Pinal Vista Properties, LLC v. Turnbull

• Decision Date: 17 June 2004
• Docket Number: No. 1CA-TX 03-0008.,1CA-TX 03-0008.
• Citation: 208 Ariz. 188,91 P.3d 1031
• Parties: PINAL VISTA PROPERTIES, L.L.C., an Arizona limited liability company, Plaintiff-Appellant, v. Jim L. TURNBULL, Pinal County Treasurer; Pinal County Board of Supervisors and Lionel D. Ruiz, Sandie Smith, Jimmie B. Kerr, as members of and constituting the Board of Supervisors, Pinal County; Pinal County, a political subdivision of the State of Arizona; State of Arizona ex rel. Pinal County Board of Supervisors, Real Party in Interest, Defendants-Appellees.
• Court: Arizona Court of Appeals

91 P.3d 1031

208 Ariz. 188

PINAL VISTA PROPERTIES, L.L.C., an Arizona limited liability company, Plaintiff-Appellant, v. Jim L. TURNBULL, Pinal County Treasurer; Pinal County Board of Supervisors and Lionel D. Ruiz, Sandie Smith, Jimmie B. Kerr, as members of and constituting the Board of Supervisors, Pinal County; Pinal County, a political subdivision of the State of Arizona; State of Arizona ex rel. Pinal County Board of Supervisors, Real Party in Interest, Defendants-Appellees.

No. 1CA-TX 03-0008.

Court of Appeals of Arizona, Division 1, Department T.

June 17, 2004.

Mark L. Manoil, P.C. by Mark L. Manoil, Phoenix, Attorneys for Plaintiff-Appellant.

Terry Goddard, Attorney General by J.W. Ranby, Assistant Attorney General, Phoenix, Attorneys for Defendant-Appellee State of Arizona.

Helm & Kyle, Ltd. by Roberta S. Livesay, Tempe, Attorneys for Defendant-Appellee Turnbull, Pinal County, and Pinal County Board of Supervisors.

OPINION

HALL, Judge.

¶ 1 Pinal Vista Properties, L.L.C. (Pinal Vista) appeals from summary judgment in favor of Pinal County (County) and the State of Arizona (State) (collectively, Defendants). The issue presented is whether the transfer of real property to the State by issuance of a treasurer's tax deed extinguishes any privately held tax liens.

¶ 2 The relevant facts are undisputed. In October 2001, Pinal Vista acquired Pinal County Certificate of Purchase No. 143308-87 (the CP) for Tax Assessor's Parcel No. 101-06-005D0 (the Property) by assignment. The CP evidenced payment of delinquent taxes for the years 1987 through 1992 and represented a $70,312.46 investment by Pinal Vista's predecessor in interest.

¶ 3 In 1992, the Pinal County Assessor (the Assessor) initially valued the land covered by the CP at $59,242 and the improvements at $170,016. The Assessor subsequently learned that the improvements had been destroyed, presumably by a fire. Accordingly, the Assessor revalued the Property for the 1993 tax year at the full cash value of $29,621 and changed the assessment ratio to reflect the Property's new status as vacant land.

¶ 4 Because no one purchased any of the subsequently accruing tax liens, they were assigned to the State pursuant to Arizona Revised Statutes (A.R.S.) section 42-18113 (1999). On June 4, 2001, after giving notice to lienholders, the Pinal County Board of Supervisors foreclosed on the Property and issued a treasurer's deed to the Property to the State in accordance with A.R.S. § 42-18261 (1999).

¶ 5 On November 21, 2001, Pinal Vista filed a claim against the Defendants for the redemption value of the tax liens, which it calculated to be $167,926.50 plus accruing interest. When the County declined to act, Pinal Vista sued for a declaratory judgment and special action relief. The parties filed cross-motions for summary judgment. The trial court granted the Defendants' motions and entered judgment accordingly.

DISCUSSION

¶ 6 On appeal from a summary judgment in which the material facts are not in dispute, we review the issues of law de novo and determine only whether the tax court correctly applied the law to the undisputed facts. Southern Pac. Transp. Co. v. Dep't of Revenue, 202 Ariz. 326, 329-30, ¶ 7, 44 P.3d 1006, 1009-10 (App.2002). Questions of statutory interpretation are issues of law and also subject to de novo review. Boynton v. Anderson, 205 Ariz. 45, 46, ¶ 4, 66 P.3d 88, 89 (App.2003).

I

¶ 7 To secure payment of delinquent taxes on real property, a county treasurer may sell a tax lien at a judicial sale. A.R.S. §§ 42-18101 to -18126 (1999). Following the sale, the treasurer issues a certificate of purchase to the successful bidder. § 42-18118. The certificate is evidence of the holder's right to a treasurer's deed at the end of the applicable statutory period. A.R.S. §§ 42-18201 to -18207 (1999).

