Ellman Land Corp. v. Maricopa County

• Decision Date: 03 May 1994
• Docket Number: No. 1,CA-TX,1
• Citation: 884 P.2d 217,180 Ariz. 331
• Parties: ELLMAN LAND CORPORATION, an Arizona corporation, Plaintiff-Appellee, v. MARICOPA COUNTY, Defendant-Appellant. 91-0035.
• Court: Arizona Court of Appeals

Page 217

884 P.2d 217

180 Ariz. 331

ELLMAN LAND CORPORATION, an Arizona corporation, Plaintiff-Appellee, v. MARICOPA COUNTY, Defendant-Appellant.

No. 1 CA-TX 91-0035.

Court of Appeals of Arizona Division 1, Department T.

May 3, 1994.

As Corrected May 4, 1994.

Review Denied Nov. 29, 1994.

Mariscal, Weeks, McIntyre & Friedlander, P.A. by Brian M. Mueller and Gary L. Birnbaum, Phoenix, for plaintiff-appellee.

Richard M. Romley, Maricopa County Atty. by Mary Z. Chandler and James D. Winter, Deputy County Attys., Phoenix, for defendant-appellant.

FIDEL, Judge.

Maricopa County appeals from a tax court judgment reducing the aggregate full cash value of seven parcels of real property owned by taxpayer Ellman Land Corporation from $11.59 million to $5.5 million. We summarize the questions on appeal, and our answers to those questions, as follows:

(1) Is Maricopa County a necessary party? Yes.

(2) Did the county, by moving to dismiss for lack of personal and subject matter jurisdiction, or by joining in a pretrial statement that purported to preserve its objections, make a general appearance that waived its objections to non-joinder and non-service? No.

(3) Did the tax court abuse its discretion in granting the taxpayer's motion to amend its complaint to add the county as a defendant? No.

(4) Did the taxpayer satisfy the requirements of Ariz.R.Civ.P. 15(c) for relation back of amendments adding party defendants? Yes.

(5) Did the tax court abuse its discretion in finding good cause for extending the time for service on Maricopa County beyond the ten day period specified by Ariz.Rev.Stat.Ann. § 42-177(D). No.

(6) After issuing an order three days before trial granting the taxpayer leave to name and serve the county as a defendant, did the tax court err by proceeding to trial and judgment against the county without requiring that an amended complaint be filed and served? Yes.

FACTUAL AND PROCEDURAL HISTORY

The taxpayer owns seven parcels of real property in Maricopa County that the county assessor valued in the aggregate at $11.59 million for 1990. The taxpayer commenced this action by filing a timely complaint and notice of appeal challenging the assessor's valuation. The taxpayer's complaint and notice of appeal expressly invoked Ariz.Rev.Stat.Ann. ("A.R.S.") §§ 42-177 and 42-246 (1991). Section 42-246 provides:

Any person dissatisfied with the valuation or classification of his property as determined by the county assessor may appeal to the superior court in the manner provided in § 42-177 on or before November 1.

Section 42-177 provides in part:

C. The clerk of the court shall docket the appeal in the name of the appellant as plaintiff and of the state or county, whichever is appropriate, and the department [of revenue] as defendants....

D. A copy of the notice of appeal shall be served on the defendant or defendants and the state board of tax appeals within ten days of filing, in the manner provided for service of process in the rules of civil procedure or by certified mail. An affidavit showing such service shall be filed with the clerk of the court.

(emphasis added).

The taxpayer properly identified and timely served the state and Department of Revenue as defendants. But the taxpayer did not name or serve Maricopa County. Instead, it named "Ira Friedman as Assessor of Maricopa County, Arizona," and accomplished service on an employee at the assessor's office on November 6, 1990.

On January 2, 1991, the tax court notified the parties by minute entry that it would set a trial date within 120 days from the date the case was filed. On March 14, 1991, a second minute entry set trial for May 31, 1991, and directed the parties to file a joint pretrial statement no less than five days before trial. Both minute entries included the Civil Division On March 13, 1991, the county moved to dismiss the taxpayer's action for lack of subject matter jurisdiction, lack of personal jurisdiction, and insufficient process. The county argued that it was a necessary party under A.R.S. § 42-177(C). It correctly pointed out that naming and serving the Maricopa County Assessor was not the equivalent of naming and serving Maricopa County. ¹ The county also attached affidavits demonstrating that process had not been served on its chief executive officer, secretary, clerk, or recording officer as required by Ariz.R.Civ.P. 4(d)(8). ²

[180 Ariz. 334] of the Maricopa County Attorney's Office among the addressees.

