IN THE

ARIZONA COURT OF APPEALS

DIVISION TWO

FALCONE BROTHERS & ASSOCIATES, INC.,

AN ARIZONA CORPORATION,

Plaintiff/Appellant,

v.

CITY OF TUCSON,

AN ARIZONA MUNICIPAL CORPORATION,

Defendant/Appellee.

No. 2 CA-CV 2015-0212

Filed August 25, 2016

Appeal from the Superior Court in Pima County

No. C20152217

The Honorable Richard S. Fields, Judge

The Honorable Richard E. Gordon, Judge

REVERSED AND REMANDED

COUNSEL

Carmichael & Powell, P.C., Phoenix

By David J. Sandoval

Counsel for Plaintiff/Appellant

Michael G. Rankin, Tucson City Attorney

By Stacy Stauffer, Principal Assistant City Attorney, Tucson

Counsel for Defendant/Appellee
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

2

OPINION

Chief Judge Eckerstrom authored the opinion of the Court, in which 

Presiding Judge Vásquez and Judge Miller concurred.

E C K E R S T R O M, Chief Judge:

¶1 Following a contractual dispute regarding a roadimprovement project, appellant Falcone Brothers and Associates, 

Inc. (Falcone) filed a civil complaint against appellee City of Tucson 

(City). The City maintained that the action was barred because the 

issues already had been decided by the City’s director of 

procurement and that Falcone had refused to challenge the 

director’s “administrative decision” by special action as required by

the parties’ contract and the City’s code. We conclude that neither 

the contract nor the City code can direct judicial review of a 

breach-of-contract claim by special action; therefore, we reverse the 

trial court’s order granting the City’s motion to dismiss and remand 

the case for further proceedings.

I. Factual and Procedural Background

¶2 In 2012, Falcone and the City executed a contract that 

incorporated chapter 28 of the Tucson Code, a chapter also known 

as the Procurement Code. Under the applicable version of that code, 

a dispute regarding a contract would be decided first by a contract 

officer from the City’s Procurement Department. Tucson, Ariz., 

Code (“TC”) §§ 28-76, 28-91 to 28-93 (1987 & Supp. 2007).

1 An 

 

1 The contract here incorporated and modified the City’s 

“Standard Specifications” to create what was nominally a three-step 

process of dispute resolution. The first step required submission of 

a claim to the Tucson Department of Transportation (TDOT) for a 

“‘field’ level” review. The second and third steps involved “review” 

by the Procurement Department and City Attorney’s Office, 

respectively. In light of the contract’s amendment to § 105-18(C) of 

the Standard Specifications, however, no process was provided for a 

decision by TDOT. The only decision described in the contract was 
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

3

aggrieved party then could file an appeal with the City’s director of 

procurement. TC § 28-94. If the director assigned the claim to a 

hearing, the director would appoint a hearing officer to conduct the 

proceeding and make a recommendation, which included proposed

findings and conclusions. See TC §§ 28-94(3), 28-96, 28-113, 

28-114(1). The Procurement Code broadly authorized the director to 

“affirm, modify, or reject the hearing officer’s recommendation in 

whole or in part, . . . remand the matter to the hearing officer with 

instructions, or make any other appropriate disposition.” TC 

§ 28-114(2). The Procurement Code specified that “[a] decision by 

the director shall be final.” TC § 28-115. Under TC §§ 28-117 and 

28-118, the director’s final decision could only be challenged by 

“special action review” in the superior court filed within thirty days. 

The Procurement Code stated that “[e]xhaustion of the procedures 

set forth in this Code shall be a condition precedent to seeking 

judicial review,” TC § 28-117, and that the code “provide[d] the 

exclusive procedure for asserting a claim or cause of action against 

this city” that arose from a procurement contract. TC § 28-118.

¶3 According to Falcone, the company suffered 

approximately $2.5 million in damages from the construction 

project. Those damages included the additional costs that Falcone 

incurred from errors in the plans it had relied on to formulate its bid, 

as well as unforeseeable utility conflicts and subterranean structures 

for which the City bore responsibility.

