IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

STATE OF ARIZONA, et al., Plaintiffs/Appellants,

v.

ARIZONA BOARD OF REGENTS, et al., Defendants/Appellees.

No. 1 CA-TX 20-0003 

Appeal from the Superior Court in Maricopa County

No. TX2019-000011

The Honorable Christopher T. Whitten, Judge

AFFIRMED

COUNSEL

Arizona Attorney General’s Office, Phoenix

By Brunn W. Roysden III, Robert J. Makar, Michael S. Catlett,

Katlyn J. Divis

Counsel for Plaintiff/Appellant State of Arizona

Snell & Wilmer LLP, Phoenix

By Brett W. Johnson, Colin P. Ahler, Tracy Olson

Co-Counsel for Defendant/Appellee ABOR

Perkins Coie LLP, Phoenix

By Paul F. Eckstein, Joel W. Nomkin, Shane R. Swindle, 

Thomas D. Ryerson, Austin C. Yost

Co-Counsel for Defendants/Appellees ABOR, et al. 

FILED 4-20-2021
STATE, et al. v. ABOR, et al.

Opinion of the Court

2

Kolodin Law Group PLLC, Phoenix

By Alexander Kolodin, Chris Ford, Christopher Viskovic

Amicus Curiae for Senator Vince Leach

OPINION

Presiding Judge Jennifer M. Perkins delivered the opinion of the Court, in 

which Judge David B. Gass and Judge Michael J. Brown joined.

P E R K I N S, Judge:

¶1 The Arizona Attorney General’s Office (“AGO”) sued to 

enjoin an agreement by the Arizona Board of Regents (“ABOR”) and a 

private company to build and operate a hotel and conference center on state 

property. The tax court ruled the AGO’s amended claim under our 

constitution’s Gift Clause was untimely and thus granted summary 

judgment on that claim. The court dismissed the remaining claims, finding 

the AGO lacked statutory authority to bring them. The AGO appeals from 

the tax court’s resulting entry of judgment for ABOR and Arizona State 

University Vice President John Creer. 

¶2 We agree with the tax court that a one-year statute of 

limitations period applies to bar the AGO’s Gift Clause claim. In doing so,

we conclude the AGO had sufficient information to prompt an 

investigation more than a year before it attempted to bring this claim and 

that the claim does not relate back to the original complaint. We also agree 

with the tax court that the AGO lacked statutory authority or independent 

quo warranto authority to bring the remaining claims. Finally, we conclude

the AGO failed to establish the attorneys’ fees awarded to ABOR and Creer

were unreasonable. We affirm the tax court’s judgment.

FACTUAL AND PROCEDURAL BACKGROUND

¶3 ABOR owns about ten acres of land on the southeast corner 

of Mill Avenue and University Drive, in Tempe. ABOR’s land, like all stateowned property, is exempt from property taxes. See Ariz. 

Const. art. 9, § 2(1); see also A.R.S. § 42-11102(A). This case concerns an 

agreement ABOR struck with Omni Hotels Corporation (“Omni”) to grant 

Omni an option to build and operate a hotel and conference center. ABOR 
STATE, et al. v. ABOR, et al.

Opinion of the Court

3

first publicly discussed its intent to develop and/or lease this land during 

a June 2016 meeting. 

¶4 Four months later, ABOR, Omni, and the City of Tempe 

signed a term sheet containing some of the deal’s terms. ABOR agreed to 

lease 1.6 acres to Omni and contribute up to $19.5 million towards 

constructing a conference center next to the hotel. ABOR would retain 

ownership of both the hotel and conference center until the 60-year lease 

term expired, when Omni could exercise an option to purchase the hotel 

and conference center for a nominal amount. Omni agreed to prepay some 

rent at roughly $85 per square foot and make additional yearly payments 

as rent instead of property taxes. Finally, ABOR agreed to build a parking 

structure directly abutting the complex and granted Omni exclusive use of 

about one-fifth of the parking spaces. 

¶5 On January 11, 2018, the City of Tempe reached a final 

agreement with Omni to develop a hotel and conference center on ABOR’s 

property. The agreement included $21 million in sales tax relief. On that 

same day, AGO attorneys internally circulated a letter to the editor of the 

Arizona Republic discussing the Omni transaction. One AGO attorney

wrote that the Omni transaction sounded “pretty suspicious.” On February 

28, 2018, ABOR and Omni signed an “option to lease” allowing Omni to 

exercise the lease if ASU agreed to build the parking structure. 

¶6 The AGO filed a three-count complaint on January 10, 2019. 

Count I sought declaratory and injunctive relief, alleging the lease 

improperly exempted the hotel and conference center from property taxes. 

