Arizona law gives Judgment Creditors a remedy to aid in the collection of a judgment when the Judgment Debtor holds stock. The Judgment Creditor can ask the court to enter an order in aid of collection and authorize the execution upon stock interests of Judgment Debtor.

In accordance with A.R.S. § 47-8112(E) and § 12-1559(5), the Judgment Creditor applies for an injunction and order to aid in the collection of, and the execution upon, stock certificates. The Judgment Creditor can enjoin the Judgment Debtor from hiding or transferring the stock certificates that so that the certificates can be seized.

In the Application the Judgment Creditor must allege it holds a money judgment against Judgment Debtor that has not been satisfied, and that the Judgment Debtor refused to satisfy the Judgment upon demand.  The Judgment Creditor will then establish for the court the stock interests at issue and the remaining amounts owing on the Judgment. Once these items are established, the Judgment Creditor is entitled to supplementary relief in aid of collection of the judgment.

A.R.S. § 12-1559(5) provides that to execute upon the stock of a corporation, the Judgment Creditor shall follow the procedure set forth in A.R.S. § 47-8112. The procedure set forth in A.R.S. § 47-8112 requires the creditor to establish the Judgment Debtor owns stock, and the Judgment Creditor is seeking to execute upon that stock to satisfy the judgment.  To help the Judgment Creditors, A.R.S. § 47-8112(E) provides for injunctive relief:

1. A creditor whose debtor is the owner of a certificated security, uncertificated security or security entitlement is entitled to aid from a court of competent jurisdiction, by injunction or otherwise, in reaching the certificated security, uncertificated security or security entitlement or in satisfying the claim by means allowed at law or in equity in regard to property that cannot readily be reached by other legal process. (emphasis added).

Judgment Creditor is entitled to an injunction, pursuant to A.R.S. § 47-8112(E), to prevent Judgment Debtor from hiding or transferring his stock certificates, or from otherwise interfering with Judgment Creditors’ legal rights to attach the certificates.  Under the same statute, Judgment Creditor is also entitled to an order of the court that requires Judgment Debtor to deliver the stock certificates to counsel for the Judgment Creditor.  Finally, Judgment Creditor is entitled to an order that requires Judgment Debtor, to turn over any of Judgment Debtor’s stock certificates, or uncertificated interests.

Arizona law provides the mechanism and authority for a Court to order an injunction and require the Judgment Debtor to deliver the stock to Judgment Creditor’s attorney.  This is a valuable tool for a Judgment Creditor.

The attorneys at Windtberg & Zdancewicz, PLC provide clients with experienced legal representation in all litigation and bankruptcy matters. We are experienced in creditor’s rights prosecuting and defending garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance with your collection matters, please contact us at (480) 584-5660.

The United States Supreme Court issued its decision in Bank of America v. Caulkett, which is a solid guidepost in the bankruptcy journey for both creditors and debtors alike.  The issue confronted by the Supreme Court was whether a wholly unsecured junior mortgage lien may be stripped off pursuant to §506(d) in a Chapter 7 bankruptcy.

This case was a “consolidated case where both debtors had two mortgage liens on their respective homes with the junior lien on each being held by Bank of America. In each instance, the amount owed on debtor’s senior mortgage was greater than each home’s current market value and therefore Bank of America’s junior liens were wholly ‘underwater’ or unsecured. In each case, the Debtors moved to “strip off” the junior liens under section 506(d) of the Bankruptcy Code, claiming that the Bank’s claims were not “secured” within the meaning of §506(d).

The Debtors urged the Court to adopt a straightforward reading of the term “secured claim” from section 506(a)(1) in conjunction with 506(d) to void the Bank’s claims. However, a straightforward reading would directly conflict with the Supreme Court’s 1992 ruling in Dewsnup v. Timm where the Court refused to allow a debtor to “strip down” her debt of $120,000 to the value of the collateral securing the claim, $39,000. Dewsnup v. Timm 502 U.S. 410, 413 (1992). The Dewsnup Court concluded that the term “secured claim” means a claim supported by a security interest in property, regardless of whether the value of that property would be sufficient to cover the claim.

“Section 506(a)(1) provides that ‘[a]n allowed claim of a creditor secured by a lien on property…is a secured claim to the extent of the value of such creditor’s interest in…such property,’ and ‘an unsecured claim to the extent that the value of such creditor’s interest…is less than the amount of such allowed claim.”

