Court Opinion

ID: 9401649
Source: CourtListenerOpinion
Date Created: 2023-06-13 18:03:38.913107+00
Date Added: 2024-06-11T17:19:54.073422
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                      DANIEL POPE, Plaintiff/Appellant,

                                         v.

                   CITY OF PHOENIX, Defendant/Appellee.
                    _________________________________
                   RACHEL ROBERTS, Plaintiff/Appellant,

                                         v.

                   CITY OF PHOENIX, Defendant/Appellee.

                    No. 1 CA-TX 20-0006, 1 CA-TX 21-0004
                              (Consolidated)
                              FILED 6-13-2023

                    Appeal from the Arizona Tax Court
                     No. TX2018-00759, TX2020-000833
                 The Honorable Christopher Whitten, Judge
                   The Honorable Danielle J. Viola, Judge

                                   AFFIRMED

                                    COUNSEL

Shawn Aiken PLLC, Phoenix
By Shawn Aiken
Co-Counsel for Plaintiffs/Appellants
Holden Willits PLC, Phoenix
By Robert G. Schaffer
Co-Counsel for Plaintiffs/Appellants

Kickham Hanley PC, Royal Oak, MI
By Gregory D. Hanley
Co-Counsel for Plaintiffs/Appellants

Osborn Maledon PA, Phoenix
By Eric M. Fraser
Counsel for Defendant/Appellee City of Phoenix

                       MEMORANDUM DECISION

Chief Judge Kent E. Cattani delivered the decision of the court, in which
Presiding Judge Cynthia J. Bailey and Judge D. Steven Williams joined.

C A T T A N I, Chief Judge:

¶1            Daniel Pope and Rachel Roberts appeal the dismissal of their
anti-diversion claims against the City of Phoenix. For reasons that follow,
we affirm.

             FACTS AND PROCEDURAL BACKGROUND

¶2             In the mid-2000s, the City built a rental car facility to serve
Sky Harbor Airport. To fund the project, the City implemented a customer
facility charge (“CFC”) of $6 per transaction day for each vehicle rented at
the facility. See Phoenix City Code § 4-79(A). Funds generated by the CFC
are to be used to pay debt service on the bonds used to construct the facility
as well as for ongoing costs associated with the facility and transportation
to the airport, including an extension of the SkyTrain light-rail system. See
Phoenix City Code § 4-79(C)(1).

¶3           Pope rented a car at the facility in 2017 and paid a CFC of $36.
Roberts rented a car at the facility in 2019 and paid a $30 CFC. Each brought
a putative class action alleging that the CFC violates the Arizona
Constitution’s anti-diversion provision, which (broadly speaking) requires
that funds generated by taxes or fees imposed on road users for their road
use be expended only for road purposes. See Ariz. Const. art. 9, § 14. The

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City moved to dismiss in each case, and the tax court granted both motions
on various grounds.

¶4            After the court entered judgment against Pope, Pope timely
filed a motion for new trial, which the court denied. Pope then appealed.
The court entered judgment against Roberts, and after the court reopened
the time to appeal under ARCAP 9(f), Roberts appealed. We consolidated
the two appeals.

                                DISCUSSION

I.     Appellate Jurisdiction.

¶5             Preliminarily, the City argues that Pope did not timely appeal
the tax court’s judgment, and that we thus lack appellate jurisdiction over
his case. The tax court entered judgment against Pope on March 10, 2020,
and Pope timely filed a motion for new trial 14 days later on March 24.
After full briefing, the court denied the motion on May 6. Pope filed his
notice of appeal 16 days later on May 22.

¶6             Under the Arizona Rules of Civil Appellate Procedure, if a
party timely and properly files a post-judgment motion, the 30-day window
for filing an appeal does not begin to run until after the court enters a signed
written order resolving the last such motion. See ARCAP 9(a), (e)(1). A
motion for new trial is one such time-extending post-judgment motion.
ARCAP 9(e)(1)(D). And because the Arizona Rules of Civil Procedure
generally “govern all Arizona Tax Court proceedings,” Ariz. Tax Ct. R. of
Prac. 2, a motion for new trial may properly be filed in a tax case. See Ariz.
R. Civ. P. 59; see also SMP II Ltd. P’ship v. Ariz. Dep’t of Revenue, 188 Ariz.
320, 322 (App. 1996) (noting the tax appeal includes denial of a motion for
new trial); Estate of Bohn v. Scott, 185 Ariz. 284, 289 (App. 1996); State ex rel.
Ariz. Dep’t of Revenue v. Care Constr. Corp., 166 Ariz. 294, 296–97 (App. 1990);
cf. Aileen H. Char Life Int. v. Maricopa County, 208 Ariz. 286, 298–99, ¶¶ 36–
41 (2004) (affirming the tax court’s ruling on a post-judgment Rule 60
motion for relief from judgment).

