Jose R. Aroca v. Tang Investment

IN THE

SUPREME COURT OF THE STATE OF ARIZONA

JOSE R. AROCA AND KIRSTIN AROCA, HUSBAND AND WIFE,
Plaintiffs/Appellants,

v.

TANG INVESTMENT COMPANY LLC, AN ARIZONA LIMITED
LIABILITY COMPANY,
Defendant/Appellee.

No. CV-24-0049-PR
Filed March 31, 2025

Appeal from the Superior Court in Pinal County
The Honorable Christopher J. O’Neil, Judge
No. S1100CV202200940
REVERSED AND REMANDED

Opinion of the Court of Appeals, Division Two
257 Ariz. 75 (App. 2024)
VACATED IN PART

COUNSEL:

Robert S. Porter (argued), Porter Law Firm, Phoenix, Attorneys for Tang
Investment Company, LLC

Trevor J. Fish (argued), Douglas N. Nelson, H. Lee Dove, Evans Dove
Nelson Fish & Grier PLC, Mesa, Attorneys for Jose and Kirstin Aroca
 JOSE R. AROCA, ET AL. V. TANG INVESTMENT
Opinion of the Court

JUSTICE KING authored the Opinion of the Court, in which CHIEF
JUSTICE TIMMER, VICE CHIEF JUSTICE LOPEZ, and JUSTICES BOLICK,
BEENE, MONTGOMERY, and BRUTINEL * (RETIRED) joined.

JUSTICE KING, Opinion of the Court:

¶1 The issue before us is whether an action to quiet title to real
property may proceed where the underlying debt remains unpaid but the
statute of limitations for suit on that debt has expired.

¶2 In 1914, this Court held that equitable principles prohibited a
plaintiff from obtaining a quiet title judgment when his mortgage debt
remained unpaid. Provident Mut. Bldg.-Loan Ass’n v. Schwertner
(“Provident”), 15 Ariz. 517, 518–20 (1914). In 1941, the legislature took a
different approach by enacting A.R.S. § 12-1104(B) pertaining to quiet title
actions: “If it is proved that the interest or lien or the remedy for
enforcement thereof is barred by limitation, . . . plaintiff shall be entitled to
judgment barring and forever estopping assertion of the interest or lien in
or to or upon the real property adverse to plaintiff.”

¶3 We hold that the equitable principles set forth in Provident do
not alter the rights established in § 12-1104(B). An action to quiet title to
real property may proceed where the underlying debt remains unpaid but
the statute of limitations for suit on that debt has expired.

BACKGROUND

¶4 In 2007, Jose and Kirstin Aroca (the “Arocas”) executed two
documents. The first was a “Note Secured by Deed of Trust” (“Note”)
wherein the Arocas agreed to pay Tang Investment Company, LLC
(“Tang”) the principal sum of $40,000. The second was a “Deed of Trust”
that secured payment of the amounts owed in the Note with real property

* Justice Brutinel retired after oral argument in this case but nevertheless
participated in deciding this Opinion.
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in Pinal County owned by the Arocas. The Note required the Arocas to
make semi-annual, interest-only payments beginning in 2008, with the
entire unpaid balance of principal and interest due on April 30, 2012. Tang
recorded the Deed of Trust with the Pinal County Recorder’s Office.

¶5 The Arocas made interest-only payments on the Note for one
year, but then stopped making payments. Tang failed to initiate foreclosure
proceedings or bring any action to enforce its rights on the underlying debt
pursuant to the Note. To this day, the debt remains unsatisfied.

¶6 In 2022, the Arocas brought an action against Tang for quiet
title, wrongful lien, and declaratory relief, seeking to clear up clouded title
to the Pinal County property. The Arocas’ complaint alleged the Deed of
Trust was now wrongfully recorded because the statute of limitations on
the Note had run, and therefore the Deed of Trust was now invalid. See
A.R.S. § 12-1101(A) (“An action to determine and quiet title to real property
may be brought by any one having or claiming an interest therein, whether
in or out of possession, against any person . . . when such person . . . claims
an estate or interest in the real property which is adverse to the party
bringing the action.”).

