Professional Documents
Culture Documents
No. CV-22-0228-PR
Filed March 22, 2024
COUNSEL:
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¶1 Petitioners Jie Cao and Haining Xia (the “Xias”) are former
condominium unit owners who object to the forced sale of their unit by
their condominium association (the “Association”) following dissolution of
the condominium. We hold that the Arizona Condominium Act, A.R.S.
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CAO, ET AL. V. PFP DORSEY INVESTMENTS, LLC, ET AL.
Opinion of the Court
BACKGROUND
1 The parties dispute which version of § 33-1228 applied to the Dorsey Place
termination. The court of appeals held the version of § 33-1228 that became
effective in 1986 applied. Cao v. PFP Dorsey Invs., LLC, 253 Ariz. 552, 556–58
¶¶ 18–24 (App. 2022). For the reasons below, we disagree. Accordingly, all
references to § 33-1228 refer to the version that became effective in 2018,
unless otherwise noted.
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CAO, ET AL. V. PFP DORSEY INVESTMENTS, LLC, ET AL.
Opinion of the Court
¶8 PFP Dorsey was the only unit owner that signed the
termination agreement. Article 13.4 of the Declaration provided, “the
Condominium may be terminated only by the agreement of Unit Owners
of Units to which at least ninety percent (90%) of the votes in the
Association are allocated.” Because PFP Dorsey controlled 93.75% of the
Association’s votes, the Association ratified the termination agreement.
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CAO, ET AL. V. PFP DORSEY INVESTMENTS, LLC, ET AL.
Opinion of the Court
¶9 The Xias filed a claim against the Association and PFP Dorsey
alleging civil trespass, conversion, breach of fiduciary duty, unjust
enrichment, and wrongful recording. Cao, 253 Ariz. at 555 ¶ 9. The Xias
sought ejectment, imposition of a constructive trust, and to quiet title. Id.
The Xias argued that the sale of their unit violated § 33-1228(C), and,
alternatively, that § 33-1228 was unconstitutional because it authorized a
taking of private property for private use. Id. The Association and PFP
Dorsey filed separate motions to dismiss, arguing the Xias failed to state a
claim for which relief could be granted because the sale complied with
§ 33-1228. Id. ¶ 10. The superior court granted the Association and PFP
Dorsey’s motions. Id. The Xias appealed this dismissal. Id. ¶ 11.
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CAO, ET AL. V. PFP DORSEY INVESTMENTS, LLC, ET AL.
Opinion of the Court
¶14 The Xias petitioned this Court for review. We granted review
on the following issues: (1) whether § 33-1228 authorized the taking of
private property for private use in violation of article 2, section 17 of the
Arizona Constitution, either on its face or as applied in this case; (2) whether
§ 33-1228(C) required all of the common elements and units of a
condominium to be part of a sale if any common elements or units of the
condominium are to be sold pursuant to a condominium termination
agreement; (3) whether the terms of an unconstitutional statute are
enforceable as to the contracting parties if a contract incorporates the statute
by reference; and (4) whether subsequent statutory amendments are
incorporated into a condominium declaration if the condominium
declaration incorporates the statute by reference. These are important
issues of statewide concern. We have jurisdiction under article 6, section
5(3) of the Arizona Constitution.
DISCUSSION
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CAO, ET AL. V. PFP DORSEY INVESTMENTS, LLC, ET AL.
Opinion of the Court
on its face and as applied to them. The Xias argue in the alternative that if
we construe the statute to require the sale of all of the common elements
and units, it would largely ameliorate the problem. We address the discrete
challenges to the forced sale in turn. 2
I. EMINENT DOMAIN
from contract—specifically, the Declaration that all unit owners signed and
to which their property interests were subject. “[P]arties are generally free
to contract on whatever terms they choose.” Zambrano v. M & RC II LLC,
254 Ariz. 53, 56 ¶ 1 (2022). Among the terms to which they generally may
agree is a waiver of constitutional rights. See State ex rel. Polk v. Hancock, 237
Ariz. 125, 128–29 (2015); CSA 13-101 Loop, LLC v. Loop 101, LLC, 236 Ariz.
410, 411 ¶ 6 (2014).
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CAO, ET AL. V. PFP DORSEY INVESTMENTS, LLC, ET AL.