¶7             Here, Pope’s motion for new trial was timely filed, see Ariz. R.
Civ. P. 59(b)(1) (15-day deadline to file motion for new trial), and Pope filed
his notice of appeal 16 days after the court ruled on the motion, well within
the 30-day deadline. The City asserts, however, that ARCAP 9 (including
its provision for time-extending motions) does not apply to appeals from
tax court judgments. Instead, in the City’s view, a tax-court-specific statute
restricts the time to appeal to a flat 30 days from entry of judgment by
directing that “[t]he judgment is final unless within thirty days after the

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entry of the judgment a notice of appeal is filed with the clerk of the tax
court.” A.R.S. § 12-170(C).

¶8              As the City notes, ARCAP 9(a) contemplates that the deadline
to appeal can permissibly be varied, setting a baseline deadline of 30 days
after entry of judgment “unless the law provides a different time.” But § 12-
170(C) does not provide a different time. Enacted when the Legislature
established a dedicated tax court, see 1988 Ariz. Sess. Laws, ch. 330, § 2 (38th
Leg., 2d reg. sess.), § 12-170(C) sets a deadline of 30 days from entry of
judgment to appeal—just like ARCAP 9(a). That is, the final-judgment rule
now codified in § 12-2101(A)(1) still provides the substantive right to appeal
from a final tax court judgment, see Devenir Assocs. v. City of Phoenix, 169
Ariz. 500, 502 (1991) (citing prior codification of A.R.S. § 12-2101(A)(1)), and
§ 12-170(C) simply “confirms that the procedures for appealing final
judgments under A.R.S. § 12-2101[(A)(1)] also apply to judgments entered
by the tax court,” Devenir, 169 Ariz. at 503 (quoting People of Faith v. Ariz.
Dep’t of Revenue, 164 Ariz. 102, 105 (App. 1990)).

¶9             The City relies on the Devenir court’s observation that § 12-
170(C) “emphasizes that a final judgment of the tax court becomes absolute
and unreviewable if no notice of appeal is filed within the 30 days following
its entry.” Devenir, 169 Ariz. at 503 (quoting People of Faith, 164 Ariz. at 105).
But this simply confirms that the procedures for appealing civil judgments
apply in tax court; a failure to timely appeal from a civil judgment (which
also must be final before appeal is proper) likewise makes that judgment
“unreviewable.” See id.; see also, e.g., Edwards v. Young, 107 Ariz. 283, 284
(1971) (“[W]here the appeal is not timely filed, the appellate court acquires
no jurisdiction other than to dismiss the attempted appeal.”); cf. Ariz. R.
Civ. P. 54(a)–(c), 58(b) (entry of final judgment).

¶10           It would be anomalous to permit post-judgment motions
asserting errors in the tax court’s judgment, see supra ¶ 6, but then require
that an appeal be filed before the tax court has an opportunity to correct any
error (or reaffirm its judgment). See generally Ariz. R. Civ. P. 50(b), 52(b),
59(a)–(b), 59(d), 60(b)–(c) (15-day deadline for post-judgment motions,
including Rule 60 motions under ARCAP 9(e)(1)(D)); Ariz. R. Civ. P.
7.1(a)(3) (permitting 10 days for a response and 5 days for a reply to
motions). Pope’s case demonstrates the quandary: no appeal would have
been necessary (from Pope’s perspective) if the tax court had granted his
timely motion for new trial, but the court did not rule until more than 30
days after entering judgment, at which point (under the City’s
interpretation) Pope would not be able to appeal. Moreover, the City’s
interpretation of finality under § 12-170(C) would presumably divest the

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tax court of authority to rule on a post-judgment motion (not just a party’s
ability to appeal the ruling) 30 days after judgment.

¶11           In sum, § 12-170(C) simply confirms that the procedures for
appealing civil judgments apply in tax court. Thus, ARCAP 9(e)(1)(D)
extended the time for Pope to appeal, and his appeal was timely filed. We
have jurisdiction under A.R.S. § 12-2101(A)(1).1

II.    Anti-Diversion.

¶12             The City requires all rental car companies that either lease
space at or obtain customers through Sky Harbor’s consolidated rental car
facility to collect a CFC of “six dollars per transaction day per vehicle” from
all airport customers. Phoenix City Code § 4-79(A). Each rental company
must hold those funds in trust and must, on a monthly basis, “remit [to the
City] all CFC’s that were collected or should have been collected from its
airport customers.” Phoenix City Code § 4-79(B)–(C). Failure to comply
with these requirements is a class 1 misdemeanor. Phoenix City Code § 4-
80.