Count II sought quo warranto relief to void the transaction because it 

constituted an improper exercise of ABOR’s power to enter into leases for 

public purposes. Count III sought quo warranto and declaratory relief that 

the lease was illegal because it lacked a public purpose under A.R.S. § 15-

1625. 

¶7 Extensive motion practice ensued, including several motions 

to dismiss. The tax court ultimately granted ABOR’s motion to dismiss the 

three counts in the complaint, ruling the AGO lacked authority to bring 

them. By that time, the AGO had filed an amended complaint adding a 

fourth count against ABOR and Creer. Count IV alleged several components 

of the transaction violated the Arizona Constitution’s Gift Clause and 

constituted an illegal payment of public money, which the AGO is 

empowered to police. See A.R.S. § 35-212. After substantial discovery, the 

AGO and ABOR filed cross motions for summary judgment on ABOR’s 

contention that a statute of limitations barred Count IV. 
STATE, et al. v. ABOR, et al.

Opinion of the Court

4

¶8 After hearing argument, the tax court granted summary 

judgment in ABOR’s favor. The court ruled Count IV was untimely because 

the AGO had actual knowledge more than one year before filing the 

amended complaint that ABOR would spend public funds to construct the 

conference center. As the court stated, “[n]ot only did [the AGO] have 

enough information to trigger a duty to investigate, [it] was investigating a 

Gift Clause claim involving the ABOR/Omni Deal more than a year before 

it filed the instant claim.” The tax court also held Count IV did not relate 

back to the filing of the original complaint. 

¶9 The tax court issued its final judgment in February 2020. In 

that judgment, the court dismissed the AGO’s claim against Creer on the 

basis he could not be personally liable for any violation of A.R.S. § 35-212. 

The court awarded ABOR and Creer $979,758 in attorneys’ fees and 

$2,356.62 in taxable costs. The AGO timely appealed, and we have 

jurisdiction under A.R.S. § 12-2101(A)(1). 

DISCUSSION

¶10 The AGO argues the tax court erred in granting summary 

judgment to ABOR on the Gift Clause claim, erred in dismissing the three 

claims in the original complaint, and awarded excessive attorneys’ fees. 

I. Summary Judgment on the Gift Clause Claim

¶11 We review the tax court’s grant of summary judgment de novo. 

Calpine Const. Fin. Co. v. Ariz. Dep’t of Revenue, 221 Ariz. 244, 247, ¶ 12 (App. 

2009). 

A. Statute of Limitations

¶12 The tax court ruled Count IV was untimely under the one-year 

limitations period for claims against public entities. See A.R.S. § 12-821. The

AGO contends the tax court incorrectly barred Count IV under the one-year 

limitations period because A.R.S. § 35-212(E) gives the AGO five years to 

sue after an illegal payment is ordered. We review issues of statutory 

interpretation de novo. Id.

¶13 Under § 35-212(E),

An action brought pursuant to this article is 

subject to title 12, chapter 7, article 2. If the 

action is brought by the attorney general, the 

action must be brought within five years after 
STATE, et al. v. ABOR, et al.

Opinion of the Court

5

the date an illegal payment was ordered and 

[A.R.S.] § 12-821.01 does not apply to the 

action.

(Sections 12-820 to -826 fall within title 12, chapter 7, article 2). The AGO

relies only on the second sentence of § 35-212(E). But the first sentence of § 

35-212(E) expressly subjects any action to enjoin illegal payments to chapter 

7, article 2 of Title 12, which includes the one-year limitations period for 

suits against public entities and employees. See A.R.S. § 12-821. The second 

sentence is a statute of repose (not a statute of limitations) which bars any 

suit by the AGO filed more than five years after an illegal payment is 

ordered. See A.R.S. § 35-212(E). “[S]tatutes of repose differ in purpose and 

operation from statutes of limitations.” Albano v. Shea Homes Ltd. P’ship, 227 

Ariz. 121, 127, ¶ 23 (2011). Statutes of limitations begin running “after an 

injury occurs and is (or reasonably should have been) discovered . . . But 

a statute of repose is intended to establish a limit beyond which no suit may 

be pursued and sets a period of time within which claims must be brought 

regardless of when the cause of action may accrue.” Id. (internal quotations 

and citations omitted).

