author: WINTHROP, Judge:

text:
    In re the Matter of: Jean M. MONROE, Plaintiff/Appellee, v. ARIZONA ACREAGE LLC, et al., Defendants/Appellants.
    Boyd Family Partnership and Jean M. Monroe, Plaintiffs/Appellees, v. Sunny Lakes Ranchos LLC, et al., Defendants/Appellants.
    Nos. 1 CA-CV 18-0476 1 CA-CV 18-0478, 1 CA-CV 19-0170, 1 CA-CV 19-0171 (Consolidated)
    Court of Appeals of Arizona, Division 1.
    FILED May 16, 2019
    Lundberg & Elias, PLLC, Bullhead City, By T'shura-Ann Elias, Counsel for Plaintiffs/Appellees
    Johnson & Gubler, P.C., Las Vegas, Nevada, By Matthew L. Johnson, Russell G. Gubler, Counsel for Defendants/Appellants
    Presiding Judge Lawrence F. Winthrop delivered the opinion of the Court, in which Judge Maria Elena Cruz and Chief Judge Samuel A. Thumma joined.
   WINTHROP, Judge:

¶1 These consolidated appeals arise from two class action lawsuits to foreclose on real property in Mohave County, Arizona. Defendants Arizona Acreage LLC ("AZ Acreage") and Sunny Lakes Ranchos LLC ("Sunny Lakes") (collectively "Appellants") appeal the superior court's denial of their cross-motions for partial summary judgment and grant of partial summary judgment in favor of representative plaintiffs Jean M. Monroe and Boyd Family Partnership (collectively "Appellees"). Co-defendant Leonard Mardian ("Mardian") also appeals the superior court's grant of judgment on the pleadings in favor of Appellees. For the following reasons, we hold: (1) the six-year statute of limitations in Arizona Revised Statutes ("A.R.S.") section 47-3118(A) (2019) controls the underlying debts, the deeds of trust, and the guaranties signed by Mardian; (2) Appellees had standing to seek foreclosure of the deeds of trust; (3) the certification of each class satisfied the requirements for initiating a foreclosure action as outlined in the deeds of trust; and (4) Nevada Revised Statutes ("N.R.S.") section 645B.340 did not apply to bar Appellees' claims. We further reject Appellants' arguments concerning issue and claim preclusion. Because Appellees properly demonstrated they were entitled to judgment as a matter of law, we affirm the judgments entered.

FACTS AND PROCEDURAL HISTORY

¶2 In September 2006, Sunny Lakes executed a promissory note in favor of multiple lenders in exchange for $5,000,000. Over one hundred individuals and entities contributed money to the Sunny Lakes loan, and no lender contributed more than fourteen percent of the total loan value. The note was secured by a deed of trust encumbering several acres of undeveloped land in Mohave County ("Plot A"). In addition to the note and deed of trust, Mardian executed a guaranty agreement, promising to repay the loan in the event Sunny Lakes failed to do so. The execution of the promissory note was conditioned on Mardian providing a personal guaranty on the note.

¶3 In August 2007, AZ Acreage executed a promissory note in favor of multiple lenders in exchange for $4,000,000. Over eighty individuals and entities-many of whom contributed to the Sunny Lakes loan-contributed money to the AZ Acreage loan. The loan was secured by a deed of trust encumbering another plot of undeveloped land in Mohave County ("Plot B"). No lender contributed more than twenty-one percent to the total loan value. Mardian also executed a guaranty agreement as a material condition for execution of the AZ Acreage loan.

¶4 Both Sunny Lakes and AZ Acreage made payments on their respective notes until July 2008, when both companies stopped making payments. In late June 2014, believing the statute of limitations was just days from expiration, Appellees filed two class action lawsuits to foreclose on Plot A and Plot B and recover any resulting deficiency. Although many of the investors contributed money to both promissory notes, some contributed towards one note but not the other-resulting in two different classes. Sunny Lakes and Mardian were named defendants in one lawsuit (the "Boyd Case"); and AZ Acreage and Mardian were named defendants in the other lawsuit (the "Monroe Case").

¶5 Appellants moved to dismiss each case pursuant to Arizona Rule of Civil Procedure ("Rule") 12(b)(6), arguing that the four-year statute of limitations under A.R.S. § 12-544(3) applied and had expired and that Appellees lacked standing because they did not obtain the requisite fifty-one percent ("51%") majority agreement outlined in the deeds of trust to declare a default and bring a judicial foreclosure action. The superior court denied Appellants' motions and later certified the classes.

¶6 Mardian then moved for summary judgment in both cases, arguing the four-year statute of limitations period in A.R.S. § 12-544(3) barred the claim against him for enforcement of the guaranty contracts. Both sides briefed the issue and presented oral argument, and the court denied the motions.

¶7 Thereafter, Appellees moved for partial summary judgment to: (1) establish the dollar amount due under each note; (2) establish that the classes were entitled to payment under the notes; (3) order a sheriff's sale of Plot A and Plot B; and (4) establish liability against each defendant for payment of any deficiency that may arise. Appellants each cross-moved for summary judgment, again arguing the claims were barred by a four-year statute of limitations and Appellants had failed to bring the actions in accordance with the terms of the deeds of trust and controlling Nevada law. In July 2018, the court granted the Appellees' motions in part-reserving the issue of Mardian's liability to pay a deficiency until after the properties were sold and a fair market value hearing could be held. In its Rule 54(b) order, the court determined Sunny Lakes owed $13,870,277.75 on its promissory note plus interest, and AZ Acreage owed $10,933,666.62 on its promissory note plus interest. Sunny Lakes and AZ Acreage timely appealed the superior court's order in August 2018, and the appeals were consolidated.

¶8 While the first two appeals were pending, Plot A and Plot B were sold at a sheriff's sale in September 2018. Appellants and Mardian did not contest the sale price for either property, and the court vacated the fair market value hearing. Plot A sold for $80,000, resulting in a deficiency for Sunny Lakes. Plot B sold for $195,000, resulting in a deficiency for AZ Acreage.

¶9 A week later, Appellees moved for judgment on the pleadings, arguing Appellants and Mardian admitted all the material facts in the complaints and failed to show any viable defense to their claims. Appellants and Mardian opposed the motions. The court ultimately granted the motions and entered final Rule 54(c) judgments in favor of Appellees. Mardian appealed the judgments, and those appeals have been consolidated with the previous appeals. We have jurisdiction pursuant to A.R.S. § 12-120.21.

ANALYSIS

¶10 The promissory notes, deeds of trust, and guaranties were all executed in Nevada and include choice-of-law provisions designating Nevada law as governing the agreements. We therefore review the substantive issues according to the laws of Nevada but apply Arizona law to resolve any procedural issues. Ross v. Ross , 96 Ariz. 249, 251-52, 393 P.2d 933 (1964) ("Matters respecting the remedy, such as the bringing of suits, admissibility of evidence, [and] statutes of limitation, depend upon the law of the place where the suit is brought.") (internal quotation omitted).

¶11 Appellants and Mardian raise three main arguments on appeal: (1) the Appellees' claims are barred by the doctrines of issue and claim preclusion; (2) the Appellees' claims are governed by a four-year statute of limitations and, accordingly, are untimely; and (3) the Appellees' claims are barred because they failed to obtain written consent of 51% of the lenders before filing the lawsuits, as required by the deeds of trust and by N.R.S. § 645B.340. We review each issue below.

I. Issue Preclusion and Claim Preclusion Do Not Apply

¶12 Appellants argue the holding in related litigation, Karayan v. Mardian , 690 Fed. Appx. 996 (9th Cir. 2017) (mem. decision), under the doctrines of issue and claim preclusion bars both class action lawsuits. Before the superior court, however, Appellants only argued that the Karayan decision should preclude one class member, the Karayan Family Trust, from participating in the class. Appellants never argued that Appellees as class representatives should be barred from bringing suit, and we will not consider the argument for the first time on appeal. ARCAP 13(a)(7)(B) ; In re MH 2008-002659 , 224 Ariz. 25, 27, ¶ 9, 226 P.3d 394, 396 (App. 2010).

II. Statutes of Limitations

¶13 We review the application of each statute of limitations de novo . Broadband Dynamics, LLC v. SatCom Mktg., Inc. , 244 Ariz. 282, 285, ¶ 5, 418 P.3d 1055, 1058 (App. 2018). We discuss the applicable limitations period for the deeds of trust and guaranty agreements separately.

A. The Judicial Foreclosure Claims Were Timely Filed

¶14 Appellants failed to make payments on the notes starting in July 2008. The subject lawsuits were filed on June 27, 2014. Appellants contend the superior court erred by denying their cross-motions for summary judgment, arguing that the four-year limitations period under A.R.S. § 12-544(3) applies to bar Appellees' claims. Appellees assert the six-year limitations period under A.R.S. § 47-3118(A) applies and the claims were timely filed.

