Court Opinion

ID: 2830349
Source: CourtListenerOpinion
Date Created: 2015-08-25 17:04:06.50204+00
Date Added: 2024-06-11T13:40:15.676260
License: Public Domain

IN THE

     SUPREME COURT OF THE STATE OF ARIZONA
       CECELIA M. LEWIS AND RANDALL LEWIS, A MARRIED COUPLE
                         Plaintiffs/Appellants

                                   v.

     RAY C. DEBORD AND ANNE NELSON-DEBORD, HUSBAND AND WIFE,
                        Defendants/Appellees

                          No. CV-14-0293-PR
                         Filed August 25, 2015

            Appeal from the Superior Court in Pima County
                 The Honorable Gus Aragón, Judge
                           No. C20125400
                   REVERSED AND REMANDED

            Opinion of the Court of Appeals, Division Two
               236 Ariz. 57, 335 P.3d 1136 (App. 2014)
                             VACATED

COUNSEL:

James M. Sakrison (argued), Diana L. Kanon, Slutes, Sakrison & Rogers,
P.C., Tucson, Attorneys for Cecelia M. Lewis and Randall Lewis

Charles W. Wirken, Scott A. Malm (argued), Gust Rosenfeld P.L.C.,
Phoenix, Attorneys for Ray C. Debord and Anne Nelson-Debord

JUSTICE BRUTINEL authored the opinion of the Court, in which CHIEF
JUSTICE BALES, VICE CHIEF JUSTICE PELANDER, and JUSTICES
BERCH and TIMMER joined.

JUSTICE BRUTINEL, opinion of the Court:

¶1          Arizona’s judgment lien statutes, A.R.S. §§ 33-961 through 33-
                           LEWIS v. DEBORD
                           Opinion of the Court

968, require the filing of an information statement, but do not specify the
consequences of failing to do so. We conclude that failing to attach an
information statement to a certified copy of the judgment does not
invalidate an otherwise valid lien; rather the judgment lien simply lacks
priority against competing creditors who record liens against the property
before the information statement is filed.

    I.   FACTUAL BACKGROUND AND PROCEDURAL HISTORY

¶2            The underlying facts are not in dispute. In 2003, the Lewises
obtained a default money judgment against Karen MacKean and Fred Foust
(the “MacKeans”), a married couple. In 2006, the Lewises recorded their
judgment in Pima County attempting to create a lien on the MacKeans’ real
property. They filed a renewal affidavit in 2008. Neither the initial
recording nor the renewal was accompanied by a separate information
statement as required by A.R.S. §§ 33-961(C) and 33-967(A).1

¶3            In March 2008, Karen MacKean purchased the property and
almost immediately transferred it to Sonomex, LLC. Foust was Sonomex’s
statutory agent. In July 2012, the Debords, the defendants/appellees in this
case, bought the property from Sonomex. A month later, the Lewises
sought to foreclose their lien against the property and named the Debords,
Sonomex, and MacKean as defendants. The Debords moved for summary
judgment, arguing that the Lewises could not execute against the property
because their failure to file an information statement rendered their
judgment lien invalid. The trial court agreed and entered summary
judgment in favor of the Debords.

¶4            The court of appeals affirmed, but on different grounds. Lewis
v. Debord, 236 Ariz. 57, 335 P.3d 1136 (App. 2014). The court of appeals
reasoned that recording a judgment without an information statement does
not affect the resulting lien’s validity, but the absence of an information
statement affects the lien’s priority among competing creditors and fee title
holders like the Debords. Id. at 61 ¶ 13, 62 ¶¶ 15–16, 335 P.3d at 1140–41.

1      The Lewises did eventually file a renewal affidavit with an attached
information statement in August 2013, well after the Debords purchased
the property and recorded their fee interest.

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                            Opinion of the Court

The court concluded that the legislature intended, through the information
statement requirement, to “carve[] out a narrow exception to the general
principle that a subsequent purchaser who has notice of a judgment lien
takes the property subject to it.” Id. at 63 ¶ 18, 335 P.3d at 1142. The court
thus held that the Lewises’ lien lacked priority against the Debords’
subsequent fee interest and the Lewises could not execute against the
property. Id. at 63 ¶¶ 17–19, 335 P.3d at 1142.

¶5            We granted review of the Lewises’ petition and the Debords’
cross-petition because they present recurring legal issues of statewide
importance regarding the judgment lien statutes. We have jurisdiction
under Article 6, Section 5(3) of the Arizona Constitution and A.R.S. § 12-
120.24.

