IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

EARLE INVESTMENTS, LLC, an 

Arizona limited liability, 

Plaintiff/Counterdefendant/Appellee,

v.

SOUTHERN DESERT MEDICAL CENTER 

PARTNERS, an Arizona general partnership, 

Defendant/Counterclaimant/Appellant.

No. 1 CA-CV 15-0507

Appeal from the Superior Court in Maricopa County

No. CV2013-015653

The Honorable David O. Cunanan, Judge

AFFIRMED IN PART, REVERSED AND REMANDED IN PART

COUNSEL

Combs Law Group, PC, Phoenix

By Christopher A. Combs, Alexandra E. Fugate

Counsel for Plaintiff/Counterdefendant/Appellee

Dickinson Wright, PLLC, Phoenix

By Michael R. Scheurich, Maggie E. Wood

Counsel for Defendant/Counterclaimant/Appellant 
EARLE v. SOUTHERN PARTNERS

Opinion of the Court

2

OPINION

Presiding Judge Diane M. Johnsen delivered the opinion of the Court, in 

which Judge Jon W. Thompson and Chief Judge Michael J. Brown joined. 

J O H N S E N, Judge:

¶1 We address in this case the effect of broadly written 

subordination agreements a landowner executed in support of deeds of 

trust that secured loans made to the owner of some commercial 

condominium units situated on the owner's land. We conclude the 

subordination agreements functioned as conveyances of the landowner's 

interest in the encumbered property, and vacate and remand the superior 

court's judgment to the extent it is inconsistent with that conclusion. 

FACTS AND PROCEDURAL BACKGROUND

¶2 In January 1974, Duane P. Alleman, on behalf of Du Paul Ltd. 

("Du Paul"), conveyed by warranty deed a fee-simple interest in land

located in Tempe to Arizona Title Insurance and Trust Company ("Arizona 

Title"). In 1976, Arizona Title then leased a portion of the land to Duane P. 

Alleman, acting on behalf of Southern Desert Medical Center, Inc., "Phase 

II" ("SDMC Inc.").

¶3 The 50-year lease stated that SDMC Inc. could use the land 

"only for the purpose of operating and maintaining offices for medical and 

dental and related services." SDMC Inc. was to pay all taxes and 

assessments and rent of $1,250 per month. Additionally, the lease provided 

it was "UNDERSTOOD AND AGREED that the lease-hold interest of the 

Lessee may be enrolled in a Horizontal property Regime" pursuant to 

Arizona Revised Statutes ("A.R.S.") section 33-551 (1976). The lease 

specified that SDMC Inc. could convey "Units" of its leasehold estate under 

such a horizontal property regime. Each such conveyance would include a 

proportionate interest in the "Common Areas" of the horizontal property 

regime. The lease provided that Unit owners would be responsible for their

respective shares of rent, taxes and assessments due under the lease. The

lease further set out remedies available to Arizona Title as lessor in the 

event of a breach by a Unit owner. Among other things, Arizona Title could 

"terminate this Lease as to that portion of the premises on which the 

leasehold estate is owned by such [Unit owner]."
EARLE v. SOUTHERN PARTNERS

Opinion of the Court

3

¶4 The lease also addressed respective rights and obligations 

with respect to security interests. First, SDMC Inc. agreed that its leasehold 

interest would be subordinate to any mortgage or deed of trust placed on 

Arizona Title's interest in the property, with the proviso that the lease 

would remain in full force and effect notwithstanding any default. The 

lease also addressed the possibility that an owner of a Unit might want to 

post its interest as security for a loan:

Lessor may, in its sole discretion, but it shall not be obligated 

to, subordinate its interest in portions of the real estate to the 

lien of a mortgage or Deed of Trust granted of [sic] the grantee 

of the leasehold estate in one or more Units under a 

Declaration of Horizontal Property Regime. In such event, 

however, the subordination shall be only as to the property 

upon which the leasehold estate is owned by such grantee, 

and appurtenant interest in the Common Areas.

¶5 On the same day it entered into the lease with Arizona Title, 

SDMC Inc. established a horizontal property regime on the parcel. The 

Declaration that established the regime recited that Arizona Title was the 

owner of fee-simple title to the land and that, pursuant to its lease, SDMC 

Inc. was "the owner of the leasehold estate in and to the aforedescribed 

property, subject to the provisions of said Lease." The Declaration further 

recited that SDMC Inc. was constructing on the parcel a professional 

building project that was to be known as Southern Desert Medical Center, 

Phase II, which "shall be held, sold and conveyed" subject to the 

Declaration. The regime was to last until the 50-year lease from Arizona 

Title expired.

