Court Opinion

ID: 4659601
Source: CourtListenerOpinion
Date Created: 2021-02-11 17:02:13.888816+00
Date Added: 2024-06-11T08:02:00.231814
License: Public Domain

NOTICE: NOT FOR OFFICIAL PUBLICATION.
  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                  AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

                                     IN THE
              ARIZONA COURT OF APPEALS
                                 DIVISION ONE

           AHMAD ZAKY QASIMYAR, et al., Plaintiffs/Appellees,

                                         v.

                 MARICOPA COUNTY, Defendant/Appellant.

                              No. 1 CA-TX 19-0008
                               FILED 2-11-2021

                    Appeal from the Arizona Tax Court
                           No. TX 2016-000882
                The Honorable Christopher T. Whitten, Judge

                                   AFFIRMED

                                    COUNSEL

Helm, Livesay & Worthington LTD, Mesa
By Roberta S. Livesay, Joshua W. Carden
Counsel for Defendant/Appellant

Mooney, Wright, Moore & Wilhoit PLLC, Mesa
By Bart Wilhoit, Paul Moore, Jim L. Wright, Paul J. Mooney
Counsel for Plaintiffs/Appellees

Arizona Attorney General’s Office, Phoenix
By Jerry A. Fries, Lisa A. Neuville
Counsel for Amicus Curiae, Arizona Department of Revenue
                     QASIMYAR, et al. v. MARICOPA
                         Decision of the Court

                      MEMORANDUM DECISION

Judge Michael J. Brown delivered the decision of the Court, in which
Presiding Judge Jennifer M. Perkins and Judge David B. Gass joined.

B R O W N, Judge:

¶1             This tax dispute arises from a challenge by property owners
(“Taxpayers”) to the Maricopa County Assessor’s decision to apply what is
known as “Rule A,” see A.R.S. § 42-13301, to calculate the limited property
value (“LPV”) of their single-family residences (“Properties”). Taxpayers
contend that reclassifying the Properties because they were owner-
occupied primary residences was a “change in use” that required the LPVs
to be calculated pursuant to “Rule B,” see A.R.S. § 42-13302(A). The tax
court agreed with Taxpayers and granted partial summary judgment on
that theory, which we address in a separate opinion. In this memorandum
decision, we consider whether the tax court erred in granting Taxpayers’
motion for class certification. For the following reasons, we affirm the
court’s order.

                              BACKGROUND

¶2             The Properties are located in Maricopa County. For tax year
2016, the Assessor classified each Property as class four, under A.R.S. § 42-
12004 (including residential property not otherwise falling into another
classification). For tax year 2017, the Assessor maintained the classifications
for the Properties and used Rule A to determine their LPVs under A.R.S.
§ 42-13301. Taxpayers unsuccessfully petitioned the Assessor for
administrative review, arguing that because the Properties were in fact
“owner-occupied,” the Assessor should have classified them as class three,
not class four. See A.R.S. § 42-12003(A)(1) (class three includes owner-
occupied primary residences).

¶3             Taxpayers appealed the Assessor’s decision to the State Board
of Equalization, which reclassified the Properties as class three but did not
change the Properties’ LPVs. Taxpayers appealed the Board’s decision to
the tax court, alleging a “change in use” had occurred because of the change
from class four to class three based on the owners’ occupation of the
Properties as primary residences, requiring the Assessor and Board to
calculate the LPVs pursuant to Rule B, not Rule A. See A.R.S. § 42-

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13302(A)(2) (LPV) calculated under Rule B if “change in use” for property
occurred). According to Taxpayers, a Rule B calculation would have
reduced their LPVs, resulting in lower property tax bills. Taxpayers
requested revised LPVs calculated under Rule B and refunds for the
overpaid tax.

¶4            Taxpayers later filed a motion for class certification, asserting
they “brought this litigation on behalf of themselves and the class of others
similarly situated (“Class”) to redress the County’s failure to follow the
law.” Taxpayers included analysis under Arizona Rule of Civil Procedure
(“Rule”) 23, asserting the Class met all the requirements for certification.