“To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void.” 11 U.S.C. §506(d)(emphasis added by the Court). “Subject to some exceptions not relevant here, a claim filed by a creditor is deemed ‘allowed’ under §502 if no interested party objects, or if, in the case of an objection, the Bankruptcy Court determines that the claim should be allowed under the Code.” §§502(a)-(b)

Here, the Bank’s claims were secured by liens and allowed under §502 so they cannot be voided under the definition given to the term “allowed secured claim” in Dewsnup. The Court’s ruling is Dewsnup was not dependent on whether a lien is partially or wholly underwater. So long as a claim in a Chapter 7 bankruptcy is secured by a lien and allowed under §502, it may not be “stripped off” even if the lien is wholly underwater.

The attorneys at Windtberg & Zdancewicz, PLC provide clients with experienced legal representation in all litigation and bankruptcy matters. We are experienced in creditor’s rights prosecuting and defending garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance with your collection matters, please contact us at (480) 584-5660.

The Arizona Court of appeals issued its opinion in SQPR Venture, Inc. v. Robertson addressing the issue of whether a non-debtor spouse’s income can be used to satisfy a separate pre-existing debt of the debtor spouse (“Judgment Debtor”) when the Judgment Debtor provides non-financial support to the family as a stay at home spouse and parent.

The underlying facts are that the Judgment Debtor had a default judgment entered against her in 2003. The Judgment was timely renewed. Years later, after she re-married, the judgment creditor, filed an earnings garnishment against the community property. The non-debtor spouse provided all of the income while the debtor was a full-time stay at home mother. The Judgment Creditor argued that the Judgment Debtor’s non-financial contribution to community property was a quantifiable value that should open the non-debtor’s community income to garnishment.

Arizona law provides “[t]he community property is liable for the premarital separate debts or other liabilities of a spouse, incurred after September 1, 1973 but only to the extent of the value of that spouse’s contribution to community property which would have been such spouse’s separate property if single” A.R.S. § 25-215(B).

The Judgment Creditor also argued that the transfer of the non-debtor spouse’s income into the Judgment Debtor’s account of funds that fell just short of the threshold for garnishment was a fraudulent transfer under the UFTA. The Judgment Creditor argued for a UFTA violation if the court found that the non-debtor spouse’s community property was liable on the judgment. The flaw with the Judgment Creditor’s argument is that the Judgment Debtor was not making any transfers. Rather, the non-debtor spouse transferred funds to the Judgment Debtor. The Judgment Creditor’s arguments did not satisfy UFTA.

The court of appeals court held that the trial court correctly found that the income of the non-debtor spouse was protected against liability for the Judgment Debtor’s premarital debt, when the Judgment Debtor provides a non-financial service to the family that has value and for which the community would otherwise have to pay. The court affirmed the trial court’s finding that the non-debtor spouse’s property was immune from garnishment since the Judgment Debtor was not making a financial contribution to the marital community.

The attorneys at Windtberg & Zdancewicz, PLC provide clients with experienced legal representation in all litigation and bankruptcy matters. We are experienced in creditor’s rights prosecuting and defending garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance with your collection matters, please contact us at (480) 584-5660.

Many times debtors will purchase a vehicle on the eve of a bankruptcy, and often the bankruptcy happens within thirty days following the purchase. The creditor in Arizona that finances the purchase has a statutory safe harbor period to perfect its lien interest on the vehicle. The timing of a how and when a lien gets placed on a motor vehicle many times is the question in preference actions filed by chapter 7 trustees. Two recent cases in the District of Arizona offer guidance debtors, creditors, and trustees.

Judge Ballinger recently issued a minute entry opinion addressing the mechanics of perfection of a lien on a motor vehicle. This is the second opinion from this district in recent months. (See In re Lloyd 2:13-bk-21588-DPC).  The case was S. William Manera, Trustee v. AmeriCredit Financial Services, Inc., 14-bk-06920-EPB. The timeline in this case was as follows:

– The Debtors purchased a vehicle on February 24, 2014, GM mailed the Title Application to the Motor Vehicle Department (the “MVD”) on March 6, 2014.

– The MVD logged receipt on March 11, 2014 but did not process and endorse the title documents until March 20, 2014.

– On May 8, 2014 the debtors filed their bankruptcy petition.

The sole question presented is whether GM’s lien interest was perfected on March 11 when the title application was received and logged by MVD, or on March 20 when it was processed and endorsed by MVD.

Until 2013, A.R.S. § 28-2133 (B) provided retroactive perfection only if it was both received and endorsed within 30 business days of execution. In 2013, the Arizona legislature amended A.R.S. § 28-2133 (B) to read “if the documents referred to in this article are delivered to a registering office or an authorized third party provider of the department within 30 days after the date of their execution, the constructive notice dates from the time of execution.”