¶7 Tang moved to dismiss the complaint for failure to state a
claim under Arizona Rule of Civil Procedure 12(b)(6). Tang acknowledged
that suit on the Note was barred by the six-year statute of limitations for
actions on debt. See A.R.S. § 12-548(A)(1) (“An action for debt shall be
commenced and prosecuted within six years after the cause of action
accrues, and not afterward, if the indebtedness is evidenced by or founded
on . . . [a] contract in writing that is executed in this state.”). But Tang
argued that § 12-548(A)(1) did not extinguish the Deed of Trust lien on the
property, the Deed of Trust was not satisfied or discharged, and A.R.S.
§ 33-714 extended the statute of limitations to enforce deed of trust liens,
through foreclosure or a trustee’s sale, to ten or fifty years after a deed is
recorded (in this case, through 2057). See § 33-714(A)(2) (providing that a
“lien of any mortgage or deed of trust on any real property that is not
otherwise satisfied or discharged expires” fifty years after the mortgage or
deed of trust was recorded “[i]f the final maturity date or the last date fixed
for payment of the debt or performance of the obligation is not ascertainable

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Opinion of the Court

from the county recorder’s records or if there is no final maturity date or
last date fixed for payment of the debt or performance of the obligation”).

¶8 The superior court granted the motion to dismiss. The court
agreed with Tang that, pursuant to § 33-714, it had until 2057 to foreclose
or hold a trustee’s sale under the Deed of Trust. The Arocas, therefore, were
not entitled to relief.

¶9 The court of appeals reversed. See Aroca v. Tang Inv. Co. LLC,
257 Ariz. 75 (App. 2024). The court determined that § 33-714 “does not
implicate the remedy of foreclosure or the timeframe in which a foreclosure
proceeding must be initiated.” Id. at 78 ¶ 13. The court instead concluded
that A.R.S. § 33-816 “dictates that a trustee’s sale or foreclosure on a deed
of trust must be commenced within the same limitation period that would
apply to an action on the contract securing it.” Id. As the court observed,
“[a]n action for debt formed by a contract must be brought within six
years.” Id. (citing § 12-548(A)(1)). The court held that “Tang has been
barred from foreclosing on the deed of trust or initiating a trustee’s sale of
the property since 2018.” Id. at 79 ¶ 16.

¶10 The court of appeals also noted the holding in Provident but
observed that the legislature subsequently enacted § 12-1104(B). Id. ¶ 15.
The court held that “because Tang’s recorded deed of trust is barred by
limitation, the lien has been discharged and the Arocas are entitled to
judgment under § 12-1104 in their action to quiet title.” Id. ¶ 16.

¶11 We granted review because this case involves an issue of
statewide importance and requires consideration of whether there is a
conflict between Provident and more recently enacted statutes. We have
jurisdiction pursuant to article 6, section 5(3) of the Arizona Constitution.

DISCUSSION

¶12 We review the dismissal of a complaint pursuant to Rule
12(b)(6) and issues of statutory interpretation de novo. Shepherd v. Costco
Wholesale Corp., 250 Ariz. 511, 513 ¶ 11 (2021).

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Opinion of the Court

¶13 The parties do not dispute that any action brought by Tang to
enforce the unpaid amounts under the Note is barred by § 12-548(A)(1)’s
six-year statute of limitations. But Tang contends that the Arocas’ quiet title
action must be dismissed because of this Court’s holding in Provident. In
addition, Tang argues that § 12-548(A)(1)’s six-year statute of limitations is
inapplicable to an action enforcing the Deed of Trust (which is different
than the Note evidencing the debt), and the statute of limitations is
extended under § 33-714 because the Deed of Trust under that statute does
not expire until 2057.

