Snell & Wilmer Secures Favorable Ruling from Arizona Court of Appeals in Receivership Case

PHOENIX – Snell & Wilmer, representing the Receiver over property that was formerly the Sheraton Phoenix Crescent Hotel, obtained a favorable ruling* from the Arizona Court of Appeals, Division One regarding a receiver’s ability to reject a lease under Arizona’s Uniform Commercial Real Estate Receivership Act. Specifically, the Court of Appeals accepted special action jurisdiction and held that a receiver’s rejection of a lease under the Commercial Receivership Act terminates the lessees’ right to possession of the leased property. The Court of Appeals’ ruling resolves an unsettled issue under the Commercial Receivership Act and is the first case in the nation addressing whether a receiver’s rejection of a lease under the Commercial Receivership Act terminates a lessee’s right to possession of the property. 

In the underlying receivership action, the Receiver moved to reject a cell tower lease on a portion of the Property as part of the Receiver’s efforts to sell the Property. The Maricopa County Superior Court granted the Receiver’s motion to reject the cell tower lease and held that the Receiver’s rejection of the lease terminated the lessee’s right to possession under the lease.

The lessee sought special action review of the Superior Court’s ruling from the Court of Appeals. The lessee argued that the Receiver’s rejection of the cell tower lease did not terminate its right to possession under the lease because the Commercial Receivership Act does not specifically provide that a receiver’s rejection of a lease terminates the lessee’s right to possession. The Court of Appeals disagreed with the lessee’s arguments and affirmed the Superior Court’s ruling regarding the effect of the Receiver’s rejection of the cell tower lease under the Commercial Receivership Act.

Steven D. Jerome led the Snell & Wilmer team advising the Receiver, alongside Partner James G. Florentine and Counsel Emily Gildar Yaron.

Snell & Wilmer’s bankruptcy and reorganization attorneys regularly represent receivers, lenders, business owners, investors, consumers, and creditors in a broad range of industries and business sectors in state, federal and administrative receivership proceedings. With more than 30 attorneys located across eight offices who focus their practice on insolvency related litigation, our firm has the breadth and depth of experience necessary to handle receivership matters of any size or complexity. Our insolvency attorneys also, when necessary, work with other professionals practicing in corporate and securities, real estate, tax, or intellectual property law to find solutions to even the most complex legal, financial and business issue that may arise in insolvency and receivership matters.

*The result does not predict the same outcome for others.