Court Opinion

ID: 6332909
Source: CourtListenerOpinion
Date Created: 2022-04-19 17:02:12.373512+00
Date Added: 2024-06-11T09:23:23.984089
License: Public Domain

IN THE

    SUPREME COURT OF THE STATE OF ARIZONA

                       STATE OF ARIZONA, ET AL.,
                          Plaintiffs/Appellants,

                                   v.

                  ARIZONA BOARD OF REGENTS, ET AL.,
                        Defendants/Appellees.

                          No. CV-21-0134-PR
                          Filed April 5, 2022

          Appeal from the Superior Court in Maricopa County
            The Honorable Christopher T. Whitten, Judge
                         No. TX2019-000011
               AFFIRMED IN PART & REMANDED

             Opinion of the Court of Appeals, Division One
                       251 Ariz. 182 (App. 2021)
                              VACATED

COUNSEL:

Mark Brnovich, Arizona Attorney General, Joseph A. Kanefield, Chief
Deputy and Chief of Staff, Brunn (“Beau”) W. Roysden, III, Solicitor
General, Michael S. Catlett, Deputy Solicitor General, Phoenix; and Brian
M. Bergin (argued), Brent Demmitt, Bergin Frakes Smalley & Oberholtzer
PLLC, Phoenix, Attorneys for State of Arizona and Mark Brnovich

Paul F. Eckstein, Joel W. Nomkin (argued), Shane R. Swindle, Thomas D.
Ryerson, Austin C. Yost, Perkins Coie LLP, Phoenix, Attorneys for Arizona
Board of Regents and John P. Creer
        STATE, ET AL. V. ARIZONA BOARD OF REGENTS, ET AL.
                          Opinion of the Court

Brett W. Johnson, Colin P. Ahler, Tracy A. Olson, Snell & Wilmer LLP,
Phoenix, Attorneys for Arizona Board of Regents

David J. Cantelme, D. Aaron Brown, Cantelme & Brown P.L.C., Tempe,
Attorneys for Amicus Curiae Vince Leach

JUSTICE LOPEZ authored the opinion of the Court, in which CHIEF
JUSTICE BRUTINEL, VICE CHIEF JUSTICE TIMMER, and JUSTICES
BOLICK, BEENE, MONTGOMERY, and JUDGE STARING joined. *

JUSTICE LOPEZ, opinion of the Court:

¶1            We consider the scope of three statutes the Attorney General
invoked to challenge an agreement the Arizona Board of Regents (“ABOR”)
entered into with a private company for the latter to construct and operate
a hotel and conference center on ABOR-owned property. We conclude that
(1) to initiate an action under A.R.S. § 42-1004(E), there must be an
applicable tax law to enforce; (2) the Attorney General may bring a quo
warranto action under A.R.S. § 12-2041 to challenge the unlawful
usurpation or exercise of a public franchise; and (3) a public-monies claim
brought by the Attorney General is subject to the five-year statute of
limitations described in A.R.S. § 35-212(E). Accordingly, we affirm the
dismissal of Counts I and II, and remand Counts III and IV to the tax court
for further proceedings.

                            BACKGROUND

¶2           The challenged agreement between ABOR and Omni Tempe,
LLC (“Omni”) became effective on February 28, 2018. The agreement
outlined various terms of what has collectively been referred to as the
“Omni Deal.” The Omni Deal includes construction of a new hotel,
conference center, and parking lot on land owned by ABOR at Arizona State
University’s (“ASU”) Tempe campus. The agreement gave Omni an

*Justice Kathryn H. King has recused herself from this case. Pursuant to
article 6, section 3 of the Arizona Constitution, the Honorable Christopher
Staring, Judge of the Arizona Court of Appeals, Division Two, was
designated to sit in this matter.
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        STATE, ET AL. V. ARIZONA BOARD OF REGENTS, ET AL.
                          Opinion of the Court

option1 to lease the hotel and conference center property from ABOR for
sixty years and to purchase the property from ABOR at the end of the lease
term for a nominal fee. Because property owned by ABOR, as a state entity,
is tax-exempt, Omni would not pay the property taxes a private hotel and
conference center would otherwise pay during the lease term; instead,
Omni would pay ABOR prepaid rent of $5.9 million and annual rent during
the lease term totaling more than $118 million. ABOR also agreed to pay
Omni up to $19.5 million towards constructing the conference center, which
Omni would otherwise fund, in exchange for seven days’ use of the center
annually.

