisdiction under A.R.S. § 12-2101(A)(1).

                                DISCUSSION

¶8             The Estate challenges the superior court granting summary
judgment and contends that it erred in interpreting the applicable law. In
reviewing the ruling, we determine de novo whether any genuine dispute
of material fact exists and whether the trial court properly applied the law.
Eller Media Co. v. City of Tucson, 198 Ariz. 127, 130, ¶ 4, 7 P.3d 136, 139 (App.
2000). In interpreting a statute, we look first to its language. Canon Sch.
Dist. No. 50 v. W.E.S. Constr. Co., 177 Ariz. 526, 529, 869 P.2d 500, 503 (1994).
If the statutory language is unambiguous, we give effect to the language
and do not use other rules of statutory construction in its interpretation.
Janson v. Christensen, 167 Ariz. 470, 471, 808 P.2d 1222, 1223 (1991). Statutory
interpretation is an issue of law we review de novo. State Comp. Fund v.
Superior Court, 190 Ariz. 371, 374, 948 P.2d 499, 502 (App. 1997). And we
can affirm summary judgment on grounds other than those found by the
court. See Ness v. Western Sec. Life Ins. Co., 174 Ariz. 497, 502, 851 P.2d 122,
127 (App. 1992).

                                       I.

¶9           The Estate first argues that the superior court erred by
concluding that A.R.S. § 14-3803(A) did not preclude BMO’s deficiency
claim. We disagree.

¶10            A promissory note secured by a deed of trust is a contract. See
National Bank v. Schwartz, 230 Ariz. 310, 312, ¶ 7, 283 P.3d 41, 43 (App. 2012).
Generally, absent a trustee’s sale, a creditor has six years to bring an action
on the promissory note. A.R.S. § 12-548(A); see A.R.S. § 33-814(A) (requiring
that a creditor maintain a lawsuit for any deficiency balance ninety days
after the trustee’s sale). Here, BMO filed its breach-of-contract lawsuit two
months after default and notice of default.

¶11           The Estate contends, however, that BMO’s action is barred
because BMO had two years after Arthur’s death to file a claim with the
personal representative or file a lawsuit under the Arizona Probate Code
because the property was in Arizona. As a result, BMO’s failure to file a
claim within two years after Arthur’s death bars its action. BMO disputes,
however, the applicability of Arizona probate law given that the probate
estate was in Canada, no ancillary action was filed in Arizona, and it was
never provided with a creditors’ notice under Arizona law.



                                       4
                                BMO v. REID
                             Decision of the Court

¶12         We agree with BMO. Even if we assume Chapter 3 of the
Arizona Probate Code applies, in order to get the protection of Arizona
law—especially the nonclaim statute—the Estate needed to have done more
than merely file a proof of authority; the Estate needed to have notified
BMO, a known creditor, pursuant to Arizona law.

¶13           Under A.R.S. § 14-3801,3 a personal representative must notify
anyone who could be considered a creditor of the estate, with the
information about her appointment and address, and to advise the creditors
that claims against the estate must be filed within either four months, if the
notice is by publication, or sixty days, if the notice is directly to a known
creditor. The notice must also tell creditors to file a claim within the longer
of the above time frames or the creditors’ claim will be forever barred.
A.R.S. § 14-3801.


3   The statute states:

         A. Unless notice has already been given under this section, at
            the time of appointment a personal representative shall
            publish a notice to creditors once a week for three
            successive weeks in a newspaper of general circulation in
            the county announcing the appointment and the personal
            representative's address and notifying creditors of the
            estate to present their claims within four months after the
            date of the first publication of the notice or be forever
            barred.

         B. A personal representative shall give written notice by mail
            or other delivery to all known creditors, notifying the
            creditors of the personal representative's appointment.
            The notice shall also notify all known creditors to present
            the creditor's claim within four months after the published
            notice, if notice is given as provided in subsection A, or
            within sixty days after the mailing or other delivery of the
            notice, whichever is later, or be forever barred. A written
            notice shall be the notice described in subsection A or a
            similar notice.

         C. The personal representative is not liable to a creditor or to
            a successor of the decedent for giving or failing to give
            notice under this section.



