Opinion
1 CA-CV 11-0190
04-12-2012
CITY OF PHOENIX, a municipal corporation, Plaintiff/Appellee, v. R.E.M. INVESTMENT COMPANY, a partnership; SAMUEL J. SUTTON, a married man; ANNE v. SUTTON, a married woman, Defendants/Appellants, and TRIYAR CAPITAL, L.L.C., an Arizona limited liability company, Defendant/Appellee.
Ayers & Brown, PC By Charles K. Ayers And Joseph M. Hillegas, Jr. Attorneys for Plaintiff/Appellee City of Phoenix Jennings Haug & Cunningham, LLP By Thomas J. Chamberlin And William F. Begley Joseph A. Brophy Attorneys for Defendants/Appellants REM Investment Company, Samuel J. Sutton and Anne V. Sutton Mariscal Weeks McIntyre & Friedlander, PA By James T. Braselton And Michael J. Plati Attorneys for Defendant/Appellee Triyar Capital, LLC
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED
EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
Ariz. R. Crim. P. 31.24
MEMORANDUM DECISION
(Not for Publication - Rule 28, Arizona Rules of Civil Appellate Procedure)
Appeal from the Superior Court in Maricopa County
Cause No. CV2003-016817
The Honorable Carey Snyder Hyatt, Judge
The Honorable Jeanne Garcia, Judge
REVERSED AND REMANDED WITH INSTRUCTIONS
Ayers & Brown, PC
By Charles K. Ayers And Joseph M. Hillegas, Jr.
Attorneys for Plaintiff/Appellee City of Phoenix
Phoenix
Jennings Haug & Cunningham, LLP
By Thomas J. Chamberlin
And William F. Begley
Joseph A. Brophy
Attorneys for Defendants/Appellants REM Investment Company,
Samuel J. Sutton and Anne V. Sutton
Phoenix
Mariscal Weeks McIntyre & Friedlander, PA
By James T. Braselton
And Michael J. Plati
Attorneys for Defendant/Appellee Triyar Capital, LLC
Phoenix GOULD, Judge
¶1 Appellants R.E.M. Investment Company ("REM"), Samuel J. Sutton ("Mr. Sutton"), and Amy Sutton ("Mrs. Sutton") appeal from the trial court's judgment awarding title to real property and condemnation damages to Triyar Capital, L.L.C. ("Triyar").
Factual and Procedural Background
We draw all facts and reasonable inferences in favor of Appellants (REM and the Suttons), given that they were the parties against whom summary judgment was granted. Prince v. City of Apache Junction, 185 Ariz. 43, 45, 912 P.2d 47, 49 (App. 1996).
The Original Condemnation Proceeding
¶2 On September 4, 2003, the City of Phoenix ("City") filed an eminent domain complaint seeking to acquire a strip of property located on the north side of two parcels of property owned by REM. On November 10, 2003, the court issued an order of immediate possession, and shortly thereafter the City took physical possession of the subject strip of property. Eventually REM and the City settled the condemnation case, and a judgment was filed on March 7, 2007. The judgment specified that REM was to be paid $101,237.62 in condemnation damages as compensation for the City's acquisition of its property. On April 20, 2007, the trial court entered a final order of condemnation.
Triyar's Option Contract
¶3 On May 17, 2006, REM entered into an option contract with Shawn Yari ("Mr. Yari"), one of Triyar's principals, to purchase REM's two parcels of property. The option agreement described the two parcels by referencing the parcels' tax assessor numbers. The option agreement also stated that: "Seller [REM] is exclusively entitled [to] any proceeds from settlement or adjudication of this condemnation proceeding" (i.e., Maricopa County Superior Court, CV 2003-016817).
The Half-Acre Exclusion
¶4 On May 22, 2007, Mr. Yari assigned his purchase option to Triyar. The property description attached as Exhibit A to the assignment excluded approximately half an acre from one of REM's parcels. The title company retained by Triyar upon the exercise of the option subsequently prepared a legal description of the property that also excluded the same half acre from the sale. The half acre was not included as part of the sale in Exhibit A to the escrow instructions. The language used in the title description, which was incorporated as Exhibit A to the warranty deed that REM conveyed to Triyar on May 23, 2007, also excluded the same half acre from the sale. Triyar later argued that "[w]ithout understanding that REM had carved out the Half-Acre from the option property," Triyar "executed closing documents and paid the full price for the option property on May 23, 2007."
