LEVERAGED LAND COMPANY, LLC v. Hodges

232 P.3d 756, 224 Ariz. 442, 583 Ariz. Adv. Rep. 17, 2010 Ariz. App. LEXIS 93
CourtCourt of Appeals of Arizona
DecidedMay 27, 2010
Docket2 CA-CV 2009-0093, 2 CA-CV 2009-0094, 2 CA-CV 2009-0095
StatusPublished
Cited by3 cases

This text of 232 P.3d 756 (LEVERAGED LAND COMPANY, LLC v. Hodges) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
LEVERAGED LAND COMPANY, LLC v. Hodges, 232 P.3d 756, 224 Ariz. 442, 583 Ariz. Adv. Rep. 17, 2010 Ariz. App. LEXIS 93 (Ark. Ct. App. 2010).

Opinions

OPINION

BRAMMER, Judge.

¶ 1 This is the third appeal stemming from a tax lien foreclosure and redemption of real property located in Pinal County. See generally Leveraged Land Co. v. Hodges (Hodges II), No. 2 CA-CV 2009-0057, 2009 WL 3087551 (memorandum decision filed Sept. 24, 2009); Leveraged Land Co. v. Hodges (Hodges I), No. 2 CA-CV 2006-0210, 2007 WL 5556356 (memorandum decision filed Aug. 8, 2007).1 After protracted litigation, the trial court granted summary judgment in favor of appellees Michael Hodges and David Cain and quieted title to the land in Cain’s name. Appellants Raven II Holdings, L.L.C., and Hanna 120 Holdings, L.L.C., (collectively “Raven”) and Bingham Arizona Land, L.L.C., challenge the court’s grant of summary judgment claiming they were bona fide purchasers of the property. Bingham also challenges the award of attorney fees to Hodges and Cain. Appellants Leveraged Land Company, L.L.C., and Norman and Cheryl Montgomery (collectively “LLC”) challenge the court’s denial of nearly all their requested attorney fees from Hodges and Cain. We vacate the court’s award of attorney fees to LLC and remand the case to the trial court to determine a reasonable fee award, but otherwise affirm the judgment.

Factual and Procedural Background

¶ 2 The background of this case is set forth in our prior memorandum decisions and may be summarized, in relevant part, as follows. In June 2005, after Hodges had been served [445]*445with notice by publication of a tax lien redemption foreclosure, a default judgment was entered in favor of LLC, and it took title to his land. Hodges I, No. 2 CA-CV 2006-0210, ¶ 2. LLC subsequently sold the land to Raven, and Raven conveyed a partial interest in the property to Bingham in February 2007.

¶ 3 In November 2005, Hodges moved to set aside the judgment for lack of jurisdiction due to insufficient service of process. Id. ¶ 3. He also moved for a new trial on the ground that he was able to redeem the tax lien. Id. ¶¶ 3, 10. LLC and Raven, the intervening party, successfully opposed the motions below. On appeal, we determined that service by publication was appropriate and that the trial court had jurisdiction to enter the default judgment. Id. ¶¶ 6-9. We reversed the court's denial of Hodges’s motion for a new trial and, because Hodges timely had shown he was able to redeem the tax liens, remanded the case to the trial court to allow him to do so. Id. ¶¶ 15-16,18-19.

¶ 4 On remand, the trial court granted a new trial and entered an order restoring Hodges’s right to redeem the tax liens. Hodges II, No. 2 CA-CV 2009-0057, ¶4. Hodges then redeemed the tax liens with money provided by Cain, his successor in interest, who had been permitted to intervene in the action. Id. ¶¶ 4, 6, 15. LLC then filed a complaint against Hodges and Cain, challenging the validity of Hodges’s redemption. The court granted partial summary judgment in favor of Hodges and Cain, dismissed the claims in LLC’s amended complaint, and entered judgment pursuant to Rule 54(b), Ariz. R. Civ. P. Hodges II, No. 2 CA-CV 2009-0057, ¶¶ 5, 7. As it did below, LLC challenged Hodges’s redemption on appeal, and we affirmed. Id. ¶ 1.

