Nayeri v. Mohave County

Citation: Not availableDocket: 1 CA-TX 18-0009

Court: Court of Appeals of Arizona; November 13, 2019; Arizona; State Appellate Court

Original Court Document: View Document

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

A.R.S. § 42-11004 does not mandate that a property owner must pay delinquent taxes prior to initiating a lawsuit in tax court to contest the sale of a property tax lien under A.R.S. § 42-18105. The Arizona Court of Appeals, in the case of Nayeri et al. v. Mohave County, vacated the previous ruling and remanded the case for further proceedings. The plaintiffs, Majid Nayeri and Bita Abidian, purchased a property in Mohave County in 2010 and had consistently paid property taxes since then. However, prior to their purchase, a lawsuit (Aria) concerning the property’s ownership was pending, which resulted in the County not collecting taxes during that time. After the lawsuit concluded in 2009 with no claims against the property, the County demanded payment of past due taxes in 2010. The County offered to waive certain accrued fees if the plaintiffs paid the base tax amount, but the plaintiffs declined. Subsequently, the County issued a delinquent tax notice and attempted to sell tax liens for unpaid taxes, which led to the plaintiffs joining a separate lawsuit aimed at declaring the lien sales time-barred. The tax court initially ruled in favor of the County, citing A.R.S. § 42-11004 as a barrier for the plaintiffs' challenge.

Taxpayers appealed after an unsuccessful motion for a new trial, asserting jurisdiction under A.R.S. 12-2101(A)(1) and (A)(5). Tax liens on real or personal property serve as a lien on the assessed property per A.R.S. 42-17153(A). County treasurers can sell these tax liens to secure payment of unpaid taxes, with third parties receiving certificates of purchase (A.R.S. 42-18101(A), 42-18118(A)). Liens can encompass all delinquent taxes or just one tax year, as established in Bauza Holdings, LLC v. Primeco, Inc. (199 Ariz. 338, 339, 342, ¶¶3, 17). Unsold liens are assigned to the state for potential later purchase (A.R.S. 42-18113, 42-18122), and if unredeemed after five years, the county may obtain a treasurer's deed (A.R.S. 42-18261). A lien cannot be assigned to the state unless it was first offered for sale per statutory requirements (State v. Miami Trust Co., 61 Ariz. 499, 501–02).

The lawsuit, initiated by Mohave Valley River Enterprises, Inc., settled with the County and is no longer a party to the appeal. The court reviews the tax court's summary judgment rulings de novo, interpreting tax statutes strictly against the state and resolving ambiguities in favor of the taxpayer. Taxpayers argued that A.R.S. 42-11004, which requires payment of delinquent taxes before challenging their validity, does not apply to their case. They contended their lawsuit focuses on a statutory time limitation regarding tax lien sales rather than challenging the tax validity or amount. The court agreed, clarifying that A.R.S. 42-11004 does not bar the lawsuit. Taxpayers sought a declaratory judgment that the County could not sell tax liens due to failure to advertise the sale within five years of delinquency, as stipulated by A.R.S. 42-18105. This statute limits the County’s right to sell if it does not meet the time frame established, and the Taxpayers are not disputing the tax amounts, but asserting the County is time-barred from selling the liens.

The County cites the case Strawberry Ridge Estates, LLC v. Gila Cty. to assert that A.R.S. 42-11004 mandates Taxpayers to pay delinquent taxes prior to filing a lawsuit. However, the circumstances in Strawberry Ridge differ significantly, as those taxpayers contested both the validity and amount of the tax, while the current Taxpayers do not challenge these aspects. Consequently, A.R.S. 42-11004 is deemed inapplicable, leading to the vacation of the tax court's summary judgment in favor of the County.

Regarding the timeliness of the tax lien sale, Taxpayers argue that A.R.S. 42-18105 prohibits the County from selling tax liens on the Property in February 2017 because the advertisement for the sale must occur within five years of the delinquency. A.R.S. 42-18105 specifies that no sale may commence later than five years after delinquency unless advertised within that timeframe. The County must also advertise the sale between two and three weeks before the sale date.

The court emphasizes the importance of proper notice for the validity of the sale process, noting that substantial failures in compliance can invalidate subsequent proceedings. The County contends that previous advertisements since 1995 constitute compliance; however, tax liens created before 2010 could not be sold for the first time in February 2017. The court maintains that the statute requires the County to advertise the actual sale within the five-year period, rejecting any interpretation that allows for avoiding this requirement through past advertisements for sales that did not occur. Thus, once the five-year-and-three-week period after delinquency lapses, the tax lien remains valid but cannot be sold.

The County provided evidence indicating it sold some tax liens after the Aria litigation but within five years of delinquency. Taxpayers acknowledged that it was unclear if liens on the Property were sold before February 2017. The tax court is instructed to reassess Taxpayers' motion for summary judgment to determine if the County met the requirements outlined in A.R.S. 42-18105 for the disputed tax liens. Taxpayers requested attorney's fees on appeal under A.R.S. 12-348(B)(3), which allows fees for parties who prevail on the merits regarding the validity of delinquent tax property sales. The request is denied without prejudice due to unresolved issues, but the tax court may revisit it after determining the prevailing party. Taxpayers are awarded costs on appeal upon compliance with ARCAP 21. The summary judgment in favor of the County is vacated, and the case is remanded for further proceedings.