Second Condemnation Proceeding
¶5 Shortly after the condemnation judgment was filed, the City discovered that the property description it had attached to its complaint was incorrect; the description inadvertently omitted a significant portion of REM's property that it had sought to acquire by eminent domain. The City learned that this error had pervaded the entire condemnation proceeding, and the incorrect property description was incorporated into the Judgment and Final Condemnation Order.
Mr. Sutton would later testify that he had been aware of the discrepancy regarding the City's legal description of the strip of land and what the City had intended to describe since May 2004.
¶6 On April 30, 2007, the City moved to set aside the judgment based on the erroneous property description. Complicating matters further, at the time the City filed its motion to set aside the original condemnation judgment, Triyar had purchased REM's two parcels and, therefore, held record title to some of the condemned property. As a result, the City moved to amend its original complaint and add Triyar as a defendant.The court subsequently granted the City's motion to set aside the judgment and its motion to amend.
The City also added Mr. and Mrs. Sutton as parties. At the time the condemnation action was filed, the Suttons were partners in REM. Shortly after Mr. Sutton notified the City that its description of the original taking was incorrect, REM conveyed the disputed property to Mr. and Mrs. Sutton on April 26, 2007. REM then dissolved and wound up its affairs on May 26, 2007. Before dissolving, REM assigned its right to any condemnation damages to the Suttons.
¶7 Eventually, Mr. Sutton, as a successor-in-interest to REM, filed a motion for partial summary judgment seeking two rulings: (1) that Triyar had no right to the condemnation proceeds because Triyar's 2007 acquisition of the subject parcels came four years after the taking of the property on November 10, 2003 and (2) that the sale of land to Triyar on May 23, 2007 excluded the half acre from one of the parcels and, as a result, there was no basis for Triyar to claim condemnation damages relating to the half acre.
¶8 In its response to Mr. Sutton's motion for summary judgment, Triyar contended that the trial court should award the condemnation proceeds to the party that owned the property on the date the trial court entered final judgment rather than to the party that owned the property at the time of taking. Triyar also argued that a fact issue precluded summary judgment as to the ownership of the half acre. Triyar did not attach any supporting affidavits, exhibits, written discovery responses or deposition testimony to its response or separate statement of facts.
¶9 The trial court set oral argument on Mr. Sutton's motion for June 11, 2009. The Suttons failed to attend this hearing, so the court proceeded with oral argument in their absence. Although the court noted that the reply time was "not quite ripe" for the motion for partial summary judgment, it ruled that Mr. Sutton had waived his arguments concerning payment of the condemnation proceeds; the court therefore denied the motion for partial summary judgment as moot.
Mr. Sutton contends that he arranged for an employee to call the court and that this employee advised a staff member that he was unable to make the hearing due to car trouble. The court noted that its judicial assistant did receive a phone message from an "anonymous caller" that Mr. Sutton could not make the hearing due to car trouble. Counsel for Triyar and the City objected to a continuance. The court proceeded with the hearing, noting that Mr. Sutton did not try to call himself, he had delayed proceedings before, and that the call was made one hour after the time set for the hearing.
¶10 Before it denied Mr. Sutton's motion for partial summary judgment, the trial court discussed ownership of the half acre. Because the original option agreement between REM and Triyar had not excluded the half acre from REM's parcels, the trial court found that the half acre was sold to Triyar. The court's reasoning was as follows:
The Court finds that no factual dispute exists as to the fact that the Option
Agreement . . . contemplated the entirety of the properties. Moreover, there is no dispute that Triyar's predecessor in interest [Shawn Yari] exercised that Option Agreement as to the contemplated properties and thereafter assigned his interest to Triyar. By failing to appear today to present evidence and argument regarding his position as to the validity of his subsequent transfer of a piece of the Second Parcel, [Defendants] have waived this claim as to this condemnation action.
¶11 The court did not address whether the transfer from REM to Triyar actually transferred REM's parcels in their entirety. However, it concluded that "the transfer by REM Investment of a portion of [the half acre] to [the Suttons] is void ab initio" and "[Triyar] is the owner of both parcels . . . as described and contemplated in the Option Agreement dated May 17, 2006."
