Opinion
No. 1 CA-CV 16-0544
03-13-2018
ELMER R. PARSONS, et al., Plaintiffs/Appellees, v. JOHNATHAN NACE, et al., Defendants/Appellants.
COUNSEL Horne Slaton PLLC, Scottsdale By Sandra Slaton, Kristin Roebuck Bethell Counsel for Plaintiffs/Appellees Teresa H. Foster PLLC, Phoenix By Teresa H. Foster Counsel for Defendants/Appellants
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.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 2013-001720 CV 2014-052380 (Consolidated)
The Honorable Hugh E. Hegyi, Judge
AFFIRMED
COUNSEL Horne Slaton PLLC, Scottsdale
By Sandra Slaton, Kristin Roebuck Bethell
Counsel for Plaintiffs/Appellees Teresa H. Foster PLLC, Phoenix
By Teresa H. Foster
Counsel for Defendants/Appellants
MEMORANDUM DECISION
Judge Jennifer M. Perkins delivered the decision of the Court, in which Presiding Judge Michael J. Brown and Judge Jennifer B. Campbell joined. PERKINS, Judge:
¶1 Appellants Johnathan Nace, Christopher Nace, and Dean Brayton appeal the superior court's orders granting summary judgment in favor of Appellees Elmer R. Parsons and Eunice Ellingson, Trustee of the Ellingson Family Trust, and dismissing the counterclaim. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 In 2009, Don Nace, manager of Buckeye Air Commerce Center, LLC (Buckeye), executed a Deed of Trust in favor of Appellants and Appellees, secured by three parcels of property owned by Buckeye. At all relevant times, Buckeye was owned by the Don Nace Family Limited Liability Limited Partnership (99% member) and Parsons (1% member).
The parties' percentage of interest in the Deed of Trust was as follows: Parsons — 69.500%; Ellingson Family Trust — 6.130%; Johnathan Nace — 10.285%; Christopher Nace — 10.285%; Brayton — 3.800%. --------
¶3 In February 2013, Kolonia, LLC, filed suit against Buckeye, Appellants, Appellees, and others to foreclose on a tax lien Kolonia had purchased against one parcel of the property. See generally Ariz. Rev. Stat. ("A.R.S.") §§ 42-18201 to -18208 (2018). Appellees purchased the tax certificate from Kolonia in May 2013; thereafter, they were substituted as plaintiffs in the Kolonia action. In February 2014, Appellees filed suit against Appellants and others to foreclose on tax liens Appellees had purchased against the other two parcels of the property. After the cases were consolidated, Appellants filed a counterclaim against Appellees for breach of fiduciary duty, requesting that Appellees' purchase of the tax certificates be deemed for the benefit of all the "co-owners" under the Deed of Trust.
¶4 The parties filed cross-motions for summary judgment and Appellees moved to dismiss the counterclaim. After full briefing, the superior court granted Appellees' motion for summary judgment and motion to dismiss the counterclaim, and denied Appellants' cross-motion for summary judgment. In granting summary judgment and dismissal of Appellants' counterclaim, the superior court concluded that co-beneficiaries under a deed of trust do not owe fiduciary duties to one another.
¶5 Following the entry of judgment foreclosing their right to redeem the tax liens, see Ariz. R. Civ. P. 54(b), Appellants timely appealed. We have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).
DISCUSSION
¶6 On appeal from summary judgment, we review questions of law and the existence of any genuine issues of material fact de novo. Parkway Bank & Tr. Co. v. Zivkovic, 232 Ariz. 286, 289, ¶ 10 (App. 2013). We view the facts and the inferences drawn therefrom in the light most favorable to the party against whom judgment was entered. Weitz Co. L.L.C. v. Heth, 235 Ariz. 405, 408, ¶ 2 (2014). We review an order granting a motion to dismiss de novo, assuming the truth of all facts stated in the pleading. Premier Physicians Grp., PLLC v. Navarro, 240 Ariz. 193, 194, ¶ 6 (2016); Botma v. Huser, 202 Ariz. 14, 15, ¶ 2 (App. 2002).
¶7 Arizona's real estate tax statutes permit the government to recoup unpaid property taxes by selling first-priority tax liens against deficient property to the public. A.R.S. § 42-18101. The statutory scheme requires the treasurer of each county to sell tax liens to any person who pays the prescribed costs and fees. See A.R.S. §§ 42-18114, -17154. A purchaser may then foreclose on the lien pursuant to A.R.S. § 42-18201. State law protects property owners and others with a legal or equitable interest in the property, including creditors, by allowing these stakeholders to redeem the property pursuant to A.R.S. § 42-18151, if they so choose during the prescribed redemption period. If a stakeholder redeems the tax lien, it is eliminated and title to the property is essentially unchanged. See §§ 42-18154, -18204, -18206. However, nothing in the statutory scheme requires creditors to redeem, or prevents them from purchasing tax liens. See generally A.R.S. §§ 42-18101-18127.
