In re Re

• Decision Date: 20 December 2016
• Docket Number: No. 2 CA-CV 2015-0171,2 CA-CV 2015-0171
• Parties: IN RE $26,305 IN U.S. CURRENCY
• Court: Arizona Court of Appeals

IN RE $26,305 IN U.S. CURRENCY

No. 2 CA-CV 2015-0171

ARIZONA COURT OF APPEALS DIVISION TWO

December 20, 2016

THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.

NOT FOR PUBLICATION

See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f).

Appeal from the Superior Court in Pinal County

No. S1100CV201301482

The Honorable Karen J. Stillwell, Judge Pro Tempore

AFFIRMED IN PART; VACATED IN PART; REMANDED

COUNSEL

Kenneth S. Countryman, P.C., Tempe

By Kenneth S. Countryman

Counsel for Claimants/Appellants

M. Lando Voyles, Pinal County Attorney

By Alex Mahon, Deputy County Attorney, Florence

Counsel for Appellee

MEMORANDUM DECISION

Judge Espinosa authored the decision of the Court, in which Presiding Judge Howard and Judge Staring concurred.

ESPINOSA, Judge:

¶1 In this civil forfeiture proceeding, appellants Terron Taylor and Oznie Manhertz (Claimants) challenge the trial court's denial of their request for attorney fees, costs, and prejudgment interest. For the following reasons, we affirm in part, vacate in part, and remand.

Factual and Procedural Background

¶2 The facts of this case are undisputed, but it is necessary to recount much of its lengthy procedural history in some detail. In June 2012, after a Pinal County Sheriff's deputy stopped a truck for a traffic offense, the driver and passenger were arrested and the truck was seized, as well as $26,305 in currency and a handgun found inside. The truck was registered to "VIP Line Com," and Manhertz was listed on the title as the first lienholder. The driver and passenger were given copies of "seizure paper work," including a notice of property seizure and pending uncontested forfeiture as to the currency and truck.

¶3 Taylor, who was not a passenger, filed a verified claim as to the currency in July 2012 in Maricopa County Superior Court and sent copies by certified mail to the Pinal County Narcotics Task Force and the Pinal County Attorney Asset Forfeiture Team. In September 2012, Taylor telephoned the Pinal County Attorney's Office to inquire about the status of his claim. After providing the case number listed on the notice given to the occupants of the truck at the time of seizure, he was told there was no record of that case, the office could not find his claim, and attorney Craig Cameron would contact him when paperwork was received. Taylor left histelephone number and sent a copy of his claim to the office by facsimile.

¶4 In June 2013, the state filed an "Initiation of Civil Forfeiture Proceedings," in Pinal County Superior Court, stating it had provided notice as to the truck and currency either personally or by publication. The document indicated the state had sent Manhertz a "Notice of Pending Uncontested Forfeiture" as to the truck on June 7, 2013, but it was silent as to Taylor. In an amended notice, the state further indicated that the vehicle's passenger had been issued a notice as to the handgun but, again, Taylor was not mentioned.

¶5 Manhertz filed a timely "Verified Claim" to the truck on June 28. A few months later, the state filed an "Application for Order on Forfeiture and Allocation of Property" as to the cash, truck, and gun, representing it had given notice of the forfeiture as required by law and no claims had been filed. Shortly thereafter, Manhertz filed a motion for an order directing the state to release the truck and Taylor filed motions for an order directing the state to release the currency and the gun. The state did not respond, prompting Claimants to file "Motion[s] for Summary Disposition of Motion[s] for Order Directing State to Release [Property]." In September, after the trial court set a hearing on the motions, the state assured the court it would file responses to Claimants' motions, but, again, no responses were filed.

¶6 At a status review hearing in November, the state indicated it would release the truck and the handgun but argued a hearing was required pursuant to A.R.S. § 13-4310(D) to establish Taylor's ownership of the currency. The state also indicated it had filed notices of release with the court earlier that morning, which provided "authorization and notice . . . to the seizing agency . . . [to] release . . . the seizure for forfeiture" on the truck and handgun. When Claimants requested that the court sign proposed orders to facilitate the release of those items, the state's attorney stated it was unnecessary because the Sheriff's Department "typically release[d] forfeiture cases on [his] signature."

¶7 Following another hearing in December, the trial court issued an under-advisement ruling, finding Taylor had "no standing" in this case and declining to "reach the questions whether Taylor is time-barred from filing a claim" or "whether the State is time-barred from pursuing forfeiture." The court subsequently denied Claimants' motion to vacate its ruling, noting "this matter has not yet concluded and the currency has not been forfeited or released." The court also ordered the state to file notices confirming that it had actually released the truck and the handgun.

