Court Opinion

ID: 4705668
Source: CourtListenerOpinion
Date Created: 2021-07-22 18:02:44.420002+00
Date Added: 2024-06-11T08:06:30.519973
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                    ZADOK ELI, et al., Plaintiffs/Appellants,

                                         v.

           PROCACCIANTI AZ II LP, et al., Defendants/Appellees.

                              No. 1 CA-CV 19-0855
                                FILED 7-22-2021

           Appeal from the Superior Court in Maricopa County
           Nos. CV2012-000363, CV2012-051066 (Consolidated)
           Nos. CV2014-054346, CV2015-053091, CV2016-050379
              The Honorable Theodore Campagnolo, Judge

               DISMISSED IN PART; AFFIRMED IN PART

                                    COUNSEL

Zadok Eli, Hana Eli, Scottsdale
Plaintiffs/Appellants

Colleen London, R.L. Whitmer, Scottsdale
Plaintiffs/Appellants

Spencer Fane LLP, Phoenix
By Andrew M. Federhar, Jessica Anne Gale
Counsel for Defendant/Appellee Procaccianti AZ II LP

Hill Hall & DeCiancio PLC, Phoenix
By R. Corey Hill, Ginette M. Hill, Christopher Robbins
Counsel for Defendant/Appellee Hilton Casitas Council of Homeowners
                    ELI, et al. v. PROCACCIANTI, et al.
                            Decision of the Court

                      MEMORANDUM DECISION

Chief Judge Kent E. Cattani delivered the decision of the Court, in which
Judge Samuel A. Thumma and Judge Peter B. Swann joined.

C A T T A N I, Chief Judge:

¶1           This consolidated case involves claims by Zadok and Hana
Eli, along with R.L. Whitmer and Colleen London (collectively,
“Homeowners”), against a homeowner’s association (“HOA”) and a
Scottsdale Hilton Hotel (the “Hotel”). Re-urging claims that have
previously been rejected in related appeals, Homeowners allege that the
HOA is an unincorporated entity and was not entitled to raise the rents on
land owned by the Hotel and on which Homeowners’ condominiums were
built. For reasons that follow, we affirm the superior court’s denial of
Homeowners’ motion for relief from judgment.

             FACTS AND PROCEDURAL BACKGROUND

¶2             In 1970, the Hotel signed a long-term land lease for a 20-acre
parcel of land in Scottsdale. The Hotel reserved 12 acres for a resort and
dedicated the remaining 8 acres to the 29-unit Casitas condominium
complex. Under the sublease agreement, the condo owners (including
Homeowners) were required to make payments toward their individual
share of the land lease to the Hotel and the HOA. In 1970, the HOA was an
unincorporated association named the Hilton Casitas Council of
Homeowners. In 1994, however, the HOA became a non-profit corporation
named Hilton Casitas Council of Co-Owners.

¶3            In 1999, the Hotel and HOA (collectively, “Defendants”)
amended the sublease. After those amendments, Homeowners brought
numerous lawsuits against either the Hotel, Procaccianti AZ II, L.P. (the
Hotel’s successor-in-interest), or the HOA. See, e.g., Shaffer v. Procaccianti
AZ II, L.P., 1 CA-CV 16-0628, 1 CA-CV 16-0629, 1 CA-CV 16-0654
(consolidated), 2018 WL 2306949 (Ariz. App. May 22, 2018) (mem. decision).
In these lawsuits, Homeowners primarily argued that only the original,
unincorporated HOA could amend the sublease, so any actions taken by
the successor non-profit HOA were invalid—an argument that was rejected
in each case. See id. at *5–6, ¶¶ 23–24. The superior court entered judgment

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                   ELI, et al. v. PROCACCIANTI, et al.
                           Decision of the Court

for the Defendants and awarded the Hotel attorney’s fees of $459,000. Id.
at *3, ¶ 9.

¶4            Homeowners moved for relief from judgment under Arizona
Rule of Civil Procedure (“Rule”) 60 three times. The first two motions cited
fraud on the court under current Rule 60(b)(3) and argued that the HOA
and its attorneys defrauded the court regarding the HOA’s true legal status,
and that the Hotel falsely concealed the identity of the HOA’s recordkeeper.
Homeowners again argued that the HOA remained an unincorporated
entity. The court denied both motions.

¶5            In their third motion for relief from judgment, Homeowners
again asserted fraud on the court under Rule 60(b)(3) regarding the HOA’s
legal status. This motion, however, also included a short Rule 60(b)(6)
(“any other reason justifying relief”) argument. Homeowners supported
their motion with two new affidavits they claimed provided
“uncontroverted” evidence rebutting the HOA’s legal status as a non-profit
corporation. Both affidavits focused on alleged admissions made by an
HOA board member during a settlement meeting in a tangentially related
case, Whitmer v. Hilton Casitas Homeowners Ass’n, 245 Ariz. 77 (App. 2018).
Homeowners’ stated basis for extraordinary relief under Rule 60(b)(6) was
harm to “the marketability of the casitas and their ability to be financed.”

¶6             After briefing and argument, the superior court denied
Homeowners’ third Rule 60 motion in a minute entry primarily addressing
the unsubstantiated fraud allegations. The court concluded that the HOA’s
legal status had been litigated many times, that Homeowners’ arguments
were circular, and that their Rule 60 motion was filed without substantial
justification and for purposes of delay. The court entered a revised
judgment including an attorney’s fees award under A.R.S. § 12-349.
Homeowners timely appealed, and we have jurisdiction under A.R.S. § 12-
2101(A)(2).

                              DISCUSSION

I.    Rule 60 Relief.

¶7            Homeowners’ opening brief raises seven issues, all of which
challenge the superior court’s denial of their Rule 60(b)(6) motion.
Homeowners’ only substantive contention, however, is that they were
entitled to relief based on their “uncontroverted and undisputed sworn
declarations” challenging the HOA’s legal status.

