Tanner v. woloszyn/mcdaniels ( 2023 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
JENNIFER ROVEN TANNER,
Plaintiff/Appellee,
v.
WOLOSZYN INVESTMENTS, LLC,
Defendant/Appellant.
WOLOSYN INVESTMENTS, LLC,
Third-Party Plaintiff/Appellant,
v.
TIM N. MCDANIELS and JANE DOE MCDANIELS, husband and wife;
MICHELE LUNDY and JAMES LUNDY, wife and husband;
MOUNTAIN DESERT LIVING, LLC, an Arizona limited liability
company dba REALTY ONE GROUP, MOUNTAIN DESERT; JAMES W.
WITT and BARBARA J. WITT, husband and wife; ALEJANDRO
GUTIERREZ and JANE DOE GUTIERREZ, husband and wife;
DON DICKINSON and JANE DOE DICKINSON, husband and wife;
RUSS LYON LLC, an Arizona limited liability company dba
RUSS LYON SOTHEBY’S INTERNATIONAL REALTY,
Third-Party Defendants/Appellees.
No. 1 CA-CV 21-0239
FILED 6-15-2023
Appeal from the Superior Court in Coconino County
No. S0300CV201900550
The Honorable Dan R. Slayton, Judge
REVERSED AND REMANDED
COUNSEL
Matthew J. Mansfield, PLLC, Flagstaff
By Matthew J. Mansfield
Counsel for Plaintiff/Appellee
Provident Law, Scottsdale
By Erik W. Stanley, Philip A. Overcash
Counsel for Defendants/Appellants
MEMORANDUM DECISION
Judge D. Steven Williams delivered the decision of the court, in which
Presiding Judge Cynthia J. Bailey and Chief Judge Kent E. Cattani joined.
W I L L I A M S, Judge:
¶1 Woloszyn Investments and its members, Wojciech Woloszyn
and Theresa Woloszyn (collectively, “Woloszyn”), appeal the superior
court’s entry of declaratory judgment in favor of Jennifer Tanner. Woloszyn
contends the court erred in finding the Broken Arrow Hills Declaration of
Covenants, Conditions, and Restrictions (“CC&Rs”) valid and enforceable
against their property. For the following reasons, we reverse the judgment
of the superior court, including its award of attorneys’ fees and costs, and
remand for further proceedings consistent with this decision.
FACTUAL AND PROCEDURAL HISTORY
¶2 Tanner owned an undeveloped 3.21-acre parcel on Cypress
Drive in Sedona. In 1995, Tanner divided the land into three parcels (“Parcel
A,” “Parcel B,” and “Parcel C”). Around the same time, Tanner purportedly
created the CC&Rs imposing restrictions on all three parcels. As relevant
here, the CC&Rs prohibit renting the properties as short-term vacation
rentals.
¶3 Tanner and her now-deceased husband signed and dated the
CC&Rs. The Tanners’ signatures reflect a signing date of September 21,
1995, but their signatures were not notarized, and the document was not
recorded until November 1997. Tanner concedes the CC&Rs were not
acknowledged.
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Decision of the Court
¶4 In 1996, before recording the CC&Rs, Tanner sold Parcel C to
John and Sharon Merz (“Merz”). At some point, Tanner provided Merz a
copy of the unrecorded CC&Rs.
¶5 Merz split Parcel C into two parcels (“75 Cypress Drive” and
“80 Cypress Drive”) and sold 80 Cypress Drive to Janice and James Witt
(“Witt”). Merz apparently provided Witt a copy of the unrecorded CC&Rs
before the close of escrow. Several months later, Tanner recorded the
CC&Rs.
¶6 In 2006, Witt, through their attorney, requested that Tanner
remove the CC&Rs from their property. Witt alleged that Tanner recorded
the CC&Rs without their consent. Witt also challenged the validity of the
CC&Rs given the absence of notarization. Tanner refused Witt’s request,
asserting Witt knowingly accepted the CC&Rs prior to the close of escrow.
¶7 In 2019, Witt sold 80 Cypress Drive to Woloszyn. In their
property disclosure statement, Witt disclosed: “We purchased our property
on April 25, 1997. In November of 1997, Jennifer Tanner, a neighbor,
recorded CC&Rs on our property, which we did not sign.” Woloszyn
apparently did not receive a copy of the CC&Rs prior to the close of escrow
and the title commitment documents did not refer to the CC&Rs. Shortly
after purchasing the property, Woloszyn began renting it as a short-term
vacation rental.