¶ 8 Relying on Bauza Holdings, L.L.C. v. Primeco, Inc., 199 Ariz. 338, 18 P.3d 132 (App.2001), Pinal Vista argues that A.R.S. § 42-17153 (1999) requires governmental entities that acquire real property to take such property subject to any existing tax liens. In Bauza, one tax lien investor sought to foreclose the right of another tax lien investor through judicial foreclosure. Id. at 339, ¶ 1, 18 P.3d at 133. Both investors were private purchasers of tax lien certificates and each held certificates for three nonconsecutive years of delinquent taxes. Id. at 340, ¶ 6, 18 P.3d at 134. Reasoning that A.R.S. § 42-17153(B)(3) (1999),¹ amended by 2001 Ariz. Sess. Laws, ch. 242, § 1, establishes parity, not priorities, between tax lienholders, we required the foreclosing lienholder to redeem or compromise competing liens to receive free and clear title to the property. Id. at 343, ¶¶ 19-23, 18 P.3d at 137.

¶ 9 Pinal Vista argues that Bauza requires that the State be treated no differently than private investors, i.e., that property tax liens held by the State have parity, not priority, over other-year property tax liens sold to a certificate of purchase holder. Defendants assert that Bauza's determination that "parity" exists amongst private holders of CPs has no application to the issue here, namely, does the conveyance of title to real property to the State by issuance of a treasurer's tax deed extinguish all privately held tax liens?

¶ 10 To answer this question we must examine related provisions of Arizona's property tax lien statutes. Our primary goal in construing a statute is to determine and give effect to the intent of the legislature. Luchanski v. Congrove, 193 Ariz. 176, 178, ¶ 9, 971 P.2d 636, 638 (App.1998). Generally, when the language of the statute is clear, we follow its direction without resorting to other methods of statutory interpretation. Bilke v. State, 206 Ariz. 462, 464, ¶ 11, 80 P.3d 269, 271 (2003). However, statutes relating to the same subject or having the same general purpose, i.e., statutes that are in pari materia, "should be read in connection with, or should be construed with other related statutes, as though they constituted one law." Bauza, 199 Ariz. at 342, ¶ 14, 18 P.3d at 136 (quoting State ex rel. Larson v. Farley, 106 Ariz. 119, 122, 471 P.2d 731, 734 (1970)). Further, each word or phrase of a statute must be given meaning so that no part is rendered void, superfluous, contradictory or insignificant. Guzman v. Guzman, 175 Ariz. 183, 187, 854 P.2d 1169, 1173 (App.1993). ¶ 11 We begin by examining § 42-17153(B)(3), which provides that a tax lien "is prior and superior to all other liens and encumbrances on the property, except liens or encumbrances held by this state." In Bauza, we interpreted the first clause, in conjunction with § 42-18204(B),² applicable to judicial foreclosures of redemption rights, as establishing parity among private tax lienholders. Pinal Vista argues that we should similarly interpret the language "except liens or encumbrances held by this state" as establishing parity between the State and private lienholders. We disagree.

¶ 12 Arguably, the quoted language standing alone supports Pinal Vista's argument in favor of parity rather than superiority of tax liens held by the State. However, a "parity" interpretation is inconsistent with the etiology of the exception language, which can be traced to Steinfeld v. State, 37 Ariz. 389, 294 P. 834 (1930). In Steinfeld, the supreme court construed paragraph 4845 of the 1913 Civil Code, the remote predecessor to § 42-17153, as treating a privately held tax lien superior to a prior mortgage held by the state. The court based its holding on the last sentence of paragraph 4845, which provided that a tax lien "shall be prior and superior to all other liens and encumbrances upon the said property."³ In response, the Legislature amended the last sentence to read: "The lien shall be prior and superior to all other liens and encumbrances upon the property, except liens or encumbrances held by the state of Arizona." 1931 Ariz. Sess. Laws, ch. 106, § 1. (Emphasis added.) The purpose of the amendment was to supercede Steinfeld and provide that state liens, of any type whatsoever, were superior to—and not simply on an equal footing with—tax liens held by private investors. State v. Martin, 59 Ariz. 438, 443, 130 P.2d 48, 50 (1942) (recognizing that the amendment "was a very definite and plain declaration by the legislature that mortgages held by the state were a lien prior and superior to a tax lien"); Shumway v. State, 63 Ariz. 400, 406, 163 P.2d 274, 276 (1945) (same). Moreover, under Arizona's statutory scheme for the collection of taxes, state tax liens, unlike state mortgages, have historically been accorded superior status vis-à-vis all other tax liens. See, e.g., Bd. of Supervisors of Yuma County v. Miners & Merchants Bank of Bisbee, 59 Ariz. 460, 470, 130 P.2d 43, 47 (1942) (upon issuance of tax deed to State, paragraph 4845 and related tax sale procedures "wiped out" previously existing tax lien arising from levy of special tax by county); City of Phoenix v. Elias, 64 Ariz. 95, 166 P.2d 589 (1946) (issuance of a tax deed to the State extinguished pre-existing City of Phoenix tax liens).

¶ 13 The Legislature's intent to treat state tax liens as superior to those held by private investors is clarified when one considers A.R.S. §§ 42-18261 to -18267 (1999) (Title 42, Chapter 18, Article 6.1), which govern conveyances to the State on failure to redeem. In such administrative proceedings, the county treasurer is required, before preparing a treasurer's deed, to conduct a limited title search sufficient to "identify all parties who have a legal or equitable interest in the property recorded with the county recorder," § 42-18263, and to provide notice to such persons by certified mail at least ninety days before the date of delivering the deed to the board of supervisors, § 42-18264. Then, if the tax lien is not redeemed before the date stated in the notice, § 42-18267 requires that the county treasurer

execute and deliver to the board of

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