VALENCIA v. ALLEN

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

ARMIDA A. VALENCIA, ERIC WOLFE, and STEVE POSTMA, on behalf
of themselves and all others similarly situated, Plaintiffs/Appellants,

v.

JOHN M. ALLEN, in his official capacity as Treasurer of Maricopa
County; MARICOPA COUNTY, an Arizona political subdivision unit of
government; SUEANN MELLO, in her official capacity as Treasurer of
Mohave County; MOHAVE COUNTY, an Arizona political subdivision
unit of government, Defendants/Appellees.

No. 1 CA-CV 25-0452
FILED 02-24-2026

Appeal from the Superior Court in Mohave County
No. S8015CV202401923
The Honorable Steven C. Moss, Judge

VACATED AND REMANDED

COUNSEL

Martin Law & Mediation PLLC, Phoenix
By Aaron Thomas Martin
Counsel for Plaintiff/Appellant Armida A. Valencia

Hughes & Suhr LLC, Chicago
By Daniel R. Suhr
Counsel for Plaintiff/Appellant Eric Wolfe
Spero Law LLC, Charleston
By Christopher Mills
Counsel for Plaintiff/Appellant Steve Postma

Tully Bailey LLP, Scottsdale
By Stephen W. Tully
Counsel for Defendants/Appellees John M. Allen and Maricopa County

Mohave County Attorney’s Office, Kingman
By Matthew J. Smith, Jason Mitchell, William Davis
Counsel for Defendants/Appellees SueAnn Mello and Mohave County

OPINION

Presiding Judge Andrew M. Jacobs delivered the opinion of the Court, in
which Judge Brian Y. Furuya and Judge James B. Morse Jr. joined.

J A C O B S, Judge:

¶1 Plaintiffs Armida Valencia, Eric Wolfe, and Steve Postma
(the “Homeowners”) appeal the superior court’s dismissal of their
complaint alleging that tax lien foreclosures on properties they owned were
takings and excessive fines that violated the Fifth and Eighth Amendments
to the United States Constitution, in light of Tyler v. Hennepin County, 598
U.S. 631 (2023). Because the Arizona Tax Court has exclusive subject matter
jurisdiction over this case, we vacate all proceedings in it after the filing of
the complaint and remand the case to the superior court with a direction to
transfer it to the Arizona Tax Court.

FACTS AND PROCEDURAL HISTORY

A. Arizona’s Tax Lien Foreclosure Scheme

¶2 We first outline Arizona’s tax lien foreclosure scheme that
was in effect until 2024 and resulted in the losses of which the Homeowners
complain. (After Tyler, our legislature amended that scheme, but those
amendments do not affect this appeal.)

¶3 In Arizona, units of local government tax real property each
year. Until county treasurers collect the property tax, a lien remains on the
taxed property. A.R.S. §§ 42-17153, -18001. If a property owner does not
pay, the treasurer may, after notifying the property taxpayer, collect by

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selling the tax lien on the delinquent property at a public auction to
whoever “pays the whole amount of delinquent taxes, interest, penalties
and charges due on the property,” and “accept[s] the lowest rate of interest
on the amount so paid to redeem the property from the sale.” A.R.S. §§ 42-
18106, -18114.

¶4 If a private purchaser acquires the tax lien at auction, the
treasurer issues a certificate of purchase to them. A.R.S. § 42-18118. If no
one buys the tax lien, the certificate of purchase is assigned to the State.
A.R.S. § 42-18113(A)(1). Either way, the certificate of purchase does not
transfer ownership. Rather, the former owner remains in possession with
the right to redeem the tax lien for three years after the sale. A.R.S. §§ 42-
18151, -18152(A)(1).

¶5 If the real property owner does not redeem and the State
holds the certificate of purchase, the property may be auctioned to recover
the “taxes, interest, penalties, fees and costs” due, but the former owner can
recover “[a]ny balance remaining.” A.R.S. § 42-18303(A), (C).