¶15 Section 12-544(3) provides, "[t]here shall be commenced and prosecuted within four years after the cause of action accrues ... [an action] upon an instrument in writing executed without the state." Alternatively, A.R.S. § 47-3118(A) provides, "an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date."

¶16 Both Appellants and Appellees rely on the proposition that where one statute of limitations has general application and another arguably competing statute of limitations is specific, the specific statute should prevail. See Evans v. Young , 135 Ariz. 447, 449, 661 P.2d 1148, 1150 (App. 1983). The parties disagree, however, as to which of these arguably competing statutes is specific and controlling. Appellants argue § 12-544(3) is specific because it applies to instruments created outside this state and is therefore directly applicable to the promissory notes and deeds of trust executed in Nevada. In contrast, Appellees argue § 47-3118(A) is more specific and should prevail because it outlines the limitations period for particular negotiable instruments created pursuant to the Uniform Commercial Code ("U.C.C."), including promissory notes.

¶17 When the Legislature "enacts a new statute that applies to preexisting statutes, we presume [the Legislature] intended some change in existing law." Lavidas v. Smith , 195 Ariz. 250, 254, ¶ 17, 987 P.2d 212, 216 (App. 1999) (internal quotation omitted). In enacting statutory amendments, the Legislature is presumed to be "aware of existing statutes." Washburn v. Pima Cty. , 206 Ariz. 571, 576, ¶ 11, 81 P.3d 1030, 1035 (App. 2003). "[W]hen there is conflict between two statutes, the more recent, specific statute governs over the older, more general statute." In re Estate of Winn , 214 Ariz. 149, 152, ¶ 16, 150 P.3d 236, 239 (2007) (internal quotation omitted). Moreover, this court generally follows the rationale that "[t]he defense of the statute of limitations is not favored ... and where two constructions are possible, the longer period of limitations is preferred." Woodward v. Chirco Constr. Co., Inc. , 141 Ariz. 520, 524, 687 P.2d 1275, 1279 (App. 1984) (internal citation omitted).

¶18 For decades, Arizona applied different limitations periods depending upon whether a written instrument was executed within Arizona or elsewhere. Under Section 2061 of the Arizona Revised Code of 1928, for example, an action "upon an instrument in writing executed without this state" had to be brought within four years after the claim accrued, while Section 2062 provided that an action for a written debt "upon a contract in writing, executed within this state, shall be commenced and prosecuted within six years after the cause of action has accrued."

Moore v. Diamond Dry Goods Co. , 47 Ariz. 128, 131, 54 P.2d 553 (1936). The reason for this dichotomy as it existed decades ago is not certain. What is certain, however, is that the law has evolved since that time.

¶19 The U.C.C. was promulgated in 1953 and has been adopted in some form in all fifty states. See Bank of Am. Nat'l Tr. & Sav. Ass'n v. U.S. , 552 F.2d 302, 303, n.1 (9th Cir. 1977) ; see also William A. Schnader, A Short History of the Preparation and Enactment of the Uniform Commercial Code , 22 U. Miami L. Rev. 1, 1, 8 (1977). Article One § 1-103(a) of the U.C.C. (adopted as A.R.S. § 47-1103(A) ) outlines three underlying purposes for the code: "(1) [t]o simplify, clarify and modernize the law governing commercial transactions; (2) [t]o permit the continued expansion of commercial practices through custom, usage and agreement of the parties; and (3) [t]o make uniform the law among the various jurisdictions." This court has previously explained that the U.C.C., as adopted in Arizona, must be "construed in accordance with [these] underlying purposes and policies." Koss Corp. v. Am. Express Co. , 233 Ariz. 74, 79, ¶ 13, 309 P.3d 898, 903 (App. 2013).

¶20 As applicable here, in 1993, Arizona adopted Article Three of the U.C.C., which includes § 47-3118. See 1993 Ariz. Sess. Laws, ch. 108, § 6 (1st Reg. Sess.). This enactment, made long after the "within" or "without" general limitations periods in the Arizona Revised Code of 1928, deals solely with negotiable instruments-a specific subset of the "instruments" set forth in § 12-544(3).

¶21 Considering the more recent enactment of Article Three and the clear purpose and policies of the U.C.C., we conclude § 47-3118(A) is the more specific limitations statute and applies to the promissory notes and related deeds of trust at issue in this case. See Valley Nat'l Bank of Ariz. v. Flagstaff Dairy , 116 Ariz. 513, 519, 570 P.2d 200, 206 (App. 1977) (explaining the U.C.C. should be interpreted in a way that does not create "violence to the obvious intent expressed in the provisions of the code" and does not "ignore commercial realities"). Interpreting § 47-3118(A) as the more specific statute furthers the overarching policies of the U.C.C.-particularly simplicity and uniformity in commercial transactions-by providing that, in Arizona as elsewhere, there is a six-year limitations period to enforce a negotiable instrument.

¶22 Our conclusion is supported by the fact that Nevada has also adopted the six-year statute of limitations period outlined in Article Three. See N.R.S. § 104.3118(1). And since Arizona's initial adoption of the U.C.C. in 1967, this court has interpreted § 12-544(3) only in regard to claims brought by a plaintiff seeking to enforce a foreign judgment. See e.g. , Cristall v. Cristall , 225 Ariz. 591, 242 P.3d 1060 (App. 2010) ; Grynberg v. Shaffer , 216 Ariz. 256, 165 P.3d 234 (App. 2007) ; cf. Clark Equip. Co. v. Ariz. Prop. & Cas. Ins. Guar. Fund , 189 Ariz. 433, 439, 943 P.2d 793, 799 (App. 1997). This narrow application of the older limitations provision further supports our conclusion that the more recent limitations provision is specific to promissory notes and should therefore apply in this case.

¶23 Finally, the Arizona Supreme Court has long "held that while the defense of the statute of limitations is a legitimate one, it is not favored by the courts, and, where two constructions are possible, the one which gives the longer period of limitations is the one to be preferred." O'Malley v. Sims , 51 Ariz. 155, 165, 75 P.2d 50 (1938). O'Malley has been followed by this court and the Arizona Supreme Court many times. See e.g. , San Manuel Copper Corp. v. Redmond , 8 Ariz. App. 214, 218, 445 P.2d 162 (1968) ; Guertin v. Dixon , 177 Ariz. 40, 45, 864 P.2d 1072, 1077 (App. 1993) ; Physical Therapy Assocs., Inc. v. Pinal Cty. , 154 Ariz. 405, 407, 743 P.2d 1, 3 (App. 1987) ; Woodward , 141 Ariz. at 524, 687 P.2d at 1279. For all of these reasons, we conclude § 47-3118(A) applies to the promissory notes and deeds of trust at issue in this case and Appellees' claims were timely filed. See Nat'l Bank of Ariz. v. Schwartz , 230 Ariz. 310, 312, ¶ 7, 283 P.3d 41, 43 (App. 2012) ("[T]he debt and all the potential recovery flow from the promissory note.").

B. The Breach of Guaranty Claims Were Timely Filed

¶24 Mardian argues Arizona case law establishes that provisions from the U.C.C., as codified in Arizona, do not apply in any respect to guaranty agreements-regardless of the underlying instrument the guaranty agreement relates to-because the guaranty is a separate contract. He therefore contends that the shorter four-year limitations period of A.R.S. § 12-544(3) should apply to bar Appellees' claim against him, irrespective of whether the six-year limitations period of A.R.S. § 47-3118(A) applies to the judicial foreclosure claims against Appellants.

¶25 Mardian correctly states that Arizona treats guaranty agreements as contracts separate from their related instruments. Flori Corp. v. Fitzgerald , 167 Ariz. 601, 602, 810 P.2d 599, 600 (App. 1990). However, we do not agree that the cases Mardian relies upon broadly prohibit U.C.C. application to all guaranty agreements. Pi'Ikea, LLC v. Williamson , 234 Ariz. 284, 321 P.3d 449 (App. 2014), and Consolidated Roofing & Supply Co., Inc. v. Grimm , 140 Ariz. 452, 682 P.2d 457 (App. 1984), addressed continuing guaranty agreements-unconditional promises to pay any debt that a borrower creates with a lender. Here, Mardian signed specific guaranty agreements, which obligated him to repay only the debts of the particular promissory notes related to each loan. Further, in Grimm , this court contemplated that the U.C.C. could apply to a guaranty agreement in situations where the borrower under a negotiable instrument is an entity owned by the guarantor. See Grimm , 140 Ariz. at 456, 682 P.2d 457. We determine that this case is such a case. Accordingly, § 47-3118(A) applies to Appellees' breach of guaranty claims against Mardian.