                                        5
                                BMO v. REID
                             Decision of the Court

¶14            If a creditor receives proper notice, whether before or after the
appointment of a personal representative, the creditor must either file a
timely written claim with the personal representative or, within the same
time limits, file a lawsuit against the personal representative for payment
of the claim. See A.R.S. § 14-3804(1)-(2); In re Estate of Van Der Zee, 228 Ariz.
257, 259, ¶ 11, 265 P.3d 439, 441 (App. 2011). Moreover, if a creditor does
not file a timely claim after receiving proper notice, the creditor will be
barred from collecting the claim two years after the decedent passed away.
A.R.S. § 14-3803(B); Ray v. Rambaud, 103 Ariz. 186, 190, 438 P.2d 752, 756
(1968); In re Estate of Barry, 184 Ariz. 506, 508-09, 910 P.2d 657, 659-60 (App.
1996).

                                       A.

¶15             Here, there is no evidence the Estate provided a notice to
BMO that if it failed to file a claim with Emilie its claim would be forever
barred. See A.R.S. § 14-3801(B). The record shows that the Estate mailed
four letters to the bank in January and February 2009 advising it about
Arthur’s death and seeking information about the value or balances in his
checking account, money-market account and two credit cards, whether
Arthur had any additional credit cards and if he had a safety deposit box,
and later seeking release of any funds being held in the checking and
money-market account. The letters did not include any type of notice
directing BMO to file a claim with Emilie within sixty days, or any other
time frame, given that the bank was a known creditor. Likewise, the letters
did not state that failing to file a claim within the applicable time period
would result in BMO’s claim being forever barred. See A.R.S. § 14-3801(B)
(“The notice shall also notify all known creditors to present the creditor’s
claim . . . or be forever barred.”).

¶16            Because there is no evidence that the Estate notified BMO that
it needed to file a claim or its claim (deficiency) would be forever barred,
even though current, the nonclaim statute, A.R.S. § 14-3803, does not bar
BMO’s lawsuit. Cf. Ray, 103 Ariz. at 187, 438 P.2d at 753 (noting that the
personal representative properly published the notice to creditors, but no
claim was timely presented); In re Estate of Randall, 441 P.2d 153, 154 (Colo.
1968) (recognizing that the personal representative properly published
notice to creditors, yet the creditor filed the claim sixteen days late); see also
State Bar of Arizona, Arizona Probate Code Practice Manual, §§ 7.12.1(3), 7.12.6
(5th ed. 2014) (noting that “if notice is published or mailed,” a claim may be




                                        6
                               BMO v. REID
                            Decision of the Court

barred unless properly and timely presented).4 Consequently, the superior
court did not err by ruling that the nonclaim statute was inapplicable.

                                      B.

¶17            Equally unpersuasive is the Estate’s argument that BMO, as a
creditor, could have sought appointment as the local personal
representative forty-five days after Arthur’s death or after the Canadian
probate case was closed under A.R.S. §§ 14-3202, -3301(A)(7). Although our
case law notes that unsecured creditors have successfully sought
appointment as personal representatives, see, e.g., In re Estate of Stephenson,
217 Ariz. 284, 285, ¶¶ 3-4, 173 P.3d 448, 449 (App. 2007) (AHCCCS sought
and was appointed personal representative to recover medical benefits paid
before the decedent’s death), In re Estate of Zaritsky, 198 Ariz. 599, 601,
¶¶ 1-3, 12 P.3d 1203, 1205 (App. 2000) (unsecured creditor successfully
sought informal appointment as personal representative), the Arizona
Probate Code does not require creditors, secured or unsecured, to file for
local administration in order to preserve their claim when a foreign
personal representative did not properly notify creditors under Arizona
law. See generally In re Estate of Stephenson, 217 Ariz. at 287, ¶ 15, 173 P.3d
at 451 (stating “secured creditors do not have to use probate proceedings to
enforce any security, even after the appointment of a personal
representative”).

                                      II.

¶18       The Estate also argues that the court erred by finding that
BMO was not required to amend its complaint to plead a claim for a


4 The Estate urges us to follow other jurisdictions that have adopted the
Uniform Probate Code and barred untimely claims with the nonclaim
provision, especially In re Estate of Ongaro, 998 P.2d 1097 (Colo. 2000) and In
re Estate of Earls, 262 P.3d 832 (Wash. App. 2011). Neither case supports the
Estate’s argument given the facts of this case. In Earls, the personal
representative published notice to the creditors and sent a notice to the
known creditor by certified mail, but the creditor did not file or present a
creditor’s claim before the filing period expired and, as a result, was barred
from pursuing a claim “even where the claim is not yet due.” Earls, 262
P.3d at 833, 837, ¶¶ 4-5, 21. Similarly, in Ongaro, the decedent’s estate was
probated locally and, although notice was not given to the bank as a known
creditor, the estate published a notice to creditors in the local newspaper.
998 P.2d at 1099. As a result, the bank’s failure to take action within the
Colorado nonclaim statute barred its claim. Id.


