Court Opinion

ID: 8405158
Source: CourtListenerOpinion
Date Created: 2022-10-25 16:02:31.129163+00
Date Added: 2024-06-11T16:46:49.245990
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  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

                     MICHAEL PIERCE, Plaintiff/Appellee,

                                         v.

            DOUGLAS A. DUCEY, et al., Defendants/Appellants.

                              No. 1 CA-CV 22-0007
                               FILED 10-25-2022

            Appeal from the Superior Court in Maricopa County
                           No. CV2018-000108
                  The Honorable John R. Hannah, Judge

                       VACATED AND REMANDED

                                    COUNSEL

Gordon Rees Scully Mansukhani LLP, Phoenix
By Andrew S. Jacob
Counsel for Plaintiff/Appellee

Fennemore Craig, P.C., Phoenix
By Timothy J. Berg, Emily Ward, Taylor Burgoon
Co-Counsel for Defendants/Appellants Governor Douglas A. Ducey and State of
Arizona

Office of the Governor, Phoenix
By Anni Lori Foster
Co-Counsel for Defendants/Appellants Governor Douglas A. Ducey and State of
Arizona
                           PIERCE v. DUCEY, et al.
                             Decision of the Court

                       MEMORANDUM DECISION

Judge Angela K. Paton delivered the decision of the Court, in which
Presiding Judge Maria Elena Cruz and Judge Peter B. Swann joined.

P A T O N, Judge:

¶1             Governor Douglas A. Ducey and the State of Arizona
(collectively “the State”) appeal the entry of declaratory judgment in favor
of Michael Pierce, declaring that the Enabling Act of Arizona required
congressional consent to any change in the formula for investment and
distribution of assets in the School Land Trust Fund (“Fund”). Because the
matter was mooted by congressional action, we vacate the judgment of the
superior court and remand the matter for dismissal.

                  FACTS AND PROCEDURAL HISTORY

¶2              The Enabling Act of Arizona was enacted in 1910 by
Congress, and conditioned Arizona’s statehood on its acquiescence to
“specific directives to the Arizona constitutional convention.” John D.
Leshy, The Arizona State Constitution, 407 (2d ed. 2013); see also 36 Stat. 557
(“Enabling Act” or “Act”). We apply the Enabling Act as the fundamental
law of Arizona, superior even to the Arizona State Constitution. Gladden
Farms, Inc. v. State, 129 Ariz. 516, 518 (1981). As relevant here, Arizona
adopted conforming provisions related to the use of state lands granted in
trust by the federal government to the state. Leshy, supra at 299-312; see also
Ariz. Const. art. 10. These included the establishment of the Fund—a
“permanent inviolable fund” derived from the use and sale of land—and
the investment of proceeds from land use and sales—which must be used
to benefit education in Arizona. 36 Stat. 557, 573-74, §§ 27, 28. The Enabling
Act also provided that Arizona could not change the way distributions from
the Fund were made or utilized without congressional consent. Id. at § 28.
Congress has provided such consent on several occasions. See Pub. L. No.
115-141, tit. IV, § 401, 132 Stat. 348 (2018); Pub. L. No. 106-133, 113 Stat. 1682
(1999); Pub. L. No. 85-180, 71 Stat. 457 (1957); Pub. L. No. 82-44, 65 Stat. 51
(1951); Pub. L. No. 74-658, 49 Stat. 1477 (1936); Pub. L. No. 70-788, 45 Stat.
1252 (1929); Pub. L. No. 69-570, 44 Stat. 1026 (1927).

¶3            The 1999 amendment to the Enabling Act provided that
“[d]istributions from the trust funds shall be made as provided in Article

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                           PIERCE v. DUCEY, et al.
                             Decision of the Court

10, Section 7 of the Constitution of the State of Arizona.” Pub. L. No. 106-
133, 113 Stat. 1682, § 2(a). In 2012, Arizona voters adopted Proposition 118,
which provided that the Fund would distribute 2.5% of its corpus, as
opposed to the prior formulation which permitted distribution only of the
interest returns on the Fund. Laws 2012, H.C.R. 2056, § 1, Prop. 118,
approved election Nov. 6, 2012. No congressional action followed this
amendment. In 2016, voters adopted Proposition 123, which provided that
the Fund would distribute 6.9% of the “average monthly market value[]” of
the Fund over each of the prior five years. Laws 2015, 1st Spec. Sess., H.C.R.
2001, § 1, Prop. 123, approved election May 17, 2016.