¶14 In Provident, the plaintiff filed an action to remove a cloud
upon his title to real property. 15 Ariz. at 517. The cloud consisted of a
deed of trust to secure a loan evidenced by a note from the Provident
Mutual Building-Loan Association. Id. The debt was unpaid, and the
statute of limitations barred filing suit on the unpaid balance under the
note. Id. at 517–18. But the Provident Mutual Building-Loan Association
contended that “an action to remove a cloud, being an equitable action,
cannot be maintained for the cancellation of an unsatisfied mortgage, even
though limitation has run against it, and the debt secured by it is barred.”
Id. at 518.

¶15 Noting that it is “the jurisdiction of courts of equity to remove
clouds from title,” this Court stated that “[o]utlawry, under the statute of
limitation, affects the remedy and not the right. It does not extinguish or
satisfy the debt; it only prevents a recovery when properly invoked by the
debtor. It is a shield and not a sword.” Id. (internal quotations and citation
omitted). Emphasizing its reliance on common law equitable principles,
this Court explained:

Equity and good conscience require that she should pay the
debt secured by the mortgage as a condition to its
cancellation. The maxim that he who seeks equity must do
equity voices a just and universal rule in determining the
equitable rights of suitors, and should always be applied in
cases like this. . . . The plaintiff seeks equity. They must do
equity. Every man should pay his just debts. It is right that he
should do so. The fact that he may not be coerced to discharge

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them by legal means affects only the legal character of his
obligation. It does not alter the primary fact that he owes an
obligation which in equity and good conscience he should
pay.

Id. at 519 (quoting Tracy v. Wheeler, 107 N.W. 68, 68 (N.D. 1906)). In
addition, other cases support the view that “equity will not grant relief,
except upon condition that the debtor pay or tender payment of the debt
secured.” Id. (citing Tracy, 107 N.W. at 69, and its collection of other
decisions). Thus, Provident held that the plaintiff must first pay the full
amount of the debt (principal and interest) before the deed of trust would
be removed. Id. at 519–20.

¶16 In 1941, twenty-seven years after Provident, the legislature
enacted § 12-1104:

A. In an action to quiet title to real property, if the complaint sets
forth that any person or the state has or claims an interest in
or a lien upon the property, and that the interest or lien or the
remedy for enforcement thereof is barred by limitation, or
that plaintiff would have a defense by reason of limitation to
an action to enforce the interest or lien against the real
property, the court shall hear evidence thereon.

B. If it is proved that the interest or lien or the remedy for
enforcement thereof is barred by limitation, or that plaintiff would
have a defense by reason of limitation to an action to enforce the
interest or lien against the real property, the court shall have
jurisdiction to enter judgment and plaintiff shall be entitled to
judgment barring and forever estopping assertion of the interest or
lien in or to or upon the real property adverse to plaintiff.

(Emphasis added.) Our role is to interpret the text of § 12-1104 as written
by the legislature. The plain language of § 12-1104(B) makes clear that in a
quiet title action, if the remedy for enforcement of the interest in or lien
against the property is barred by the statute of limitations, the plaintiff is
entitled to judgment barring and forever estopping the defendant’s
assertion of such lien or interest. In other words, a plaintiff is entitled to a
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quiet title judgment in its favor when the statute of limitations has run on
an action to enforce a lien or interest. § 12-1104(B).

¶17 As discussed, Tang’s enforcement of the debt under the Note
is barred by the six-year statute of limitations. See § 12-548(A)(1). Because
this remedy for enforcing the interest in or lien against the property is
barred by the statute of limitations, § 12-1104(B) bars and forever estops
Tang’s assertion of an interest in or lien against the property.

