Procaccianti v. Shaffer ( 2018 )

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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
PROCACCIANTI AZ II LP, Plaintiff/Appellee,
v.
DIANA R. SHAFFER, Defendant/Appellant.
No. 1 CA-CV 17-0205
FILED 6-21-2018
Appeal from the Superior Court in Maricopa County
No. CV2016-012290
The Honorable Michael L. Barth, Judge Pro Tempore
AFFIRMED
COUNSEL
Porter Law Firm, Phoenix
By Robert S. Porter
Counsel for Defendant/Appellant
Spencer Fane, LLP, Phoenix
By Andrew M. Federhar, Jessica A. Gale
Counsel for Plaintiff/Appellee
PROCACCIANTI v. SHAFFER
Decision of the Court
MEMORANDUM DECISION
Judge Peter B. Swann delivered the decision of the court, in which Presiding
Judge Jon W. Thompson and Judge James P. Beene joined.
S W A N N, Judge:
¶1 This is an appeal from a forcible-detainer judgment based on
the appellant’s failure to pay rent under a ground sublease covering the
parcel underlying her separately-purchased residence. We reject the
appellant’s contention that the superior court lacked jurisdiction to act
under the forcible entry and detainer statutes. The ground sublease was
governed by Chapter 3 of Title 33 of the Arizona Revised Statutes, and that
Chapter specifically authorizes forcible entry and detainer proceedings.
We affirm.1
FACTS AND PROCEDURAL HISTORY
¶2 In 1970, landowners and the predecessor-in-interest to
Procaccianti AZ II LLP2 entered a ninety-nine-year ground lease for twenty
acres of land in Scottsdale. Procaccianti thereafter recorded a declaration
of horizontal property regime to establish condominiums on eight of the
twenty acres; the eight acres was then divided into twenty-nine parcels and
a single-family residence constructed on each parcel. In 1973, Diana R.
Shaffer’s predecessor-in-interest subleased one of the parcels for a ninety-
six-year term and, by separate contract, purchased the residence thereon.
Shaffer assumed the ground sublease and obtained ownership of the
residence, subject to a deed of trust in favor of a lender, in 2005.
¶3 In June 2016, Procaccianti obtained a judgment against
Shaffer for rent and interest unpaid through January 2016. Later that
month, Procaccianti sent Shaffer a notice of default and demanded that she
1 We deny the appellee’s motion to strike the appellant’s “Amended
and Restated Rule 17 Supplemental Citation of Legal Authority.” We
conclude, however, that the appellant’s filing provides no supplemental
legal authority within the meaning of ARCAP 17.
2 For convenience, we hereinafter refer to any predecessor-in-interest
of Procaccianti as “Procaccianti.”
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Decision of the Court
cure her ongoing failure to pay rent. When Shaffer failed to respond,
Procaccianti, in August 2016, filed a verified complaint for forcible detainer
under A.R.S. §§ 33-361 and 12-1171 to -1183.
¶4 The forcible detainer action did not proceed in accordance
with the normal accelerated timeline for such actions. The parties
ultimately waived trial and submitted the matter to the court on competing
motions for summary judgment. The parties agreed that the sole issue was
whether the court had jurisdiction to act under the forcible entry and
detainer statutes.
¶5 In January 2017, the court ruled that Procaccianti was entitled
to summary judgment. The court held that because Shaffer’s ground
sublease and residence-purchase contract were separate agreements, not “a
hybrid real estate contract,” the breach of the sublease “falls within the
scope of the applicable forcible detainer statute.”
¶6 After the court’s ruling, Shaffer relinquished possession of the
parcel. The court then entered an appealable judgment awarding
possession of “the leased premises” to Procaccianti, ordering Shaffer to pay
rent unpaid from February 2016 to January 2017, and awarding Procaccianti
nearly $25,000 in attorney’s fees. Shaffer appeals.
DISCUSSION
I. SHAFFER’S APPEAL IS NOT MOOT.
¶7 As an initial matter, we reject Procaccianti’s contention that
Shaffer’s appeal is moot because she relinquished the parcel.3 “A decision
becomes moot for the purpose of appeal where a change in circumstances
prior to the appellate decision renders the case without practical purpose
for the parties.” Ariz. State Bd. of Dirs. for Junior Colls. v. Phx. Union High
Sch. Dist. of Maricopa Cty., 102 Ariz. 69, 73 (1967). A practical appellate
purpose remains when a tenant’s abandonment of the premises was solely
because of the landlord’s action and the tenant wishes to be restored to
possession. Thompson v. Harris, 9 Ariz. App. 341, 344 (1969). Here, it is
apparent that Shaffer’s relinquishment of the parcel was the direct result of
3 Shaffer did not post a bond as set forth in A.R.S. § 33-361(C). But as
we held by separate order earlier in this appeal, Shaffer was not required to
post a bond because she did not remain in possession of the parcel. See Lane
v. Hognason, 12 Ariz. App. 330, 333 (1970).
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PROCACCIANTI v. SHAFFER
Decision of the Court
Procaccianti’s action. Further, she asserts that she intends to resume
possession if successful on appeal. Her appeal therefore is not moot.
II. THE SUPERIOR COURT HAD JURISDICTION TO ACT UNDER
THE FORCIBLE ENTRY AND DETAINER STATUTES.
¶8 Like the superior court, the only issue we are asked to decide
is whether the court had jurisdiction to grant relief under the forcible entry
and detainer statutes. We review questions of subject matter jurisdiction
and statutory interpretation de novo. Thomas v. Thomas, 203 Ariz. 34, 35–36
(App. 2002).
