State of Arizona v. Arizona Board of Regents

Summary

The Arizona Supreme Court considers the Attorney General’s authority to challenge an agreement between the Arizona Board of Regents and a private company for a hotel and conference center on university property. The court holds that no tax-enforcement action was available because the property was constitutionally tax-exempt, but that quo warranto authority could support a challenge to an unlawful exercise of the Board’s franchise. The court also holds that a public-monies claim brought by the Attorney General is subject to a five-year limitations period and that the claim related back to the original complaint.

Holdings

1. A.R.S. § 42-1004(E) requires an applicable tax law to enforce, and the Attorney General lacked authority to bring Count I because the Board of Regents is the state and its property is constitutionally exempt from taxation.
2. Under A.R.S. § 12-2041(A), the Attorney General may challenge the unlawful holding or exercise of a public office or franchise, including an unlawful exercise by an otherwise legitimate office holder.
3. Quo warranto reaches only ultra vires acts performed outside the finite authority granted to a public official, office, or franchise; it cannot challenge the wisdom of decisions made within otherwise lawful authority.
4. Count II fails because it rests on a conveyance to evade taxation and no applicable tax existed; Count III survives dismissal because it alleges that the Board's lease was not for the benefit of the state and institutions under its jurisdiction and violated the non-delegation doctrine.
5. An action brought by the Attorney General under A.R.S. § 35-212 is subject to a five-year limitations period running from the date of the illegal payment of public monies, and is exempt from the entirety of A.R.S. § 12-821.01.
6. An amended claim relates back when it arises from the same transaction set forth in the original pleading; Count IV therefore related back because all counts arose from the same Omni Deal.

Questions Presented

1. Whether the Attorney General had authority under A.R.S. § 42-1004(E) to challenge the tax-exempt status of the Board of Regents' property.
2. Whether the Attorney General may bring a quo warranto action under A.R.S. § 12-2041 to challenge the unlawful exercise, rather than merely the unlawful holding, of a public franchise.
3. Whether the alleged exercise of authority by the Board of Regents was sufficiently alleged to constitute an ultra vires act subject to quo warranto.
4. Whether an Attorney General public-monies claim under A.R.S. § 35-212 is governed by a five-year limitations period rather than the one-year period in A.R.S. § 12-821.
5. Whether the amended complaint's public-monies claim related back under Arizona Rule of Civil Procedure 15(c) because it arose from the same Omni Deal described in the original complaint.

Disposition

reversed_and_remanded