¶6 If, however, the real property owner does not redeem within
three years and a private party holds the certificate of purchase, that private
party may foreclose the right of redemption by filing a superior court action
naming the treasurer as defendant. A.R.S. § 42-18201. If the private
foreclosure action satisfies certain requirements, the superior court will
enter a foreclosure judgment directing the treasurer to deliver to the
foreclosing party a treasurer’s deed conveying the property, thus
extinguishing the previous owner’s interests entirely. A.R.S. § 42-18204(A).
After that, the private purchaser may dispose of the property how they
wish, including by selling it and keeping any surplus value above the
amount paid for the tax lien.

B. The Homeowners Allege They Suffered Constitutional
Violations Under Arizona’s Tax Lien Foreclosure Scheme.

¶7 Until 2023, the Homeowners each owned real property in
either Maricopa or Mohave County. The Homeowners allege that after they
failed to pay their property taxes, private purchasers bought the tax liens
on their properties from the relevant county treasurers. The Homeowners
allege that after they failed to redeem their properties, those private
purchasers instituted foreclosure actions and received treasurer’s deeds
from the county treasurers. They allege the private purchasers then sold
the properties for more than the Homeowners’ delinquent tax debts, thus
keeping the surplus value for themselves.

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¶8 The same year the Homeowners allege they suffered these
losses, the United States Supreme Court decided Tyler. In Tyler, the Court
held a homeowner has a constitutionally protected property interest in the
surplus value of their real property after it is taken by the state and sold to
satisfy delinquent taxes. 598 U.S. at 641. Believing Tyler rendered Arizona’s
tax lien foreclosure scheme unconstitutional, the Homeowners sued
Maricopa and Mohave Counties and their treasurers John Allen and
SueAnn Mello (the “Counties”) to recover surplus value they had lost.

¶9 The Homeowners filed an eight-count suit in the superior
court in Mohave County alleging the Counties sold the tax liens and issued
the treasurer’s deeds, thus participating in or permitting a taking of the
Homeowners’ property without just compensation, and imposing
excessive fines upon them. They argued the Counties’ “pattern, practice,
and policy of choosing to exercise their authority to sell tax liens and issue
treasurer’s deeds” “took property from” the Homeowners “by facilitating
the theft of surplus value in connection with property taken to satisfy a tax
lien.” They alleged the private tax lien purchasers “reap[] a significant
windfall by seizing all excess home equity, without” compensating “the
previous owner,” and the Counties “make more money than they otherwise
would by selling liens.” The Homeowners’ claims are grounded in Arizona
Revised Statutes title 42, chapters 17 and 18. See A.R.S. § 42-18001 et seq.

C. The Superior Court Dismisses the Homeowners’ Claims,
and This Appeal Follows.

¶10 The Counties moved to dismiss the Homeowners’ claims of
uncompensated takings under the Fifth Amendment and of excessive fines
under the Eighth Amendment for failure to state claims upon which relief
could be granted. The superior court in Mohave County agreed with the
Counties, dismissing the Fifth and Eighth Amendment claims, as well as
other related state constitutional and tort claims.

¶11 The Homeowners timely appealed the dismissal of their Fifth
and Eighth Amendment claims. We have jurisdiction. Ariz. Const. art. 6, §
9; A.R.S. § 12- 2101(A)(1).

DISCUSSION

¶12 Courts have a continuing obligation to police their own
jurisdiction, even in the absence of any party raising the issue. Morgan v.
Hays, 102 Ariz. 150, 152-53 (1967). Given the jurisdiction of the Arizona Tax
Court over cases that “involve the legality of any tax, impost or
assessment,” A.R.S. § 12-161(A), and given that neither party had raised the

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propriety of the Mohave County Superior Court retaining jurisdiction over
this case, we asked the parties to address that question at argument, which
they did.

The Superior Court in Mohave County Erred By Not Assigning
This Matter to the Tax Court, Which Has Exclusive Subject Matter
Jurisdiction Over It.

¶13 “The jurisdiction of the superior court is conferred upon it by
the state constitution and statutes.” Schoenberger v. Bd. of Adjustment, 124
Ariz. 528, 530 (1980). Our Legislature gave the Arizona Tax Court, which
is the tax department of the superior court in Maricopa County, exclusive
jurisdiction over “cases . . . which involve the legality of any tax, impost or
assessment.” A.R.S. § 12-161(A).