¶5            While that motion was pending, the parties filed competing
motions for summary judgment. After briefing and oral argument, the tax
court granted partial summary judgment for Taxpayers, agreeing that
“where there is a change in classification based upon the change in use of a
residential property, as is the case when its use changes from a [c]lass [four]
to a [c]lass [three] property, a new limited property value must be
established.”

¶6              The tax court later granted Taxpayers’ motion for class
certification, summarily finding the proposed class met the requirements of
Rule 23(a) and (b), and Taxpayers’ counsel was appropriate to serve as class
counsel. Consistent with Taxpayers’ motion, the court described the Class
as follows:

       [A]ll real property owners and taxpayers in the taxing
       jurisdiction of Maricopa County, Arizona, whose property
       classification was changed from class three to class four, or
       from class four to class three, for the 2017 tax year, where the
       limited property value was inappropriately calculated
       pursuant to [Rule A] instead of [Rule B] and application of
       [Rule A] led to a higher limited property value than
       application of [Rule B].

Because its summary judgment ruling is “outcome determinative with
respect to alleged valuation claims” of absent Class members, the court said
the only remaining matters were adjudication of issues relating to notice,
and a final determination of the Class members and their damages, as well
as other remedies, such as attorneys’ fees and costs. The County timely
appealed, and this court has jurisdiction under A.R.S. § 12-1873(A), which
provides that “certification or refusal to certify a class action is appealable
in the same manner as a final order or judgment.”

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                          Decision of the Court

                                 DISCUSSION

¶7           The County asks us to reverse the tax court’s order on the
grounds that Taxpayers failed to satisfy jurisdictional requirements and
Rule 23. We review a class-certification order for an abuse of discretion.
Godbey v. Roosevelt Sch. Dist. No. 66, 131 Ariz. 13, 16 (App. 1981).

¶8             Plaintiffs seeking class certification must meet all the
requirements of Rule 23(a) and at least one of the requirements of Rule
23(b). “One seeking to maintain a class action has the burden of showing
that the prerequisites are satisfied—merely calling it a class action does not
make it one.” Carpinteiro v. Tucson Sch. Dist. No. 1, 18 Ariz. App. 283, 286
(1972). “[C]ertification is proper only if ‘the trial court is satisfied, after a
rigorous analysis, that [Federal] [Rule 23’s] prerequisites . . . have been
satisfied.’” Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013) (citation omitted);
see ESI Ergonomic Sols., LLC v. United Artists Theatre Cir., Inc., 203 Ariz. 94,
98, ¶ 11 n.2 (App. 2002) (“Because Rule 23 is identical to Rule 23 of the
Federal Rules of Civil Procedure, we view federal cases construing the
federal rule as authoritative.”).

¶9              “An order that certifies a class action must: . . . (iii) set forth
the court’s reasons for maintaining the case as a class action; and (iv)
describe the evidence supporting the court’s determination.” Rule 23(c); see
also A.R.S. § 12-1871(B) (“If the court finds that an action should be
maintained as a class action, the court shall certify the action in writing,
shall set forth its reasons as to why the action should be maintained as a
class action and shall describe all evidence in support of its
determination.”). The tax court failed to include such detail. But the
County did not object to the certification order on this basis in the tax court
or raise it as an issue on appeal. We therefore decline to further address the
level of detail in the order.

       A.      Jurisdiction/Exhaustion of Remedies

¶10             The County argues the tax court lacked jurisdiction to issue
its class certification order because Taxpayers failed to appeal, or exhaust
their remedies, “in such a ‘representative’ way that would actually preserve
the ability to seek class certification.” The County acknowledges it did not
raise this issue in the tax court, but contends waiver is inapplicable because
its argument invokes subject-matter jurisdiction.            The doctrine of
exhaustion of administrative remedies, however, “does not implicate
subject-matter jurisdiction.” Medina v. Ariz. Dept. of Transp., 185 Ariz. 414,
416 (App. 1995) (holding that agency’s failure to raise exhaustion of

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                          Decision of the Court

remedies defense resulted in its waiver). The County has therefore waived
this issue on appeal. See Griffith Energy, L.L.C. v. Ariz. Dept. of Revenue, 210
Ariz. 132, 137, ¶ 22 (App. 2005) (declining to consider taxpayer’s argument
because it was not raised in the tax court).

