Link v. Valdez-Acosta ( 2022 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
WILLIAM A. LINK, Plaintiff/Appellee,
v.
JOSE CARLOS VALDEZ-ACOSTA, et al., Defendants/Appellants.
No. 1 CA-CV 21-0436
FILED 5-17-2022
Appeal from the Superior Court in Maricopa County
No. CV2020-013960
CV2020-015331
CV2020-094877
The Honorable David J. Palmer, Judge
AFFIRMED
COUNSEL
Zapata Law PLLC, Chandler
By Julio M. Zapata
Counsel for Plaintiff/Appellee
Jose Carlos Valdez-Acosta and Griselda Molina Valdez, Phoenix
Defendants/Appellants
LINK v. VALDEZ-ACOSTA, et al.
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Maria Elena Cruz delivered the decision of the Court, in
which Judge Samuel A. Thumma and Judge Michael J. Brown joined.
C R U Z, Judge:
¶1 Jose Carlos Valdez-Acosta and Griselda Molina Valdez
appeal the superior court’s order setting aside a stipulated judgment on the
grounds of fraud. For the following reasons, we affirm.
FACTUAL AND PROCEDURAL HISTORY
¶2 These consolidated cases have a “long and tortured” history.
They stem from a conversion action filed a decade ago, CV2012-004104
(“the Conversion Action”), in which appellee William A. Link obtained a
money judgment, after a jury trial, against Valdez and Molina for about
$45,000.
¶3 In 2013, while the Conversion Action was still pending,
Valdez’s brother-in-law, Javier Gonzalez Vivar, recorded a quit-claim deed
purporting to transfer Valdez and Molina’s interests in real property in
Buckeye to himself. In 2017, an entity called Always Inc., the president of
which is Valdez and Molina’s daughter, recorded a quit-claim deed
purporting to transfer all of Vivar’s interests in the Buckeye property to
Always Inc.
¶4 In 2017, Link filed a fraudulent conveyance action, CV2017-
094880 (“the Fraudulent Conveyance Action”), against Valdez and Molina.
Link obtained a judgment in the Fraudulent Conveyance Action that
voided the 2013 and 2017 quit-claim deeds as fraudulent transfers of the
Buckeye property and permitted Link to execute on the Buckeye property
to satisfy the judgment in the Conversion Action.
¶5 In February 2019, Link purchased the Buckeye property at a
sheriff’s sale, and the sheriff recorded a certificate of sale of the Buckeye
property. Meanwhile, an individual named DaMarcus Woods recorded a
warranty deed in March 2019 purporting to convey the Buckeye property
from Always Inc. to Woods. Given the February 2019 recorded certificate
of sale, in August 2019, the sheriff recorded a sheriff’s deed conveying to
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LINK v. VALDEZ-ACOSTA, et al.
Decision of the Court
Link any interests in the Buckeye property held by Valdez, Molina, Vivar,
and Always Inc.
¶6 Later that same month, the United States Bankruptcy Court
(the “Bankruptcy Court”) in Valdez and Molina’s then-pending bankruptcy
proceeding entered an order granting abandonment of the Buckeye
property from the bankruptcy estate because the trustee’s interest in the real
property was not of value or benefit to the estate.
¶7 In September 2019, Woods recorded an “affidavit of
ownership” asserting that he was the owner of the Buckeye property.
Woods also recorded disclaimer deeds stating that Valdez and Molina had
no interest or claims to the Buckeye property and that Woods had acquired
title to the Buckeye property.
¶8 In October 2019, Valdez, Molina, Woods, and Link made
various representations about the Buckeye property to the Bankruptcy
Court at a hearing in Valdez and Molina’s bankruptcy. Molina avowed to
the Bankruptcy Court that she and Valdez did not own the Buckeye
property. The Bankruptcy Court then denied any relief relating to the
Buckeye property based on the finding that the bankruptcy estate did not
own the property, and that the state court would need to address any
conflict between Link and Woods regarding the property.
¶9 In November 2019, Woods recorded an amended “affidavit of
ownership” again asserting he owned the Buckeye property. Later that
same month, Link filed an action against Woods to quiet title to the Buckeye
property in Link’s name, CV2019-097315 (“the First Quiet Title Action”). In
April 2020, the court in the First Quiet Title Action granted summary
judgment and quieted title to the Buckeye property in Link’s name, noting
specifically that the certificate of sale recorded by the sheriff vested title in
Link. The court in the First Quiet Title Action also vacated and voided the
March 2019 recorded warranty deed purporting to convey the Buckeye
property from Always Inc. to Woods.