The former statute read in part, “if the documents referred to in this article are received and filed.”

As acknowledged by the Bankruptcy Court, the 2013 statutory amendment was deemed to be substantial and served to distinguish any decision made under the previous statue. When there is no legitimate, material dispute that the MVD received a non-defective title application within thirty days of execution of the document creating the security interest referenced in an application, the applicant is entitled to the retroactive constructive notice granted by A.R.S. § 28-2133(B).

Windtberg & Zdancewicz, PLC provides clients with experienced legal representation in all litigation and bankruptcy matters. We represent creditors, trustee’s and interested parties in bankruptcy court and state court prosecuting and defending garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, and the domestication of foreign judgments.. If you need assistance with your collection matters, please contact us at (480) 584-5660.

In the case of Rachael Anne Earl, 13-bk-18751-EPB, Judge Ballinger issued a detailed minute entry order addressing whether it is permissible for a debtor to amend their bankruptcy schedules to claim a different property under the homestead exemption than the one originally claimed.

Judge Ballinger ruled that for a property to qualify for the homestead exemption after amending the schedules, that property must have been able to qualify under the homestead exemption as of the petition date, not a date thereafter, because exemptions are fixed as of the petition date (citing In re Jacobson 9th Cir. 2012).

In this case the Debtor had two properties: Sunnyvale and Claiborne. On Debtor’s schedules she listed the Claiborne residence under the homestead exemption and that was the location where debtor kept her personal property. As of the petition date, the Sunnyvale residence was used solely to generate rental income. When the case was converted to Chapter 7, the Court sustained the trustee’s objection that the Debtor could not claim an exemption in the Claiborne property. When Debtor realized she could not defeat the Trustee’s objection, she amended her bankruptcy schedules to assert her homestead exemption on the Sunnyvale property instead.

Debtor did not show the requisite intent on the petition date to make the Sunnyvale property her homestead, but rather intended the Claiborne residence to be her homestead. Debtor would not be permitted to claim the Claiborne property as her exempt property on her schedules and then amend them to change her homestead exemption to the Sunnyvale property if the Sunnyvale property would not have met the homestead exemption standard as of the petition date. The Debtor had previously received the benefit of the homestead exemption on the Claiborne property and the court would not allow the Debtor to receive a “second bite at the apple”.

The attorneys at Windtberg & Zdancewicz, PLC provide clients with experienced legal representation in all litigation and bankruptcy matters. We are experienced in creditor’s rights prosecuting and defending garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance with your collection matters, please contact us at (480) 584-5660.

The Arizona Supreme Court issued an opinion relating to the anti-deficiency statute, A.R.S. § 33-814(G). This was the second opinion in less than 30 days dealing with certain aspects of the anti-deficiency statute. The significance of this case is that it overruled a related case interpreting the anti-deficiency statute, and it further clarified the law.

The court accepted review of the case because cases involving the anti-deficiency statutes are creating reoccurring issues with statewide importance. The Supreme Court issued the opinion to give guidance to the trial courts on how to rule on these issues.
Wildwood Creek Ranch, LLC (“Borrower”) borrowed $260,200 from a lender (“Lender”) to construct a home on a vacant 2.26 acre lot. The loan was guaranteed by the Mr. and Mrs. Rudgear (the “Rudgears” or “Guarantors”). The loan was secured by a deed of trust. The Rudgears intended to build a home, but construction never started and the lot was undeveloped. The Borrower defaulted and the property was sold at a trustee’s sale for $31,100. The Lender then sued the borrowers for a deficiency.

The trial court judge granted summary judgment in favor of the Borrower/Guarantors because the Rudgears argued they “intended” to build and use their home, once it was completed, as their primary residence. Thus, the trial court granted the Rudgears anti-deficiency protection. The trial court relied on a M & I Marshall Ilsley Bank v. Mueller, 228 Ariz. 478, 268 P.3d 1135 (App 2011) a case that applied the anti-deficiency statute when the borrower “intended” to eventually occupy a partially constructed home.

The Lender appealed and the Court of Appeals reversed the trial court. The Court of Appeals held the anti-deficiency statute did not apply because the lot was vacant and never utilized for a dwelling. The Court of Appeals came to the correct conclusion, nonetheless, the Supreme Court took review of the case to clarify the statutory language “utilized for either a single one-family or single two-family dwelling”. The two key terms in this sentence the Supreme Court wanted to clarify are ‘utilized’ and ‘dwelling’.