¶4 In 2014, Falcone submitted a notice of claim pursuant to 

A.R.S. § 12-821.01, expressly reserving its right to file a civil suit. In 

the notice, the company maintained “the claim procedure set forth 

in the Contract [w]as illegal and unenforceable,” but Falcone 

nonetheless agreed to participate in the City’s administrative 

 

one “made by the Procurement Department’s Contract Officer in 

accordance with” the Procurement Code. We further note that the 

City’s brief does not refer to any independent decision by TDOT. 

Instead, the City states that Falcone brought “its original contract 

claim [in] the Procurement Department.” We therefore understand 

the City’s contract officer as either issuing or participating in the 

initial decision.
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

4

proceedings. In the first stage of that process, a City contract officer 

rejected Falcone’s claim in its entirety. After Falcone appealed, a 

hearing officer conducted an evidentiary hearing and recommended 

to the director that the claim be denied. The director then issued a 

decision on April 20, 2015, denying Falcone any additional 

compensation.2

¶5 Despite the limitation in TC § 28-117, Falcone did not 

seek special action relief from this decision. Instead, the company 

filed a complaint in the superior court asserting claims of breach of 

contract and unjust enrichment. The City filed a motion under 

Rule 12(b)(1), Ariz. R. Civ. P., to dismiss the complaint on three 

grounds: failure to exhaust administrative remedies, res judicata, 

and collateral estoppel. The trial court granted the motion after oral 

argument, stating that the grounds for its decision were “stated on 

the record.” Neither party provided a transcript of the hearing. 

This appeal by Falcone followed.

II. Appellate Jurisdiction

¶6 With respect to the procedures applicable to a case such 

as this, both parties have cited this court’s opinion in Richard E. 

Lambert, Ltd. v. City of Tucson Department of Procurement, 223 Ariz. 

184, 221 P.3d 375 (App. 2009). There, the aggrieved contractor

pursued an appeal in the superior court that was characterized as a 

“special action” under the City’s Procurement Code. Lambert, 223 

Ariz. 184, ¶¶ 4-5, 221 P.3d at 377-78. We expressly declined to 

address whether this procedure was proper. Id. n.1. We also 

implied that we had appellate jurisdiction over the resulting 

judgment from the superior court under the former A.R.S. 

 

2The parties have failed to provide accurate record citations 

showing whether this item is included in the record on appeal. See

Ariz. R. Civ. App. P. 13(a)(5), (7)(A), (b)(1). Yet no dispute exists 

regarding the date or nature of the director’s decision.
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

5

§ 12-2101(B), which was later renumbered § 12-2101(A)(1). 3 See 

Lambert, 223 Ariz. 184, ¶ 5, 221 P.3d at 378.

¶7 That provision allows an appeal to this court when an 

action is “commenced in a superior court.” § 12-2101(A)(1). 

However, neither an appeal nor a special action in the superior court 

is “commenced” there within the meaning of this statute. Stant v. 

City of Maricopa Emp. Merit Bd., 234 Ariz. 196, ¶¶ 7-8, 319 P.3d 1002, 

1004-05 (App. 2014). Accordingly, because Lambert did not identify 

a proper ground for appellate jurisdiction, we do not rely on that 

case as precedent.

¶8 The present case differs from Lambert because Falcone 

filed a civil complaint in the superior court. The case therefore 

“commenced” in that court pursuant to § 12-2101(A)(1), and the trial 

court’s dismissal order is a “final judgment” subject to appeal. Id. 

Although the court’s order initially lacked certification pursuant to 

Rule 54(c), Ariz. R. Civ. P., we have stayed the appeal and revested 

jurisdiction in the superior court to obtain such certification. 

See Ariz. R. Civ. App. P. 3; Madrid v. Avalon Care Ctr.-Chandler, 

L.L.C., 236 Ariz. 221, ¶ 5, 338 P.3d 328, 330-31 (App. 2014). With a 

formal judgment now included in the record on appeal, we have 

appellate jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-

2101(A)(1).