¶6 As provided in the Declaration, SDMC Inc. was to divide the 

project into "Units and "Common Elements." The Declaration defined 

"Unit" to mean "a separate leasehold estate, consisting of the space bounded 

by and contained within the perimeter walls, floors, ceilings and windows 

of each Unit." The Declaration specified that "Common Elements" and 

"Common Area" were "synonymous," and meant "each multi-office 

structure, except for the Units, the earth upon which the structure is located 

and the air space above, the interior surface of the ceiling of the structure," 

and, inter alia, all bearing walls, roofs, ceilings, floors, foundations, storage 

spaces, patios, lobbies, carports, parking spaces, pipes, wires. Further, 

ownership of a "condominium" within the meaning of the Declaration 

would include "the leasehold interest in a Unit," along with an undivided 

interest in the Common Areas. Finally, the Declaration specified that each 

condominium was "a separate parcel of real property which may be 
EARLE v. SOUTHERN PARTNERS

Opinion of the Court

4

conveyed, transferred and encumbered in the same manner as any other 

parcel of real property, independently of all other parts of the property, 

subject only to the provisions of this Declaration and the underlying 

Lease."1

¶7 On June 28, 1977, Duane P. Alleman, acting on behalf of 

SDMC Inc., conveyed to Duane P. Alleman, in his personal capacity, two 

suites of condominiums under the regime, designated as numbers 1 

through 34 of Building "G" and numbers 40 through 59 of Building "I." The

warranty deed described the real property to be conveyed as the Units, 

"TOGETHER with an undivided . . . interest in and to the Leasehold Estate

in and to the subject Real Property, and TOGETHER with [an undivided] 

interest in the common areas," all as set forth in the Declaration. Two days

later, to secure financing for tenant improvements, Alleman granted a 

lender a security interest in each of the two suites through identical deeds 

of trust. The same day, Arizona Title, as owner/lessor, and SDMC Inc., as 

lessee, executed two identical Subordination Agreements. The particulars 

of the Subordination Agreements are set out infra ¶¶ 15, 23, 25, 29.

¶8 Two years later, Arizona Title conveyed to Du Paul by special 

warranty deed its fee-simple title in and to the land that was subject to the 

lease between Arizona Title and SDMC Inc. On the same day, Du Paul

conveyed the same interest to Southern Desert Medical Center Partners 

("Partners") by warranty deed. At that point, therefore, Partners became 

the owner/lessor of the parcel of land, subject to whatever rights, benefits 

or obligations were imposed or granted by the Subordination Agreements. 

¶9 In July 1997, the lender foreclosed on the deeds of trust 

securing construction of Alleman's two suites of Units. The condominiums 

were sold at a trustee's sale, and later conveyed to a second entity, which, 

 

1 Consistent with the Declaration, ownership of a condominium 

generally means ownership of a horizontal layer of cubic content space, 

subject to the owner's exclusive control, together with a fractional interest

held in common with other unit owners in the common elements. Makeever 

v. Lyle, 125 Ariz. 384, 386 (App. 1980), citing former A.R.S. § 33-553(3). The 

common elements include "the land, the foundations, floors, the exterior 

walls of each [unit], ceilings and roofs, and in general all that portion of the 

property other than that which is subject to the exclusive ownership and 

control of an individual [unit] owner." 125 Ariz. at 386, citing former § 33-

551(6).
EARLE v. SOUTHERN PARTNERS

Opinion of the Court

5

on November 7, 2001, conveyed the Units by warranty deed to appellee,

Earle Investments, LLC ("Earle"). 

¶10 Even though it was an owner of Units ostensibly subject to the 

Lease, Earle paid no rent to Partners, the owner/lessor, until 2012, when it 

agreed to pay six years' back rent of $35,481.07 for Units 1 through 34 of 

Building "G" and $20,871.21 for Units 40 through 59 of Building "I." 

Thereafter, Earle made rent payments for several months, then stopped, 

asserting that, under the Subordination Agreements and as a result of the 

foreclosure sales in July 1997, it held a fee simple interest in the land 

occupied by the Units. It argued that when the lender foreclosed, the 

owner/lessor's fee-simple interest in the land on which the Units were 

situated was extinguished.

