Voliner v. Olson

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

JAKE VOLINER, et al., Plaintiffs/Appellees,

v.

JUSTIN OLSON, Defendant/Appellant.

No. 1 CA-CV 23-0818
FILED 09-24-2024

Appeal from the Superior Court in Maricopa County
No. CV2023-095122
The Honorable Brian Kaiser, Judge Pro Tempore

VACATED AND REMANDED

COUNSEL

Tucker Law Group, P.C., Mesa
By Mark A. Tucker, J. McKay Tucker
Counsel for Plaintiffs/Appellees

Community Legal Services, Phoenix
By Pamela Bridge, Jeffrey A. Katz, Robin L. Dugas
Counsel for Defendant/Appellant
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MEMORANDUM DECISION

Presiding Judge Michael J. Brown delivered the decision of the Court, in
which Judge D. Steven Williams and Judge Daniel J. Kiley joined.

B R O W N, Judge:

¶1 Justin Olson appeals a superior court judgment finding him
guilty of forcible detainer and granting possession of a house to Jake and
Torie Voliner. For the following reasons, we vacate the judgment and
remand for dismissal of the complaint.

BACKGROUND

¶2 In June 2022, the Voliners agreed to sell a house (“Property”)
to Olson for $510,000. Both parties signed a preprinted document titled
Seller Financing Addendum Consumer Credit Transaction Secured By A
Dwelling (“Agreement”), which outlined the details of the transaction. As
far as the record reveals, the Agreement is the only signed document
memorializing the parties’ contractual relationship.

¶3 Under the Agreement, Olson would make a non-refundable
$75,000 down payment, with the Voliners financing the rest of the purchase
price. Olson needed to make monthly interest-only payments of $2,356.25,
and after five years the remaining $435,000 would become due. Olson was
also required “to execute” a note and deed of trust, with the deed being
recorded “at the Close of Escrow.” If the Property was transferred in any
way, the “unpaid balance” would be “immediately due and payable.” And
if Olson defaulted, the Voliners could (1) exercise their “power of sale in
order to recover legal title” and (2) “initiate a forcible entry and detainer
action to recover physical possession.” Finally, a trustee’s sale could not be
conducted any earlier than 90 days from the recording of a notice of
trustee’s sale.

¶4 Olson made the $75,000 down payment but neither a
promissory note nor a deed of trust was executed. The record contains no
evidence of a close of escrow or recording of a deed. In May 2023, Olson
stopped making monthly payments, and between August 22 and
September 7, the Voliners recorded three notices of election to forfeit. On
October 5, they recorded an affidavit of completion of forfeiture and served

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Decision of the Court

Olson with a five-day notice to vacate several days later. The Voliners then
filed a forcible detainer complaint in the superior court, seeking Olson’s
removal from the Property under A.R.S. § 12-1173.01(A)(3) (authorizing
removal of a person who retains possession after forfeiture of the property
through a contract for conveyance).

¶5 In Olson’s answer, he sought dismissal of the complaint,
explaining that the forfeiture statutes were inapplicable because the
Agreement contemplated a secured loan and that title was to be transferred
immediately, “not when the final payment was made.” Olson claimed that
the Voliners have no right to evict under § 12-1173.01(A)(3) because they
were trying to receive the “benefit of a contract or related statutory
remedies for which they never bargained.” Olson asserted that because the
Voliners never prepared or recorded a deed transferring the title, they were
improperly treating the transaction as a contract under the forfeiture
statutes to shorten the time for Olson to reinstate the loan, “rather than
proceeding by a Trustee Sale as set forth in the Agreement.” Olson
therefore contended that because the parties disputed title to the Property,
the complaint must be dismissed because only the right to possession can
be decided in eviction actions. He also noted that a quiet title action
governing the title dispute was pending in the superior court.

¶6 At the subsequent forcible detainer hearing, in response to a
question from the superior court about compliance with the forfeiture
process, Olson clarified that he was not challenging the forfeiture process
itself; instead, “[a]ll we’re saying is that the forfeiture statutes do not apply
here [and the Voliners] do have remedies under the [A]greement that’s
signed by the parties, but forfeiture is just not one of them; and therefore,
they can’t evict [Olson] under § 12-1173.01(A)(3).”