¶14 The Legislature’s preference that the tax court hear such cases
is strong — it mandates that “if it appears from the pleadings . . . filed with
the superior court that an action involves the imposition, assessment or
collection of a tax, including all questions of law and fact relating to
disputes about taxes, . . . arising under title . . . 42,” the “presiding judge of
the superior court shall assign the action to the tax court.” A.R.S. § 12-163(A)
(emphasis added). As we next explain, this case fits every one of these
criteria for the tax court’s jurisdiction.

¶15 First, it “appears from the pleadings . . . that [the
Homeowners’] action involves the . . . collection of a tax.” A.R.S. § 12-
163(A). The Homeowners allege in their complaint that “[t]he County
Treasurer, as tax collector, secures payment on delinquent taxes by selling
liens and/or foreclosing the right to redeem those liens.” They further
allege that the Counties “took property from” the Homeowners “by
facilitating the theft of surplus value in connection with property taken to
satisfy a tax lien.” (Emphasis added). These allegations show this case
involves the collection of a tax.

¶16 Second, the Homeowners’ action also presents “questions of
law . . . relating to disputes about taxes.” A.R.S. § 12-163(A). The
Homeowners’ complaint challenges the constitutionality of Arizona’s tax
lien foreclosure scheme. And at argument, they agreed that their claim is
that “Arizona’s tax lien foreclosure scheme is unconstitutional under the
Fifth Amendment.” Whether Arizona’s tax lien foreclosure scheme is
illegal under the Fifth Amendment and Tyler is a “question of law.”
Matthews v. Indus. Comm’n of Ariz., 254 Ariz. 157, 160 ¶ 16 (2022). Whether
it effects a conversion or an unjust enrichment, as the Homeowners also

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contend, likewise presents questions of law. And these questions of law
relate to disputes about taxes, which A.R.S. § 12-163(A) tells us must be
litigated in the tax court. For this reason too, the Homeowners’ case must
be litigated before the tax court.

¶17 Third, the Homeowners could not be clearer that their
complaint challenges tax collection that “aris[es] under” title 42, chapters
17 and 18. They pleaded that “[f]or decades, Arizona law allowed counties
to profit from the collection of unpaid property taxes under Title 42,
Chapter 18 of the Arizona Revised Statutes.” That too makes this a case for
the tax court specifically, A.R.S. § 12-161(A), and not the superior court
generally. A.R.S. § 12-163(A).

¶18 There are limited exceptions to the tax court’s exclusive
jurisdiction, but they don’t apply here. Actions “involving the imposition,
assessment or collection of a tax, including questions of law or fact relating
to a dispute about taxes, arising under title 42, chapters 11 through 16 may
be filed in either the tax court or the superior court.” A.R.S. § 12-163(B).
But this isn’t such a case — the Homeowners pleaded a dispute about taxes
that arises under title 42, chapters 17 and 18. Additionally, an “action to
foreclose the right to redeem [a tax lien] shall be filed in the superior court
in the county in which the real property is located and shall name the
county treasurer as a party to the action.” A.R.S. § 42-18201(A)-(B). But this
isn’t an action to foreclose anything — it’s a constitutional and tort lawsuit
challenging how Arizona counties collect unpaid property taxes through
our state’s tax lien foreclosure scheme.

¶19 For these reasons, the presiding judge of the county in which
this matter was filed was required to transfer it to the tax court. A.R.S. §§
12-163(A), -165(B). Otherwise, parties could select other fora in which to
litigate such disputes, which the legislature has prohibited.

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CONCLUSION

¶20 We vacate the judgment and all proceedings in this case after
the filing of the complaint. We remand this case to the superior court and
direct it to transfer this matter to the Arizona Tax Court for further
proceedings. Because no party prevailed in this appeal, we award no one
costs under ARCAP 21.

MATTHEW J. MARTIN • Clerk of the Court
FILED: JR

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