¶18 This conclusion is also consistent with § 33-816, which
requires that a trustee’s sale or action to foreclose a deed of trust be
commenced “within the period prescribed by law for the commencement
of an action on the contract secured by the trust deed.” The statute of
limitations to commence a trustee’s sale or action to foreclose a deed of trust
is the same as the statute of limitations for an action on the Note secured by
the Deed of Trust—namely, six years. See § 12-548(A)(1); see also De Anza
Land & Leisure Corp. v. Raineri, 137 Ariz. 262, 266 (App. 1983) (holding that
the statute of limitations for an action to foreclose a mortgage is the same as
for an action on the underlying debt: “A.R.S. § 12-548 applies to foreclosure
actions as well as to actions on the underlying debt”). Tang failed to
commence a trustee’s sale or foreclose on the property within six years of
the Arocas’ default and is now time-barred from taking such actions. See
§ 33-816.

¶19 Where, as here, the statute of limitations has run on an action
to enforce a lien but the plaintiff seeking to quiet title has not paid off the
underlying debt, Provident and § 12-1104 are in direct conflict. Under
§ 12-1104(B), a plaintiff is entitled to a quiet title judgment when the statute
of limitations has run on an action to enforce a lien or interest. But Provident
held that a plaintiff may not obtain a quiet title judgment in its favor when
the underlying debt remains unpaid, regardless of the statute of limitations.
15 Ariz. at 518–20. Under these circumstances, Provident and § 12-1104(B)
cannot both apply.

¶20 So how do judges resolve such conflicts in the law? We have
clarity and direction in A.R.S. § 1-201: “The common law only so far as it
is . . . not repugnant to or inconsistent with the . . . laws of this state . . . is

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adopted and shall be the rule of decision in all courts of this state.”
“Section 1-201 recognizes th[e] basic constitutional principle” that
“judge-made substantive law is subordinated to contrary legislative acts
validly adopted under” the legislative authority in article 4 of the Arizona
Constitution. Seisinger v. Siebel, 220 Ariz. 85, 92 ¶ 28 (2009).

¶21 And this Court has consistently reaffirmed that principle:
“When rights are clearly established and defined by a statute, equity has no
power to change or upset such rights.” Valley Drive-In Theatre Corp. v.
Superior Court, 79 Ariz. 396, 399 (1955) (explaining that “this principle was
so well expressed” in Sparks v. Douglas & Sparks Realty Co., 19 Ariz. 123, 129
(1917)); see also Cloeter v. Superior Court, 86 Ariz. 400, 402 (1959) (to same
effect). It is fundamental to our legal system that when a substantive statute
conflicts with an equitable principle under the common law, “the statute
prevails under a separation of powers analysis.” See Seisinger, 220 Ariz.
at 92 ¶ 28. The holding in Provident may not change or upset the rights set
forth in § 12-1104(B). Section 12-1104(B) prevails.

¶22 We are not persuaded by Tang’s citation to case law relying
on Provident that came after § 12-1104’s enactment in 1941. These cases may
have restated the holding in Provident, but they did not mention § 12-1104,
much less address Provident’s conflict with § 12-1104. See Farrell v. West, 57
Ariz. 490, 491 (1941) (relying on Provident for the point that “[i]n an action
to quiet title, the party invoking the court’s jurisdiction is required to do
equity and, if it appears there is an unsatisfied balance due a
defendant-mortgagee, . . . the court will not quiet the title until and unless
he pays off such mortgage lien, though it be barred by limitation”); Andra
R Miller Designs LLC v. US Bank NA, 244 Ariz. 265, 269 ¶ 11 (App. 2018)
(citing Provident in support of the proposition that “[w]hen the statute of
limitations expires, . . . the debt is not extinguished; rather, the remedy for
an action on the debt is merely barred”), overruled in part on other grounds by
Bridges v. Nationstar Mortg. LLC, 253 Ariz. 532, 535 ¶ 17 n.2 (2022); RCBT
Holdings, LLC v. CIT Bank, N.A., No. 1 CA-CV 16-0177, 2017 WL 1739111,
at *2 ¶ 7 (Ariz. App. May 4, 2017) (mem. decision) (citing and quoting
Provident); Manicom v. CitiMortgage, Inc., 236 Ariz. 153, 161 ¶ 34 (App. 2014)
(explaining that the court of appeals is bound by Provident and restating the
holding in Provident); De Anza Land & Leisure Corp., 137 Ariz. at 265

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(discussing Provident’s holding and noting that the issue before the court
differed from the issue in Provident). 1 To the extent those cases contradict
our holding here, we overrule them.