¶8 Tanner filed a complaint for: (1) declaratory judgment
—seeking a judicial declaration that the CC&Rs are valid and enforceable,
and (2) a permanent injunction—requesting a court order requiring
Woloszyn to cease and desist short-term vacation rentals. In response,
Woloszyn argued, as an affirmative defense, that the CC&Rs failed to
comply with statutory requirements.
¶9 Before discovery, Tanner moved for judgment on the
pleadings, arguing the CC&Rs, though not notarized, were nonetheless
validly recorded and statutorily compliant. The superior court granted
Tanner’s request for declaratory relief as to the validity of the CC&Rs but
denied her request for a permanent injunction.
¶10 Woloszyn timely appealed. We have jurisdiction under
Article 6, Section 9, of the Arizona Constitution and A.R.S. § 12-2101(A)(1).
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DISCUSSION
¶11 A plaintiff is entitled to judgment on the pleadings if the
complaint sets forth a claim for relief and the defendant’s answer fails to
assert a legally sufficient defense. See Walker v. Estavillo, 73 Ariz. 211, 215
(1952). In reviewing a plaintiff’s motion for judgment on the pleadings, we
consider the allegations of the complaint and the answer and accept as true
the factual allegations of both pleadings. Neiderhiser v. Henry’s Drive-In, Inc.,
96 Ariz. 305, 308 (1964). We review the court’s conclusions of law de novo.
Save our Valley Ass’n v. Ariz. Corp. Comm’n, 216 Ariz. 216, 218-19, ¶ 6 (App.
2007).
¶12 In Arizona, “[n]o instrument affecting real property gives
notice of its contents to subsequent purchasers . . . for valuable
consideration without notice, unless recorded as provided by law.” A.R.S.
§ 33-411(A) (1990).1 In other words, an instrument binds a subsequent
purchaser for value only if the purchaser had actual or constructive notice.
See Manicom v. CitiMortgage, Inc., 236 Ariz. 153, 156, 158, ¶¶ 8, 16 (App. 2014)
(as corrected) (distinguishing between actual and constructive notice and
explaining that “[a] recorded deed provides constructive notice.”).
¶13 Here, by finding Tanner lawfully recorded the CC&Rs, the
superior court implicitly determined that Woloszyn was bound by them
based on constructive notice. The court, however, did not find that
Woloszyn had actual notice of the CC&Rs.
¶14 To be lawfully recorded, deeds, conveyances, and
instruments affecting real property must be acknowledged. A.R.S.
§ 33-401(B) (deeds and conveyances); A.R.S. § 33-411(B) (instruments
affecting real property); Phipps v. CW Leasing, Inc., 186 Ariz. 397, 400–01
(App. 1996). “An instrument shall not be deemed lawfully recorded unless
it has been previously acknowledged.” A.R.S. § 33-411(B).
¶15 Prior to July 1, 2022, both § 33-401(D), the subsection
applicable to deeds and conveyances, and § 33-411(C), the subsection
applicable to instruments affecting real property, provided that recordings
with defects in the acknowledgment could be cured by the passage of time.
1 The relevant language of this statute was added in 1990. 1990 Ariz. Sess.
Laws 84. It remained unchanged until July 2022. 2021 Ariz. Sess. Laws, Ch
66, §§ 6, 25. Unless otherwise stated, we cite to the 1990 version of the
statute. Section 33-401 was also amended in 1990, 2010, and 2022. Any
reference to § 33-401 is to the 2010 version.
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A.R.S. § 33-401(D) (10 years); A.R.S. § 33-411(C) (1 year). Because the
CC&Rs were not created or recorded by way of deed or conveyance, A.R.S.
§ 33-411(C) governs.2
¶16 Under § 33-411(C), “an instrument affecting real property
containing any defect, omission or informality in the certificate of
acknowledgment and which has been recorded for longer than one year . .
