Opinion
No. 1 CA-CV 13-0009
03-18-2014
STATE OF ARIZONA, by and through Maria Baier as State Land Commissioner, Plaintiff/Appellee/Cross-Appellant, v. STEPHEN SUSSEX, and VIRGINIA SUSSEX, husband and wife; CAHILL CONTRACTING, INC.; JUDY TROUTMAN, Defendants/Appellants/Cross-Appellees.
Arizona Attorney General's Office, Phoenix By Paul A. Katz Counsel for Plaintiff/Appellee/Cross-Appellant Wilenchik & Bartness, Phoenix By John D. Wilenchik Co-Counsel for Defendants/Appellants/Cross-Appellees Farley, Robinson & Larsen, Phoenix By Greg A. Robinson Co-Counsel for Defendants/Appellants/Cross-Appellees
NOTICE: NOT FOR PUBLICATION.
UNDER ARIZ. R. SUP. CT. 111(c), THIS DECISION DOES NOT CREATE LEGAL PRECEDENT
AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.
Appeal from the Superior Court in Maricopa County
No. CV2005-006521
The Honorable John Christian Rea, Judge
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED FOR
AWARD OF COSTS TO STATE OF ARIZONA
COUNSEL
Arizona Attorney General's Office, Phoenix
By Paul A. Katz
Counsel for Plaintiff/Appellee/Cross-Appellant
Wilenchik & Bartness, Phoenix
By John D. Wilenchik
Co-Counsel for Defendants/Appellants/Cross-Appellees
Farley, Robinson & Larsen, Phoenix
By Greg A. Robinson
Co-Counsel for Defendants/Appellants/Cross-Appellees
MEMORANDUM DECISION
Presiding Judge Donn Kessler delivered the decision of the Court, in which Judge Patricia K. Norris and Judge Maurice Portley joined. KESSLER, Presiding Judge:
¶1 Stephen Sussex, Virginia Sussex, and Judy Troutman ("Appellants") appeal the trial court's order granting summary judgment in favor of the State. The State cross-appeals from both the jury instructions in its damages trial for trespass and the failure of the trial court to award it its costs and fees. For the following reasons, we affirm in part, reverse in part, and remand for award of costs to the State.
FACTUAL AND PROCEDURAL HISTORY
¶2 This appeal presents questions about the State's right to certain trust lands and whether the State can be barred by laches from seeking to quiet title to those lands as to persons claiming an interest in the lands. As such, we will briefly describe how the State was granted such trust lands, the chain of title to the lot at issue, and later, how both the federal government and Arizona limited the rights of third parties to claims on such lands based upon prior occupancy.
¶3 In 1850, Congress defined the boundaries and established a temporary government for the Territory of New Mexico. Organic Act Establishing the Territory of New Mexico, ch. 49, § 2, 9 Stat. 446 (1850). It further enacted that the lands be surveyed under the direction of the United States government, and that sections sixteen and thirty-six in each township be reserved for common school use. Id. at § 15. Congress extended this reservation of common school land to the Territory of Arizona in 1863. An Act to Provide a Temporary Government for the Territory of Arizona, and for Other Purposes, ch. 56, § 2, 12 Stat. 664 (1863).
"When the lands in said territory shall be surveyed under the direction of the government of the United States, preparatory to bringing the same into market, sections numbered sixteen and thirty-six in each township in said territory shall be, and the same are hereby, reserved for the purpose of being applied to schools in said territory, and in the states and territories hereafter to be erected out of the same." Organic Act Establishing the Territory of New Mexico, ch. 49, § 15, 9 Stat. 446 (1850).
¶4 The property in dispute, Lot 1E, is located within a township's section sixteen and was approved by a federal survey in October 1868. In 1902, the federal government withdrew that section sixteen from sale, entry, or preemption in connection with the Salt River Reclamation Project. Instead of selecting land in lieu of the section sixteen, Arizona opted to wait for the land to be restored to the public domain and for title to vest in the State. See 43 U.S.C. § 851 ("[T]he selection of any lands under this section in lieu of sections granted or reserved to a State shall be a waiver by the State of its right to the granted or reserved sections. . . . Provided, however, [t]hat nothing in this section contained shall prevent any State from awaiting the extinguishment of any such military, Indian, or other reservation and the restoration of the lands therein embraced to the public domain and then taking the sections sixteen and thirty-six in place therein."). In 1945, the Bureau of Land Management waived its rights to section sixteen and title vested in the State. In 1963, the federal government issued a patent to the State confirming the 1945 transfer.
The Reclamation Act of 1902 "outlines a comprehensive reclamation scheme, and provides for the examination and survey of lands and for construction and maintenance of irrigation works for the storage, diversion, and development of water for the reclamation of arid and semiarid lands." Henkel v. United States, 237 U.S. 43, 49 (1915). It allowed the Secretary of the Interior to "withdraw from public entry the lands required for . . . irrigation works contemplated under the provisions of [the] Act," and to "restore to public entry any of the lands so withdrawn when, in his judgment, such lands [were] not required for the purpose of [the] Act." Reclamation Act, ch. 1093, § 3, 32 Stat. 388 (1902) (current version at 43 U.S.C. §§ 373, 376).