¶7 After further discussion, the court denied Olson’s oral motion
to dismiss, finding that his “argument [is] regarding title,” which cannot be
litigated in a forcible action. The court then found Olson guilty of forcible
detainer under “§ 12-117[3].01(A)(3)” and granted possession of the
Property to the Voliners. The court also awarded the Voliners $5,947 for
rental value, attorneys’ fees, and costs.

¶8 Olson timely appealed, and, on the parties’ stipulation of a
supersedeas bond, the court stayed enforcement of the judgment until the
resolution of this appeal. We have jurisdiction under A.R.S. § 12-2101(A)(1).

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DISCUSSION

¶9 Olson argues that the superior court erred by denying his
motion to dismiss because the Agreement he signed was a “purchase
contract” and thus the Property was not subject to forfeiture under
§ 12-1173.01(A)(3). The Voliners contend the court correctly rejected
Olson’s attempt to interject his contract interpretation arguments that have
been raised in the quiet title action. Because the material facts are
undisputed, we determine de novo whether the court correctly applied the
law to those facts. In re Estate of Headstream, 214 Ariz. 530, 532, ¶ 9 (App.
2007).

¶10 A person who “retains possession of any land” after receiving
a “written demand of possession may be removed through an action for
forcible detainer . . . [i]f the property has been forfeited through a contract
for conveyance of real property pursuant to title 33, chapter 6, article 3.”
A.R.S. § 12-1173.01(A)(3). Section 33-741(2) defines a “contract” as:

[A] contract for conveyance of real property, a contract for
deed, a contract to convey, an agreement for sale or any
similar contract through which a seller has conveyed to a
purchaser equitable title in property and under which the
seller is obligated to convey to the purchaser the remainder of
the seller’s title in the property, whether legal or equitable, on
payment in full of all monies due under the contract. This
article does not apply to purchase contracts and receipts, escrow
instructions or similar executory contracts which are intended to
control the rights and obligations of the parties to executory
contracts pending the closing of a sale or purchase transaction.

(Emphasis added.) Thus, seller-financed real estate transactions, where the
seller transfers title to the buyer upon close of escrow and before receiving
payment in full, are “purchase contracts” that are not subject to forfeiture
under § 12-1173.01(A)(3). Such transactions do not enable the seller to bring
a forcible detainer action until completion of foreclosure proceedings,
typically pursuant to a deed of trust sale. In contrast, a contract that does
not transfer title until after payment in full is subject to forfeiture under
§ 12-1173.01(A)(3) and thereby gives the seller the right to pursue a forcible
detainer under that specific authority.

¶11 Olson argues the Agreement was a “purchase contract”
because it did not allow the Voliners to “hold back title to [the Property]
until Olson remitted payment in full” and so the court erred in implicitly

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holding that the Agreement was a “contract” as defined under
§ 12-1173.01(A)(3). Olson contends the court needed to ascertain whether
the Agreement was, ”of itself, subject to eviction.” As best we can tell, the
Voliners suggest that because neither a promissory note nor a deed of trust
was signed, and no deed was recorded, the Agreement transformed from a
purchase contract to one that permitted forfeiture of Olson’s purported
ownership interest and thus provided the legal basis for evicting him. But
the Voliners cite no authority supporting that theory and we are aware of
none.

¶12 The purpose of a forcible detainer action is “to provide a
summary, speedy and adequate means for obtaining possession of [a]
premises.” Colonial Tri-City Ltd. v. Ben Franklin Stores, Inc., 179 Ariz. 428,
433 (App. 1993). The right of actual possession is the only issue to be
decided, and the court may not inquire into the merits of title. A.R.S.
§ 12–1177(A); Curtis v. Morris, 186 Ariz. 534, 534–35 (1996). The plaintiff has
the burden of proof to support his claim for possession. Montano v. Luff, 250 Ariz. 401, 405, ¶ 12 (App. 2020).