¶11 In November 2013, Earle filed a complaint against Partners, 

asking the court, among other things, to quiet title in favor of Earle. In due 

course, the superior court granted Earle's motion for summary judgment, 

finding Earle had "good and valid and inclusive of full fee simple title" in 

"Units 1 through 34, inclusive, of Building G, and Units 40 through 59, 

inclusive, of Building I." The court also ruled that Earle's title to the Units 

was not subject to the Lease, and therefore "enjoined, estopped, and barred 

[Partners] from asserting any claim, estate, right, title, or interest 

whatsoever in or to the land or premises, or to any part thereof, adverse to 

. . . Earle."

¶12 Partners timely appealed. We have jurisdiction pursuant to 

Article 6, Section 9, of the Arizona Constitution and A.R.S. § 12-2101(A)

(2017).

2

DISCUSSION

A. Legal Principles.

¶13 Summary judgment is appropriate when "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). We review a grant of summary 

judgment de novo, viewing the facts and inferences drawn therefrom in the 

light most favorable to the party against which judgment was entered. 

Corbett v. Manorcare of Am., Inc., 213 Ariz. 618, 621-22, ¶ 2 (App. 2006). 

 

2 Absent material revision after the relevant date, we cite a statute's 

current version.
EARLE v. SOUTHERN PARTNERS

Opinion of the Court

6

¶14 The interpretation of a contract is a matter of law, which we 

review de novo. Rand v. Porsche Fin. Servs., 216 Ariz. 424, 434, ¶ 37 (App. 

2007). In interpreting a contract, our purpose is to determine and enforce 

the parties' intent. US W. Commc'ns, Inc. v. Ariz. Corp. Comm'n, 185 Ariz. 

277, 280 (App. 1996). In determining the parties' intent, we "look to the 

plain meaning of the words as viewed in the context of the contract as a 

whole." United Cal. Bank v. Prudential Ins., 140 Ariz. 238, 259 (App. 1983).

B. Subordination Agreement or Deed of Trust.

¶15 Each of the two Subordination Agreements expressly 

provided that the related deed of trust "shall unconditionally be and remain 

at all times a lien, charge, and encumbrance upon the Property prior and 

superior to any right, title, or interest in or to the Property of Owner or 

Lessee." Earle argues the Subordination Agreements effectively conveyed 

the owner/lessor's fee-simple interest in the Property; as the current 

owner/lessor, Partners argues the Subordination Agreements encumbered 

only the leasehold estate.

¶16 Our analysis is informed by a handful of cases from other 

jurisdictions, the first being Old Stone Capital Corp. v. John Hoene Implement 

Corp., 647 F. Supp. 916 (D. Idaho 1986), which addressed a question very 

similar to the one here. As here, the lessee had granted a lender a deed of 

trust on its lease interest in some commercial property, and, at the lessee's 

request, the owner/lessor executed a subordination agreement. After the 

lessee defaulted and the lender sought foreclosure, the question was 

whether the owner/lessor had subordinated her fee interest or only her 

lease interest in the property subject to the deed of trust. Id. at 917. The 

owner/lessor argued she agreed to subordinate only her leasehold interest 

in the property, "as that was the only interest which was the subject of the 

leasehold mortgage" that the lessee had executed. Id. As in this case, the 

owner/lessor's argument was that "the subordination agreement could 

only prioritize the interest which [the lender] had, and the only interest 

which it had was in the leasehold." Id. 

¶17 The court agreed with the owner/lessor. It explained that 

"the nature of a subordination is such that the beneficiary of the 

subordination must have a competing interest which, after the 

subordination, becomes senior to that which, before the subordination, was 

the senior interest." Id. at 919. As applied, the only interest the security 

agreement granted the lender in that case was in the lessee's leasehold. 

After the subordination, therefore, the lender's interest in the lease became 

superior to the owner/lessor's interest in the lease. Id. But "[b]y its very 
EARLE v. SOUTHERN PARTNERS

Opinion of the Court

7

nature, the vehicle of subordination could not be used to grant [the lender] 

an interest in the fee." Id. Significantly for our purposes, however, the court 

observed that the lender might have acquired an interest in the 

owner/lessor's fee if the owner/lessor had executed what amounted to a 

mortgage or a deed of trust. Id. There was no dispute in that case that the 

subordination agreement lacked the formalities state law required for a 

mortgage or deed of trust. Id.