¶5 Appellants claim to have an interest in Lot 1E because they and their ancestors allegedly have occupied the land since 1892. In an affidavit, Stephen Sussex declared that (1) according to family tradition and neighborhood reputation, his family has openly, obviously, and continuously possessed Lot 1E since before the turn of the century; and (2) based on his own personal knowledge, his family has possessed the land since the 1930s. Appellants did not produce any deeds or documents to support that assertion and later admitted that they could not produce such documentation.
¶6 According to State records, in 1930, Rosario Martinez, the great-grandmother of Stephen Sussex and Judy Troutman, filed an application for and was granted a lease to Lot 1E. In 1934, the State cancelled the lease for non-payment of annual rent.
Federal law permitted the State to lease trust properties even if title in the State had not yet vested. See An Act to Authorize the Leasing of Lands for Educational Purposes in Arizona, ch. 95, 29 Stat. 90 (1896) ("[T]he lands reserved for university purposes, and all of the school land in the Territory of Arizona reserved by law for school purposes, may be leased under such laws and regulations as may be hereafter prescribed by the legislature of said Territory . . . .").
¶7 In 1938, the Arizona State Land Department (the "Department") issued a commercial lease for lands, including Lot 1E, to Howard Van Horne. In his 1938 application and 1943 renewal request, Van Horne certified that there were no squatters, settlers, or other occupants on the land. Department records also indicate that Rosario Martinez's daughter, Belen Sussex, filed for a Homesite lease but her application was rejected in 1951.
¶8 In 1956, prior to public auction, the Department appraised Lot 1E and concluded that there were no reimbursable improvements on the land. The Department issued an amended appraisal eight months later to include $1510 in improvements claimed by Belen Sussex. The land was then sold to Ernest C. Mohamed in 1956, and the Department sent the Sussex family $1510 to cover the value of improvements on the land sold. Belen Sussex also signed a form stating that as an interested party she had no objection to the amended appraisal and waived the thirty-day appeal period in connection with the decision. In 1971, Mohamed failed to make payments and the land was forfeited back to the State. Appellants allege that they continued to occupy the land. In 1986, Appellants leased Lot 1E to Cahill Contracting, Inc.
The improvements included two-thirds of a frame house, half of a box house, the west wall of two shacks, one outhouse, one fence, and a clothesline.
¶9 In 1988, the State announced the public auction of 59.46 acres of State Trust land, including Lot 1E. The land was sold to the City of Tempe for $21,363.35 per acre. The sale, however, was ultimately voided due to pending quiet title litigation with Southern Pacific Railroad. The railroad dispute was eventually resolved in 2002. According to Appellants, the Department did not demand possession of the land until 1992.
¶10 In 2005, the State filed a complaint against Appellants for trespass, quiet title, injunctive relief, and recovery of real property. The trial court granted the State summary judgment on the issues of title and present possession, and entered a judgment under Arizona Rule of Civil Procedure 54(b). Appellants appealed, but we dismissed that appeal because the judgment was improperly certified under Rule 54(b). On remand, the trial court granted the State summary judgment for common-law trespass. Following a three-day jury trial, the State was awarded $1500 in damages. The trial court then entered a new judgment.
¶11 Both Appellants and the State timely appealed from the final judgment. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101(A)(1) (Supp. 2013).
We cite to the current versions of statutes when no changes material to this decision have since occurred.
DISCUSSION
I. The Appeal
¶12 On appeal, Appellants argue that the trial court erred by granting summary judgment in favor of the State for quiet title and possession of the lot. Appellants limit the issues presented to three: (1) Did the trial court err in not barring the quiet title complaint for laches?; (2) Were Appellants entitled to judgment based on laches?; and (3) Did the trial court err in confirming the 1963 patent to the State because of lack of notice to Appellants?
¶13 The limited nature of the appeal creates a quandary for Appellants. The State contends that it is undisputed that it had clear title to the property based on the above facts. Despite referring to factual issues that might affect title, Appellants nowhere argue in the opening brief that the record showed they had any legal interest or claim to title of the lot except as might affect their right to notice of the 1963 patent. Nor do they dispute that one of the Sussex predecessors in interest agreed to waive all interest in the property upon the State paying the predecessor for damages to the property in 1956. Thus, Appellants have waived any argument as to disputed title. See ARCAP 13(a)(6) (stating the appellant's brief must contain an argument with citations to relevant authority); State v. Carver, 160 Ariz. 167, 175, 771 P.2d 1382, 1390 (1989) ("In Arizona, opening briefs must present significant arguments, supported by authority, setting forth an appellant's position on the issues raised. Failure to argue a claim usually constitutes abandonment and waiver of that claim."); Polanco v. Indus. Comm'n of Ariz., 214 Ariz. 489, 491 n.2, ¶ 6, 154 P.3d 391, 393 n.2 (App. 2007) ("Although [the petitioner] mentions this argument in passing in his opening brief, he cites no relevant supporting authority and does not develop it further. Accordingly, we conclude he has waived this issue and do not address its merits.").
