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Starr Pass Resort Developments, LLC v. Harrington

Court of Appeals of Arizona, Second Division

October 10, 2018

Starr Pass Resort Developments, LLC; Starpass Master Home Owners Association; Starr Pass Residential, LLC; Title Security Agency of Arizona; and Starr Pass Redevelopment, LLC, Petitioners,
Hon. Charles Harrington, Judge of the Superior Court of the State of Arizona, in and for the County of Pima, Respondent, and U.S. Bank National Association, as Trustee, successor-in-interest to Bank of America, N.A., as Trustee, successor to Wells Fargo Bank, N.A., as Trustee, for the Registered Holders of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2006 TFL2, by and through its Special Servicer, CW Capital Asset Management, LLC, Real Party in Interest.

          Special Action Proceeding Pima County Cause No. C20117682

          Campbell Killin Brittan & Ray LLC, Denver, Colorado By Bruce E. Rohde and BurnsBarton LLP, Phoenix By C. Christine Burns Counsel for Petitioners

          Stephen J. Gonzalez PC, Tucson By Stephen J. Gonzalez Counsel for Petitioner Starr Pass Resort Developments LLC

          DeConcini McDonald Yetwin & Lacy, Tucson By Jody Corrales Counsel for Petitioner Starr Pass Residential LLC

          Ballard Spahr LLP, Phoenix By Brian Schulman, Dean C. Waldt, and Craig C. Hoffman Counsel for Real Party in Interest

          Judge Eppich authored the opinion of the Court, in which Presiding Judge Vásquez and Judge Espinosa concurred.


          EPPICH, JUDGE

         ¶1The petitioners[1] seek special-action review of the respondent judge's determination that he lacks authority to permit a property bond to stay a judgment pending appeal pursuant to A.R.S. § 12-2108 and Rule 7, ARCAP, and that any appeal bond must be a cash bond. Because the petitioners have no remedy by appeal and the issue is of statewide importance, we accept special-action jurisdiction. See Pinal County v. Fuller, 798 Ariz. Adv. Rep. 31, ¶ 5 (Ct. App. Aug. 28, 2018) (special-action jurisdiction appropriate to address issues of statewide importance); Chula Vista Homeowners Ass'n v. Irwin, 796 Ariz. Adv. Rep. 49, ¶ 1 (Ct. App. Jul. 27, 2018) (special-action jurisdiction appropriate when petitioner has no remedy by appeal); see also Ariz. R. P. Spec. Act. 1(a). Because the respondent erred as a matter of law, we grant relief. See Ariz. R. P. Spec. Act. 3(c); Kohler v. Kohler, 211 Ariz. 106, ¶ 2 (App. 2005) (abuse of discretion includes an error of law).

         ¶2 In August 2017, the respondent judge entered judgment against the petitioners in the underlying action and in favor of U.S. Bank National Association, the real party in interest. Several of the petitioners moved for determination of an appeal bond pursuant to Rule 7(a), ARCAP. In that motion, petitioners Starr Pass Master Home Owners Association and Starr Pass Redevelopments, LLC, requested leave to post a property bond in lieu of a cash bond. U.S. Bank objected, arguing in part that property bonds were no longer permitted after the legislature enacted § 12-2108 in 2011 and our supreme court modified Rule 7 in response. In a May 2018 under-advisement ruling, the respondent agreed with U.S. Bank that, due to the "enactment of A.R.S. § 12-2108 and the amendment of Rule 7 of the Arizona Rules of Appellate Procedure, this Court . . . no longer has the discretion to allow Defendants to post a property bond in the form requested. A cash bond will be required." This petition for special-action relief followed.[2]

         ¶3 Our legislature enacted § 12-2108 in 2011. 2011 Ariz. Sess. Laws, ch. 99, § 3. Effective January 2012, the supreme court amended Rule 7(a)(2) to mirror § 12-2108. Ariz. Sup. Ct. Order R-11-0019 (Dec. 13, 2011). The issue presented in this special action is whether, in light of these changes, a trial court may allow a party to post a property bond, instead of or in addition to a cash bond, to stay a judgment while an appeal is pending. The interpretation of statutes and court rules is a legal question we review de novo. Bobrow v. Herrod, 239 Ariz. 180, ¶ 7 (App. 2016). We look to the plain language of the statute or rule as the best indicator of the drafters' intent. Id.


         ¶4 Before the legislature enacted § 12-2108 and the supreme court amended Rule 7, this court concluded a trial court could permit an appellant to post a property bond instead of a cash bond to stay a judgment pending appeal. Salt River Sand & Rock Co. v. Dunevant, 222 Ariz. 102, ¶¶ 4, 8 (App. 2009). We relied on the language in the former version of Rule 7(a)(2) that permitted a trial court to "fix[] a different amount" for the bond or order additional or alternative security or conditions, to conclude a trial court may reduce the amount of the bond and allow alternate security. Id. ¶ 8. This court thus determined the trial court could evaluate whether it was appropriate to lower the bond amount and allow the appellant to pledge real property to satisfy that reduced amount. Id. ¶¶ 4, 8.

         ¶5 Section 12-2108(A) states that "the amount of the bond that is necessary to stay execution during the course of all appeals" of a judgment in a civil action "shall be set as the lesser of" three calculations: the total damages excluding punitive damages, half the appellant's net worth, or twenty-five million dollars. The statute further gives the court authority to increase the bond to "an amount up to the full amount of the judgment" if there is "clear and convincing evidence that an appellant is intentionally dissipating assets outside the ordinary course of business to avoid payment of a judgment." § 12-2108(B). Alternatively, a court may reduce a bond amount upon clear and convincing evidence "that the appellant is likely to suffer substantial economic harm if required to post bond in an amount required under subsection A." § 12-2108(C).

         ¶6 Before the 2012 amendment, ...

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