¶14 The AGO argues § 12-821 does not apply to any claim brought 

by the attorney general and contends such claims are only subject to the 

five-year period specified in the second sentence of § 35-212(E). When 

construing two statutes, we will try to harmonize and give effect to all their 

provisions. State v. Bowsher, 225 Ariz. 586, 589, ¶ 14 (2010). Section 35-212(E) 

first explicitly invokes the article in Title 12, which contains the generally 

applicable limitations period for claims against public entities and 

employees. It then provides a single exception from Title 12 for claims 

brought by the attorney general: the notice of claim statute. See A.R.S. § 12-

821.01. Thus, by its plain language, a suit initiated by the AGO to invalidate 

an illegal payment of public funds remains subject to each of the other 

provisions within §§ 12-820 to -826. Applying that principle here, Count IV

is subject to the one-year limitations period in § 12-821.

B. Accrual

¶15 The AGO next argues Count IV was timely because it accrued

within one year of filing the amended complaint. As pertinent here, a claim 

accrues when a reasonable person would have been on notice to investigate. 

See Cruz v. City of Tucson, 243 Ariz. 69, 72, ¶ 8 (App. 2017). See A.R.S. § 12-

821.01(B) (“For the purposes of this section, a cause of action accrues when 

the damaged party realizes he or she has been damaged and knows or 

reasonably should know the cause, source, act, event, instrumentality or 
STATE, et al. v. ABOR, et al.

Opinion of the Court

6

condition that caused or contributed to the damage.”). The AGO first 

questioned whether ABOR’s commercial development implicated the Gift 

Clause on January 11, 2018, when senior AGO attorneys circulated an 

internal legal memorandum and an opinion editorial on the topic. And one 

of the AGO’s attorneys specifically called the transaction “pretty 

suspicious.” By that time, term sheets outlining the transaction were 

publicly accessible and the finalized option agreement, executed in 

February 2018, contained all the provisions the AGO would later challenge. 

On this record, the AGO had notice to investigate any Gift Clause claim 

long before April 3, 2018 (one year before the AGO filed its amended 

complaint). 

¶16 The AGO argues, however, that when the claim accrued is a 

question of fact and the tax court erred in denying discovery to address 

whether ABOR’s conduct tolled the limitations. Though juries normally 

decide when a claim accrues as a factual matter, summary judgment is 

appropriate when no genuine issue of material fact exists, and the questions

can be resolved on the law. See Doe v. Roe, 191 Ariz. 313, 323, ¶ 32 (1998); see 

also Thompson v. Pima Cnty., 226 Ariz. 42, 47, ¶ 14 (App. 2010). And a court 

may properly enter summary judgment when the plaintiff cannot 

reasonably justify its failure to investigate. See Walk v. Ring, 202 Ariz. 310, 

316, ¶ 23 (2002). 

¶17 To be sure, the AGO did not obtain all documents related to 

the transaction contemplated between Omni and ABOR until after April 3, 

2018. But the AGO undisputedly knew about the transaction and could 

have asked for copies of the agreements before that date. Indeed, the AGO

affirmatively opted against requesting copies of the documents out of a 

desire—as one AGO attorney put it—not to “poke the bear.” The tax court

thus appropriately determined Count IV’s accrual date as a matter of law. 

¶18 The tax court allowed limited discovery into whether the 

AGO knew or should have known enough to investigate a claim under the 

Gift Clause. In doing so, the court denied the AGO’s request for ABOR’s 

“entire file on the Omni deal, including deal drafts and communications.” 

The AGO argued ABOR officials made public statements concealing the 

true nature of the Omni agreements, the file might contain evidence ABOR 

fraudulently concealed details of those agreements, and ABOR’s 

concealment would have tolled the statute of limitations. But the court

noted the AGO already possessed enough evidence to raise the argument 

in summary judgment briefing. 
STATE, et al. v. ABOR, et al.

Opinion of the Court

7

¶19 The AGO does not specify a basis on which this court could 

conclude the tax court abused its discretion by denying the AGO’s request 

for ABOR’s “entire file” on the transaction. See State v. Connor, 215 Ariz. 553, 

557, ¶ 6 (App. 2007) (abuse of discretion standard applies to review of 

discovery rulings). We find no abuse of discretion here.

C. Relation Back 

¶20 The AGO also argues Count IV was timely because it relates 

back to the filing of the original complaint. Count IV relates back if it arises 

out of the same conduct, transaction, or occurrence set forth in the original 

complaint. See Ariz. R. Civ. P. 15(c). We review the interpretation of a court 

rule de novo. Flynn v. Campbell, 243 Ariz. 76, 80, ¶ 7 (2017). Rule 15(c) seeks

“to ameliorate the effect of the statute of limitations.” Id. at ¶ 10. 

¶21 An amended claim that introduces new facts may relate back 

if those facts relate to the transaction at issue in the original pleading. See 

Servs. Holding Co. v. Transamerica Occidental Life Ins. Co., 180 Ariz. 198, 208 

(App. 1994). Likewise, an amendment that changes a claimant’s legal theory 

may relate back if “the factual situation . . . remains the same and has been 

brought to the defendant’s attention by the original pleading.” Marshall v. 