¶3            The Attorney General’s Office ultimately discovered the
Omni Deal. Although the parties dispute when the Attorney General’s
knowledge of the Omni Deal became legally relevant, it is undisputed that
an email thread linking to online articles referring to the Omni Deal as a
bad “tax break” was generated by and between Attorney General’s Office
attorneys on January 11, 2018. The articles suggested that Omni would be
shielded from up to $21 million in taxes that it would otherwise have to pay
the City of Tempe because Omni would be making “payments in lieu of
taxes” to ASU. In the email thread, one assistant attorney general
characterized the “in lieu of” payments as “pretty suspicious.”

¶4             The Attorney General filed a three-count complaint against
ABOR on January 10, 2019, seeking to void the transaction or subject the
property to taxes. Count I alleges that the lease between Omni and ABOR
is subject to taxation because the constitutional exemption from taxation
that ABOR enjoys cannot apply to a commercial enterprise like the Omni
Deal. Counts II and III seek quo warranto relief alleging that ABOR was
unlawfully exercising its official franchise by entering into this lease. On
April 3, 2019, the Attorney General filed an amended complaint adding
Count IV, which seeks to enjoin the illegal payment of public monies under
the Attorney General’s authority as authorized by § 35-212. Specifically,
Count IV alleges that the up to $19.5 million ABOR agreed to contribute
towards the construction of the conference center violates article 9, section
7 of the Arizona Constitution, commonly referred to as the “Gift Clause.”

1
 In its briefing to this Court, ABOR confirmed that Omni has exercised this
option.
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         STATE, ET AL. V. ARIZONA BOARD OF REGENTS, ET AL.
                           Opinion of the Court

¶5            ABOR moved to dismiss Counts I–III, and the tax court
granted those motions after finding that the Attorney General lacked the
authority to bring each claim. ABOR also moved for summary judgment
on Count IV arguing that it was barred by a one-year statute of limitations.
The tax court agreed and ruled that because the claim accrued on
January 11, 2018—the date of the email exchange at the Attorney General’s
Office—and Count IV did not “relate back” to the original complaint, it was
barred for untimeliness. The tax court’s final judgment included an award
to ABOR of $979,758 in attorney fees and $2,356.62 in taxable costs. The
court of appeals affirmed the tax court’s judgment, State v. Ariz. Bd. of
Regents, 251 Ariz. 182, 190 ¶ 36 (App. 2021), and the Attorney General
timely petitioned this Court.

¶6            We granted review to determine whether the Attorney
General is authorized to bring Counts I–III, and whether Count IV was
timely filed. These are issues of statewide importance over which we have
jurisdiction pursuant to article 6, section 5 of the Arizona Constitution.

                                DISCUSSION

¶7           Our constitution limits the Attorney General’s authority to
bring claims as delineated by statute. State ex rel. Brnovich v. Ariz. Bd. of
Regents, 250 Ariz. 127, 130 ¶ 8 (2020); see also Ariz. Const. art. 5, § 9 (“The
powers and duties of . . . [the] attorney-general . . . shall be as prescribed by
law.”).

                                       I.

¶8            We first consider whether the Attorney General had the
authority to bring Counts I–III in his initial complaint against ABOR. We
review an order granting a motion to dismiss for failure to state a claim
under Arizona Rule of Civil Procedure 12(b)(6) de novo. Cox v. Ponce ex rel.
Cty. of Maricopa, 251 Ariz. 302, 304 ¶ 7 (2021).

                                       A.