The taxpayer argued in response that the state, not Maricopa County, was the proper defendant because the property taxes at issue were received by and for the benefit of the state. The taxpayer stated:

Service is not an issue here. This is not a case as in Maricopa County [v. Arizona Tax Court, 162 Ariz. 64, 781 P.2d 41 (App.1989),] where the County is an intended named defendant and the issue is whether it had been properly served. Rather, in this case, the county is not an intended defendant and has not been served because its presence is not required.

Alternatively, if the court found the county a necessary defendant, the taxpayer asked leave to amend its complaint pursuant to Ariz.R.Civ.P. 15(c). ³ The taxpayer also asked the court to "order that such amendment relate back to the filing of the original Complaint...."

After further briefing and argument, the tax court took the matter under advisement on April 29, 1991, reaffirming the trial date of May 31, 1991. The tax court had not yet ruled on May 22, when the date arrived for the parties to file their joint pretrial statement. Footnote 1 to the pretrial statement stated:

As the court is aware, Maricopa County has filed a Motion to Dismiss based on its absence as an original defendant in this matter, and Ellman has filed a Motion to Amend to add Maricopa County as a defendant. The court has yet to make a ruling on either of these two pleadings. Maricopa County participates in this Joint Pretrial Statement only to the extent that it may be included as a party in the event the court grants Ellman's Motion to Amend. Maricopa County specifically reserves, and expressly does not waive, any matters contained in its Motion to Dismiss regardless of its participation here.

On May 28, 1991, the tax court denied the county's motion to dismiss, granted the taxpayer's motion to amend to add the county as a defendant, and reconfirmed the trial date of May 31, 1991. On the morning of trial, the county attorney notified the trial court that the county would not appear:

Since Maricopa County has never been named by the Plaintiff in this action (although a Motion for Leave to Add Maricopa County was granted) and since Maricopa County has not been served at this point in time, the Court does not have jurisdiction over Maricopa County.

Since Maricopa County is not before the court, Maricopa County will not appear in the trial of this action set for 10:00 a.m. on this date.

At trial, a judge pro tempore acting for the tax court found that Maricopa County was a party and had voluntarily chosen not to appear. The court went on to hear the taxpayer's evidence, find the assessor's valuation excessive, and set the full cash value of the taxpayer's parcels at an aggregate $5.5 million. After the tax court entered formal judgment in accordance with this ruling, Maricopa County timely appealed.

The tax court thereafter filed a written opinion pursuant to A.R.S. § 12-171 (1992). Ellman Land Corp. v. State, 169 Ariz. 13, 816 P.2d 272 (Tax Ct.1991). The opinion held that Maricopa County was a necessary party and should have been joined as a party pursuant to Ariz.R.Civ.P. 19(a)(1). In summarizing its prior order granting the taxpayer leave to amend its complaint, the tax court stated:

The Maricopa County Assessor was served, and failed to respond. The Assessor is the county officer responsible for the valuation from which the appeal is sought to be taken. The Court assumes the Assessor referred the complaint to his attorney, the County Attorney for Maricopa County. The Court, therefore, concluded that Maricopa County had notice of the appeal, either through its Assessor, or through its attorney. Based on the authority of Pesqueira, the Court denied the motion to dismiss, and granted the motion to amend. Pursuant to Maricopa County v. Arizona Tax Court, the Court found good cause to extend the time for service on Maricopa County beyond the 10 days provided in A.R.S. § 42-177(D).

169 Ariz. at 15, 816 P.2d at 274. ⁴

DISCUSSION

1. Maricopa County's Standing to Appeal

Only a party aggrieved by a judgment may appeal. Ariz.R.Civ.App.P. 1. In its answering brief the taxpayer asserts that Maricopa County was not aggrieved by the judgment because the taxpayer's refund will ultimately come not from the county but from the state treasury. The taxpayer cites A.R.S. § 42-178(E) ⁵ to support this proposition. The taxpayer is mistaken.

Real property taxes are levied and assessed by counties only in part on behalf of the state. Bromley Group, Ltd. v. Arizona Dep't of Revenue, 170 Ariz. 532, 540, 826 P.2d 1158, 1166 (App.1991). The county receives a share of those taxes. Id.; see A.R.S. § 42-341 to 354. When a taxpayer is awarded a refund of taxes overpaid to the county treasurer, A.R.S. § 42-178(E) requires the county treasurer to pay the refund and requires the state to reimburse the county only for the portion of the overpaid taxes that the state received. Maricopa County was accordingly aggrieved by the tax court's judgment and has standing to pursue this appeal.

2. Maricopa County's Status as Necessary Party

The taxpayer originally contended that the state, not Maricopa County, was the proper co-defendant of the Department of Revenue under A.R.S. § 42-177(C). The taxpayer has abandoned that position on appeal. Instead it argues that, if naming the state and not the county was mistaken, it was a reasonable mistake that the tax court had discretion to permit the taxpayer to correct by...