Nat'l Tax Lien Redemption Servs. L.L.C. v. Rivers
| Decision Date | 08 January 2019 |
| Docket Number | No. 1 CA-CV 17-0765,1 CA-CV 17-0765 |
| Parties | NATIONAL TAX LIEN REDEMPTION SERVICES L.L.C., et al., Plaintiffs/Appellees, v. JAMES M. RIVERS, et al., Defendants/Appellants. |
| Court | Arizona Court of Appeals |
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
Appeal from the Superior Court in Maricopa County
The Honorable David M. Talamante, Judge
AFFIRMED IN PART; REVERSED IN PART; VACATED IN PART; REMANDED
The Hendrix Law Office, Gilbert
By Heather M. Hendrix
Counsel for Plaintiff/Appellee National Tax Lien Redemption Services L.L.C.
Lake & Cobb, P.L.C., Tempe
By Richard L. Cobb, Hank E. Pearson
Counsel for Plaintiff/Appellee Premier Equity Solutions, L.L.C.
Gust Rosenfield, P.L.C., Phoenix
Co-Counsel for Plaintiffs/Appellees Geared Equity, L.L.C. and 50780, L.L.C. Kevin T. Ahern, P.C., Phoenix
Co-Counsel for Plaintiffs/Appellees Geared Equity, L.L.C. and 50780, L.L.C.
Cochran Law Firm, P.C., Phoenix
By Jerry L. Cochran
Treon & Aguirre, P.L.L.C., Phoenix
By Richard T. Treon
Presiding Judge Kenton D. Jones delivered the decision of the Court, in which Vice Chief Judge Peter B. Swann and Judge David D. Weinzweig joined.
¶1 James Rivers and Richard Treon (collectively, Rivers/Treon) appeal the trial court's orders denying partial summary judgment in their favor and later granting summary judgment in favor of National Tax Lien Redemption Services L.L.C. (National Tax); Premier Equity Solutions, L.L.C. (Premier); and Geared Equity, L.L.C. and 50780, L.L.C. (collectively the Lenders). At issue is whether Rivers/Treon have standing to redeem tax liens filed against a parcel of real property in Phoenix (the Property) arising from an interest Rivers/Treon claim to possess in the Property. For the following reasons, we hold that Rivers/Treon presented sufficient evidence of their alleged interest in the Property to create a genuine issue of material fact that precluded entry of summary judgment in Appellees' favor. Accordingly, we affirm in part, reverse in part, vacate the award of attorneys' fees, and remand for further proceedings.
¶2 This is a highly unusual tax lien foreclosure/quiet title case that raises procedural, ethical, and public policy concerns.1 Nonetheless, this Court is limited to reviewing the posture of the case presented by the parties. See Young v. Bishop, 88 Ariz. 140, 147 (1960). "On appeal from a grant of summary judgment, we view all facts and reasonable inferences therefrom in the light most favorable to the party against whom judgment was entered." City of Tempe v. State, 237 Ariz. 360, 362, ¶ 1 n.3 (App. 2015) (quoting Bothell v. Two Point Acres, Inc., 192 Ariz. 313, 315, ¶ 2 (App. 1998)).
¶3 In 1983, Diane Sweeney and her husband, Tom, purchased the Property as a residence for Tom's mother.2 Three years later, the Sweeneys borrowed $120,000 from Rivers. Treon wore several hats in the transaction, including attorney for both parties, personal guarantor of repayment, and ultimately a lender to the Sweeneys. He drafted the written promissory note (the 1986 Note), the recorded deed of trust securing the note, and his personal guaranty.
¶4 The relevant documents have been lost, including the original and all copies of the 1986 Note and Treon's personal guaranty. According to Treon and the Sweeneys, however, the 1986 Note required the Sweeneys to pay taxes on the Property, make monthly interest payments, and repay the underlying indebtedness within 120 days of written demand.
¶5 In 1987, the Sweeneys were unable to make monthly interest payments on the 1986 Note, so Treon began making them pursuant to the guaranty. Treon then paid off the principal in its entirety and obtained a written assignment (the 1988 Assignment) of Rivers' rights under the 1986 Note and Deed of Trust. The 1988 Assignment was not recorded and has likewise been lost.