¶10 In June 2020, despite the judgment against him, Woods
recorded a warranty deed purporting to grant title to the Buckeye property
to Valdez and Molina. In August 2020, an entity known as Eagle Document
Processing recorded a deed of trust purporting to state that Valdez and
Molina owed Woods funds evidenced by a promissory note, and
purportedly granted the Buckeye property from Valdez and Molina to
Eagle Document Processing as “trustee.”
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Decision of the Court
¶11 In August 2020, Link then filed this quiet title action, CV2020-
094877 (the “Second Quiet Title Action”) against Valdez, Molina, Woods,
and Eagle Document Processing to again quiet title to the Buckeye property.
Link filed a motion for summary judgment in September 2020. In October
2020, Woods recorded a warranty deed in lieu of foreclosure, purporting
that Valdez and Molina transferred title of the Buckeye property to Woods.
¶12 In November 2020, while Link’s motion for summary
judgment was pending in the Second Quiet Title Action, Woods filed a
breach of contract and default of deed of trust action, CV2020-015331 (“the
Breach of Contract Action”) against Valdez and Molina, claiming they
owed him money allegedly secured by the deed of trust on the Buckeye
property. Woods, Valdez, and Molina then “stipulated” to a judgment in
favor of Woods—whereby Woods could execute on the Buckeye property
by a writ of execution—that the superior court entered in the Breach of
Contract Action. Woods then filed in the Breach of Contract Action a writ
of execution directing the sheriff to execute on the Buckeye property to
satisfy the judgment in his favor.
¶13 Without knowledge of the Breach of Contract Action, the
superior court in the Second Quiet Title Action granted summary judgment
to Link, finding he had established sole ownership of the Buckeye property.
Upon discovering the Breach of Contract Action, Link moved to set aside
the stipulated judgment in that case as a fraud on the court. Link also filed
a motion to consolidate the Breach of Contract Action and the Second Quiet
Title Action, which the superior court granted. The court ultimately
granted Link’s motion to set aside the stipulated judgment in the Breach of
Contract Action based on fraud, which Molina and Valdez appealed.
¶14 We have jurisdiction under Arizona Revised Statutes section
12-2101(A)(2).
DISCUSSION
¶15 We review for abuse of discretion an order granting a motion
to set aside a judgment based on fraud. See City of Phoenix v. Geyler, 144
Ariz. 323, 328 (1985). We review the record in the light most favorable to
upholding the court’s ruling. See Ezell v. Quon, 224 Ariz. 532, 534, ¶ 2 (App
2010). We limit the scope of our review to the court’s rulings that
“necessarily affect the validity of judgment from which an appeal has been
taken.” Truck Ins. Exch. v. State Comp. Fund, 138 Ariz. 116, 118 (App. 1983).
¶16 Valdez and Molina argue that because Link only sued Woods
but not Valdez in the First Quiet Title Action, the judgment in that case only
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Decision of the Court
quieted title against Woods. They assert that Link’s First Quiet Title Action
was an improper attempt to collect on the underlying debt that originated
in the Fraudulent Conveyance Action against Valdez and Molina, which
they claim they discharged in bankruptcy. Valdez and Molina also argue
that Link committed fraud on the court by hiding the discharged status of
the original debt and ask this court to vacate the judgment in the Fraudulent
Conveyance Action. Appellants maintain they still own the Buckeye
property, and that Woods could not convey property he never owned.
¶17 The scope of our review of the order setting aside the
stipulated judgment in the Breach of Contract Action does not include
review of the Fraudulent Conveyance Action, which Valdez and Molina
untimely appealed in 2019. See Truck Ins. Exch., 138 Ariz. at 118. Appellants
make no substantive argument that the court abused its discretion in setting
aside the stipulated judgment in the Breach of Contract Action on the
grounds of fraud.
¶18 Further, as argued by Link, the record supports setting aside
the stipulated judgment in the Breach of Contract Action on the grounds of
fraud. The superior court can set aside a judgment based on fraud. Ariz.
R. Civ. P. 60(d)(3). A judgment can be set aside “[w]hen a party obtains a
judgment by concealing material facts and suppressing the truth with the
intent to mislead the court.” Cypress on Sunland Homeowners Ass’n v.
Orlandini, 227 Ariz. 288, 299, ¶ 42 (App. 2011) (where complaint contained
material omissions and false statements).
