Court Opinion

ID: 9363795
Source: CourtListenerOpinion
Date Created: 2023-01-17 18:02:07.644915+00
Date Added: 2024-06-11T17:15:34.245394
License: Public Domain

IN THE

       SUPREME COURT OF THE STATE OF ARIZONA
              PROTECT OUR ARIZONA, A POLITICAL COMMITTEE,
                           Plaintiff/Appellant,

                                    v.

       ADRIAN FONTES, IN HIS CAPACITY AS THE SECRETARY OF STATE OF
                                ARIZONA, 1
                            Defendant/Appellee,

                                   and

    ARIZONANS FED UP WITH FAILING HEALTHCARE (HEALTHCARE RISING AZ),
                        A POLITICAL COMMITTEE,
                      Real Party in Interest/Appellee.

                         No. CV-22-0203-AP/EL
                         Filed January 17, 2023

            Appeal from the Superior Court in Maricopa County
               The Honorable Frank W. Moskowitz, Judge
                           No. CV2022-009335
                              AFFIRMED

1 The name of Defendant/Appellee has been changed from “Katie Hobbs,
in her capacity as the Secretary of State of Arizona” to “Adrian Fontes, in
his capacity as the Secretary of State of Arizona” pursuant to Arizona Rule
of Civil Appellate Procedure 27(c)(2).
PROTECT OUR ARIZONA V. ADRIAN FONTES/ARIZONANS FED UP
              WITH FAILING HEALTHCARE
                  Opinion of the Court

COUNSEL:

Kory Langhofer, Thomas Basile, Statecraft PLLC, Phoenix, Attorneys for
Protect Our Arizona, a Political Committee

Amy Chan, Noah Gabrielsen, Arizona Secretary of State’s Office, Phoenix,
Attorneys for Adrian Fontes, Secretary of State

James E. Barton II, Jacqueline Mendez Soto, Barton Mendez Soto PLLC,
Tempe; and Joshua D. Bendor, Joshua J. Messer, Travis C. Hunt, Osborn
Maledon, P.A., Phoenix, Attorneys for Arizonans Fed Up With Failing
Healthcare (Healthcare Rising AZ), a Political Committee

Christina Sandefur, Timothy Sandefur, Scharf-Norton Center for
Constitutional Litigation at the Goldwater Institute, Phoenix, Attorneys for
Amicus Curiae Goldwater Institute

Daniel J. Adelman, Samuel Schnarch, Arizona Center for Law in the Public
Interest, Phoenix, Attorneys for Amici Curiae Laura N. Coordes, Professor
Christopher G. Bradley, and Professor Kara J. Bruce

Patrick J. Kane, Maurice Wutscher LLP, Solana Beach, California, Attorneys
for Amicus Curiae Receivables Management Association International

Roy Herrera, Daniel A. Arellano, Herrera Arellano LLP, Phoenix, Attorneys
for Amici Curiae Center for Responsible Lending and Southwest Center for
Economic Integrity

Timothy A. La Sota, Timothy A. La Sota, PLC, Phoenix, Attorney for
Amicus Curiae Direct Contact, LLC

Dominic E. Draye, Greenberg Traurig, LLP, Phoenix, Attorney for Amici
Curiae Governor Doug Ducey, Senate President Karen Fann, and Speaker
of the House Russell “Rusty” Bowers

Barney M. Holzman, Bernardo M. Velasco, Mesch Clark Rothschild,
Tucson, Attorneys for Amici Curiae Arizona Creditors Bar Association and
National Creditors Bar Association

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PROTECT OUR ARIZONA V. ADRIAN FONTES/ARIZONANS FED UP
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                  Opinion of the Court

JUSTICE KING authored the Opinion of the Court, in which CHIEF
JUSTICE BRUTINEL, VICE CHIEF JUSTICE TIMMER, and JUSTICES
BOLICK, LOPEZ, BEENE, and MONTGOMERY joined.

JUSTICE KING, Opinion of the Court:

¶1         Arizona Revised Statutes § 19-102(A) (2014) requires a 100-word
description of the principal provisions of the proposed measure as part of
the petition. 2 The final statement in the “Predatory Debt Collection
Protection Act” initiative description read: “Does not change existing law
regarding secured debt.” At issue here is whether this single statement
rendered the description objectively false or misleading. As reflected in
our prior order, we hold the description, when read in its entirety, does not
communicate objectively false or misleading information.

