Opinion
2 CA-CV 2023-0125
02-01-2024
Boardman Chandler, LLC, an Idaho limited liability company, Plaintiff/Counterdefendant/Appellee, v. Covenant Clearinghouse, LLC, a Nevada limited liability company, Defendant/Counterclaimant/Appellant.
Fidelity National Law Group, Phoenix By Nathaniel B. Rose Counsel for Plaintiff/Counterdefendant/Appellee. Schern Richardson Finter PLC, Mesa By Aaron M. Finter Counsel for Defendant/Counterclaimant/Appellant.
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Maricopa County No. CV2022004728 The Honorable Dewain D. Fox, Judge.
Fidelity National Law Group, Phoenix By Nathaniel B. Rose Counsel for Plaintiff/Counterdefendant/Appellee.
Schern Richardson Finter PLC, Mesa By Aaron M. Finter Counsel for Defendant/Counterclaimant/Appellant.
Presiding Judge Brearcliffe authored the decision of the Court, in which Judge Eckerstrom and Judge Kelly concurred.
MEMORANDUM DECISION
BREARCLIFFE, PRESIDING JUDGE.
¶1 Covenant Clearinghouse, LLC, appeals from the superior court's judgment in favor of Boardman Chandler, LLC. For the following reasons, we affirm in part and reverse in part.
Factual and Procedural Background
¶2 Because this matter was resolved on summary judgment, we view the facts proffered by Boardman Chandler in the light most favorable to the non-prevailing party, Covenant Clearinghouse. See BMO Harris Bank, N.A. v. Wildwood Creek Ranch, LLC, 236 Ariz. 363, ¶ 7 (2015). In December 2006, a group of companies (collectively the "Passco Companies") obtained fee simple title as tenants in common to a property in Maricopa County ("the Property"). The Passco Companies recorded a Declaration of Covenant ("the Declaration") for the Property. While the initial conveyance of the Property by the Passco Companies to a new owner would not be subject to it, under § 5 of the Declaration, whenever the Property is reconveyed, the seller would owe the Declaration's beneficiaries (including the Passco Companies) a "Reconveyance Fee" equal to one percent of the purchase price. Covenant Clearinghouse was named as trustee under the Declaration and empowered to collect any Reconveyance Fee on the beneficiaries' behalf. This power included "the right to undertake on behalf of Beneficiaries, as agent thereof, any action [Covenant Clearinghouse] deems reasonably necessary or appropriate to prosecute, defend, administer and exercise rights and obligations arising out of or related to" the Declaration. In return for its services, Covenant Clearinghouse would retain three percent of any Reconveyance Fee collected. Under the Declaration, if a Reconveyance Fee is not paid when due, it "shall thereupon become a continuing lien."
No transcripts of the relevant proceedings are in the record on appeal. The procedural background here is derived from signed and unsigned minute entries, exhibits in the record, and the superior court's orders.
These companies-each a limited liability company incorporated in Delaware-include: Passco Chandler Heights H, LLC; Chandler Heights TIC 1, LLC; Chandler Heights TIC 2, LLC; Chandler Heights TIC 3, LLC; Chandler Heights TIC 5, LLC; Chandler Heights TIC 6, LLC; Chandler Heights TIC 7, LLC; and Chandler Heights TIC 8, LLC. Passco Companies, LLC, also a Delaware limited liability company, is the attorney-in-fact for these companies. These defendant companies defaulted below and have not participated in this action at any time.
The Arizona legislature prohibited these types of transfer fees contained in documents executed after July 29, 2010. See A.R.S. § 33-442(A), (D). The Declaration here was recorded in May 2010. Although § 33-442(D) makes clear that the statute "shall not be construed to imply that" an illegal transfer fee covenant "executed before July 29, 2010 is enforceable or valid," the statute also does not purport to retroactively invalidate contracts that contain these fees. Neither party argues illegality.
¶3 In September 2016, the Passco Companies conveyed the Property to Boardman. In June 2019, Boardman conveyed the Property to Sita Enterprises, LLLP. Boardman took a seller carryback note from Sita for the purchase, secured by a deed of trust.
¶4 In August 2021, Covenant Clearinghouse recorded a "Notice of Assessment" against the Property indicating that the Property is subject to the Declaration, and any transfers of the property could be subject to an assessment of one percent of the sales price for any transfer. The notice included a warning that failure to pay the assessment "may result in a senior claim against the property and violate lender closing instructions."