¶13 Arizona courts have recognized that a forcible detainer action
should be dismissed when there is a dispute over “an issue whose
resolution is a prerequisite to determining which party is entitled to
possession.” Colonial Tri-City, 179 Ariz. at 433. Yet the Colonial Tri-City
“holding does not mean that every defendant can avoid the summary
[forcible detainer] proceedings simply by denying” the existence of a
prerequisite; instead, “[t]here must be a genuine dispute.” RREEF Mgmt.
Co. v. Camex Prods., Inc., 190 Ariz. 75, 79 (App. 1997) superseded on other
grounds by A.R.S. § 33-1315(A)(2)).

¶14 In Colonial Tri-City, this court held that the trial court erred by
not dismissing a forcible detainer action because there was a dispute over
whether the requisite landlord-tenant relationship existed. 179 Ariz. at 433
(“The issue in a [forcible detainer] proceeding . . . is not whether the parties
have created a landlord and tenant relationship but whether an already
existing lease should be terminated and possession awarded to the landlord
because of the tenant’s breach of lease or nonpayment of rent.”). The
existence of such a relationship was a prerequisite, and part of the plaintiff’s
burden of proof, for establishing the right to possession of the subject
property. Id.

¶15 The Voliners needed to prove the allegations of their
complaint, which included showing that their relationship with Olson
stemmed from an agreement that allowed forfeiture. Stated differently,

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whether the Agreement met A.R.S. § 12-1173.01(A)(3)’s definition of
“contract” was a prerequisite for concluding that the Voliners were entitled
to actual possession of the Property. See Olds Bros. Lumber Co. v. Rushing, 64 Ariz. 199, 205–06 (1946) (explaining that “if the plaintiff failed to establish
a [landlord-tenant] relationship or his right to possession then the Justice of
the Peace should have dismissed the complaint”); E-Z Livin’ Mobile Sales,
Inc. v. Van Zanen, 26 Ariz. App. 363, 365 (1976) (“We think the trial court
was justified in finding that the case was not one of a landlord tenant
relationship but rather a vendor-vendee relationship, and as such, forcible
entry and detainer action will not lie.”).

¶16 Olson, in turn, was not required to prove that the Voliners are
legally precluded from obtaining possession through a forcible detainer
action based on their purported forfeiture of the Property. Instead, he
needed to show a genuine dispute exists on whether the Voliners met the
statutory prerequisite (forfeiture through a contract for conveyance of real
property under § 12-1173.01(A)(3)) for removing Olson from the property
through a forcible detainer action. Thus, we do not decide here whether (1)
the Agreement is a purchase contract, which would not permit forfeiture,
or (2) a contract for conveyance, which would allow forfeiture along with a
forcible detainer action for regaining possession.

¶17 Given the narrow record before us and the parties’ competing
arguments, we hold that a genuine dispute exists on whether the Voliners
met the statutory prerequisite (forfeiture through a contract for conveyance
of real property under § 12-1173.01(A)(3)) for removing Olson from the
property through a forcible detainer action. See Colonial Tri-City, 179 Ariz.
at 433. The court therefore erred by failing to dismiss the forcible detainer
complaint. See RREEF Mgmt. Co., 190 Ariz. at 78 (explaining there was “a
genuine issue of fact not suited to the [forcible detainer] process, but one
that must be left to an ordinary civil action, in which time periods are not
accelerated, counter- and crossclaims are allowed, and there is an
opportunity for discovery”); Hepler Fam. Tr. v. Hepler, 1 CA-CV 21-0709,
2023 WL 1860514, at *2, ¶ 11 (Ariz. App. Feb. 9, 2023) (mem. decision)
(“Summary relief is, quite logically, unavailable [in a forcible detainer
action] if there is a material predicate dispute regarding the nature of the
parties’ relationship.”). Given our holding, we need not address Olson’s
alternative argument that the action should have been dismissed because
the Voliners “did not timely file the Affidavit of Completion of Forfeiture.”

¶18 Both parties request an award of attorneys’ fees under A.R.S.
§ 12-341.01(A), which provides that in an action arising out of contract, a
court may award the successful party reasonable attorneys’ fees. Because

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the Voliners have not prevailed on appeal, we deny their request. In our
discretion, we award Olson reasonable attorneys’ fees incurred on appeal,
together with taxable costs, subject to compliance with ARCAP 21.

CONCLUSION

¶19 We vacate the superior court’s judgment finding Olson guilty
of forcible detainer and remand with directions to dismiss the complaint.

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

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