III. Discussion

¶9 As it did below, Falcone claims on appeal that the 

“administrative process” prescribed by the City violates Falcone’s 

constitutional rights to due process and a jury trial. Specifically, 

Falcone maintains that the City’s director of procurement is not a 

neutral arbiter of the City’s contract disputes and that the limited 

process of review afforded by the City denies an aggrieved party the 

opportunity for “a de novo review of the facts” by an impartial 

decision maker. In light of these alleged constitutional defects, 

Falcone asserts that the trial court erred in granting the City’s 

 

3Anderson v. Valley Union High Sch., Dist. No. 22, 229 Ariz. 52, 

¶ 3 & n.1, 270 P.3d 879, 881 & n.1 (App. 2012).
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

6

motion to dismiss and that the “civil complaint was appropriately 

filed and should be tried on its merits.”

¶10 Rule 12(b)(1) allows a trial court to dismiss an action for 

lack of subject matter jurisdiction. When, as here, a trial court’s 

disposition of such a motion does not resolve any disputed 

jurisdictional facts, we review the court’s ruling de novo. See Church 

of Isaiah 58 Project of Ariz., Inc. v. LaPaz County, 233 Ariz. 460, ¶ 9 & 

n.4, 314 P.3d 806, 808-09 & 809 n.4 (App. 2013).

¶11 As our supreme court established in R.L. Augustine 

Construction Co. v. Peoria Unified School District No. 11, “[w]e will not 

reach a constitutional question if a case can be fairly decided on 

nonconstitutional grounds.” 188 Ariz. 368, 370, 936 P.2d 554, 556 

(1997). Following that precedent, we avoid Falcone’s constitutional 

arguments and decide the present case on a narrow basis. Our 

analysis that follows will establish, first, that Falcone properly 

asserted a contract claim in the superior court that is subject to trial 

on a de novo basis; second, the City’s Procurement Code was invalid 

insofar as it attempted to make the director’s decision binding and to 

limit access to the superior court by restricting parties to special 

action review; and third, none of the doctrines identified in the 

City’s motion to dismiss would bar Falcone’s action.

A. Superior Court Jurisdiction

¶12 The superior court’s jurisdiction is provided by our 

state constitution and statutes. Grosvenor Holdings, L.C. v. Figueroa, 

222 Ariz. 588, ¶ 13, 218 P.3d 1045, 1052 (App. 2009); see Ariz. Const. 

art. VI, §§ 14, 16, 18. The court is one of general jurisdiction, State

ex rel. Neely v. Brown, 177 Ariz. 6, 8, 864 P.2d 1038, 1040 (1993), with 

original jurisdiction to resolve contract disputes in which the 

amount in controversy is at least $1,000. See Ariz. Const. art. VI, 

§ 14(3). Because the present contract claim exceeds this amount, the 

superior court has jurisdiction over the case.

¶13 “[A] city has no authority to limit the jurisdiction of the 

state’s courts.” Tempe Life Care Vill., Inc. v. City of Tempe, 148 Ariz. 

264, 266, 714 P.2d 434, 436 (App. 1985). A superior court’s 

jurisdiction can only be limited by law, not by a city’s charter or an 
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

7

agreement between two parties. See Grosvenor, 222 Ariz. 588, ¶ 21, 

218 P.3d at 1053-54; Tempe Life Care Vill., 148 Ariz. at 266, 714 P.2d at 

436. When an action presents a traditional contract claim and no 

statute gives another entity exclusive jurisdiction over the matter, 

the superior court retains jurisdiction to resolve the claim. See

Campbell v. Mountain States Tel. & Tel. Co., 120 Ariz. 426, 432, 586 

P.2d 987, 993 (App. 1978). We therefore must examine whether the 

City’s Procurement Code is supported by any enabling legislation

and, if not, whether it is nevertheless enforceable as a matter of 

contract.

B. Procurement Code Validity

1. Legal Authorization

¶14 At oral argument, the City failed to identify any specific 

law authorizing its Procurement Code. Instead, the City referred to 

the general provisions from article XIII, § 2 of the Arizona 

Constitution and A.R.S. §§ 9-137 and 9-499.01. The City also 

observed in passing that its Procurement Code is modeled after the 

state procurement code, A.R.S. §§ 41-2501 to 41-2673.

