Court Opinion

ID: 4398855
Source: CourtListenerOpinion
Date Created: 2019-05-21 16:01:52.316226+00
Date Added: 2024-06-11T09:24:43.439425
License: Public Domain

IN THE
             ARIZONA COURT OF APPEALS
                               DIVISION ONE

        HERITAGE VILLAGE II HOMEOWNERS ASSOCIATION,
                        Plaintiff/Appellee,
               _________________________________

   RICHARD WEINBERG, et al., Defendants/Appellees-Cross-Appellants,

                                      v.

 JOHN L. NORMAN; GERRY MOLOTSKY, Intervenors/Appellants-Cross-
                        Appellees.

                            No. 1 CA-CV 18-0193
                              FILED 5-21-2019

           Appeal from the Superior Court in Maricopa County
                          No. CV2014-009229
             The Honorable Hugh E. Hegyi, Judge, Retired

    REVERSED IN PART, VACATED IN PART, AND REMANDED

                                 COUNSEL

Dickinson Wright, PLLC, Phoenix
By Scott A. Holcomb, David J. Ouimette
Counsel for Plaintiff/Appellee

Mandel Young, PLC, Phoenix
By Taylor C. Young, Robert A. Mandel
Counsel for Defendants/Appellees-Cross-Appellants

Fennemore Craig, P.C., Phoenix
By Douglas C. Northup, Emily Ayn Ward
Counsel for Intervenors/Appellants-Cross-Appellees
                     HERITAGE v. WEINBERG, et al.
                         Opinion of the Court

                                OPINION

Presiding Judge James B. Morse Jr. delivered the opinion of the Court, in
which Judge Jon W. Thompson and Vice Chief Judge Peter B. Swann joined.

M O R S E, Judge:

¶1            John L. Norman and Gerry Molotsky ("Movants") appeal the
superior court's denial of their motion to intervene and corresponding
award of attorneys' fees to Heritage Village II Homeowners' Association
("Heritage") and Richard and Laine Weinberg. The Weinbergs cross-appeal
the court's partial denial of their application for attorneys' fees. The
superior court denied intervention for two reasons: (1) Movants did not
seek intervention in a timely manner, and (2) Movants' ability to protect
their interests would not be impaired or impeded because they could
pursue a separate cause of action. For the reasons set forth below, we
conclude that Movants were not untimely and that the availability of a
separate cause of action does not create a per se prohibition to intervention
of right. Accordingly, we reverse the superior court's order denying the
motion to intervene and vacate the orders awarding fees and dismissing the
lawsuit. We remand for further proceedings.

                FACTS AND PROCEDURAL HISTORY

¶2            The Weinbergs own a home located in Heritage Village II,
which is part of the McCormick Ranch master-planned community in
Scottsdale. In July 2014, Heritage sued the Weinbergs alleging they violated
the applicable covenants, conditions, and restrictions ("CC&Rs") in building
their new home. The complaint included claims for declaratory relief,
breach of contract, and breach of the duty of good faith and fair dealing.

¶3            After a three-day hearing, the superior court granted
declaratory relief, concluding the Weinbergs had violated the CC&Rs and
ordering them to bring their home into compliance. Thereafter, the court
awarded Heritage $111,711.53 in attorneys' fees and $3,932.22 in costs.1

1      The Weinbergs appealed from the attorneys' fee award, but this
court dismissed their appeal for lack of jurisdiction. See generally Heritage

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                     HERITAGE v. WEINBERG, et al.
                         Opinion of the Court

¶4            The superior court then entered an order directing the
Weinbergs to take specific remedial measures to bring their home into
compliance with the CC&Rs. Nine months later, Heritage moved to compel
compliance with the order. Granting the motion in part, the superior court
noted that the parties were still unable to agree on modifications necessary
to bring the Weinbergs' home into compliance with the CC&Rs.

¶5            Meanwhile, Heritage's Board of Directors (the "Board") began
to disagree on litigation strategy, dividing into a four-member majority and
a three-member minority. In July 2017, the Board majority voted to settle
with the Weinbergs, who agreed to make minor changes to their home in
exchange for Heritage's promise to release them from liability for all
attorneys' fees, including the $111,711.53 already awarded. The majority
reasoned that there was "no end in sight" to the litigation and that Heritage
was not financially able to further pursue the litigation.