                             II.   ANALYSIS

¶6             Judgment liens are purely statutory remedies that give
judgment creditors the right to force the sale of property to satisfy money
judgments. Sysco Ariz., Inc. v. Hoskins, 235 Ariz. 164, 165 ¶ 6, 330 P.3d 354,
355 (App. 2014). Once attached, a judgment lien remains in place until it
expires, is removed, or the judgment is satisfied. Freeman v. Wintroath
Pumps, 13 Ariz. App. 182, 184, 475 P.2d 274, 276 (1970). The owner remains
in full control of the property until the lienholder executes on the property,
and any subsequent purchaser with constructive or actual notice of the lien
takes the property subject to it. Sysco Ariz., 235 Ariz. at 165 ¶ 6, 330 P.3d at
355.

   A. Failure to file an information statement does not invalidate a
      recorded lien, but does affect priority.

¶7            To create a judgment lien, a judgment creditor must comply
with A.R.S. § 33-961, which provides:

       A. A copy of the judgment of a court, certified by the clerk,
       shall be filed and recorded in the office of the county recorder
       in each county where the judgment creditor desires the
       judgment to become a lien upon the real property of the
       judgment debtor before the judgment shall become a lien upon or

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                            Opinion of the Court

       in any manner affect or encumber the real property of the judgment
       debtor, or any part of the real property of the judgment debtor.
       The certified copy of the judgment shall set forth the:

       1. Title of the court and the action and number of the action.
       2. Date of entry of the judgment and the docket record thereof.
       3. Names of the judgment debtor and judgment creditor.
       4. Amount of the judgment.
       5. Attorney of record for the judgment creditor.

       ....

       C. A judgment or decree or any renewal that requires
       payment of money shall also be accompanied by an information
       statement as prescribed by § 33-967.2

(Emphasis added.) The cross-reference in subsection (C) indicates that
compliance with § 33-967 is mandatory for all judgment liens recorded after
January 1, 1997. Section 33-967 requires a judgment creditor to attach to the
recorded judgment “a separate information statement,” which must
contain the name and address of the judgment debtor and creditor; the
amount of the judgment; the judgment debtor’s social security number,
date of birth, and driver license number; and whether a stay of enforcement
has issued. A.R.S. § 33-967(A)(1)–(5). A judgment lien or renewal recorded
after January 1, 1997, has priority as of the date the judgment creditor filed
the information statement. Id. § 33-967(D). Here we determine the effect of
recording a judgment lien that complies with § 33-961(A), but does not
include the information statement required by §§ 33-961(C) and 33-967.

2      We note that the legislature has recently amended § 33-961. 2015
Sess. Laws, ch. 110, § 1 (1st Reg. Sess.). This amendment provides that “[o]n
recording the judgment becomes a lien.” Id. But this amendment is only
applicable to judgments filed after December 31, 2015. Id. at § 3. Thus, it
does not guide our analysis. See BMO Harris, 236 Ariz. at 365 ¶ 10 n.1, 340
P.3d at 1083 n.1 (noting that an amendment to the deed of trust statutes that
had only prospective effect would not guide the analysis of previous
statute).

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                             Opinion of the Court

¶8              We review the interpretation of statutes de novo. BMO Harris
Bank, N.A. v. Wildwood Creek Ranch, LLC, 236 Ariz. 363, 365 ¶ 7, 340 P.3d
1071, 1073 (2015). In construing a statute, our primary purpose is to give
effect to the legislature’s intent in enacting it. J.D. v. Hegyi, 236 Ariz. 39, 40
¶ 6, 335 P.3d 1118, 1119 (2014). Although we first examine a statute’s
language in attempting to discern legislative intent, when the language is
susceptible to differing reasonable interpretations we interpret the statute
“as a whole, and consider ‘the statute’s context, subject matter, historical
background, effects and consequences, and spirit and purpose.’” State ex
rel. Montgomery v. Harris, 237 Ariz. 98, 101 ¶ 13, 346 P.3d 984, 987 (2014)
(quoting Calik v. Kongable, 195 Ariz. 496, 500 ¶ 16, 990 P.2d 1055, 1059
(1999)).

¶9             The applicable statutes’ text does not clearly specify the
consequence of failing to file an information statement. On the one hand,
§ 33-961(A) appears to prescribe what is necessary and sufficient “for the
judgment to become a lien”; that is, the filing of a certified judgment that
contains the required information set forth in that subsection. See A.R.S.
§ 33-961(A). On the other hand, § 33-961(C) provides that a judgment or
renewal “shall also” be accompanied by an information statement as
prescribed by § 33-967. The requirements of § 33-967 are “in addition to the
requirements prescribed by § 33-961.” A.R.S. § 33-967(A). These
provisions, added in 1996, could reasonably be read as making compliance
with § 33-967 an additional prerequisite before a judgment “shall become a
lien.” See A.R.S. §§ 33-961(A), (C); 33-967; see also T3 Properties, LLC v.
Persimmon Invs., Inc., 299 P.3d 613, 617 ¶ 18 (Utah Ct. App. 2013) (holding
that judgment lien statutes that essentially mirror Arizona’s require that a
recorded judgment “must be accompanied by an information statement in
order to create a judgment lien on real property of the judgment debtor”).
Despite this ambiguity, we conclude that compliance with § 33-961(A) alone
suffices to create a valid lien on a judgment debtor’s property.