¶5 In October 2021, Boardman and Sita discovered the Notice of Assessment when Sita sought to refinance its purchase loan for the Property. Before that refinancing closed, Covenant Clearinghouse demanded payment of the Reconveyance Fee. In correspondence between Boardman and Covenant Clearinghouse, Boardman insisted that the original Declaration had been terminated by the Passco Companies in May 2013 and no Reconveyance Fee was owed. Under § 25 of the Declaration, titled "Declarant's Right to Terminate," the Passco Companies could unilaterally terminate the Declaration through a written, recorded document describing the portion of the Property to be released from the Declaration, and which "contains the following statement made under oath":
"Undersigned does swear and affirm upon personal knowledge that neither the Released Property, nor Declarant's Beneficial Interest, nor a Controlling Interest in Declarant, has been sold, conveyed or assigned since the date of filing of the Declaration recorded in [insert recording information of this Declaration]."
Additionally, § 25 requires the Passco Companies to provide a copy of the filed termination to the trustee within ten days.
¶6 Indeed, in May 2013, years before Boardman acquired the Property, the Passco Companies had recorded a written "Termination of Declaration of Covenant" that included the above statement. However, while the termination was notarized with an acknowledgement attesting to the identity of the signer, there is neither an indication that an oath was administered nor that the Passco Companies provided a copy to Covenant Clearinghouse.
¶7 Covenant Clearinghouse responded to Boardman that the termination was invalid for lack of an oath and the Property is still subject to the Declaration and therefore demanded the Reconveyance Fee due as a result of Boardman's conveyance to Sita. Boardman insisted that Covenant Clearinghouse execute a quit-claim deed "transferring any interest [it] may claim to have in the Property to Boardman and releasing the [Notice of Assessment]." Covenant Clearinghouse refused.
The escrow company handling Sita's refinancing held the disputed funds-$308,050-in escrow pending resolution of the dispute.
¶8 Boardman brought suit for quiet title and declaratory judgment against Covenant Clearinghouse and the Passco Companies; Covenant Clearinghouse counterclaimed for breach of contract and declaratory judgment. The Passco Companies did not appear or otherwise defend against the complaint.
¶9 After litigation began, in July 2022, the Passco Companies recorded a "Release of Notice of Assessment," purporting to "release the Notice of Assessment . . . recorded by Covenant Clearinghouse . . . against the real property." The release states that the Passco Companies terminated the Declaration on May 6, 2013, and, "[a]ccordingly, Covenant [Clearinghouse] had no unilateral authority to record the [Notice of Assessment] and no fees were owed in connection with any transfer of the Property after May 6, 2013." Therefore, the release explains, "Covenant [Clearinghouse] breached the fiduciary duties that it owed to [the Passco Companies] by recording the unauthorized [Notice of Assessment]."
¶10 Thereafter, Boardman moved for summary judgment, requesting that the superior court declare the Declaration terminated as of May 6, 2013; that Covenant Clearinghouse's Notice of Assessment was released; and that Boardman's conveyance to Sita was not subject to a Reconveyance Fee. Boardman also asserted that Covenant Clearinghouse had no standing to assert that the termination was ineffective because it "never had any interest in the Property," "was not a signor of the Declaration," and "was not a 'Beneficiary' of the Declaration as defined in the Declaration." Covenant Clearinghouse cross-moved for summary judgment, arguing that the termination was ineffective because it was neither "made under oath," nor delivered within ten days as required. It further argued that, as trustee, it had standing to enforce the Declaration, and that Boardman lacked standing because Boardman was not a party to the Declaration and had transferred away its interest in the Property to Sita.
¶11 After oral argument, the superior court granted Boardman's motion in part and denied Covenant Clearinghouse's cross-motion. The court entered final judgment finding that the Declaration was effectively terminated on May 6, 2013, and no Reconveyance Fee was owed for any transfer of the Property thereafter. It further ruled that Covenant Clearinghouse's Notice of Assessment was invalid and released and that Boardman is entitled to the funds withheld in escrow. It dismissed Covenant Clearinghouse's counterclaims against Boardman and awarded Boardman its attorney fees and costs. Covenant Clearinghouse appealed, and we have jurisdiction pursuant to A.R.S. §§ 12-1837 and 12-2101(A)(1).
Discussion
¶12 We review the superior court's grant of summary judgment de novo. Tritschler v. Allstate Ins. Co., 213 Ariz. 505, ¶ 48 (App. 2006). We also review questions of law, such as the interpretation of a Declaration of Covenant, de novo. Kalway v. Calabria Ranch HOA, LLC, 252 Ariz. 532, ¶ 9 (2022). Summary judgment should be granted "if the moving party shows that there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law." Ariz. R. Civ. P. 56(a).