The statute in question is A.R.S. 33-814(G) , which provides:

If trust property of two and one-half acres or less which is limited to and utilized for either a single one-family or a single two-family dwelling is sold pursuant to the trustee’s power of sale, no action may be maintained to recover any difference between the amount obtained by sale and the amount of the indebtedness and any interest, costs and expenses.

The court noted that the statute does not define a dwelling. It looked to prior decisions to get to the working definition of a dwelling. ‘We observed that the “principal element” in the varied definitions of “dwelling” is “the purpose or use of a building for human abode, meaning that the structure is wholly or partially occupied by persons lodging therein at night or intended for such use.”’ Wildwood, at ¶ 12. The structure must also be suitable for residential use. Id.

The Supreme Count went on to discuss the word ‘utilize’. In getting to a working definition of utilize, the court had to deal with the Mueller decision that emphasized the reliance on the borrower’s intent. With the Wildwood decision, the Supreme Court closed the door on the ‘intent’ theme that was created in Mueller. Rather the court looked at whether the residential structure was in a completed condition:

To clarify, we reaffirm the distinction noted in Mid Kansas between property that is intended for eventual use as a dwelling and property utilized for a dwelling. The latter requires that a residential structure have been completed. Vacant property is not being utilized for a dwelling even if the borrower intends someday to construct and occupy a home there.

Wildwood, at ¶ 17.

The crux of the holding is that there must be a completed structure on the property suitable for dwelling purposes. Even if a homeowner has not moved into the completed residence they would still qualify for anti-deficiency protection under the court’s interpretation of the statute. “For purposes of § 33-814(G), a residential structure may qualify as a “dwelling” before it is occupied, see supra ¶ 15, but trust property is not being “utilized for” a dwelling until a residential structure is completed.” Wildwood, at ¶ 18. To qualify for anti-deficiency protection ‘ . . . there must be a completed structure on the property suitable for dwelling purposes. And . . . even the homeowner who has not yet moved into the completed residence would be entitled to anti-deficiency protection . . .” Wildwood, at ¶ 17.

The Supreme Court in Wildwood is giving guidance to the lower courts by telling them to eliminate the borrower’s intentions from the equation. The message is clear, look to the ‘trust property’ and determine if a ‘dwelling’ has been constructed that is completed and suitable for dwelling purposes. If these conditions are met, even if the homeowner has not moved in, the anti-deficiency protections are going to be afforded the homeowner.

The attorneys at Windtberg & Zdancewicz, PLC provide clients with experienced legal representation in all litigation and bankruptcy matters. We are experienced in creditor’s rights prosecuting and defending garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance with your collection matters, please contact us at (480) 584-5660.

In this ever-changing world that we live in, the use of paper checks is steadily decreasing. The use of paper checks is decreasing for a number of reasons. One of those reasons is that financial institutions discourage their use. There are handling costs for paper checks, and the risk of third-party fraud is higher. Another reason the use of paper checks is decreasing is because mobile banking is increasing, and institution sponsored bill pay is consumer friendly.

Moreover, if a customer using bill pay has insufficient funds in the bill pay account, no check will be issued. At some point, we will be in an all-digital-format financial world. Until that time comes, paper checks are still with us.

The main difference between the digital and paper worlds is time. Digital happens in a matter of seconds. Paper checks take days to process. Consider the amount of time that passes from when the issuer signs the check to when the paper is received, deposited, and cleared. Following the paper check, once received and deposited, the financial institution will electronically “send” the check to the collecting bank (the place where the issuer banks) usually within 24 hours. The collecting bank then transfers the money from the issuers account to the institution where the check was deposited.

Some check writers use the time delay to get the money in the account for a check that’s already issued. An issuer may write and mail a check on Monday, when the issuer knows there are insufficient funds in the account, in hopes that a deposit on Wednesday will cover the check. Despite the issuer’s intentions, if a check is written at a time when there are insufficient funds in the account, the issuer can face civil and criminal liability.

Putting aside the criminal repercussions, Arizona law severely punishes those who write a check with insufficient funds in the account. The civil “bad check statute” is found at Arizona Revised Statutes §12-671. Section A of the statute imposes liability on a person who “. . .for himself or for another, with intent to defraud. . . delivers to another person or persons a check or draft on a bank or depositary for payment of money, knowing at the time of such making, drawing, uttering or delivery, that he or his principal does not have an account or does not have sufficient funds in, or credit with, such bank . . . to meet the check or draft in full upon presentation . . .” The statute goes onto impose liability “ . . . for twice the amount of such check or draft or fifty dollars, whichever is greater, together with costs and reasonable attorney’s fees as allowed by the court on the basis of time and effort expended by such attorney on behalf of plaintiff.”

