IN THE

ARIZONA COURT OF APPEALS

DIVISION TWO

JOHN R. FRANCE,

Plaintiff/Appellant,

v.

ARIZONA COUNTIES INSURANCE POOL,

AN ARIZONA CORPORATION,

Defendant/Appellee.

No. 2 CA-CV2022-0024

Filed October 21, 2022

Appeal from the Superior Court in Gila County

Nos. S0400CV201900231 and S0400CV202100061

The Honorable David E. Wolak, Judge Pro Tempore

AFFIRMED

COUNSEL

O’Steen & Harrison PLC, Phoenix

By Jonathan V. O’Steen and Kathryn K. McCormick

Counsel for Plaintiff/Appellant

Wright Welker & Pauole PLC, Phoenix

By Christopher S. Welker and Richard R. Carpenter

Counsel for Defendant/Appellee
FRANCE v. ARIZ. CNTYS. INS. POOL

Opinion of the Court

2

OPINION

Chief Judge Vásquez authored the opinion of the Court, in which Presiding 

Judge Eckerstrom and Judge Cattani concurred.

V Á S Q U E Z, Chief Judge:

¶1 John France appeals from a judgment dismissing his 

insurance bad faith claim against Arizona Counties Insurance Pool (ACIP),

arguing the court erred by ruling his claim was time-barred.

1 For the 

following reasons, we affirm.

Factual and Procedural Background

¶2 In reviewing an order granting a motion to dismiss, “we look 

only to the complaint, assuming the truth of all well-pled factual allegations 

and indulging all reasonable inferences.” Sw. Non-Profit Hous. Corp. v. 

Nowak, 234 Ariz. 387, ¶ 10 (App. 2014). In June 2017, France was involved 

in a shooting incident that occurred while he was employed as a sergeant

with the Gila County Sheriff’s Department. He suffered post-traumatic 

stress disorder as a result and was unable to return to work. He later filed 

a workers’ compensation claim, which ACIP, his employer’s insurer, 

denied on August 7, 2017. France timely contested the denial with the 

Industrial Commission of Arizona (ICA). On March 27, 2018, the ICA 

issued its decision and award, also denying France’s claim. 

¶3 France appealed, and on February 18, 2020, this court set aside 

the ICA’s decision and award, concluding that the ICA had incorrectly 

interpreted the relevant statute. France v. Indus. Comm’n, 248 Ariz. 369, 

¶¶ 13-15, 17 (App. 2020). The Arizona Supreme Court accepted review,

clarified the applicable standard, vacated the opinion of this court, and set 

aside the ICA’s decision and award. France v. Indus. Comm’n, 250 Ariz. 487, 

1Given this resolution, and recognizing that this court may affirm a 

decision if it is correct for any reason, see Goldman v. Sahl, 248 Ariz. 512, ¶ 56 

(App. 2020), we need not address other arguments France raises on appeal, 

see Sw. Barricades, L.L.C. v. Traffic Mgmt., Inc., 240 Ariz. 139, n.3 (App. 2016).
FRANCE v. ARIZ. CNTYS. INS. POOL

Opinion of the Court

3

¶¶ 12, 25 (2021). As a result, the parties stipulated that France’s claim was 

compensable and that he was entitled to workers’ compensation benefits. 

¶4 In August 2019, France sued ACIP, claiming it had acted in 

bad faith by denying his workers’ compensation claim. He filed a notice of 

claim on July 28, 2020, “[i]n an abundance of caution,” noting that ACIP 

had taken the position that the notice of claim statute applied to claims 

against it. In February 2021, he filed a second lawsuit for bad faith against 

ACIP and its member counties, which the trial court consolidated with his 

August 2019 lawsuit.

¶5 ACIP moved to dismiss, arguing France’s claim was timebarred. On the merits, ACIP argued that it had not acted in bad faith 

because it had a reasonable basis to deny France’s coverage. The trial court 

granted ACIP’s motion, ruling that France had failed to timely serve a 

notice of claim and failed to timely file his lawsuit. France appealed after 

entry of a final judgment. We have jurisdiction under A.R.S. §§ 12-

120.21(A)(1) and 12-2101(A)(1).

