Opinion
1 CA-CV 21-0188
02-24-2022
CYPRESS LANDING COMMUNITY ASSOCIATION INC, Plaintiff/Appellee, v. ALICIA A. PADRON, Defendant/Appellee, MARICOPOLY, LLC, Intervenor/Appellant.
Maxwell & Morgan PC, Mesa By Mark W. Waldron Counsel for Plaintiff/Appellee Windtberg Law PLC, Phoenix By Marc Windtberg Counsel for Defendant/Appellee Law Office of Lawrence K. Lynde, Phoenix By Lawrence K. Lynde Counsel for Intervenor/Appellant
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Maricopa County No. CV2017-090836 The Honorable Steven P. Lynch, Judge (Retired)
Maxwell & Morgan PC, Mesa By Mark W. Waldron Counsel for Plaintiff/Appellee
Windtberg Law PLC, Phoenix By Marc Windtberg Counsel for Defendant/Appellee
Law Office of Lawrence K. Lynde, Phoenix By Lawrence K. Lynde Counsel for Intervenor/Appellant
Judge Randall M. Howe delivered the decision of the court, in which Presiding Judge Jennifer B. Campbell and Judge James B. Morse Jr. joined.
MEMORANDUM DECISION
HOWE, JUDGE
¶1 Maricopoly, LLC, the purchaser of real property sold at a sheriff's execution sale to satisfy a judgment and foreclosure obtained by Cypress Landing Community Association, Inc. ("Cypress"), appeals the trial court's award of excess proceeds to the homeowner, Alicia Padron, and the superior court's award of attorneys' fees to her. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 This is the second appeal involving Maricopoly and Padron's dispute over the excess proceeds from a sheriff's execution sale. See Padron v. Maricopoly, LLC, No. 1 CA-CV 19-0670, 2020 WL 4692868, at *1 (App. 2020). In 2017, Cypress foreclosed on Padron's property because she failed to pay her homeowner association assessments and dues. Maricopoly purchased the property subject to a senior lien at a sheriff's sale and $67,921.56 remained after satisfaction of the judgment, which the sheriff deposited with the clerk of court.
¶3 Padron applied for the excess proceeds. Maricopoly intervened, opposed Padron's application, and submitted its own, arguing that it should be awarded the excess proceeds because Padron had assigned it her right to the proceeds. The court found that Padron had assigned to Maricopoly her right to the proceeds. Padron appealed, arguing that the trial court erred in awarding Maricopoly the proceeds without holding an evidentiary hearing to determine the validity of the assignment. Before Maricopoly filed its answering brief, it fully paid off the senior lienholder on the property.
¶4 On appeal, this court reversed the trial court's award of excess proceeds, finding that the parties disputed the facts surrounding the execution of the written assignment. Padron, 2020 WL 4692868, at *2 ¶¶ 12, 15. It remanded the case to the trial court to hold an evidentiary hearing "for fact-finding on the contract formation and enforcement issues" that Padron raised. Id. at *2 ¶ 15. Before the evidentiary hearing, Maricopoly offered Padron $67,921.56-the amount of the excess proceeds-for "full and final settlement" and release of all claims, but Padron declined.
¶5 The trial court on remand heard evidence about the assignment's validity and the parties' conduct relating to the assignment and subsequent purchase agreement. It found that Padron's signature on the assignment did not match her other signatures and that a different person than the notary executed the agreement at a different date and therefore concluded that the executed assignment was void. It granted Padron $67,921.56 in excess proceeds with interest of 4.25% per year from August 15, 2019, the date that the funds were awarded to Maricopoly.
¶6 Maricopoly moved for amended or additional findings under Arizona Rule of Civil Procedure ("Rule") 52(b) and a new trial under Rule 59(a), asserting that the court did not consider whether Maricopoly was "equitably subrogated" to the senior lienholder after it satisfied the senior lien. Padron argued that Maricopoly had waived the issue, argued against the merits, and subsequently moved for attorneys' fees under A.R.S. § 12-341.01 and A.R.S. § 12-349 because Maricopoly used a "forged" assignment to make a claim without substantial justification and unreasonably delayed or expanded the proceeding.