I. Standing
¶13 As an initial matter, each party asserted below, and maintains on appeal, that the other lacks standing. The superior court concluded that each party had sufficient standing. We examine party standing de novo. Mills v. Ariz. Bd. of Tech. Registration, 253 Ariz. 415, ¶ 10 (2022).
A. Boardman's Standing
¶14 Covenant Clearinghouse asserts that Boardman lacks standing to enforce the Declaration because Boardman was not a party to the Declaration and conveyed whatever interest it had in the Property's title to Sita. We disagree.
¶15 Boardman brought its action under several statutes, two of which are relevant on appeal. As to Boardman's standing to bring its declaratory judgment claim under the Uniform Declaratory Judgments Act (UDJA), A.R.S. §§ 12-1831 to 12-1846, for a party to have such standing, there must be "an actual controversy ripe for adjudication" in which it has "a real interest in the questions to be resolved." Bd. of Supervisors of Maricopa Cnty. v. Woodall, 120 Ariz. 379, 380 (1978); see Mills, 253 Ariz. 415, ¶ 25. Here, as the superior court correctly noted, both Boardman and Covenant Clearinghouse assert a right to funds from Sita's purchase of the Property currently held in escrow, which will not be released until either establishes its superior right to the funds. This is sufficient to establish a justiciable controversy under the UDJA to impart standing to each party. See Woodall, 120 Ariz. at 380.
As to Boardman's quiet title action under A.R.S. § 12-1101(A), such "may be brought by any one having or claiming an interest therein, whether in or out of possession, against any person . . . when such person . . . claims an estate or interest in the real property which is adverse to the party bringing the action." Covenant Clearinghouse did not challenge Boardman's standing under § 12-1101 below or on appeal, so we do not address the issue.
¶16 Finally, as to Boardman's claim under A.R.S. § 33-420, "[a] person purporting to claim an interest in, or a lien or encumbrance against, real property" and "who causes a document asserting such claim to be recorded . . . knowing or having reason to know" that the recorded document is "groundless" or "otherwise invalid" is liable to a "beneficial title holder of the real property." A beneficial title holder may bring an action under § 33-420(B) "for such relief as is required to immediately clear title to the real property" on the grounds that the lien is "groundless" or "otherwise invalid." Below, the superior court determined that Boardman was ineligible for relief under § 33-420 because it was not "the owner or beneficial title holder of the real property." However, although Boardman conveyed its interest in the property to Sita, it retained rights as the beneficiary of a deed of trust for the Property as security in that transaction. "[A] beneficiary of a deed of trust is a beneficial title holder for the property conveyed within the meaning of [§ 33-420]." Hatch Cos. Contracting, Inc. v. Ariz. Bank, 170 Ariz. 553, 556 (App. 1991). Because it was a beneficial title holder at all times relevant to the initiation of litigation, Boardman also has standing to bring an action under § 33-420. Id. The court's contrary conclusion was incorrect.
B. Covenant Clearinghouse's Standing
¶17 Boardman asserts that Covenant Clearinghouse lacks standing to assert that the termination is ineffective because Covenant Clearinghouse: "(1) never had any interest in the Property; (2) was not a signer of the Declaration; (3) was not a 'Beneficiary' of the Declaration as defined in the Declaration; and (4) has no claim to the Reconveyance Fee." In addition to seeking declaratory judgment, Covenant Clearinghouse brought one count for breach of contract and one count for breach of duty of good faith and fair dealing, each pursuant to the Declaration.
¶18 Covenant Clearinghouse's standing to bring claims pursuant to the Declaration is tied to the question of whether the termination of the Declaration was effective. If the termination was not effective and the Declaration remained in place, the Declaration empowered Covenant Clearinghouse "to undertake on behalf of Beneficiaries, as agent thereof, any action [it] deems reasonably necessary or appropriate to prosecute, defend, administer and exercise rights and obligations arising out of or related to this Declaration," including, but not limited to, the right to "collect . . . sums in connection with this Declaration" and "undertake or defend, including retaining others to undertake and defend, legal, arbitration and administrative proceedings." Consequently, Covenant Clearinghouse had standing to pursue the action in accord with the Declaration-provided, of course, that the Declaration remained unterminated.
