Court Opinion

ID: 7798854
Source: CourtListenerOpinion
Date Created: 2022-08-08 17:02:32.594243+00
Date Added: 2024-06-11T16:28:51.981976
License: Public Domain

IN THE

    SUPREME COURT OF THE STATE OF ARIZONA
                             TFLTC, LLC,
                           Plaintiff/Appellant,

                                    v.

                 BETH FORD, PIMA COUNTY TREASURER,
                         Defendant/Appellee.

                          No. CV-21-0133-PR
                          Filed August 8, 2022

           Appeal from the Superior Court in Pima County
          The Honorable Lee Ann Roads, Judge Pro Tempore
               The Honorable Brenden J. Griffin, Judge
                The Honorable Leslie B. Miller, Judge
     Nos. C20195744, C20190581, C20196128, C20195823, C20195924
                  REVERSED AND REMANDED

     Memorandum Decision of the Court of Appeals, Division Two
Nos. 2 CA-CV 2020-0122, 2 CA-CV 2020-0123, 2 CA-CV 2020-0124, 2 CA-
           CV2020-0128, 2 CA-CV2020-0137 (Consolidated)
                         Filed April 22, 2021
                             REVERSED

COUNSEL:

Mark L. Manoil, Barrett L. Kime, Manoil Kime, PLC, Phoenix, Attorneys for
TFLTC, LLC

Laura Conover, Pima County Attorney, Kathryn Ore, Eric J. Levy, Deputy
County Attorneys, Tucson, Attorneys for Pima County Treasurer

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

CHIEF JUSTICE BRUTINEL, opinion of the Court:

¶1             This case arises from five separate tax lien foreclosure actions,
each brought pursuant to A.R.S. § 42-18201 and consolidated on appeal.
We granted review to decide whether Leveraged Land Co. v. Hodges, 226 Ariz.
382 (2011), precludes all attorney fees and costs incurred after a redemption
certificate has issued, including those fees and costs incurred as a direct and
necessary result of completing that redemption. We hold reasonable fees
and costs arising from redemption itself are recoverable even though those
expenses were incurred after the redemption.

                          I.       BACKGROUND

¶2             TFLTC, LLC (“TFLTC”) purchased tax liens on five properties
and subsequently filed an action to foreclose each property owner’s
redemption rights. Eventually, the owners redeemed their tax liens and
certificates of redemption issued. TFLTC then sought to recover attorney
fees and costs in each case pursuant to A.R.S. § 42-18206, including fees and
costs incurred after the certificates of redemption had issued. Included
were fees and costs incurred, among others, for: drafting fee and cost
demand letters; reviewing pleadings; drafting stipulations to dismiss non-
redeeming defendants; filing motions to schedule and vacate default
judgment hearings; and preparing motions for summary judgment. All
were incurred in connection with services performed relating to
redemption.

¶3           The trial courts each awarded fees and costs to TFLTC but,
relying on Leveraged Land, awarded only fees and costs incurred before
redemption. TFLTC appealed.

¶4             In a memorandum decision, the court of appeals concluded
that the trial courts properly adhered to the decision in Leveraged Land,
interpreting it to preclude recovery of all post-redemption fees and costs,
and thus did not abuse their discretion in denying TFLTC recovery of those
fees and costs.

¶5           TFLTC filed a petition for review asking that this Court revisit
Leveraged Land and determine whether it pronounced a categorical rule
barring recovery of post-redemption fees and costs, a question of statewide

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                              TFLTC v. FORD
                            Opinion of the Court

importance, likely to reoccur. We have jurisdiction pursuant to article 6,
section 5(3) of the Arizona Constitution.

                            II.    DISCUSSION

¶6            The question before us is whether our decision in Leveraged
Land precludes recovery of all fees and costs incurred pursuant to
§ 42-18206 after a certificate of redemption has issued. We review the
interpretation of a statute, a question of law, de novo. Leveraged Land,
226 Ariz. at 384 ¶ 6.

¶7            Section 42-18206 provides:

       Any person who is entitled to redeem under article 4 of this
       chapter may redeem at any time before judgment is entered,
       notwithstanding that an action to foreclose has been
       commenced, but if the person who redeems has been served
       personally or by publication in the action, or if the person
       became an owner after the action began and redeems after a
       notice is recorded pursuant to § 12-1191, judgment shall be
       entered in favor of the plaintiff against the person for the costs
       incurred by the plaintiff, including reasonable attorney fees to
       be determined by the court.

