Fabrizio v. State Ex Rel. Ariz.

• Decision Date: 13 July 2010
• Docket Number: 1 CA-CV 09-0538,1 CA-CV 09-0593
• Parties: ROBERT FABRIZIO, Plaintiff/Appellee, v. STATE OF ARIZONA ex rel. ARIZONA DEPARTMENT OF TRANSPORTATION, Defendant/Appellant. NEW CENTURY, INC., an Arizona Corporation, Plaintiff/Appellee, v. STATE OF ARIZONA ex rel. ARIZONA DEPARTMENT OF TRANSPORTATION, Defendant/Appellant.
• Court: Arizona Court of Appeals

ROBERT FABRIZIO, Plaintiff/Appellee,

v.STATE OF ARIZONA ex rel. ARIZONA

DEPARTMENT OF TRANSPORTATION,

Defendant/Appellant.

NEW CENTURY, INC., an Arizona

Corporation, Plaintiff/Appellee,

v.STATE OF ARIZONA ex rel. ARIZONA

DEPARTMENT OF TRANSPORTATION,

Defendant/Appellant.

1 CA-CV 09-0538

1 CA-CV 09-0593

COURT OF APPEALS STATE OF ARIZONA DIVISION ONE DEPARTMENT C

Filed: July 13, 2010

NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED

EXCEPT AS AUTHORIZED BY APPLICABLE RULES.

See Ariz. R. Supreme Court 111(c); ARCAP 28(c);

Ariz. R. Crim. P. 31.24

(Consolidated)

MEMORANDUM DECISION

(Not for Publication-Rule 28, Arizona Rules of Civil Appellate Procedure)

Appeal from the Superior Court in Maricopa County

Cause Nos. CV2006-005833 and CV2006-006187

The Honorable Richard L. Nothwehr, Commissioner

The Honorable Michael L. Barth, Commissioner

AFFIRMED

Terry Goddard, Attorney General

Phoenix

By Ron J. Aschenbach, Assistant Attorney General

And Joe Acosta, Jr., Assistant Attorney General

Attorneys for Appellant

Ramras Law Offices, P.C.

Phoenix

By David N. Ramras

And Ari Ramras

Attorneys for Appellee Fabrizio

Barry C. Becker, P.C.

Phoenix

By Barry Becker

Attorney for Appellee New Century, Inc.

KESSLER, Judge

¶1 In this consolidated appeal, defendant/appellant Arizona Department of Transportation ("ADOT") appeals from two decisions denying its motions to set aside two default judgments foreclosing its right to redeem tax liens on two parcels of property. ADOT contends that the judgments are void because it did not receive prelitigation notice of the plaintiffs' intent to foreclose on the liens as required by Arizona Revised Statutes ("A.R.S.") section 42-18202 (2006). Because the State did receive service of process before it lost title to the two parcels in question, this decision is limited to the purely statutory requirement of notice before filing and need not address concerns of due process or constitutionally valid notice. The court found that the plaintiffs complied with the statute by sending notice to the owner as listed according tothe records of the County Assessor, although the assessor's records were incorrect. For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

¶2 In April 2006, plaintiffs/appellees Robert Fabrizio and New Century, Inc. (collectively "plaintiffs") separately filed complaints to foreclose tax liens on parcel numbers 219-26-096E and 219-26-096H in Maricopa County, respectively. Prior to filing the actions, the plaintiffs sent notices of their intent to foreclose the right to redeem under A.R.S. § 42-18202 to McKellips Investment Inc./McRae Group, which was listed by the Maricopa County Assessor's Office and the Maricopa County Treasurer's Office as the owner of both parcels. The complaints named as defendants McRae Investments, Inc. II (as successor in interest to McKellips Investments, Inc.) and ADOT.¹ The defendants did not answer the complaint, and default judgments were entered in favor of Fabrizio on July 10, 2006, and in favor of New Century on July 13, 2006.

¶3 In February 2009, ADOT filed motions in both actions to have the default judgments declared void and set aside pursuant to Rule 60(c)(4), Arizona Rules of Civil Procedure. ADOT explained that it had obtained title to the properties by foreclosing a judgment lien against McRae Investments II assuccessor in interest to McKellips Investments, Inc., that the Maricopa County Treasurer never changed the ownership record on the tax rolls for tax years 2004 and 2005, that ADOT never received notice of any delinquent taxes, and that, because of the error on the County Treasurer's tax records, plaintiffs sent the prelitigation notice to the prior owner of the property but not to ADOT. ADOT argued, among other things, that A.R.S. § 4218202 required that notice be sent to the owner of the property and that, because the plaintiffs did not give the statutorily required notice, the judgment should be declared void. ADOT also argued that A.R.S. § 42-18202(B) required that the prelitigation notice include the name of the correct owner and that, because the incorrect owner was identified, the notice itself was defective, requiring the judgment to be declared void.