                      I.     BACKGROUND

¶2         Real Party in Interest Arizonans Fed Up with Failing Healthcare
(Healthcare Rising Arizona) (the “Committee”) is the political committee
that sponsored the Predatory Debt Collection Protection Act initiative for
the November 8, 2022 general election ballot. The Committee prepared
the following 98-word description:
      Caps interest rate on “medical debt,” as defined in the Act;
      applies this cap to judgments on medical debt as well as to
      medical debt incurred. Increases the value of assets – a
      homestead, certain household possessions, a motor vehicle,
      funds in a single bank account, and disposable earnings –
      protected from certain legal processes to collect debt.
      Annually adjusts these amended exemptions for inflation
      beginning 2024. Allows courts to further reduce the amount
      of disposable earnings subject to garnishment in some cases
      of extreme economic hardship. Does not affect existing

2 The legislature recently increased the word limit to “two hundred
words.” See 2021 Ariz. Sess. Laws ch. 345, § 2 (1st Reg. Sess.). These
statutory amendments became effective after the Committee had filed its
application and obtained its serial number for the initiative.
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                  Opinion of the Court

       contracts. Does not change existing law regarding secured
       debt.

Additionally, pursuant to § 19-102(A), the initiative petition provided the
following required notice:

       Notice: This is only a description of the proposed measure (or
       constitutional amendment) prepared by the sponsor of the
       measure. It may not include every provision contained in the
       measure. Before signing, make sure the title and text of the
       measure are attached. You have the right to read or examine
       the title and text before signing.

In July 2022, the Committee submitted the signatures it had gathered to the
Secretary of State. Thereafter, the Secretary of State certified the initiative
as Proposition 209 for the general election ballot.

¶3          Protect Our Arizona (“POA”) filed a complaint claiming the
initiative description was legally insufficient because the final statement—
“Does not change existing law regarding secured debt”—was objectively
false or misleading. More specifically, the complaint alleged “debt can be
secured by a debtor’s voluntary pledge of collateral (for example, a
purchase money mortgage on real property),” but often “secured debt is
created involuntarily—commonly by a judgment lien.” Further, “[w]hile
the Act generally may not affect existing laws concerning voluntarily
secured debt, it substantially and pervasively changes existing laws
regarding involuntarily secured debt,” but the final statement “fail[s] to
distinguish existing laws regarding voluntarily secured debt from laws
regarding involuntarily secured debt.” According to POA, the final
statement “conveys objectively false or misleading information because the
Act would, in fact, ‘change existing law regarding secured debt’ by
preventing some secured creditors from collecting against certain debtor
assets that are subject to levy under current law.”

¶4         In evaluating whether the description was objectively false or
misleading, the trial court first considered what the term “secured debt” is
“commonly understood to mean,” citing Molera v. Hobbs (Molera II),
250 Ariz. 13, 22 ¶ 21 (2020). The court considered whether “secured debt”
is commonly understood to mean both voluntarily secured debt (e.g., loans
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for the purchase of real property or a vehicle where such property is offered
as collateral) and involuntarily secured debt (e.g., judgment liens). The
court explained that POA’s objection “only applies if the term ‘secured
debt’ is commonly understood to also mean involuntarily secured debt . . . .
Thus, to the extent the term ‘secured debt’ is commonly understood to only
mean voluntarily secured debt, [the objection] is not well-taken and the
summary is not ‘objectively false or misleading.’” Citing a dictionary
definition of “secured debt,” the court concluded “secured debt” is
“commonly understood to mean voluntarily secured debt.” Secured Debt,
Cambridge Dictionary, https://dictionary.cambridge.org/us/dictionary/
english/secured-debt (defining “secured debt” as “a debt or debts that
include an agreement for the lender to take particular assets from the
borrower if the money is not paid back”) (last visited Dec. 21, 2022).