¶15 We recognize that § 41-2501(C) allows “political 

subdivisions” such as cities to “adopt all or any part” of the state 

procurement code. See City of Tucson v. Fleischman, 152 Ariz. 269, 

272, 731 P.2d 634, 637 (App. 1986) (“The general rule is that cities are 

political subdivisions of the state.”); cf. Model Procurement Code for 

State & Local Governments § 1-104, Alternative B (Am. Bar Ass’n 

2000) (“All political subdivisions and other local public agencies of 

this State are authorized to adopt all or any part of this Code and its 

accompanying regulations.”). Section 41-2614 of our state code

provides that a final administrative decision concerning 

procurement is subject to judicial review under the Administrative 

Review Act (ARA), A.R.S. §§ 12-901 to 12-914. And, consistent with 

the City’s position, judicial review under the ARA is initiated by 

filing a notice of appeal in the superior court. See §§ 12-904, 12-905. 

Although the ARA generally is inapplicable to cities, see § 12-901(1); 

Stant, 234 Ariz. 196, ¶ 10, 319 P.3d at 1005, a specific statute could 

authorize cities to adopt it. See Augustine, 188 Ariz. at 371, 936 P.2d 

at 557. It therefore could be argued that the City’s Procurement 
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

8

Code was an analogous local version of the state code, and 

consequently authorized by § 41-2501(C). See Model Procurement 

Code for State & Local Governments § 1-104 cmt. to Alternative B 

(noting that application or adoption of model code requires “various 

sections of this Code . . . to be adjusted” for local governments). 

Because the City has developed no such contention on appeal, 

however, we need not address the numerous legal issues that might

attend this line of argument.

¶16 Ultimately, we conclude the City’s Procurement Code 

was neither an adoption of nor a permissible extension of the state 

procurement code because the City’s Procurement Code shared the 

same essential defect identified in Augustine. There, our supreme 

court explained that the state procurement code normally provides a 

“two-tiered administrative process” of review prior to possible court 

action. Augustine, 188 Ariz. at 370, 936 P.2d at 556. Under that 

system, a contract claim first is reviewed by the governmental unit 

that purchased the goods or services. Id. A second level of review 

then occurs with the director of the department of administration. 

Id. In this way, the state procurement code creates a “dual entity 

scheme” of review in which “the purchasing agency and the director 

are separate entities.” Id. Augustine expressly noted that it did not 

address the situation where the department of administration was 

also the purchasing entity. Id. at 370 n.1, 936 P.2d at 556 n.1.

¶17 In Augustine, the state board of education had 

attempted to create a review process consistent with the state 

procurement code. See id. at 370, 936 P.2d at 556. But that process 

deviated from the state code insofar as it allowed the governing 

boards of school districts to resolve their own contract disputes. 

“[W]hile structured as a two-tiered process in form, in substance [it] 

provide[d] a one-tier process in which the purchasing body 

constitute[d] both the first and second tier.” Id.

¶18 The City’s process here shared the same critical defect. 

The director of procurement executed the contract with Falcone. A 

City contract officer served as the first administrative adjudicator in 

the procurement dispute. See TC §§ 28-91 to 28-93. The second level 

of administrative review then took place before a hearing officer 

selected by the City’s procurement director. See TC §§ 28-94, 28-96, 
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

9

28-113. But that hearing officer made only recommended findings 

and conclusions; the City’s procurement director retained the 

ultimate decision-making authority in the proceeding. See TC 

§§ 28-114, 28-115.4

¶19 These are the same operative facts as in Augustine, 188 

Ariz. at 370, 936 P.2d at 556. Despite its formalities, the City’s 

process provided only one level of administrative review in which

the City, through its agents and employees, acted as “both the 

first-tier reviewer and the second-tier final decision maker.” Id.; see 

also State ex rel. Thomas v. Schneider, 212 Ariz. 292, ¶ 16, 130 P.3d 991, 

995 (App. 2006) (“Like other legal entities, a city ‘can only act 

through its agents.’”), quoting Samaritan Found. v. Goodfarb, 176 Ariz. 