¶9 We begin with A.R.S. § 33-381, which provides that “[t]his
chapter [Chapter 3 of Title 33 of the Arizona Revised Statutes] shall apply
to all landlord-tenant relationships except for landlord-tenant relationships
arising out of the rental of dwelling units which shall be governed by
chapter 10 or 11 of this title.” (Emphasis added.) Under Chapter 33,
“[w]hen a tenant neglects or refuses to pay rent when due and in arrears for
five days, . . . the landlord . . . may reenter and take possession or, without
formal demand or reentry, commence an action for recovery of possession
of the premises.” A.R.S. § 33-361(A). “The action shall be commenced,
conducted and governed as provided for actions for forcible entry or
detainer” under A.R.S. §§ 12-1171 to -1183. A.R.S. § 33-361(B). All of the
foregoing provisions existed at the time Shaffer assumed her property
interests.
¶10 The foregoing statutory directives are plain and
unambiguous. Disputes regarding the existence of a landlord-tenant
relationship may not be decided in a forcible detainer action. United Effort
Plan Tr. v. Holm, 209 Ariz. 347, 350–51, ¶ 21 (App. 2004). It is undisputed
that the sublease established such a relationship, under which Shaffer failed
to pay rent for more than five days. Shaffer contends, however, that the
sublease did not establish only a landlord-tenant relationship. We disagree.
¶11 First, the sublease did not, as Shaffer claims, create a
“leasehold condominium” in the land. “‘Condominium’ means real estate,
portions of which are designated for separate ownership and the remainder
of which is designated for common ownership solely by the owners of the
separate portions,” and “‘[l]easehold condominium’ means a condominium
in which all or a portion of the real estate is subject to a lease the expiration
or termination of which will terminate the condominium or reduce its size.”
A.R.S. § 33-1202(10), (16). Here, the condominium arrangement did not
extend to the land. Shaffer’s sublease of the parcel was a separate contract,
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PROCACCIANTI v. SHAFFER
Decision of the Court
specific to her — no condominium association was a party, and the sublease
is limited to the single parcel underlying her residence. The sublease
provides that its termination will result in the tenant’s surrender of the
parcel and the improvements thereon. It does not specify an effect on the
condominium arrangement.
¶12 Second, the sublease did not give Shaffer property interests
beyond those of a tenant. To be sure, a “lease” that creates ownership
interests may be exempt from summary dispossession procedures. See, e.g.,
E-Z Livin’ Mobile Sales, Inc. v. Van Zanen, 26 Ariz. App. 363, 364–65 (1976)
(holding that forcible entry and detainer action did not lie for so-called
“lease option” where parties originally agreed to a sale, lease term was for
ten years, tenant was to pay all taxes and assessments on lot, and purchase
option at end of lease term was for nominal sum); see also Queen Emma
Found. v. Tingco, 845 P.2d 1186, 1189–91 (Haw. 1992) (recognizing that under
Hawaii’s unique and extensive ground-lease scheme, summary
dispossession procedures do not apply where long-term residential ground
leases grant leasehold title to property by, for example, permitting lessees
to mortgage and sell their leasehold estates). But here, the only property
interest established by the sublease was the right to possess the parcel.
Though the sublease cross-referenced the residence-purchase contract and
the condominium-association bylaws (even making breach thereof a
default under the sublease), and placed the obligation to pay taxes on the
tenant, those provisions did not grant an ownership interest. Indeed, the
sublease strictly limited the tenant’s ability to sublet or otherwise transfer
the subleasehold interest, and the sublease provided for the tenant’s
surrender of all rights to the parcel and improvements thereon upon
termination of the sublease. We conclude that the sublease created nothing
more than a landlord-tenant relationship falling squarely within the ambit
of A.R.S. §§ 33-381 and -361 and, consequentially, §§ 12-1171 to -1183.
¶13 Shaffer relies on Kadera v. Superior Court (Consol. Coop. of
Scottsdale East, Inc.), 187 Ariz. 557 (App. 1996), to argue otherwise. Kadera
is inapposite. Kadera held that residents of cooperatives are not subject to
summary dispossession procedures because cooperatives are specifically
excluded from Chapter 10 of Title 33 (the Arizona Residential Landlord and
Tenant Act) and the forcible detainer statutes are not separately applicable
because Chapter 10’s special detainer statute incorporates them. 187 Ariz.
at 563. Here, by contrast, nothing excludes the property interest at issue
from the scope of Chapter 3 and the forcible entry and detainer statutes
incorporated therein.
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PROCACCIANTI v. SHAFFER
Decision of the Court
¶14 We recognize that the application of forcible entry and
detainer proceedings to ground-lease situations may produce harsh results,
because dispossession of the leased land will likely substantially interfere
with any right of the tenant to improvements constructed on the leased
land. But that is what our statutory scheme commands, and such
consequences are not unknown in our national jurisprudence. See State v.
Braverman, 137 A.3d 377, 381–83 (Md. App. 2016) (describing continuation
of longstanding rule of Maryland law that ground-lease tenant’s default
entitled landlord to eject the tenant and take possession of the land — and
any improvements, with lessee losing any accrued equity). We do not
purport to decide who holds title to either the parcel or the residence
thereon. See United Effort Plan Tr., 209 Ariz. at 350–51, ¶ 21 (holding that
merits of title cannot be litigated in forcible detainer action). Nor does our
decision today have any bearing on any other dispute between the parties,
including the pending appeal from the 2016 judgment.
CONCLUSION
¶15 We affirm for the reasons set forth above. We award
Procaccianti reasonable attorney’s fees and costs, upon compliance with
ARCAP 21. See A.R.S. §§ 33-361(B), 12-1178, 12-341, 12-341.01; Ariz. R.P.
Evic. Act. 13(f).
AMY M. WOOD • Clerk of the Court
FILED: AA
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