¶19 Nonetheless, under the terms of the Declaration, in order to pursue an action to foreclose on a lien for unpaid Reconveyance Fees or bring an action for a money judgment for such unpaid amounts, Covenant Clearinghouse must have "the prior written consent of the Beneficiaries then holding 51% or more of the Beneficial Interests." Accordingly, to assess the full measure of Covenant Clearinghouse's standing to bring its counterclaims, we must first assess the validity of the Declaration's termination.
II. Validity of the Termination
¶20 As stated above, under the Declaration, the Passco Companies retained the right to terminate the Declaration by recording a written instrument, with specific language executed under oath. The language required to terminate the Declaration includes a statement that the undersigned "does swear and affirm upon personal knowledge" that certain conditions are met. It is undisputed that a notary public acknowledged the identity of the signer of the Passco Companies' purported termination, but did not first administer an oath. Covenant Clearinghouse therefore argues that the termination of the Declaration was invalid. The superior court determined that the oath requirement did not affect the termination's validity.
¶21 A declaration containing restrictive covenants that run with the land, such as the Declaration here, is a contract, and we review any contractual interpretation de novo. Powell v. Washburn, 211 Ariz. 553, ¶ 8 (2006). In Powell, our supreme court held that covenants "should be interpreted to give effect to the intention of the parties as determined from the language of the document in its entirety and the purpose for which the covenants were created." Id. ¶ 1 (adopting § 4.1(1) of the Restatement (Third) of Property: Servitudes). When a contract provision is "clear and unambiguous, a court must give effect to the contract as written." Grubb &Ellis Mgmt. Servs., Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, ¶ 12 (App. 2006); accord Kalway, 252 Ariz. 532, ¶ 14 (contracts generally enforced as written, except for terms beyond reasonable expectation of parties). In approaching the text, "we attempt to reconcile and give effect to all terms of the contract to avoid any term being rendered superfluous." Terrell v. Torres, 248 Ariz. 47, ¶ 14 (2020); see also Sky Mountain Ranch Subdiv. Prop. Owners Ass'n v. Williams, 12 Ariz.App. 244, 246 (1970) ("'[T]he intent of the parties and the object of the deed or restriction should govern, giving the instrument a just and fair interpretation.'" (quoting R &R Realty Co. v. Weinstein, 4 Ariz.App. 517, 522 n. 2 (1966))).
A. Oath Requirement
¶22 The superior court ruled the oath requirement redundant to the requirement that the Declarant "swear and affirm" that certain conditions are true. The court explained that Covenant Clearinghouse "has not identified, and the Court is unable to discern, a purpose that would be served by declaring the Termination ineffective because the notary did not place the signer under oath before notarizing his signature."
¶23 The provision at issue outlines unambiguous and clear procedures for terminating the Declaration through a subsequent written instrument, executed under oath, with necessary language. We cannot conclude, as the superior court did, that the oath requirement is essentially satisfied when the signer of a termination states that he "does swear and affirm upon personal knowledge" that certain conditions of the Property are true. The Declaration requires the presence of both an oath and particular language.
¶24 There is no indication that the Declaration contemplated a special meaning for "oath" beside its ordinary meaning. See Terrell, 248 Ariz. 47, ¶ 14 (language given plain and ordinary meaning unless "it can be shown that the parties intended a special meaning"). An oath is a solemn declaration whereby "the person making the oath implicitly invites punishment if the statement is untrue" and "the person is subject to penalties for perjury if the testimony is false." Oath, Black's Law Dictionary (11th ed. 2019); see also A.R.S. § 12-2221 (oath is "taken upon the penalty of perjury" and "may be administered by" a "notary public"). An avowal in an acknowledged instrument does not carry the penalty of perjury unless an oath is first administered. Compare A.R.S. § 41-251(1) ("'Acknowledgment' means a declaration by an individual before a notarial officer that the individual has signed a record for the purpose stated in the record and, if the record is signed in a representative capacity, that the individual signed the record with proper authority ...."), with § 41-251(16) ("'Verification on oath or affirmation' means a declaration, made by an individual on oath or affirmation before a notarial officer, that a statement in a record is true.").
