513 P.3d 1106
Ariz.2022Background
- HNT Holdings owned three contiguous Oro Valley parcels whose property taxes became delinquent; three separate private purchasers (Lienholders) bought tax liens on the parcels and later sought foreclosure.
- Lienholders sent certified pre‑litigation notices to the addresses specified in A.R.S. § 42‑18202(A)(1)(a)–(c) (assessor address, situs address if different, treasurer tax‑bill mailing address); the notices were returned as undeliverable.
- Lienholders then filed foreclosure actions, obtained default judgments after difficulties serving HNT, and ultimately served HNT via the Arizona Corporation Commission.
- HNT moved to set aside the defaults; trial courts granted relief (finding lack of service and relying on due‑diligence principles/Jones v. Flowers); the court of appeals required additional efforts when notices were returned undeliverable.
- The Arizona Supreme Court granted review to decide whether mailing to the addresses listed in § 42‑18202(A)(1)(a)–(c) satisfies the statute even if a lienholder has reason to believe the owner never received the notice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 42‑18202(A)(1)(a)–(c) is satisfied by certified mail to the listed addresses even if returned undeliverable | Mailing to the assessor, situs, and treasurer addresses as specified satisfies the statute; no additional diligence required | If notice is returned undeliverable, due process (Jones/Flowers) and Sherman require additional reasonable steps to locate the owner | The second method (A)(1)(a)–(c) is satisfied by delivery to those addresses; no further efforts required; Sherman’s due‑diligence rule applies to the recorder‑address method, not the assessor/three‑address method |
| Whether due process (or service rules) invalidates defaults because pre‑litigation notices were returned undeliverable | Pre‑litigation notice under § 42‑18202 (second method) is a statutory requirement and was met; Flowers inapplicable to private lienholders | Flowers requires additional steps when mailed notice is returned unclaimed; default judgments therefore void for lack of notice/service | Supreme Court held Flowers inapplicable to the private pre‑litigation stage and did not decide Rule 4.1 service; remanded for the court of appeals to consider whether proper service of process was obtained under Rule 4.1 |
Key Cases Cited
- Jones v. Flowers, 547 U.S. 220 (2006) (when mailed notice of a tax sale is returned unclaimed, the State must take additional reasonable steps to attempt to notify owner if practicable)
- Advanced Prop. Tax Liens, Inc. v. Sherman, 227 Ariz. 528 (Ariz. App. 2011) (interprets § 42‑18202 first method and requires greater certainty that recorder‑address notice will reach owner)
- Roberts v. Robert, 215 Ariz. 176 (Ariz. App. 2007) (service of process for foreclosure actions governed by Rule 4.1)
- State v. Sharp, 193 Ariz. 414 (1999) (constitutional due‑process protections apply to state action, not private parties)