¶26 We reach this conclusion after examining the unique facts of this case. At the time of execution, Mardian was the owner and managing member of both AZ Acreage and Sunny Lakes. He signed both promissory notes on behalf of each entity, and he executed each guaranty agreement as a material condition to obtaining each loan. The guaranty agreements were executed days before the promissory notes, and a copy of each promissory note was attached as an exhibit to each guaranty agreement. On these facts, it would be illogical to hold that A.R.S. § 12-544(3) applies and the limitations period governing Mardian's liability to repay the debts should be shorter than that of Appellants'. Absent any prior agreements to the contrary by the parties, the applicable statute of limitations for bringing a claim on the guaranty agreements should not expire before the statute of limitations on the underlying promissory notes. See Resolution Tr. Corp. v. Northpark Joint Venture , 958 F.2d 1313, 1321 (5th Cir. 1992) ("We recognize that, as a general rule, the liability of a guarantor is equal to that of its principal.").

¶27 Therefore, we conclude § 47-3118(A) applies and the superior court did not err in finding that Appellees timely filed a claim against Mardian. Beck v. Hy-Tech Performance, Inc. , 236 Ariz. 354, 360, ¶ 23, 340 P.3d 433, 439 (App. 2015) ("On appeal, we will sustain the trial court's ruling on any theory supported by the evidence, even though the trial court's reasoning may differ from our own.") (quoting Lake Havasu Resort, Inc. v. Commercial Loan Ins. Corp. , 139 Ariz. 369, 373, 678 P.2d 950, 954 (App. 1983) ).

III. The 51% Requirement Under the Default Clause and N.R.S. § 645B.340

¶28 Appellants argue the claims are barred because Appellees lacked standing to sue. They assert Appellees did not comply with certain terms of the default clause that had to be met before bringing the foreclosure actions. In the alternative, Appellants contend Appellees' claims are barred for failure to comply with N.R.S. § 645B.340.

¶29 Each deed of trust included a default clause stating:

Section 11.33
Default Clause
The Beneficiaries herein named agree and affirm the provision that any default of this Deed of Trust may be declared by the Beneficiaries holding a minimum of 51% of the beneficial interest in said Deed of Trust, and in addition, those Beneficiaries holding a minimum 51% beneficial interest may commence foreclosure proceedings against the Trustor herein, upon a declared default.

A. Appellees Sufficiently Pled a Declared Default

¶30 Appellants argue Appellees did not have standing to bring these claims because they did not obtain the agreement of 51% of the lenders before declaring a default on the deeds of trust.

¶31 To initiate a claim in Arizona, a party must have standing-that is, a plaintiff must allege a "distinct and palpable injury." See Sears v. Hull , 192 Ariz. 65, 69, ¶ 16, 961 P.2d 1013, 1017 (1998) (citation omitted); see also Workman v. Verde Wellness Ctr., Inc. , 240 Ariz. 597, 603, ¶ 17, 382 P.3d 812, 818 (App. 2016). "[T]he question of standing in Arizona is not a constitutional mandate ... [and] [i]n addressing the question of standing, therefore, we are confronted only with questions of prudential or judicial restraint." Armory Park Neighborhood Ass'n v. Episcopal Cmty. Serv. in Ariz. , 148 Ariz. 1, 6, 712 P.2d 914, 919 (1985). Stated differently, "[t]he issue in Arizona is whether, given all the circumstances in the case, the [plaintiff] has a legitimate interest in an actual controversy ... and whether judicial economy and administration will be promoted by allowing representational appearance." Id.

¶32 Here, Appellees alleged in their complaints that a default under the deeds of trust had occurred, resulting in the full amount being due under each note. Appellees' motions for partial summary judgment asserted that Appellants were in default as of July 1, 2008. Appellants originally challenged the sufficiency of a specific "declared default" date in their 2014 motion to dismiss, but later abandoned this position and did not contest the July 1, 2008 date in their response to the motions for partial summary judgment or their cross-motions for summary judgment. On this record, Appellees sufficiently established an injury-the July 1, 2008 default-giving them standing to bring both lawsuits.

¶33 It is undisputed that Appellants failed to make payments on either note since July 1, 2008. It also is undisputed that each class is owed money under the notes. Furthermore, Appellants have not asserted that they were improperly prejudiced or damaged in this litigation due to the alleged failure to properly "declare" a default. See Ariz. R. Civ. P. 61. Therefore, we determine that "judicial economy and administration" is promoted by affirming that Appellees have standing to seek recovery for the money owed under each note. Armory Park Neighborhood Ass'n , 148 Ariz. at 6, 712 P.2d at 919.

B. Appellees Met the Deeds of Trust's 51% Requirement

¶34 Appellants next argue Appellees lack standing because the default clause required written consent by a 51% majority of lenders before this action could be commenced. Appellees assert the deeds of trust do not require written consent; instead, the deeds of trust required 51% of lenders to simply "agree" in order to pursue the judicial foreclosures. Appellees further assert that the certification of the classes satisfied the 51% requirement because the lenders were specifically given a chance to opt-in or opt-out of the lawsuits, and the affirmation from all but five of the lenders to opt-in related back to the filing of the complaints. The superior court found that by providing notice to the class members and an opportunity to opt-out, Appellees complied with the 51% majority requirement under the default clause.

¶35 Nevada law governs the interpretation of the default clause, which is a question of law reviewed de novo . May v. Anderson , 121 Nev. 668, 672, 119 P.3d 1254 (Nev. 2005). In interpreting a contract, "the court shall effectuate the intent of the parties, which may be determined in light of the surrounding circumstances if not clear from the contract itself." Anvui, LLC v. G.L. Dragon, LLC , 123 Nev. 212, 215, 163 P.3d 405 (Nev. 2007) (internal quotation omitted). "[A]n interpretation which renders the contract or agreement valid and its performance possible will be preferred to one which makes it void or its performance impossible or meaningless." Mohr Park Manor, Inc. v. Mohr , 83 Nev. 107, 111, 424 P.2d 101 (Nev. 1967). Likewise, "an interpretation which makes the contract or agreement fair and reasonable will be preferred to one which leads to harsh or unreasonable results." Id.

¶36 In 2011, the Nevada federal district court aptly explained the basic principle behind including a 51% agreement requirement in contracts related to mortgage loans with multiple lenders. The court there stated:

Nevada Administrative Code section 645B.073 requires-and did so long before Nevada Revised Statutes section 645B.340(1) passed-that any document related to a mortgage loan must contain a provision to allow the holder of 51% or more of the beneficial interests in the loan to act on behalf of all the remaining beneficial interest holders in that loan. ... The 51% Rule recognizes that 51% or more of the fractional beneficial interest holders in a loan are entitled to exercise management control over that loan, including designating their loan servicer and deciding whether to foreclose on a loan[ ] [or] to sell foreclosure property .... The 51% Rule is premised on the fact that the fractional beneficial interest holders are the owners of their loans.

In re USA Commercial Mortg. Co. , 802 F.Supp.2d 1147, 1159 (D. Nev. 2011).

¶37 Applying the principles outlined in In re USA Commercial Mortgage , we conclude the superior court did not err in permitting the class certification to relate back to the date of the filing of the complaints, thereby satisfying the 51% requirement in the default clause. That decision effectuated the purpose of the default clause-that a majority of the lenders are entitled to exercise management and control over the loans. See DeChambeau v. Balkenbush , --- Nev. ----, 431 P.3d 359, 362 (Nev. Ct. App. 2018) ("When examining the supposed 'intent' behind contractual words, what matters is not the subjective intention of the parties ... but rather the more objective inquiry into the meaning conveyed by the words they selected to define the scope of the agreement.") (internal citation omitted). The consensus among a majority of the lenders was sufficiently evidenced by the lenders opting-in to the class action lawsuits. All but five-three in the Boyd Case and two in the Monroe Case-explicitly chose to pursue the judicial foreclosures and assert their rights to collect any deficiency that resulted from the sales.

¶38 Appellants had not made payments on the notes at the time Appellees initiated the lawsuits and have not alleged they were prejudiced in any way by the class certification process effectively satisfying the 51% agreement. Indeed, Appellants could have filed a counterclaim for breach of contract if they felt their rights under the deeds of trust were violated, but they did not. Steinberger v. McVey ex rel. Maricopa Cty. , 234 Ariz. 125, 140-41, ¶¶ 67-72, 318 P.3d 419, 434-35 (App. 2014) (explaining a trustor may bring a breach of contract claim in Arizona to recover attorneys' fees, costs, and accruing interest on a promissory note when the beneficiary failed to comply with certain procedures outlined in the deed of trust that had to be performed before the beneficiary could attempt to foreclose on the secured collateral). Likewise, Appellants could have identified and asserted any prejudice on appeal once the classes were certified in 2015. See A.R.S. § 12-1873(A). They did not do so, however, and have not shown any reversible error regarding the 51% requirement. See Ariz. R. Civ. P. 61.