¶6 Shortly thereafter, Treon and the Sweeneys orally agreed to change the terms of the original loan. Treon described the new terms as follows:
I agreed to forebear enforcing the 120-day payment demand provision of the note; the Sweeneys agreed they would pay the note off when they were able plus all accrued interest . . . Thomas Sweeney's mother . . . could continue to live in the house and the interest owed on the $120,000 note would simply accumulate pending one of three possible events. First, Thomas and Diane Sweeney would pay off all of the accrued interest and the principal; second if [Tom's mother] moved, or third, died, Thomas and Diane Sweeney and I would then implement our oral partnership agreement that provided that the property would then either be sold, or if market circumstances were favorable, we would engage in a joint venture to develop the property. If the property was sold, I would receive the $120,000 plus all accrued interest . . . and the Sweeneys and I would then split the net dollars left out of the sale price, if any. Or, we would jointly develop the property and I would subordinate the Rivers' Deed of Trust for financing in order to build a house, and the payment would be the same: I would receive the first $120,000 plus all accrued interest and we would divide the net profits equally.
¶7 After Tom failed to pay the taxes on the Property, the Maricopa County Treasurer sold the resulting tax liens to National Tax. In March 2012, National Tax filed a tax lien foreclosure action against Diane as the property owner and Rivers as a "beneficiary." Seven months later, National Tax obtained judgment against Diane — the effect of which was to foreclose her right to redeem the tax liens — and received a treasurer's deed to the Property. In May 2013, National Tax sold the Property to Premier, which later intervened in the lawsuit.
¶8 National Tax had neglected to serve Rivers with the foreclosure complaint, however, until around eighteen months after securing a judgment and obtaining title to the Property.3 Premier soughtsummary judgment on the grounds that Rivers had been served by publication. The trial court found National Tax had failed to properly serve Rivers, and thus, the 2012 foreclosure judgment did "not operate to foreclose [Rivers/Treon's] redemption rights."
¶9 The parties then moved into the quiet title phase of litigation. Premier amended the complaint to include a quiet title action in February 2016.4 Premier asserted that Rivers/Treon never had a valid interest in the Property, and therefore never had any right to redeem the tax liens.
¶10 Rivers/Treon and Premier filed cross-motions for summary judgment in September 2016. In support of its motion, Rivers/Treon submitted: (1) declarations from the Sweeneys and Treon describing the terms of the oral 1988 Agreement and (2) a 2015 agreement between Treon and a special conservator appointed to protect the now-mentally incapacitated Rivers, which said that "Treon entered into a separate agreement [in 1988] with the Sweeneys" that contained different terms than those in the 1986 Note.
¶11 In March and May 2017, the trial court denied Rivers/Treon's motion and entered summary judgment in Premier's favor. After moving unsuccessfully for a new trial, Rivers/Treon timely appealed, and we have jurisdiction over both orders pursuant to A.R.S. §§ 12-120.21(A)(1)5 and -2101(A)(1). See Bothell, 192 Ariz. at 316, ¶ 7 () (citing Mealey v. Orlich, 120 Ariz. 321, 322(1978), and State Farm Mut. Auto. Ins. v. Peaton, 168 Ariz. 184, 194 (App. 1990)).
¶12 We review a trial court's disposition on summary judgment de novo. Salib v. City of Mesa, 212 Ariz. 446, 450, ¶ 4 (App. 2006) (citing Romley v. Arpaio, 202 Ariz. 47, 51, ¶ 12 (App. 2002)). Summary judgment is appropriate if no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Ariz. R. Civ. P. 56(a); Orme Sch. v. Reeves, 166 Ariz. 301, 305 (1990).
¶13 Premier moved for summary judgment on the grounds that: (1) Rivers/Treon were required to show documentary evidence that the 1986 Note existed; (2) even assuming the 1988 Agreement existed, it extinguished the 1986 Deed of Trust; (3) the statute of frauds barred Rivers/Treon's rights to redeem the tax liens; (4) the statute of limitations barred Rivers/Treon's rights; (5) Premier and the Lenders were bona fide purchasers, and thus, protected from Treon's unrecorded 1988 interest; and (6) no reasonable jury would believe the unrecorded 1986 Note or 1988 Agreement existed. We discuss each argument in turn.
¶14 Appellees rely upon A.R.S. § 47-3309 () to argue Rivers/Treon have no interest in the Property because it cannot prove the 1986 Note ever existed. However, A.R.S. § 47-3309 is contained within Arizona's version of the Uniform Commercial Code (UCC), and "the UCC does not govern liens on real property." Steinberger v. McVey, 234 Ariz. 125, 136, ¶ 43 n.14 (App. 2014). Additionally, this Court has held that, where documents tracing a beneficial interest are not available, "affidavits or deposition testimony from persons involved in the transfers may suffice as evidence of the chain of title." Id. at ¶ 43.
¶15 Here, Rivers/Treon provided evidence of the existence and terms of the 1986 Note in the form of: (1) the 1986 Deed of Trust, which references a "Promissory Note dated July 17, 1986" in the amount of $120,000; (2) Treon's...
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