14 The plaintiffs responded that the language of the statute gave them the option of sending notice to the property owner identified according to the records of the County Assessor, which they did.

¶5 In the action involving Fabrizio, the superior court denied ADOT's motion, rejecting several arguments made by ADOT, but not addressing ADOT's argument with respect to the prelitigation notice. ADOT filed a motion for new trial, askingthe court to consider the argument. The court denied the motion, stating:

In this case, Plaintiff Fabrizio sued ADOT to foreclose the right of redemption on certain property. Prior to the suit,

Fabrizio gave notice of the proceeding to an entity that had the recorded ownership interest in the property, although this entity was not the true owner. ADOT argues that Fabrizio's notice was improper.

This Court agrees with ADOT that notice, as provided in this matter was ineffective, but the Court disagrees with ADOT's conclusion that the method utilized by Fabrizio did not comply with the law.

By all accounts, it appears that Fabrizio did provide notice to the "recorded owner" of the property. This notice

complied with the statutory requirements, and should end the issue. The fact that ADOT was not the "recorded owner" of the property should not be held against Fabrizio, and to the extent that ADOT has a right to complain, the complaint should be leveled at the parties responsible for the proper recordation of ownership, which includes ADOT's own responsibility for not confirming a proper record.

Second, to the extent that ADOT argues that a renewed notice must be provided, upon the discovery of a true owner, ADOT's argument fails logic, and their argument should be addressed to the legislature. If the Court accepts ADOT's argument that a pre-litigation notice must be provided to a late-discovered owner, the claim would only frustrate the attempts to foreclose on the property and would discourage accurate recording of title transfers. In effect, ADOT's theory would encourage disreputable owners to transfer title without recordationin an effort to stall the tax lien foreclosure. Such was not the intent.

It appears that the intent of the current legislation was to place responsibility upon the owners of property to protect their interests, which includes the incentive to an owner to have the property rightfully recorded in the true owner's name.

¶6 In the action involving New Century, the superior court also denied ADOT's motion to set aside the default judgment. The court found in part:

[T]he notice requirements of the statute at issue here, A.R.S. § 42-18202, were satisfied. This Court disagrees with ADOT's position that if the County Assessor's records regarding the identity of [the] actual owner of the property in question are in error, then A.R.S. § 4218202 mandates that notice be given to the property owner as identified in the County Recorder's records versus County Assessor's records. There is nothing in the statute even suggesting such a limitation or exception to relying on the County Assessor's records to give notice.

ADOT's argument that subsection B of A.R.S. § 42-18202 imposes a notice requirement in addition to those set forth in subsection A of the statute is likewise contrary to the plain language of the statute. Subsection B simply refers back to the notice requirements of subsection A, and outlines the information to be contained in the notice to be given per subsection A, which includes the identity of the property owner, either as identified in the County Recorder's records or the County Assessor's records.

To interpret the statute as proposed by ADOT would discourage proper recordation of title transfers, thereby forestalling tax lien foreclosure. It was clearly the intent of the legislature to place responsibility upon the actual owners of property to ensure that the property is properly recorded.

¶7 ADOT timely appealed from both orders, and this court consolidated the appeals. We have jurisdiction pursuant to A.R.S. § 12-2101(C) (2003).

DISCUSSION

¶8 We review for an abuse of discretion a trial court's decision denying a motion to set aside a default judgment. Hilgeman v. American Mortgage Sec, 196 Ariz. 215, 218, 1 7, 994 P.2d 1030, 1033 (App. 2000) (citation omitted). If a judgment is void, a court has no discretion and must vacate the judgment. Martin v. Martin, 182 Ariz. 11, 14, 893 P.2d 11, 14 (App. 1994) (citation omitted). However, interpretation of a statute is an issue of law, which we review de novo. State Comp. Fund v. Super. Ct., 190 Ariz. 371, 374-75, 948 P.2d 499, 502-03 (App. 1997) (citation omitted).

¶9 Under A.R.S. § 42-18202, a lienholder intending to file an action to foreclose the right to redeem a tax lien must send notice of that intent at least thirty days prior to filing the action to:

1. The property owner of record

according to the records of the countyrecorder in the county in which the property is located or to all of the following:

(a) The property owner according to the records of the county assessor in the county in which the property is located as determined by § 42-13051.²

(b) The situs address of the property, if shown on the tax roll and if different from the owner's address under subdivision

(a).

(c) The tax bill mailing address according to the records of the county treasurer in the county in which the property is located, if that address is different from the addresses under subdivisions (a) and (b).

2. The treasurer of the county in which the real property is located.

A.R.S. § 18202 (A)(1), (2) (emphasis added). The notice must include "[t]he property owner's name." A.R.S. § 42-18202 (B)(1). The statute further provides:

C. If the purchaser fails to send the notice required by this section

...