497, 502, 862 P.2d 870, 875 (1993). The City, through its director of 

procurement, was a party to the contract under review. 

See Augustine, 188 Ariz. at 370, 936 P.2d at 556. Thus, as Augustine 

established, the City’s scheme was inconsistent with Arizona’s 

procurement code. The City failed to “adopt” the state procurement 

code within the meaning of § 41-2501(C).

¶20 The City alternatively asserts that the administrative 

review process under its Procurement Code is authorized by a 

portion of our notice-of-claim statute, § 12-821.01(C). Yet this statute 

does not serve as enabling legislation. Section 12-821.01(C) merely 

establishes the time for filing a notice of claim. The provision 

specifies the “accru[al]” date for claims against public entities that 

must first be submitted to a non-judicial review process “pursuant 

to a statute, ordinance, resolution, administrative or governmental 

rule or regulation, or contractual term.” Id. The statute does not 

give cities authority to establish unlimited administrative-claims 

processes; rather, the law presumes that authority for the particular 

claims process exists in another source, such as a statute or contract.

 

4We note that the process has changed materially due to 

amendments to the Procurement Code in 2015. See Tucson, Ariz., 

Ordinance No. 11296, § 1 (Aug. 5, 2015). Our analysis does not 

address the present code.
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

10

2. Contractual Authorization

¶21 At oral argument, the City suggested its administrative 

review process is enforceable as an arbitration agreement because 

the parties mutually agreed to be bound by this alternative dispute 

resolution process. Putting aside the fact that the Procurement Code 

itself distinguished the process here from arbitration, see TC §§ 28-

94, 28-98, we are not persuaded by the City’s contractual argument. 

The enforceability of an arbitration provision is determined by 

considering the provision as an independent agreement, separate 

from the underlying contract. Stevens/Leinweber/Sullens, Inc. v. Holm 

Dev. & Mgmt., Inc., 165 Ariz. 25, 29-30, 795 P.2d 1308, 1312-13 (App.

1990). “An arbitration provision is not valid or enforceable where ‘a 

ground exists . . . at law or in equity for the revocation of a 

contract,’” Austin v. Austin, 237 Ariz. 201, ¶ 12, 348 P.3d 897, 902 

(App. 2015), quoting A.R.S. § 12-3006(A), such as substantive 

unconscionability. Clark v. Renaissance W., LLC, 232 Ariz. 510, ¶ 8, 

307 P.3d 77, 79 (App. 2013). For example, arbitration agreements are 

unconscionable and unenforceable when they give an employer 

unrestricted control over the selection of arbitrators such that the

employer’s own managers can serve as the sole decision makers in 

the dispute. Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 938-40 (4th 

Cir. 1999).

¶22 In this case, the City’s director of procurement not only 

selected the hearing officer, without any apparent constraints on this

appointment power, TC § 28-113, but the director also retained the 

authority to reject that hearing officer’s recommendation, modify it, 

“or make any other appropriate disposition.” TC § 28-114(2). Such 

a one-sided scheme is invalid because it denies the other party a 

neutral, unbiased decision maker. See Hooters of Am., 173 F.3d at 940;

cf. Stevens/Leinweber/Sullens, Inc., 165 Ariz. at 30, 795 P.2d at 1313

(finding arbitration agreement unenforceable when one party’s 

discretion over dispute-resolution process was “grossly 

inequitable”). In short, the same self-dealing feature that made the 

City’s process of administrative review deviate from the state 

procurement code also rendered that process unenforceable as a 

matter of contract law.
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

11

¶23 In the absence of any statutory or contractual 

authorization, the City therefore could not render binding decisions 

in its contractual disputes or limit aggrieved parties to “special 

action review” under TC § 28-117.5 When no statutory authority

exists for review before the superior court, an agreement purporting 

to create such review is invalid and unenforceable. Grosvenor, 222 

Ariz. 588, ¶¶ 14-16, 218 P.3d at 1052. Similarly, unless an ordinance 

concerning judicial review “is supported by and implicates a statute 

that expressly gives the superior court subject matter jurisdiction,” 

such an ordinance is invalid. Id. ¶ 26.

