State v. Mabery Ranch, Co., L.L.C.

• Decision Date: 16 August 2007
• Docket Number: No. 1 CA-CV 06-0143.,1 CA-CV 06-0143.
• Citation: 165 P.3d 211,216 Ariz. 233
• Parties: STATE of Arizona, Plaintiff/Counterdefendant/Appellant/Cross-Appellee, v. MABERY RANCH, CO., L.L.C., an Arizona limited liability company, Defendant/Counterclaimant/Appellee/Cross-Appellant.
• Court: Arizona Court of Appeals

165 P.3d 211

216 Ariz. 233

STATE of Arizona, Plaintiff/Counterdefendant/Appellant/Cross-Appellee, v. MABERY RANCH, CO., L.L.C., an Arizona limited liability company, Defendant/Counterclaimant/Appellee/Cross-Appellant.

No. 1 CA-CV 06-0143.

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

August 16, 2007.

Terry Goddard, Attorney General By Daniel P. Schaack and James R. Morrow, Assistant Attorneys General, Liability Management Section, and Joy L. Hernbrode, Assistant Attorney General, Natural Resources Section, Phoenix, Attorneys for Plaintiff/Counterdefendant/Appellant/Cross-Appellee.

L. Richard Mabery, P.C. By L. Richard Mabery, Prescott, Attorney for Defendant/Counterclaimant/Appellee/Cross-Appellant.

OPINION

JOHNSEN, Judge.

¶ 1 Mabery Ranch Company, L.L.C. ("Mabery") owns land in Yavapai County ("Mabery property"). Following a jury trial, the State of Arizona ex rel. Arizona State Parks Board ("State Parks") and Mabery appeal and cross-appeal, respectively, the trial court's final Amended Judgment on State Parks' declaratory judgment action and Mabery's counterclaim. We hold that (1) the State's filing of a declaratory judgment action to enforce alleged contract rights may not by itself give rise to a claim for inverse condemnation; (2) a damages claim brought under Arizona Revised Statutes ("A.R.S.") section 33-420 (2007) for improper recording of an interest in real property accrues when the claimant becomes aware of damages resulting from the improper recording; and (3) A.R.S. § 12-821.01 (2003), which requires a pre-complaint filing of a claim against a public entity, does not apply to a claim for injunctive relief seeking to restrain governmental conduct.

FACTS AND PROCEDURAL HISTORY

¶ 2 The story of what became a bitter dispute between Mabery and State Parks began in 1968, when Charles Mabery ("Mr. Mabery") purchased approximately 28 acres ("original holding") north of Cottonwood. The Verde River lay to the west of the original holding; directly to the east lay property owned by Louise and Walter Edwards. In 1984, Mr. Mabery obtained an easement running roughly west-to-east across the Edwards' property ("Edwards Easement"), the details of which are discussed at length below. Mr. and Mrs. Edwards then sold their property to State Parks; whatever rights the Edwards Easement granted remained in favor of Mr. Mabery and his successors in interest. A few years later, in 1991, Mr. Mabery sold some of the eastern portion of the original holding to State Parks. In the sale transaction, Mr. Mabery reserved for himself and his successors in interest an easement for ingress and egress ("Mabery Easement"). Linked together, the alignments of the Mabery Easement and the Edwards Easement provided a route from the remaining Mabery property eastward to Tuzigoot Road, which runs roughly north/south at that location.

¶ 3 Mr. Mabery's family company, as his successor in interest, came to own approximately eight acres remaining from the original holding. Due to State Parks' various purchases of nearby land, by 1993, the Mabery property was surrounded by the Verde River and by property owned by the State. Directly to the east of the Mabery property was Dead Horse Ranch State Park ("Dead Horse Park"), owned by State Parks. The Mabery and Edwards Easements extended to a section of Tuzigoot Road located within Dead Horse Park.

¶ 4 Mabery decided in 1993 to establish a chuckwagon and entertainment "venue" called the "Blazin' M Ranch" on what remained of the original holding. Mabery notified State Parks of its development plans and sought a conditional use permit from Yavapai County. During public hearings, State Parks objected to Mabery's proposed development as being incompatible with Dead Horse Park due to the development's potential for increased noise, dust and traffic. State Parks also disputed Mabery's right to use the Edwards and Mabery Easements for public access to the Blazin' M Ranch. While State Parks did not dispute that Mabery was the successor in interest to the original holders of those easements, it contended that the terms of those easements restricted Mabery's use of those rights of way to private use, not commercial use.

¶ 5 Over State Parks' objection, Yavapai County approved a five-year, non-transferable conditional use permit for the operation of Blazin' M Ranch. At the same time, Mabery and State Parks entered into two agreements, an Easement Exchange Agreement ("Easement Agreement") and a License Agreement.