¶14 Accordingly, we consider the merits of the issues on appeal in light of the unappealed conclusion that the State had legal title to the property. We review the trial court's grant of summary judgment de novo, "determin[ing] independently whether there are any genuine issues of material fact and whether the trial court erred in its application of the law." Valder Law Offices v. Keenan Law Firm, 212 Ariz. 244, 249, ¶ 14, 129 P.3d 966, 971 (App. 2006). "[W]e view the evidence in a light most favorable to the party against whom judgment was granted," Desilva v. Baker, 208 Ariz. 597, 600, ¶ 10, 96 P.3d 1084, 1087 (App. 2004), but we will affirm the entry of summary judgment if it is correct for any reason, Hawkins v. State, 183 Ariz. 100, 103, 900 P.2d 1236, 1239 (App. 1995).
A. The trial court did not err in finding that sovereign immunity barred Appellant's defense of laches.
¶15 Appellants argue the trial court erred in finding that sovereign immunity barred their defense of laches. Specifically, they argue that, even though they did not claim title by adverse possession, because they had occupied the property openly and continuously since 1894 the State should be held accountable for sitting on its rights for over a century.
¶16 "Laches is the equitable counterpart of a statute of limitations. A claim is considered unenforceable in an action in equity where, under the totality of circumstances, the claim, by reason of delay in prosecution, would produce an unjust result." Harris v. Purcell, 193 Ariz. 409, 410 n.2, ¶ 2, 973 P.2d 1166, 1167 n.2 (1998). "To constitute laches there must be a lack of diligence on the part of the plaintiff and resulting injury to the defendant. Equity does not encourage laches, and the doctrine may not be invoked to defeat justice but only to prevent injustice." Beltran v. Razo, 163 Ariz. 505, 507, 788 P.2d 1256, 1258 (App. 1990) (internal citation omitted).
In order to bar a claim on the basis of laches, a court must find more than mere delay in the assertion of the claim. The delay must be unreasonable under the circumstances, including the party's knowledge of his or her right, and it must be shown that any change in the circumstances caused by the delay has resulted in prejudice to the other party sufficient to justify denial of relief.Cyprus Bagdad Copper Corp. v. Ariz. Dep't of Revenue, 196 Ariz. 5, 8, ¶ 9, 992 P.2d 5, 8 (App. 1999) (internal quotation marks and citation omitted).
¶17 Here, the trial court found that laches did not apply because the State, in dealing with common school land, was acting in a governmental, and not proprietary, capacity:
The State's responsibility and authority with respect to school trust land is described and circumscribed by the organic documents of the State and by statute. While equitable considerations may apply in some cases when the State acts in a proprietary capacity, in this case the State is acting as trustee, and in a higher calling than as simply a property owner.
¶18 Generally, equitable defenses, such as laches and estoppel, may not be asserted against the State in matters affecting governmental or sovereign functions. Mohave Cnty. v. Mohave-Kingman Estates, Inc., 120 Ariz. 417, 421, 586 P.2d 978, 982 (1978). In contrast, these equitable defenses are available when the State acts within its proprietary capacity. Id. There is an exception to this rule, however, "when its rigid application would defeat, rather than serve, the higher purpose that all rules are intended to serve: that of doing justice." Utah State Univ. of Agric. & Applied Sci. v. Sutro & Co., 646 P.2d 715, 718 (Utah 1982); see also Freightways, Inc. v. Ariz. Corp. Comm'n, 129 Ariz. 245, 248, 630 P.2d 541, 544 (1981) ("We recognize that estoppel in its usual sense is not generally applicable against a sovereign in the exercise of governmental functions, but where right and justice demand it, the doctrine will be applied." (citation omitted)); People v. Weiszmann, 541 N.E.2d 205, 207 (Ill. App. Ct. 1989) ("The reluctance to apply equitable principles against the State does not, however, amount to an absolute immunity under all circumstances. The State may be barred by laches, even when acting in its governmental capacity, under extraordinary circumstances." (internal citations omitted)).