¶5          The court went on to explain, “even assuming that the term
‘secured debt’ is commonly understood to also mean involuntarily secured
debt, the Court still finds that the summary, when read as [a] whole, is not
‘objectively false or misleading.’” The court noted POA’s objection that
the initiative amends five statutes governing the collection of involuntarily
secured debts. But the court explained the description “addresses these
changes, including any distinction about the collection of involuntarily
secured debt,” elsewhere in the description “when it says: ‘Increases the
value of assets—a homestead, certain household possessions, a motor
vehicle, funds in a single bank, and disposable earnings—protected from
certain legal processes to collect debt . . . . Allows courts to further reduce
the amount of disposable earnings subject to garnishment in some cases of
extreme hardships.’” Thus, the court concluded “the chosen language
would alert a reasonable person to the principal provisions’ general
objectives,” and “that is sufficient.” The court denied POA’s objection and
ordered “that the Act qualifies to appear on the general election ballot.”

¶6          This expedited appeal followed. We have jurisdiction under
article 6, section 5(3) of the Arizona Constitution. After considering the
briefs and authorities filed by the parties and amici, we issued a decision
order on August 24, 2022, concluding that “the summary is sufficient and
alerted a reasonable person to the principal provisions’ general
objectives . . . . The summary, when read as a whole, is not objectively false
or misleading.” We now explain our reasoning in greater detail.

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                            II.   DISCUSSION

¶7         “The only issue before us involves interpretation and application
of constitutional and statutory provisions regarding initiatives, which we
review de novo.” Molera v. Reagan (Molera I), 245 Ariz. 291, 294 ¶ 8 (2018).

           A. The Need for Multiple Circulator Affidavits

¶8          In this case, POA claimed that signatures collected by some
initiative petition circulators must be disqualified because those circulators
failed to strictly comply with A.R.S. § 19-118(B)(5)’s circulator affidavit
requirement. For the reasons explained in Leibsohn v. Hobbs, 254 Ariz. 1,
6–9 ¶¶ 18–32 (2022), which addressed the identical issue, we decline to
disqualify the signatures on this basis.

           B. Does the 100-Word Description Communicate Objectively
              False or Misleading Information?

¶9          “The Arizona Constitution reserves to this state’s citizens the
power to propose and enact laws by initiative.” Molera I, 245 Ariz. at 294
¶ 9 (citing Ariz. Const. art. 4, pt. 1, § 1(1)–(2)). “Under our constitutional
separation of powers, the courts must not intrude upon the people’s power
to legislate, subject to constitutional and proper statutory requirements.”
Id. (citing Kromko v. Superior Court, 168 Ariz. 51, 57–58 (1991)).

¶10         The statutory provision at issue here requires “the title and body
of [an initiative] petition” to include “a description of no more than one
hundred words of the principal provisions of the proposed measure.”
§ 19-102(A) (2014).       The petition must then include the following
language:

          Notice: This is only a description of the proposed measure
          (or constitutional amendment) prepared by the sponsor of
          the measure. It may not include every provision contained
          in the measure. Before signing, make sure the title and text
          of the measure are attached. You have the right to read or
          examine the title and text before signing.

Id.

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¶11        “The 100-word description serves as the ‘elevator pitch’ that
alerts prospective signatories to the measure’s key operative provisions,
enabling them to decide in short order whether to sign the petition, refuse
to do so, or make further inquiry about the measure.” Molera II, 250 Ariz.
at 19 ¶ 9. “Section 19-102(A) does not require the description to be
impartial.” Id. ¶ 10 (citing Save Our Vote, Opposing C-03-2012 v. Bennett,
231 Ariz. 145, 152 ¶ 28 (2013)). “But to comply, the description must
describe the principal provisions to accurately communicate their general
objectives.” Id. We have stated that “[r]easonable people can differ
about the best way to describe a principal provision, but a court should not
enmesh itself in such quarrels.” Id. at 20 ¶ 11 (citing Quality Educ. & Jobs
Supporting I-16-2012 v. Bennett, 231 Ariz. 206, 209 ¶ 13 (2013)). “If the
chosen language would alert a reasonable person to the principal
provisions’ general objectives, that is sufficient.” Id.