Opinion of the Court
¶23 For the foregoing reasons, because the Xias and other unit
owners agreed to follow the Condominium Act, including § 33-1228(C)’s
terms regarding a termination agreement, we do not address the
constitutionality of the Condominium Act. In short, the Condominium Act
did not effect a taking of the Xias’ property.
¶24 The Xias argue that if the sale was permissible, § 33-1228(C)
required that all of the common elements and units be sold, including the
units belonging to PFP Dorsey. Here, the Association sold to PFP Dorsey
only the six units it did not already own.
¶28 The source of the Association’s power to take and sell the
Xias’ unit derived from the first sentence of § 33-1228(C), which stated that
“[a] termination agreement may provide that all the common elements and
units of the condominium shall be sold following termination.” (Emphasis
added). “All” means all—not less than all. Although “may” is permissive,
Garcia v. Butler, 251 Ariz. 191, 194 ¶ 13 (2021); Antonin Scalia & Bryan A.
Garner, Reading Law: The Interpretation of Legal Texts 112 (2012), “may”
modifies “provide,” not “all.” Hence, the effect of the permissive “may”
was to authorize conduct that otherwise could not lawfully occur. The
words that follow, read as a whole, are what was authorized: selling all of
the property.
¶30 Nor do we read the reference to the sale of “any real estate”
in the second sentence, in light of the first, to have independently
authorized the sale of less than the entire property. The second sentence’s
reference to the sale of “any real estate” accounted for two circumstances.
The first circumstance was where a termination agreement provided for the
sale of an entire condominium over a unit owner’s objection. As discussed,
a condominium association derived its power to do so from the first
sentence of § 33-1228(C). The second circumstance occurred where a
termination agreement provided for the sale of an entire condominium or
only part of a condominium with the consent of all the unit owners whose
property was to be sold. A condominium association derived its power to
effect a sale under this circumstance not from the first sentence of
§ 33-1228(C), but from contract law. Thus, the second sentence of
§ 33-1228(C) did not grant condominium associations the additional power
to sell less than all of a condominium over a unit owner’s objection.
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CAO, ET AL. V. PFP DORSEY INVESTMENTS, LLC, ET AL.
Opinion of the Court
¶31 Again, applying the surplusage canon, we note the term “all”
means “the whole amount, quantity, or extent of; as much as possible; every
member or individual component of.” All, Meriam-Webster available at
https://www.merriam-webster.com/dictionary/all#dictionary-entry-1
(last visited Mar. 13, 2024). The term “any” means “one, some, or all
indiscriminately of whatever quantity.” Any, Merriam-Webster,
https://www.merriam-webster.com/dictionary/any (last visited Mar. 13,
2024). Thus, the term “all” encompasses “any.” By interpreting
§ 33-1228(C) to have required the sale of an entire condominium if any
portion was to be sold over a unit owner’s objection, we give meaning to
both terms.
¶33 Subsection (E) provided, “[i]f the real estate constituting the
condominium is not to be sold following termination, title to all the real
estate in the condominium vests in the unit owners on termination as
tenants in common in proportion to their respective interests.” § 33-1228(E)
(emphasis added). If PFP Dorsey is correct that subsection (C) permitted a
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CAO, ET AL. V. PFP DORSEY INVESTMENTS, LLC, ET AL.
Opinion of the Court
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CAO, ET AL. V. PFP DORSEY INVESTMENTS, LLC, ET AL.
Opinion of the Court
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CAO, ET AL. V. PFP DORSEY INVESTMENTS, LLC, ET AL.
Opinion of the Court
¶41 The Xias argue that if the Declaration intended the reference
to § 33-1228 as a contractual term, as we find here, subsequent amendments
to the statute apply only if they fall within unit owners’ reasonable
expectations. The Xias do not argue that the termination and sale here were
governed by amended statutory terms falling outside their reasonable
expectations. Instead, they raise the point as illustrating the difficulties
with deeming the statute a contractual term.
ATTORNEY FEES
¶46 The Xias seek attorney fees on a variety of bases. Article 13.15
of the Declaration provides for attorney fees if a unit owner who “employs
an attorney . . . to enforce compliance with or recover damages for any
violation or noncompliance with the Condominium Documents” prevails
in the action. Likewise, A.R.S. § 12-341.01 authorizes courts to award
attorney fees for actions arising out of contract.
DISPOSITION
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