¶7 The trial court denied Maricopoly's Rule 52(b) and Rule 59(a) motion finding no basis for relief. It awarded Padron $42,500 in attorneys' fees but did not state under which statute it awarded them. Maricopoly timely appeals.
DISCUSSION
¶8 Maricopoly appeals the trial court's award of the entire $67,921.56 in excess proceeds to Padron, arguing that as payor of the senior lien on the property, it was equitably subrogated to the senior lienholder's right to the excess proceeds under A.R.S. § 33-727(B). Maricopoly also appeals the trial court's award of attorneys' fees to Padron under either A.R.S. § 12-341.01 or A.R.S. § 12-349. We review issues of law and statutory interpretation governing the distribution of excess proceeds de novo, Bank of Am., N.A. v. Felco Bus. Servs., Inc. 401(K) Profit Sharing Plan, 243 Ariz. 150, 154 ¶ 11 (App. 2017), as we do when a party is entitled to fees under A.R.S. § 12-341.01 or A.R.S. § 12-349, see Goldman v. Sahl, 248 Ariz. 512, 531 ¶ 65 (App. 2020).
1. The trial court could not consider issues outside of this court's mandate.
¶9 Padron asserts that the trial court lacked jurisdiction to consider Maricopoly's equitable subrogation argument on remand and has further waived the argument by first raising the argument in its motion for a new trial. We agree. When a reviewing court has considered a given case, has decided the merits, and remanded it with specific directions, "the court to which such mandate is directed has no power to do anything but to obey." Tovrea v. Superior Ct. In & For Maricopa Cty., 101 Ariz. 295, 297 (1966). The trial court "is without jurisdiction to fly in the face of an appellate mandate[.]" Id.
¶10 This court's mandate explicitly instructed the trial court to conduct an evidentiary hearing on "the contract formation and enforcement issues" relevant to the assignment to determine if Padron had assigned her rights to the proceeds. The court thus lacked jurisdiction on remand to consider any issue outside the parties' contract issues, see id., and this court similarly lacks jurisdiction to review the merits of Maricopoly's equitable subrogation argument on appeal, Natasha S. v. Dep't of Child Safety, 246 Ariz. 491, 492 ¶ 5 (App. 2019) ("This court 'cannot consider an appeal from the superior court on the merits unless the superior court has jurisdiction.'") (quoting Riendeau v. Wal-Mart Stores, Inc., 223 Ariz. 540, 541 ¶ 4 (App. 2010)); Webb v. Charles, 125 Ariz. 558, 565 (App. 1980) ("[A]ppellate jurisdiction is derivative," meaning that "when jurisdiction is lacking in the trial court, it is lacking on appeal.").
¶11 Maricopoly argues, however, that it could not have raised the issue until after the appeal process because it was not equitably subrogated to the senior lienholder until after the start of the initial appeal. But this does not affect the trial court's lack of jurisdiction to consider the argument contrary to this court's mandate. See Tovrea, 101 Ariz. at 297. Furthermore, even if the trial court could have considered issues outside this court's mandate, Maricopoly did not argue in either the pre-hearing memorandum or at the evidentiary hearing that it was equitably subrogated to the senior lienholder's entitlement to the excess proceed under A.R.S. § 33-727(B) regardless of the assignment.
¶12 By waiting to bring the issue in a motion for a new trial, it has waived the issue. Conant v. Whitney, 190 Ariz. 290, 293 (App. 1997) ("[Plaintiff] waived the issue by first raising it in a motion for new trial."). We thus reject Maricopoly's argument that the issue was tried by consent under Rule 15(b)(2) because it never brought the issue to the trial court during the hearing on remand. Because Maricopoly does not otherwise appeal the trial court's findings on the assignment issue, we affirm the trial court's award of $67,921.56 in excess proceeds to Padron.