C. N.R.S. § 645B.340 's 51% Majority Requirement Does Not Apply to The Deeds of Trust

¶39 Appellants argue in the alternative that N.R.S. § 645B.340 required written consent by at least 51% of the lenders under each note thirty days before the lawsuits could be filed, and Appellees' claims therefore should be barred for failure to adhere to the statute's requirements. Appellees assert that the class certification process and order satisfied the requirements of the statute, or alternatively, the statute does not apply because the terms in the deeds of trust outline and control the requirements for foreclosure proceedings. The superior court found that the class certification sufficiently complied with the terms of N.R.S. § 645B.340.

¶40 Without deciding whether the superior court erred in finding the class certification complied with the thirty-day requirement in N.R.S. § 645B.340(2), we conclude the statute does not apply to bar Appellees' claims because the deeds of trust-and not the statute-controlled the parties' agreements. See Beck , 236 Ariz. at 360, 340 P.3d at 439.

¶41 Section 645B.340 states it is applicable only when the parties have not made other agreements for when the "holders of [the] majority" may act. Under the express terms of the statute, either the statute or the deeds of trust-but not both-control in this case.

¶42 The default clause demonstrates the parties expressly contemplated the procedure for when the majority could initiate "foreclosure proceedings." Unlike the statute, the deeds of trust impose no thirty-day written notice requirement on the lenders before filing a judicial foreclosure. If the parties intended to require a written notice be distributed before a foreclosure action was commenced, they were free to explicitly state as much in the deeds of trust. Indeed, other clauses in the contracts include a written notice requirement, but the default clause does not. We therefore conclude N.R.S. § 645B.340 does not apply to Appellees' claims.

IV. Attorneys' Fees and Costs on Appeal

¶43 Appellees request an award of attorneys' fees and costs on appeal pursuant to ARCAP 21 and A.R.S. § 12-341.01. Appellants do not oppose the request. Each promissory note and guaranty agreement provided that Appellees may recovery their attorneys' fees and costs in actions arising from the execution of the loan agreements. We therefore award Appellees their reasonable attorneys' fees and costs upon compliance with ARCAP 21.

CONCLUSION

¶44 For the stated reasons, we affirm the superior court's grant of partial summary judgment and judgment on the pleadings in favor of Appellees.

      Unless otherwise specified, we cite to the current version of the applicable statutes because no revisions material to this opinion have since occurred.

      Mardian's wife also executed a guaranty agreement for both loans. However, she filed for bankruptcy once the two lawsuits commenced and was subsequently dropped as a defendant in both cases.

      The interest in the promissory note was originally distributed as follows: eighty percent to a mortgage brokerage firm and the remainder to eighteen different lenders. The brokerage firm subsequently assigned its interest to several other investors, resulting in the current class of approximately eighty entities and individuals.

      Although a promissory note secured by a mortgage and a promissory note secured by a deed of trust are different kinds of transactions, when a deed of trust is judicially foreclosed in Arizona, Arizona procedural law treats the foreclosure action the same as a judicial foreclosure of a mortgage. See A.R.S. § 33-807(A). Therefore, A.R.S. §§ 33-721 to -730 apply to the foreclosure actions in this case.

      Even assuming the issue was properly preserved for appeal, Appellants' argument misses the mark. In Karayan , the federal district court determined that Nevada's statutorily-created "one action rule," N.R.S. § 40.435(2)(a) -and alternatively the "51% rule" set forth in N.R.S. § 645B.340 -applied to the plaintiff's claim and granted the defendants' motion to dismiss. Without addressing the "51% rule," the Ninth Circuit affirmed the ruling based on the "one action rule," determining the district court properly dismissed the claim without prejudice. A dismissal without prejudice does not preclude later litigation, and therefore is not considered a judgment "on the merits" for purposes of preclusion. Restatement (Second) of Judgments § 27 cmt. n (1982). As such, the Karayan Family Trust was free to file another action on the same claim; however, it chose instead to remain a class member in the current litigation. That choice was not precluded by the Ninth Circuit's ruling.

      Mardian also argues the purported waiver of the statute of limitations defense provided for in the express terms of the guaranty agreements is void as against public policy. Because we determine the breach of guaranty claims were timely filed, we do not address this argument.

      Other jurisdictions have recognized the U.C.C.'s applicability to guaranty agreements executed separate from their related promissory notes where the facts show the guaranty was an essential part of a loan transaction. See Gunter v. True , 203 Ga.App. 330, 416 S.E.2d 768 (1992) (holding that the U.C.C. governed a guaranty agreement written on a separate piece of paper where the guaranty was executed contemporaneously with the promissory note; the guaranty applied exclusively to the debt evidenced in the note; and the note and guaranty were affixed together); Commerce Bank of St. Louis, N.A. v. Wright , 645 S.W.2d 17, 20 (Mo. Ct. App. 1982) (holding that the U.C.C. governed a separate guaranty agreement when it was related exclusively to the promissory note and was an "integral part" of executing the loan transaction).

      The parties' intent that the default clause would govern their agreements is further confirmed by the inclusion of an integration clause in the contract language.

      Because the parties contractually agreed to the award of attorneys' fees and costs, we do not address whether an award of fees and costs is supportable under A.R.S. § 12-341.01. See First Interstate Bank of Nev. v. Green , 101 Nev. 113, 116, 694 P.2d 496 (Nev. 1985) (stating attorneys' fees are recoverable under Nevada law if authorized by an agreement between the parties).


source: Caselaw Access Project

author: MORSE, Judge:

license: Public Domain

text:
    HERITAGE VILLAGE II HOMEOWNERS ASSOCIATION, Plaintiff/Appellee,
    Richard Weinberg, et al., Defendants/Appellees-Cross-Appellants, v. John L. NORMAN ; Gerry Molotsky, Intervenors/Appellants-Cross-Appellees.
    No. 1 CA-CV 18-0193
    Court of Appeals of Arizona, Division 1.
    FILED May 21, 2019 AS AMENDED May 22, 2019
    Dickinson Wright, PLLC, Phoenix, By Scott A. Holcomb, David J. Ouimette, Counsel for Plaintiff/Appellee
    Mandel Young, PLC, Phoenix, By Taylor C. Young, Robert A. Mandel, Counsel for Defendants/Appellees-Cross-Appellants
    Fennemore Craig, P.C., Phoenix, By Douglas C. Northup, Emily Ayn Ward, Counsel for Intervenors/Appellants-Cross-Appellees
    Presiding Judge James B. Morse Jr. delivered the opinion of the Court, in which Judge Jon W. Thompson and Vice Chief Judge Peter B. Swann joined.
   MORSE, Judge:

¶1 John L. Norman and Gerry Molotsky ("Movants") appeal the superior court's denial of their motion to intervene and corresponding award of attorneys' fees to Heritage Village II Homeowners' Association ("Heritage") and Richard and Laine Weinberg. The Weinbergs cross-appeal the court's partial denial of their application for attorneys' fees. The superior court denied intervention for two reasons: (1) Movants did not seek intervention in a timely manner, and (2) Movants' ability to protect their interests would not be impaired or impeded because they could pursue a separate cause of action. For the reasons set forth below, we conclude that Movants were not untimely and that the availability of a separate cause of action does not create a per se prohibition to intervention of right. Accordingly, we reverse the superior court's order denying the motion to intervene and vacate the orders awarding fees and dismissing the lawsuit. We remand for further proceedings.

FACTS AND PROCEDURAL HISTORY

¶2 The Weinbergs own a home located in Heritage Village II, which is part of the McCormick Ranch master-planned community in Scottsdale. In July 2014, Heritage sued the Weinbergs alleging they violated the applicable covenants, conditions, and restrictions ("CC&Rs") in building their new home. The complaint included claims for declaratory relief, breach of contract, and breach of the duty of good faith and fair dealing.

¶3 After a three-day hearing, the superior court granted declaratory relief, concluding the Weinbergs had violated the CC&Rs and ordering them to bring their home into compliance. Thereafter, the court awarded Heritage $111,711.53 in attorneys' fees and $3,932.22 in costs.

¶4 The superior court then entered an order directing the Weinbergs to take specific remedial measures to bring their home into compliance with the CC&Rs. Nine months later, Heritage moved to compel compliance with the order. Granting the motion in part, the superior court noted that the parties were still unable to agree on modifications necessary to bring the Weinbergs' home into compliance with the CC&Rs.

¶5 Meanwhile, Heritage's Board of Directors (the "Board") began to disagree on litigation strategy, dividing into a four-member majority and a three-member minority. In July 2017, the Board majority voted to settle with the Weinbergs, who agreed to make minor changes to their home in exchange for Heritage's promise to release them from liability for all attorneys' fees, including the $111,711.53 already awarded. The majority reasoned that there was "no end in sight" to the litigation and that Heritage was not financially able to further pursue the litigation.

