EQUITY INCOME PARTNERS LP GALILEO CAPITAL PARTNERS LIMITED v. CHICAGO TITLE INSURANCE COMPANY (2017)

MEMORANDUM *

On July 12, 2016, we certified the following questions of law to the Arizona Supreme Court pursuant to Ariz. Rev. Stat. § 12-1862:

1. When a lender purchases property by full-credit bid at a trustee's sale, does Section 9 [of the standard form lender's title insurance policies] apply, or does Section 2 apply?

2. Is a full-credit bid at a trustee's sale a “payment” or “payment[ ] made” under Sections 2 or 9 of the policies?

3. To what extent does a full-credit bid at a trustee's sale either (a) terminate coverage under Section 2(a)(i) of the policies, or (b) reduce coverage under Section 2 and any possible liability under Section 7?

Equity Income Partners, LP v. Chi. Title Ins. Co., 828 F.3d 1040, 1045 (9th Cir. 2016).

On February 7, 2017, the Arizona Supreme Court answered the certified questions as follows:

1. Section 2 applies when a lender purchases property by full-credit bid at a trustee's sale.

2. A full-credit bid at a trustee's sale is not a “payment” under Sections 2 or 9 of the policy.

3. The full-credit bid neither terminates nor reduces coverage under Section 2 or Section 7.1

Equity Income Partners, LP v. Chi. Title Ins. Co., No. CV-16-0162-CQ, ---P.3d ----, 2017 WL 490398, at *1 (Ariz. 2017).

In light of the Arizona Supreme Court's answers to the certified questions, we vacate the district court's summary judgment and remand for further proceedings consistent with those answers. Costs are awarded to appellants. Fed. R. App. P. 39(a).

VACATED and REMANDED.

FOOTNOTES

1.   The footnote in the Arizona Supreme Court opinion stated:As explained below, the trustee sale may reduce or even eliminate a title insurer's ultimate liability under its policy. However, this reduction or elimination is not a function of the credit bid amount. Rather, the amount of the reduction, if any, is the fair market value of the property the lender receives as a result of its credit bid or, if the property is acquired by a third party, the amount that party pays for the property.