¶18 Applying the same logic, the court in Republic National Life Ins. 

v. Lorraine Realty Corp., 279 N.W.2d 349, 357 (Minn. 1979), held that an 

agreement that "[t]he interest of the Lessors in the leased premises . . . shall 

be junior and subordinate to the interest of [the lender]" did not subordinate 

the owner/lessor's fee interest. The court explained, "Ground lessors 

manifestly intended to retain their fee interest, and only if they themselves 

mortgaged the fee would the lessee's mortgagees have priority over the 

fee." Id. at 355.

¶19 In Matthews v. Hinton, 234 Cal. App. 2d 736 (1965), the court 

addressed the same issue but held for the lender because it concluded the 

owner/lessor had joined in the deed of trust. The court began its analysis 

by describing the economics of the situation: "The lessees or sublessees 

might have attempted to put up their tenancy for years as security for 

construction loans. A fee simple estate would be far more attractive 

security to a lender." Id. at 741 (citation omitted). While the relevant 

security agreements in Old Stone and Lorraine did not purport to convey the 

owner/lessor's fee interest, the deed of trust in Matthews did just that: By 

expressly joining with the lessees as "trustor," the owner/lessor "contracted 

directly with the lender, exposing [its] reversionary interest to direct 

liability independently of auxiliary collection attempts against the 

borrowers." Id.

¶20 The court in Travelers Ins. v. Holiday Village Shopping Cemter

Ltd. Par., 931 P.2d 1292 (Mont. 1996), applied a similar analytical framework 

in reversing summary judgment entered in favor of the lender. The 

subordination agreement in that case recited that the lender was "unwilling 

to make said loan or advance funds thereon unless it is assured that the 

[mortgage granted by the lessee] shall be a lien upon the [owner/lessor's] 

fee simple title in the hereinbefore described real property . . . ." Id. at 1295. 

The agreement continued:

WHEREAS, the undersigned [owner/lessor] is willing to 

subordinate its fee simple title to said real property to said 

mortgage and is willing to give such assurance,
EARLE v. SOUTHERN PARTNERS

Opinion of the Court

8

NOW, THEREFORE, in consideration of the making of said 

loan . . . the undersigned hereby subordinates all of its right, 

title and interest in and to said real property to the lien of said 

mortgage and agrees that said mortgage shall continue to be 

a first lien upon said property prior and superior in right to 

any right, title and interest of the undersigned in and to said 

real property.

Id. at 1295.

¶21 The Montana Supreme Court reversed the trial court's entry 

of summary judgment in favor of the lender, holding that the agreement 

was ambiguous. Id. at 1296. In explaining the ambiguity, the court noted 

that although the subordination agreement recited that the owner/lessor's 

fee interest was to be "subordinated," it contained no language purporting to 

mortgage the property to the lender as security. Id. The court explained, 

"A subordination agreement only dictates the priorities between existing 

interests, for example lien holders – it does not mortgage an interest in the 

property. A mortgage 'is a contract by which specific property is 

hypothecated for the performance of an act, without the necessity of a 

change of possession.'" Id. (citation omitted).

¶22 Applying the principles of these decisions to this case, the first 

question is whether the two Subordination Agreements functioned as

mortgages or deeds of trust that conveyed the owner/lessor's fee interest in 

some property. We say "some property" because the somewhat awkward 

wording of the Subordination Agreements requires our analysis to proceed 

in stages.

¶23 To begin with, the "whereas" clauses at the beginning of each 

of the Subordination Agreements broadly describe facts leading up to 

execution of the document. In particular, the fourth such clause recites that 

"it is a condition precedent to making said loan that the Deed of Trust shall 

unconditionally be and remain at all times a lien, charge, and encumbrance 

upon the Property prior and superior to any right, title, or interest in or to 

the Property of Owner . . . ." But the dispositive language is paragraph (2), 

which states:

The Deed of Trust and the Note, and renewals or extensions 

thereof, shall unconditionally be and remain at all times a lien, 

charge, and encumbrance on the Property prior and superior 

to any right, title, or interest therein of Owner . . . . For the 

purpose of giving effect to this subordination, Owner . . . consent[s]
EARLE v. SOUTHERN PARTNERS

Opinion of the Court

9

to and join[s] in the Deed of Trust and hereby grant[s], transfer[s], 

and assign[s] to the Trustee of the Deed of Trust all right, title, and 

interest of Owner . . . in and to the Property, in trust pursuant to 

the Deed of Trust with the power of sale, it being understood that 

such power of sale shall be exercised only in connection with 

the enforcement of the Deed of Trust.