¶6 Movants are homeowners and members of Heritage. One day before Heritage and the Weinbergs filed their notice of settlement, Movants filed an emergency motion to intervene pursuant to Arizona Rule of Civil Procedure ("Rule") 24(a)(2), and filed an independent lawsuit in superior court against the Weinbergs. See generally Maricopa County Superior Court Case No. CV2017-009249.

¶7 Heritage and the Weinbergs opposed Movants' intervention motion. Following oral argument, the superior court denied the motion to intervene and awarded Heritage and the Weinbergs some, but not all, of their attorneys' fees incurred in responding to the motion. The court then entered final judgment approving the settlement and dismissing all claims.

¶8 Movants appealed, and the Weinbergs cross-appealed from the partial denial of their request for attorneys' fees. We have jurisdiction pursuant to Arizona Revised Statutes sections 12-2101(A)(1) and (A)(3). See McGough v. Ins. Co. of N. Am ., 143 Ariz. 26, 30, 691 P.2d 738, 742 (App. 1984) ("[A]n order denying intervention is an appealable order ....").

DISCUSSION

¶9 In reviewing the denial of a motion to intervene, we accept the allegations of the motion as true. Saunders v. Superior Court , 109 Ariz. 424, 425, 510 P.2d 740, 741 (1973). We review de novo the superior court's ruling on an applicant's right to intervene under Rule 24(a)(2). Dowling v. Stapley , 221 Ariz. 251, 269-70, ¶ 57, 211 P.3d 1235, 1253-54 (App. 2009). We review the court's ruling on the motion's timeliness, however, for an abuse of discretion. State ex rel. Napolitano v. Brown & Williamson Tobacco Corp. , 196 Ariz. 382, 384, ¶ 5, 998 P.2d 1055, 1057 (2000).

I. Denial of Motion to Intervene

¶10 A third party's ability to intervene as a matter of right is governed by Rule 24(a)(2). Under this rule, the superior court must permit intervention when four conditions are satisfied: (1) the motion is timely; (2) the movants claim an interest relating to the subject of the action; (3) the movants show that disposition of the action may, as a practical matter, impair or impede their ability to protect their interests; and (4) the movants show that existing parties do not adequately represent their interests. Woodbridge Structured Funding, LLC v. Ariz. Lottery , 235 Ariz. 25, 28, ¶ 13, 326 P.3d 292, 295 (App. 2014) ; Ariz. R. Civ. P. 24(a)(2).

¶11 Movants satisfy condition two and four. As homeowners and members of Heritage, they have an interest in ensuring the Weinbergs comply with the CC&Rs, which expressly provide that any owner "shall have the standing and right to enforce" the restrictions against other owners. Likewise, Movants contest the settlement agreement between Heritage and the Weinbergs and allege that the settlement permits violations of the CC&Rs to go forward unremedied. We must accept these allegations as true, and agree that Heritage no longer adequately represents Movants' interest in enforcing the CC&Rs against the Weinbergs. See Woodbridge, 235 Ariz. at 27, ¶ 3, 326 P.3d at 294 ("[W]e take the allegations of [the] motion to intervene as true ....").

¶12 The superior court found that Movants failed to satisfy conditions one and three. We address these conditions in turn.

A. Timeliness of the Motion

¶13 Intervention as a matter of right requires a "timely motion." Ariz. R. Civ. P. 24(a). Timeliness hinges on two discrete questions: "the stage at which the action has progressed before intervention is sought and whether the applicant was in a position to seek intervention at an earlier stage of the proceedings." Winner Enterprises, Ltd. v. Superior Court (Hancock) , 159 Ariz. 106, 109, 765 P.2d 116, 119 (App. 1988).

¶14 Movants argue that timeliness is measured "not from the inception of the case, but from when the movant has notice that its interests are no longer being adequately represented." Both the text of the Rule and the relevant case law support their position.

¶15 The Rule does not allow intervention of right where "existing parties adequately represent" the interest of the proposed intervenor. Ariz. R. Civ. P. 24(a)(2). Because Movants could not seek intervention of right until their interests diverged from those of Heritage, the Rule implicitly provides that timeliness must be measured from the stage in the proceedings at which Heritage no longer represented Movant's interests.

¶16 Our supreme court reached the same conclusion in interpreting an earlier version of the Rule. See John F. Long Homes, Inc. v. Holohan , 97 Ariz. 31, 396 P.2d 394 (1964). In that case, a home builder obtained a use permit from the City of Phoenix Board of Adjustment to construct a mobile home park. Id . at 32, 396 P.2d 394. A third party then petitioned the superior court to review the Board's decision, and the superior court entered a judgment finding the permit void. Id. The builder asked the City of Phoenix, a party to the superior court action, to appeal the court's judgment, but the City refused. Id . The builder moved to intervene after receiving notice from the City that it would not appeal. Id. Our supreme court found the builder's motion was timely:

[A]n application to intervene in the lower court under Rule 24(a) is improper where arguments presented by the city are those which would be presented by the applicant. Thus, applicant was in no position to intervene under Rule 24(a) prior to judgment and the receipt of notice by the city that it did not intend to prosecute the appeal. Upon receipt of this notice petitioner made application to intervene within three hours. We are of the opinion that an application made to intervene within three hours after the first time an application could be entertained has been timely made.

Id . at 34-35, 396 P.2d 394 ; see also United States v. Carpenter , 298 F.3d 1122, 1125 (9th Cir. 2002) (concluding that a motion to intervene was timely because movants "acted as soon as they had notice that the proposed settlement was contrary to their interests"); Smith v. Marsh , 194 F.3d 1045, 1052 (9th Cir. 1999) ("The crucial date for assessing the timeliness of a motion to intervene is when proposed intervenors should have been aware that their interests would not be adequately protected by the existing parties.").

¶17 Here, the majority of the Board voted to accept the Weinbergs' settlement offer on July 7, 2017. Movants filed their emergency motion to intervene only five days later, before the Weinbergs and Heritage even filed their notice of settlement. Movants acted promptly after realizing that Heritage no longer adequately represented their interests. Therefore, the superior court abused its discretion in finding that the motion to intervene was untimely. See Winner Enterprises, Ltd. , 159 Ariz. at 109-10, 765 P.2d 116 (finding intervention was timely when it was sought at least 21 days after movant had notice of the proceedings and entry of a preliminary injunction).

B. Impaired or Impeded Ability to Protect Interests

¶18 Movants also must show that disposition of the action "may as a practical matter impair or impede" their ability to protect their interests. Ariz. R. Civ. P. 24(a)(2). In denying the motion to intervene, the superior court did not determine whether the resolution of this case could possibly have an impact on the Movants' interest in enforcing the CC&Rs against the Weinbergs. Instead, the superior court relied on its determination that Movants "are free to file a separate lawsuit against the ... Weinbergs concerning the matters the instant action raises."

¶19 Arizona cases have not yet opined on whether the availability of a separate action acts as a bar to intervention, but Federal Rule of Civil Procedure 24 is substantively indistinguishable from Arizona Rule 24, and we may look for guidance to federal courts' interpretations of their rules. See Marquette Venture Partners II, L.P. v. Leonesio , 227 Ariz. 179, 182, ¶ 11, n.6, 254 P.3d 418, 421 (App. 2011).

¶20 There is a split in authority in the federal cases and even among courts within the same circuit on this issue. Some courts have found that an intervenor's interest is not impaired or impeded unless the intervenor will be precluded from protecting its interests in another forum. See, e.g. , California ex rel. Lockyer v. United States , 450 F.3d 436, 442 (9th Cir. 2006) (noting that even if a pending lawsuit "would affect the proposed intervenors' interests, their interests might not be impaired if they have 'other means' to protect them"); Meridian Homes Corp. v. Nicholas W. Prassas & Co. , 683 F.2d 201, 204 (7th Cir. 1982) (stating that impairment "depends on whether the decision of a legal question involved in the action would as a practical matter foreclose rights of the proposed intervenors in a subsequent proceeding"). However, other cases from those courts recognize that an interest may be impaired or impeded even when alternative forums exist. See Johnson v. San Francisco Unified Sch. Dist. , 500 F.2d 349, 353 (9th Cir. 1974) (allowing intervention even though appellants had "the practical alternative of asserting in a subsequent lawsuit that the new policies adopted by the school district are unconstitutional"); Commodity Futures Trading Com'n v. Heritage Capital Advisory Services, Ltd. , 736 F.2d 384, 387 (7th Cir. 1984) ("It is true that where a proposed intervenor's interest will be prejudiced if it does not participate in the main action, the mere availability of alternative forums is not sufficient to justify denial of a motion to intervene.").

