McNamara v. Citizens Protecting Tax Payers

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
JANE H. MCNAMARA; KIM ROSENTHAL; and MADELEINE
KESSELMAN, qualified electors, Plaintiffs/Appellants,
v.
CITIZENS PROTECTING TAX PAYERS, an Arizona non-profit
corporation; COMMITTEE CITIZENS PROTECTING TAXPAYERS IN
OPPOSITION TO RC-2-11, a political committee, Defendants/Appellees.
No. 1 CA-CV 13-0551
FILED 10-30-2014
Appeal from the Superior Court in Maricopa County
No. CV 2013-008922
The Honorable Mark H. Brain, Judge
AFFIRMED
COUNSEL
Coppersmith Brockelman, P.L.C., Phoenix
By L. Keith Beauchamp, Roopali H. Desai, Melissa A. Soliz
Counsel for Plaintiffs/Appellants
Tiffany & Bosco, P.A., Phoenix
By Timothy A. LaSota, William M. Fischbach, III
Counsel for Defendants/Appellees
MCNAMARA, et al. v. CITIZENS, et al.
Opinion of the Court
OPINION
Presiding Judge Margaret H. Downie delivered the opinion of the Court,
in which Judge Andrew W. Gould and Judge Samuel A. Thumma joined.
D O W N I E, Judge:
¶1 The dispositive issue in this appeal is whether qualified
electors may maintain a private cause of action based on alleged violations
of Arizona Revised Statutes (“A.R.S.”) section 16-915.01 (disposal and use
of surplus monies held by political committees). We conclude no such
private right of action exists and therefore affirm the superior court’s
dismissal of the complaint filed by Jane McNamara, Kim Rosenthal, and
Madeleine Kesselman (“Appellants”).
FACTS AND PROCEDURAL HISTORY
¶2 Phoenix City Councilman Sal DiCiccio became the target of a
recall effort in 2011. Appellee Committee Citizens Protecting Taxpayers in
Opposition to RC-2-11 (“the Committee”) is a political committee formed
to counter the recall campaign. According to Appellants, “the recall effort
never got off the ground and ended prior to completion of the petition
circulating phase.” The Committee had raised funds, some of which
remained in its account when the recall effort concluded. Meanwhile,
DiCiccio formed Appellee Citizens Protecting Tax Payers, Inc.
(“Citizens”), a non-profit corporation. In October 2011, the Committee
transferred surplus funds totaling $121,265.37 to Citizens.
¶3 Appellants filed a verified complaint in June 2013, alleging
that the Committee’s transfer of surplus monies to Citizens violated A.R.S.
§ 16-915.01 and that DiCiccio was illegally using the transferred funds in
his 2013 re-election campaign. Appellants requested injunctive relief and
an order requiring Citizens to return the surplus funds to the Committee.
¶4 Appellees moved to dismiss the complaint, arguing, inter
alia, that no private right of action exists for alleged violations of A.R.S.
§ 16-915.01. After briefing and oral argument, the superior court agreed
with Appellees and dismissed the complaint under Arizona Rule of Civil
Procedure 12(b)(6). Appellants timely appealed. We have jurisdiction
pursuant to A.R.S. § 12-120.21(A)(1), -2101(A)(1).
2
MCNAMARA, et al. v. CITIZENS, et al.
Opinion of the Court
DISCUSSION
¶5 We review legal questions and issues of statutory
interpretation de novo. See Lincoln v. Holt, 215 Ariz. 21, 23, ¶ 4, 156 P.3d
438, 440 (App. 2007). We similarly review the dismissal of claims under
Rule 12(b)(6) de novo. Coleman v. City of Mesa, 230 Ariz. 352, 355, ¶ 7, 284
P.3d 863, 866 (2012).
¶6 Section 16-915.01 dictates how political committees are to
dispose of “surplus monies.”1 The statute does not expressly state that a
private cause of action exists to enforce its terms. Nevertheless, our
appellate courts have implied the existence of a private right of action
when doing so is consistent with “the context of the statutes, the language
used, the subject matter, the effects and consequences, and the spirit and
purpose of the law.” Transamerica Fin. Corp. v. Superior Court, 158 Ariz.
115, 116, 761 P.2d 1019, 1020 (1988). Evaluation of these factors is a tool of
statutory construction designed to discern legislative intent, not a license
for the judicial branch to read into a statute something that might be
perceived as better effectuating a statute’s spirit and purpose. See
Transamerica Mortg. Advisors, Inc. v. Lewis, 444 U.S. 11, 15 (1979) (“The
question whether a statute creates a cause of action, either expressly or by
implication, is basically a matter of statutory construction.”); New Sun Bus.
Park, LLC v. Yuma Cnty., 221 Ariz. 43, 47, 209 P.3d 179, 183 (App. 2009)
(Courts “are not at liberty to rewrite . . . statute[s] under the guise of
judicial interpretation.”).
¶7 Several Arizona appellate decisions have addressed whether
an implied private right of action exists under various statutory schemes.