¶ 5 While Hodges II was pending, Hodges and Cain moved for summary judgment against Raven and Bingham, asking the trial court to quiet title to the property in Cain. The court granted the motion, rejecting arguments by Raven and Bingham that they were bona fide purchasers of the land. In its final judgment, the court ordered Bingham and Raven to pay Hodges and Cain their attorney fees. It also required Hodges and Cain to pay $1,500 of LLC’s attorney fees pursuant to A.R.S. § 42-18206. LLC, Raven, and Bingham filed separate appeals, which we have consolidated.

Discussion

Bona Fide Purchasers

¶ 6 Raven and Bingham challenge the trial court’s finding that they were not bona fide purchasers of the subject property. “The term ‘bona fide purchaser’ is often used to refer to one who purchases property for value and without notice” of another’s interest in it. First Am. Title Ins. Co. v. Action Acquisitions, LLC, 218 Ariz. 394, ¶ 12, 187 P.3d 1107, 1111 (2008); see also Davis v. Kleindienst, 64 Ariz. 251, 258, 169 P.2d 78, 82 (1946); Sprang v. Petersen Lumber, Inc., 165 Ariz. 257, 263, 798 P.2d 395, 401 (App.1990). Raven claims it lacked the requisite notice because, when it purchased the land from LLC, Hodges merely had a potential interest in the property but had not actually asserted a claim to it. Bingham argues it lacked notice because neither Hodges nor Cain recorded a lis pendens pursuant to A.R.S. § 12-1191. Both appellants’ arguments are unavailing in light of our prior decisions and the case law cited therein.

¶ 7 In Hodges I, we held Rule 59(j)(1), Ariz. R. Civ. P., and A.R.S. § 12-1560(A) give a person served by publication one year to appear and redeem tax liens. Hodges I, No. 2 CA-CV 2006-0210, ¶¶ 11-12. “Under Southwest Metals [Co. v. Snedaker, 59 Ariz. 374, 129 P.2d 314 (1942) ], the end result of a successful Rule 59(j) challenge is restoration of a defendant’s right to redeem under what is now § 42-18206.” Hodges I, No. 2 CA-CV 2006-0210, ¶ 18. The party prevailing under a Rule 59(j) motion is placed in the same legal position he would have been in had he appeared before the entry of default judgment. See Nielson v. Patterson, 204 Ariz. 530, ¶ 12, 65 P.3d 911, 914 (2003). Hence, “[pjurehasing a tax lien entails risk[,] and the onus is on the purchaser to protect its own interests.” PLM Tax Certificate Program 1991-92, L.P. v. Schweikert, 216 Ariz. 47, ¶ 23, 162 P.3d 1267, 1271 (App.2007).

[446]*446¶ 8 As the trial court observed here, the treasurer’s deed obtained by LLC was recorded properly and the default judgment was attached to it, serving as constructive notice to all persons of its existence. See A.R.S. § 33-416. LLC, Raven, and Bingham thereby were made aware of the legal consequences of a successful Rule 59(j) motion by Hodges. See Conway v. State Consol. Pub. Co., 57 Ariz. 162, 171, 112 P.2d 218, 222 (1941) (“Every one is presumed to know the law.”). Rejecting LLC’s equitable arguments concerning the validity of the redemption in Hodges II, we stated:

Despite obtaining a default judgment to foreclose Hodges’s right of redemption, LLC knew the judgment obtained would remain vulnerable to a Rule 59(j) motion for a new trial for up to one year. Thus, the risk of disruptions to any subsequent conveyances of the foreclosed property fell squarely on LLC and its successors-in-interest.

2 CA-CV 2009-0057, ¶ 16.

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232 P.3d 756 (Court of Appeals of Arizona, 2010)

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Bluebook (online)
232 P.3d 756, 224 Ariz. 442, 583 Ariz. Adv. Rep. 17, 2010 Ariz. App. LEXIS 93, Counsel Stack Legal Research, https://law.counselstack.com/opinion/leveraged-land-company-llc-v-hodges-arizctapp-2010.