Huhtamaki v. Maricopa

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

HUHTAMAKI, INC., Plaintiff/Appellant,

v.

MARICOPA COUNTY, Defendant/Appellee.

No. 1 CA-TX 21-0010
FILED 3-23-2023

Appeal from the Arizona Tax Court
No. TX2017-000542
The Honorable Danielle J. Viola, Judge

AFFIRMED

COUNSEL

Dickinson Wright PLLC, Phoenix
By Dawn R. Gabel, Bennett Evan Cooper, Cameron Stanley
Counsel for Plaintiff/Appellant

Maricopa County Attorney’s Office, Phoenix
By Joseph Branco, Courtney R. Glynn
Counsel for Defendant/Appellee
 HUHTAMAKI v. MARICOPA
Opinion of the Court

OPINION

Presiding Judge Brian Y. Furuya delivered the opinion of the Court, in
which Judge Jennifer B. Campbell and Judge Paul J. McMurdie joined.

F U R U Y A, Judge:

¶1 Huhtamaki, Inc. is a taxpayer who appeals from the Arizona
Tax Court’s entry of summary judgment in favor of Maricopa County (the
“County”) on Huhtamaki’s tax code and Arizona Constitution Uniformity
Clause claims. This appeal requires us to construe an exception within
Arizona Revised Statutes (“A.R.S.”) § 42-13302(A)(4)’s alternative
calculation of limited property value for taxation purposes. Because the tax
court correctly determined that this exception did not apply in this case, we
affirm. We need not reach the uniformity issue because it cannot be
addressed for the first time on appeal.

FACTS AND PROCEDURAL HISTORY

¶2 Huhtamaki purchased six parcels of property (collectively,
the “Property”) in an industrial development within the City of Goodyear
from Broadway Goodyear, LLC. The five parcels at issue in this case were
contiguous and were formerly identifiable by parcel numbers assigned by
the Maricopa County Assessor as ending in 943, 944, 945, 946, and 947, as
shown in the diagram included below.

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¶3 Three parcels, 946, 944, and 947, were located within a single
tax area code south of the Broadway Road Alignment. The other two
parcels, 943 and 945, were north of the Broadway Road Alignment and,
although contiguous, were located within a different tax area code.
Huhtamaki purchased all of parcels 943, 944, 946, and 947, but not all of
parcel 945.

¶4 Because Huhtamaki purchased only part of parcel 945, seller
Broadway Goodyear prepared and submitted a Minor Land Division,
which it recorded with the County Recorder’s Office after approval by the
City.

¶5 The Minor Land Division created new legal descriptions and
an associated map reflecting the reorganization of the six original parcels
into three new lots, as depicted in the diagram above. Lot 1 was created by

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Opinion of the Court

combining parcels 943, 944, 946, and 947 with part of parcel 945. Lot 2 is the
remainder of parcel 945 that Huhtamaki did not purchase. Lot 3, which is
not at issue in this case, remained unchanged. Broadway Goodyear deeded
Lots 1 and 3 to Huhtamaki while retaining the title to Lot 2.

¶6 After discovering the changes completed under this Minor
Land Division, the Assessor amended its parcel map and assigned new
parcel numbers to reflect the new legal descriptions and configurations
effectuated by the Minor Land Division. Because Lot 1 straddles two tax
area codes separated by the Broadway Road Alignment, the Assessor
assigned it two parcel numbers, each corresponding to that portion of Lot
1 situated within the different tax area codes.

¶7 Because the Minor Land Division required both a split and
various combinations involving the Property, the Assessor applied A.R.S. §
42-13302(A) to calculate the Property’s 2018 limited property value
(“LPV”). Using the statutory valuation methodology raised the Property’s
2017 LPV of $19,452,848 to $32,512,450 in 2018 (a $13,059,592 increase),
substantially increasing Huhtamaki’s property tax obligation.

¶8 Huhtamaki filed suit, alleging the Assessor had improperly
applied A.R.S. § 42-13302(A)(4). It argued the Assessor should have instead
used the standard LPV calculation method of A.R.S. § 42-13301(A) because
the Assessor’s consolidation and then split of the parcels constituted “an
action initiated by a governmental entity,” an exception to the application
of A.R.S. § 42-13302(A)(4). On cross-motions for summary judgment, the
court ruled for the County, explaining the split and combination were
initiated by the Minor Land Division instituted by Broadway Goodyear and
Huhtamaki, not by government action. The court also rejected Huhtamaki’s
Uniformity Clause argument, finding that Huhtamaki had failed to
sufficiently plead such a claim and that the LPV was consistent with LPVs
of other properties to which A.R.S. § 42-13302(A)(4) had been applied.

¶9 Huhtamaki timely appealed, and we have jurisdiction
pursuant to A.R.S. §§ 12-2101(A)(1) and -170(C).