¶10           Section 33-961(A) describes what is necessary to create a
judgment lien and specifically requires compliance, “before the judgment
shall become a lien.” A.R.S. § 33-961(A); Sysco Ariz., 235 Ariz. at 166 ¶ 10,
330 P.3d at 356 (holding no judgment lien created by judgment creditor
filing an unsigned minute entry that did not comply with § 33-961(A)).
When the legislature added the information statement requirement in 1996,

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                            Opinion of the Court

it did not alter § 33-961(A) or provide any analogous language in the newly
created §§ 33-961(C) or 33-967. See 1996 Ariz. Sess. Laws, ch. 289, §§ 5, 7.
Neither of the latter statutes conditions the creation of a valid judgment lien
on compliance with the information-statement requirement. Rather, the
only express consequence for failing to file the information statement is
contained in § 33-967(D), referring to priority. See A.R.S. § 33-967(D) (“A
judgment . . . has as its priority the date of compliance with subsection (A)
of this section.”). This supports the conclusion that the legislature intended
that omitting the mandatory information statement would only modify a
lien’s position and not its validity.

¶11             We hesitate to condition a lien’s existence on compliance with
§ 33-967 when the legislature did not include language requiring such a
result, particularly because it has used such language elsewhere. See, e.g.,
Estate of McGill ex rel. McGill v. Albrecht, 203 Ariz. 525, 530–31 ¶ 20, 57 P.3d
384, 389–90 (2002) (declining to read a gross-negligence standard of care
into a statute where legislature created that standard in other statutes but
did not in the statute at issue). Section 33-963 provides that an abstract of
judgment from a federal district court within this state “shall be recorded
in the manner provided in § 33-961 and in compliance with § 33-967, if
applicable, before the judgment becomes a lien upon, or in any manner affects or
encumbers, the real property of the judgment debtor, or any part thereof.”3
(Emphasis added.) Because the legislature did not include similar language
in reference to judgment liens based on Arizona state court judgments, we
assume that this omission was purposeful. See A.R.S. §§ 33-961(C), 33-
967(A); cf. A.R.S. § 33-962(B) (requiring judgments of justice or municipal
courts to “be recorded in the manner provided in § 33-961 before it becomes
a lien,” without expressly conditioning the lien’s creation on compliance
with § 33-967). “It is not the function of the courts to rewrite statutes,” Orca
Commc’ns Unlimited, LLC v. Noder, 236 Ariz. 180, 182 ¶ 11, 337 P.3d 545, 547
(2014) (quoting City of Phoenix v. Butler, 110 Ariz. 160, 162, 515 P.2d 1180,
1182 (1973)), and we decline to do so here.

¶12           The Debords argue that requiring compliance with § 33-967

3     Federal judgments from district courts outside this state are treated
in the same manner as superior court judgments under the Uniform
Enforcement of Foreign Judgments Act, A.R.S. §§ 12-1702–1708.

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                            LEWIS v. DEBORD
                            Opinion of the Court

for federal judgment liens but not for state judgment liens creates an absurd
result. We disagree. See State v. Estrada, 201 Ariz. 247, 251 ¶ 17, 34 P.3d 356,
360 (2001) (noting that we seek to avoid absurd results and that a result is
absurd only if “so irrational, unnatural, or inconvenient that it cannot be
supposed to have been within the intention of persons with ordinary
intelligence and discretion” (quoting Perini Land Dev. Co. v. Pima County,
170 Ariz. 380, 383, 825 P.2d 1, 4 (1992))). Federal abstracts of judgment may
lack some of the identifying information necessary to create a lien under
state law. See Davis v. State Nat’l Bank (In re Davis), 174 B.R. 223, 227–28
(Bankr. N.D. Tex. 1994) (holding no lien attached where federal abstract of
judgment lacked information required to create a valid judgment lien under
Texas law). The legislature could have determined that compliance with
both § 33-961 and § 33-967 was necessary to fill in the gaps and create a valid
lien based on federal court judgments.

¶13            There are several other examples in Title 33 where the
legislature has conditioned instrument validity on compliance with a
statutory mandate. See, e.g., A.R.S. § 33-405(E) (“A beneficiary deed is valid
only if the deed is executed and recorded as provided by law in the office
of the county recorder of the county in which the property is located before
the death of the owner or the last surviving owner.” (emphasis added));
A.R.S. § 33-452 (“A conveyance or incumbrance of community property is
not valid unless executed and acknowledged by both husband and wife . . . .”
(emphasis added)); A.R.S. § 33-1501(A)(3)(f) (“A memorandum of lease is
not valid unless the signatures of both the landlord and the tenant are
included on the memorandum and are acknowledged.” (emphasis added)).
Because no similar language appears in the statutes at issue here, we decline
to impose this requirement when the legislature did not see fit to do so.

