Opinion
No. 1 CA-CV 13-0703
07-30-2015
ARIZONA BILTMORE HOTEL VILLAS CONDOMINIUM ASSOCIATION, INC., an Arizona nonprofit corporation, Plaintiff/Appellant, v. THE ARIZONA BILTMORE HOTEL MASTER ASSOCIATION, an Arizona nonprofit corporation, Defendant/Appellee, MSR BILTMORE RESORT, LP, Intervenor/Appellee.
COUNSEL Hinshaw & Culbertson LLP, Phoenix By Stephen W. Tully Counsel for Plaintiff/Appellant Squire Patton Boggs (US) LLP, Phoenix By George Brandon, Kerryn L. Holman Counsel for Defendant/Appellee Snell & Wilmer L.L.P., Phoenix By Kevin J. Parker, Erica J. Stutman Counsel for Intervenor/Appellee
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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
No. CV 2010-026686
The Honorable Maria del Mar Verdin, Retired Judge
AFFIRMED
COUNSEL Hinshaw & Culbertson LLP, Phoenix
By Stephen W. Tully
Counsel for Plaintiff/Appellant
Squire Patton Boggs (US) LLP, Phoenix
By George Brandon, Kerryn L. Holman
Counsel for Defendant/Appellee
Snell & Wilmer L.L.P., Phoenix
By Kevin J. Parker, Erica J. Stutman
Counsel for Intervenor/Appellee
MEMORANDUM DECISION
Judge Peter B. Swann delivered the decision of the court, in which Presiding Judge Randall M. Howe and Judge Andrew W. Gould joined. SWANN, Judge:
¶1 This appeal arises from a dispute between the owners of a hotel and neighboring condominiums about the chain of title to a parking lot. Under an easement granted by a putative owner of the lot, certain deed restrictions provided that the lot was to be used primarily for hotel parking. But under a joint use agreement entered by a second putative owner of the lot, the condominium association held the right to use the southern portion of the lot for parking. The condominium association sought a declaratory judgment that would establish its exclusive right to use the southern portion of the lot under the joint use agreement. During the course of the litigation, however, the second putative owner cancelled the joint use agreement and granted a license to the hotel. We hold that these actions rendered the condominium association's complaint nonjusticiable. We therefore affirm the superior court's dismissal of the action. We also affirm the court's imposition of an award of attorney's fees against the condominium association.
FACTS AND PROCEDURAL HISTORY
¶2 The Arizona Biltmore Hotel ("the Hotel") was founded in 1929. In the 1990s, the owner of the Hotel ("the Hotel Owner") constructed private condominiums, known as the Arizona Biltmore Hotel Villas Condominiums, adjacent to the Hotel. Related to the development, the Hotel Owner incorporated the Arizona Biltmore Hotel Master Development Association ("the Hotel Master Development Association") and the Arizona Biltmore Hotel Villas Condominium Association ("the Condominium Association").
Ownership of the Hotel changed multiple times during the period relevant to this appeal. Appellee MSR Biltmore Resort, LP, was the owner during most of the litigation underlying the appeal. For convenience, we refer to all owners as "the Hotel Owner."
¶3 The Hotel Owner had previously obtained an easement from the Flood Control District of Maricopa County ("the Flood Control District") to use certain canal-side property as a parking lot. Under the Associations' declarations of covenants, conditions, and restrictions (collectively, "the Declarations"), each occupied condominium would receive one space in the parking lot and the Hotel Master Development Association would maintain the lot and use the remaining spaces for the Hotel's benefit.
¶4 After the Declarations were recorded, the Salt River Project Agricultural Improvement and Power District ("SRP") claimed that it -- not the Flood Control District -- held the use rights to the parking-lot property, under contracts with the federal government. Instead of obtaining a legal adjudication regarding the ownership of the property, the Hotel Owner and SRP entered into a Joint Use Agreement that allowed the Hotel Owner to use the northern half of the property for parking, and the Condominium Association and SRP entered into a Joint Use Agreement that allowed the Condominium Association to use the southern half of the property for parking.
