Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-01238/USCOURTS-azd-2_06-cv-01238-2/pdf.json

Nature of Suit Code: 240
Nature of Suit: Torts to Land
Cause of Action: 28:1441 Petition for Removal- Declaratory Judgement

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WO

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

Marian B. Farris, an unmarried woman,

Plaintiff,

v.

Advantage Capital Corporation, a New

York corporation,

Defendant.

No. CIV06-01238-PHX-PGR

ORDER CERTIFYING QUESTION TO

THE ARIZONA SUPREME COURT

Pursuant to A.R.S. §§ 12-1861 to -1867 and Rule 27, Rules of the Arizona Supreme

Court, the United States District Court for the District of Arizona hereby certifies the

following question of state law to the Arizona Supreme Court. The resolution of this question

will be determinative of a substantive question of law in the above captioned action and may

be determinative of the case. No controlling precedent exists in the decisions of the Arizona

Supreme Court and the intermediate appellate courts of Arizona. 

Case 2:06-cv-01238-PGR Document 42 Filed 03/29/07 Page 1 of 5
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I. THE QUESTION OF LAW TO BE ANSWERED

Under Arizona law, is a fraudulent transfer action under A.R.S. § 44-1001 et seq.,

which seeks to void the transfer of real property is an action "affecting title to real property"

within the meaning of the lis pendens statute, A.R.S. § 12-1191, where the action is brought

by a creditor of the transferor to make the real property available for the collection of a debt

or judgment?

II. FACTS RELEVANT TO THE QUESTION TO BE CERTIFIED

In this action, Plaintiff Marian B. Farris (“Farris”) alleges that Defendant Advantage

Capital Corporation (“Advantage Capital”) wrongfully recorded a Notice of Lis Pendens in

violation of A.R.S. § 33-420 in connection with its separate fraudulent transfer action against

Farris, her son, and her ex-daughter-in-law. Advantage Capital alleges that its fraudulent

transfer action is one “affecting title to real property” within the meaning of A.R.S. § 12-1191,

and that, pursuant to such statute, Advantage Capital was authorized to record the Notice of

Lis Pendens.

The Court has made no factual findings in this case. The Court is not now making

factual findings. However, for the purposes of the present certification issue, the Court

acknowledges the following relevant allegations, taken from the Complaint of Advantage

Capital in the separate fraudulent transfer litigation now pending in Bankruptcy Court:

Charles L. Bolton, III is Farris’ son. Mr. Bolton is a former registered representative

of Advantage Capital, a licensed securities brokerage firm. On December 19, 2005,

Advantage Capital terminated Mr. Bolton. In or about January 2006, two of Advantage

Capital’s customers complained that $649,000 was missing from their accounts that Mr.

Bolton serviced. Based upon this alleged misconduct and upon Mr. Bolton’s alleged violation

of contractual and other duties to Advantage Capital, Advantage Capital filed a Verified

Complaint on March 31, 2006, in the Arizona Superior Court.

In 2002, the Boltons bought a residence in Scottsdale, Arizona (“Windrose Drive

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A.R.S. § 12-1191 provides in relevant part: “In an action affecting title to real

property, the plaintiff at the time of filing the complaint, or thereafter ... may file in the

office of the recorder of the county in which the property is situated a notice of the

pendency of the action or defense....”

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Property”) and held it as community property. In transactions dated January 22, 2003, March

23, 2004, and April 21, 2004, Mr. and Mrs. Bolton transferred the Windrose Drive Property

between themselves, resulting in Mrs. Bolton purporting to hold the Windrose Drive Property

as her sole and separate property. On September 23, 2005, the Boltons sold their Windrose

Drive home to Mr. Bolton’s mother, Farris, for $1,050,000. Advantage Capital makes no

claim that it is entitled to claim title to the Windrose Drive Property.

A. Advantage Capital’s Complaint

On March 31, 2006, Advantage Capital filed a Verified Complaint in the Arizona

Superior Court alleging seven claims for relief against Mr. Bolton, his then-wife, Brenda L.

Bolton, and Farris. Advantage Capital’s Verified Complaint against Farris alleges a claim for

fraudulent transfer under A.R.S. §§ 44-1001 to -1010. Advantage Capital seeks damages and

a judgment voiding Mr. and Mrs. Bolton’s allegedly fraudulent transfer to Farris of the

Windrose Drive Property. Also on March 31, 2006, Advantage Capital filed a Statement of

Claim against Mr. and Mrs. Bolton to initiate an arbitration before the National Association

of Securities Dealers Regulation, Inc. (“NASD”) because some of Advantage Capital’s claims

against them were subject to NASD arbitration. 

B. The Lis Pendens

On March 31, 2006, Advantage Capital recorded a Notice of Lis Pendens on the

Windrose Drive Property. A.R.S. § 12-1191 authorizes the filing of a lis pendens notice “[i]n

an action affecting title to real property.”1

 Advantage Capital has never had title to the

property is not seeking title to the Windrose Drive Property, but only seeks to void the transfer

to Farris and collect damages from her.

Because Advantage Capital filed the Notice of Lis Pendens, Farris lost a sale on the

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Windrose Drive Property on April 3, 2006 for $1,150,000. Farris subsequently filed the

present lawsuit seeking removal of the lis pendens and damages under A.R.S. § 33-420.

III. CURRENT STATE OF ARIZONA LAW ON THE QUESTION TO BE

ANSWERED

There is no controlling Arizona precedent on the question to be answered, which

involves two state statutes, A.R.S. § 12-1191 and A.R.S. § 33-420. Accordingly, this case

presents an important question of state law for which there is no controlling Arizona

precedent. This question should be certified to the Arizona Supreme Court.

IV. LIST OF THE COUNSEL APPEARING IN THIS MATTER

Counsel for Plaintiff Marian B. Farris are Richard R. Thomas and Lori A. Curtis, Davis

Miles, PLLC, P.O. Box 15070 Mesa, AZ 85211, (480) 344-4579. 

Counsel for Defendant Advantage Capital Corporation are Janet Weinstein and James

D. Burgess, Fennemore Craig, 3003 N. Central Ave., Suite 2600, Phoenix, AZ 85012, (602)

916-5000.

V. FILING FEES

Pursuant to A.R.S. § 12-1865, Plaintiff Marian B. Farris and Defendant Advantage

Capital Corporation shall share equally the required filing fees for this certification process.

In accordance with Arizona Supreme Court Rule 27 (e), no party to this certification process

shall apply for attorneys’ fees or any other costs associated with this certification process.

THEREFORE, pursuant to A.R.S. § 12-1861 et seq. and Rule 27, Rules of the Arizona

Supreme Court, the Court orders as follows:

1. The Court certifies that resolution by the Arizona Supreme Court of the question

of law set forth in Section I supra will be determinative of a substantive question of law in the

above captioned action and may be determinative of the action.

2. The Clerk of this Court shall file with the Arizona Supreme Court the original

of this Order and six (6) certified copies.

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3. The Clerk of this Court shall transmit to the Arizona Supreme Court the original

or copies of such other portions of the Court’s record as the Arizona Supreme Court may

deem necessary to a determination of the certified question.

DATED this 29th day of March, 2007.

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