¶12 After the trial court denied Mr. Sutton's motion for partial summary judgment as moot, Mr. Sutton filed a reply in support of his motion for partial summary judgment; Mr. Sutton was apparently unaware that the trial court had already denied his motion. In response, the trial court vacated its earlier decision denying Mr. Sutton's motion for partial summary judgment as moot and granted partial summary judgment in favor of Triyar on September 14, 2009.
¶13 The trial court acknowledged that Triyar had not moved for summary judgment, but cited Trimmer v. Ludtke, 105 Ariz. 260, 263, 462 P.2d 809, 812 (1969), for the principle that "judgment on motion for summary judgment may be either for or against the moving party, even though the opposing party has not filed such a motion." The trial court specifically affirmed its prior ruling concerning the exclusion of the half acre from the sale to Triyar, stating that exclusion of the half acre from the transfer to Triyar was "void ab initio" and Triyar owned "both parcels . . . as described and contemplated in the Option Agreement dated May 17, 2006, and the Assignment dated May 22, 2007." The court then explained that "by his failure to appear after notice and without cause this date [August 28, 2009], Defendant Sam Sutton has waived all issues with respect to the Court proceeding in his absence on June 10, 2009."
¶14 Based on the court's ruling, Triyar subsequently moved to expunge a mortgage that had been placed on the half acre by the Suttons to non-party Aspen Research, Ltd. On November 4, 2009, the trial court granted this motion and ordered the Suttons to "prepare, execute, and record a full and complete release of the subject mortgage."
¶15 The following year, the trial court scheduled a status conference to determine "what needs to be done to adjudicate this case on its merits." The trial court eventually entered a final judgment awarding the condemnation proceeds to Triyar. The trial court awarded ownership of the half acre to Triyar. The trial court also declared as void ab initio the mortgage that the Suttons had placed on the half acre. REM and the Suttons timely appealed.
Discussion
¶16 Appellants argue that the trial court erred in granting summary judgment to Triyar. Triyar's main response is that Appellants are misframing the issue and that the trial court's actions were in reality a sanction for Appellants' non-appearances at hearings. The City argues that we should affirm the trial court's decision because "that is a just result and to do otherwise is to reward deceit" given that "Appellants' conduct during the course of this case has been consistently outrageous and contemptible." We examine these arguments below. When evaluating the trial court's grant of a motion for summary judgment, we determine de novo whether there are any genuine issues of material fact and whether the trial court erred in applying the law. United Bank of Ariz. v. Allyn, 167 Ariz. 191, 195, 805 P.2d 1012, 1016 (App. 1990).
I. Condemnation Award
¶17 The trial court erred when it granted summary judgment to Triyar on the condemnation award. Condemnation proceeds are personal to the owner at the time of the taking, and do not pass to a subsequent owner absent an express agreement. United States v. Dow, 357 U.S. 17, 20-21 (1958); Danforth v. United States, 308 U.S. 271, 283-84 (1939); see also Boyd v. Atchison, T. & S.F. Ry. Co., 39 Ariz. 154, 158-59, 4 P.2d 670, 671 (1931) (quoting with approval the holding in Roberts v. N. Pac. R.R. Co., 158 U.S. 1, 11 (1895), which held that any damages stemming from a railroad company entering possession of land under the power of eminent domain "belong to the owner at the time of the taking, and do not pass to a grantee of the land under a deed made subsequent to that time, unless expressly conveyed therein").
¶18 Triyar has abandoned the argument it made to the trial court that condemnation proceeds should be awarded to the party that owned the property on the date the trial court entered final judgment. Based on the briefing, it appears that none of the parties dispute that (1) the City's taking of the thirty-seven foot strip of land occurred no later than November 10, 2003, (2) Triyar had no interest in any of the property taken by the City on this date, and (3) condemnation damages are owed to the owner at the time the condemned property is taken. Given these facts, it was not proper for the trial court to award summary judgment to Triyar on this issue.
Despite the fact that this issue was not raised in Triyar's answering brief, Triyar's counsel at oral argument argued that Triyar had not conceded this point.