¶8            In Leveraged Land, we concluded that the post-redemption fees
and costs at issue were not recoverable under § 42-18206 for reasons
entirely inapplicable here. The tax lien purchaser in Leveraged Land initiated
an action to foreclose the owner’s right to redeem the tax lien. 226 Ariz.
at 384 ¶ 2. The landowner failed to appear after being served by
publication, and default judgment was entered in the lien purchaser’s favor.
Id. The landowner then moved to set aside the judgment, arguing he had
been improperly served. Id. ¶ 3. The landowner eventually succeeded in
setting aside the judgment and redeemed the tax lien. Id. The purchaser
then amended the original complaint, this time challenging the validity of
the redemption, which was ultimately unsuccessful both at the trial court
and on appeal. Id. While the appeal was pending, however, the purchaser
sought $153,182 in attorney fees and costs under § 42-18206 for the amount
incurred during the entire redemption litigation. Id. ¶ 4. A substantial
portion of the fees and costs was incurred after the redemption and as a
result of the litigation challenging redemption. Id. The superior court
awarded only $1,500 for the amount incurred before redemption and

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                              TFLTC v. FORD
                            Opinion of the Court

nothing for the subsequent litigation challenging the redemption. Id. A
divided panel of the court of appeals reversed, concluding that the
purchasers were entitled to collect the fees and costs incurred in challenging
the validity of the redemption. Id.

¶9             This Court disagreed with the court of appeals, holding that
the post-redemption fees and costs were not reasonable under § 42-18206.
See id. at 386 ¶ 12. In reaching this conclusion, we noted two issues with
precluding post-redemption fees and costs.

¶10           First, we considered it implausible that the legislature
intended that § 42-18206 relieve tax lien purchasers challenging the validity
of a redemption “from the financial risk accompanying such litigation by
awarding fees incurred after the redemption.” Id. at 385 ¶ 7. Post-
redemption litigation challenging the redemption’s validity is wholly
distinct from the redemption process; indeed, we reasoned that “[b]ecause
the redemption is complete when the certificate of redemption issues, an
action challenging the validity of a redemption that has already occurred is
not part of the redemption.” Id. ¶ 9.

¶11            Second, we noted that allowing recovery of post-redemption
fees and costs challenging redemption would contravene the purpose of
§ 42-18206, which is “to make a tax lien purchaser whole if the landowner
redeems.” Id. ¶ 11. Allowing purchasers to recover those fees and costs at
issue would “skew[] the statute to subsidize unsuccessful litigation” and
allow “tax lien purchasers to coerce landowners otherwise able to redeem
to forfeit their property by the threat of continued litigation conducted at
the landowners’ expense.” Id. at 386 ¶ 12. We concluded that “neither the
text of § 42-18206 nor sound policy” supported awarding fees and costs
incurred as a result of challenging redemption. Id.

¶12           Neither of those issues arises here. Rather than fees and costs
incurred from a process completely separate from the redemption, the fees
and costs requested here are a direct and necessary result of completing the
redemption. Allowing recovery of those fees and costs aligns with
§ 42-18206’s purpose of making the tax lien purchaser whole after
redemption. In fact, not allowing recovery would contravene § 42-18206’s
purpose. Imposing a strict temporal cutoff for recovery would potentially
cause tax lien purchasers to incur a loss by making them pay out-of-pocket
for reasonable expenses necessary to complete the redemption and possibly
deter the purchase of tax liens. See id. at 385 ¶¶ 10–11.

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                             TFLTC v. FORD
                           Opinion of the Court

¶13            We hold that Leveraged Land does not preclude recovery of all
fees and costs incurred after redemption. And just as in Leveraged Land, we
“leave it to the sound discretion of the trial court to determine how much
of the plaintiff’s costs and fees were reasonable” in a request for fees and
costs under § 42-18206. Id. at 386 ¶ 13. Where the fees and costs sought are
the direct and necessary result of the redemption process and not arising
out of a challenge to the validity of the redemption, they are recoverable
under § 42-18206.

¶14           Today’s holding does not disturb the holding in Leveraged
Land; trial courts should continue to consider the purpose for which the
post-redemption fees and costs were incurred in determining their
reasonableness (e.g., whether they incentivize meritless litigation).

                          III.   CONCLUSION

¶15          We reverse the court of appeals’ decision, reverse the trial
courts’ orders denying fees and costs incurred after redemption, and
remand to those courts to award fees and costs consistent with this opinion.

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