MORONES v. HON BRAIN/HORNE

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IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE ) ) ) Petitioners, ) ) v. ) ) THE HONORABLE MARK H. BRAIN, ) Judge of the SUPERIOR COURT OF ) THE STATE OF ARIZONA, in and for ) the County of MARICOPA, ) ) Respondent Judge, ) ) TOM HORNE, in his capacity as ) Attorney General; and DOUG DUCEY, ) in his capacity as Arizona ) Treasurer; STEVE PIERCE, in his ) capacity of President of the ) Arizona State Senate; and ANDREW ) M. TOBIN, in his capacity as ) Speaker of the Arizona House of ) Representatives, ) ) Real Parties in Interest. ) __________________________________) DIVISION ONE FILED: 3/12/2013 RUTH A. WILLINGHAM, CLERK BY: mjt JOSEPH MORONES and ELVIRA HERNANDEZ, 1 CA-SA 12-0243 Maricopa County Superior Court No. CV 2012-008573 DEPARTMENT E DECISION ORDER This special action came on regularly for conference this 26th day of November, 2012, before Presiding Judge Jon W. Thompson, and Judges Peter B. Swann and Philip Hall. IT IS ORDERED that the Court of Appeals, in the exercise of its discretion, accepts jurisdiction of Special action jurisdiction is appropriate. this special action. See League of Ariz. Cities & Towns v. Martin, 219 Ariz. 556, 558, ¶ 4, 201 P.3d 517, 519 (2009); Ariz. R.P. Spec. Act. 1(a) (a special action is 1 available when there is no other equally plain, speedy or adequate remedy by appeal). IT IS FURTHER ORDERED denying Petitioners relief. the Attorney General s transfer of $50 million of We find the State Direct Payment Settlement from the national mortgage settlement consent judgment to the Legislature for appropriation was not an abuse of his discretion.1 As background, in May 2012 the Arizona Legislature included a provision in its annual budget bill requiring the Attorney General to transfer $50 million from the national mortgage settlement into the general fund to compensate the State for costs resulting Defendants. ( SB1523 ). from See the 2012 alleged Ariz. unlawful Sess. Laws, conduct Ch. 294 of the (2012) Section 128 of SB 1523 indicated the legislature intended to use the funds to fund efforts to ameliorate the foreclosure crisis and compensate the State for losses connected to bank-defendants conduct. Petitioners Arizona Revised brought Statutes this taxpayer (A.R.S.) §§ action 35-212, pursuant -213 to (2011), alleging SB1523 is an illegal appropriation of custodial trust funds and violates Article III, the separation of powers clause, 1 The funds at issue are from the Direct Payment Settlement Amount for use by the states, neither the Borrower Payment Fund to compensate persons foreclosed upon nor the Consumer Relief Fund to provide refinancing to qualified consumers and remediation are implicated. The funds at issue were to reimburse the State of Arizona for its damages. 2 of the Arizona Constitution. the consent judgments The Attorney General asserts that authorize the [Attorney General] to transfer $50 million to the State s general fund where it will be used for purposes consistent with the national mortgage settlement. At the outset, we note that there is nothing in the record to suggest that the restrictive language of the consent decree was an drafted essential by the part of Attorney the settlement. General, and The several language other was settling states elected to take their share of the settlement pool with no stated restrictions. Moreover, because the proceeds became the property of the State, we see no legal basis upon which the Attorney General could unilaterally impose restrictions upon the use of the funds. See Rios v. Symington, 172 Ariz. 3, 5, 833 P. 2d. 20, 23 (1992) ( the Legislature commands the power of the purse ). Even if the consent decree did amount to a restriction on the use of the funds, we would find that such a transfer of a portion of the Direct Payment Settlement did not violate the terms of the consent decree. That document stated: Arizona s share of the State Payment Settlement Amounts ( Funds ) provided under this Consent Judgment, and any interest thereon, shall be made payable to the Office of the Arizona Attorney General. The Attorney General shall direct the use of the Funds in Arizona. The Funds shall be used for purposes intended to avoid preventable foreclosures, to ameliorate the effects of the foreclosure crisis, to enhance law enforcement efforts to prevent and 3 prosecute financial fraud, or unfair or deceptive acts or practices and to compensate the State for costs resulting from the alleged unlawful conduct of the Defendants. In interpreting settlement agreements, such as this one, we review questions of law de novo. See City of Tucson v. Clear Channel Outdoor, Inc., 218 Ariz. 172, 182, ¶ 27, 181 P.3d 219, 229 (App. 2008). construction. General contract principles govern our Emmons v. Superior Court, 192 Ariz. 509, 512, ¶ 14, 968 P.2d 582, 585 (App. 1998). We need not interpret a contract if the intent of the parties is clear and unambiguous from its plain language. Mining Inv. Grp., LLC v. Roberts, 217 Ariz. 635, 639, ¶ 16, 177 P.3d 1207, 1211 (App. 2008). The plain language of the consent agreement states [t]he Attorney General shall direct the use of the Funds in Arizona and [t]he Funds shall be used for purposes intended to avoid preventable foreclosures . . . and to compensate the State for costs resulting from the alleged unlawful conduct of the defendants. Nor do we find error with the intended use of the funds. The Legislature indicated in Section 128 that it intended to fund areas covered by the National Mortgage Settlement, including agencies such as the state real estate department, department of insurance . . . and for other areas impacted. This allocation of funds not only comports with the goals plainly outlined in the consent judgment, it satisfies both the 4 Attorney General and Petitioners.2 Finding no error, we affirm the superior court s denial of relief. We need not address the Petitioners theoretical separation of powers concerns because the Attorney General and Legislature are in full accord on the matter before us.3 /s/ __________________________________ JON W. THOMPSON, Presiding Judge 2 Counsel for Petitioners agreed during oral argument that they would have no objection to the funds being used in that manner where such funding had been so directed by the Attorney General. 3 As the Attorney General stated in his brief this is not a case in which the Legislature commanded the Attorney General to direct settlement proceeds to the State s general fund contrary to the language of a court-approved Consent Judgment. Instead, the [Attorney General] indicated his intention to transfer $50 million into the State s general fund consistent with the Consent Judgments. 5

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