¶19 Based on the law and the undisputed facts, the trial court should have awarded the condemnation damages to Appellants. REM was the owner at the time the order of immediate possession was entered in 2003 and when the City actually took possession of the condemned strip of property. Triyar did not purchase the subject parcels until 2006. In addition, the option agreement expressly states that REM was "exclusively entitled to any proceeds from settlement or adjudication" of the City's condemnation proceeding. Moreover, it is clear from the documents submitted in support of Mr. Sutton's motion that REM had assigned its rights to the condemnation proceedings to the Suttons. We therefore grant the motion for partial summary judgment insofar as the condemnation damages are concerned.
This issue is properly before the court notwithstanding the fact that we do not generally consider the denial of a motion for summary judgment appealable or subject to review. See State Farm Hut. Auto Ins. Co. v. Peaton, 168 Ariz. 184, 194, 812 P.2d 1002, 1012 (App. 1990) (explaining that the rule against considering such motions is designed to prevent piecemeal appeals, but when "our review of the record reveals no issues of fact, we prevent piecemeal litigation by ordering the entry of judgment in favor of the party whom, as a matter of law, is entitled to it").
II. Ownership of the Half Acre
¶20 The trial court erred in awarding the half acre to Triyar because there are material issues of fact precluding summary judgment in favor of Triyar. It is the trial court's duty to ascertain whether REM and Triyar intended to include the disputed half acre in the option agreement and eventual sale of REM's parcels. ELM Ret. Ctr., LP v. Callaway, 226 Ariz. 287, 290-91, ¶ 15, 246 P.3d 938, 941-42 (App. 2010). On the record before us, the intent of the parties is not plain and unambiguous. The option agreement, by reference to the tax parcel descriptions, would appear to include the half acre. However, in several documents, beginning with the assignment and continuing through the closing documents, the half acre is excluded from the sale.
Triyar itself acknowledged in its response to Defendants' motion for partial summary judgment below that the intent of the parties regarding sale of the half acre was not clear and unambiguous.
¶21 Additionally, Triyar did not submit any affidavits, deposition excerpts or similar evidence of the parties' intentions; arguments of counsel are not evidence. See London v. Green Acres Trust, 159 Ariz. 136, 141, 765 P.2d 538, 543 (App. 1988) ("A statement by counsel is not . . . evidence before the court."). Therefore, an issue of fact exists concerning the parties' intentions in entering the option agreement and ultimately transferring the property.
III. Sanctions
¶22 Triyar argues that the trial court sanctioned Appellants for failing to appear at the June 11 hearing by granting summary judgment in favor of Triyar. However, the trial court never stated that it was granting summary judgment to Triyar as a sanction for the Suttons' failure to appear. While the court appears to have been understandably upset with the Suttons' failure to appear, and found that Mr. Sutton had waived his arguments regarding his motion for partial summary judgment, the court did not provide any sanction-based reason for granting summary judgment in Triyar's favor.
¶23 Instead, the court relied on the summary judgment standard in determining whether summary judgment for Triyar was appropriate. In its minute entry regarding the June 11 oral argument, the trial court noted that "no factual dispute exists" and that "there is no dispute" as a justification for its decision. Similarly, at the August 28, 2009 hearing, the court discussed the case using phrases associated with summary judgment: "it's clear that - there was no factual dispute" and "there's no dispute." The transcripts of the June 11 hearing and the August 28 hearing both reflect that the court was granting summary judgment in favor of Triyar on the grounds there was no material factual dispute.
¶24 Even if the trial court theoretically had the power to dismiss Appellants' claims to the condemnation damages for their failure to comply with the court's orders, Green v. Lisa Frank, Inc., 221 Ariz. 138, 149-50, 211 P.3d 16, 27-28 (App. 2009), the court did not have the power to award condemnation damages to Triyar unless and until Triyar could prove it was entitled to them. See Grain Dealers Mut. Ins. Co. v. James, 118 Ariz. 116, 118, 575 P.2d 315, 317 (1978) ("Even though cross motions for summary judgment [are] filed, a court may not grant a summary judgment unless there remains no genuine issue as to any material fact and one of the parties is entitled to judgment as a matter of law.").