¶5 Fifteen years later, the Condominium Association filed an action in Maricopa County Superior Court against the Hotel Master Development Association, seeking declaratory relief with respect to the southern half of the parking lot. In the Condominium Association's view, the lot was controlled by SRP and was therefore subject to the Joint Use Agreements only, which gave the Condominium Association exclusive parking-use rights in the southern half of the lot. The Condominium Association asked for judgment:
A. Declaring both the [Hotel Master Development Association] Declaration and [the Condominium Association] Declaration void to the extent they claim to control property within 50 feet of the north of the SRP canal [i.e., the southern half of the parking lot]; and
B. Declaring that the [Condominium Association's] Joint Use Agreement with SRP provides the [Condominium Association] the right to use that strip of land outside of either the [Hotel Master Development Association] or [the Condominium Association] Declarations.
¶6 The Hotel Master Development Association answered and filed a counterclaim for declaratory and injunctive relief. The parties then filed cross-motions for summary judgment. Shortly before briefing on the motions concluded, the Hotel Master Development Association and the Hotel Owner filed a parallel federal action, in the United States District Court for the District of Arizona, that included the Flood Control District, SRP, and the United States as parties and sought a determination of rights with respect to both the southern and the northern portions of the parking lot. Around the same time, the Hotel Owner moved to intervene in the state-court case.
¶7 The superior court granted the Hotel Owner's motion to intervene, and the Hotel Owner and the Hotel Master Development Association joined in a motion to stay the case pending resolution of the federal action. Before the time set for oral argument on the motion for stay, the Hotel Owner, the Hotel Master Development Association, SRP, and the United States settled the federal case, subject to approval of the settlement agreement by the court presiding over the Hotel Owner's pending bankruptcy case. The superior court denied the request for stay and scheduled oral argument on the Condominium Association's motion for summary judgment.
The District Court later dismissed the federal action, declining to exercise supplemental jurisdiction over the remaining state-law claims.
¶8 Before the time set for oral argument, the Hotel Owner filed a notice of changed circumstances, informing the court that SRP had recently terminated its Joint Use Agreement with the Condominium Association, issued temporary licenses that allowed the Hotel Owner and the Hotel Master Development Association to use the parking lot, and agreed to issue a new license to the Hotel Master Development Association upon the bankruptcy court's approval of the settlement agreement. Concurrent with the Hotel Owner's notice of changed circumstances, the Hotel Master Development Association withdrew its motion for summary judgment on its counterclaims and filed a revised motion for summary judgment, arguing that the Condominium Association's complaint should be dismissed because SRP's actions made the claims moot and negated the Condominium Association's standing.
¶9 In view of the notice and the revised motion, the court reset oral argument and ordered further briefing. Responding to the Hotel Master Development Association's revised motion for summary judgment, the Condominium Association acknowledged that the federal government had directed SRP to terminate its Joint Use Agreement with the Condominium Association, and that SRP had informed the Condominium Association of the termination. The Condominium Association further acknowledged that SRP had issued a temporary license allowing the Hotel Owner and the Hotel Master Development Association to use the parking lot, and had agreed to issue a new license to the Hotel Master Development Association upon the bankruptcy court's approval of the settlement agreement. The Condominium Association argued, however, that dismissal of the action was not warranted because SRP's termination of the Joint Use Agreement constituted a breach of contract, and the condition precedent to SRP's issuance of the new long-term license had not yet occurred.
¶10 After considering the briefing and oral argument, the court denied the Condominium Association's motion for summary judgment and dismissed its complaint with prejudice. The court explained that "because the facts originally brought forth by the Plaintiff have changed, the Court must look at the totality of the circumstances as they exist today." The court concluded that because the Condominium Association's Joint Use Agreement no longer existed and the Hotel Owner and the Hotel Master Development Association held a use license, "[t]he issue originally brought before the Court requesting a finding of superior rights to the property and to oust the Defendant is moot."