¶23 Tang argues that the controlling statute is § 33-714 because it
defines when a lien expires or is satisfied and extends the deadline to
foreclose or initiate a trustee’s sale until the lien’s expiration or satisfaction.
In contrast, § 12-1104 does not define when a lien expires or is satisfied.

¶24 Section 33-714 provides:

A. The lien of any mortgage or deed of trust on any real
property that is not otherwise satisfied or discharged expires
at the later of the following times:

1. If the final maturity date or the last date fixed for payment
of the debt or performance of the obligation is ascertainable
from the county recorder’s records, ten years after that date.

2. If the final maturity date or the last date fixed for payment
of the debt or performance of the obligation is not
ascertainable from the county recorder’s records or if there is
no final maturity date or last date fixed for payment of the

1 Tang also cites Best Fertilizers of Ariz., Inc. v. Burns, 116 Ariz. 492 (1977),
and Stewart v. Underwood, 146 Ariz. 145 (App. 1985), but these cases are not
persuasive because they did not address Provident or § 12-1104. Also, the
court of appeals has not been uniform in its decisions, and at least one case
addressed § 12-1104 but reached a conclusion that differs from the cases
Tang relies upon. See Wood v. Fitz-Simmons, No. 2 CA-CV 2008-0041, 2009
WL 580784, at *3 ¶ 9 n.3 (Ariz. App. Mar. 6, 2009) (mem. decision)
(concluding that a trial court properly entered summary judgment in favor
of plaintiffs in a quiet title action, pursuant to § 12-1104, when plaintiffs
established that the six-year statute of limitations had run on the underlying
debt).
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debt or performance of the obligation, fifty years after the date
the mortgage or deed of trust was recorded.
....
C. Expiration of the lien of a mortgage or deed of trust
pursuant to this section is equivalent for all purposes to a
satisfaction, reconveyance, release or other discharge of the
lien.

Relying on § 33-714(A)(2) and (C), Tang contends that enforcement of the
lien is not barred until 2057 for essentially two reasons. First, because the
Deed of Trust does not identify a final maturity date, it remains a valid lien
and does not expire until fifty years after it was recorded, which will be in
2057. Second, the Deed of Trust has not been “otherwise satisfied or
discharged,” which will not happen until it expires in 2057.

¶25 But § 33-714 is not a statute of limitations. The plain language
of § 33-714 does not set forth a time limit to bring an action to enforce a lien
of a deed of trust. Instead, § 33-714 provides an expiration date for a lien of
a deed of trust, thereby setting forth an outer time limit for the expiration
of the lien (in other words, the maximum duration of the lien).

¶26 Indeed, § 33-714(A) only applies to a “lien of any mortgage or
deed of trust on any real property that is not otherwise satisfied or discharged.”
(Emphasis added.) Thus, § 33-714 provides a default term for a lien but
explicitly recognizes that a lien may be discharged sooner than the
expiration period in the statute. As relevant here, once an action to enforce
a lien against property accrues, the relevant statute of limitations provides
the time period to bring that action. See § 12-1104. In this case,
§ 12-548(A)(1) establishes a six-year statute of limitations. And § 33-714
does not extend that six-year statute of limitations period.