¶24 Applying these principles in Grosvenor, we held void a 

contractual provision that attempted to limit the superior court’s 

role in a contract action. Id. ¶ 28. The provision there essentially 

transformed “a de novo complaint” for breach of contract into 

“nothing more than a request for review under the ARA.” 

Grosvenor, 222 Ariz. 588, ¶ 21, 218 P.3d at 1054. In effect, the parties’ 

contract waived the right to a jury trial by making the county’s 

administrative decision final and subjecting that decision only to a 

limited form of judicial review in the superior court. See id. ¶¶ 3-7. 

In Grosvenor, we held this provision void despite the fact that it had 

been negotiated by sophisticated parties. Id. ¶ 28 & n.4.

¶25 Here, as in Grosvenor, the superior court’s jurisdiction 

over the contract claim could not be limited by the City. Nor could 

the City limit the trial court’s role in that action, effectively denying 

Falcone a trial de novo on its breach-of-contract claim. Although the 

City’s ordinance was patterned after the state procurement code, the

ARA’s provision limiting the scope of judicial review did not apply

because the ordinance failed to conform to the state code. Special 

action review likewise did not apply, because the City’s 

administrative review process made “the interested party . . . the 

 

5Because Falcone otherwise participated in the review process 

prescribed by the Procurement Code, we need not decide whether 

the City could compel participation in that process as a mere 

condition of bringing suit. We further note that the City has not 

argued Falcone waived any challenge to the administrative review 

process by entering into the underlying contract with the City.
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

12

adjudicator of contract obligations,” Augustine, 188 Ariz. at 370, 936 

P.2d at 556, without any legal authority. Only statutes and court 

rules govern special actions in the superior court. See Schoenberger v. 

Bd. of Adjustment of City of Phx., 124 Ariz. 528, 530, 606 P.2d 18, 20 

(1980); see also Seisinger v. Siebel, 220 Ariz. 85, ¶¶ 7-8, 203 P.3d 483, 

486-87 (2009). Without a lawful administrative review process in 

place, the City could neither effectuate a waiver of trial rights nor 

shield itself from de novo review of contract claims. Cf. Tempe Life 

Care Vill., 148 Ariz. at 266, 714 P.2d at 436 (distinguishing a “charter 

city’s enforcement of its ordinances” from “a ruling made by a state 

administrative agency”). Just as the contractual provisions in 

Grosvenor were invalid and unenforceable, TC §§ 28-117 and 28-118 

were similarly invalid insofar as they designated special action 

review in the superior court the exclusive avenue for judicial relief.

¶26 Moreover, to the extent the City believed a special 

action was available under our general certiorari statute, A.R.S. 

§ 12-2001, see Ariz. R. P. Spec. Act. 1(b), we note that certiorari does 

not exist as a matter of right; it is discretionary with the superior 

court. See Bilagody v. Thorneycroft, 125 Ariz. 88, 92, 607 P.2d 965, 969 

(App. 1979); see also Book Cellar, Inc. v. City of Phoenix, 139 Ariz. 332, 

336, 678 P.2d 517, 521 (App. 1983); Estrin v. Superior Court, 96 P.2d 

340, 342 (Cal. 1939).6 In addition, no time limit exists for a certiorari 

action; the doctrine of laches serves as the only limitation. 

Schoenberger, 124 Ariz. at 530, 606 P.2d at 20. An ordinance 

purporting to place a time limit on a certiorari action is invalid. Id. 

Accordingly, TC § 28-117 neither created a right of review in the 

superior court nor limited the time for judicial review to occur, and 

Falcone was not required to seek relief through a void ordinance. 

See Manning v. Reilly, 2 Ariz. App. 310, 312, 408 P.2d 414, 416 (1965).