¶8 In June 2014, Claimants initiated a special action in this court. We accepted jurisdiction and granted relief, concluding that because the state did not timely or properly initiate a forfeiture proceeding against any of the property, the trial court was required to allow Taylor to establish ownership of the currency and upon such proof order the state to release it. Taylor v. Stillwell, 2 CA-SA 2014-0034, ¶¶ 12, 27 (Ariz. App. Sept. 25, 2014) (mem. decision). We further concluded the respondent judge had abused her discretion in not granting the motions to return property and remanded the case for further proceedings as to the currency. Id. ¶¶ 24, 27.

¶9 Following a November 2014 hearing¹, the trial court found Taylor had established ownership of the currency and ordered the state to release it and all interest earned "immediately." The court also awarded post-judgment interest but denied Taylor's request for prejudgment interest and took the issues of attorney fees and costs under advisement. Two days later, Taylor filed a "Notice of Assignment" indicating "he ha[d] assigned his right to all proceeds flowing from this case to Kenneth S. Countryman, Esq." for legal fees owed to Countryman "predat[ing] the date of seizure" and the "assignment [wa]s effective as of 09/16/2011." Taylor's signature on the notice was dated September 19, 2013. Claimantsthen filed a "Clarified and Consolidated Application for Attorney Fees" in January 2015, and the trial court set the matter for "Internal Review." The state did not respond to Claimants' application for fees.

¶10 In March 2015, the trial court issued a notice stating that "additional argument is necessary to determine whether the State unreasonably delayed these proceedings, and therefore, warrants an award of attorneys' fees," apparently as a sanction under A.R.S. § 12-349 or Rule 11, Ariz. R. Civ. P., as urged by Claimants, and setting the matter for oral argument. The court also issued a separate order making several findings to "narrow the scope of the Oral Argument," which included a finding that the state—due to its lack of response or objection to Claimants' fee request—had "conceded . . . the reasonableness of the attorneys' fees requested." It further prohibited the state from "address[ing] whether it unreasonably delayed the proceedings and/or whether the requested attorneys' fees are reasonable," and "strictly limited [argument] to . . . the statutory and/or legal basis to support an award of attorneys' fees in this case." At the time set for oral argument,² however, the state filed a "Motion for Leave to File Response to Requests for Attorney Fees and Costs" which the trial court granted and again set the matter for "internal review."

¶11 In June, the trial court issued an under-advisement ruling striking Claimants' application for attorney fees and costs and denying their request for attorney fees, citing both the assignment to Countryman and insufficiency of Claimants' affidavit for attorney fees and costs. Claimants moved to vacate the court's ruling and made an "informal request for change of judge pursuant to Rule 42(A)." See Ariz. R. Civ. P. 59. The trial court issued an unsigned notice declining to "take . . . further action as this matter is closed."

¶12 After Claimants filed a notice of appeal, this court suspended and revested jurisdiction to allow the trial court to resolve the motion to vacate in a signed order. It did so, affirming its previous ruling and entering judgment pursuant to Rule 54(c), Ariz. R. Civ. P. We have jurisdiction pursuant to A.R.S. §§ 12-2101(A)(1), (5)(a) and 12-120.21(A)(1).

Attorney Fees

¶13 Claimants assert on appeal, as they did below, that they are entitled to recover attorney fees under A.R.S. § 12-2030, permitting fees to prevailing parties in mandamus actions; A.R.S. §§ 13-2314(A) and 13-2314.04, permitting recovery of fees by persons against whom racketeering claims were unsuccessfully brought by the state or a private party; and Rule 11, Ariz. R. Civ. P., as a sanction for the state's filing of pleadings "not grounded in fact or warranted by law," expansion of proceedings "unnecessarily and without justification," and failure to comply with court orders. Claimants contend the trial court abused its discretion by declining to award attorney fees under all grounds.

¶14 Attorney fee awards are generally reviewed for an abuse of discretion, but we review whether a fee statute applies de novo. See Burke v. Ariz. State Ret. Sys., 206 Ariz. 269, ¶ 6, 77 P.3d 444, 447 (App. 2003). We will uphold the trial court's exercise of discretion if the record contains a reasonable basis for its denial of fees, Kadish v. Ariz. State Land Dep't, 177 Ariz. 322, 326, 868 P.2d 335, 339 (App. 1993), but a refusal to grant attorney fees where law mandates an award requires reversal, see Janis v. Spelts, 153 Ariz. 593, 598, 739 P.2d...