In Transamerica Financial Corp., the Arizona Supreme Court held that
borrowers have an implied private right of action under the Consumer
Loan Act. 158 Ariz. at 116, 761 P.2d at 1020. The court traced the Act’s
origins, observing that as far back as 1935, it had “recognized a borrower’s
implied right to enforce provisions of the Small Loan Act by permitting a
borrower to seek and receive relief in the courts from loans alleged to be
usurious under that act.” Id. at 117, 761 P.2d at 1021. Although the Act
was later amended several times, the legislature took no steps to prohibit
a private right of action, indicating “a legislative intent to preserve the
private right judicially recognized by the court.” Id. The court concluded:
1 A.R.S. § 16-901(25) defines “surplus monies” as “those monies of a
political committee remaining after all of the committee’s expenditures
have been made and its debts have been extinguished.”
3
MCNAMARA, et al. v. CITIZENS, et al.
Opinion of the Court
Since 1919 Arizona’s legislative policy has been to forfeit
usurious small loans. In 1956 the legislature specifically
stated that loans made in violation of the Consumer Loan
Act were void and that a licensee had no right to collect
principal, interest or other charges. Since Walker [v. Peoples
Finance & Thrift Co., 45 Ariz. 226, 42 P.2d 405 (1935)], the
common law in Arizona has recognized a private right of
action to void a usurious contract. The provisions of the
Consumer Loan Act are part of the loan contract by
operation of law and are enforceable in a contract action
between the parties.
Id. at 118, 761 P.2d at 1022.
¶8 There is no comparable common law history implying a
private right of action to enforce statutes governing the use and disposal
of surplus funds held by political committees. And in contrast to the
borrowers in Transamerica Financial Corp., Appellants here are more akin
to the “incidental beneficiaries” discussed in Lancaster v. Arizona Board of
Regents, 143 Ariz. 451, 457, 694 P.2d 281, 287 (App. 1984) (holding no
private right of action existed for plaintiffs who were “incidental
beneficiaries” of a statute requiring specific action by the Board of
Regents). Appellants correctly observe that campaign finance laws are
intended to benefit the voting public by, among other things, ensuring the
transparency and integrity of the process. But whether the legislature
intended to permit enforcement of campaign finance statutes through
private litigation is an entirely different question.
¶9 It is also important to note that we are not dealing here with
a special class of voters for whose specific benefit A.R.S. § 16-915.01 was
enacted — a fact that distinguishes this case from Chavez v. Brewer, 222
Ariz. 309, 214 P.3d 397 (App. 2009). In Chavez, we held that certain
qualified electors could maintain a private cause of action based on
election officials’ alleged failure to provide voting machines in compliance
with statutory requirements. Id. at 311, ¶ 1, 214 P.3d at 399. The Chavez
plaintiffs were not simply members of the electorate, but individuals with
disabilities and persons whose primary language was not English. Id. at
313, ¶ 8, 214 P.3d at 401. The statute they sought to enforce required all
polling sites to be equipped with “at least one voting system equipped for
individuals with disabilities and accessible to voters in alternative
languages.” Id. at 318, ¶ 28, 214 P.3d at 406. In implying a private cause
of action in that context, we stated:
4
MCNAMARA, et al. v. CITIZENS, et al.
Opinion of the Court
[T]he overall purpose of the voting machine statutes is to
ensure the administration of fair and accurate elections and
effectuate [the Help American Vote Act of 2002 (“HAVA”)].
To achieve this goal, the legislature enacted some statutes
that clearly benefit individuals with disabilities. For
example, § 16-442.01 sets forth voting systems criteria
designed to guarantee blind and visually impaired voters
the opportunity to vote. In addition, § 16-442 provides that
only machines that comply with HAVA may be approved,
incorporating HAVA’s requirement that each polling place
provide at least one voting system equipped for individuals
with disabilities and accessible to voters in alternative
languages. . . . Thus, similar to the statutes at issue in
Transamerica, the focus of these statutes is protecting the
rights of individuals. Moreover, unlike the plaintiffs in
Lancaster, appellants are not “incidental” beneficiaries of the
statutes, but members of “the class for whose especial
benefit” the statutes were adopted.
Id. Appellants here have neither alleged nor established that they are
members of a class of electors for whose “especial benefit” A.R.S. § 16-
915.01 was enacted.
¶10 In Pacion v. Thomas, 225 Ariz. 168, 169, ¶ 9, 236 P.3d 395, 396
(2010), the Arizona Supreme Court held that the exclusive remedy for
violations of A.R.S. § 16-903(A) (requiring candidates to form campaign
committees before making expenditures, accepting contributions,
distributing campaign literature, or circulating petitions) is the civil
penalty set forth in title 16. Rejecting a private challenge to petition
signatures obtained before the formation of a campaign committee, the
court noted that the legislature had expressly disqualified signatures
obtained on initiative and referendum petitions before formation of a
political committee, “yet provided only a civil penalty for violations of the
campaign finance statutes governing candidates, including § 16-903(A).”
Id. at 170, ¶ 12, 236 P.3d at 397. The court “decline[d] to infer a statutory
remedy into the campaign finance statutes that the legislature eschewed.”
