Grosvenor Holdings, L.C. v. Figueroa

• Decision Date: 22 October 2009
• Docket Number: No. 2 CA-SA 2009-0050.,2 CA-SA 2009-0050.
• Citation: 218 P.3d 1045,222 Ariz. 588
• Parties: GROSVENOR HOLDINGS, L.C., an Arizona limited liability company; K. Hovnanian Great Western Homes, L.L.C., an Arizona limited liability company; and Tousa Homes, Inc., dba Engle Homes, a Florida corporation, Petitioners, v. Hon. Gilberto V. FIGUEROA, Judge of the Superior Court of the State of Arizona, in and for the County of Pinal, Respondent, and Pinal County, a political subdivision of the State of Arizona, Real Party in Interest.
• Court: Arizona Court of Appeals

218 P.3d 1045

222 Ariz. 588

GROSVENOR HOLDINGS, L.C., an Arizona limited liability company; K. Hovnanian Great Western Homes, L.L.C., an Arizona limited liability company; and Tousa Homes, Inc., dba Engle Homes, a Florida corporation, Petitioners, v. Hon. Gilberto V. FIGUEROA, Judge of the Superior Court of the State of Arizona, in and for the County of Pinal, Respondent, and Pinal County, a political subdivision of the State of Arizona, Real Party in Interest.

No. 2 CA-SA 2009-0050.

Court of Appeals of Arizona, Division 2, Department A.

October 22, 2009.

Fennemore Craig, P.C. by Douglas C. Northup and Scott J. Shelley, Phoenix, Attorneys for Petitioner.

Kutak Rock, LLP by Michael W. Sillyman, Scottsdale, Attorneys for Real Party in Interest.

OPINION

ESPINOSA, Presiding Judge.

¶ 1 In this special action, petitioners Grosvenor Holdings, L.C., K. Hovnanian Great Western Homes, L.L.C., and Tousa Homes, Inc., dba Engle Homes (petitioners) challenge the respondent judge's order denying their motion for partial summary judgment in the underlying action against Pinal County (the County) and remanding this matter to the Pinal County Board of Supervisors (the Board) for further proceedings consistent with the Administrative Review Act (the ARA), A.R.S. §§ 12-901 through 12-914. For the reasons stated below, we accept jurisdiction to answer the following question: Can a county subject its disputes under a contract to judicial review pursuant to the ARA by a term of the contract if the ARA would not otherwise apply?

FACTS AND PROCEDURAL BACKGROUND

¶ 2 In 2000, petitioner Grosvenor purchased 453 acres of land in the County, planning to develop the property as a residential project called Entrada del Oro. On June 25, 2003, Grosvenor and the County entered into a development agreement (the Agreement),¹ establishing permitted uses for the property, density and intensity of use requirements, parameters regarding construction and installation of infrastructure, and a development schedule, providing for phased construction. The Agreement states that, unless otherwise specified, "no surcharge, development or impact fees, or impositions of any kind whatsoever for water, sewer, utilities, transportation systems, public services or any other infrastructure cost or expense shall be chargeable to Developer in any phase of the construction of the development of the Property." Additionally, paragraph three of the Agreement grants to Grosvenor "the right to implement in phases [a] Development Plan under the terms and conditions of the Development Plan and this Agreement for an initial period of five (5) years, unless terminated sooner as set forth below." That paragraph further provides that Grosvenor "may request an extension of the term of this Agreement for one additional five (5) year period, which extension shall not be unreasonably withheld, conditioned or delayed by the County."

¶ 3 With respect to the resolution of disputes between the parties, paragraph twenty-one of the Agreement entitled "ADMINISTRATIVE DISPUTE RESOLUTION PROCESS" states: "Any dispute between Developer and County arising from the failure of either party to comply with material terms and conditions of the Development Plan or this Agreement after an impasse has been reached, shall be resolved by a review hearing by the Board." After providing specific procedures and time limits for review by the Board, the paragraph further states:

The Board's decision shall be subject to appeal and judicial review in the Superior Court of the State of Arizona in and for Pinal County pursuant to [the ARA]. . . . The Board and any judicial tribunal shall take into consideration, the purposes and goals of the Development Plan and this Agreement, the cost and expense incurred by Developer, the need and timeliness of the specific requested action and the fundamental purposes of A.R.S. § 11-1101, et seq. This dispute process is limited to disputes relating to either party's material failure to comply with the terms and conditions of this Agreement and the Development Plan, as they may be amended from time to time.