¶21 Other courts, including the Sixth and Tenth Circuits, take the broader view that "a would-be intervenor must show only that impairment of its substantial legal interest is possible if intervention is denied. This burden is minimal." Utah Ass'n of Ctys. v. Clinton , 255 F.3d 1246, 1253 (10th Cir. 2001) (emphasis added) (quoting Grutter v. Bollinger , 188 F.3d 394, 399 (6th Cir. 1999) ); W. Energy All. v. Zinke , 877 F.3d 1157, 1167-68 (10th Cir. 2017) (stating that the possibility of alternative forums is not sufficient to deny intervention if the intervenor's interest will be prejudiced if it is not allowed to participate in the main action) (citing Commodity Futures Trading Com'n , 736 F.2d at 387 ).

¶22 Our Rule, like its federal counterpart, does not require certainty, and only requires that an interest "may" be impaired or impeded. Ariz. R. Civ. P. 24(a)(2). Because "[i]t is well settled in Arizona that Rule 24 'is remedial and should be liberally construed with the view of assisting parties in obtaining justice and protecting their rights,' " Bechtel v. Rose, ex rel. Dep't of Econ. Sec. , 150 Ariz. 68, 72, 722 P.2d 236, 240 (1986) (quoting Mitchell v. City of Nogales , 83 Ariz. 328, 333, 320 P.2d 955 (1958) ), we agree with the broader approach. When proposed intervenors meet the minimal burden of showing that disposition of the action may impair or impede their ability to protect their interest, then the availability of an alternative forum, by itself, does not preclude intervention.

¶23 Thus, even if Movants can independently sue to enforce the CC&Rs, intervention is proper if Movant's ability to enforce the CC&Rs may be impaired by the resolution of the current action. At a minimum, without intervention, Movants are denied the ability to weigh in on the merits of any settlement. See Johnson , 500 F.2d at 353 (allowing intervention where proposed intervenors sought "to influence the manner in which the school district exercises its admitted discretion" in resolving the underlying action). In light of the remedial nature of Rule 24 and the minimal burden placed on proposed intervenors, we conclude that the disposition of the underlying case may, as a practical matter, impair or impede Movants' ability to protect their claimed interests.

¶24 Accordingly, we reverse the superior court's order denying intervention and remand for further proceedings. Because we reverse the denial of intervention, we must vacate the judgment approving the settlement agreement and dismissing all claims. See McGough , 143 Ariz. at 30, 691 P.2d at 742 (explaining that if an order denying intervention is reversed, the entire judgment will be reversed). On remand, Heritage and the Weinbergs may re-urge whatever settlement agreement they deem appropriate between those parties.

II. Attorneys' Fees

¶25 Because we reverse the denial of Movants' motion to intervene, we also vacate the accompanying award of attorneys' fees, thereby mooting the Weinbergs' cross-appeal.

CONCLUSION

¶26 For the foregoing reasons, we reverse the superior court's denial of the motion to intervene and vacate the award of fees and the final judgment approving the settlement agreement and dismissing all claims. We remand for further proceedings. We also deny the Weinbergs' and Heritage's requests for fees and costs on appeal.

      The Weinbergs appealed from the attorneys' fee award, but this court dismissed their appeal for lack of jurisdiction. See generally Heritage Vill. II Homeowners' Ass'n v. Weinberg , 1 CA-CV 15-0547, 2017 WL 929743 (Ariz. App. Mar. 9, 2017) (mem. decision).

      The parties do not dispute that individual members have standing to enforce the CC&Rs, but they disagree as to how this authority applies in the context of architectural approval under the CC&Rs. Because the broad grant of standing is sufficient to confer an interest in enforcement of the CC&Rs, we need not decide how far that interest extends.

      Federal Rule 24 was liberalized to its current form in 1966, and "an earlier draft would have required that the judgment 'substantially' impair or impede the interest, but that higher barrier was deleted in the course of approving the amendment." Nuesse v. Camp , 385 F.2d 694, 701 (D.C. Cir. 1967) (citing Sherman L. Cohn, The New Federal Rules of Civil Procedure , 54 Geo. L. J. 1204, 1232 (1966)).

      During oral argument, counsel for both Heritage and the Weinbergs expressly reserved the right to assert that Movants could not pursue an independent action against the Weinbergs for the alleged violations of the CC&Rs at issue in this action.

      We only determine that Movants have met the minimal burden for intervention of right under Rule 24(a)(2). Our decision does not address whether the actions to be taken pursuant to the proposed settlement between Heritage and the Weinbergs would or would not cure any noncompliance with the CC&Rs. Such matters are left to the superior court in the first instance.


author: BEENE, Judge:

text:
    STATE of Arizona, Appellee, v. Don Jacob HAVATONE, Appellant.
    No. 1 CA-CR 17-0547
    Court of Appeals of Arizona, Division 1.
    FILED June 6, 2019
    Arizona Attorney General's Office, Phoenix, By Terry M. Crist, Counsel for Appellee
    Law Offices of Shawn B. Hamp, Kingman, By Shawn B. Hamp, Virginia L. Crews, Troy M. Anderson, Counsel for Appellant
    Judge James P. Beene delivered the opinion of the Court, in which Presiding Judge Maria Elena Cruz and Judge Jennifer B. Campbell joined.
   BEENE, Judge:

¶1 Don Jacob Havatone appeals from his convictions and sentences for two counts of aggravated driving under the influence of intoxicating liquor ("DUI"), one count of aggravated assault, one count of endangerment, and four counts of misdemeanor assault. Because a Nevada statute at the time allowed a blood sample to be taken from an unconscious DUI suspect, the good-faith exception to the exclusionary rule applied, and the superior court did not err by denying Havatone's motion to suppress. Accordingly, we affirm.

FACTS AND PROCEDURAL HISTORY

¶2 In September 2012, Havatone's SUV swerved into oncoming traffic and collided with another vehicle near Kingman, Arizona. Havatone was taken to a hospital in Nevada for injuries sustained in the collision. A police officer in Nevada, without securing a warrant, obtained a sample of Havatone's blood drawn by the hospital's phlebotomist. A criminalist in Arizona tested Havatone's blood sample and it showed a blood alcohol concentration of 0.21.

¶3 The State charged Havatone with two counts of aggravated DUI, five counts of aggravated assault, and one count of endangerment. Before trial, Havatone moved to suppress the results of the warrantless blood draw.

¶4 At the suppression hearing, Officer Perea with the Arizona Department of Public Safety ("DPS") testified that he responded to the collision. He stated that the passengers riding with Havatone, as well as the driver of the other vehicle, were injured in the collision. He found Havatone lying behind his SUV with a head wound. Officer Perea smelled alcohol coming from Havatone, found alcohol containers in his vehicle, and Havatone admitted he was driving.

¶5 Based on his injuries, Havatone was taken by helicopter to a hospital in Nevada. Officer Perea contacted DPS dispatch and asked them to contact Nevada Highway Patrol ("NHP") to collect a blood sample. DPS dispatch contacted NHP, informed them that Havatone caused a collision in Arizona, the officer on scene suspected him of DUI, and requested Nevada law enforcement assist in the collection of a blood sample.

¶6 Officer Perea did not direct dispatch to explain how Nevada law enforcement should collect the blood sample or whether they needed a search warrant. Although Officer Perea testified at the suppression hearing that whether to obtain a search warrant was his "sole decision," he did not believe he needed to obtain a search warrant for an out-of-state blood draw and he never attempted to do so in prior cases.

¶7 NHP dispatch relayed Officer Perea's request to NHP Officer Reinmuth. Officer Reinmuth testified that he went to the hospital, obtained a sample of Havatone's blood from a phlebotomist, and completed a declaration form pursuant to NHP protocol. Havatone was unconscious at the time of the blood draw and the State stipulated that the blood sample was not collected for medical purposes. The officer sent Havatone's blood sample to Arizona DPS for testing. Both officers testified that they followed departmental policies and their law enforcement training regarding the taking of Havatone's blood.

¶8 After the suppression hearing, the superior court found that the officers were authorized under both Arizona and Nevada law to obtain a warrantless blood sample, and, even if a warrant was required, the good-faith exception applied. The court denied Havatone's request to suppress the blood test results and the evidence was presented at trial. A jury found Havatone guilty as charged in four counts and guilty of lesser included offenses in the remaining counts. The court sentenced Havatone to a total of 17.5 years' imprisonment.

¶9 In his first appeal, Havatone argued the superior court erred in refusing to suppress the blood test results because both states' "implied consent" laws authorizing officers to conduct blood draws from unconscious DUI suspects violated his Fourth Amendment rights. See Ariz. Rev. Stat. ("A.R.S.") § 28-1321(C) (2011); Nev. Rev. Stat. ("N.R.S.") § 484C.160(1), (2) (2009). Citing Missouri v. McNeely , 569 U.S. 141, 133 S.Ct. 1552, 185 L.Ed.2d 696 (2013), Havatone argued that the officers lacked exigent circumstances to obtain a warrantless blood sample and the good-faith exception did not apply under Arizona law.