¶25 Unlike the superior court, we see sound reasons for the taking of the oath. A solemn oath, in part, impresses upon the signer the gravity of the need for truth in his assertions; the attendant penalty for misstatement or false statement, and imparts its reliability to the reader. But even if we did not see a reason for the inclusion of the oath requirement, the parties to the Declaration did. It is not the court's role to dispense with it. See 1800 Ocotillo, LLC v. WLB Grp., Inc., 219 Ariz. 200, ¶ 8 (2008) ("Our law generally presumes, especially in commercial contexts, that private parties are best able to determine if particular contractual terms serve their interests."); Bridges v. Nationstar Mortg. L.L.C., 253 Ariz. 532, ¶ 9 (2022) ("Parties are generally 'free to contract as they please,' and when entered into voluntarily, courts will enforce the contract's provisions." (citation omitted) (quoting Shattuck v. Precision-Toyota, Inc., 115 Ariz. 586, 588 (1977))). An attestation without an oath is not "a just and fair interpretation" of the term "oath" as used in the Declaration. Sky Mountain Ranch Subdiv. Prop. Owners Ass'n, 12 Ariz.App. at 246.
¶26 In sum, because a necessary condition in the procedure for termination-the oath-under § 25 did not occur, the Declaration did not terminate on May 6, 2013. It continued to run with the Property, as outlined in § 7 of the Declaration, and to bind successive owners. Accordingly, those sections of the Declaration pertaining to Reconveyance Fees applied to any conveyances of the Property. Under § 6 of the Declaration, the Passco Companies' first conveyance to Boardman was not subject to a Reconveyance Fee. However, Boardman's conveyance to Sita was subject to a Reconveyance Fee under § 5 of the Declaration.
Because we conclude that the termination was ineffective on this basis, we need not, and do not, reach the issue of whether the termination was ineffective due to the Passco Companies' failure to deliver the attempted termination to Covenant Clearinghouse within ten days of filing the termination.
¶27 Under that same section, Covenant Clearinghouse-as trustee for the beneficiaries of the Declaration-became responsible for collecting the Reconveyance Fee on the beneficiaries' behalf. To that end, the Declaration placed no conditions on Covenant Clearinghouse's granted authority to take enforcement actions, such as recording a Notice of Assessment against the Property. Indeed, Covenant Clearinghouse was empowered under § 12 "to undertake on behalf of Beneficiaries, as agent thereof, any action [Covenant Clearinghouse] deem[ed] reasonably necessary or appropriate to prosecute, defend, administer and exercise rights and obligations arising out of or related to [the] Declaration." Recording the Notice of Assessment was a valid application of the responsibility bestowed upon Covenant Clearinghouse. And, beyond the power to record an assessment, Covenant Clearinghouse was also granted the authority to request the payment of the Reconveyance Fee in connection with the Property, which, by the Declaration's terms in § 9, "bec[a]me a continuing lien and charge . . . upon the portion of the Property that was the subject of the Conveyance" when Boardman did not "[pay] when due." Therefore, the superior court's contrary conclusions below-that no Reconveyance Fee was owed after May 6, 2013, and that the lien asserted in Covenant Clearinghouse's Notice of Assessment was invalid-were erroneous.
B. Effect of the Declaration's Non-Termination on Covenant Clearinghouse's Standing
¶28 That conclusion does not wholly resolve the issue of Covenant Clearinghouse's standing in this litigation. As stated above, to pursue an action to foreclose on a lien for unpaid Reconveyance Fees or bring an action for a money judgment for such unpaid amounts under the Declaration, Covenant Clearinghouse must have the consent of the holders of the majority of the beneficial interests. This consent must "include instructions pertaining to payment of enforcement costs and disposition of Lien Property ultimately acquired at any foreclosure."
¶29 The beneficiaries of the Declaration are listed in § 17, and, while the Passco Companies collectively own fifty percent of the beneficial interest in the Property, a mix of five other companies and individuals own the remaining fifty percent. There is no indication in the record before us that Covenant Clearinghouse obtained written consent to pursue a money judgment on the beneficiaries' behalf as required under § 9(f).
¶30 On appeal, Covenant Clearinghouse does not assert that it obtained the requisite consent from the Declaration's beneficiaries to bring its counterclaims. It argues instead that consent was not required because the language in § 9(f) pertaining to an action "to recover a money judgment" is strictly in the context of a foreclosure action, such that the consent requirement is not applicable to its counterclaim here. We disagree. Section 9(f) contemplates two different kinds of action-one to institute a foreclosure on the lien, and another to recover a money judgment. This separation is confirmed by language in the last sentence of § 9(f), where a trustee is entitled to recover "attorney's fees incurred in either a foreclosure action or an action to recover a money judgment for Unpaid Reconveyance Fees." (Emphasis added.) It applies, then, to Covenant Clearinghouse's action to seek a money judgment through counts one and two of its counterclaim.
