Cypress on Sunland Homeowners Association and Scott Jacoby v. James V. Orlandini II and First American Title Insurance Company; consolidated with Cypress on Sunland Homeowners Association v. James V. Orlandini II and First American Title Insurance Company
At a Glance
| Parties | An HOA and a purchaser defended an HOA foreclosure default judgment against the holder of a deed-of-trust interest and related title interests. |
|---|---|
| Panel | Judge Weisberg |
| Statutes interpreted |
Summary
This case is about an HOA foreclosure gone badly off the rails. The association obtained a default judgment that treated its lien as if it were senior to a recorded first deed of trust, even though Arizona law said otherwise. The Court of Appeals held that the HOA’s lawyers committed a fraud on the court by presenting the foreclosure complaint and default materials in a way that misled the judicial officer into entering relief the law did not permit. The court reversed the reinstatement of the foreclosure judgment and reversed the fee award entered in the HOA’s favor. The opinion is unusually blunt and is one of the strongest Arizona appellate warnings about lien-priority misstatements, default practice, and candor to the tribunal in HOA collection litigation.
Holding
The court held that the default foreclosure judgment was procured through a fraud on the court because the HOA’s lawyers falsely treated the HOA lien as superior to the first deed of trust, and the resulting judgment and fee award could not stand.
Reasoning
Arizona’s planned-community lien statute did not give the HOA priority over the first deed of trust except for a limited superpriority concept not applicable the way the HOA argued. The court found the foreclosure complaint, the request for relief, and the default presentation all ignored that plain rule and effectively invited the court to wipe out a superior lien without disclosing the controlling law.
The panel stressed that this was not just a technical pleading error. It viewed the conduct as a serious failure of candor by lawyers who practiced regularly in HOA law and therefore knew, or should have known, the actual priority structure. Because the judgment rested on that false premise, equitable and procedural consequences followed.
Why This Matters for HOAs
For HOA collection counsel, this case is mandatory reading. It shows that Arizona appellate courts will not treat sloppy or aggressive default foreclosure practice as harmless when lien priority is misrepresented.
For owners, lenders, and title insurers, Cypress is a powerful case for attacking HOA foreclosure judgments that were obtained on a legally false theory of lien superiority.