Id.
¶11 Turning to the circumstances of this case, A.R.S. § 16-915.01
appears in title 16 (elections and electors), chapter 6 (campaign
contributions and expenses), article 1 (general provisions). Within article
1, private rights of action are expressly prescribed in certain contexts. See,
e.g., A.R.S. §§ 16-905(K) (“Any qualified elector may file a sworn
5
MCNAMARA, et al. v. CITIZENS, et al.
Opinion of the Court
complaint” with the attorney general or county attorney alleging
contribution limit violations.), -905(L) (If the attorney general or county
attorney fails to institute an action within 45 days after a complaint is filed
under (K), “the individual filing the complaint may bring a civil action in
the individual’s own name.”), -912.01(I) (establishing a private right of
action for alleged statutory violations by ballot measure committees). The
legislature obviously knows how to provide for private rights of action in
the campaign finance context when it chooses to do so. As in Pacion, we
will not “infer a statutory remedy into the campaign finance statutes that
the legislature eschewed.” Pacion, 225 Ariz. at 170, ¶ 12, 236 P.3d at 397.
¶12 We disagree with Appellants’ assertion that A.R.S.
§ 16-915.01 is “rendered useless” unless an implied private right of action
is recognized. As Appellants acknowledge, the enforcement procedures
and remedies set forth in A.R.S. § 16-924(A) apply to alleged violations of
§ 16-915.01.2 As relevant here, § 16-924(A) provides: (1) if the city clerk
“has reasonable cause to believe that a person is violating any provision of
this title, except for violations of chapter 6, article 2,” the clerk shall notify
the city attorney; (2) the city attorney “may serve on the person an order
requiring compliance with that provision,” which “shall state with
reasonable particularity the nature of the violation and shall require
compliance within twenty days from the date of issuance of the order;” (3)
the alleged violator has twenty days to request a hearing pursuant to title
41, chapter 6; (4) if the alleged violator does not take corrective action
within the time specified in the compliance order, the city attorney “shall
issue an order assessing a civil penalty of not more than one thousand
dollars;” (5) the alleged violator has thirty days after assessment of the
civil penalty to request a hearing pursuant to title 41, chapter 6; and (6) a
party aggrieved by an order or decision of the city attorney may appeal to
the superior court as provided in title 12, chapter 7, article 6. A.R.S.
§ 16-924(A)-(C).
2 Appellants filed complaints with the Phoenix City Clerk, the
Maricopa County Attorney, and the Arizona Secretary of State on the
same day they filed their superior court action. Appellants indicate the
County Attorney’s office responded that it has no role in “pursuing
alleged City election law violations,” and the Secretary of State’s office
stated “it cannot take action until and unless the City Clerk refers the
matter.” When the parties filed their appellate briefs, the Phoenix City
Clerk had not yet acted on Appellants’ complaint. Whether Appellants
may compel the city clerk to act via mandamus proceedings is not
properly before us.
6
MCNAMARA, et al. v. CITIZENS, et al.
Opinion of the Court
¶13 Appellants’ dissatisfaction with the enforcement mechanism
and limited remedies prescribed by the legislature for alleged violations of
A.R.S. § 16-915.01 is understandable. But the legislature sets policy for
regulating and enforcing campaign finance laws. See, e.g., Van Arsdell v.
Shumway, 165 Ariz. 289, 291, 798 P.2d 1298, 1300 (1990) (election contests
“are purely statutory and dependent upon statutory provisions for their
conduct.”). “[W]here a statute expressly provides a particular remedy or
remedies, a court must be chary of reading others into it.” Transamerica
Mortg. Advisors, 444 U.S. at 19-20.
¶14 Principled application of tools of statutory construction
reveals no legislative intent to establish a private right of action for alleged
violations of A.R.S. § 16-915.01. Cf. City of Sierra Vista v. Sierra Vista Wards
Sys. Voting Project, 229 Ariz. 519, 525, ¶ 21, 278 P.3d 297, 303 (App. 2012)
(“Section 16-924 demonstrates a legislative intent to cap civil penalties
authorized by title 16, chapter 6, article 1, at $1,000 unless otherwise
provided.”). Modification of the “comprehensive statutory scheme
governing election campaign finance,” Pacion, 225 Ariz. at 169, ¶ 6, 236
P.3d at 396, if it is to occur, is the prerogative of the legislative branch. See
Hunt v. Norton, 68 Ariz. 1, 11, 198 P.2d 124, 130 (1948) (If a “statute is
oppressive or unworkable, relief lies with the legislative department.”).
7
MCNAMARA, et al. v. CITIZENS, et al.
Opinion of the Court
CONCLUSION3
¶15 For the reasons stated, we affirm the dismissal of
Appellants’ complaint. We deny Appellants’ request for attorneys’ fees.
Appellees are entitled to recover their taxable costs upon compliance with
ARCAP 21.
:10/30/2014
3 Based on our determination that no private right of action exists,
we need not resolve standing and statute of limitations issues briefed by
the parties.
8