¶19 Simply put, the trial court reached the correct result. In seeking to protect Trust lands, the State was acting in a sovereign capacity. Section 15 of the Organic Act of New Mexico reserved sections sixteen and thirty-six in each township for the purpose of being applied to schools for the territory and future state. This reservation was extended to the Territory of Arizona, An Act to Provide a Temporary Government for the Territory of Arizona, and for Other Purposes at § 2, and ultimately supplemented by the New Mexico-Arizona Enabling Act, which authorized the people of Arizona to form a state government, ch. 310, § 19, 36 Stat. 568 (1910); see also § 28, 36 Stat. 574 ("That it is hereby declared that all lands hereby granted, including those which, having been heretofore granted to the said Territory, are hereby expressly transferred and confirmed to the said State, shall be by the said State held in trust, to be disposed of in whole or in part only in manner as herein provided and . . . the natural products and money proceeds of any of said lands shall be subject to the same trusts as the lands producing the same."). The people of Arizona accepted the grant of school lands through the approval and ratification of the Arizona Constitution, Ariz. Const. art. 10, § 1, and safeguarded the trust by providing that the proceeds from the sale of common school lands remain in a permanent state school fund, Ariz. Const. art. 11, § 8, and the land only be sold at public auction, Ariz. Const. art. 10, § 3. Thus, the State's ownership of common school lands, which it assumed upon admission to the Union, is not proprietary in nature. Rather, the State holds those lands in trust for the specific purpose of applying the land to state school use. See Flowing Wells Irr. Dist. v. City of Tucson, 176 Ariz. 623, 624, 863 P.2d 915, 916 (Ariz. Tax Ct. 1993) ("A governmental function is generally recognized as one undertaken because of a duty imposed on the entity for the welfare or protection of its citizens or a function that is fundamentally inherent in or encompassed within the basic nature of government. A proprietary function is 'more a commercial activity which directly competes with other commercial activities. . . .'" (citations omitted)).
¶20 Although there might be an exception to the application of laches against the State acting in a governmental capacity, that exception does not apply here. Ultimately, "[n]either doctrines of laches, nor statutes of limitation of actions can be allowed to defeat the [S]tate's sovereign title to trust lands." State of N.D. ex rel. Bd. of Univ. & Sch. Lands v. Andrus, 506 F.Supp. 619, 625 (D.N.D. 1981), rev'd on other grounds, Block v. N.D. ex rel. Bd. of Univ. & Sch. Lands, 461 U.S. 273 (1983).
[C]ourts [have] adopted [this] rule, not on the theory that an "impeccable" sovereign could not be guilty of laches, but because of the public policies served by the doctrine. The public interest in preserving public rights and property from injury and loss attributable to the negligence of public officers and agents, through whom the public must act, justified a special rule for the sovereign.Block, 461 U.S. at 294; see Freightways, 129 Ariz. at 248, 630 P.2d at 544 ("The United States Ninth Circuit Court of Appeals has held that the 'sovereign' can be estopped if the government's wrongful conduct threatens to work a serious injustice and if the public interest would not be unduly damaged by the imposition of estoppel." (emphasis added)); see also Defenders of Wildlife v. Hull, 199 Ariz. 411, 415 n.1, ¶ 2, 18 P.3d 722, 726 n.1 (App. 2001) (stating that 73 years of dormancy did not affect the validity of the State's claim to watercourse bedlands because neither laches nor statutes of limitations could defeat the State's sovereign title to trust lands); cf. Lindsey v. Miller's Lessee, 31 U.S. 666, 673 (1832) ("If a contrary rule were sanctioned, it would only be necessary for intruders upon the public lands, to maintain their possessions, until the statute of limitations shall run; and then they would become invested with the title against the government, and all persons claiming under it. In this way the public domain would soon be appropriated by adventures. Indeed it would be utterly impracticable, by the use of any power within the reach of the government, to prevent this result. It is only necessary, therefore, to state the case, in order to show the wisdom and propriety of the rule that the statute never operates against the government.").
We note that to allow the disposition of state trust land to Appellants in the manner requested would constitute a breach of trust in violation of the Arizona Constitution. See Ariz. Const. art. 10, § 2 ("Disposition of any of said lands, or of any money or thing of value directly or indirectly derived therefrom, for any object other than that for which such particular lands (or the lands from which such money or thing of value shall have been derived) were granted or confirmed, or in any manner contrary to the provisions of the said Enabling Act, shall be deemed a breach of trust."); cf. Murtaugh v. Chicago, 112 N.W. 860, 862 (Minn. 1907) ("[I]t is unthinkable that the Legislature intended . . . to provide a way whereby the trust as to any of the school lands might be defeated, and title thereto acquired by adverse possession, contrary to the mandate of the Constitution that title thereto could only be obtained by a public sale thereof.").
¶21 In all of the cases cited by Appellants to support their argument that the exception should apply, not one concerns an effort to defeat the State's claim to trust lands held in its sovereign capacity. See Freightways, 129 Ariz. at 248, 630 P.2d at 544 (finding the State was estopped from denying the validity of a certificate of public convenience and necessity based on a defect in the certificate's renewal fifty years earlier); Weiszmann, 541 N.E.2d at 207 (finding the State was barred by laches in attempting to establish ownership to three parcels of real estate); State v. Nw. Magnesite Co., 182 P.2d 643, 645 (action to recover royalties from the sale of minerals mined from public land leased to defendant). Accordingly, on this record, the trial court did not err in finding that sovereign immunity barred Appellant's defense of laches.
B. Appellants were not entitled to judgment on the basis of laches.
¶22 Appellants argue that even if they did not have any claim to title of the lot, if sovereign immunity did not apply, they were entitled to judgment on laches because the State waited to assert its claim for at least 50 years after 1963, and perhaps over 120 years in total, and Appellants, who were in open possession of the lot, were prejudiced by the delay. We disagree.
