National Tax v. Sweeney

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

NATIONAL TAX LIEN REDEMPTION SERVICES L.L.C., et al.,
Plaintiffs/Appellees,

v.

DIANE BOSCHIAN SWEENEY,
Defendant/Appellant.

No. 1 CA-CV 17-0611
FILED 1-8-2019

Appeal from the Superior Court in Maricopa County
No. CV2012-092032
The Honorable David M. Talamante, Judge

AFFIRMED

COUNSEL

The Hendrix Law Office, Gilbert
By Heather M. Hendrix
Co-Counsel for Plaintiff/Appellee National Tax Lien Redemption Services, L.L.C.

Strojnik, P.C., Phoenix
By Peter Strojnik
Co-Counsel for Plaintiff/Appellee National Tax Lien Redemption Services, L.L.C.
Lake & Cobb, P.L.C., Tempe
By Richard L. Cobb, Hank E. Pearson, Timothy H. Barnes
Counsel for Plaintiff/Appellee Premier Equity Solutions, L.L.C.

Gust Rosenfield, P.L.C., Phoenix
By Scott A. Malm, Mina O’Boyle
Co-Counsel for Plaintiffs/Appellees Geared Equity L.L.C. and 50780, L.L.C.

Kevin T. Ahern, P.C., Phoenix
By Kevin T. Ahern
Co-Counsel for Plaintiffs/Appellees Geared Equity L.L.C. and 50780, L.L.C.

Law Office of Jim Crook, Phoenix
By Jim Crook
Counsel for Defendant/Appellant

MEMORANDUM DECISION

Presiding Judge Kenton D. Jones delivered the decision of the Court, in
which Vice Chief Judge Peter B. Swann and Judge David D. Weinzweig
joined.

J O N E S, Judge:

¶1 Diane Sweeney appeals the denial of her motion to set aside a
2012 tax lien foreclosure judgment. Sweeney argues the judgment is void
because she was not properly served. For the following reasons, we affirm.1

STATUTORY BACKGROUND

¶2 This case arises from a tax lien foreclosure judgment. “[A] tax
that is levied on real or personal property is a lien on the assessed
property.” Ariz. Rev. Stat. (A.R.S.) § 42-17153(A).2 To secure payment of
unpaid taxes, the Arizona Legislature has authorized county treasurers to

1 A related case was contemporaneously filed with this one. See Nat’l
Tax Lien Redemption Servs. L.L.C. v. Rivers, 1 CA-CV 17-0611 (Ariz. App. Jan.
8, 2019) (mem. decision).

2 Absent material changes from the relevant date, we cite the current
version of rules and statutes.

2
 NATIONAL TAX, et al. v. SWEENEY
Decision of the Court

sell the tax liens to third-party purchasers who receive a certificate of
purchase. A.R.S. §§ 42-18101(A), -18118(A). If the lien is not redeemed
within three years of the sale, “the [lien’s] purchaser . . . may bring an action
to foreclose the right to redeem.” A.R.S. § 42-18201(A). However, “[a]t
least thirty days before filing an action to foreclose the right to redeem . . .
the purchaser shall send notice of intent to file the foreclosure action by
certified mail to . . . [t]he property owner of record.” A.R.S. § 42-
18202(A)(1).

¶3 A tax lien may be redeemed by or on behalf of the property
owner or “[a]ny person who has a legal or equitable claim in the property,”
A.R.S. § 42-18151(A), “at any time before judgment is entered,
notwithstanding that an action to foreclose has been commenced,” A.R.S.
§ 42-18206. If the trial court finds, however, “that the sale [of the tax lien] is
valid and that the tax lien has not been redeemed,” the court must enter
judgment foreclosing the right of the property owner to redeem the liens
and direct the county treasurer to “expeditiously execute and deliver to the
[purchaser] . . . a deed conveying the property described in the certificate of
purchase.” A.R.S. § 42-18204(A). The entry of judgment extinguishes all
“legal or equitable right, title or interest in the property” of the parties
whose rights to redeem are foreclosed. A.R.S. § 42-18204(B).3

FACTS AND PROCEDURAL HISTORY

¶4 In 1983, Diane and her husband, Tom, purchased a home on
real property in Phoenix (the Property) for Tom’s mother to live in.4 In 2007,
Tom quitclaimed his interest in the Property to Diane, making her the sole
owner, but Diane delegated to Tom the responsibility to continue paying
the property taxes and insurance for the Property. When Tom failed to pay