¶11            Waiver aside, we are not persuaded by the County’s
argument. Citing Arizona Department of Revenue v. Dougherty, 200 Ariz. 515
(2001) and McNutt v. Department of Revenue, 196 Ariz. 255 (App. 1998), the
County asserts that “none of the Plaintiffs appear to have filed a
‘representative’ claim” with the Assessor or the Board. Those cases are
inapposite. In Dougherty, a taxpayer filed a “representative” administrative
petition for an income tax refund from the Department. 200 Ariz. at 516, ¶ 2.
After exhausting her administrative remedies, the taxpayer filed suit in tax
court, seeking class certification. Id. Our supreme court explained that “the
class device is a suitable vehicle for exhaustion of administrative remedies
when not expressly prohibited by statute.” Id. at 522, ¶ 24. The court held
that “only those taxpayers whose claims were not barred by the statute of
limitations, and who therefore could have filed separate, individual administrative
refund claims at the time [taxpayer] filed her representative claim, and whose
administrative remedies were therefore preserved by [taxpayer’s] filing, are
not barred by the statute of limitations and may join as members of the class
in tax court.” Id. at 523, ¶ 25 (emphasis added).

¶12             Dougherty does not support the County’s position because the
law at issue in Dougherty required exhaustion of administrative remedies.
See id. at 516, ¶ 2. For the same reason, McNutt is also distinguishable. See
196 Ariz. at 264–65, 267, ¶¶ 27, 33, 44 (because taxpayers were required to
file a refund claim within four years, the “letter did not assert a ‘class claim’
that encompassed either plaintiffs or putative class”).

¶13            Here, Taxpayers faced no administrative exhaustion
requirements before they filed suit in the tax court. See A.R.S. § 42-16201(A)
(property owner dissatisfied with county assessor’s valuation or
classification may file a direct appeal with the tax court “regardless of
whether the person has exhausted the administrative remedies under this
chapter”). Thus, without the exhaustion requirements, the relevant inquiry
is whether Class members could have filed “separate, individual” claims at
the time Taxpayers filed their representative claim, thus preserving their
remedy by the filing. See Dougherty at 523, ¶ 25. The County does not
dispute that Class members could have done so or that Taxpayers timely
asserted claims on behalf of Class members in tax court when the first
amended complaint was filed in November 2018. Therefore, consistent

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                     QASIMYAR, et al. v. MARICOPA
                         Decision of the Court

with Dougherty, the tax court had jurisdiction to consider Taxpayers’
request for class certification.

¶14            The County correctly notes that if a taxpayer (1) did not timely
pay taxes and failed to cure the delinquency, or (2) filed an administrative
claim and did not appeal the decision within 60 days, the tax court would
lack jurisdiction to include such a taxpayer in the Class. See A.R.S. §§ 42-
16210(B) (“If the taxes are not paid before becoming delinquent, the court
shall dismiss the appeal except” if delinquency is cured); 42-16203(C)
(property owner must appeal Board decision within 60 days of its mailing).
But that does not deprive the tax court of jurisdiction over the entire class
action as a whole. Cf. McDonald v. Heckler, 612 F. Supp. 293, 298–300 (D.
Mass. 1985) (dismissing claims of certain groups of proposed class members
but ultimately certifying suit as class action under Federal Rule 23). Thus,
Taxpayers could properly pursue a class action.