¶12         We recently clarified the standard for determining whether a
description is deficient under § 19-102(A) based on the manner in which it
describes the initiative’s principal provisions. Id. at 19–20 ¶¶ 10, 12–13.
In Molera II, we held “[t]he court should disqualify an initiative from the
ballot whenever the 100-word description . . . communicates objectively
false or misleading information.” Id. at 20 ¶ 13 (“[A]lthough sponsors are
free to describe the measure in a positive way and emphasize its most
popular features, they may not engage in a ‘bait and switch’ in which the
summary attracts signers but misrepresents . . . key provisions.”). When
a court is faced with such a challenge, it “should ‘consider the meaning a
reasonable person would ascribe to the description.’” Id. (quoting Ariz.
Chapter of the Associated Gen. Contractors v. City of Phx. (AGCA), 247 Ariz. 45,
48 ¶ 15 (2019)). 3

¶13        POA contends the final statement of the description—“Does not
change existing law regarding secured debt”—is objectively false and
misleading. According to POA, both non-legal resources and legal
authorities recognize the term “secured debt” to mean both voluntarily and

3 A measure will also be disqualified from the ballot if “the sponsor omitted
a ‘principal provision’ of the measure from the description.” Molera II,
250 Ariz. at 19 ¶ 8. Here, POA did not allege the description improperly
omitted a principal provision of the initiative.

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involuntarily secured debt. POA claims the initiative “directly and
materially amends no fewer than five statutes directly governing the rights
of involuntarily secured creditors” (citing A.R.S. §§ 33-1101, -1123, -1125,
-1126, -1131), and therefore the last sentence communicates “objectively
false or misleading information.”4

¶14         The parties and amici have cited numerous authorities—
statutes, case law, Uniform Commercial Code provisions, dictionaries, and
publicly available materials—which they claim support their respective
positions regarding the common understanding of the term “secured debt.”
POA and supporting amici claim their authorities demonstrate an
understanding of “secured debt” as consisting of both voluntarily and
involuntarily secured debt.    The Committee and supporting amici,
conversely, claim their authorities illustrate that “secured debt” is
commonly understood to mean voluntarily secured debt.

¶15        Here, however, we need not determine what the term “secured
debt” is “commonly understood to mean.” See Molera II, 250 Ariz. at 22
¶ 21. This is because, even if “secured debt” is commonly understood to
include both involuntarily and voluntarily secured debt, the description’s
final statement must be “[r]ead in context” with all preceding sentences in
the description to determine what “a reasonable person would know.” See
AGCA, 247 Ariz. at 49 ¶ 17.

¶16         On this point, our recent decision in AGCA is instructive. In
that case, the initiative description stated, in relevant part: “This initiative
measure amends the City Charter to terminate construction of all future
light rail extensions and redirect the funds toward infrastructure
improvements. Revenues from terminating light rail extensions . . . will
fund” various “infrastructure improvements.” 247 Ariz. at 48–49 ¶ 16.
The plaintiffs argued the description was misleading because, among other
things, “the description’s references to ‘revenues’ falsely suggest[ed] that

4 Several amici raised issues that were not raised by the parties. “Because
‘[a]micus curiae will not be permitted to create, extend, or enlarge the
issues’ on appeal, we need not resolve” these issues that the parties did not
present for review. Vangilder v. Ariz. Dep’t of Revenue, 252 Ariz. 481, 493
¶ 46 (2022) (alteration in original) (quoting City of Phoenix v. Phx. Civic
Auditorium & Convention Ctr. Ass’n, 99 Ariz. 270, 274 (1965)).
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terminating light rail extensions would generate income.” Id. at 49 ¶ 17.
But we concluded the language was not misleading because the
description’s “first sentence speaks of ‘redirect[ing]’ existing funds from
future light rail extension projects. Read in context, a reasonable person
would know that the ‘revenues’ mentioned in the succeeding sentences
refer to the redirected funds.” Id. (alteration in original).

¶17       Likewise, in evaluating POA’s claim that the description’s final
statement communicated objectively false or misleading information, we
must read the final statement “in context” with the entire description and
in conjunction with all preceding sentences to determine what “a
reasonable person would know.” See id.

¶18         The description’s text explicitly states the initiative “[i]ncreases
the value of assets—a homestead, certain household possessions, a motor
vehicle, funds in a single bank, and disposable earnings—protected from
certain legal processes to collect debt. Annually adjusts these amended
exemptions for inflation beginning 2024.” This language “would alert a
reasonable person to the principal provisions’ general objectives,” Molera II,
250 Ariz. at 20 ¶ 11—that the Predatory Debt Collection Protection Act will
change the law to increase the values of certain categories of property
statutorily exempt from execution by legal process. This language “would
alert a reasonable person,” id., that the initiative changes existing laws
governing the rights of judgment creditors seeking “to collect debt” on
these specified assets.