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                    ELI, et al. v. PROCACCIANTI, et al.
                            Decision of the Court

¶8            The court may grant relief from a final judgment under Rule
60(b)(6) for “any other reason justifying relief” if a party can show
extraordinary hardship or injustice for a reason other than the five specified
in Rule 60(b)(1)–(5). Hilgeman v. Am. Mortg. Sec., Inc., 196 Ariz. 215, 220, ¶
15 (App. 2000). To prevail under Rule 60(b)(6), a party must also show
“substantial prejudice.” See Copeland v. Ariz. Veterans Mem’l Coliseum &
Exposition Ctr., 176 Ariz. 86, 89 (App. 1993). We review the superior court’s
decision to deny Homeowners’ Rule 60(b)(6) motion for an abuse of
discretion and review the court’s interpretation of procedural rules de
novo. See Gonzalez v. Nguyen, 243 Ariz. 531, 533, ¶ 8 (2018). We do not
reweigh evidence on appeal. See Godwin v. Farmers Ins. Co. of Am., 129 Ariz.
416, 419 (App. 1981).

¶9             Here, Homeowners did not satisfy their burden of
establishing grounds for relief under Rule 60(b)(6). The superior court
correctly determined that Homeowners’ affidavits did not overcome the
preclusive effect of our prior decisions.            Further, preclusion
notwithstanding, the superior court did not abuse its discretion by
determining that Homeowners filed the Rule 60 motion without substantial
justification and for the purpose of delay. Although Homeowners’ motion
initially relied on deposition testimony by a board member in separate
proceedings, they now rely solely on their own declarations to assert that
Procaccianti and the HOA committed fraud on the court by
misrepresenting that the HOA was incorporated. Homeowners assert that
an HOA board member made “admissions” during a settlement conference
that the HOA was not incorporated, but Homeowners acknowledge that
the board member ultimately disavowed that assessment.

¶10           Homeowners view the HOA’s legal status as an issue of fact
subject to redetermination. At this point, however, the HOA’s status has
been decided in prior appeals in several underlying cases in which the
mandate has issued. See, e.g., Shaffer, 1 CA-CV 16-0628, at *5–6, ¶¶ 23–24;
London v. Karatz, 1 CA-CV 15-0070, 2016 WL 5746236, at *4, ¶ 17 (Ariz. App.
Oct. 4, 2016) (mem. decision). As this court has previously stated, “the
question of the HOA’s status, and its authority to act on behalf of the casita
owners, has already been litigated and decided numerous times.” Shaffer,
1 CA-CV 16-0628, at *6, ¶ 24. Thus, this issue is precluded, and we decline
to further address it. See Campbell v. SZL Props., Ltd., 204 Ariz. 221, 223, ¶ 9
(App. 2003) (noting that issue preclusion binds a party to a previously
rendered decision).

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                    ELI, et al. v. PROCACCIANTI, et al.
                            Decision of the Court

II.    Motion to Dismiss Appeal.

¶11            The HOA filed a motion to dismiss the appeal of CV2012-
015066, arguing that the aggrieved party in that case (Diana Shaffer) never
filed a notice of appeal. Homeowners oppose, contesting that they were
aggrieved, and that the cases were consolidated, so the CV2012-051066
judgement was against them as well. But consolidation of cases does not
merge them into a single case, Brummond v. Lucio, 243 Ariz. 360, 365, ¶ 20
(App. 2017), and the Homeowners were not the parties aggrieved by the
judgment against Shaffer in CV2012-051066. See ARCAP 1(d) (noting that
the “aggrieved” party may appeal the judgment); In re Estate of Friedman,
217 Ariz. 548, 551, ¶ 9 (App. 2008) (“An appeal may only be taken by a party
aggrieved by the judgment.”) (emphasis added). Therefore, because
Homeowners were not aggrieved by the judgment in CV2012-051066, and
because Shaffer did not pursue appellate relief, we grant the motion to
dismiss the appeal of CV2012-051066.

III.   Attorney’s Fees on Appeal.

¶12            Defendants seek attorney’s fees on appeal under A.R.S. § 12-
341.01 as well as attorney’s fees and sanctions under A.R.S. § 12-349. Under
A.R.S. § 12-349, an award of fees is mandatory and double damages are
discretionary against any party that brings a claim without substantial
justification or that brings a claim for purposes of delay. A.R.S. § 12-
349(A)(1)–(2). For these purposes, “‘without substantial justification’
means that the claim . . . is groundless and is not made in good faith.” A.R.S.
§ 12-349(F).

¶13           After considering Homeowners’ arguments, the superior
court awarded Defendants attorney’s fees under A.R.S. § 12-349.
Defendants assert Homeowners continue to misstate evidence, are
motivated by personal animus, have violated the Rules of Evidence, and
continue to bring meritless appeals on issues long ago decided. We agree.

¶14           This is Homeowners’ third unsuccessful attempt to evade
judgment. They continue to make unsubstantiated allegations that fraud
by the parties or their counsel led to the court’s decisions. Defendants have
met their burden to show by a preponderance of the evidence violations of
A.R.S. § 12-349(A). See In re Estate of Stephenson, 217 Ariz. 284, 289, ¶ 28
(App. 2007). Accordingly, we award Defendants their attorney’s fees
pursuant to both A.R.S. § 12-341.01 and A.R.S. §§ 12-349(A), -350 and their
costs pursuant to A.R.S. § 12-342 upon compliance with ARCAP 21.

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           ELI, et al. v. PROCACCIANTI, et al.
                   Decision of the Court

                      CONCLUSION

¶15   We affirm the superior court’s ruling.

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

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