¶11 The court awarded attorney's fees and costs to the Hotel Master Development Association and the Hotel Owner, dismissed the counterclaims and claims-in-intervention, and denied the Condominium Association's motions for reconsideration, clarification, and a new trial. The Condominium Association appeals. We have jurisdiction under A.R.S. § 12-2101(A)(1) and (5)(a).
DISCUSSION
I. THE SUPERIOR COURT PROPERLY DISMISSED THE CONDOMINIUM ASSOCIATION'S COMPLAINT.
¶12 The Condominium Association contends that its claims were unaffected by SRP's termination of the Joint Use Agreement and issuance of a use license to the Hotel Owner and the Hotel Master Development Association. Because the court dismissed the Condominium Association's complaint on summary judgment, our review is de novo. Andrews v. Blake, 205 Ariz. 236, 240, ¶ 12 (2003). We will affirm if the court's ruling is correct for any reason. Glaze v. Marcus, 151 Ariz. 538, 540 (App. 1986).
¶13 As an initial matter, the Condominium Association contends that the superior court erroneously construed its complaint as requesting injunctive rather than declaratory relief. We discern no error in the superior court's characterization of the action as one "to exclude the Defendant . . . from the property" and "oust the Defendant." Though the complaint requested declaratory relief only, such declarations would determine which of the parties could exercise the right of exclusive control over the disputed portion of the parking lot -- an issue that the Condominium Association repeatedly argued to the superior court (and acknowledged in its opening brief as the practical result of the relief it sought). Had the Condominium Association been granted declaratory relief, it would also have been entitled to injunctive relief as necessary to give meaning to the declaratory relief. See A.R.S. § 12-1838 ("Further relief based on a declaratory judgment or decree may be granted whenever necessary and proper."); Trico Elec. Co-op. v. Ralston, 67 Ariz. 358, 365 (1948) ("It is proper to ask for and receive injunctive or other relief [in a declaratory-judgment action] where the facts warrant it."); see also Ariz. R. Civ. P. 54(d) ("Except as to a party against whom judgment is entered by default, every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in the party's pleadings."). The superior court did not mischaracterize the dispute.
¶14 The Condominium Association next contends that SRP's actions had no bearing on its request for a declaration regarding the Declarations' scope. Citing A.R.S. § 12-1832, which is part of the Uniform Declaratory Judgments Act ("the Act"), the Condominium Association argues that SRP's actions did nothing to alter the Condominium Association's right to obtain a judicial construction of the Declarations. Section 12-1832 provides that "[a]ny person interested under a . . . written contract or other writings constituting a contract, or whose rights, status or other legal relations are affected by a . . . contract . . . may have determined any question of construction or validity arising under the . . . contract . . . and obtain a declaration of rights, status or other legal relations thereunder." The Condominium Association has an interest in the Declarations. But though the Act is remedial and must be liberally construed, it requires a justiciable controversy. Citizens' Committee for Recall of Jack Williams v. Marston, 109 Ariz. 188, 193 (1973). The Act "was not intended to constitute a fountain of legal advice for the court." Id. An action to obtain an advisory declaratory judgment, or one that answers a moot or abstract question, must generally fail. Moore v. Bolin, 70 Ariz. 354, 356 (1950). Declaratory relief requires "specific adverse claims, based upon present rather than future or speculative facts, which are ripe for judicial determination," Manning v. Reilly, 2 Ariz. App. 310, 314 (1965). Exceptions apply if the declaration is reasonably sure to pertain to future factual situations or the matter is one of public importance. Thomas v. City of Phoenix, 171 Ariz. 69, 74 (App 1991); Secrist v. Diedrich, 6 Ariz. App. 102, 104 (1967). The court may also refuse to enter declaratory relief if such relief would not terminate the controversy giving rise to the proceeding. A.R.S. § 12-1836.