 

6 “Our constitutional and statutory provisions relative to 

certiorari are comparable to those of California and other 

neighboring states.” Hunt v. Norton, 68 Ariz. 1, 5, 198 P.2d 124, 126 

(1948).
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

13

C. The City’s Arguments

1. Exhaustion of Administrative Remedies

¶27 Contrary to the City’s assertion, the exhaustion doctrine 

does not support the dismissal of the present case. This doctrine 

generally provides that a party must exhaust all available 

administrative remedies before seeking relief in the courts. See Sw. 

Soil Remediation, Inc. v. City of Tucson, 201 Ariz. 438, ¶ 12, 36 P.3d 

1208, 1212 (App. 2001). But the doctrine “must be applied in each 

case with an ‘understanding of its purposes and of the particular 

administrative scheme involved.’” Farmers Inv. Co. v. Ariz. State 

Land Dep’t, 136 Ariz. 369, 373, 666 P.2d 469, 473 (App. 1982), quoting

McKart v. United States, 395 U.S. 185, 193 (1969). “The basic purpose 

of the doctrine is to allow an administrative agency to perform 

functions within its special competence—to make a factual record, to 

apply its expertise, and to correct its own errors so as to moot 

judicial controversies.” Id., quoting Parisi v. Davidson, 405 U.S. 34, 37 

(1972).

¶28 Assuming for the purpose of argument that the City’s 

Procurement Code is valid, the fact remains that Falcone exhausted 

all administrative remedies in this case. When the procurement 

director issued his or her decision, the matter became complete for 

administrative purposes. “The administrative remedy that must be 

exhausted is the main event.” Sw. Paint & Varnish Co. v. Ariz. Dep’t 

of Envtl. Quality, 194 Ariz. 22, ¶ 15, 976 P.2d 872, 875 (1999). No 

request for rehearing was required in order for the matter to be 

exhausted. Id.

¶29 Although the City maintains Falcone failed to exhaust 

administrative remedies because it did not file a special action in the 

superior court, as prescribed by TC § 28-117, the City overlooks the 

fact that certiorari is not an “administrative” remedy that must be 

exhausted before a party may seek relief in court. “According to the 

doctrine of exhaustion of remedies, ‘litigants may not seek judicial 

relief for a supposed or threatened injury until the prescribed 

administrative remedy has been exhausted.’” Moulton v. Napolitano, 205 

Ariz. 506, ¶ 9, 73 P.3d 637, 642 (App. 2003), quoting Medina v. Ariz. 

Dep’t of Transp., 185 Ariz. 414, 417, 916 P.2d 1130, 1133 (App. 1995)
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

14

(emphasis added). All administrative remedies were exhausted in 

this case upon the director’s decision, even assuming arguendo that 

the exhaustion doctrine applied.

2. Res Judicata, Collateral Estoppel

¶30 Relying on Guertin v. Pinal County, 178 Ariz. 610, 875 

P.2d 843 (App. 1994), and Hurst v. Bisbee Unified School District No. 

Two, 125 Ariz. 72, 607 P.2d 391 (App. 1979), the City maintains that 

the procurement director’s decision should be given finality and that 

Falcone’s contract claim should be dismissed as an impermissible 

collateral attack on that decision. Citing Hurst, 125 Ariz. at 75, 607 

P.2d at 394, the City specifically asserts that Falcone’s due process 

argument is precluded because the administrative decision “is 

conclusively presumed to be just, reasonable and lawful” in the 

absence of a special action taken under TC § 28-117. The cases cited 

are inapt for several reasons.

¶31 First, the cases are distinguishable because they 

involved entities that were authorized by statute to conduct a 

non-judicial review in the first instance. See Guertin, 178 Ariz. at 611 

n.1, 875 P.2d at 844 n.1; Hurst, 125 Ariz. at 76, 607 P.2d at 395. The

City is a municipal corporation, City of Tucson v. Rineer, 193 Ariz. 

160, ¶ 2, 971 P.2d 207, 208-09 (App. 1998), and lacks legal authority 

for its administrative scheme here.