¶14           That is not to say, however, that there are no negative
consequences to a judgment creditor who fails to file an information
statement. Section 33-967(D) makes it clear that a lien’s priority is
determined upon a judgment creditor’s compliance with § 33-967(A).
A.R.S. § 33-967(D). Put differently, filing the certified judgment creates a
valid lien as against the judgment debtor, but it remains unperfected and
does not have priority against other competing interests until a judgment
creditor complies with § 33-967. See § 33-967(D); Black’s Law Dictionary
152 (10th ed. 2014) (defining “attachment” as the creation of a security

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interest); Black’s Law Dictionary 1318 (10th ed. 2014) (defining “perfection”
as a “[v]alidation of a security interest as against other creditors.”).

¶15            This interpretation furthers the purpose of the applicable
statutes, as amended in 1996. The legislature enacted the information sheet
requirement to prevent erroneous identifications of judgment debtors and
speed up real estate closings. See Senate Fact Sheet, S.B. 1300 at 1, 42d Leg.,
2d Reg. Sess. (1996). Because losing priority may eliminate any economic
benefit from filing a lien, the threat of losing priority provides a strong
incentive for judgment creditors to file the information statement. Having
determined that the Lewises have a valid lien, we now turn to whether
“priority” as used in § 33-967(D) includes fee interests or only competing
liens.

   B. “Priority” as used in § 33-967(D) affects the rights between
      competing creditors, not subsequent purchasers.

¶16             We do not analyze statutory language in a vacuum, but
consider the context in which the legislature used it. Adams v. Comm’n on
Appellate Court Appointments, 227 Ariz. 128, 135 ¶ 34, 254 P.3d 367, 374 (2011)
(“[I]t is a ‘fundamental principle of statutory construction (and, indeed, of
language itself) that the meaning of a word cannot be determined in
isolation, but must be drawn from the context in which it is used.’” (quoting
Deal v. United States, 508 U.S. 129, 132 (1993))).

¶17           The court of appeals broadly defined “priority” in § 33-967(D)
as “[t]he status of being earlier in time or higher in degree or rank;
precedence.” Lewis, 236 Ariz. at 62 ¶ 15, 335 P.3d at 1141 (quoting Black’s
Law Dictionary 1386 (10th ed. 2014)). It then extrapolated that “where a
subsequent purchaser acquires an interest in a judgment debtor’s real
property after a judgment creditor records a judgment but before attaching
an information statement, the resulting judgment lien loses its priority and
the judgment creditor cannot satisfy his or her judgment by executing on
that property.” Id. at 63 ¶ 18, 335 P.3d at 1142.

¶18           The court of appeals erred when it defined “priority,” and
thus concluded that the Lewises’ lien lost priority against the Debords’ fee
interest. Although the court used an accepted definition of “priority,” in

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                            LEWIS v. DEBORD
                            Opinion of the Court

the context of liens, commercial law, and Title 33, a more appropriate
definition here is “a creditor’s right to have a claim paid before other
creditors of the same debtor receive payment.” Black’s Law Dictionary 1386
(10th ed. 2014); see also Black’s Law Dictionary 1387 (10th ed. 2014) (defining
“priority of liens” as “[t]he ranking of liens in the order in which they are
perfected”).

¶19           Under Arizona law, the well-settled default rule is that a
subsequent purchaser with notice takes subject to an existing judgment
lien. See Sysco Ariz., 235 Ariz. at 165 ¶ 6, 330 P.3d at 355. Absent any clear
statement in the statute, we decline to infer that the legislature intended to
upset this rule.

¶20            The record is unclear whether the Debords had actual notice
of the Lewises’ judgment lien. But it is undisputed that the Debords had
constructive notice of the certified judgment the Lewises recorded in
compliance with § 33-961(A). See Collins v. Stockwell, 137 Ariz. 416, 420, 671
P.2d 394, 398 (1983) (noting that a recorded lien should alert those
“searching the record to the fact that a lien has been filed on the subject
property and that further inquiry should be made”). Consequently, the
Debords took the property subject to the lien, and the Lewises’ failure to file
an information statement does not preclude them from executing against
the property. See Sysco Ariz., 235 Ariz. at 165 ¶ 6, 330 P.3d at 355 (“[A]ny
subsequent purchaser with actual or constructive notice takes the property
subject to the lien.”).

                         III.   CONCLUSION

¶21           We vacate the court of appeals’ opinion, reverse the superior
court’s entry of summary judgment in favor of the Debords, and remand
the case to that court for further proceedings consistent with this opinion.

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