¶19        When the final statement—“[d]oes not change existing law
regarding secured debt”—is “[r]ead in context” with the entire description,
we conclude “a reasonable person would know” that the initiative will
increase the value of certain property exempt from execution through legal
process, thereby limiting assets available to judgment creditors, but
changes do not extend beyond those in the description and debts secured
through voluntary financing arrangements are unaffected. See AGCA,
247 Ariz. at 49 ¶ 17; see also Molera II, 250 Ariz. at 20 ¶ 13 (“In addressing
challenges, a court should ‘consider the meaning a reasonable person
would ascribe to the description.’” (quoting AGCA, 247 Ariz. at 48 ¶ 15)).

¶20         The reference to “secured debt,” in context, clarifies that—just as
the initiative “[d]oes not affect existing contracts” regarding debt, which are
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themselves voluntarily entered into—the initiative does not affect the law
regarding how secured transactions are voluntarily attached, perfected,
and enforced. Indeed, the description explains the initiative amends
certain exemptions; and as recognized in the exemption statutes, these
exemptions apply only in the context of involuntarily imposed liens and do
not apply to collection of debt secured through voluntary financing
arrangements. See A.R.S. § 33-1103(A)(1) (“Real property that is subject to
the homestead exemption” under § 33-1101(A) “is exempt from
involuntary sale under a judgment or lien, except in connection with [a]
consensual lien, including a mortgage or deed of trust, or contract of conveyance.”
(emphasis added)); A.R.S. § 33-1122 (“The property declared exempt by this
article,” which includes certain household possessions (§ 33-1123), a motor
vehicle (§ 33-1125(8)), funds in a single bank account (§ 33-1126(9)), and
disposable earnings (§ 33-1131(B)), “is not exempt from process utilized to
enforce a security interest in or pledge of such property.” (emphasis added)).
These exemption statutes list property and values that are exempt from
legal process but exclude financing arrangements involving agreements to
offer as security a consensual lien or pledge of collateral. Further, the
description notes the initiative affects “processes to collect debt” in the
context of these exemptions that apply only to involuntarily imposed liens.

¶21        Therefore, even if a reader were to understand “secured debt” as
generally including both voluntarily and involuntarily secured debt, “a
reasonable person would know”—by reading the entire description—that
the measure intended to change existing laws governing the rights of
judgment creditors by increasing the value of assets exempt from execution,
but the initiative does not make changes beyond those in the description
and does not change existing law regarding debt secured by a consensual
lien or pledge. See AGCA, 247 Ariz. at 49 ¶ 17; see also Molera II, 250 Ariz.
at 20 ¶ 13 (discussing “the meaning a reasonable person would ascribe to
the description”).

¶22        We have stated that “[r]easonable people can differ about the best
way to describe a principal provision, but a court should not enmesh itself
in such quarrels.” Molera II, 250 Ariz. at 20 ¶ 11. Here, we conclude the
description, when read in its entirety, “alert[ed] a reasonable person to the
principal provisions’ general objectives” and was not “objectively false or
misleading.” Id. ¶¶ 11, 13.

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           C. Attorney Fees

¶23        Both parties here request an award of attorney fees pursuant to
A.R.S. § 19-118(F) (“The prevailing party in an action to challenge the
registration of a circulator under this section is entitled to reasonable
attorney fees.”). In declining each party’s request for attorney fees in
Leibsohn, we stated that “neither party prevailed entirely in their arguments
concerning the Committee’s compliance with § 19-118(B).” 254 Ariz. at 9
¶ 33. Here, as well, “[o]ur refusal to disqualify signatures for the
Committee’s failure to comply with § 19-118(B)(5) was based on the
Secretary [of State’s] acts rather than the Committee’s legal arguments.”
Id. We adopt the same reasoning in this case and decline each party’s
request for attorney fees under § 19-118(F).

                           III.   CONCLUSION

¶24       For the foregoing reasons, we affirm the judgment of the trial
court and decline to award attorney fees to either party.

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