Superior Ct., 131 Ariz. 379, 383 (1982). But an amendment does not relate 

back if it “seeks relief with respect to a transaction or event which was not 

the basis of the original complaint.” Id. (citations omitted).

¶22 The AGO contends Count IV should relate back because it 

arises out of the overall ABOR-Omni transaction the AGO challenged in the 

original complaint. We disagree.

¶23 Our supreme court’s decision in Barnes v. Vozack, 113 Ariz. 269 

(1976), illustrates the distinction between an amended claim based on the 

same transaction or event and an amended claim based on a different 

transaction or event. The plaintiff in Barnes originally alleged the 

defendants committed common-law fraud when they sold him stock. Id. at 

271. The plaintiff later amended his complaint to add two claims. Id. The 

first new claim alleged the defendants’ misrepresentations also violated a 

statute barring fraud in the sale of stock. Id. The second claim alleged the 

defendants made misrepresentations in violation of another statute when 

they applied to the state for an exemption permitting the stock sale. Id. The 

court held the first new claim related back but the second did not. Id. at 272. 

The statutory stock-fraud claim relied on the same facts as the common-law 

fraud alleged in the original complaint. Id. But the exemption filing at issue 

in the second new claim was not mentioned in the original complaint, and 
STATE, et al. v. ABOR, et al.

Opinion of the Court

8

the statute on which that claim was based did not apply to 

misrepresentations made in the sale of stock. Id. “Although a fraudulent 

practice, [the misrepresentations made in the exemption filing were] not a 

part of the same conduct, transaction or occurrence which was the basis for 

the original complaint for fraud in the sale of stock.” Id. 

¶24 The amendment did not necessarily relate back under Rule 

15(c)(1) simply because Count IV asserted a claim tangentially related to 

those alleged in the AGO’s original complaint. Like the second new claim 

in Barnes, Count IV alleged facts not pled in the original complaint and, 

based on those facts, introduced a new claim based on legal authorities also

absent in the original complaint. 

¶25 Counts I, II, and III alleged the deal effectively constituted 

ABOR-approved tax evasion. Count I claimed the for-profit enterprise did 

not qualify for tax-exempt status under any statutory or constitutional 

exemption. Count II claimed ABOR exceeded its statutory authority by 

conveying property to avoid taxes. Count III claimed the property should 

carry ad valorem taxes because ABOR is not “receiving and holding” the 

property as required by § 15-1625, which allows ABOR to enter into leases 

and long-term leases “for the benefit of this state and for the use of the 

institutions under its jurisdiction.” A.R.S. § 15-1625(B)(4). The AGO thus 

crafted each original claim to address the property’s tax-exempt status and 

the State’s potentially lost/uncollectable tax revenue. 

¶26 Count IV did not turn on the alleged diversion of property tax 

revenues, the concern articulated throughout the original complaint. 

Rather, Count IV centered on elements of the overall ABOR-Omni 

transaction that were not at issue — let alone mentioned — in the original 

complaint. The AGO’s amended complaint introduced 17 pages of 

additional facts in support of its new claim, including that ABOR agreed to 

contribute $19.5 million toward Omni’s construction of the conference 

center and agreed to build a parking garage with more than 200 spaces

dedicated for Omni’s use. The AGO alleged that ABOR agreed to accept 

below-market rent payments from Omni for the leased property. And the 

AGO also argued that the “additional rent” Omni agreed to pay ABOR 

cannot be considered a public benefit because those payments would have 

been otherwise collected as ad valorem taxes.

¶27 To prove Count IV, the AGO would have to show that those 

elements of the transaction lacked a public purpose or the consideration 

received by ABOR was disproportionate to what it agreed to give Omni. See 

Cheatham v. DiCiccio, 240 Ariz. 314, 318, ¶ 10 (2016). Those are different 
STATE, et al. v. ABOR, et al.

Opinion of the Court

9

inquiries than the implications of tax evasion and misuse of ABOR’s

authority that underlay Counts I, II, and III.

¶28 In essence, although the amended complaint introduced new 

facts relating to the ABOR/Omni deal raised in the original complaint, the 

operative facts supporting Count IV (ABOR’s direct and indirect payments 

to Omni) do not fall within that factual overlap. We agree with the tax court 

that Count IV does not relate back to the original complaint and affirm entry 

of summary judgment dismissing Count IV against ABOR and Creer.

