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Nat. Bank of Ariz. v. Schwartz - 6/26/2012

Arizona Court of Appeals Division One Holds That Deficiency Action is Subject to Arbitration Clause in Promissory Note.


This case presents an arbitration issue previously resolved against National Bank of Arizona in memorandum decisions by the Court of Appeals.  The Bank brought a deficiency action following a trustee’s sale, and it successfully argued to the trial court that the deficiency action was not subject to an arbitration provision in the promissory note signed by the homeowners.  The Court of Appeals disagreed, noting that it is well settled in Arizona that the potential recovery in a deficiency action arises from the promissory note and not, as the Bank argued, from the non-judicial foreclosure.  The deficiency action therefore is subject to the arbitration clause in the promissory note.  The Court of Appeals reversed and remanded with instructions to order the parties to arbitration.

Judge Thompson authored the opinion; Judges Portley and Gemmill concurred.

Posted by: Grace Rebling

Posted On: 7/5/2012