Pub. 9 2019 Issue 3

9 ISSUE 3. 2019 discharge occurred – at the end of 2009. No pay - ments were made after discharge. Did the lender lose its right to foreclose? The facts in our hypothetical are drawn from recent cases in Washington and the Ninth Cir - cuit. 13 In Jarvis , the homeowners obtained a loan on their home from Federal National Mortgage Association in 2006. They defaulted on the loan and filed for relief under Chapter 7. They never reaffirmed the mortgage in the bankruptcy and they obtained a discharge in 2009. They never made a payment on the loan after the discharge. Federal commenced a trustee sale more than six years after the entry of discharge and more than six years after the first post-discharge payment was missed. The lender asserted that it could wait until six years after the last payment on the original note became due to commence its sale and pursue its in rem remedy. In granting sum- mary judgment to Jarvis, the district court held that the in rem remedy available to Federal runs from the first missed payment after discharge. Washington law is virtually identical to Arizo - na in this area, and Arizona courts will look to guidance from those decisions. 14 Like Arizona, Washington recognizes that each installment due on an installment note represents its own statute of limitations for its enforcement. 15 Washington also provides for a six-year limitation period for the enforcement of a contract in writing and the foreclosure of a deed of trust. The district court decision in Ortiz 16 predates the unpublished Ninth Circuit Jarvis decision. There was no analysis by the court in Ortiz as to the im- pact of the discharge on the running of the statute of limitations. Arizona courts should strongly con - sider Jarvis as a guidepost in ruling on these issues that will arise in the near future. How will an Arizona court (state or federal) deter - mine this issue? Considering the “perfect storm” of recession, bankruptcy and real-estate appreciation, we are certainly going to find out shortly. w 1 See 11 U.S.C. §§ 1322(b)(2) and 506(a). See also In re Zimmer, 313 F.3d 1220 (9th Cir. 2002). 2 Dewsnup v. Timm, 502 U.S. 410 (1992). 3 Gust Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 898 P.2d 964 (Ariz. 1995). 4 Porter v. Spader, 239 P.3d 743 (Ariz. Ct. App. 2010). 5 Atlee Credit Corp. v. Quetulio, 22 Ariz. App. 116 (Ct. App. 1974); De Anza Land and Leisure Corp. v. Raineri, 137 Ariz. 262 (Ct. App. 1983). 6 Navy Fed. Credit Union v. Jones, 930 P.2d 1007 (Ariz. Ct. App. 1996). 7 Baseline Fin. Servs. v. Madison, 278 P.3d 321, 322 (Ariz. Ct. App. 2012). 8 See Jones, 930 P.2d at 1009. 9 A.R.S. § 33-816. 10 Id. § 33-813; Andra R. Miller Designs LLC v. US Bank, NA, 418 P.3d 1038 (Ariz. Ct. App. 2018). 11 98 F. Supp. 3d 1037 (D. Ariz. 2015). 12 930 P.2d at 1007. 13 Jarvis v. Federal Nat’l Mortgage Ass’n, 2017 WL 1438040), aff’d 2018 WL 2979017 (9th Cir. 2018). 14 In re Stark’s Estate, 82 P.2d 894 (Ariz. 1938); Solana Land C. v. Murphey, 210 P.3d 593 (Ariz. 1949). 15 Herzog v. Herzog, 23 Wash. 2d 382 (1945). 16 98 F. Supp. 3d at 1037. LAWRENCE D. HIRSCH is a Partner at Parker Schwartz, PLLC, is a certified Bankruptcy Specialist, and has practiced in Phoenix for over 35 years, having a broad range of experience in all aspects of bankruptcy practice and debtor/creditor practice, including loan workouts. He can be reached at 602-282-0477 and at LHirsch@ psazlaw.com . ROBERT R. NORTHROP is an associate at Parker Schwartz, PLLC and focuses his practice in Real Estate and Commercial Litigation. He can be reached at 602-282-0477 and at RNorthrop@ psazlaw.com .