¶23 As we explained above, the trial court correctly held that laches, under these circumstances, cannot be applied to the State. Accordingly, regardless of whether Appellants were in continuous possession of the property, they cannot assert laches against the State.
¶24 Alternatively, even if sovereign immunity did not bar the laches defense here, the record does not support application of laches. To successfully prove the defense of laches, "[t]he delay must be unreasonable under the circumstances, including the party's knowledge of his or her right, and it must be shown that any change in the circumstances caused by the delay has resulted in prejudice to the other party sufficient to justify denial of relief." Cyprus, 196 Ariz. at 8, ¶ 9, 992 P.2d at 8 (citing McComb v. Superior Ct., 189 Ariz. 518, 525, 943 P.2d 878, 885 (App. 1997)).
¶25 Appellants did not make such a showing below. Appellants do not dispute that the trial court properly found the State proved its chain of title. At best, Appellants showed that the family had a four-year lease on the lot beginning in 1930 and that the State knew they had some improvements on the property in 1959, when the State paid their predecessor in interest $1500 for the loss of that property. In so doing, however, the predecessor in interest waived any right to appeal the order approving the sale of the lot to Mohamed, which was the basis for the payment of $1500 to her. Appellants did not prove below that the State had any knowledge of their trespassing on the property after that date until 1986, when Appellants began to lease the property for commercial purposes. Appellants also admitted that aerial photographs of the lot showed that until 1979 not much visible activity was taking place on the lot, and heavier use began in the mid-1980s. Even then, the State made a demand on Appellants as early as 1992 to vacate the premises. When Appellants refused, and after intervening disputes about rights of way on the land, the State made a new demand on Appellants, including sending them a quit claim deed to the State to avoid litigation. It was only when Appellants refused, that the State sued. On these facts, the State did not have any knowledge of Appellant's possession until about 1986, and did not unreasonably delay in bringing this action.
C. The State's 1963 claim to title is not constitutionally defective for lack of notice.
¶26 Finally, Appellants argue their due process rights were violated in 1963 when they failed to receive actual notice that the United States government was going to issue a confirmatory patent to the State for section sixteen. They specifically argue that the 1963 proceedings violated their due process rights because notice was made by newspaper publication only. We understand Appellant's argument to be that the form of notice somehow barred the State from arguing that it had superior title to the property to bring a quiet title action. We disagree.
¶27 The State filed an application under the Act of June 21, 1934, for the issuance of a patent, as evidence of title, to section sixteen for the support of common schools. See Act of June 21, 1934, ch. 689, 48 Stat. 1185 (codified at 43 U.S.C. § 871(a)), repealed by Pub. L. No. 94-579, § 705(a), 90 Stat. 2743 (1976); see also 43 C.F.R. § 270.31(a) (1963) ("The purpose of the act of June 21, 1934, is to provide the States, upon application, with evidence of title to the designated school-section lands granted by the Enabling Acts . . . and by any other act of Congress.").
The Federal Land Policy and Management Act of 1976 replaced the Act of June 21, 1934 and "authoriz[ed] the Secretary to issue patents in accordance with his authority to dispose of public lands." H.R. Rep. No. 94-1163, at 27 (1976); see 43 U.S.C. § 1718.
¶28 The State was granted Patent No. 02-63-0154 confirming title to section sixteen in 1963. The patent states that "[e]vidence of publication in the manner prescribed by 43 C.F.R. [§] 270.32 [(1963)] has been furnished and no protest has been filed." Section 270.32 required a patent applicant to publish notice of its application in a newspaper for five consecutive weeks.
"An applicant for patent under the act of June 21, 1934 will be required to publish notice of its application, at its own expense, in a daily, weekly, or semi-weekly paper, published in the vicinity of the land, once each week for five consecutive weeks, and to furnish proof thereof by a statement of the publisher or foreman of the newspaper employed. . . . The notice should require persons asserting claims to any of the lands advertised to file protest or notice of their claims in the land office within 30 days from the date of the last publication, in order to receive proper consideration before issuance of a patent." 43 C.F.R. § 270.32.
¶29 Appellants contend that newspaper publication alone does not give sufficient notice as a matter of law "with respect to a person whose name and address are known or very easily ascertainable and whose legally protected interests are directly affected by the proceedings in question." Mason v. Wilson, 116 Ariz. 255, 257-58, 568 P.2d 1153, 1155-56 (App. 1977).
¶30 To support their argument, Appellants rely on Mennonite Board of Missions v. Adams, 462 U.S. 791 (1983), and Mason v. Wilson, 116 Ariz. 255, 568 P.2d 1153 (App. 1977). Neither of these cases deal with notice regarding the issuance of a patent to a state for public lands. See Mennonite, 462 U.S. at 792 (addressing "whether notice by publication and posting provides a mortgagee of real property with adequate notice of a proceeding to sell the mortgaged property for nonpayment of taxes"); Mason, 116 Ariz. at 258, 568 P.2d at 1156 (holding that owners of real property are entitled to personal notice when a lienholder against their predecessors in interest seeks to hold a sheriff's sale on the lien). Although we find these cases to be inapposite, even if we applied the rule to Appellant's case, their argument still fails because they had no legally protected-interest in the land.