¶4             Pierce is a United States citizen and Arizona resident. In 2016,
Pierce filed an action in the District Court of Arizona, seeking to enjoin
Governor Ducey and the State of Arizona from implementing Proposition
123 because Congress had not consented to the Fund distribution change
by amending the Enabling Act, along with other claims. Pierce v. Ducey,
2019 WL 4750138 (D. Ariz. 2019) (“Pierce I”). The district court dismissed
the State from the action based on its Eleventh Amendment immunity from
suit. See Pierce v. Ducey, 965 F.3d 1085, 1088, n.3 (9th Cir. 2020) (“Pierce II”).

¶5            Pierce initially prevailed at the district court, obtaining
declaratory relief, but the Ninth Circuit Court of Appeals vacated the
judgment and remanded for dismissal of the federal claim. See id. at 1089-
91. The court found Pierce lacked Article III standing, and that his claim
was mooted by Congress consenting to Proposition 123 by way of stating
its consent to the changes in a continuing resolution. See Consolidated
Appropriations Act, 2018, Pub. L. No. 115-141, 132 Stat. 348, 1128, tit. IV, §
401 (2018) (“Consolidated Appropriations Act”). The Ninth Circuit also
found Pierce had no concrete injury stemming from the distribution as an
Arizona resident and consequently lacked standing. Pierce II, 965 F.3d at
1089.

¶6            While his federal action was pending in 2018, Pierce filed this
action in the Maricopa County Superior Court challenging the validity of
Proposition 123 as a violation of the Enabling Act and seeking injunctive
relief.

¶7           The parties filed opposing motions for summary judgment
that were stayed pending resolution of the Ninth Circuit appeal. Upon
issuance of the Ninth Circuit's mandate in that case, the superior court
granted summary judgment for Pierce, finding that Pierce had standing
under Arizona law to maintain the action, but that congressional action
mooted Pierce’s claims that specific distributions arising from Proposition

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                          PIERCE v. DUCEY, et al.
                            Decision of the Court

123 violated the Act. The court, however, also found that “the fundamental
legal question” of “whether the Arizona Statehood and Enabling Act
Amendments of 1999 effectively repealed the Enabling Act provision that
requires Congressional approval” for changes to distribution formulas was
not mooted by congressional action, applying the doctrine of voluntary
cessation.

¶8           Following oral argument at which Pierce for the first time
asked the superior court for a declaratory judgment, the court requested
supplemental briefing as to whether the doctrines of mootness or ripeness
barred such a judgment. After further briefing and argument, the court
agreed with Pierce and issued a final declaratory judgment setting forth
that:

        [T]he Arizona Statehood and Enabling Act Amendments of
        1999 . . . do not repeal or impair the Enabling Act requirement
        of congressional consent to any changes to the Arizona State
        Constitution that affect the investment or distribution of the
        assets in [the Fund] . . . until and unless Congress provides
        consent to such changes . . . .

¶9           The court also awarded Pierce his reasonable attorneys’ fees
and costs under the private attorney general doctrine.

¶10          The State timely appealed. We have jurisdiction pursuant to
the Arizona Constitution, Article 6, Section 9 and A.R.S. § 12-2101(A)(1).

                               DISCUSSION

¶11          The State argues that the superior court should have
dismissed Pierce’s action for essentially the same reasons as the Ninth
Circuit—that the controversy Pierce seeks to resolve is moot. We agree.

   I.      Consent by Congress in 2018 mooted any controversy.

¶12            The State acknowledged at oral argument that if we find
Pierce’s claim moot, we need not determine whether he has standing to
bring it. We agree, and therefore decline to address standing. The
enactment of the Consolidated Appropriations Act mooted any potential
controversy. Although the federal government consented to the Fund
distribution formula change in the Consolidated Appropriations Act, the
superior court, persuaded by the reasoning of the district court, believed
that this consent represented voluntary cessation of illegal activity. See
Pierce I, 2019 WL 4750138 at *4. This was error.

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                          PIERCE v. DUCEY, et al.
                            Decision of the Court

¶13            While declaratory relief is “designed to afford security and
relief against uncertainty with a view to avoiding litigation,” it is not
available to settle “a mere difference of opinion.” Ariz. St. Bd. of Dirs. for
Junior Colleges v. Phx. Union High Sch. Dist. of Maricopa Cnty., 102 Ariz. 69,
73 (1967). A justiciable controversy must exist between the parties for
declaratory relief to be afforded. Thomas v. City of Phoenix, 171 Ariz. 69, 74
(App. 1991). A justiciable controversy exists if there is “an assertion of a
right, status, or legal relation in which the plaintiff has a definite interest
and the denial of it by the opposing party.” Hunt v. Richardson, 216 Ariz.
114, 125, ¶ 37 (App. 2007) (quoting Keggi v. Northbrook Prop. & Cas. Ins. Co.,
199 Ariz. 43, 45, ¶ 10 (App. 2000)). “Declaratory relief should be based on
an existing state of facts, not facts that may or may not arise in the future.”
Thomas, 171 Ariz. at 74. In other words, “[t]he controversy . . . must be real,
not merely theoretical.” Hunt, 216 Ariz. at 125, ¶ 37.