¶9           Count I seeks declaratory and injunctive relief against ABOR.
The Attorney General asserts that the ABOR-owned property on which the
Omni hotel and conference center is to be built is subject to taxation; thus,
the property must either be taxed or the agreement voided. The Attorney

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         STATE, ET AL. V. ARIZONA BOARD OF REGENTS, ET AL.
                           Opinion of the Court

General argues that he has the authority to bring this claim under
§ 42-1004(E), which mandates that the Attorney General “shall prosecute in
the name of this state all actions necessary to enforce this title [42] and title
43.” The referenced titles include Arizona’s tax laws. The tax court
dismissed Count I for lack of authority because there was no title—i.e., tax—
for the Attorney General to “enforce.” The court of appeals affirmed, and
we agree.

¶10             The Attorney General does not dispute that state property is
exempt from taxation. See Ariz. Const. art. 9, § 2(1) (“There shall be exempt
from taxation all federal, state, county and municipal property.” (emphasis
added)). But contrary to the Attorney General’s assertion that ABOR is not
exempt from taxation because it is acting as a “political subdivision” and
not the “state,” this Court has already resolved that ABOR is considered the
“state,” Bd. of Regents of Univs. & State Coll. v. City of Tempe, 88 Ariz. 299, 305
(1960) (“We think it perfectly clear . . . that the Board of Regents may, for all
purposes, be classified as a public agency of the State rather than a private
corporation.”), and its actions do not transmute its state status. Because
ABOR is the “state,” our constitution provides that its property is not
subject to taxation. See Ariz. Const. art. 9, § 2(1); see also City of Tempe v. Del
E. Webb Corp., 13 Ariz. App. 597, 598 (1971) (“[T]he Board of Regents is a
state agency and therefore exempt from taxation.”). Thus, there is no
enforcement action the Attorney General can take under his § 42-1004(E)
authority because there is no tax to enforce.

¶11            Notwithstanding the Attorney General’s inability to identify
an applicable tax law under title 42 or 43 that he is authorized to enforce
here, he argues that because the purpose of the Omni Deal is to evade taxes,
the property leased is subject to taxation. He relies on the Arizona
Constitution, which provides that “[n]o property shall be exempt which has
been conveyed to evade taxation.” Ariz. Const. art. 9, § 2(12). But again,
for a conveyance to be made to evade taxation, there must be a tax to evade
in the first place, and here there is none. Thus, we affirm the dismissal of
Count I.

                                        B.

¶12          The Attorney General filed Counts II–III pursuant to his quo
warranto authority. Both counts allege that ABOR unlawfully usurped or
exercised state franchises by exceeding its statutory authority to

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         STATE, ET AL. V. ARIZONA BOARD OF REGENTS, ET AL.
                           Opinion of the Court

“[p]urchase, receive, hold, make and take leases and long-term leases of and
sell real and personal property for the benefit of this state and for the use of
the institutions under its jurisdiction.” A.R.S. § 15-1625(B)(4). The Attorney
General alleges separate bases for Counts II and III, which we address in
turn, concerning how ABOR exceeded its lawful authority in entering the
Omni Deal.

¶13            Under the quo warranto statute, § 12-2041(A), the Attorney
General may bring an action “against any person who usurps, intrudes into
or unlawfully holds or exercises any public office or any franchise within
this state.” The court of appeals held, and ABOR once again argues, that
our quo warranto statute only allows “the [Attorney General] to challenge
a person’s right to hold office but not how that person exercises that office’s
powers.” Ariz. Bd. of Regents, 251 Ariz. at 189 ¶ 32 (emphasis added). This
interpretation is contrary to the text of the statute, which explicitly
empowers the Attorney General to bring a claim against “any person who
. . . unlawfully holds or exercises” a public office or franchise. § 12-2041(A)
(emphasis added). We decline to interpret § 12-2041(A) in a manner that
would render the word “exercises” superfluous. See Nicaise v. Sundaram,
245 Ariz. 566, 568 ¶ 11 (2019) (“A cardinal principle of statutory
interpretation is to give meaning, if possible, to every word and provision
so that no word or provision is rendered superfluous.”).