¶6            Movants are homeowners and members of Heritage. One day
before Heritage and the Weinbergs filed their notice of settlement, Movants
filed an emergency motion to intervene pursuant to Arizona Rule of Civil
Procedure ("Rule") 24(a)(2), and filed an independent lawsuit in superior
court against the Weinbergs. See generally Maricopa County Superior Court
Case No. CV2017-009249.

¶7             Heritage and the Weinbergs opposed Movants' intervention
motion. Following oral argument, the superior court denied the motion to
intervene and awarded Heritage and the Weinbergs some, but not all, of
their attorneys' fees incurred in responding to the motion. The court then
entered final judgment approving the settlement and dismissing all claims.

¶8            Movants appealed, and the Weinbergs cross-appealed from
the partial denial of their request for attorneys' fees. We have jurisdiction
pursuant to Arizona Revised Statutes sections 12-2101(A)(1) and (A)(3). See
McGough v. Ins. Co. of N. Am., 143 Ariz. 26, 30 (App. 1984) ("[A]n order
denying intervention is an appealable order . . . .").

                              DISCUSSION

¶9            In reviewing the denial of a motion to intervene, we accept
the allegations of the motion as true. Saunders v. Superior Court, 109 Ariz.
424, 425 (1973). We review de novo the superior court's ruling on an

Vill. II Homeowners' Ass'n v. Weinberg, 1 CA-CV 15-0547, 2017 WL 929743
(Ariz. App. Mar. 9, 2017) (mem. decision).

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                      HERITAGE v. WEINBERG, et al.
                          Opinion of the Court

applicant's right to intervene under Rule 24(a)(2). Dowling v. Stapley, 221
Ariz. 251, 269-70, ¶ 57 (App. 2009). We review the court's ruling on the
motion's timeliness, however, for an abuse of discretion. State ex rel.
Napolitano v. Brown & Williamson Tobacco Corp., 196 Ariz. 382, 384, ¶ 5 (2000).

I.     Denial of Motion to Intervene

¶10          A third party's ability to intervene as a matter of right is
governed by Rule 24(a)(2). Under this rule, the superior court must permit
intervention when four conditions are satisfied: (1) the motion is timely; (2)
the movants claim an interest relating to the subject of the action; (3) the
movants show that disposition of the action may, as a practical matter,
impair or impede their ability to protect their interests; and (4) the movants
show that existing parties do not adequately represent their interests.
Woodbridge Structured Funding, LLC v. Ariz. Lottery, 235 Ariz. 25, 28, ¶ 13
(App. 2014); Ariz. R. Civ. P. 24(a)(2).
¶11            Movants satisfy condition two and four. As homeowners and
members of Heritage, they have an interest in ensuring the Weinbergs
comply with the CC&Rs, which expressly provide that any owner "shall
have the standing and right to enforce" the restrictions against other
owners.2 Likewise, Movants contest the settlement agreement between
Heritage and the Weinbergs and allege that the settlement permits
violations of the CC&Rs to go forward unremedied. We must accept these
allegations as true, and agree that Heritage no longer adequately represents
Movants' interest in enforcing the CC&Rs against the Weinbergs. See
Woodbridge, 235 Ariz. at 27, ¶ 3 ("[W]e take the allegations of [the] motion to
intervene as true . . . .").

¶12          The superior court found that Movants failed to satisfy
conditions one and three. We address these conditions in turn.

       A.     Timeliness of the Motion

¶13           Intervention as a matter of right requires a "timely motion."
Ariz. R. Civ. P. 24(a). Timeliness hinges on two discrete questions: "the
stage at which the action has progressed before intervention is sought and
whether the applicant was in a position to seek intervention at an earlier

2      The parties do not dispute that individual members have standing
to enforce the CC&Rs, but they disagree as to how this authority applies in
the context of architectural approval under the CC&Rs. Because the broad
grant of standing is sufficient to confer an interest in enforcement of the
CC&Rs, we need not decide how far that interest extends.

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                      HERITAGE v. WEINBERG, et al.
                          Opinion of the Court

stage of the proceedings." Winner Enterprises, Ltd. v. Superior Court
(Hancock), 159 Ariz. 106, 109 (App. 1988).

¶14           Movants argue that timeliness is measured "not from the
inception of the case, but from when the movant has notice that its interests
are no longer being adequately represented." Both the text of the Rule and
the relevant case law support their position.

¶15            The Rule does not allow intervention of right where "existing
parties adequately represent" the interest of the proposed intervenor. Ariz.
R. Civ. P. 24(a)(2). Because Movants could not seek intervention of right
until their interests diverged from those of Heritage, the Rule implicitly
provides that timeliness must be measured from the stage in the
proceedings at which Heritage no longer represented Movant's interests.