3 For this reason, “if the holder of a tax lien certificate wants to
foreclose the redemption right of an owner or a person who has a legal or
equitable interest in the property, the holder must join those parties in the
foreclosure action.” Roberts v. Robert, 215 Ariz. 176, 180, ¶ 16 (App. 2007).
If the certificate holder fails to join an interested party, “but obtains a
judgment foreclosing the right to redeem held by other defendants, that
judgment will not foreclose the redemption right of the missing party.” Id.

4 In reviewing a denial of a motion to set aside, “[w]e view the facts in
the light most favorable to upholding the trial court’s ruling.” Blair v.
Burgener, 226 Ariz. 213, 215, ¶ 2 (App. 2010) (quoting Ezell v. Quon, 224 Ariz.
532, 534, ¶ 2 (App. 2010), and citing Goglia v. Bodnar, 156 Ariz. 12, 20 (App.
1987)).

3
 NATIONAL TAX, et al. v. SWEENEY
Decision of the Court

the taxes on the Property from 2006 to 2011, the Maricopa County Treasurer
sold the resulting tax liens to National Tax Lien Redemption Services,
L.L.C. (National Tax) for approximately $28,000. In February 2012,
National Tax mailed a notice of intent to foreclose to both the Property and
Diane’s residence. See A.R.S. § 42-18202(A)(1).

¶5 Tom received the notice but apparently did not inform Diane
of either the tax liens or the potential lawsuit. Instead, in early March 2012,
Tom negotiated an agreement whereby National Tax would wait sixty days
to act upon its foreclosure action in exchange for double the amount owed.
National Tax sent Tom a written agreement containing these terms and
instructed him to “[p]lease have your wife sig[n] it and email it back.” Tom
signed Diane’s name on the document and returned it to National Tax
without telling her. The next week, National Tax filed its tax lien
foreclosure complaint. Personal service upon Diane at her residence was
attempted but unsuccessful.

¶6 Tom did not make the agreed-upon payment in May 2012 but
instead negotiated a second agreement whereby National Tax would wait
another thirty days to act upon its foreclosure action in exchange for receipt
of a reduced sum, Diane’s acceptance of service of process, and a stipulation
for the entry of judgment in the event of nonpayment. National Tax again
sent Tom a written agreement memorializing those terms and instructed
Tom to “have [his] wife sign.” Tom again signed Diane’s name without
telling her and returned the document to National Tax. Tom again failed
to pay. National Tax filed a notice of nonpayment and obtained judgment
against Diane pursuant to the signed stipulation in October 2012.

¶7 In May 2013, Premier Equity Solutions, L.L.C. (Premier)
purchased the Property for $565,000 from National Tax, in large part with
funds borrowed from Geared Equity, L.L.C. and 50780, L.L.C. (collectively,
the Lenders). Premier promptly evicted Tom’s ninety-nine-year-old
mother from the Property, demolished the existing residence, and
borrowed another half-million dollars from the Lenders to build a new
residence upon the Property.

¶8 Three years later, in October 2016, Diane moved to set aside
the 2012 judgment, arguing it was void because she had not been properly
served. The trial court denied the motion after an evidentiary hearing, and
Diane timely appealed. We have jurisdiction pursuant to A.R.S. §§ 12-
120.21(A)(1) and -2101(A)(2). See M&M Auto Storage Pool, Inc. v. Chem.
Waste Mgmt., Inc., 164 Ariz. 139, 141 (App. 1990) (“An order denying or

4
 NATIONAL TAX, et al. v. SWEENEY
Decision of the Court

granting a motion to set aside a judgment . . . is appealable as a ‘special
order made after final judgment.’”) (citations omitted).