(Emphasis added.)

¶24 Guided by the authorities discussed above, we hold that by 

agreeing to this provision, the owner/lessor did more than subordinate the

leasehold to the lender; it conveyed all of its right, title and interest, namely 

its fee interest, "in and to the Property" in trust as security for debt. That is 

the effect of the owner/lessor's joining in the deeds of trust and expressly 

"grant[ing], transfer[ring], and assign[ing]" all of its "right, title, and 

interest" to the trustee.3

¶25 Partners argues this conclusion disregards the provision in 

Exhibit A to the subordinations that the conveyances in the deeds of trust

shall be "SUBJECT TO" the lease. Reading the body of the Subordination 

Agreements together with the property description, however, the 

owner/lessor's joinder in the deeds of trust supersedes the "subject to" 

provision in the property description. That is, Exhibit A acknowledges that 

the property the Unit owner is conveying as security is subject to the lease; 

by joining in the deeds of trust and conveying all of its "right, title, and 

interest" in the property, the owner/lessor conveyed its fee-simple interest 

in the described property.

¶26 Partners further argues that the Subordination Agreements 

cannot be construed as deeds of trust because they lack a sufficient legal 

description. As Earle points out, however, Exhibit A to the Subordination 

Agreements contains a legal description of the property conveyed. Those 

documents describe the property by reference to the Declaration of 

Horizontal Property Regime and specify the docket and page number on 

which the description is recorded. The Subordination Agreements

therefore adequately described the property. See Wang Elec., Inc. v. Smoke 

Tree Resort, LLC, 230 Ariz. 314, 324, ¶ 33 (App. 2012).

 

3 Given the passage of time, neither party offers any extrinsic evidence 

of the intent of the parties to the Subordination Agreements; nor does 

Partners argue there are disputed issues of fact as to their meaning.
EARLE v. SOUTHERN PARTNERS

Opinion of the Court

10

¶27 For these reasons, we hold that by executing the documents 

labeled "Subordination Agreement," the owner/lessor conveyed its fee 

interest "in and to the Property," in trust as security for the Unit-owner's

debt.

C. The "Subject Real Property."

¶28 The conclusion that the Subordination Agreements effectively 

conveyed the owner/lessor's fee interest "in and to the Property" leaves 

open precisely what "Property" was conveyed. Earle argues the superior 

court correctly ruled that when the lender foreclosed, it took fee title to the 

land beneath the Units that secured the debt. The cases cited above do not 

answer this question because they involved simple commercial leases, not 

commercial condominiums as are at issue here.

¶29 Returning to the language of the Subordination Agreements, 

the key provision is, as we have said, the owner/lessor's consent and 

joinder in the deeds of trust so as to "grant, transfer, and assign to the 

Trustee of the Deed of Trust all right, title, and interest of Owner . . . in and 

to the Property, in trust pursuant to the Deed of Trust . . . ." The 

Subordination Agreements define "the Property" to mean the property 

described in an attached "Exhibit A." In turn, Exhibit A to each of the 

Subordination Agreements describes the Property as: (1) the specified 

"Units" as recorded in the Declaration; (2) "TOGETHER with an undivided 

[fractional] interest in and to the Leasehold Estate in and to the subject Real 

Property," and (3) "TOGETHER with a [fractional] interest in the common 

areas and facilities as set forth in said Declaration." (Emphasis added.)

¶30 None of the three elements of the described "Property" 

includes the ground beneath any particular Unit or Units. Earle argues that 

the second item – the "interest in and to the Leasehold Estate in and to the 

subject Real Property" means the land beneath the Units it owns. But that

interpretation unduly stretches the language of the property description: 

The interest specified in Exhibit A is an undivided fractional interest in "the 

Leasehold Estate in and to the subject Real Property." Thus, when the 

lender foreclosed, it received (1) the Unit-owner's interest in the Units (as 

defined by and subject to the Declaration), (2) an undivided fee-simple 

interest in the leasehold estate "in and to the subject Real Property," and (3) 

an undivided fee-simple interest in the Common Areas and facilities, as set 

forth in the Declaration.