DISCUSSION

¶10 We review de novo the grant of summary judgment in a tax
case. Wilderness World, Inc. v. Dep’t of Revenue, 182 Ariz. 196, 198 (1995);
Qasimyar v. Maricopa Cnty., 250 Ariz. 580, 584 ¶ 6 (App. 2021). Summary
judgment is appropriate “if the moving party shows that there is no
genuine dispute as to any material fact and the moving party is entitled to
judgment as a matter of law.” Ariz. R. Civ. P. 56(a). We also review de novo

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Opinion of the Court

issues of statutory interpretation and the court’s application of tax law.
Home Depot USA, Inc. v. Ariz. Dep’t of Revenue, 230 Ariz. 498, 500 ¶ 7 (App.
2012); see Qasimyar, 250 Ariz. at 584 ¶ 6.

I. The Assessor Did Not Err in Applying A.R.S. § 42-13302(A)(4).

¶11 Arizona law provides two means of determining LPV. In
most cases, a property’s LPV is equal to “the preceding valuation year plus
five per cent [sic] of that value,” a methodology commonly referred to as
“Rule A.” A.R.S. § 42-13301(A). Application of Rule A moderates the
taxation effects of sharp increases in a property’s market value, provided
there have been no changes to the property that affect its value.

¶12 Under certain enumerated circumstances, however, LPV
must be calculated instead based on a percentage of the full cash value
(“FCV”) comparable to percentages of properties “of the same or a similar
use or classification,” a methodology commonly referred to as “Rule B.”
A.R.S. § 42-13302(A). One such enumerated circumstance invoking the
application of Rule B occurs when a property is “split, subdivided or
consolidated from January 1 through September 30 of the valuation year.”
A.R.S. § 42-13302(A)(4). But in 2007, the Legislature enacted an exception to
the application of Rule B when a split, subdivision, or consolidation of
property “result[ed] from an action initiated by a governmental entity.”
A.R.S. § 42-13302(A)(4); 2007 Ariz. Legis. Serv. Ch. 104 (S.B. 1553). If this
exception applies, assessors must apply Rule A, even if a split, subdivision,
or consolidation has occurred during these nine months of the valuation
year.

¶13 In this appeal, Huhtamaki argues the Assessor initiated the
tax parcel split and consolidation because neither Huhtamaki nor
Broadway Goodyear requested that the Assessor split or consolidate the
Property for tax purposes. Huhtamaki cites our decision in Premiere RV &
Mini Storage LLC v. Maricopa County, arguing that because “there is no
inherent significance in a change in ownership,” the sale of the Property did
not initiate a change in the tax parcels. See Premiere RV, 222 Ariz. 440, 445 ¶
17 (App. 2009). Premiere RV holds that, in deciding when Rule B applies to
a property split, “the acts of the Assessor . . . have significance” because
only the Assessor can “create or deactivate parcels.” Id. at 444 ¶ 16.
Therefore, a “split” for the purposes of Rule B refers to the Assessor’s
administrative process. Id. Seizing on this language, Huhtamaki argues its
purchase of the Property did not constitute a split or consolidation because
the Assessor performed the split and consolidation by assigning new parcel
numbers, and neither it nor Broadway Goodyear requested the Assessor to

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take such an action. However, this argument mistakenly conflates the
initiation of the split and combination process with its completion.

¶14 Premiere RV did not discuss the issue of whether an assessor’s
office triggers the application of Rule B’s exception when it updates parcel
numbers after a split, subdivision, or consolidation. The parties in Premiere
RV did not dispute that a split had occurred. Id. at 444 ¶ 13. Further,
Premiere RV did not consider or decide whether a split, subdivision, or
consolidation “result[s] from an action initiated by a governmental entity.”
A.R.S. § 42-13302(A)(4). Indeed, at the time relevant to the Premiere RV
decision, Rule B did not contain that exception. Id. at 443–44 ¶ 12 n.1
(comparing Rule B (2006) with Rule B (2007)). Nevertheless, in that context,
we explained, “a consolidation occurs when the Assessor completes the
activation and evaluation of the new parcel.” Id. at 446 ¶ 22 (emphasis
added). Therefore, Premiere RV clarifies that the administrative action in
assigning new parcel numbers is what completes the process of a split,
subdivision, or consolidation—not what initiates the process, contrary to
Huhtamaki’s argument.

¶15 Further, while the “consolidation process is not self-
executing,” such actions can and do originate from the actions of property
owners. See id. (observing that “[c]onsolidation of property frequently
involves an internal transaction with only one party—the common owner
of multiple pieces of property” and reasoning that tax significance of such
an act does not take place until the Assessor activates and values the new,
larger parcel). This circumstance implicitly acknowledges and accepts that
despite the necessity of government action in consummating and
implementing splits, subdivisions, and combinations of property, private
owners can, and frequently do, initiate such processes. If, as Huhtamaki
argues, all splits, subdivisions, and combinations not expressly requested
by owners constitute government-initiated action invoking Rule B’s
exception, then owners could substantially change the character, nature,
and value of their property by their own actions and yet still avoid
application of Rule B—an absurd result that would cause the exception to
swallow the rule and render A.R.S. § 42-13302(A)(4) discretionary to
property owners and all but meaningless. That is a proposition we must
reject. See In re Est. of Zaritsky, 198 Ariz. 599, 603 ¶ 11 (App. 2000) (explaining
we give meaning to each part of a statute and avoid rendering any of it
“surplusage”).