DISCUSSION

I. Standing to Oppose Motion to Set Aside

¶9 As a threshold issue, Diane argues the trial court erred when
it allowed Premier and the Lenders to oppose her motion to set aside.
Although she repeatedly asserts that Premier and the Lenders lacked
standing, she fails to cite any relevant legal authority to support her
argument. This Court will not consider bald assertions “offered without
elaboration or citation to any . . . legal authority.” In re U.S. Currency in the
Amount of $26,980.00, 199 Ariz. 291, 299, ¶ 28 (App. 2000) (citing ARCAP 13,
and Brown v. U.S. Fid. & Guar. Co., 194 Ariz. 85, 93, ¶ 50 (App. 1998)); see also
Polanco v. Indus. Comm’n, 214 Ariz. 489, 491, ¶ 6 n.2 (App. 2007) (concluding
that the mere mention of an argument in passing without reference to
relevant supporting authority waived the issue on appeal). Nonetheless,
we conclude that Premier and the Lenders had standing to intervene as
entities with substantial financial investments in the Property that would
have been directly injured if Diane’s motion had been granted.

II. Motion to Set Aside

¶10 Diane argues the 2012 judgment is void and should have been
set aside because she was never properly served. Specifically, Diane
disputes the trial court’s finding that Tom was authorized to accept service
on her behalf. Indeed, a judgment entered without jurisdiction because of
a lack of proper service is void, Koven v. Saberdyne Sys., Inc., 128 Ariz. 318,
321 (App. 1980) (citing Marquez v. Rapid Harvest Co., 99 Ariz. 363, 365 (1965)),
and may be challenged via Arizona Rule of Civil Procedure 60(b)(4) at any
time, “even if the party seeking relief delayed unreasonably,” Martin v.
Martin, 182 Ariz. 11, 14 (App. 1994) (quoting Brooks v. Consol. Freightways, 173 Ariz. 66, 71 (App. 1992), and citing In re Estate of Milliman, 101 Ariz. 54,
58 (1966)); Ariz. R. Civ. P. 60(b)(4), (c)(1).

¶11 Generally, we review an order denying a motion to set aside
a final judgment for an abuse of discretion, see State ex rel. Brnovich v. Culver, 240 Ariz. 18, 19-20, ¶ 4 (App. 2016) (citing City of Phoenix v. Geyler, 144 Ariz.
323, 329 (1985)), but “proper service under the rule is a legal question of
personal jurisdiction which we review de novo,” Ruffino v. Lokosky, 245 Ariz.
165, 168, ¶ 9 (App. 2018) (citing Duckstein v. Wolf, 230 Ariz. 227, 233, ¶ 19
(App. 2012), and Ezell, 224 Ariz. at 536, ¶ 15). Whether an agency
relationship exists is a question of fact, Sparks v. Republic Nat’l Life Ins., 132

5
 NATIONAL TAX, et al. v. SWEENEY
Decision of the Court

Ariz. 529, 542 (1982) (citing Corral v. Fid. Bankers Life Ins., 129 Ariz. 323, 326
(App. 1981)), and we defer to the trial court’s factual findings unless they
are clearly erroneous, Ruffino, 245 Ariz. at 168, ¶ 9 (citing Huskie v. Ames
Bros. Motor & Supply Co., 139 Ariz. 396, 401 (App. 1984)).

¶12 The Arizona Rules of Civil Procedure allow a party to accept
service of process through an authorized agent. Ariz. R. Civ. P. 4(f)(2) (“A
party subject to service under Rule 4.1 or 4.2 may accept service.”). “The
acceptance of service must be in writing, signed by that party or that party’s
authorized agent or attorney, and be filed in the action.” Id. An agent’s
actual authority “may be proved by direct evidence of express contract of
agency between the principal and agent or by proof of facts implying such
contract or the ratification thereof.” Ruesga v. Kindred Nursing Ctrs., L.L.C.,
215 Ariz. 589, 597, ¶ 29 (App. 2007) (quoting Corral, 129 Ariz. at 326, and
citing Restatement (Third) of Agency § 2.01 cmt. b (2006)).

¶13 “Ratification is the affirmance of a prior act done by another,
whereby the act is given effect as if done by an agent acting with actual
authority.” Restatement (Third) of Agency § 4.01(1), cited favorably by Fid.
& Deposit Co. of Md. v. Bondwriter Sw., Inc., 228 Ariz. 84, 90, ¶ 31 (App. 2011).
“A person ratifies an act by (a) manifesting assent that the act shall affect
the person’s legal relations, or (b) conduct that justifies a reasonable
assumption that the person so consents.” Restatement (Third) of Agency
§ 4.01(2). Generally, “ratification retroactively creates the effects of actual
authority,” Restatement (Third) of Agency § 4.02(1), and thereby “recasts
the legal relations between the principal and agent as they would have been
had the agent acted with actual authority,” Bondwriter, 228 Ariz. at 90, ¶ 31
(citing Restatement (Third) of Agency § 4.02 cmt. b). The legal
consequences of an act subsequently ratified by the principal thus “relate
back” to the time the agent acted. See Restatement (Third) of Agency § 4.02
cmt. b.

