Ray and Lindsay v. Gilbert ( 2021 )

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
RAY AND LINDSAY - 11, LLC,
Plaintiff/Appellant,
v.
TOWN OF GILBERT,
Defendant/Appellee.
No. 1 CA-CV 20-0443
FILED 5-4-2021
Appeal from the Superior Court in Maricopa County
No. CV2018-011285
The Honorable Pamela S. Gates, Judge
AFFIRMED
COUNSEL
Berry Riddell, LLC, Scottsdale
By Jeffrey D. Gross, Michael W. Zimmerman
Counsel for Plaintiff/Appellant
Gust Rosenfeld, PLC, Phoenix
By Charles W. Wirken
Counsel for Defendant/Appellee
RAY AND LINDSAY v. GILBERT
Decision of the Court
MEMORANDUM DECISION
Judge David D. Weinzweig delivered the decision of the Court, in which
Presiding Judge David B. Gass and Judge Michael J. Brown joined.
W E I N Z W E I G, Judge:
¶1 Ray and Lindsay, LLC (“R&L”) appeals the superior court’s
entry of judgment on the pleadings for the Town of Gilbert and award of
attorney fees. We affirm.
FACTS AND PROCEDURAL BACKGROUND
¶2 Because the superior court dismissed the lawsuit on the
pleadings under Arizona Rule of Civil Procedure 12(c), we accept and thus
recount “the allegations of the complaint as true.” Muscat by Berman v.
Creative Innervisions LLC, 244 Ariz. 194, 197, ¶ 7 (App. 2017).
2005 Development Agreement
¶3 Greater Phoenix Income Properties (“GPI”) owned and
intended to develop a vacant parcel (“Property”) in the Town. When so
developed, GPI understood it would need “to construct certain
improvements.”
¶4 GPI and the Town entered into a development
reimbursement agreement (“Agreement”) in April 2005. The Agreement
expressly bound all successors and was recorded to notify prospective
purchasers about its obligations. The Town promised “to construct” capital
improvements for the Property, and GPI promised to reimburse the Town
for nearly $760,000 in improvements, including roadway improvements,
design fees, construction management fees, irrigation costs and power
costs. The Agreement explained that the Town would not record “the final
plat for any portion of the Property and [would] withhold[] permits and
municipal services to the Property until the funds [were] fully received.” A
lien was recorded on the Property to secure the debt, which the Town
promised to release once paid.
¶5 The Town approved the Agreement by resolution, citing its
authority under A.R.S. § 9-500.05 to “enter into development agreements
relating to the development of property in the Town.”
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R&L Acquires the Property and Sues the Town
¶6 R&L bought the Property from GPI in December 2016.
Around 13 months later, R&L asked the Town to reduce the reimbursement
amount under the Agreement and release the lien. R&L claimed the
Agreement was an assessment under A.R.S. § 9-243, which abated in 2015
because the Property remained undeveloped after 10 years. The Town
refused, and R&L sued for a declaratory judgment that the assessment and
lien had expired.
¶7 The superior court granted the Town’s motion for judgment
on the pleadings and awarded attorney fees to the Town. R&L timely
appeals. We have jurisdiction. See A.R.S. § 12-2101(A)(1).
DISCUSSION
¶8 We review de novo an order granting judgment on the
pleadings and will affirm if it is correct for any reason. Muscat by Berman,
244 Ariz. at 197, ¶ 7. We also interpret statutes de novo. Duff v. Lee, 250
Ariz. 135, 138, ¶ 11 (2020).
I. Assessments and Development Agreements
¶9 Although contained in a development agreement authorized
by § 9-500.05, R&L argues the reimbursement requirement was an
involuntary assessment under § 9-243. We thus begin by describing and
comparing assessments and development agreements.
¶10 Assessments. Arizona cities and towns may impose
assessments under § 9-243—without mutual assent—shifting the costs for
public improvements (streets and sidewalks) from all taxpayers to local
businesses and landowners who need the improvements:
The council may by ordinance require the proprietor or owner
of any property within the town at the time of the
development of the property to construct streets within and
adjacent to the property. If the council determines that such
streets are necessary before the development of the property,
the council may order these improvements to be constructed
by the town at its expense and the expense shall be assessed
against the property.
A.R.S. § 9-243(B).
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¶11 The legislature created a framework for municipalities to
impose assessments and for landowners to appeal them. See A.R.S. § 9-
243(D) (“The determination of necessity by the council resulting in the
assessing of property under this section may be appealed by any aggrieved
party to the superior court.”).
¶12 Assessments are time-limited to protect landowners from
paying to construct streets and sidewalks they never need or use: “Any
assessment under this section shall abate if the property has not been
developed within ten years of the assessment.” A.R.S. § 9-243(C). The
Town cannot extend or exceed its powers beyond that granted by the
legislature. Town of Florence v. Florence, __ Ariz. __, 2021 WL 1099043 at *4
(Ariz. App. Mar. 23, 2021).
¶13 Development agreements. By contrast, Arizona cities and
towns may negotiate development agreements with developers under § 9-
500.05 to attract and induce development. Id. (“By authorizing cities and
towns to enter development agreements, the legislature expanded the land-
use toolbox of local governments to attract large investments from
developers who demand more certainty and less risk—sheltering the
developers from oscillating public preference and unpredictable political
winds.”). Mutual assent is needed to enter or amend a development
agreement. See A.R.S. § 9-500.05.