¶14            Our interpretation finds contextual support in other quo
warranto sections. See Antonin Scalia & Bryan A. Garner, Reading Law: The
Interpretation of Legal Texts 167 (2012) (“Context is a primary determinant of
meaning.”). For instance, A.R.S. § 12-2045 criminalizes “usurpation” as a
petty offense and defines that offense as “usurping or intruding into or
unlawfully holding an office, franchise or privilege.” Notably, although §
12-2045 otherwise mirrors the language of the quo warranto statute, it does
not mention the unlawful “exercise” of an office, franchise, or privilege;
presumably, this is because § 12-2041(A)’s reference to “exercise”
contemplates the unlawful exercise of an office or franchise by an otherwise
legitimate office holder. Similarly, A.R.S. § 12-2044, which delineates the
pleading requirements and remedial damages available when the quo
warranto “action involves the right to an office,” necessarily implies that
actions under § 12-2041(A) must also lie for reasons other than challenges
to a person’s right to the office.

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         STATE, ET AL. V. ARIZONA BOARD OF REGENTS, ET AL.
                           Opinion of the Court

¶15            Moreover, we have recognized the Attorney General’s
authority to bring a quo warranto challenge for “exercising” an unlawful
franchise. See, e.g., Donaghey v. Attorney General, 120 Ariz. 93, 94 n.1 (1978)
(discussing the “long established principle” that the Attorney General may
be compelled to initiate a quo warranto action if “a franchise is being
unlawfully exercised” or usurped); State ex rel. Pickrell v. Town of Scottsdale,
99 Ariz. 103, 104 (1965) (using quo warranto challenge to set aside Town’s
annexation of an area that was outside of the Town’s statutorily defined
jurisdiction to do so).

¶16           Although the Attorney General may bring a quo warranto
action challenging a person’s unlawful holding or exercise of a public office
or franchise, such authority is not unlimited. Only ultra vires acts
performed by a public official, office, or franchise—i.e., acts outside the
confines of the finite authority granted to the entity by our legislature—are
subject to quo warranto challenge. Cf., e.g., Pawn 1st, LLC v. City of Phoenix,
242 Ariz. 547, 551–52 ¶ 11 (2017) (stating that variance grants in excess of
the board of adjustment’s statutory authority are “ultra vires and invalid as
a matter of law”). Whether the public office or franchise made wise
decisions within the otherwise lawful exercise of its authority cannot be
challenged in a quo warranto action.

¶17            In Brnovich, we declined to adopt a sweeping interpretation of
another statutory source of the Attorney General’s authority, A.R.S. § 41-
193(A)(2), because if we had embraced a broad interpretation, “the
Attorney General would generally be free to initiate legal challenges against
other state officers and agencies any time he concludes they are violating
the law.” 250 Ariz. at 130 ¶ 10. Instead, we recognized that over the last
sixty years, the legislature has enacted more than one hundred statutes that
authorize the Attorney General to take specific and defined legal actions.
Id. at 132–33 ¶¶ 20–21. It would be illogical for the legislature to provide
these grants of specific authority if one statute, such as § 12-2041, authorized
the Attorney General to challenge any exercise of authority by a state actor.

¶18             We decline to adopt a broader reading of § 12-2041(A) than is
supported by its text: the verb “exercises” is qualified by the word
“unlawfully.” Thus, the Attorney General may challenge only unlawful
exercises of a public office or franchise; in other words, to initiate such a quo
warranto action, the Attorney General must identify a law that has been
violated and allege a relevant, ultra vires act.

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         STATE, ET AL. V. ARIZONA BOARD OF REGENTS, ET AL.
                           Opinion of the Court

                                        C.

¶19            Although we conclude that the Attorney General was
authorized to bring a quo warranto action challenging ABOR’s unlawful
exercise of its authority under § 15-1625(B)(4) to “make and take leases and
long-term leases of . . . real . . . property for the benefit of this state and for
the use of the institutions under its jurisdiction,” our analysis does not end
there.

¶20            Count II seeks quo warranto relief to prevent a “conveyance
to evade taxation,” which is the same conduct alleged to support Count I.
As noted, supra ¶¶ 9–11, no conveyance is made to evade taxation as part
of the Omni Deal because there is no applicable tax to evade. Thus, Count
II fails as a matter of law.