2. Padron was entitled to her attorneys' fees in the superior court.
¶13 Maricopoly argues that the court erred in awarding Padron $42,500 in attorneys' fees. Once a party has been awarded fees, this court reviews the evidence in a manner "most favorable to sustaining the award and affirm unless the trial court's finding" is clearly erroneous. Goldman, 248 Ariz. at 531 ¶ 65. Under A.R.S. § 12-341.01, the court may award the successful party reasonable attorneys' fees in any contested action arising out of a contract. A.R.S. § 12-341.01. An action arises out of a contract if it could not exist "but for" the contract. See Sparks v. Republic Nat'l Life Ins. Co., 132 Ariz. 529, 543 (1982). Section 12-341.01 does not apply to purely statutory causes of action, however, Kennedy v. Linda Brock Auto. Plaza, Inc., 175 Ariz. 323, 325 (App. 1993), or if the contract is a factual predicate to the action but not the essential basis of it, id.; Hanley v. Pearson, 204 Ariz. 147, 151 ¶ 17 (App. 2003). Alternatively, a party is entitled to fees under A.R.S. § 12-349 if the opposing party brings or defends a claim without substantial justification. A.R.S. § 12-349(A)(1). "Without substantial justification" means that a claim or defense is "groundless and is not made in good faith." A.R.S. § 12-349.
¶14 The court did not err in awarding Padron her attorneys' fees under A.R.S. § 12-341.01. Padron's purported assignment, a contract, formed the essential basis for Maricopoly's statutory action. Indeed, the court originally granted Maricopoly the excess proceeds based on the alleged assignment. Thus, determining whether a contract existed was necessary to resolve Padron's entitlement to the excess proceeds and therefore arose under contract. See ML Servicing Co. v. Coles, 235 Ariz. 562, 570 ¶ 30 (App. 2014) (stating that the phrase "arising out of a contract" in § 12-341.01 must be read broadly and encompasses an action when one party asserts a contract and another "successfully proved that no contract existed").
¶15 Maricopoly nonetheless argues that because Padron refused Maricopoly's offer of $67,921.56 after remand, she is not entitled to fees because that amount was the maximum that she could have been awarded. Under A.R.S. § 12-341.01(A) "[i]f a written settlement offer is rejected and the judgment finally obtained is equal to or more favorable to the offeror than an offer made in writing to settle any contested action arising out of contract, the offeror is deemed to be the successful party from the date of the offer and the court may award" them their reasonable attorneys' fees. A.R.S. § 12-341.01. But Padron also received prejudgment interest on the $67,921.56 from August 15, 2019, the date those funds were first awarded to Maricopoly. Because Padron increased her entitlement in the final judgment, the trial court did not err in determining she was the successful party and therefore entitled to her fees. See Hall v. Read Dev., Inc., 229 Ariz. 277, 281 ¶ 14 (App. 2012) (stating that "judgment finally obtained" means the sum ultimately obtained, including attorneys' fees under A.R.S. § 12-341.01); Berry v. 352 E. Virginia, L.L.C., 228 Ariz. 9, 15 ¶ 29 (App. 2011) (included prejudgment interest in "judgment finally obtained").
¶16 Maricopoly next argues that the court erred in awarding Padron fees for her unsuccessful claims that the assignment was based on mutual mistake, fraud, misrepresentation, and duress. Padron challenged the validity of the assignment as a single claim involving multiple legal theories and was thus entitled to her fees for "time spent even on unsuccessful legal theories" related to the contract issue. See Schweiger v. China Doll Rest, Inc., 138 Ariz. 183, 189 (App. 1983). Because we find that the court properly awarded fees under A.R.S. § 12-341.01, we need not determine whether an award under A.R.S. § 12-349 was proper.
CONCLUSION
¶17 Padron requests her attorneys' fees on appeal under A.R.S. § 12-341.01. For the reasons stated above and, in our discretion, we award Padron her reasonable attorneys' fees under A.R.S. § 12-341.01 and costs on appeal in compliance with ARCAP 21. For the reasons stated, we affirm.