¶14 The legislature identified various forms of development
agreements, including, as relevant here, “an agreement between a
municipality and a [landowner]” relating to “[c]onditions, terms,
restrictions and requirements for public infrastructure and the financing of
public infrastructure and subsequent reimbursements over time.” A.R.S.
§ 9-500.05(H)(1)(g). The legislature did not limit the duration of
development agreements. Rather, the burdens and benefits of development
agreements inure to “successors in interest and assigns,” and development
agreements cannot be terminated without mutual assent. A.R.S. § 9-
500.05(A), (C), (D).
II. Abatement
¶15 R&L argues the development reimbursement agreement
between its predecessor and the Town was really an assessment under § 9-
243, which necessarily abated in 2015 because the Property had “not been
developed within ten years of the assessment.” See A.R.S. § 9-243(C). This
argument fails under the plain language of § 9-243 and § 9-500.05. Our
primary goal with statutory interpretation is to discern and carry out the
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Decision of the Court
legislature’s intent, J.D. v. Hegyi, 236 Ariz. 39, 40, ¶ 6 (2014), which is best
expressed by the statute’s plain language, Premier Physicians Grp., PLLC v.
Navarro, 240 Ariz. 193, 195, ¶ 9 (2016).
¶16 First, the legislature expressly limited § 9-243’s ten-year
abatement period to “any assessment under this section.” A.R.S. § 9-243(C)
(emphasis supplied). Had the legislature intended this limitation to apply
more broadly, including to development agreements under § 9-500.05, it
could and would have said, “under this title.” State ex rel. Fox v. New Phoenix
Auto Auction, Ltd., 185 Ariz. 302, 308 (App. 1996) (citing A.R.S. § 1-213)
(recognizing the importance when “the legislature expresses itself using its
own technical terms,” like “section”).
¶17 Second, the Town did not “require” or “order” GPI and its
successors to reimburse the improvement costs under § 9-243(B). Rather,
the parties negotiated and voluntarily agreed to the reimbursement
obligation as a valid “condition[], term[], restriction[] [or] requirement for
public infrastructure” financing under § 9-500.05(H)(1)(g). Nor has R&L
alleged the development agreement is void or voidable as the product of
duress.
¶18 Third, unlike a unilateral assessment under § 9-243, the terms
of a development agreement under § 9-500.05 run with the land, bind
successors in interest and cannot be amended or terminated without
mutual consent. See A.R.S. § 9-500.05(C), (D).
¶19 R&L relies on Achen-Gardener, Inc. v. Superior Ct., 173 Ariz. 48(1992), to argue that “A.R.S. § 9-500.05 does not give cities unfettered
authority to statutory limitations.” That reliance is misplaced. There, our
supreme court held that local governments cannot negotiate whether
compliance with state procurement laws will be required under a
development agreement. But state procurement laws are mandatory and
protect taxpayers from self-dealing and cronyism. Id. at 55. Assessment
laws, by contrast, describe how and when local governments can shift the
cost of improvements. See Shelby D. Green, Development Agreements:
Bargained-For Zoning That Is Neither Illegal Contract Nor Conditional Zoning,
33 Cap. U.L. Rev. 383, 394 (2004). Compare Assoc’d Gen. Contractors of Cal. v.
San Francisco Unified Sch. Dist., 616 F.2d 1381, 1391 (9th Cir. 1980)
(procurement laws are “designed to protect the public [coffers] by
preventing public officials from awarding contracts uneconomically on the
basis of special friendships”), with 3 Rathkopf’s The Law of Zoning and
Planning § 44:16 (4th ed.) (both parties benefit from development
agreements when the municipality negotiates for “fees, dedications,
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exactions, and improvements,” and the developer negotiates to “‘lock in’
the land use regulations”). We affirm the superior court’s entry of
judgment on the pleadings.
III. Attorney Fees
¶20 R&L also challenges the superior court’s statutory authority
to award the Town its attorney fees, which we review de novo. Bennett
Blum, M.D., Inc. v. Cowan, 235 Ariz. 204, 205, ¶ 5 (App. 2014). Finding no
error, we affirm.
¶21 The superior court is authorized under A.R.S. § 12-341.01(A)
to award reasonable attorney fees to the successful party in a “contested
action arising out of a contract.” The development agreement is a contract
and the Town prevailed in a lawsuit arising from the development
agreement. See Florence, 2021 WL 1099043 at *6. Moreover, the
development agreement provided that “the prevailing party shall be
awarded his reasonable attorney[] fees and costs and collection costs
incurred” if required to litigate. That provision is enforceable. Bennett
Blum, 235 Ariz. at 206, ¶ 8 (quoting McDowell Mountain Ranch Cmty. Ass’n
v. Simons, 216 Ariz. 266, 269, ¶ 14 (App. 2007)).
¶22 Both parties seek attorney fees under A.R.S. § 12-341.01. The
Town also requests fees under the Agreement. We award the Town its
reasonable attorney fees as the prevailing party upon compliance with
ARCAP 21 and deny R&L’s request.
CONCLUSION
¶23 We affirm.
AMY M. WOOD • Clerk of the Court
FILED: AA
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