¶21            Count III, however, properly seeks quo warranto relief. The
Attorney General alleges that the lease portion of the Omni Deal is not for
the “benefit of this state and for the use of the institutions under its
jurisdiction,” as required by § 15-1625(B)(4), but rather for the benefit and
use of Omni, and that the lease violates the non-delegation doctrine. We do
not reach the merits of the Attorney General’s Count III claim, but merely
conclude that this count survives a Rule 12(b)(6) motion because he has the
authority to bring a quo warranto action alleging ABOR unlawfully
exercised its franchise. We remand Count III for further proceedings.

                                        II.

¶22           We next consider the timeliness of Count IV, which the
Attorney General filed in an amended complaint on April 3, 2019. Neither
party disputes that the Attorney General had the authority to bring this
claim. Under § 35-212(A)(1), the Attorney General may “bring an action in
the name of this state to . . . [e]njoin the illegal payment of public monies.”
The question here is whether this “public-monies claim” is governed by the
five-year limitations period in § 35-212(E) or the one-year limitations period
under A.R.S. § 12-821. Our review of the interpretation of a statute is de
novo. Stambaugh v. Killian, 242 Ariz. 508, 509 ¶ 7 (2017).

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         STATE, ET AL. V. ARIZONA BOARD OF REGENTS, ET AL.
                           Opinion of the Court

                                      A.

¶23           Section 35-212(E) provides that:

       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 the
       date an illegal payment was ordered and § 12-821.01 does not
       apply to the action.

Section 12-821, which is in title 12, chapter 7, article 2, provides that “[a]ll
actions against any public entity . . . shall be brought within one year after
the cause of action accrues and not afterward.” Because the first sentence
of § 35-212(E) renders § 12-821 and its referenced neighboring sections
applicable to public-monies claims, ABOR argues that the court of appeals
correctly held that a one-year statute of limitations applies and that the
second sentence of § 35-212(E) adds a separate five-year statute of repose.
Ariz. Bd. of Regents, 251 Ariz. at 186–87 ¶¶ 13–14. We conclude, however,
that the second sentence of § 35-212(E) creates an exception for public-
monies claims brought by the Attorney General that (1) supplants the one-
year limitations period in § 12-821 with a five-year limitations period, and
(2) exempts such claims from the entirety of § 12-821.01.

¶24             Statutory provisions should be read in context to determine
meaning, with an aim at effectuating the legislature’s intent. Stambaugh,
242 Ariz. at 509 ¶ 7. “[W]e may also consider statutes that are in pari
materia—of the same subject or general purpose—for guidance and to give
effect to all of the provisions involved.” Id. Section 35-212 authorizes the
Attorney General to “[e]njoin the illegal payment of public monies,” as well
as to “recover illegally paid public monies.” § 35-212(A)(1), (B).
Section 35-212 resides in article 6, titled “Recovery of State Monies Illegally
Paid,” as does § 35-213, which allows taxpayers to request that the Attorney
General initiate a public-monies claim and to institute their own claims if
the Attorney General fails to do so within sixty days of a request.

¶25           The legislature’s intent in enacting § 35-212 and authorizing
the Attorney General or a taxpayer to initiate public-monies claims is
manifest: to prevent or recover the illegal payment of public monies. Given
the legislature’s concern with protecting state funds and preventing past
and future illegal payments, it would be counterintuitive to create two

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         STATE, ET AL. V. ARIZONA BOARD OF REGENTS, ET AL.
                           Opinion of the Court

limitations periods, applicable only to claims brought by the Attorney
General—the primary enforcer of this authority.