¶27 Moreover, as a practical matter, if an action is not brought
under a note or a trustee’s sale or action to foreclose is not commenced
within the six-year statute of limitations, a deed of trust lien will continue
to exist on the property. In such a situation, a party may file suit to obtain
a quiet title judgment to clear up that clouded title. But if such a suit is
never commenced, § 33-714 serves the purpose of establishing that after a

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specified time period (ten or fifty years), that lien automatically expires and
will no longer cloud the title. In addition, in situations where a party pays
the debt in full but never takes legal action to demonstrate the debt has been
paid (e.g., failing to record a notice of satisfaction), § 33-714 can also serve
the purpose of considering the lien automatically expired after a specified
time period and clearing the title.

¶28 Our reading harmonizes all the relevant statutes and does not
result in a determination that § 33-714 (enacted in 2002) implicitly repealed
§ 33-816 (enacted in 1971), as Tang argues. See In re Riggins, 257 Ariz. 28, 33
¶ 29 (2024) (“The doctrine of repeal by implication is disfavored in Arizona.
‘Rather, when two statutes appear to conflict, whenever possible, we adopt
a construction that reconciles one with the other, giving force and meaning
to all statutes involved.’” (internal citation omitted) (quoting UNUM Life
Ins. Co. of Am. v. Craig, 200 Ariz. 327, 333 ¶ 28 (2001))).

¶29 In support of its argument that § 33-714 extended the deadline
to foreclose or commence a trustee’s sale, Tang cites an Arizona House of
Representatives bill summary and two California cases. See Ung v. Koehler, 37 Cal. Rptr. 3d 311, 318 (Ct. App. 2005); Smith v. Caliber Home Loans, Inc.,
No. 16cv220-LAB (NLS), 2016 WL 7188278 (S.D. Cal. Dec. 12, 2016). First,
“[w]e do not consider legislative history when the correct legal
interpretation can be determined from the plain statutory text and the
context of related statutes.” State v. Ewer, 254 Ariz. 326, 331 ¶ 20 (2023).
Here, we can determine the correct legal interpretation of § 33-714 from the
plain statutory text and the context of related statutes. Section 33-714 is not
ambiguous and therefore we do not consider its legislative history. Second,
the California cases are not persuasive because they evaluate California
Civil Code Section 882.020 (addressing the expiration date of liens), but not
in the context of Arizona’s specific statutory directives in § 12-1104 and
§§ 33-714, -816. See Columbus Life Ins. Co. v. Wilmington Trust, N.A., 255 Ariz.
382, 385 ¶ 11 (2023) (“Our statutory interpretation jurisprudence requires
us to determine the plain meaning of the words the legislature chose to use,
viewed in their broader statutory context.”); see also Kotterman v. Killian, 193
Ariz. 273, 291 ¶ 68 (1999) (“We alone must decide how persuasive the legal
opinions of other jurisdictions will be to our holdings.”).

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¶30 In conclusion, under § 12-1104(B), a plaintiff is entitled to a
quiet title judgment discharging a deed of trust lien on real property when
an action to enforce the underlying unpaid debt is barred by the statute of
limitations. Because this statute conflicts with the equitable principles upon
which Provident’s holding rests, we overrule Provident to the extent of the
conflict. The Arocas are entitled to a quiet title judgment discharging the
Deed of Trust lien on the Pinal County property because any action under
the Note is barred by the statute of limitations.

CONCLUSION

¶31 Although we agree with the court of appeals’ ultimate
holding, we vacate paragraphs 1–16 and 19 of the court of appeals’ opinion
to replace its reasoning with our own. We leave paragraphs 17 and 18 of
the court of appeals’ opinion intact, as the parties did not ask this Court to
review the attorney fees awarded in the superior court or court of appeals.

¶32 We reverse the superior court’s judgment in favor of Tang
and remand to the superior court for entry of judgment in favor of the
Arocas.

¶33 We also decline Tang’s request for attorney fees and costs
pursuant to A.R.S. §§ 12-341, -341.01, as Tang is not the successful party.

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