¶31 In support of the superior court's ruling that the lender took 

fee-simple title to the land beneath the Units subject to the deeds of trust, 
EARLE v. SOUTHERN PARTNERS

Opinion of the Court

11

Earle points to the provision in the lease, supra ¶ 5, stating that the 

owner/lessor "may . . . subordinate its interest in portions of the real estate" 

to a Unit-owner's lender. As Earle notes, the lease continues, "In such event, 

however, the subordination shall be only as to the property upon which the 

leasehold estate is owned by such grantee, and the appurtenant interest in 

the Common Areas."

¶32 The lease provision Earle cites reserves the owner/lessor's 

right to subordinate on certain terms, but does not preclude the 

owner/lessor from agreeing to subordination on terms less favorable to a 

lender. Under the circumstances, we cannot construe the lease provision to 

broaden the express terms of the Subordination Agreements. If the parties 

had intended that the owner/lessor would subordinate its interest in "the 

property upon which the leasehold estate is owned" by a Unit-owner, we 

presume they would have so stated in the Subordination Agreements. The 

reference in Exhibit A to an "undivided interest," which is incorporated into 

the Subordination Agreements by the Subordination Agreements'

references to the exhibit as defining the encumbered property, cannot be 

read to refer to a fee-simple interest in the land on which any specific Units 

are situated.

¶33 In summary, we conclude that in executing the Subordination 

Agreements, the owner/lessor conveyed to the lender, in trust as security 

for repayment of the loan to the Unit-owner, an undivided fractional feesimple interest in the entire parcel of property that was the subject of the 

Lease. In foreclosing on the Deed of Trust, the lender therefore succeeded 

to an undivided fractional fee-simple interest in that property, and after 

foreclosure, the lender owned the relevant Units and the associated 

undivided fractional fee-simple interests in the leasehold and "Common 

Areas" and facilities. Since its fee-simple interest was free and clear of the 

owner/lessor's interest in the leasehold, the lender and its assigns were not 

subject to the lease or any rent obligation. But they did not gain a fee-simple 

interest in any particular portion of the land subject to the Lease; instead, 

their interest is an undivided fractional fee-simple interest in the entire 

subject property. Moreover, just as the owner/lessor's interests were 

subject in the first instance to the Declaration, the interests to which the 

lender took title (and which now are owned by Earle) remain subject to the 

Declaration. Accordingly, Earle is subject to the obligations spelled out in 

the Declaration (other than the obligation to pay rent under the lease).
EARLE v. SOUTHERN PARTNERS

Opinion of the Court

12

D. Ratification.

¶34 We have held that upon foreclosure, the lender obtained a feesimple interest in the property, unencumbered by the lease. Partners 

argues, however, that Earle ratified the lease by making rent payments. But 

the cases on which Partners relies do not support the proposition that a 

lease obligation may be created in the first instance by payments 

denominated as rent. See All-Way Leasing, Inc. v. Kelly, 182 Ariz. 213, 217

(App. 1994) (rejecting contention that wife had ratified contract executed by 

husband, so as to bind the community); Young Mines Co. v. Citizens' State 

Bank, 37 Ariz. 521, 528-29 (1931) (ratification is "subsequent approval by a 

principal of a previous unauthorized act by one claiming to act as an 

agent"). Partners also cites Restatement of Contracts (Second) § 380 (1981), 

but that provision concerns acts by which one may ratify a contract that is 

voidable. See id. ("Loss of Power of Avoidance by Affirmance"). As we 

have said, upon the lender's foreclosure, the lease was not voidable as to 

the lender and its assigns, but void.4

CONCLUSION

¶35 For the reasons stated, we affirm the judgment to the extent it 

provides that Earle owns the Units and an undivided fractional fee-simple 

interest in the property identified in the Lease and is not subject to the 

obligations of the Lease. We otherwise reverse and remand the judgment 

to the superior court so that it may enter a revised judgment consistent with 

this opinion. Because neither side has substantially prevailed in this appeal, 

we deny both sides' requests for fees and costs. See A.R.S. §§ 12-341.01

(2017), -342 (2017).

 

4 Our decision to address the ratification issue on the merits renders 

moot Partners' contention that the superior court erred by declining to 

consider Partners' reply in support of its second motion for reconsideration.