¶26            The court of appeals concluded that the five-year limitations
period in § 35-212(E) was a statute of repose and that public-monies claims
brought by the Attorney General were subject to both it and the one-year
statute of limitations at § 12-821. Ariz. Bd. of Regents, 251 Ariz. at 186–87
¶ 13. The court described the differences between a statute of limitations
and statute of repose, noting that statutes of repose are “intended to
establish a limit beyond which no suit may be pursued and set[] a period of
time within which claims must be brought regardless of when the cause of
action may accrue.” Id. (quoting Albano v. Shea Homes Ltd. P’ship, 227 Ariz.
121, 127 ¶ 23 (2011)). Statutes of limitations, on the other hand, typically
begin to accrue “after an injury occurs and is (or reasonably should have
been) discovered.” Albano, 227 Ariz. at 127 ¶ 23. For instance, a cause of
action accrues for claims against public entities under § 12-821 “when the
damaged party realizes he or she has been damaged and knows or
reasonably should know the cause, source, act, event, instrumentality or
condition that caused or contributed to the damage.” § 12-821.01(B); see also
Dube v. Likins, 216 Ariz. 406, 421 ¶ 2 (App. 2007) (explaining that
§ 12.821.01(B) sets the accrual standard for claims governed by § 12-821).

¶27            It is true that tying § 35-212(E) to “the date of an illegal
payment” as opposed to when an injury occurred or was discovered is
characteristic of a statute of repose. See CTS Corp. v. Waldburger, 573 U.S. 1,
8 (2014) (“A statute of repose . . . is measured not from the date on which
the claim accrues but instead from the date of the last culpable act or
omission of the defendant.”); Kenyon v. Hammer, 142 Ariz. 69, 73 (1984)
(reasoning that if the statute in question were tied to the date of a negligent
act it would be a statute of repose). But § 35-212(E) does not bear all the
hallmarks of a statute of repose. “[A] statute of repose defines a substantive
right” because it sets an outer time limit after which no claim can be brought
against a potential defendant. Albano, 227 Ariz. at 127 ¶¶ 23–24. Unlike a
statute of repose, § 35-212(E) does not protect potential defendants by
imposing an outer time limit on all public-monies claims; because this limit
applies only to the Attorney General, a taxpayer could bring a claim under
§ 35-213 after five years from the date of the illegal payment, provided the
payment was not otherwise barred by the one-year limitations period as
defined by the § 12-821.01(B) accrual standard.

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         STATE, ET AL. V. ARIZONA BOARD OF REGENTS, ET AL.
                           Opinion of the Court

¶28            In considering two plausible interpretations of a statute, we
will not credit one that leads to absurd results. See State ex rel. Montgomery
v. Harris, 237 Ariz. 98, 101 ¶ 13 (2014). We are unpersuaded that the
legislature intended to set an additional time constraint that applies only to
claims brought by the Attorney General. Instead, it is more likely that the
legislature aimed to provide sufficient time for the Attorney General to
investigate and recover illegally paid public funds and to shield the
Attorney General’s enforcement authority from collateral litigation about
the accrual date. We also agree with the Attorney General that it would be
illogical for the legislature, in exempting such public-monies claims from
§ 12-821.01’s requirements, to have applied § 12-821’s one-year limitations
period and simultaneously eliminated its accrual standard at § 12-821.01(B).

¶29            Our conclusion that § 35-212(E) creates a five-year statute of
limitations for claims initiated by the Attorney General is consistent with
fundamental principles of statutory construction. “[W]hen there is conflict
between two statutes, the more recent, specific statute governs over the
older, more general statute.” In re Est. of Winn, 214 Ariz. 149, 152 ¶ 16 (2007)
(internal      quotation      marks       omitted)      (quoting       In     re
Guardianship/Conservatorship of Denton, 190 Ariz. 152, 157 (1997)). Further,
“if there is doubt as to which of two limitations periods should apply, courts
generally apply the longer.” Gust, Rosenfeld & Henderson v. Prudential Ins.
Co. of Am., 182 Ariz. 586, 590 (1995). Here, § 35-212(E) was added in 2018,
twenty-five years after § 12-821 was enacted, it is specific to public-monies
claims brought by the Attorney General, and it is the longer of the two
limitations periods.

¶30            Thus, we conclude that Count IV was subject to a five-year
statute of limitations from “the date of an illegal payment of public monies”
and remand for further proceedings.