. shall be deemed to have been lawfully recorded on and after the date of
its recording.” In other words, under this savings clause, an instrument
affecting real property that has a deficient acknowledgment may be cured,
and therefore considered lawfully recorded, after the passage of one year.3
¶17 The parties dispute whether the savings clause applies here
because, as Tanner concedes, the CC&Rs were not acknowledged at all. We
review de novo issues of statutory interpretation and application. Obregon v.
Indus. Comm’n, 217 Ariz. 612, 614, ¶ 9 (App. 2008).
¶18 “Statutory interpretation requires us to determine the
meaning of the words the legislature chose to use,” S. Ariz. Home Builders
Ass’n v. Town of Marana, 522 P.3d 671, 676, ¶31 (Ariz. 2023), including giving
meaning “to every word and provision so that no word or provision is
rendered superfluous,” Nicaise v. Sundaram, 245 Ariz. 566, 568, ¶ 11 (2019).
“Absent ambiguity or absurdity, our inquiry begins and ends with the plain
meaning of the legislature’s chosen words . . . .” Welch v. Cochise Cnty. Bd.
Of Supervisors, 251 Ariz. 519, 523, ¶ 11 (2021) (quotations omitted).
¶19 Reading the relevant statutory provisions together, an
instrument affecting real property is not binding on subsequent purchasers
(absent actual notice) unless lawfully recorded; an instrument is “not
lawfully recorded unless it has been previously acknowledged”; and a
“defect, omission or informality in the certificate of acknowledgment” may be
2 The superior court relied on § 33-401, the statute governing the recordation
of deeds and conveyances.
3 The current version of § 33-411(C) eliminates the one-year recording
provision and provides that “an instrument that affects real property
containing any defect, omission or informality in the certificate of
acknowledgment, or for which there is any failure to perform a duty or
meet a requirement in the taking of the acknowledgment, and that has been
recorded in the office of the county recorder of the county in which the
property is located shall be deemed to have been lawfully recorded on and
after the date of its recording.”
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cured after the passage of one year. A.R.S. §§ 33-411(A)–(C) (Emphasis
added).
¶20 Section 33-411(C) appears to assume a document has been
acknowledged (as required under § 33-411(B)), but that the certificate of
acknowledgement contains some type of deficiency. Nothing in these
provisions excuses a signor from the express requirement of obtaining an
acknowledgment. Indeed, reading out the acknowledgement requirement
renders the “lawfully recorded” language in subsection B surplusage,
which we will not do.4 Apart from a plain reading of the relevant statutes,
this interpretation is also supported by dicta in Phipps, 186 Ariz. at 401–02,
a case in which this court rejected an attempt to apply the savings provision
under § 33-411(C) on the basis that the document in question had been
recorded less than a year before it was challenged. The Phipps court further
noted, however, that a recorded document containing no acknowledgment
whatsoever “may not even fall within the language of A.R.S. § 33-411(C).”
Id. at 402 n.1; see also Manicom, 236 Ariz. at 159, ¶ 22 (citing Phipps and
distinguishing between “partial errors . . . and wholesale omissions” in
recorded documents); Lewis v. Herrera, 208 U.S. 309, 315 (1908) (noting that,
under Arizona law, “it is imperative that the deed should be signed and
acknowledged before a proper officer”).
¶21 In this case, we adopt the reasoning suggested by the dicta in
Phipps and hold that, because the CC&Rs contained no acknowledgment,
they do not fall within § 33-411(C). Absent the required acknowledgment,
the CC&Rs were not properly recorded. Woloszyn, therefore, did not have
constructive notice of their existence. Accordingly, the superior court erred
by awarding judgment as a matter of law on this basis. Because issues of
law preclude judgment, we need not address Woloszyn’s argument that
issues of fact also preclude judgment.
4The “lawfully recorded” requirement under § 33-411(B) would clearly be
surplusage under the current version of § 33-411(C) if recording a document
renders it valid immediately upon recordation. Under the current version
of subsection (C), the superior court’s reasoning would dictate the
conclusion that it is never necessary to obtain an acknowledgment, because
a document becomes valid “on and after the date of its recording.”
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CONCLUSION
¶22 For the foregoing reasons, we reverse the judgment of the
superior court, including its award of attorneys’ fees and costs, and remand
for further proceedings consistent with this decision.
AMY M. WOOD • Clerk of the Court
FILED: AA
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