¶14             A case is moot if an event “ends the underlying controversy
and transforms the litigation into ‘an abstract question which does not arise
upon existing facts or right.’” Workman v. Verde Wellness Ctr., 240 Ariz. 597,
603, ¶ 17 (App. 2016) (quoting Contempo-Tempe Mobile Home Owners Ass’n.
v. Steinert, 144 Ariz. 227, 229 (App. 1985)). Pierce initially sought injunctive
relief, but at the superior court’s prompting, he admittedly revised his
request to one for declaratory judgment “late in the case,” which the
superior court granted.

¶15           There are exceptions to the rule that courts do not decide moot
questions, and the superior court found that because Governor Ducey had
requested and received congressional assent to the change in distribution
formula, the case was one of voluntary cessation. See Pointe Resorts, Inc. v.
Culbertson, 158 Ariz. 137, 141 (1988) (“[U]sually a defendant cannot by its
own voluntary conduct ‘moot’ a case and deprive a court of jurisdiction.”)
But that is not what happened here. First, voluntary cessation of the
questioned practices is required for the doctrine to apply. State ex rel. Babbitt
v. Goodyear Tire & Rubber Co., 128 Ariz. 483, 486 (App. 1981). In this case,
neither the Governor nor the State ceased anything at all; they both continue
to administer the Fund as it exists under Proposition 123. We find the Ninth
Circuit’s analysis in reaching a similar conclusion persuasive. Pierce II, 965
F.3d at 1089-90.

¶16            Second, neither the Governor nor the State had any control
over whether Congress and the President would consent to the changes
upon request, and consequently did not have voluntary control over the
change in circumstance that mooted this case. The superior court followed
the district court’s reasoning, holding that because the Governor is the “sole

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                          PIERCE v. DUCEY, et al.
                            Decision of the Court

official means of communication between” the State and the federal
government, the act of seeking consent constitutes voluntary cessation. See
Pierce I, 2019 WL 4750138 at *5 (citing A.R.S. § 41-101(A)(4)). But the act that
mooted the controversy was not the Governor asking Congress for
consent—that request did nothing on its own. Congress could have
declined to approve Proposition 123, or the President could have vetoed the
Consolidated Appropriations Act. Rather than the State changing its
course, the change in circumstance was the federal government enacting
the Consolidated Appropriations Act, which rendered the purportedly
unauthorized action, authorized. Whatever official shine is conferred on
gubernatorial communication by Section 41-101, there is no law compelling
Congress to act on any matter. Indeed, in terms of legal compulsion, Pierce
has the same power the Governor possesses to “obtain” congressional
approval of any measure: petitioning Congress for a redress of grievances.
See generally U.S. Const. amend. I.

¶17            More to the point, absent a presently illegal enactment,
whether the State plans in the abstract to pass and enforce a future change
to distribution formulas is precisely the set of “facts that may or may not
arise in the future” that our courts should avoid adjudicating. Thomas, 171
Ariz. at 74. Or, as the Ninth Circuit alternatively put it, the dispute over
whether the State could legally enforce a future change, “is not ripe for
adjudication because it rests upon contingent future events that may not
occur as anticipated, or indeed may not occur at all.” Pierce II, 965 F.3d at
1090 (cleaned up). Whether framed as a question of mootness or ripeness,
we agree.

¶18           Because it was federal, not state, action that altered the legal
environment surrounding the Fund, and because a similar circumstance is
not guaranteed to arise in the future, the superior court erred by finding
that the voluntary cessation exception to mootness applied.

   II.    We do not address the 1999 amendments.

¶19          Because we find that the controversy has been mooted, we
decline to address whether the superior court substantively erred by
finding that the 1999 amendment to the Enabling Act removed the
requirement that Congress must consent to changes to Fund distribution
formulas. See Pub. L. No. 106-133, 113 Stat. 1682.

   III.   We do not award attorneys’ fees and costs.

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                        PIERCE v. DUCEY, et al.
                          Decision of the Court

¶20           Pierce is not the prevailing party, and so we cannot award
fees and costs under the private attorney general doctrine. See Cave Creek
Unified Sch. Dist. v. Ducey, 233 Ariz. 1, 8, ¶ 26 (2013).

                             CONCLUSION

¶21            We vacate the judgment of the superior court, including the
attorneys’ fees and cost award, and remand for dismissal of the action.

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

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