If there is proof that there were insufficient funds in the account at the time the check was presented, and that the issuer failed within twelve days after receiving notice of nonpayment or dishonor to pay the check or draft, that such evidence will establish the prima facie evidence of intent to defraud. Not only can the issuer be penalized for twice the amount of the face value of the check, the issuer may also be liable for attorneys’ fees incurred by the creditor who takes action to collect upon that check.

To take advantage of the enhanced civil penalties, the recipient of the bad check must provide notice to the issuer. Strict compliance with the statutory notice provision is required to lay claim to an entitlement to the enhanced penalties.

The attorneys at Windtberg & Zdancewicz, PLC provide clients with experienced legal representation in all litigation and bankruptcy matters. We are experienced in creditor’s rights prosecuting and defending garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance with your collection matters, please contact us at (480) 584-5660.

The Arizona Supreme Court issued an opinion clarifying Arizona Law addressing the waiver of statutory protections in loan documents.  The case specifically addresses when parties can waive their rights to a fair market value determination under A.R.S. § 33-814 following the trustee’s sale of real property.  A.R.S. § 33-814(A) entitles judgment debtors, including Guarantors, to have the fair market value of the property credited against the amount owed on the note following a Trustee’s Sale. Many times the loan documents include a waiver of the right to have the fair market value hearing.  The Arizona Supreme Court held that parties may not prospectively waive this statutory protection.

In this case the Borrower borrowed $15.6 million from a Lender in February 2007 to construct an office building. The promissory note was secured by a deed of trust and payment was guaranteed by four individuals. The loan documents all expressly waived the fair market value provision of A.R.S. § 33-814(A).

Borrower defaulted on the loan in June 2009, when a trustee’s sale was conducted when nearly $11.2 million remained outstanding. The Lender assigned its rights under the loan and deed of trust to a related third party.  The property was acquired the trustee’s sale for the credit bid of $6.15 million. The Borrower and Guarantors were sued for a deficiency judgment of approximately $5 million plus interest. Borrower and the Guarantors filed counterclaims and a third-party claim for breaching of the implied covenant of good faith and fair dealing. The Lender and its related third party moved to dismiss the claims on the ground that Borrower and the Guarantors waived their right under A.R.S. § 33-814 to a fair market value determination. The Superior Court denied the motion, ruling that the parties could not waive this statutory right. Following an evidentiary hearing, the court found the fair market value of the property to be $12.5 million and no deficiency existed because the property’s fair market value exceeded the amount owed on the note.

The Supreme Court provided a thorough analysis of when and under what circumstances it will authorize courts to uphold waivers of statutory rights.  The court looked to its past decisions discussing when parties may waive statutory rights.  Generally, when rights are granted solely for the benefit of individuals, those waivers were upheld, but rights enacted for the benefit of the public may not be so easily waived.  The key inquiry, as stated by the Supreme Court, is whether an identifiable public policy clearly outweighs the interest in enforcing prospective waivers of particular statutory provisions.

As applied to this case, the Supreme Court concluded the fair market value provisions, as well as the deed of trust framework, generally acknowledges “Arizona’s long-recognized public policy of protecting debtors”. (Emphasis added).  In line with this public policy, the court confirmed Arizona’s deed of trust framework streamlines the foreclosure process but maintains protections for borrowers and the public. It does this by protecting against artificially increased deficiency judgments. The court repeatedly used the language of “protecting against artificially increased deficiency judgments”.  The court concluded there is an identifiable public policy served by A.R.S. § 33-814(A) that clearly outweighs the interest in enforcing prospective waiver terms, and consequently it held that that such waivers are unenforceable.

Although not discussed in the decision, Judge Mangum at the trial court issued a 21-page minute entry ruling containing findings of fact and conclusions of law regarding the testimony of the appraisers and value of the real property.  A reading of the minute entry offers valuable insight into the thought process of a Superior Court Judge when making a finding.  The trial court found the property was worth as much as the debt and there was no deficiency.  The Lender appealed on a technical argument where the law was not clearly in its favor.  The message from the Supreme Court is clear; the Arizona statutes are in place to protect the public against artificially increased deficiency judgments. 

