Court of Appeals of Arizona, First Division, Department E
MICHAEL GRADY and JENNIFER GRADY, husband and wife, Petitioners,
THE HONORABLE MICHAEL L. BARTH, Commissioner of the SUPERIOR COURT OF THE STATE OF ARIZONA, in and for the County of MARICOPA, Respondent Commissioner, TRI-CITY NATIONAL BANK, a foreign corporation, its successors and/or assigns; MARICOPA COUNTY SHERIFF'S OFFICE, in its official capacity, Real Parties in Interest
Appeal from the Superior Court in Maricopa County Cause No. CV2012-016990 The Honorable Michael L. Barth, Commissioner
Politan & Associates PLLC Scottsdale By John R. Politan And Law Offices of Kyle A. Kinney, PLLC Scottsdale By Kyle A. Kinney Attorneys for Petitioners.
Jaburg & Wilk, PC Phoenix By Janessa E. Koenig and Laura Rogal and Neal H. Bookspan Attorneys for Real Party in Interest Tri-City National Bank.
William G. Montgomery, Maricopa County Attorney Phoenix By Lori A. Lewis, Deputy County Attorney Attorneys for Real Party in Interest Maricopa County Sheriff’s Office.
PATRICIA K. NORRIS, Presiding Judge
¶1 The issue in this special action is whether the superior court has discretion to deny a stay to a defendant in possession of property who is appealing a judgment in a forcible entry and detainer action when the plaintiff never had a landlord-tenant relationship with the defendant and, instead, purchased the property at a non-judicial trustee's sale. As we explain, the answer is "no."
FACTS AND PROCEDURAL BACKGROUND
¶2 The relevant facts are undisputed. In 2008, petitioners Michael and Jennifer Grady executed a promissory note secured by a deed of trust on improved residential real property in Maricopa County. On October 25, 2012, real party in interest Tri-City National Bank purchased the property at a trustee's sale and received a deed for the property from the trustee.
¶3 Tri-City then demanded the Gradys vacate the property. When the Gradys failed to do so, Tri-City sought possession of the property by bringing a forcible entry and detainer ("FED") action against them in superior court. See generally Ariz. Rev. Stat. ("A.R.S.") § 12-1173.01(A)(2) (2003). The Gradys answered Tri-City's FED complaint and raised several defenses challenging the underlying sale of their interest in the property under the deed of trust.
¶4 Subsequently, the superior court granted Tri-City's motion for judgment on the pleadings, finding Tri-City was entitled to possession. The court authorized issuance of a writ of restitution.
¶5 The Gradys timely appealed the judgment, and then requested the superior court stay execution of the judgment and writ of restitution, and set a bond pursuant to the Arizona Rules of Procedure for Eviction Actions. Tri-City opposed the Gradys' stay request, arguing the Gradys had "no right to an automatic stay on appeal" under either A.R.S. § 12-1182(B) (2003), the statute that authorizes a party-appellant in possession of the premises in an FED action to request the superior court stay the judgment pending appeal, or Eviction Rule 17, which is substantially similar to A.R.S. § 12-1182(B).
¶6 After conducting an evidentiary hearing on the Gradys' stay request, the superior court denied the request because Tri-City's FED action did not arise out of a landlord-tenant dispute. In so ruling, the superior court distinguished our supreme court's decision in Tovar v. Superior Court, 132 Ariz. 549, 647 P.3d 1147 (1982). As we discuss in more detail below, Tovar held the superior court did not have discretion to deny a commercial tenant's application to stay an FED judgment pending appeal as long as the tenant complied with statutory bonding requirements.
¶7 At Tri-City's urging, the superior court then evaluated the stay request under the criteria applied by Arizona courts in deciding whether to issue a preliminary injunction which, in Smith v. Arizona Citizens Clean Elections Commission, 212 Ariz. 407, 410, ¶ 9, 132 P.3d 1187, 1190 (2006), our supreme court held should also be applied to stay requests "in the appellate context." Under Smith, a court must assess the appealing party's likelihood of success on the merits, weigh the competing harm to the parties if the stay is granted, and consider whether public policy favors a stay. Id. at 410, ¶ 10, 132 P.3d at 1190. Applying the Smith test, the superior court concluded the Gradys were not entitled to a stay, stressing they did not have a strong likelihood of success on the merits of their appeal.
¶8 The Gradys filed a special action asking us to direct the superior court to stay execution of the judgment pending their appeal as well as the writ of execution which, by then, had issued to the Sheriff of Maricopa County. We stayed execution of the writ of restitution pending resolution of this special action and required the Gradys to secure the stay by posting a bond meeting the requirements of ...