                                      B.

¶31           Although we reverse the trial court’s grant of summary
judgment as to Count IV, we pause to clarify our interpretation of Arizona
Rule of Civil Procedure 15(c) and how it applies to this case. The Attorney
General argues that his amended complaint adding Count IV was timely
even under the one-year statute of limitations if the claim accrued on
January 11, 2018 (as the tax court and the court of appeals ruled) because

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                           Opinion of the Court

the amended complaint “relates back” to the original complaint filed on
January 10, 2019.

¶32           Rule 15(c) provides that: “An amendment relates back to the
date of the original pleading if the amendment asserts a claim or defense
that arose out of the conduct, transaction, or occurrence set forth, or
attempted to be set forth, in the original pleading.” Here, the court of
appeals concluded that the amended complaint did not relate back to the
original complaint because the operative facts supporting Count IV differed
from those supporting Counts I–III. Ariz. Bd. of Regents, 251 Ariz. at 189
¶¶ 26–27. This conclusion is flawed, however, because it interprets the rule
in a manner contrary to its text: a claim relates back if it arises out of the
“same transaction” as the original complaint. In this case, Count IV arises
out of the Omni Deal which, although complex, is the same discrete
transaction set forth in the original complaint as the basis for Counts I–III.

¶33            We acknowledge that some federal courts have fashioned a
fact-based test to interpret the federal counterpart to our Rule 15(c) and
consider whether the new claim arises from the same core of operative facts
as the original. See, e.g., Echlin v. PeaceHealth, 887 F.3d 967, 978 (9th Cir.
2018) (reasoning that “an amendment will not relate back where the
amended complaint ‘had to include additional facts to support the [new]
claim’” even if it arises from the same general transaction (quoting Williams
v. Boeing Co., 517 F.3d 1120, 1133 (9th Cir. 2008))). Although we recognize
the persuasive value of federal courts’ interpretation of a federal procedural
rule, it is “not binding in the construction of our rule.” Flynn v. Campbell,
243 Ariz. 76, 80 ¶ 9 (2017) (quoting Orme Sch. v. Reeves, 166 Ariz. 301, 304
(1990)).

¶34            Here, we depart from the federal interpretation and clarify
that our inquiry is transaction-based where the new claim is alleged to arise
from the “same transaction.” This approach is more closely moored to the
rule’s text and is consistent with our jurisprudence interpreting it. “It is
only when the amendment seeks relief with respect to a transaction or event
which was not the ‘basis of the original complaint’ that the doctrine of
relation back is considered inapplicable.” Marshall v. Superior Court, 131
Ariz. 379, 383 (1982); see also Barnes v. Vozack, 113 Ariz. 269, 272 (1976)
(recognizing that an amended complaint relates back to the original
complaint if “[i]t was based upon the conduct, transaction and occurrence
set forth in the original pleading”). In this case, the court of appeals relied

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         STATE, ET AL. V. ARIZONA BOARD OF REGENTS, ET AL.
                           Opinion of the Court

upon Barnes for its conclusion that Count IV and Counts I–III alleged
separate transactions. Ariz. Bd. of Regents, 251 Ariz. at 189 ¶ 27. But, as we
did in Marshall, we distinguish Barnes on its facts because the original and
amended complaints alleged separate transactions—the sale of stock to
plaintiff and a false statement in a registration form. Marshall, 131 Ariz. at
383 (“[T]here was no relation back [in Barnes] where the original complaint
alleged fraud in the sale of stock to plaintiff and the amended complaint
alleged fraud in defendant’s application for a registration exemption.”).
Thus, because all of the counts here arise from the Omni Deal, Count IV
relates back to the date of the original complaint as if it was filed on that
date.

                              CONCLUSION

¶35           For the reasons set forth above, we vacate the court of appeals’
opinion, affirm the tax court’s dismissal of Counts I and II, reverse the
dismissal of Count III, reverse the tax court’s grant of summary judgment
on Count IV, reverse the tax court’s award of attorney fees as premature,
and remand for further proceedings consistent with this opinion.

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