       B.     Rule 23(a)

¶15             “One or more members of a class may sue or be sued as
representative parties on behalf of all members only if: (1) the class is so
numerous that joinder of all members is impracticable; (2) there are
questions of law or fact common to the class; (3) the claims or defenses of
the representative parties are typical of the claims or defenses of the class;
and (4) the representative parties will fairly and adequately protect the
interests of the class.” Rule 23(a). These four requirements (numerosity,
commonality, typicality, and adequacy) “effectively ‘limit the class claims
to those fairly encompassed by the named plaintiff’s claims.’” Wal-Mart
Stores, Inc. v. Dukes, 564 U.S. 338, 349 (2011) (citation omitted).

¶16            A court’s “rigorous analysis” of whether the requirements of
Rule 23(a) have been satisfied will “frequently . . . entail some overlap with
the merits of the plaintiff’s underlying claim.” Id. at 351. “The class
determination generally involves considerations that are enmeshed in the
factual and legal issues comprising the plaintiff’s cause of action.” Id.
(citation and alteration omitted). As the tax court determined, the proposed
Class in this case consists of all Maricopa County property owners whose
properties were reclassified from class three to class four, or vice versa, for
tax year 2017, when the LPV was improperly calculated based on Rule A,
resulting in a higher LPV than Rule B would have yielded.

              1.     Numerosity

¶17            No bright line exists as to “the number of class members that
will satisfy the numerosity prerequisite of [R]ule 23.” London v. Green Acres

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                     QASIMYAR, et al. v. MARICOPA
                         Decision of the Court

Tr., 159 Ariz. 136, 140 (App. 1988). “Generally[,] less than twenty-one is
inadequate, more than forty adequate, with numbers between varying
according to other factors.” Ferrara v. 21st Century N. Am. Ins. Co., 245 Ariz.
377, 380, ¶8 (App. 2018) (citation omitted).

¶18            The County argues that Taxpayers failed to establish
numerosity because the actual number of property owners who will be part
of the Class is not yet known. But Taxpayers were not required to identify
a precise number. See Evans v. U.S. Pipe & Foundry Co., 696 F.2d 925, 930
(11th Cir. 1983) (“[A] plaintiff need not show the precise number of
members in the class.”). They presented a list, based on records obtained
from the County, of more than 21,000 likely Class members. Although the
County identified many property owners who would not be included in the
Class because of factors such as changes in ownership, Taxpayers
established that over 10,000 property owners would still be part of the
Class. Taxpayers, therefore, satisfy Rule 23(a)(1) because the Class is so
numerous that joinder of all members is impracticable.

              2.     Commonality/Typicality

¶19            Rule 23(a)(2)’s commonality prong requires questions of law
or fact that are common and that “class members ‘have suffered the same
injury.’” Dukes, 564 U.S. at 350 (citation omitted). The class members’
claims “must depend upon a common contention” that is “of such a nature
that it is capable of classwide resolution—which means that determination
of its truth or falsity will resolve an issue that is central to the validity of
each one of the claims in one stroke.” Id.

¶20          Under Rule 23(a)(3), the claims of the representative party
must be “typical” of the claims of the class. Typicality has been described
as follows:

       Some courts have held that the typicality requirement is
       satisfied when common questions of law or fact exist. Others
       have held a representative’s claim typical if the interests of the
       representative are not antagonistic to those of absent class
       members. Still others require the representative to
       demonstrate that absent class members have suffered the
       same grievances of which he complains.

Lennon v. First Nat. Bank of Ariz., 21 Ariz. App. 306, 309 (1974) (citations
omitted).

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                      QASIMYAR, et al. v. MARICOPA
                          Decision of the Court

¶21            “The commonality and typicality requirements of Rule 23(a)
tend to merge.” Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 157 n.13 (1982).
“Both serve as guideposts for determining whether under the particular
circumstances maintenance of a class action is economical and whether the
named plaintiff’s claim and the class claims are so interrelated that the
interests of the class members will be fairly and adequately protected in
their absence.” Id.