II. Dismissal of Counts I, II, and III

¶29 The AGO also challenges the tax court’s dismissal of Counts I, 

II, and III based on its conclusion that the AGO lacked statutory authority 

to bring the claims. We review dismissal of a claim under Rule 12(b)(6) de 

novo. Shepherd v. Costco Wholesale Corp., ___ Ariz. ___, ___, ¶ 11, 482 P.3d 

390, 392 (2021).

¶30 In Count I, the AGO claimed ABOR abused its tax-exempt 

status and improperly diverted property tax revenues. The AGO believes it 

has independent authority to bring that claim pursuant to A.R.S. § 42-

1004(E) (authorizing AGO to enforce payment of taxes). But any property 

owned by ABOR is exempt from taxation. Ariz. Const. art. 9, § 2(1); see also 

City of Tempe v. Del E. Webb Corp., 13 Ariz. App. 597, 598 (App. 1971). Taxes 

are levied upon land itself and not its separate legal interests; any property 

held by ABOR remains tax-exempt. See Recreation Ctrs. of Sun City, Inc. v. 

Maricopa Cnty., 162 Ariz. 281, 288 (1989). The hotel and conference center 

are thus tax-exempt. We agree with the tax court that our constitution’s

exemption from taxation attaches unconditionally to all federal, state, 

county, and municipal property. Because the property is and will remain 

tax-exempt, the AGO is left without a tax provision to enforce. The court 

thus did not err in dismissing Count I. 

¶31 The AGO claims to have independent authority to bring

Counts II and III under the quo warranto statute. In A.R.S. § 12-2041, the AGO

is authorized to bring an action “against any person who usurps, intrudes 

into or unlawfully holds or exercises any public office or any franchise 

within this state.” In Count II, the AGO accused ABOR of “unlawfully 

usurping at least two different franchises of the State” by making a 

conveyance (the lease) to evade taxes. Counts II and III also alleged ABOR 

exceeded its authority to enter into leases. But § 15-1625(B)(4) empowers

ABOR to “[p]urchase, receive, hold, make and take leases and long-term 
STATE, et al. v. ABOR, et al.

Opinion of the Court

10

leases of . . . real and personal property for the benefit of this state and for 

the use of the institutions under its jurisdiction.”

¶32 More importantly, the quo warranto statute enables the AGO

to challenge a person’s right to hold office but not how that person exercises

that office’s powers. See State ex rel. Woods v. Block, 189 Ariz. 269, 274 (1997).

Because the AGO lacked authority under the quo warranto statute to bring 

Counts II and III, the tax court did not err in dismissing them.

III. Attorneys’ Fees

¶33 Finally, the AGO objects to the tax court’s fee award, arguing 

broadly that the award is excessive. Under A.R.S. § 12-348.01, the successful 

party in a lawsuit between governmental entities is entitled to reasonable 

attorneys’ fees. We review fee awards for an abuse of discretion and will 

affirm if any reasonable basis supports the court’s decision. City of Tempe v. 

State, 237 Ariz. 360, 367, ¶ 28 (App. 2015). Once ABOR established an 

entitlement to fees, the burden shifted to the AGO to show that ABOR’s fee 

request was improper or unreasonable. See id. at 368, ¶ 32. 

¶34 The AGO presents to us the same broad arguments it made to 

the tax court. The tax court was unpersuaded by the AGO’s contention that 

ABOR’s attorneys charged an excessive hourly rate. We are similarly 

unpersuaded. The State Bar survey cited by AGO fails to prove ABOR’s 

attorneys were unreasonably overpaid. The survey only shows that 

ABOR’s attorneys charge (much) more than average, hardly unsurprising

for attorneys the tax court described as “at or near the top of the bar.” 

¶35 The AGO could have objected to particular line items or 

specific categories of time entries in ABOR’s billing records. Instead, the 

AGO invited the tax court to determine what number of billed hours were 

reasonable because “it is impracticable [for the AGO] to tease out what a 

reasonable number of hours would be for this assignment.” But the AGO

carries the burden to establish the unreasonableness of ABOR’s fee request,

and it cannot shift that burden onto the court. The AGO simply failed to 

meet its burden in the tax court. And it provided us with no analysis of how

the tax court abused its discretion. We will not upset the tax court’s ruling. 
STATE, et al. v. ABOR, et al.

Opinion of the Court

11

CONCLUSION

¶36 We affirm the tax court’s judgment. ABOR requests attorneys’

fees under § 12-348.01. Creer requests attorneys’ fees under the same section 

and A.R.S. § 12-349(A)(1). We deny Creer’s request under § 12-349(A)(1) but 

otherwise grant these requests for reasonable fees upon compliance with 

ARCAP 21.