¶32 A second, yet related, distinguishing factor concerns 

finality. Collateral estoppel requires, among other things, “a valid 

and final decision on the merits.” Aldabbagh v. Ariz. Dep’t of Liquor 

Licenses & Control, 162 Ariz. 415, 418, 783 P.2d 1207, 1210 (App. 

1989), quoting Gilbert v. Bd. of Med. Exam’rs, 155 Ariz. 169, 174, 745 

P.2d 617, 622 (App. 1987). Both Guertin and Hurst involved statutes 

that granted a right of judicial review to parties but otherwise gave 

finality to the non-judicial decisions that had been issued. See 

Guertin, 178 Ariz. at 611-12, 875 P.2d at 844-45; Hurst, 125 Ariz. at 73-

75, 607 P.2d at 392-94.

¶33 The City’s Procurement Code, by contrast, lacks a 

statutory right of judicial review. Section 28-117 of the Procurement 

Code is a nullity, as we explained above, because a city can neither 
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

15

authorize a special action in the superior court nor limit the time for 

filing one. Furthermore, no statute here prescribed judicial review 

as a party’s “exclusive remedy.” Guertin, 178 Ariz. at 612, 875 P.2d 

at 845. Thus, even assuming the City’s procurement director was 

empowered to make findings in this matter, no law makes those 

findings binding or gives them preclusive effect in a contract action 

filed in the superior court. In short, the director’s decision lacks 

statutory finality. See Campbell v. Superior Court, 18 Ariz. App. 287, 

288, 289, 501 P.2d 463, 464, 465 (1972).

¶34 The City’s argument suffers a third flaw insofar as the 

authorities it relies on upheld decisions that were made after “a full 

and fair opportunity to litigate the issue.” Guertin, 178 Ariz. at 612, 

875 P.2d at 845. Collateral estoppel only applies when a prior 

proceeding affords a “full and fair opportunity” for litigation. 

Aldabbagh, 162 Ariz. at 418, 783 P.2d at 1210, quoting Gilbert, 155 Ariz. 

at 174, 745 P.2d at 622. Here, as we previously explained, the City’s 

administrative proceeding allowed the City to adjudicate its own 

contract dispute. Preclusion of claims “naturally presupposes the 

opportunity to raise [them] and have [them] timely decided by a 

competent . . . tribunal.” Gibson v. Berryhill, 411 U.S. 564, 577 (1973). 

Thus, neither res judicata nor collateral estoppel forecloses an 

argument “that the administrative body itself was unconstitutionally 

constituted” and “incompetent by reason of bias to adjudicate the 

issues . . . before it,” id., as Falcone contends here.

¶35 We interpret Hurst as being consistent with this 

authority. Implicit in that opinion are the dual premises that an 

aggrieved teacher could challenge, by way of her statutory right of 

appeal, a governing board’s decision on the grounds that it was 

unconstitutional or procedurally unlawful and that this process 

provided the teacher a full and fair opportunity to litigate any claims 

concerning due process or bias. See Hurst, 125 Ariz. at 73-75, 607 

P.2d at 392-94. In essence, Hurst was a case in which statutes made 

the governing board’s decision final and conclusive in the absence of 

an appeal. See Campbell, 18 Ariz. App. at 289, 501 P.2d at 465. 

Unlike Hurst, however, there is no basis to presume the City’s 

process is lawful or regular, because that process is neither 
FALCONE BROS. v. CITY OF TUCSON

Opinion of the Court

16

statutorily created nor subject to an appeal in which aggrieved 

parties may challenge the fairness of that system.

IV. Disposition

¶36 For the foregoing reasons, the trial court’s order 

dismissing the complaint is reversed and the case remanded for 

further proceedings consistent with this opinion. We deny Falcone’s 

request for attorney fees, which is made without reference to any 

statute or contractual provision that would authorize such an award. 

See Ariz. R. Civ. App. P. 21(a)(2); Ezell v. Quon, 224 Ariz. 532, ¶ 31, 

233 P.3d 645, 652 (App. 2010). We grant Falcone’s request for costs, 

subject to its compliance with Rule 21(b).