¶19 During the pendency of this Second Quiet Title Action, in
which Link alleged that Valdez, Molina, Woods, and Eagle Document
Processing had recorded a void document that improperly clouded his title
to the Buckeye property, Woods filed the Breach of Contract Action against
Valdez and Molina to encumber the Buckeye property that none of them
owned. The record supports a finding that multiple statements in the
Breach of Contract Action concealed material facts and suppressed the truth
with intent to mislead the court into entering a fraudulent stipulated
judgment.
¶20 First, Woods’ complaint in the Breach of Contract Action
alleged that “Valdez obtained title to the [Buckeye] property by Order of
Abandonment” and referenced the warranty deed from Woods to Valdez.
The order of abandonment by the trustee in Valdez and Molina’s
bankruptcy did not transfer title of the property to Valdez and Molina. The
bankruptcy trustee abandoned the property as an estate asset because it had
no value—presumably because Molina stated in the Bankruptcy Court
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LINK v. VALDEZ-ACOSTA, et al.
Decision of the Court
hearing that they did not own it. At that time, Link owned the Buckeye
property because he purchased it at the sheriff’s sale and the sheriff
recorded the certificate of sale. Moreover, Woods’ reference to the warranty
deed purporting to convey the Buckeye property from Woods to Valdez
misled the court about the ownership status. Woods knew the First Quiet
Title Action had already quieted title to the property in Link’s name, and
yet Woods purposefully recorded a warranty deed purporting to convey
the Buckeye property to Valdez and Molina.
¶21 Second, Woods’ complaint in the Breach of Contract Action
alleged that a security interest arose in favor of Woods in the amount of
$117,323.55 by order of the United States Trustee in the Valdez/Molina
bankruptcy. Woods knew at the time he made this allegation that Valdez
and Molina did not own the Buckeye property, and he had no security
interest in it, because the superior court had quieted title to it in favor of
Link and that, by order of the court, Woods had no interest in the property.
Moreover, the United States Trustee does not have the authority to properly
declare that a security interest arose as a matter of law on the Buckeye
property. In addition, at most, the trustee’s final account and distribution
report shows that Woods asserted a secured claim for $117,323.55, which
was an “allowed claim” in the bankruptcy, $19,500 of which was a
“scheduled claim.” This statement does not, somehow, convey a security
interest in the Buckeye property to Woods.
¶22 There are additional examples of allegations in the Breach of
Contract Action complaint that show fraud on the court, but these two are
the most significant and are sufficient for the court’s ruling setting aside the
stipulated judgment in the Breach of Contract Action. Woods, Valdez, and
Molina then avowed to the superior court that they had “stipulated” to a
judgment based on these same fraudulent statements.
¶23 We agree with Link that Woods, Valdez, and Molina made
false statements and omissions to the superior court in the Breach of
Contract action that fraudulently induced the court to sign the stipulated
judgment, which they then used in an attempt to levy on the Buckeye
property via a writ of execution. Based on our review of the record, we find
no abuse of discretion in the ruling granting the motion to set aside the
stipulated judgment in the Breach of Contract Action based on the
procedural history of the various lawsuits, and the judicially noticed
pleadings and facts contained in the other cause numbers, which the
superior court concluded showed fraudulent filings and intent.
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LINK v. VALDEZ-ACOSTA, et al.
Decision of the Court
CONCLUSION
¶24 For the foregoing reasons, we affirm the superior court’s
ruling. We award costs to Link upon compliance with ARCAP 21. Link
also requests sanctions to deter Valdez and Molina’s conduct and seeks
various orders enjoining them from taking actions concerning the Buckeye
property and voiding documents they recorded against the Buckeye
property. ARCAP 25 governs our ability to issue sanctions, which may
include contempt, dismissal, or withholding or imposing costs or attorneys’
fees if this court determines that an appeal is frivolous. Link convincingly
argues that Valdez and Molina’s arguments on appeal are frivolous.
Because we find that Valdez and Molina’s appeal is based on issues
unsupported by any reasonable theory, and because they completely fail to
address the order from which they appeal, we sanction Valdez and Molina
for filing a frivolous appeal and award Link attorneys’ fees in an amount to
be determined upon compliance with ARCAP 21. See Ariz. Tax Rsch. Ass’n
v. Dep’t of Revenue, 163 Ariz. 255, 258 (1989); Price v. Price, 134 Ariz. 112, 114
(App. 1982).
AMY M. WOOD • Clerk of the Court
FILED: AA
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