¶22             The County does not dispute that common issues exist with
respect to whether Rule A or Rule B should be applied to determine the
LPV of properties reclassified in tax year 2017 between class three and class
four. Instead, the County argues there are an undetermined number of
taxpayers on the list of affected properties who held multiple properties in
tax year 2017, and that such taxpayers realized a “net benefit” from the
application of Rule A to the reclassification of their properties. According
to the County, those property owners are in a different legal posture than
Taxpayers. This concern is misplaced because it is irrelevant how many
single-family residences are owned by a particular property owner. Class
membership depends on whether a parcel meets the Class definition, which
includes only those qualifying parcels that were taxed more than they
should have been. Moreover, any taxpayer, whether owning multiple
properties or not, will have the option to exclude themselves, or opt out, of
the Class. See Rule 23(c)(2)(B)(v), (vi); see also Lerwill v. Inflight Motion
Pictures, Inc., 582 F.2d 507, 512 (9th Cir. 1978) (noting that where defendants
alleged a conflict between named plaintiffs and the class, each member of
the class had the right to opt out of the class and “in these circumstances,
that option protected the interests of any dissident employees”).

¶23           The County further notes that none of the Taxpayers’
Properties involved reclassification from class three to class four, but does
not explain how that matters for purposes of determining whether a
particular property owner falls within the Class definition. In the opinion
filed herewith, we conclude that a property’s reclassification “between”
specific subsections of class four and class three necessarily constitutes a
“change in use” for purposes of triggering Rule B, meaning the trigger is
applied regardless of movement in or out of class three or class four. The
County argues those property owners (changing from class three to four)
would be subject to statutory penalties, but fails to demonstrate how that
has any bearing on class certification.

¶24          The County also points to tax parcels where ownership
changed hands during tax year 2017, and to property owners (1) who failed
to timely pay taxes, (2) had reclassifications that were later reversed, or (3)

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                      QASIMYAR, et al. v. MARICOPA
                          Decision of the Court

pursued administrative appeals that reached finality before the alleged
class claims were made. But the County does not explain why such
exceptions cannot be addressed by the tax court in the course of finalizing
Class membership. Thus, Taxpayers satisfy Rule 23(a)(2) and (3).

              3.      Adequacy

¶25            Last, Rule 23(a)(4) requires plaintiffs to show they “will fairly
and adequately protect the interests of the class.” Lennon, 21 Ariz. App. at
309 (citation omitted). Plaintiffs must also “eliminate so far as possible the
likelihood that the litigants are involved in a collusive suit or that plaintiff
has interests antagonistic to those of the remainder of the class.” Id. (citation
omitted). “[B]asic consideration of fairness requires that a court undertake
a stringent and continuing examination of the adequacy of representation
by the named class representative[] at all stages of the litigation where
absent members will be bound by the court’s judgment.” London v. Wal-
Mart Stores, Inc., 340 F.3d 1246, 1254 (11th Cir. 2003) (citation omitted).

¶26            The County does not raise any new arguments relating to
adequacy. It argues that because Taxpayers only derive from “one half” of
the certified class—those switching from class four to three, this evinces a
lack of adequate representation. But the County has waived that argument
by failing to develop it on appeal. See In re Pima Cnty. Mental Health Cause
No. AXXXXXXXX, 237 Ariz. 452, 455, ¶ 9 (App. 2015) (“failure to develop and
support argument waives issue on appeal”). The County also argues that
Taxpayers and Class counsel cannot adequately represent those who
derived a net financial benefit from the application of Rule A rather than
Rule B. We reject this argument for the same reason as noted above. See
supra ¶ 22. Taxpayers have established that they will fairly and adequately
represent the Class, and the County has failed to show any overriding
antagonistic interests that could not be resolved through individual Class
members opting out of the Class. See supra ¶ 22; see also Fowler v.
Birmingham News Co., 608 F.2d 1055, 1058–59 (5th Cir. 1979) (concluding
representation was adequate because “antagonistic interests were not
significant” and “[a]ny antagonistic interests involved were ameliorated”
by “opportunity to opt out of the class”). The tax court did not abuse its
discretion when it found that Taxpayers satisfy Rule 23(a).

