Sussex v. Tempe, 1 CA-CV 16-0207

Background

Steven and Virginia Sussex claimed they and ancestors had possessed 320 W. 1st St., Tempe, adversely since at least 1967 and thus had acquired title by 2012 under A.R.S. § 12-526.
The State quitclaimed the property to Union Pacific in December 2002; Union Pacific conveyed it to the City of Tempe that same month (with some evidence of a second segment in 2005).
The City later demanded the Sussexes vacate, asserting they were trespassers on City-owned property.
The Sussexes filed a superior-court quiet-title action (May 2015) alleging the City’s failure to sue within § 12-526’s ten-year limitation period vested title in them; they amended once and sought leave to file a second amended complaint adding allegations about municipal bonds/debt used to acquire the property.
The superior court granted the City’s Rule 12(b)(6) motion to dismiss and denied leave to further amend as futile; the Sussexes appealed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the City’s failure to bring an action within § 12-526’s ten-year period quiets title in Sussex	Sussex: § 12-526 runs against the City as a “person,” so its failure to sue within ten years perfected Sussex title	City: A.R.S. § 12-510 exempts the state — including political subdivisions — from limitation bars, so § 12-526 does not divest the City	Court: § 12-510 applies to municipalities; City's failure to sue did not quiet title in Sussex as a matter of law
Whether the term “state” in A.R.S. § 12-510 excludes municipalities when acting in corporate/proprietary capacities	Sussex: Municipalities should be treated like private actors for some activities; the governmental/proprietary distinction preserves limitations running against cities	Sussex argued older precedents support that distinction	City: Supreme-court precedent rejects the governmental/proprietary distinction for § 12-510; municipalities fall within “state”	Court: Follows Tucson Unified and City of Bisbee — governmental/proprietary distinction not applicable; municipalities covered by § 12-510
Whether dismissal under Rule 12(b)(6) was appropriate	Sussex: Well-pleaded allegations (adverse possession) warranted claim; factual disputes require more than dismissal	City: Even assuming Sussex facts, legal bar in § 12-510 defeats the claim; dismissal proper	Court: De novo review — even accepting allegations, law defeats claim; dismissal proper
Whether denial of leave to file second amended complaint was an abuse of discretion	Sussex: Proposed allegations (municipal bonds/debt) would show proprietary/ corporate action and should allow amendment	City: Those additional facts would not overcome § 12-510; amendment would be futile	Court: Denial not an abuse — proposed amendment would be futile because § 12-510 still applies

Key Cases Cited

Overson v. Cowley, 136 Ariz. 60 (App. 1982) (statute-of-limitations bar in adverse-possession actions can confer title on adverse possessor)
City of Bisbee v. Cochise County, 52 Ariz. 1 (1938) (political subdivisions fall within scope of state exemption from statutes of limitation)
Tucson Unified Sch. Dist. v. Owens-Corning Fiberglas Corp., 174 Ariz. 336 (1993) (rejecting governmental/proprietary distinction for § 12-510; the term “state” includes analogous subdivisions)
Rogers v. Bd. of Regents of Univ. of Ariz., 233 Ariz. 262 (App. 2013) (in quiet-title actions plaintiff must prove own title and cannot prevail merely on weakness of defendant’s title)
Fid. Sec. Life Ins. Co. v. State Dep’t of Ins., 191 Ariz. 222 (1998) (standard for Rule 12(b)(6) dismissal: no relief under any provable facts)