¶16 We instead give the statute’s words their plain and ordinary
meaning. See S. Point Energy Ctr. LLC v. Ariz. Dep’t of Revenue, 253 Ariz. 30,
34 ¶ 14 (2022) (stating that courts “read words in context and effectuate the

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plain meaning” of statutes, unless absurd). “Initiate,” as it is commonly
understood, includes meaning “to cause or facilitate the beginning of.”
Initiate, MERRIAM WEBSTER, https://www.merriam-webster.com/
dictionary/initiate (last visited Mar. 15, 2023); see also Chaparro v. Shinn, 248
Ariz. 138, 141 ¶ 14 (2020) (observing “[a]bsent statutory definitions, courts
apply common meanings and may look to dictionaries”) (citation omitted).
Thus, we hold that Rule B applies upon any split, subdivision, or
combination of property not initiated—i.e., begun—by government action.
This is true regardless of the necessity for any government action required
or involved to complete them. A.R.S. § 42-13302(A)(4).

¶17 Here, the parties do not dispute that Broadway Goodyear—
not the Assessor—applied for the Minor Land Division, thereby initiating
the process. Nor can the parties dispute that the boundaries of the Lots
described in the Minor Land Division are not coextensive with the five
relevant formerly-existing parcels. On these facts, the tax court properly
concluded the Minor Land Division initiated the process that ultimately
resulted in a split and various combinations of the Property. Having so
concluded, the Minor Land Division triggered the application of Rule B.

¶18 Moreover, as a practical matter, the Assessor also could not
have applied Rule A. The Property’s boundaries substantially changed after
the Minor Land Division, which resulted in new parcels. As we explained
in Magellan South Mountain Limited Partnership v. Maricopa County, 192 Ariz.
499, 503–504 ¶¶ 20, 24 (App. 1998):

Parcel reconfiguration changes the dimensions of the parcel
itself resulting in a different parcel . . . . Valuations that result
from . . . parcel reconfiguration are . . . either first-time
taxation of . . . property or removal of property previously
taxed under an existing tax parcel number.

Thus, Lot 1, as a newly constituted parcel, had no baseline LPV from which
the Assessor could have added five percent, and the Assessor must use Rule
B to calculate the Property’s LPV accurately.

¶19 Huhtamaki contends that because taxpayers may share
responsibility for paying taxes on shared parcels, there was no need for the
Assessor to assign new tax parcels, and so the Assessor’s unilateral decision
to do so triggered Rule B’s exception. See A.R.S. § 42-18057. But
Huhtamaki’s argument ignores that the Minor Land Division initiated the
consolidation of the parcels in Lot 1 into one piece of property, thereby
requiring the Assessor to acknowledge and record the creation of a new

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parcel. Therefore, the reference to taxpayers’ ability to allocate tax liabilities
between them is not germane.

¶20 Because the Minor Land Division described the Property as
one piece of land, the sale initiated a split of parcel 945 and a consolidation
of it and the other contiguous parcels into the new Lot 1. The court did not
err in granting the County’s motion for summary judgment.

II. Huhtamaki Failed to Assert a Uniformity Clause Claim Correctly.

¶21 Huhtamaki also contends the Assessor erred by imposing an
LPV of 79% of the Property’s FCV, which it claims is much higher than
“comparable properties” with the same or similar use or classification. The
court ruled that Huhtamaki failed to plead the Uniformity Clause claim
adequately, and even if it did validly plead it, the argument would still fail
because Huhtamaki did not present evidence the LPV percentage was
disproportionately high when compared to LPV percentages of other
properties that had likewise undergone minor land divisions. Huhtamaki
argues this was error and that the sole consideration for comparison should
be the properties’ use or classification.

¶22 The Uniformity Clause mandates that “all taxes shall be
uniform upon the same class of property.” Ariz. Const. art. 9, § 1. However,
we need not address whether it erred by excluding evidence of properties
with similar use or classification because the court was correct—Huhtamaki
failed to raise a Uniformity Clause claim in its complaint. See Ariz. R. Civ.
P. 8(a)(2) (a pleading must contain a statement “showing that the pleader is
entitled to relief”). The complaint alleges the Assessor erred by applying
Rule B, not that the ratio of the LPV as a percentage of the FCV violates the
Uniformity Clause. Nor did the complaint include any reference to A.R.S. §
42-11005 as was required to contest the LPV amount. Having failed to
adequately raise a Uniformity Clause claim, it is now waived. See Cont’l
Lighting & Contracting, Inc. v. Premiere Grading & Utils., LLC, 227 Ariz. 382,
386 ¶ 12 (App. 2011) (explaining arguments not raised at the superior court
are waived on appeal).

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CONCLUSION

¶23 We affirm.

¶24 Because it is not the prevailing party, we deny Huhtamaki’s
requests for its attorney’s fees and costs.

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

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