We note these cases were published more than ten years after the proceedings at issue.
¶31 Appellants argue that they deserved actual notice of the proceedings because they had a legally-protected interest in Lot 1E as (1) bona fide settlers, and (2) tenants at sufferance. We confine our analysis to the bona fide settler issue because Appellants did not argue below that they had a legally-protected interest in Lot 1E as tenants at sufferance until they submitted their motion for reconsideration. "Generally we do not consider arguments on appeal that were raised for the first time at trial in a motion for reconsideration." Evans Withycombe, Inc. v. W. Innovations, Inc., 215 Ariz. 237, 240, ¶ 15, 159 P.3d 547, 550 (App. 2006). "One of the reasons, as demonstrated by the facts of this case, is that when a new argument is raised for the first time in a motion for reconsideration, the prevailing party below is routinely deprived of the opportunity to fairly respond." Id.
¶32 Appellants argue that they had a legally protected interest in Lot 1E as bona fide settlers on the land pursuant to Title 65 of the Civil Code. Mere occupation of the land, however, does not confer ownership rights. Rather, such claims are barred under two federal statues dealing with preemption of such claims and homesteads.
¶33 When this nation began to emerge, the federal government was confronted with two important duties: (1) providing financial policies for new states, and (2) electing colonization plans. Benjamin H. Hubbard, A History of the Public Land Policies, at 1 (1924) (hereinafter "Public Land Policies"). In the beginning, the need to raise revenue was the more immediate concern. As a result, between 1790 and 1841, land was regarded as a source of revenue, id., and in 1785 Congress enacted an ordinance that provided the mode for the disposal of land on a revenue basis. The ordinance also initiated the school lands grant program: "There shall be reserved the lot No. 16, of every township, for the maintenance of public schools within the said township . . . ." An Ordinance for Ascertaining the Mode of Disposing of Lands in the Western Territory (1785), available at http://memory.loc.gov/cgi-bin/query/r?ammem/bdsdcc:@field(DOCID+@lit(bdsdcc13201)). "As new states entered the union, Congress included some form of this provision into each new state's enabling act." Christopher J. Walker, The History of School Trust Lands in Nevada: The No Child Left Behind Act of 1864, 7 Nev. L.J. 110, 115 (2006); see supra ¶ 2.
¶34 Although Congress attempted to prevent unauthorized settlement on public lands, the right of preemption was eventually granted in 1841. Public Land Policies at 144 (defining the right of preemption as "the right to settle on and improve unappropriated public lands and later buy them at a minimum price without competition"); see also Sen. Young, Cong. Globe, 26th Cong., 2d Sess. App. 99 (1841) ("It is by the pre-emption policy that we secure these occupants, who have incorporated their labor with the soil, in their possessions, against the more wealthy who buy on speculation; and against whom they could not be expected successfully to compete, at public auction; and place the lands in the proper hands of those whose occupation is to cultivate them."). The Preemption Act of 1841, however, was not all inclusive. See Preemption Act of 1841, ch. 16, § 10, 5 Stat. 453. The act listed numerous limitations and exceptions, including lands reserved for the support of schools. Id. Thus, any claim of a right to the lot by Appellants by preemption is barred.
In 1807 Congress passed an act "to prevent settlements being made on lands ceded to the United States, until authorized by law." Public Land Policies at 147 (citation omitted). The act was severe, and provided that "it shall be lawful for the President of the United States to direct the marshall or other person acting as marshall, . . . and also to take such other measures and to employ such military force as he may judge necessary and proper to remove from lands . . . any person or persons who shall hereafter take possession of the same, or make, or attempt to make a settlement thereon, until thereunto authorized by law." Id. at 148 (citation omitted).
¶35 Congress passed the Homestead Act of 1862 to provide a means to obtain a patent, thereby completing a settler's claim. See Homestead Act of 1862, ch. 75, § 2, 12 Stat. 392. This act, however, also specifically excluded surveyed school land from preemption and settlement. See id. at § 1 (stating that a qualified person was "entitled to enter one quarter section or a less quantity of unappropriated public lands, upon which said person may have filed a preemption claim, or which may, at the time the application is made, be subject to preemption . . . ." (emphasis added)).
¶36 Nor can Appellants rely on their claim of bona fide settlers under the Revised Statutes of Arizona Territory ("Territorial Statutes") section 4035 (Civil Code, Title 65, § 4). Section 4035 provided that bona fide settlers could obtain title to school lands prior to the completion of surveys by the federal government:
Actual and bona fide settlers or occupants who have placed improvements on school or university lands shall have the preferred right to lease the land whereon such settlement has been made: And, provided, further, That where settlers have resided upon, occupied or cultivated any land reserved for this territory for school or university purposes prior to the extension of the surveys of the United States over said lands, or who hold the same or the possession thereof by purchase from the original settlers or their assigns, said original settlers having resided on said lands or cultivated them prior to the survey of the United States, they shall be permitted to continue to hold said land without lease until such time as this territory is admitted as a state into the union, and the title to said land can be properly adjudicated, and the state get other lands for such holdings.