                                      7
                               BMO v. REID
                            Decision of the Court

deficiency judgment within the ninety-day period in A.R.S. § 33-814(A).
Specifically, the Estate contends that BMO’s complaint failed to provide
notice that the action was for a deficiency balance. We disagree.

¶19            Section 33-814(A) provides that “within ninety days after the
date of sale of trust property under a trust deed . . . an action may be
maintained to recover a deficiency judgment against any person . . . liable
on the contract for which the trust deed was given as security . . . .”
Subsection D states that “[i]f no action is maintained for a deficiency
judgment within the time period prescribed in subsection[] A . . . the
proceeds of the sale, regardless of amount, shall be deemed to be in full
satisfaction of the obligation and no right to recover a deficiency in any
action shall exist.” A.R.S. § 33-814(D). In Valley Nat. Bank of Arizona v.
Kohlhase, we examined a similar argument, and noted that an action on a
debt is generally indistinguishable from an action for deficiency even if the
creditor did not amend the complaint to allege a deficiency after the
trustee’s sale. 182 Ariz. 436, 439, 897 P.2d 738, 741 (App. 1995). In fact, we
stated, “[w]hen a creditor initiates an action on a debt before the trustee’s
sale, the debtor receives early notice that the creditor will pursue the debtor
if any subsequent trustee’s sale results in a deficiency.” Id.; see Resolution
Trust Corp. v. Freeway Land Investors, 798 F. Supp. 593 (D. Ariz. 1992)
(holding that a lawsuit to collect on a promissory note before a trustee’s sale
is within the ninety day period required under A.R.S. § 33-814 to maintain
an action for a deficiency balance).5 We also noted in Schwartz that the debt
and any potential recovery flows from the promissory note. 230 Ariz. at
312-13, ¶¶ 7-9, 283 P.3d at 43-44 (noting that a lawsuit to recover on the
promissory note, which is the primary source of the debt, is the basis for a
deficiency action, and the trustee’s sale is ancillary to the collection of the
debt).

¶20           Here, although BMO’s complaint was an action on the note,
the evidence in the record clearly reveals that the Estate had notice of the
trustee’s sale and that BMO was seeking a deficiency balance, i.e., the
difference between the trustee’s sale price and the outstanding promissory
note balance. In answering the complaint, the Estate asserted that “[BMO]
has noticed a trustee’s sale with respect to the Property and any amount
received by [BMO] through the trustee’s sale process, or the fair market
value of the Property, whichever is greater, will work to reduce any amount
due on the Note.” Therefore, the superior court did not err by finding that

5Although the Estate urges us to overrule Kohlhase, we see no reason to
overrule long-standing precedent.



                                      8
                              BMO v. REID
                           Decision of the Court

A.R.S. § 33-814 did not bar BMO from pursuing a deficiency balance after
the trustee’s sale.6

                    ATTORNEYS’ FEES AND COSTS

¶21          BMO has requested attorneys’ fees incurred in this appeal
based on the promissory note and A.R.S. § 12-341.01. Because BMO
prevailed on appeal, we will award BMO reasonable attorney’s fees and
costs on appeal upon its in compliance with ARCAP 21(c).

                              CONCLUSION

¶22          Based on the foregoing, we affirm the judgment.




                                :ama




6 The Estate also contends that BMO’s service of process on Emilie was
ineffective because she was no longer the Estate’s personal representative
after the Canadian probate was closed. The argument, however, was not
first raised to the superior court before or after the answer was filed. As a
result, we will not consider it for the first time on appeal. See Orfaly v.
Tucson Symphony Society, 209 Ariz. 260, 265, ¶ 15, 99 P.3d 1030, 1035 (App.
2004) (arguments presented for the first time on appeal are untimely and
deemed waived); see also Ariz. R. Civ. P. 12(h)(1) (providing that a party
waives an objection to insufficient service of process when the party does
not raise it in the answer or first responsive motion).



                                       9