       C.     Rule 23(b)(3)

¶27          Because Taxpayers meet the requirements of Rule 23(a), we
turn to Rule 23(b), which provides three alternative grounds to support a
request for class certification. In their motion for class certification,

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                     QASIMYAR, et al. v. MARICOPA
                         Decision of the Court

Taxpayers argued they satisfy both Rule 23 (b)(1) and (b)(3). Because we
conclude Taxpayers meet their burden under (b)(3), we do not address
(b)(1). Rule 23(b)(3) provides that a class action may be maintained if

       the court finds that the questions of law or fact common to
       class members predominate over any questions affecting only
       individual members, and that a class action is superior to
       other available methods for fairly and efficiently adjudicating
       the controversy. The matters pertinent to these findings
       include:

       (A) the class members’ interests in individually controlling
       the prosecution or defense of separate actions;

       (B) the extent and nature of any litigation concerning the
       controversy already begun by or against class members;

       (C) the desirability or undesirability of concentrating the
       litigation of the claims in the particular forum; and

       (D) the likely difficulties in managing a class action.

“The four factors are not exclusive, and the court, in its discretion, may
consider other relevant factors.” ESI, 203 Ariz. at 98, ¶ 11. “The rule
provides a mechanism by which those with claims involving small
potential recoveries, which reduce incentive to bring an individual action,
could aggregate those claims into an action worth someone’s labor.” Id.

¶28           The County argues the availability of attorneys’ fees makes
feasible the pursuit of individual claims, and that Class certification here
has substantial obstacles. But this argument fails to recognize that a fee
award in this type of case is discretionary. See A.R.S. § 12-348(B)(1) (“court
may award fees” (emphasis added)). Also, it ignores the fact that requiring
the initiation of thousands of individual lawsuits, with relatively small
potential recoveries, would be unfair and highly inefficient. The obstacles
the County references can be addressed by refining the list of proposed
Class members such that only those meeting the definition remain. For
these reasons, Taxpayers satisfy Rule 23(b)(3).

       D.     Amendment of Class Definition

¶29            The County argues that even if the Class was properly
certified, the Class definition must be modified to

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                      QASIMYAR, et al. v. MARICOPA
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       provide for the express exclusion of: (1) any person or entity
       who was not a record owner of a subject property at some
       point in 2017; (2) property owners who held multiple parcels
       in 2017, at least some of which were given a lower LPV as a
       result of the application of Rule A than they would have been
       assigned if Rule B had been applied; (3) all parcels who
       reclassified from [c]lass [three] to [c]lass [four]; (4) all parcels
       whose reclassification to [c]lass [three] or [c]lass [four] in 2017
       was subsequently reversed; (5) all parcels for which taxes for
       2017 were not timely paid; and (6) all parcels whose owners
       filed     administrative      appeals      obtaining        adverse
       determinations that became final and were no longer
       appealable before November 28, 2016.

Although Taxpayers do not address the County’s assertion, we conclude
the tax court is in the best position to ensure that any person or entity not
properly fitting the Class definition, whether for jurisdictional reasons or
otherwise, shall not be included in the Class.

        E.     Attorneys’ Fees and Costs

¶30             Taxpayers request an award of their attorneys’ fees incurred
on appeal pursuant to A.R.S. § 12-348(B), which authorizes a fee award “to
any party, other than this state or a city, town or county, that prevails by an
adjudication on the merits in an action brought by the party against” a
“county . . . challenging . . . [t]he assessment . . . of taxes.” In our discretion,
we decline to address the fee request at this stage of the proceedings. See
Tierra Ranchos Homeowners Ass’n v. Kitchukov, 216 Ariz. 195, 204, ¶ 37 (App.
2007). Taxpayers may submit an appropriate request for fees incurred in
this litigation, including fees relating to this appeal, in the tax court in due
course. We express no opinion as to whether fees should be awarded.
Because Taxpayers are the successful parties on appeal, we award them
taxable costs upon compliance with ARCAP 21.

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                              CONCLUSION

¶31             We affirm the tax court’s order granting Taxpayer’s motion
for class certification.

                        AMY M. WOOD • Clerk of the Court
                        FILED: AA

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