¶14 Finally, in evaluating whether Diane authorized Tom to act
upon her behalf, we are mindful that “‘the degree of proof required to
establish and define the agency relationship’ between spouses is lower than
with non-spouses.” Escareno v. Kindred Nursing Ctrs. W., L.L.C., 239 Ariz.
126, 130, ¶ 10 (App. 2016) (quoting Ruesga, 215 Ariz. at 598, ¶ 33).

¶15 Here, the record shows Diane gave Tom implicit authority to
conduct the general management duties and responsibilities associated
with the Property. Tom was responsible for paying the property taxes and
maintained a separate bank account for doing so to which Diane had no
access. Tom was also responsible for the upkeep of the Property and

6
 NATIONAL TAX, et al. v. SWEENEY
Decision of the Court

continued to bear these responsibilities after quitclaiming the deed to Diane
in 2007.

¶16 Even if the general authority Diane bestowed upon Tom to
manage the Property did not include specific authority to accept service of
the foreclosure complaint on her behalf, Diane ratified Tom’s actions. The
record reflects Diane learned of Tom’s actions in accepting service upon her
behalf no later than October 31, 2014. On that date, Tom explained in a
signed declaration that:

A Stipulation was forwarded to me and, because of my wife’s
poor health and stress risk, I signed for her. It was apparently
filed on May 7, 2012. . . . At the time that she (I) signed the
Stipulation, I had an expectancy of getting $40,000 through a
business deal that I was engaged in with a client.

On the same day, Diane averred, in writing and under penalty of perjury,
that “all facts stated [in Tom’s signed declaration were] true and accurate
to [her] personal knowledge.”5 By acknowledging Tom’s acceptance of
service upon her behalf, rather than repudiating the action, Diane exhibited
“conduct that justifies a reasonable assumption” that she consented to his
conduct.6 See Restatement (Third) of Agency § 4.01(2)(b). The legal
consequence of Diane’s ratification of Tom’s actions relates back to the

5 Although Diane signed another declaration two years later claiming
she had only sworn “to [her] personal knowledge and truthfulness
paragraphs 1-15 in [Tom’s] Declaration,” the 2014 declaration states
otherwise, indicating she had read Tom’s Declaration and then averred “all
the facts stated therein [we]re true and accurate to [her] personal knowledge.”
(Emphasis added).

6 We reject Diane’s assertion, made without any citation to legal
authority or meaningful analysis, that the acceptance of service was “legally
incompetent” because Tom signed her name rather than his own as an
authorized agent. Diane’s ratification of the alleged forgery “retroactively
create[d] the effects of actual [implied] authority,” see supra ¶ 13, such that
the form of the signature is irrelevant, cf. Sec. P. Fin. Corp. v. Nelson (In re
Nelson), 761 F.2d 1320, 1322 (9th Cir. 1985) (“The fact that . . . the documents
bore his wife’s signature, and not that he had signed them as an authorized
agent . . . does not alter our conclusion because a principal is liable for the
fraud of an agent committed when the agent is, as here, executing a
transaction within the scope of his authority.”) (applying California law)
(citation omitted).

7
 NATIONAL TAX, et al. v. SWEENEY
Decision of the Court

moment Tom accepted service of the foreclosure complaint. As such, Diane
cannot now argue that he acted other than as her authorized agent within
the meaning of Rule 4(f)(2).

¶17 Accordingly, the 2012 judgment was not void for lack of
personal jurisdiction and the trial court correctly denied Diane’s motion to
set aside.

CONCLUSION

¶18 The trial court’s order denying the motion to set aside is
affirmed. As the prevailing parties, Appellees are awarded their costs
incurred on appeal upon compliance with ARCAP 21(b).

AMY M. WOOD • Clerk of the Court
FILED: AA

8