¶31 Covenant Clearinghouse argues, alternatively, that it did not bring an "action to recover a money judgment"-instead, it exercised its rights under § 12(a) and (b) of the Declaration to "collect . . . sums in connection with [the] Declaration" and "undertake or defend, including retaining others to undertake and defend, legal . . . proceedings." Covenant Clearinghouse also suggests that its counterclaims for "Breach of Contract, Breach of Duty of Good Faith and Fair Dealing, and Declaratory Judgment" do not qualify as "action[s] to recover a money judgment." Again, we disagree.
¶32 Generally, an "action" is broadly defined as a "civil or criminal judicial proceeding." Action, Black's Law Dictionary (11th ed. 2019); see also A.R.S. § 1-215(1) ("'Action' includes any matter or proceeding in a court, civil or criminal."). The term "counterclaim" is "general and comprehensive," and "may be defined as a cause of action in favor of defendant upon which he might have sued the plaintiff and recovered judgment in a separate action." Valley Gin Co. v. McCarthy, 56 Ariz. 181, 187 (1940). "It is not, strictly speaking, a defense to an action but is an independent claim" litigated concurrently with the original action for judicial efficiency. Id. And a "money judgment" is "[a] judgment for damages subject to immediate execution, as distinguished from equitable or injunctive relief." Money Judgment, Black's Law Dictionary (11th ed. 2019). In its counterclaim, in addition to seeking a declaratory judgment that the termination was void, Covenant Clearinghouse sought a judgment for damages. Because Covenant Clearinghouse brought an action for a money judgment under counts one and two of its counterclaim, consent by a majority of the Declaration's beneficiaries was required.
¶33 This consent requirement does not, by the terms of § 9(f), extend to count three of Covenant Clearinghouse's counterclaim. There, it merely requested declaratory judgment that Passco Companies' termination of the Declaration was invalid for lack of an oath. An action seeking declaratory judgment may be brought "whether or not further relief is or could be claimed." § 12-1831. While a superior court may provide "[f]urther relief based on a declaratory judgment," such is not required. § 12-1838. We conclude, therefore, that the Declaration's requirement that Covenant Clearinghouse obtain consent from fifty-one percent of the Declaration's beneficiaries does not pertain to bringing an action for declaratory judgment under count three of Covenant Clearinghouse's counterclaim, which we have addressed above.
¶34 Regarding the superior court's dismissal of counts one and two, we note that, after oral argument, the court found it "undisputed" that Covenant Clearinghouse lacked majority consent to pursue an action for a money judgment under counts one and two of its counterclaim. Covenant Clearinghouse did not provide us a transcript of the oral argument held below, and we must therefore assume that the testimony and evidence offered at the oral argument support that factual finding. See Blair v. Burgener, 226 Ariz. 213, ¶ 9 (App. 2010); Ariz. R. Civ. App. P. 11(c)(1)(A) (appellant's duty to order transcripts of proceedings "necessary for proper consideration of the issues on appeal").
C. Conclusion
¶35 The Declaration was not effectively terminated, and the conveyance from Boardman to Sita is subject to a Reconveyance Fee under § 5 of the Declaration. As trustee, Covenant Clearinghouse's recording of the Notice of Assessment was a valid exercise of its responsibility to collect the Reconveyance Fee on behalf of the beneficiaries, and Boardman's nonpayment resulted in a lien. Covenant Clearinghouse has standing to bring an action for Declaratory Judgment-count three of its counterclaim-and we have addressed the merits of that action above. However, as the superior court found, Covenant Clearinghouse failed to demonstrate the requisite authority to bring an action to collect the specific funds held in escrow related to that transaction. Accordingly, the court correctly dismissed counts one and two of Covenant Clearinghouse's counterclaim and correctly determined that Boardman is entitled to the $308,050 held in escrow.
III. Attorney Fees
¶36 Covenant Clearinghouse does not request attorney fees or costs on appeal. Boardman requests its attorney fees and costs on appeal pursuant to A.R.S. §§ 12-1103 and 33-420. Because each party prevailed in part, in our discretion we award neither party its fees or costs as prevailing party on appeal.
Disposition
¶37 For the foregoing reasons, we reverse in part and affirm in part the superior court's order granting Boardman's motion for summary judgment and denying Covenant Clearinghouse's motion for summary judgment, as well as its May 2023 judgment in favor of Boardman. We remand for further proceedings consistent with this decision.