¶10 The State argued McNeely was issued after the blood draw occurred in this case and the good-faith exception applied under both Arizona and Nevada law. This Court agreed, affirming the superior court's ruling. State v. Havatone , 1 CA-CR 14-0223, 2015 WL 6472357, at *8, ¶ 29 (Ariz. App. Oct. 27, 2015) (mem. decision). We added, "[r]egardless of whether we assess Arizona or Nevada law, statutes in both states explicitly authorized the particular police conduct at issue here." Id . at *5, ¶ 20 (citing State v. Mitchell , 234 Ariz. 410, 419, ¶ 31, 323 P.3d 69, 78 (App. 2014) ).

¶11 The Arizona Supreme Court granted review of the denial of the motion to suppress the blood test results. State v. Havatone , 241 Ariz. 506, 509, ¶¶ 9-10, 389 P.3d 1251, 1254 (2017). The Arizona Supreme Court held that the "unconscious clause" of Arizona's "implied consent" statute, as applied in this case, was unconstitutional and the good-faith exception did not apply under Arizona law. Id . at 508, ¶¶ 1-2, 389 P.3d at 1253 ; see A.R.S. § 28-1321(C). The Arizona Supreme Court vacated this Court's decision, reversed the ruling on the motion to suppress, and remanded the case to the superior court. Id . at 515, ¶ 37, 389 P.3d at 1260. On remand, the Arizona Supreme Court ordered

the trial court to determine, in the first instance, whether Arizona or Nevada law applies. If the court concludes that Nevada law applies, it should determine whether the good-faith exception applies. If the good-faith exception does not apply, the trial court must vacate the convictions and sentences, suppress the blood-draw evidence, and order a new trial.

Id . at 515, ¶ 36, 389 P.3d at 1260.

¶12 On remand, the superior court ordered the parties to submit supplemental briefs on "whether Arizona or Nevada law should apply to the seizure of the blood in this case and, if Nevada law applies, whether the good-faith exception applies." The court found that Nevada law applied to the seizure of the blood, Nevada case law authorized the officer's conduct at the time of the seizure, and the good-faith exception applied. The court added, "Although the blood could not have been lawfully obtained in Arizona under the same procedures in place in Nevada, the blood was lawfully seized in Nevada. Imposition of the exclusionary rule would not serve its stated purpose of deterring police misconduct if the evidence was precluded." Thus, the court affirmed its prior refusal to suppress the blood test results.

¶13 Havatone filed a timely appeal from the superior court's ruling upon remand and we have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1), 13-4031, and -4033(A)(1).

DISCUSSION

¶14 Havatone contends the superior court erred in applying Nevada law to the warrantless blood sample obtained through a draw conducted in that state and, in turn, erred in finding that the good-faith exception applied under Nevada law. Although Havatone argues that the court should have applied Arizona law, he asserts the good-faith exception does not apply under either Arizona or Nevada law.

¶15 We review a ruling on a motion to suppress for an abuse of discretion. State v. Valenzuela , 239 Ariz. 299, 302, ¶ 9, 371 P.3d 627, 630 (2016). We review the superior court's legal conclusions as to issues of constitutional law and "the applicability of the good-faith exception to the exclusionary rule" de novo . Havatone , 241 Ariz. at 509, ¶ 11, 389 P.3d at 1254 ; State v. Booker , 212 Ariz. 502, 504, ¶ 10, 135 P.3d 57, 59 (App. 2006). We may only consider evidence presented at the suppression hearing and view the facts in the light most favorable to upholding the court's ruling. State v. Butler , 232 Ariz. 84, 87, ¶ 8, 302 P.3d 609, 612 (2013).

I. Purpose of the Exclusionary Rule

¶16 To resolve the choice-of-law issue, we first look to the history of the exclusionary rule. Known as a judicially-created "deterrent remedy," the exclusionary rule was imposed as a consequence for illegal searches and seizures. Wolf v. Colorado , 338 U.S. 25, 31-32, 69 S.Ct. 1359, 93 L.Ed. 1782 (1949). In Weeks v. United States , 232 U.S. 383, 393, 34 S.Ct. 341, 58 L.Ed. 652 (1914), the United States Supreme Court explained that "the protection of the 4th Amendment ... is of no value" if evidence obtained in an illegal search and seizure can be used in a federal prosecution. To provide no remedy "would be to affirm by judicial decision a manifest neglect, if not an open defiance, of the prohibitions of the Constitution, intended for the protection of the people against such unauthorized action." Id . at 394, 34 S.Ct. 341. Thus, the Court in Weeks created the federal exclusionary rule, barring the use of evidence obtained in violation of the Fourth Amendment. Id . at 391-99, 34 S.Ct. 341 ; see also Silverthorne Lumber Co. v. United States , 251 U.S. 385, 392, 40 S.Ct. 182, 64 L.Ed. 319 (1920).

¶17 Later, in Mapp v. Ohio , 367 U.S. 643, 655, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961), the United States Supreme Court extended the exclusionary rule to violations of the Fourth Amendment by state actors through the Due Process Clause of the Fourteenth Amendment. The Court noted, "without that rule the freedom from state invasions of privacy would be so ephemeral and so neatly severed from its conceptual nexus with the freedom from all brutish means of coercing evidence as not to merit this Court's high regard as a freedom implicit in the concept of ordered liberty." Id . (internal quotations omitted). The Court made clear that, at its core, the purpose of the exclusionary rule is to encourage compliance with the United States Constitution and prevent convictions based on illegally obtained evidence. Id . at 657, 81 S.Ct. 1684 ; see also Davis v. United States , 564 U.S. 229, 236-37, 131 S.Ct. 2419, 180 L.Ed.2d 285 (2011) ("The rule's sole purpose, we have repeatedly held, is to deter future Fourth Amendment violations.").

¶18 Although the primary aim of the exclusionary rule is clearly deterrence, our courts have indicated that exclusion is also a "recognition that the judiciary ought not be involved in exploiting violations of the basic law." State v. Coats , 165 Ariz. 154, 157-58, 797 P.2d 693, 696-97 (App. 1990). The exclusionary rule also serves to promote "judicial integrity." Elkins v. United States , 364 U.S. 206, 222-24, 80 S.Ct. 1437, 4 L.Ed.2d 1669 (1960). Although "judicial integrity" alone would not merit exclusion of evidence, it still plays a role in determining whether exclusion is proper in a given case. United States v. Janis , 428 U.S. 433, 458 n.35, 96 S.Ct. 3021, 49 L.Ed.2d 1046 (1976).

¶19 In concluding Arizona's exclusionary rule "is no broader than the federal rule" in State v. Bolt , 142 Ariz. 260, 269, 689 P.2d 519, 528 (1984), the Arizona Supreme Court held that the rule in Arizona must mirror the federal rule. Noting that the exclusionary rule may allow guilty individuals to avoid prosecution, the Arizona Supreme Court conceded that it would be "poor judicial policy for rules governing the suppression of evidence to differ depending upon whether the defendant is arrested by federal or state officers." Id . at 267-69, 689 P.2d at 526-28. In adopting an exclusionary rule uniform with the scope and purpose of the federal rule, our courts have consistently held that the primary aim of the rule is to deter officer misconduct. E.g., Valenzuela , 239 Ariz. at 308-09, ¶ 31, 371 P.3d at 636-37 ("the exclusionary rule ... is a prudential doctrine invoked to deter future violations."); Mitchell , 234 Ariz. at 419, ¶ 31, 323 P.3d at 78 ("the exclusionary rule ... incentivizes law enforcement to err on the side of constitutional behavior."); Booker , 212 Ariz. at 504, ¶ 11, 135 P.3d at 59 ("when there is no cognitive nexus between the police misconduct and the crime for which the defendant is ultimately tried, the exclusionary rule's primary deterrent purpose is not served.").

II. Choice-of-Law and the Exclusionary Rule Analysis

¶20 Based on the history of the exclusionary rule, we turn to the issue of which state's law applies. Although choice-of-law inquiries in the criminal context are rare and no prior Arizona case has directly addressed the issue, other jurisdictions have adopted methods for determining whether the forum law (location of prosecution) or the situs law (location of officer conduct) applies. See John Bernard Corr, Criminal Procedure and the Conflict of Laws , 73 Geo. L.J. 1217, 1220-26 (1985).

¶21 Some states have chosen to employ a civil choice-of-law approach, typically called the interest analysis, which focuses on the forum state's ties to the case in deciding which law to apply; this approach tends to favor application of forum law. See State v. Grissom , 251 Kan. 851, 840 P.2d 1142, 1185-86 (1992) ; People v. Benson , 88 A.D.2d 229, 454 N.Y.S.2d 155, 156-57 (1982) ; People v. Saiken , 49 Ill.2d 504, 275 N.E.2d 381, 385 (1971) ; Burge v. State , 443 S.W.2d 720, 723 (Tex. Crim. App. 1969).