¶8 Appellants do not dispute Appellees had a statutory right to foreclose on the tax liens. See generally A.R.S. §§ 42-18201 to -18208. They argue, however, that Appellees (1) owed a fiduciary duty to their co-beneficiaries under the Deed of Trust and (2) breached that duty by purchasing the tax certificates for their individual benefit, rather than the benefit of all. The existence of a fiduciary duty is a question of law, which we review de novo. TM2008 Invs., Inc. v. Procon Capital Corp., 234 Ariz. 421, 424, ¶ 12 (App. 2014) (citing Maxfield v. Martin, 217 Ariz. 312, 314, ¶ 12 (App. 2007)).
¶9 In general, the existence of a fiduciary duty depends on the circumstances governing the relationship between the parties. Standard Chartered PLC v. Price Waterhouse, 190 Ariz. 6, 24 (App. 1996). The relationship must be such that one party is bound to act for the other's benefit and may be characterized by peculiar intimacy, disclosure of secrets, or entrusting of power. Cook v. Orkin Exterminating Co., 227 Ariz. 331, 334, ¶¶ 14-15 (App. 2011). In such a relationship, the fiduciary holds "superiority of position" over the beneficiary, and this position may be demonstrated "in material aspects of the transaction at issue by a substitution of the fiduciary's will." Standard Chartered, 190 Ariz. at 24 (internal quotation marks omitted). An arms-length commercial transaction will not create a fiduciary relationship absent "peculiar intimacy or an express agreement to serve as a fiduciary." Cook, 227 Ariz. at 334, ¶ 15.
¶10 Appellants assert here that Appellee Parsons stood in a superior position based on the Deed of Trust that seemed to limit Appellants' ability to pay taxes absent Parsons's permission. This argument fails. Appellants had a statutory right of redemption which would have allowed them to preserve their interest in the property. Appellants failed to exercise this right. Moreover, nothing in the record indicates Appellants ever requested permission from Parsons to pay the taxes due. Thus, any alleged restriction on Appellants' rights by the Deed of Trust is unavailing, as Parsons never prevented Appellants from paying the taxes. Parsons never exercised his allegedly controlling position over Appellants and, even if he had, Appellants could have redeemed the property regardless of Parsons's objection.
¶11 Appellants further argue, pursuant to Cammon Consultants Corp. v. Day, that a fiduciary relationship exists among co-beneficiaries to a deed of trust such that one may not take advantage of non-payment of taxes to the detriment of another's equitable interest in the property. 181 Ariz. 231 (App. 1994). We disagree.
¶12 Cammon applies narrowly to owners of property and does not purport to impose a fiduciary relationship between creditors secured by a common instrument. Id. at 233-34. In Cammon, this Court was faced with a property owner who failed to pay taxes and then purchased his own property at foreclosure through an invalid corporate entity under his sole control. Id. at 232-33. In doing so, the property owner acquired title to his land free and clear of a $200,000 lien held by a third-party creditor. Id. at 233. Thus, the Cammon court was faced with an owner obligated to pay property taxes and a creditor's lien, who attempted to escape liability by artifice. Id. Here, Appellants and Appellees were creditors with an interest in the property, rather than owners or obligors.
¶13 Cammon is further distinguishable because it primarily addressed piercing the corporate veil of a legally deficient corporate entity. 181 Ariz. at 233. This Court specifically recognized that the trial court's ruling at issue was decided, and affirmed, on piercing an entity's corporate veil. Id. The remainder of Cammon, which addressed the ability of certain persons to purchase statutorily authorized tax liens, is dicta. Moreover, the facts of Cammon limit that holding to owners obligated to pay property taxes. See id. at 233-34. Nothing in Cammon compels us to prevent non-owners capable of redeeming a property from purchasing a tax lien. To hold otherwise would frustrate the purpose of Arizona's tax lien system.
CONCLUSION
¶14 For the foregoing reasons, we affirm the superior court's grant of Appellees' motion for summary judgment and motion to dismiss the counterclaim. We award costs to Appellees upon compliance with Arizona Rule of Civil Appellate Procedure 21.