Two new opinions from Arizona’s appellate courts deserve the attention of real property mavens. The first is the new Arizona Supreme Court opinion of JULIA V. VASQUEZ v. SAXON MORTGAGE INC., et al, CV-11-0091-CQ. CQ stands for certified question; the Supreme Court was asked by a federal bankruptcy court to answer whether under state law an assignment of mortgage has to be recorded before the foreclosing assignee can record a notice of trustee’s sale, which in turn triggers the 90 day period for a deed of trust foreclosure sale. The Supreme Court answered that the assignment of deed of trust does not have to be recorded as a matter of law, although the court lamented (a little) the equitable circumstances this rule might create for borrowers. There’s just nothing in prior case law or statutory provisions to obligate the recording of a trust deed assignment.  If that’s desirable, the legislature has to modify the statutes to require it.

The other Arizona appellate decision of note issued just yesterday is the Court of Appeals, Division One’s, opinion in Scenic Arizona et al. v. City of Phoenix Board of Adjustment, et al. 1 CA-CV 09-0489, which declared off-premise digital billboards (digital changing video displays) to be unlawful along the interstate, secondary or primary highway systems under the Arizona Highway Beautification Act. Primary system” and “secondary system” means those portions of connected main highways located in this state that are officially so designated by the Transportation Board and approved by the United States secretary of transportation in Title 23 of the United States Code and that are listed in Title 23 of the Code of Federal Regulations, Part 658, Appendix A. So, included for sure in these categories are I-17, I-10 and U.S. 60 between Arizona 87 and Globe, as it affects the Valley. Are Loop 101, AZ Routes 51 and 202 and the rest of U.S. 60 affected in Phoenix and the east Valley? Not unless they are included in Part 658, Appendix A. (And I don’t see them in there, though I didn’t study the table that carefully.)  Well, to be technical, those state highways that are themselves within 660 feet of their interchanges with the listed U.S. Highways will be affected, too.

The Scenic Arizona court said that the “intermittent” nature of the lights in evidence when the copy on digital billboards is cycling is what makes the digital billboard non-complying with the state statute, which is modeled on the Federal Highway Beautification Act.  The Court said that the combination of LEDs transitions from one lighted image to the next one, the billboard’s lighting necessarily is intermittent, and this isn’t permitted under the state or federal act within 660 feet of the edge of the rights of way along the affected highways.  The impact of intermittancy, I guess, is the equivalent of flahing or moving lights, which is distracting to drivers and not beautiful under these statutes.

The opinion raises a couple of interesting issues, one on how technology will respond, independently of the attorneys, to this decision, and one about who will be immediately affected within the OA trade group. Here’s some off-the-cuff observations:

An OA permitting official goes to the City and says:
Here’s my application for a new billboard permit, post-Scenic Arizona. The digital copy is two colors: White background, red letters. It spools with three messages. The copy doesn’t change, it just crawls. One exits ‘stage right’ as the next message crawls into view by ‘entering, stage left’ – in other words, left to right movement, continuously. No fade to dark for even one second. What’s the response from the city to this proposed new “copy technology?”

Next, folks wanting off-premise signs in the digital OA industry occupy four categories, more or less:

a. Digital BB seekers stuck in the entitlement pipeline;

b. Those who are through the pipeline, having no building permit yet;

c. Those possessing a building permit but not undertaking sign erection yet; and

d. Those with the required permits and under construction (or, BP and completed sign erection).

My view is this:

It’s lights out for a. through c., in all likelihood. But d. is a tougher category when deciding how to treat them. I believe the Court of Appeals opinion is not retroactive, but there remains the issue of the “vested rights doctrine” for folks who have invested substantially in site preparation, materials ordering, structure  fabrication and computer technology to operate the installed billboard structure.   Cases like Emmett McLoughlin Realty, Inc. v. Pima County, 58 P.3d 39 (2002) must be considered by the communities affected for guidance on that whole mashup of law and business investment.