¶13           Pope and Roberts argue that the CFC is a fee on road users
within the ambit of the anti-diversion provision and that the City
improperly uses those funds for non-road-related purposes. They contend
that the tax court thus erred by dismissing their complaints for failure to
state a claim. We review the dismissal de novo, assuming the truth of the
complaint’s well-pleaded facts. Coleman v. City of Mesa, 230 Ariz. 352, 355–
56, ¶¶ 7–9 (2012). We will affirm dismissal under Rule 12(b)(6) if the
plaintiff “would not be entitled to relief under any interpretation of the facts
susceptible of proof.” Id. at 356, ¶ 8 (citation omitted).

1      The City does not challenge our jurisdiction to consider Roberts’s
appeal, but we note that her appeal was likewise filed outside the 30-day
period specified in A.R.S. § 12-170(C)—as was the City’s cross-appeal (later
voluntarily dismissed) from that judgment. In Roberts’s case, the superior
court granted Roberts’s request under ARCAP 9(f) to reopen the time to
appeal due to lack of notice of entry of the judgment. The City leaves
unexplained why § 12-170(C) should be interpreted to prevent time-
extension under ARCAP 9(e) for Pope’s appeal while permitting reopening
the time to appeal under ARCAP 9(f) for Roberts’s appeal. In any event,
given our conclusion that ARCAP 9’s time-extending provisions apply to
appeals from tax court judgments, we likewise have jurisdiction over
Roberts’s appeal on this basis.

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                             POPE v. PHOENIX
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¶14           The anti-diversion provision of the Arizona Constitution
prohibits use of funds generated by taxes or fees “relating to registration,
operation, or use of vehicles on the public highways or streets” for anything
other than “highway and street purposes”:

       No moneys derived from fees, excises, or license taxes relating
       to registration, operation, or use of vehicles on the public
       highways or streets or to fuels or any other energy source
       used for the propulsion of vehicles on the public highways or
       streets, shall be expended for other than highway and street
       purposes . . . .

Ariz. Const. art. 9, § 14. This provision restricts expenditures, but only if
the source of the funds falls within specified categories: as relevant here,
fees “relating to . . . operation[] or use of vehicles on the public highways or
streets.” Id.

¶15            Pope and Roberts urge us to interpret “relating to” broadly as
anything having a “connection with” or “reference to” road use. But the
Arizona Supreme Court has already rejected that type of approach and has
instead construed “relating to” in this context to mean a tax or fee “[1]
imposed as a prerequisite to, or [2] triggered by, the legal operation or use
of a vehicle on a public road.” Saban Rent-a-Car LLC v. Ariz. Dep’t of Revenue,
246 Ariz. 89, 99, ¶ 39 (2019); see also id. at 95–99, ¶¶ 22, 26–36. The CFC is
neither.

¶16              Here, payment (or non-payment) of the CFC has no bearing
on whether a rental vehicle can legally be used or operated on roads. Car
rental companies must register their vehicles (and pay the necessary
registration fees) to authorize use of their vehicles on public roadways. See
A.R.S. §§ 28-2153(A) (prohibiting operation of a motor vehicle without
current registration), -2157(E) (requiring payment of fee for vehicle
registration); cf. Saban, 246 Ariz. at 98, ¶ 33. And car renters must have a
valid driver’s license (which requires payment of a related fee) to lawfully
operate a rental car on Arizona’s roadways. See A.R.S. §§ 28-3151(A)
(prohibiting driving “without a valid driver license”), -3158(B) (requiring
payment of fee for driver license), -3002 (setting fees for driver licenses); cf.
Saban, 246 Ariz. at 98, ¶ 33. The CFC, on the other hand, does not affect
whether a driver may lawfully operate a rental vehicle or whether a rental
vehicle may lawfully be used on the road, and thus it is not “a prerequisite
to . . . the legal operation or use of a vehicle on a public road” as necessary
to implicate the anti-diversion provision. See Saban, 246 Ariz. at 99, ¶ 39.

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¶17            Pope and Roberts contend otherwise, highlighting that no car
rental company at the facility will waive the CFC or rent to an airport
customer who refuses to pay. At most, that fact simply highlights that the
CFC may be a practical requirement to rent a car at the facility. See Phoenix
City Code § 4-79(A). It is no barrier at all to anyone who chooses to rent
elsewhere. More importantly, the test under Saban does not ask whether
payment of the tax or fee presents a practical barrier to (as Pope and Roberts
phrase it) “getting on the roads.” Rather, the test asks whether the tax or
fee affects lawful road use: to fall within the anti-diversion provision,
payment must be necessary for “legal operation or use of a vehicle on a
public road.” Id. at 99, ¶ 39 (emphasis added). Indeed, a contrary rule
would sweep too broadly, reaching even taxes and fees that Pope and
Roberts concede are not subject to anti-diversion restrictions, such as a fee
paid to exit a parking garage, the transaction-privilege tax imposed on car
rentals, and even the stadium surcharge at issue in Saban. See id. at 97–98,
¶¶ 31–35.