¶16           Our supreme court reached the same conclusion in
interpreting an earlier version of the Rule. See John F. Long Homes, Inc. v.
Holohan, 97 Ariz. 31 (1964). In that case, a home builder obtained a use
permit from the City of Phoenix Board of Adjustment to construct a mobile
home park. Id. at 32. A third party then petitioned the superior court to
review the Board's decision, and the superior court entered a judgment
finding the permit void. Id. The builder asked the City of Phoenix, a party
to the superior court action, to appeal the court's judgment, but the City
refused. Id. The builder moved to intervene after receiving notice from the
City that it would not appeal. Id. Our supreme court found the builder's
motion was timely:

       [A]n application to intervene in the lower court under Rule
       24(a) is improper where arguments presented by the city are
       those which would be presented by the applicant. Thus,
       applicant was in no position to intervene under Rule 24(a)
       prior to judgment and the receipt of notice by the city that it
       did not intend to prosecute the appeal. Upon receipt of this
       notice petitioner made application to intervene within three
       hours. We are of the opinion that an application made to
       intervene within three hours after the first time an application
       could be entertained has been timely made.

Id. at 34-35; see also United States v. Carpenter, 298 F.3d 1122, 1125 (9th Cir.
2002) (concluding that a motion to intervene was timely because movants
"acted as soon as they had notice that the proposed settlement was contrary
to their interests"); Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999) ("The
crucial date for assessing the timeliness of a motion to intervene is when

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                       HERITAGE v. WEINBERG, et al.
                           Opinion of the Court

proposed intervenors should have been aware that their interests would
not be adequately protected by the existing parties.").

¶17           Here, the majority of the Board voted to accept the Weinbergs'
settlement offer on July 7, 2017. Movants filed their emergency motion to
intervene only five days later, before the Weinbergs and Heritage even filed
their notice of settlement. Movants acted promptly after realizing that
Heritage no longer adequately represented their interests. Therefore, the
superior court abused its discretion in finding that the motion to intervene
was untimely. See Winner Enterprises, Ltd., 159 Ariz. at 109-10 (finding
intervention was timely when it was sought at least 21 days after movant
had notice of the proceedings and entry of a preliminary injunction).

       B.      Impaired or Impeded Ability to Protect Interests

¶18            Movants also must show that disposition of the action "may
as a practical matter impair or impede" their ability to protect their interests.
Ariz. R. Civ. P. 24(a)(2). In denying the motion to intervene, the superior
court did not determine whether the resolution of this case could possibly
have an impact on the Movants' interest in enforcing the CC&Rs against the
Weinbergs. Instead, the superior court relied on its determination that
Movants "are free to file a separate lawsuit against the . . . Weinbergs
concerning the matters the instant action raises."

¶19           Arizona cases have not yet opined on whether the availability
of a separate action acts as a bar to intervention, but Federal Rule of Civil
Procedure 24 is substantively indistinguishable from Arizona Rule 24, and
we may look for guidance to federal courts' interpretations of their rules.
See Marquette Venture Partners II, L.P. v. Leonesio, 227 Ariz. 179, 182, ¶ 11, n.6
(App. 2011).3

¶20              There is a split in authority in the federal cases and even
among courts within the same circuit on this issue. Some courts have found
that an intervenor's interest is not impaired or impeded unless the
intervenor will be precluded from protecting its interests in another forum.
See, e.g., California ex rel. Lockyer v. United States, 450 F.3d 436, 442 (9th Cir.

3       Federal Rule 24 was liberalized to its current form in 1966, and "an
earlier draft would have required that the judgment 'substantially' impair
or impede the interest, but that higher barrier was deleted in the course of
approving the amendment." Nuesse v. Camp, 385 F.2d 694, 701 (D.C. Cir.
1967) (citing Sherman L. Cohn, The New Federal Rules of Civil Procedure, 54
GEO. L. J. 1204, 1232 (1966)).