¶22 Other states have elected to use another approach, typically called the exclusionary rule analysis, which focuses on the underlying principles of the exclusionary rule in deciding which law to apply; this approach tends to favor application of situs law. See State v. Boyd , 295 Conn. 707, 992 A.2d 1071, 1084-88 (2010) ; State v. Harvin , 345 S.C. 190, 547 S.E.2d 497, 499-500 (2001) ; Pooley v. State , 705 P.2d 1293, 1302-03 (Alaska Ct. App. 1985) ; State v. Lucas , 372 N.W.2d 731, 736-38 (Minn. 1985) ; People v. Blair , 25 Cal.3d 640, 159 Cal.Rptr. 818, 602 P.2d 738, 746-49 (1979).

¶23 While the exclusionary rule's focus on deterrence is meant to promote officers' "knowledge of controlling law," any forum-based analysis would require officers to learn the law of any "other potentially interested state[ ]." Corr, supra , at 1228-29. Moreover, any approach that favors application of forum law, even in cases where officers acted lawfully in the situs state, ignores the deterrent purpose of the exclusionary rule. See Pooley , 705 P.2d at 1302-03. Conversely, the exclusionary rule analysis focuses solely on the practical implications of exclusion in a given case. See Harvin , 547 S.E.2d at 499. Given the fact-driven nature of the exclusionary rule analysis and the problems that arise under the interest analysis, "the trend appears to be toward using the exclusionary rule analysis." Tom Quigley, Do Silver Platters Have a Place in State-Federal Relations? Using Illegally Obtained Evidence in Criminal Prosecutions , 20 Ariz. St. L.J. 285, 322 (1988).

¶24 In Boyd , Pooley , and Blair , the courts in Connecticut, Alaska, and California reasoned that, although the officers' conduct would have violated their state law, excluding evidence obtained lawfully in other states would not serve to deter future police misconduct. Boyd , 992 A.2d at 1084-86 ; Pooley , 705 P.2d at 1303 ; Blair , 159 Cal.Rptr. 818, 602 P.2d at 747-48.

¶25 In the absence of contrary authority in this state, we believe the exclusionary rule analysis is better suited to resolving choice-of-law issues in criminal cases. Using this approach, we must identify the underlying principles of Arizona's exclusionary rule and determine whether those principles will be served in the application of forum or situs law. See Richard Tullis & Linda Ludlow, Admissibility of Evidence Seized in Another Jurisdiction: Choice of Law and the Exclusionary Rule , 10 U.S.F.L. Rev. 67, 91 (1975). Mirroring federal law, Arizona courts have consistently held that the primary purpose of the exclusionary rule is to deter future police misconduct. See State v. Weakland , 246 Ariz. 67, 69, ¶ 6, 434 P.3d 578, 580 (2019).

¶26 In this case, the blood draw occurred in Nevada and Officer Reinmuth used NHP protocol in collecting the sample. Officer Perea merely sent a request through DPS dispatch to Nevada dispatch, providing no direction about the procedure the Nevada officer should employ to collect Havatone's blood sample. Nothing in the record shows that Officer Reinmuth acted as an agent of Arizona law enforcement or that Officer Perea intended to bypass a more protective state law. See Boyd , 992 A.2d at 1084-86 (finding no agency relationship where officers were merely present during an out-of-state search and record did not show they intended to skirt their state's law); State v. Brown , 132 Wash.2d 529, 940 P.2d 546, 589-90 (1997) (finding no agency relationship where officers "merely telephoned" another jurisdiction and asked them to question a suspect). Moreover, Officer Reinmuth's conduct was authorized by Nevada law at the time of the blood draw. Infra ¶¶ 30-32.

¶27 For these reasons, we adopt the reasoning in Boyd , Pooley , and Blair . Although the blood draw would have violated Arizona law, it was lawful under Nevada law and exclusion would not serve the purpose of our exclusionary rule.

¶28 Using the exclusionary rule analysis, we hold that the superior court did not err in applying Nevada law to the blood draw.

III. Application of the Good-Faith Exception

¶29 Next, we turn to whether the good-faith exception would apply to the blood sample obtained under Nevada law. As with other exceptions to the exclusionary rule, the good-faith exception arose out of the belief that suppression is "a massive remedy," unwarranted where it would yield no significant "deterrence benefits." Hudson v. Michigan , 547 U.S. 586, 596, 599, 126 S.Ct. 2159, 165 L.Ed.2d 56 (2006). In establishing the exception, the United States Supreme Court in United States v. Leon , 468 U.S. 897, 922, 104 S.Ct. 3405, 82 L.Ed.2d 677 (1984), held that "the marginal or nonexistent benefits" of excluding evidence "obtained in objectively reasonable reliance on a subsequently invalidated search warrant cannot justify the substantial costs of exclusion." Thus, in considering whether the good-faith exception applies, courts must consider whether exclusion has the potential to "meaningfully deter ... deliberate, reckless, or grossly negligent conduct, or in some circumstances recurring or systemic negligence." Herring v. United States , 555 U.S. 135, 144, 129 S.Ct. 695, 172 L.Ed.2d 496 (2009).

¶30 At the time of the collision in this case, the Nevada "implied consent" statute permitted officers to obtain nonconsensual blood draws from unconscious DUI suspects. N.R.S. § 484C.160(1), (2). In Galvan v. State , 98 Nev. 550, 655 P.2d 155 (1982), decided before McNeely , the Nevada Supreme Court considered this portion of Nevada's "implied consent" statute. In Galvan , the defendant caused a collision, appeared nonresponsive at the scene, and was transported to the hospital. Id . at 155. Suspecting him of DUI, officers obtained a warrantless blood draw while the defendant was unconscious. Id . at 155-56. Looking to the United States Supreme Court decision in Schmerber v. California , 384 U.S. 757, 86 S.Ct. 1826, 16 L.Ed.2d 908 (1966), the Nevada Supreme Court recognized that blood draws trigger Fourth Amendment protections. Galvan, 655 P.2d at 157. The Nevada Supreme Court, however, noted that nothing in the Schmerber decision required that officers obtain consent, make an arrest, or secure a warrant in every case. Id . The Schmerber decision merely required that a "properly performed" blood draw be "justified by the circumstances." Id . Based on those requirements, the Nevada Supreme Court concluded that the "inevitable and rapid" dissipation of alcohol in the defendant's blood was a sufficient exigent circumstance to justify a warrantless blood draw. Id .

¶31 Guided by McNeely , the Nevada Supreme Court ruled in 2014 that because dissipation of marijuana in the blood alone did not create a per se exigency, the portion of Nevada's "implied consent" law that allowed officers to use reasonable force in obtaining a warrantless blood draw was unconstitutional. Byars v. State , 130 Nev. 848, 336 P.3d 939, 944-46 (2014). In that case, however, the court held that the officer reasonably relied on federal appellate precedent and Nevada law at the time of the blood draw and exclusion "would not act as a deterrent to unconstitutional police conduct." Id . at 946-47 (citing Davis , 564 U.S. at 244-46, 131 S.Ct. 2419 ).

¶32 Contrary to Havatone's argument regarding Officer Reinmuth's knowledge of his state's case law, we need only look to the objective circumstances of the seizure. See Leon , 468 U.S. at 922-23, 104 S.Ct. 3405 (holding the good-faith inquiry is an objective standard). Based on Nevada's "implied consent" law and its precedent at the time of the blood draw, Officer Reinmuth reasonably relied on his department's policy for obtaining a blood sample when procuring Havatone's blood. Moreover, exclusion of the evidence would not serve to deter officer misconduct where none can be found. As noted by the superior court, the officer not only followed Nevada precedent at the time of the seizure, but his department has since changed its policies regarding warrant requirements for blood draws. Officer Reinmuth's department policy has evolved to comply with post- McNeely standards, the record shows no "recurring or systemic negligence" on the part of NHP, and exclusion would carry no deterrence benefits. See Herring , 555 U.S. at 144, 129 S.Ct. 695. Under Nevada law, the good-faith exception would apply to the blood draw and suppression would not be warranted.

CONCLUSION

¶33 For the foregoing reasons, we affirm Havatone's convictions and sentences.

      We view the facts in the light most favorable to sustaining the verdicts. State v. Payne , 233 Ariz. 484, 509, ¶ 93, 314 P.3d 1239, 1264 (2013).

      Havatone added that, although he believed Arizona law controlled, the good-faith exception would not apply even under Nevada law.

      Although the parties cite to Arizona case law involving out-of-state officer conduct, our courts have declined to adopt a specific choice-of-law analysis. See State v. Davolt , 207 Ariz. 191, 201-05, ¶¶ 21-34, 84 P.3d 456, 466-67 (2004) (applying Arizona and federal law to a search conducted in California); State v. Anderson , 197 Ariz. 314, 326, ¶ 34, 4 P.3d 369, 381 (2000) (declining to apply Arizona initial appearance rule to time spent in custody in Illinois).