¶18            Comparing the CFC to a toll, Pope and Roberts assert that the
CFC is a prerequisite to road usage notwithstanding that customers can
avoid the charge by renting elsewhere. But a toll is imposed—and payment
is necessary—for the privilege of using a particular road or bridge. A driver
cannot lawfully take that route without paying the toll. Non-payment of
the CFC imposes no such restrictions on whether or where a renter can
drive. The comparison thus underscores rather than contradicts Saban’s
focus on whether a tax or fee is a prerequisite to “legal” vehicle operation.
See id. at 99, ¶ 39. Being a practical prerequisite to completing the rental
transaction at a particular location means the CFC is essentially a facility
usage fee and does not transmute the charge into a legal prerequisite to
lawful operation or use of the vehicle on Arizona roadways.

¶19           Moreover, as the governing ordinance makes clear, the CFC
is triggered not by a rental customer’s eventual road use but rather by car
rental companies’ use of the airport’s consolidated rental car facility to serve
customers. See Phoenix City Code § 4-79. The CFC is required only for car
rental companies that use the facility (whether occupying space on-site or
obtaining customers through the facility for an off-site location), and those
companies must collect the fee from only their airport customers. Phoenix
City Code § 4-79(A). Furthermore, the ordinance directs that the funds
generated by the CFC go to the facility itself for construction, ongoing
operating costs, and future capital improvements, thus highlighting that
the CFC is a usage fee intended to help offset the facility’s cost. See Phoenix
City Code § 4-79(C)(1).

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¶20            Pope and Roberts assert, however, that the CFC is necessarily
directed to customers’ road usage, not their use of the facility, because it is
calculated based on “transaction days” (duration of the rental) and not, for
instance, as a flat rate or percentage per transaction. See Phoenix City Code
§ 4-79(A) (CFC imposed at a rate of “six dollars per transaction day per
vehicle”). But this amount plausibly relates to the volume of a car rental
company’s business at the facility: how many vehicles the company needs
there and thus how much space at the facility it needs to use. And the CFC
is imposed at the specified rate regardless of whether, how much, or how
often the customer ultimately uses the car. And because the CFC is
triggered by use of the facility, not road usage, a customer who does not
wish to pay the CFC may simply leave Sky Harbor and rent a car elsewhere.

¶21            Pope and Roberts argue that the CFC nevertheless falls within
the anti-diversion provision because it is imposed directly on road users
(the renters) and not on car rental companies (as was the case in Saban). See
Saban, 246 Ariz. at 91, ¶¶ 1, 3. But the basic premise of this argument—that
the CFC is imposed on rental customers—is far from clear. To be sure, the
ordinance directs rental car companies to collect the CFC from airport
customers. Phoenix City Code § 4-79(A) (covered rental car companies
“shall collect” the CFC at the specified rate “from all Sky Harbor Airport
customers”). But ultimately, it is the companies (not the customers) that are
obligated to remit “all CFC’s that were collected or should have been
collected.” Phoenix City Code § 4-79(C). Thus, by its terms, the ordinance
controls only behavior by car rental companies, not their customers. See,
e.g., Phoenix City Code § 4-79(A) (requiring companies to collect the CFC),
(B) (requiring companies to separately account for CFCs and hold funds in
trust for the City), (C) (requiring companies to monthly remit all CFCs that
were or should have been collected). And because the ordinance sets
requirements only for the companies, the legal obligation to pay the CFC
and the consequences for non-compliance likewise fall only on the
companies, not customers. See Phoenix City Code § 4-80 (classifying “a
violation of the requirements” of ordinances including § 4-79 as a class 1
misdemeanor).

¶22           But either way, the critical fact remains that the CFC is neither
a prerequisite to nor triggered by legal use or operation of a vehicle on
Arizona’s roadways. See supra ¶¶ 16–20. And because the CFC does not
qualify as a tax or fee “relating to . . . operation[] or use of vehicles on the
public highways or streets” as defined in Saban, the superior court properly
dismissed Pope and Roberts’s complaints. See Ariz. Const. art. 9, § 14;
Saban, 246 Ariz. at 99, ¶ 39. Because dismissal was proper on this basis, we

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need not address the City’s other proffered grounds for affirming the
judgments.

III.   Attorney’s Fees on Appeal.

¶23           The City requests an award of attorney’s fees on appeal under
A.R.S. §§ 12-349 and -341.01. In an exercise of our discretion, we deny the
request.

                              CONCLUSION

¶24          For the foregoing reasons, we affirm.

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

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