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                      HERITAGE v. WEINBERG, et al.
                          Opinion of the Court

2006) (noting that even if a pending lawsuit "would affect the proposed
intervenors' interests, their interests might not be impaired if they have
'other means' to protect them"); Meridian Homes Corp. v. Nicholas W. Prassas
& Co., 683 F.2d 201, 204 (7th Cir. 1982) (stating that impairment "depends
on whether the decision of a legal question involved in the action would as
a practical matter foreclose rights of the proposed intervenors in a
subsequent proceeding"). However, other cases from those courts
recognize that an interest may be impaired or impeded even when
alternative forums exist. See Johnson v. San Francisco Unified Sch. Dist., 500
F.2d 349, 353 (9th Cir. 1974) (allowing intervention even though appellants
had "the practical alternative of asserting in a subsequent lawsuit that the
new policies adopted by the school district are unconstitutional");
Commodity Futures Trading Com'n v. Heritage Capital Advisory Services, Ltd.,
736 F.2d 384, 387 (7th Cir. 1984) ("It is true that where a proposed
intervenor's interest will be prejudiced if it does not participate in the main
action, the mere availability of alternative forums is not sufficient to justify
denial of a motion to intervene.").

¶21           Other courts, including the Sixth and Tenth Circuits, take the
broader view that "a would-be intervenor must show only that impairment
of its substantial legal interest is possible if intervention is denied. This
burden is minimal." Utah Ass'n of Ctys. v. Clinton, 255 F.3d 1246, 1253 (10th
Cir. 2001) (emphasis added) (quoting Grutter v. Bollinger, 188 F.3d 394, 399
(6th Cir. 1999)); W. Energy All. v. Zinke, 877 F.3d 1157, 1167-68 (10th Cir.
2017) (stating that the possibility of alternative forums is not sufficient to
deny intervention if the intervenor's interest will be prejudiced if it is not
allowed to participate in the main action) (citing Commodity Futures Trading
Com'n, 736 F.2d at 387).

¶22            Our Rule, like its federal counterpart, does not require
certainty, and only requires that an interest "may" be impaired or impeded.
Ariz. R. Civ. P. 24(a)(2). Because "[i]t is well settled in Arizona that Rule 24
'is remedial and should be liberally construed with the view of assisting
parties in obtaining justice and protecting their rights,'" Bechtel v. Rose, ex
rel. Dep't of Econ. Sec., 150 Ariz. 68, 72 (1986) (quoting Mitchell v. City of
Nogales, 83 Ariz. 328, 333 (1958)), we agree with the broader approach.
Thus, when proposed intervenors meet the minimal burden of showing
that disposition of the action may impair or impede their ability to protect
their interest, then the availability of an alternative forum, by itself, does
not preclude intervention.

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                     HERITAGE v. WEINBERG, et al.
                         Opinion of the Court

¶23            Thus, even if Movants can independently sue to enforce the
CC&Rs,4 intervention is proper if Movant's ability to enforce the CC&Rs
may be impaired by the resolution of the current action. At a minimum,
without intervention, Movants are denied the ability to weigh in on the
merits of any settlement. See Johnson, 500 F.2d at 353 (allowing intervention
where proposed intervenors sought "to influence the manner in which the
school district exercises its admitted discretion" in resolving the underlying
action). In light of the remedial nature of Rule 24 and the minimal burden
placed on proposed intervenors, we conclude that the disposition of the
underlying case may, as a practical matter, impair or impede Movants'
ability to protect their claimed interests.

¶24           Accordingly, we reverse the superior court's order denying
intervention and remand for further proceedings. Because we reverse the
denial of intervention, we must vacate the judgment approving the
settlement agreement and dismissing all claims. See McGough, 143 Ariz. at
30 (explaining that if an order denying intervention is reversed, the entire
judgment will be reversed). On remand, Heritage and the Weinbergs may
re-urge whatever settlement agreement they deem appropriate between
those parties.5

II.    Attorneys' Fees

¶25         Because we reverse the denial of Movants' motion to
intervene, we also vacate the accompanying award of attorneys' fees,
thereby mooting the Weinbergs' cross-appeal.

                              CONCLUSION

¶26           For the foregoing reasons, we reverse the superior court's
denial of the motion to intervene and vacate the award of fees and the final

4     During oral argument, counsel for both Heritage and the Weinbergs
expressly reserved the right to assert that Movants could not pursue an
independent action against the Weinbergs for the alleged violations of the
CC&Rs at issue in this action.

5      We only determine that Movants have met the minimal burden for
intervention of right under Rule 24(a)(2). Our decision does not address
whether the actions to be take pursuant to the proposed settlement between
Heritage and the Weinbergs would or would not cure any noncompliance
with the CC&Rs. Such matters are left to the superior court in the first
instance.

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                   HERITAGE v. WEINBERG, et al.
                       Opinion of the Court

judgment approving the settlement agreement and dismissing all claims.
We remand for further proceedings. We also deny the Weinbergs' and
Heritage's requests for fees and costs on appeal.

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

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