¶37 Even assuming Appellants' claim that they have openly lived on Lot 1E since 1894 is correct, because it occurred after federal survey in 1868, at most they were granted a preferred right to lease the land. This right would have terminated at the expiration of the lease or upon failure to pay one month of rent. Territorial Statutes § 4040 (Civil Code, Title 65, § 9). Nor did Appellants offer any evidence that the family held the property based on a purchase from the original pre-survey settlers. As a result, Appellants have no legally protected-interest in Lot 1E as bona fide settlers under Title 65 of the Civil Code. See Charlebois v. Renaud, 38 Ariz. 378, 384, 300 P. 190, 192 (1931) ("There is no law that [authorizes] or justifies the settlement of individuals on public land; on the contrary, the laws of the United States prohibit it; and however general the practice, such settlers can be considered in no other light than as trespassers. Congress has in several instances, by extending the right of preemption, sanctioned such acts and virtually abolished the rigor of the law, by extending a benefit to the settlers in consequence of an act which was originally illegal; but these are special laws, having reference only to a particular class of individuals, designated by the particular time at which they happened to be in possession. The general law is unaltered, and it does not appear that the defendant comes within the provision of any particular law which would give color of title or exempt her from the imputation of a trespasser." (citation omitted) (emphasis omitted)); Wood v. Beach, 156 U.S. 548, 551 (1895) ("[I]t is clear that [the Homesteader] acquired no equitable rights by his occupation and settlement. He went upon lands which were not open to homestead or pre-emption entry, and cannot make his unauthorized occupation the foundation of an equitable title."). Consequently, Appellants do not have a legally-protected interest in the land at issue for purposes of further notice of the 1963 patent based on their alleged characterization as bona fide settlers.
We note Appellants do not attack the summary judgment granted to the State on the trespass claim, thus waiving that issue on appeal. See Nelson v. Rice, 198 Ariz. 563, 567 n.3, ¶ 11, 12 P.3d 238, 242 n.3 (App. 2000) (noting that party waives argument by failing to raise it in opening brief). This raises a concern about whether the appeal is moot. Even if we found that a fact issue existed regarding title to the lot, which we do not even address because Appellants waived it, and that laches might apply as to the quiet title action, the trespass judgment would still stand. However, in the exercise of discretion, we have addressed the merits of the issues on appeal and need not decide if the trespass portion of the judgment moots the appeal from the remainder of the judgment.
CROSS-APPEAL
The State presents two issues on cross-appeal: (1) the trial court erroneously instructed the jury on the State's damages; and (2) the trial court erred in failing to award it taxable costs and reasonable attorneys' fees. However, the State only asks us to address the issue of the allegedly erroneous jury instruction if we reverse and remand for new trial. Because we affirm the trial court's judgment on quiet title and trespass, we address only the issue of costs and fees.
I. The trial court erred in denying the State its taxable costs.
¶38 The State filed a cross-appeal claiming the trial court erred in failing to award it its taxable costs pursuant to A.R.S. § 12-341 (2003) ("The successful party to a civil action shall recover from his adversary all costs expended or incurred therein unless otherwise provided by law." (emphasis added)). "The trial court's discretion in awarding costs goes only to the question of which items to allow, not to the actual awarding of costs, which is mandatory in favor of the successful party." In re Estate of Miles, 172 Ariz. 442, 444, 837 P.2d 1177, 1179 (App. 1992). However, for purposes of A.R.S. § 12-341, the trial court does have discretion in determining who is the successful party. Assyia v. State Farm. Mut. Auto. Ins. Co., 229 Ariz. 216, 223, ¶ 32, 273 P.3d 668, 675 (App. 2012).
¶39 The trial court granted summary judgment in favor of the State on the issues of title, present possession, and liability for common-law trespass. But the trial court determined there was insufficient evidence to find the trespass was willful and entered a directed verdict against the State on that one issue. At trial, the State argued it was entitled to the true rental value that Appellants should have paid for use of the land from 1986 through 2012, which was estimated to be between $450,203 and $494,379. Ultimately, the State was awarded only $1500 in damages.
¶40 "The term 'successful party' means the party who wins the lawsuit." Drozda v. McComas, 181 Ariz. 82, 85, 887 P.2d 612, 615 (App. 1994). Here, the trial court granted the State summary judgment on all claims, including common-law trespass, but concluded there was not enough evidence to find that the trespass was willful. A finding of willfulness would have only increased the amount of damages awarded to the State:
Whoever commits any trespass upon state lands as defined by [A.R.S.] § 37-501 is also liable in a civil action brought in the name of the state in the county in which the trespass was committed, for three times the amount of the damage caused by the trespass, if the trespass was willful, but for single damages only if casual or involuntary.A.R.S. § 37-502(A) (2003). If the State had been successful it would have received $4500 in damages rather than $1500.
