Bank of America NA v. CBS Properties LLC et al

Filing 13

ORDER denying 9 defendants' motion for determination of fair market value. Signed by Judge Frederick J Martone on 8/24/2012.(KAR)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiff,
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vs.
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CBS Properties LLC; Mighty Bum LLC;)
Chircus Investments LP; Adam Bronfman;)
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Nelson Neal Stone; Jeffrey Chircus,
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Defendants.
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Bank of America, N.A.,

CV 12-01428-PHX-FJM
ORDER

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We have before us defendants' motion for determination of fair market value (doc. 9).
Plaintiff did not respond, and the time for responding has expired.

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In 2008, defendants CBS Properties, Chircus Investments, and Mighty Bum executed

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promissory notes to plaintiff concerning two loans ("Loan 1" and "Loan 2"). Chircus

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Investments, Mighty Bum, Bronfman, Stone, and Chircus signed as guarantors. According

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to plaintiff, defendants defaulted in 2011. The two properties securing the loans were sold

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at Trustee's Sales for $1,300,000 and $787,501 respectively. Plaintiff filed this action on July

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2, 2012, asserting four counts: (1) deficiency action against CBS Properties, Chircus

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Investments, and Mighty Bum for Loan-1; (2) deficiency action against CBS Properties,

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Chircus Investments, and Mighty Bum for Loan-1; (3) breach of contract against guarantors

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Chircus Investments, Mighty Bum, Bronfman, Stone, and Chircus for Loan-1; and (4) breach

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of contract against guarantors Chircus Investments, Mighty Bum, Bronfman, Stone, and

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Chircus for Loan-2.

Plaintiff calculates the deficiency balance due on Loan-1 as

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$659,879.37, and the deficiency balance due on Loan-2 as $1,254,762.06. Defendants ask

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us to set a hearing to determine the fair market value of the properties sold by plaintiff.

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Under Arizona law, a judgment-debtor may request the court to hold a hearing to

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determine the fair market value of a property sold at a Trustee's Sale. A.R.S. § 12-1566(C);

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see also id. § 33-814(A) ("A written application for determination of the fair market value

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of the real property may be filed by a judgment debtor with the court in the action for a

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deficiency judgment or in any other action on the contract which has been maintained.").

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After fair market value is determined, the court issues an order "crediting the amount due on

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the judgment with the greater of the sales price or the fair market value of the real property."

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Id. § 33-814(A).

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Plaintiff does not oppose defendants' request. However, unless and until plaintiff

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establishes that it is entitled to a deficiency judgment from these defendants, holding a fair

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market hearing is premature. See id. (action for deficiency judgment lies against "any person

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directly, indirectly or contingently liable on the contract"). If plaintiff establishes via

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summary judgment practice that it is entitled to a deficiency judgment, a hearing could be

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set at that point to determine the fair market value of the property. If an issue of material fact

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remains that precludes summary judgment, then we may be able to address both the issue of

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liability and fair market value at trial. And if defendants establish that plaintiff is not entitled

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to a deficiency judgment, then a fair market value hearing is not needed. In sum, there is no

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need at this early juncture in the litigation to set and hold a fair market value hearing.

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IT IS ORDERED DENYING defendants' motion for determination of fair market

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value (doc. 9). We will address whether and when a fair market value hearing should be

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scheduled after there has been a finding regarding liability.

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DATED this 24th day of August, 2012.

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