¶25 Furthermore, the trial court did not mention that it was dismissing Appellants' claims for failure to comply with its orders or as a sanction. The trial court never made findings of facts to justify a sanction. Nor did it discuss any of the following factors that a sanctioning court would typically consider:
(1) prejudice to the other party, both in terms of its ability to litigate its claims and other harms caused by the disobedient party's actions; (2) whether the violations were committed by the party or by counsel; (3) whether the conduct was willful or in bad faith and whether the violations were repeated or continuous; (4) the public interest in the integrity of the judicial system and compliance with court orders; (5) prejudice to the judicial system, including delays and the burden placed on the trial court; (6) efficacy of lesser sanctions; (7) whether the party was warned that violations would be sanctioned; and (8) public policy favoring the resolution of claims on their merits.Green, 221 Ariz. at 154, ¶ 45, 211 P.3d at 32.
¶26 While the trial court had warned prior to the June 11 hearing that "if any party fails to appear the Court can impose sanctions as well as enter orders based upon the arguments and evidence presented by the appearing parties only," this warning does not appear to be the basis of the trial court's grant of summary judgment in Triyar's favor. Accordingly, even if Mr. Sutton's behavior was "consistently outrageous and contemptible," as City claims, we cannot sustain the trial court's award of summary judgment in Triyar's favor as a sanction.
IV. Attorneys' Fees
¶27 Although Appellants are the prevailing party in this action, we exercise our discretion to deny their request for attorneys' fees pursuant to Arizona Revised Statutes ("A.R.S.") section 12-341.01(A) (2003). Appellants identify the option contract and the "real estate documentation specifying that the half acre was excluded from the sale of land" as contracts at issue for purposes of § 12-341.01(A). Although both of these "contracts" were introduced to the court via Mr. Sutton's motion for partial summary judgment, neither of these documents was necessary to the court's resolution of this condemnation action. See Dooley v. O'Brien, 226 Ariz. 149, 152-53 ¶¶ 10-12, 244 P.3d 586, 589-90 (App. 2010) (explaining that attorneys' fees may not be awarded in every case that merely involves or relates to a contract and the court must determine the "fundamental" nature of the action). This litigation was fundamentally about condemnation, and Mr. Sutton's introduction of these documents needlessly complicated this case. See Chaurasia v. Gen. Motors Corp., 212 Ariz. 18, 26, ¶ 25, 126 P.3d 165, 173 (App. 2006) ("Attorneys' fees are not recoverable, however, if the contract serves only as a factual predicate for the action and not its essential basis."). Thus, we deny Appellants' request for fees on appeal.
Conclusion
¶28 We reverse and remand to the trial court for further proceedings in accordance with our decision. Because we have vacated summary judgment in Triyar's favor regarding the ownership of the half acre, we also reverse the trial court's subsequent rulings that relied on this premise, including: (1) its declaration that the mortgage the Suttons had placed on the half acre was void, and (2) its determination that title is vested in the City as to all condemned portions of the subject parcels of property.
Since this matter is likely to arise on remand, we note that the trial court lacked jurisdiction to expunge Aspen's mortgage because Aspen was not a party to the subject case. See Master Fin., Inc. v. Woodburn, 208 Ariz. 70, 74, 90 P.3d 1236, 1240 (App. 2004) ("A judgment or order is void if the court lacked jurisdiction over the subject matter, over the person, or over the particular judgment or order entered."). Such action by the court would normally require that the mortgagor first be properly served and added as a party to the case, then given adequate notice and an opportunity to be heard regarding any expungement.
It is unclear from the record whether the trial court had already ruled on this issue prior to the hearing on the motion for partial summary judgment in June 2009. One minute entry dated June 16, 2008 suggests that the court may have already found that title to all of the condemned property was vested in the city:
It is ordered . . . that the City of Phoenix took over both of the properties from the beginning; that both parcels were identified by Mr. Sutton as East and West Grove and identified by the City of Phoenix as tax parcel numbers 301-30-002 and 301-30-003A as part of the original condemnation action, and all parties knew this to be true in spite of the mistake in the legal description attached to the original complaint.
____________
ANDREW W. GOULD, Judge
CONCURRING: ____________
MAURICE PORTLEY, Presiding Judge
____________
ANN A. SCOTT TIMMER, Judge
If the trial court already ruled on this issue before June 2009, the court's prior ruling would not be vacated. However, this issue will have to be clarified by the trial court on remand.