The Supreme Court vacated the Court of Appeals analysis on waiver, and substituted its own analysis.  The Supreme Court affirmed the Superior Court’s judgment.  The trial court awarded Borrower and Guarantors a combined $335,104.42 in attorney’s fees and costs, additionally, the Supreme Court, on appeal, awarded fees to Borrower and the Guarantors.

The attorneys at Windtberg & Zdancewicz, PLC provide clients with experienced legal representation in all litigation and bankruptcy matters. We are experienced in creditor’s rights prosecuting and defending garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance with your collection matters, please contact us at (480) 584-5660.

In this digital world electronic signatures are going to be the norm, rather than the exception. Even prior to implementation of the Arizona Electronic Transactions Act there have been cases addressing non-traditional “inked” signatures. Those cases involved a name that was typed on paper and intended by the person to be their signature.

The Act addresses the digital world of electronic signatures. If you purchased a home in the last few years, or obtained a student loan, chances are you e-signed your name to at least one of the documents. The Arizona Electronic Transactions Act applies to any electronic record and electronic signature relating to a transaction. The Act does not apply to a transaction dealing with wills, codicils or testamentary trusts and certain other statutes dealing with the Uniform Commercial Code.

Existing case law is consistent with the Arizona Electronic Transactions Act. A document is “signed” when a person employs “any of the known modes of impressing a name on paper” including “writing, printing, lithographing, or other such mode, provided that same is done with the intention of signing.” Bishop v. Norell, 88 Ariz. 148, 151, 353 P.2d 1022, 1025 (1960) (holding that party’s typed name on a listing agreement qualified as a sufficient signature and the party to be bound so conceded); see generally Restatement (Second) of Contracts § 134 (1981) (defining a “signature” as “any symbol made or adopted with an intention … to authenticate the writing as that of the signer.”).

More recently, the Haywood Securities, Inc. v. Ehrlich court held that a judge’s typed signature on electronically filed judgments complied with civil procedure requirement that an appealable judgment be “signed.” Haywood Securities, Inc. v. Ehrlich, 214 Ariz. 114, 115, 149 P.3d 738, 739 (Ariz. 2007). In Haywood, Plaintiff tried to have the previous judgment dismissed because pursuant to Rule 58(a), “All judgments shall be in writing and signed by a judge.” The Supreme Court of Arizona disagreed holding that nothing in Rule 58(a), or our case law mandates that a judge manually sign an order for it to be a valid judgment. As long as a judge intends that his or her electronic signature formalizes a written judgment, the document complies with Rule 58(a). Therefore, Arizona recognizes electronic signatures as valid and binding.

While Arizona recognizes electronic signatures, there are several requirements that need to be fulfilled in order for the signature to be recognized as valid and binding. To have a valid and binding electronic signature, the signer must complete the requirements of A.R.S. § 44-7031, as well as overcome the presumptions of A.R.S. § 44-7033.

A.R.S. § 44-7031 sets the literal requirements to create a valid binding electronic signature in Arizona. A signature is a secure electronic signature if, through the application of a security procedure, it can be demonstrated that the electronic signature at the time the signature was made was all of the following:

1. Unique to the person using it.
2. Capable of verification.
3. Under the sole control of the person using it.
4. Linked to the electronic record to which it relates in such a manner that if the record were changed the electronic signature would be invalidated.

A.R.S. § 44-7033 refers to the presumptions that arise from an electronic signature. Under Arizona law, it is presumed that:

(1) The electronic record has not been altered since the specific time to which the secure status relates,
(2) There is a rebuttable presumption that the secure electronic signature is the electronic signature of the party to whom it relates and,
(3) In the absence of a secure electronic record or a secure electronic signature, there is no presumption of validity or forgery.

A record or signature in electronic form cannot be denied legal effect and enforceability solely because the record or signature is in electric form. A.R.S. § 44-7007(A). Further, a contract formed by an electronic record cannot be denied legal effect and enforceability solely because an electronic record was used in its formation. A.R.S. § 44-7007(B).

If the electronic signature meets the requirements of A.R.S. §§ 44-7001-7051, the electronic signature should be valid and binding in Arizona.

The attorneys at Windtberg & Zdancewicz, PLC provide clients with experienced legal representation in all litigation and bankruptcy matters. We are experienced in creditor’s rights prosecuting and defending garnishments, charging orders, attachment, property execution, trustee’s sales, foreclosures, judgments, judgment collection, domestication of foreign judgments, and creditor’s issues in bankruptcy cases. If you need assistance with your collection matters, please contact us at (480) 584-5660.