¶ 6 The premise of the Easement Agreement was stated in its first paragraph: "There presently exist certain easements across the [State Parks'] property in favor of [Mabery], and the parties have agreed to change the physical location of the existing easements." The Easement Agreement consolidated all recorded and unrecorded, prescribed and implied easements in favor of Mabery over State Parks' property into a single replacement easement at a new location described in Exhibit B to the Easement Agreement. Significantly, the Easement Agreement provided that although the parties agreed on a new location to replace all prior easements, neither party gave up its right to enforce its interpretation of the terms of the easements that had been consolidated into the new location.

¶ 7 Although the License Agreement acknowledged the parties' agreement-to-disagree over the terms of the various easements, it granted Mabery the right, over the life of the License Agreement, to use the relocated easement for ingress and egress for guests of the Blazin' M Ranch. Although the replacement alignment provided a route in and out of the Blazin' M Ranch, Mabery agreed to State Parks' proposal to gate and lock that portion of Tuzigoot Road located within State Parks' land. The State gave Mabery a key to the lock, however, so that Mabery family members and others could access the road (and Dead Horse Park) on horseback.

¶ 8 About a year and a half before the expiration of the License Agreement, Mabery contacted State Parks about renegotiating the agreement. Asserting that State Parks' prior concerns about noise, dust and traffic had never materialized, Mabery sought a permanent transferable license. In the summer of 1999, over State Parks' objections, Mabery obtained a permanent transferable use permit from Yavapai County with fewer restrictions than the original conditional use permit. However, Mabery and State Parks were unable to renegotiate a new License Agreement before the original one expired in October 1999. Thereafter, Mabery continued to operate Blazin' M Ranch without a license agreement and without any resolution of its disputes with State Parks over the nature and scope of the replacement easement.

¶ 9 In February 2000, with negotiations still stalled, State Parks filed a Notice of Reservation of Rights ("Rights Reservation") in the Yavapai County Recorder's Office. The Rights Reservation described the Easement Agreement and declared that State Parks intended to retain its right to assert its interpretation of the agreement and the restrictions State Parks believed it imposed on the replacement easement. Objecting to the State's filing, Mabery wrote to State Parks on March 3, 2000 and warned that Mabery intended to protect its rights under A.R.S. § 33-420, which prohibits the improper recording of documents claiming an interest in real property.

¶ 10 After more than another year went by without a new license agreement, on March 26, 2001, State Parks filed a declaratory judgment action seeking a judicial determination that (1) the replacement easement established in the Easement Agreement was restricted to "personal" rights of ingress and egress and for the placement of utilities and (2) Mabery could not use the replacement easement for commercial activity without the State's consent. State Parks also sought an injunction enforcing the Easement Agreement as State Parks understood it.

¶ 11 Mabery wrote to State Parks again on April 5, 2001, demanding it release its recording of the Rights Reservation. On May 30, 2001, Mabery answered State Parks' complaint and filed a counterclaim asserting four causes of action alleging inverse eminent domain (Count One) and interference with Tuzigoot Road (Count Two), seeking reformation or rescission of the 1991 deed to the State (Count Three) and alleging that the recording of the Rights Reservation was improper and in violation of A.R.S. § 33-420 (Count Four).

¶ 12 State Parks moved for summary judgment on each of the claims in Mabery's counterclaim and at the same time moved to dismiss Counts One, Three and Four of the counterclaim for failure to state a claim. The State argued that the one-year limitations period established in A.R.S. § 12-821 (2003) had run on each count, and further argued that Mabery had failed to file a notice of claim pursuant to A.R.S. § 12-821.01(A) on any count. Alternatively, State Parks argued that Count One failed to state a proper claim for inverse condemnation. It additionally argued that as to Count Three of the counterclaim, Mabery failed to allege a mutual mistake of fact that might entitle it to reformation and on Count Four, it argued Mabery could not show that the Rights Reservation was groundless or contained a material misstatement.

¶ 13 Mabery responded and filed a cross-motion for partial summary judgment on three issues:

1. That the right of access of [Mabery] is superior and dominant to the subservient fee ownership of State Parks;

2. That the commercial use of the existing roadway by [Mabery] is within the private property rights appurtenant to the [Mabery] parcel; and

3. That State Parks may not hinder or interfere with [Mabery's] right to use Tuzigoot Road.

¶ 14 The superior court ruled December 6, 2002, on the cross-motions for summary judgment and the motion to dismiss. It granted in part Mabery's motion for summary judgment on State Parks' declaratory judgment action, finding that the Easement...