¶15 SRP's actions rendered the Condominium Association's request for a declaration regarding the Declarations' scope nonjusticiable and incapable of resolving the parties' dispute. Even if the Hotel Master Development Association was not entitled to use the southern half of the parking lot under the Declarations, it was entitled to do so under the license granted by SRP. The question of the Declarations' construction is not an issue of statewide importance, and it is not reasonably sure to recur. The Condominium Association argues that it has brought a contract and bad faith action against SRP, but that litigation is not yet concluded. It would be purely speculative for the court to grant declaratory relief conditioned on the entry of rescissory relief in the separate pending action. The court did not err by dismissing the Condominium Association's claim for a declaration interpreting the Declarations.
¶16 The Condominium Association next contends that it was entitled to declaratory relief regarding the Joint Use Agreement's scope even after the agreement was terminated. In support of this argument, the Condominium Association points out that the Act authorizes the court to enter declaratory relief "whether or not further relief is or could be claimed," A.R.S. § 12-1831, and "either before or after there has been a breach [of a contract]," A.R.S. § 12-1833. But again, declaratory relief requires a justiciable controversy. For the reasons set forth above, questions regarding the Joint Use Agreement's construction were purely academic. The court did not err by dismissing the Condominium Association's claim for a declaration interpreting the agreement. II. THE SUPERIOR COURT DID NOT ABUSE ITS DISCRETION BY AWARDING ATTORNEY'S FEES TO THE HOTEL OWNER AND THE HOTEL MASTER DEVELOPMENT ASSOCIATION.
¶17 The Condominium Association contends that the superior court erred by awarding attorney's fees to the Hotel Owner and the Hotel Master Development Association under A.R.S. § 12-341.01, and further contends that the amount of the award was excessive. We review awards made under § 12-341.01 for abuse of discretion. Orfaly v. Tucson Symphony Soc'y, 209 Ariz. 260, 265, ¶ 18 (App. 2004).
The Condominium Association also challenges the court's holding that fees were appropriate under A.R.S. § 12-349. Because we conclude that fees were proper under § 12-341.01, we need not reach the question of whether they were also proper under § 12-349. --------
¶18 A.R.S. § 12-341.01(A) provides that "[i]n any contested action arising out of a contract, express or implied, the court may award the successful party reasonable attorney fees." In exercising its discretion under the statute, the court should consider the merits of the unsuccessful party's claims, the novelty of the claims, the extent to which the litigation could have been avoided or settled, the extent to which the successful party prevailed with respect to the relief it sought, the hardship that a fee award would cause, and whether a fee award would discourage others with tenable claims from litigating legitimate contract issues. Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570 (1985). Here, the action arose out of contract, the Hotel Owner and the Hotel Master Development Association prevailed, and the court expressly considered the factors set forth above. We cannot say that the court abused its discretion by awarding attorney's fees to the Hotel Owner and the Master Development Association.
¶19 We also discern no abuse of discretion in the amount of fees awarded. The award was limited to the fees incurred after the Joint Use Agreement was terminated. The Condominium Association contends that some of the fees related to work done on the federal action. But the Hotel Owner and the Hotel Master Development Association complied with the court's specific order to review their fee applications to ensure that such fees were not included -- and the Hotel Master Development Association even submitted a revised fee application that excluded some fees. We discern no abuse of discretion in the court's determination that the roughly $31,500 and $74,700 in fees awarded to the Hotel Owner and the Hotel Master Development Association, respectively, were "reasonable and necessary," "discounted," and "typical of what is charged in the area for similar work by similar experienced counsel."
CONCLUSION
¶20 SRP's actions during the litigation rendered the Condominium Association's declaratory judgment action nonjusticiable. The court properly dismissed the complaint, and acted within its discretion to award attorney's fees to the Hotel Owner and the Hotel Master Development Association. We therefore affirm.
¶21 Both the Condominium Association, on the one hand, and the Hotel Owner and the Hotel Master Development Association, on the other hand, request attorney's fees on appeal under A.R.S. § 12-341.01. We deny the Condominium Association's request because it is not the prevailing party. In exercise of our discretion, we also deny the Hotel Owner and the Hotel Master Development Association's request. The Hotel Owner and the Hotel Master Development Association are entitled to recover their costs under A.R.S. § 12-341, upon compliance with ARCAP 21.