¶ 4 Petitioners contend that by May 2006, significant infrastructure had been constructed and petitioners K. Hovnanian and Engle had purchased lots within Entrada del Oro and had begun construction. In April 2008, petitioners requested a five-year extension of the Agreement pursuant to paragraph three. It is undisputed that, during a meeting on June 11, 2008, the Board denied petitioners' request on the ground that the County wished to assess impact fees on the project in order to increase revenue. Petitioners did not receive notice of the Board meeting, but on June 26, 2008, the County sent a letter by electronic mail to petitioners telling them the Agreement had expired the day before and the County would begin assessing impact fees in connection with all future building permits issued in connection with the Entrada del Oro project.

¶ 5 Petitioners sent a letter to the County protesting its decision and requesting a review hearing pursuant to paragraph twenty-one of the Agreement. During a meeting held on September 17, which Grosvenor attended, the Board orally denied petitioners' request for an extension of the Agreement and authorized charging petitioners $8,964 per building permit in impact fees. On December 9, 2008, petitioners filed a complaint against the County in Pinal County Superior Court seeking a declaratory judgment that they were not required to pay the additional fee for the building permit. The complaint alleged two counts of breach of contract, for which petitioners sought injunctive relief and specific performance; asserted a claim based on promissory estoppel; and alleged the County had violated A.R.S. § 11-1102, for which they sought injunctive relief. Petitioners sought damages for all claims as well as attorney fees and costs. On December 15, counsel for the County sent a letter to petitioners' counsel, together with the Board's findings of fact regarding its denial of petitioners' request for an extension. In that letter, the County conceded that, "[t]hrough what appears to be an administrative and procedural oversight, your clients may not have received, in written form, the [Board's] final decision and findings of fact. . . ." The letter further stated that the County regarded the petitioners' complaint as their notice of review pursuant to the ARA. See § 12-904(A) (action to review final administrative decision commenced by filing complaint); § 12-904(B) (party seeking review required to file notice of action with office of administrative hearing or agency that conducted hearing within ten days after filing complaint).

¶ 6 Petitioners filed a motion for partial summary judgment, seeking the superior court's determination that the ARA does not apply to their lawsuit for a variety of reasons and that the court was not limited to reviewing for an abuse of discretion the Board's denial of its request to renew the Agreement. Petitioners asserted the ARA does not apply because: (1) review under the ARA is not the exclusive means provided by the Agreement for reviewing the Board's decision, but even if it were, the County did not comply with the terms of the Agreement in issuing its decision; and (2) if paragraph twenty-one does provide that review pursuant to the ARA is the exclusive means of obtaining judicial review, the provision is unenforceable because (a) the ARA does not apply to decisions by the Board and therefore the court lacks subject matter jurisdiction to address the complaint pursuant to the ARA, and (b) enforcement of the provision would violate petitioners' due process rights. The respondent judge denied petitioners' motion for partial summary judgment. He found paragraph twenty-one of the Agreement unambiguously requires disputes to be resolved by the Board after the Board conducts a review hearing. The respondent also found paragraph twenty-one "sets forth that, with certain qualifiers, `the Board's decision shall be subject to appeal and judicial review in the Superior Court. . . .' pursuant to [the ARA]."

¶ 7 Relying on Airport Properties v. Maricopa County, 195 Ariz. 89, 985 P.2d 574 (App.1999), the respondent judge found the language in the Agreement "must be read, in context, to mean that no appeal must be taken, but if an appeal is taken, it will be, pursuant to ARS § 12-901, processed under the [ARA] in the Superior Court." And, agreeing with the County, the respondent concluded "the County may voluntarily submit to Administrative Review of its decisions, as authorized by ARS § 11-251(21) and ARS § 11-1101(1); see Boyce v. City of Scottsdale, 157 Ariz. 265, 756 P.2d 934 (App.1988)." The respondent found the parties had agreed any appeal would be pursuant to the ARA but found, too, that there was no final administrative order to review pursuant to the ARA, because it did not appear a hearing had been conducted consistent with the Agreement or that a final ruling had been rendered, as contemplated by the ARA. See § 12-901(2). The respondent stated he could not determine whether the parties had, in fact, complied with the provisions of paragraph twenty-one because certain factual matters remained unclear. He remanded the matter to the Board so that procedures consistent with paragraph twenty-one could be conducted and a final order entered. Presumably, the respondent judge believed he had the authority to remand the matter under § 12-910(E), which gives the superior court the authority to "affirm, reverse, modify or vacate and remand the agency action," and § 12-911(A)(6), which empowers the superior court to "[s]pecify questions or matters requiring further hearing or proceedings and give other proper instructions." This petition for special action relief followed.

SPECIAL ACTION JURISDICTION

¶ 8 This court generally will not accept jurisdiction to review an order denying a motion for summary judgment....