¶41 "The general rule is that a party who recovers judgment for only a part of a demand or claim is entitled to all taxable costs in the absence of a statute providing for apportionment or some other rule." Ayla v. Olaiz, 161 Ariz. 129, 131, 776 P.2d 807, 809 (App. 1989). Under this rule, the State is entitled to costs even though it recovered significantly less than the relief requested. It prevailed on all but one of its claims and was awarded damages on the common-law trespass claim.
II. The trial court did not err in denying the State its reasonable attorneys' fees.
¶42 The State also argues the trial court erred in failing to award it its reasonable attorneys' fees pursuant to A.R.S. § 12-1103(B) (2003) ("If a party, twenty days prior to bringing the action to quiet title to real property, requests the person, other than the state, holding an apparent adverse interest or right therein to execute a quit claim deed thereto, and also tenders to him five dollars for execution and delivery of the deed, and if such person refuses or neglects to comply, the filing of a disclaimer of interest or right shall not avoid the costs and the court may allow plaintiff, in addition to the ordinary costs, an attorney's fee to be fixed by the court."). "It is within the trial court's discretion to determine whether to award [attorneys'] fees to a party who has prevailed in a quiet title action and otherwise complied with the provisions of section 12-1103(B)." Scottsdale Mem'l Health Sys., Inc. v. Clark, 164 Ariz. 211, 215, 791 P.2d 1094, 1098 (1990).
There is no dispute that the State complied with the statutory requirements under A.R.S. § 12-1103(B).
¶43 In determining whether to award fees under A.R.S. § 12-1103(B), "the trial court may consider the same factors that are considered in determining whether to award [attorneys'] fees pursuant to A.R.S. [§] 12-341.01." Id.; see also Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570, 694 P.2d 1181, 1184 (1985). These factors include:
the merits of the unsuccessful party's claim, whether the claim could have been avoided or settled, whether the successful party's efforts were completely superfluous in achieving the result, whether assessing fees against the unsuccessful party would cause an extreme hardship, whether the successful party did not prevail with respect to all of the relief sought, the novelty of the legal question presented, and whether an award to the prevailing party would discourage other parties with tenable claims from litigating legitimate contract issues for fear of incurring liability for substantial amounts of attorneys' fees.Uyleman v. D.S. Rentco, 194 Ariz. 300, 305, ¶ 27, 981 P.2d 1081, 1086 (App. 1999) (citing Warner, 143 Ariz. at 570, 694 P.2d at 1184). In reviewing the exercise of the trial judge's discretion, we note that "[t]he question is not whether the judges of this court would have made an original like ruling, but whether a judicial mind, in view of the law and circumstances, could have made the ruling without exceeding the bounds of reason. We cannot substitute our discretion for that of the trial judge." Warner, 143 Ariz. at 571, 694 P.2d at 1185 (citation omitted). Here, the court considered these factors in its denial of attorneys' fees and the record supports the court's balancing of issues.
¶44 "[T]he weight given to any one [Warner] factor is within the [trial] court's discretion." Moedt v. Gen. Motors Corp., 204 Ariz. 100, 105, 60 P.3d 240, 245 (App. 2002). Here, the court stated a significant factor was that the State did not prevail on all relief sought. Although the State only requested fees as they related to quiet title, the court found the issues of quiet title and present possession to be inextricably linked to the issue of trespass. The State's claim for willful trespass was dismissed on directed verdict and the jury only awarded the State a total of $1500 for its common-law trespass claim. Furthermore, the State has only contingently appealed the jury instruction issue, which it claims would have entitled the jury to award it hundreds of thousands of dollars in fair market rental value. The court was permitted to consider the amount requested by the State and the amount the jury ultimately awarded in determining the prevailing party and whether fees should be awarded. Therefore, although the State was ultimately the successful party, the trial court did not abuse its discretion in finding that it did not prevail with respect to all of the relief sought.
¶45 The Warner factors were established to assist the trial court in determining whether to grant an award of attorneys' fees, but they do not dictate the appellate court's review of the trial court's decision whether to award fees. Sanborn v. Brooker & Wake Prop. Mgmt., Inc., 178 Ariz. 425, 430, 874 P.2d 982, 987 (App. 1994). The court's finding that the State did not prevail on all relief sought, by itself, is enough for a denial of fees. Therefore, although other factors might weigh in favor of the State, the court acted within its discretion in denying attorneys' fees.
CONCLUSION
¶46 For the foregoing reasons, we affirm the trial court's judgment in favor of the State, reverse the denial of costs to the State, and remand the matter back to the trial court with instructions that the court enter a supplemental judgment in favor of the State for its taxable costs, which are mandated by A.R.S. § 12-341. We also award the State its taxable costs on appeal upon compliance with Arizona Rule of Civil Appellate Procedure 21.