Discussion

¶6 We review de novo a trial court’s dismissal of an action under 

Rule 12(b)(6), Ariz. R. Civ. P., based on a statute of limitations. Standard 

Constr. Co. v. State, 249 Ariz. 559, ¶ 5 (App. 2020). Dismissal is appropriate 

when, as a matter of law, the plaintiff is not “entitled to relief under any 

interpretation of the facts susceptible of proof.” Coleman v. City of Mesa, 230 

Ariz. 352, ¶ 8 (2012) (quoting Fid. Sec. Life Ins. Co. v. State, 191 Ariz. 222, ¶ 4 

(1998)). “The affirmative defense of a statute of limitations may be raised 

in a motion to dismiss if it appears on the face of the complaint that the 

claim is barred.” Republic Nat’l Bank of N.Y. v. Pima County, 200 Ariz. 199, 

¶ 20 (App. 2001).

¶7 Claims brought against “any public entity” are subject to a 

one-year statute of limitations. A.R.S. § 12-821. However, before filing a 

claim against a public entity, a party must first file a notice of claim “within 

one hundred eighty days after the cause of action accrues.” A.R.S. § 12-

821.01(A); see Donovan v. Yavapai Cnty. Cmty. Coll. Dist., 244 Ariz. 608, ¶ 7

(App. 2018). Failure to comply with these requirements bars a claim.2 § 12-

821.01(A); see Standard Constr. Co., 249 Ariz. 559, ¶ 6.

2On appeal, neither party disputes that ACIP is a public entity 

subject to the requirements of §§ 12-821 and 12-821.01. 
FRANCE v. ARIZ. CNTYS. INS. POOL

Opinion of the Court

4

¶8 To determine whether a claim is time-barred, we must 

consider: (1) the cause of action’s accrual date, (2) the applicable limitations 

period, (3) the date the plaintiff filed his or her claim, and (4) any possible 

tolling or suspending of the limitations period. Logerquist v. Danforth, 188 

Ariz. 16, 18 (App. 1996). There is no dispute regarding the second or third 

inquiry; therefore, this case hinges upon a determination of the first and 

fourth inquiries. 

¶9 France filed his first lawsuit alleging bad faith on August 6, 

2019 and served his notice of claim July 28, 2020. To determine whether his 

bad faith claim is time-barred, we must first resolve when it accrued. 

¶10 Under the notice-of-claim statute, a claim accrues “when the 

damaged party realizes he or she has been damaged and knows or 

reasonably should know the cause, source, act, event, instrumentality or 

condition that caused or contributed to the damage.” § 12-821.01(B). Put 

simply, a claim accrues when one party can sue another. Mertola, LLC v. 

Santos, 244 Ariz. 488, ¶ 10 (2018). Generally, a party can sue for bad faith

when an insurance company denies, fails to process, or fails to pay a claim 

without a reasonable basis for doing so. Ness v. W. Sec. Life Ins., 174 Ariz. 

497, 500 (App. 1992). And specifically in the workers’ compensation 

context, for a claim that a denial of coverage was made in bad faith, the 

plaintiff must show: 

(1) the carrier and the injured worker had an 

insurer-insured relationship . . . ; (2) the absence 

of a reasonable basis for denying benefits . . . ; 

(3) the [carrier’s] knowledge or reckless 

disregard of the lack of a reasonable basis for 

denying the claim . . . ; and (4) traditional tort 

damages proximately caused by the denial of 

workers’ compensation benefits rather than the 

damages resulting from the workplace 

injury . . . .

Merkens v. Fed. Ins., 237 Ariz. 274, ¶ 16 (App. 2015). 

¶11 On appeal, both parties cite Merkens, for the proposition that 

France’s bad faith claim did not accrue until there was a compensability 

determination by the ICA. However, they differ on when that 

determination occurred. In his opening brief, France argues that his bad

faith claim did not accrue until February 18, 2020, when he received a 

favorable determination of benefits after this court had set aside the ICA 

decision, establishing ACIP’s underlying liability. See France, 248 Ariz. 369. 
FRANCE v. ARIZ. CNTYS. INS. POOL

Opinion of the Court

5

¶12 At oral argument in this court, France argued for the first time 

that under § 12-821.01(C), his claim accrued on May 6, 2021, when the ICA 

issued its “final decision” following our supreme court’s opinion, thereby 

“exhaust[ing] his administrative remedies.” Generally, arguments raised 

for the first time at oral argument on appeal are untimely and deemed 

waived. Mitchell v. Gamble, 207 Ariz. 364, ¶ 16 (App. 2004). In our 

discretion, we decline to apply waiver here. See Noriega v. Town of Miami, 

243 Ariz. 320, ¶ 27 (App. 2017) (waiver doctrine is discretionary). Even on 

the merits, however, France’s argument fails. Section 12-821.01(C) states in 

relevant part that a claim against a public entity “that must be submitted 

to . . . an administrative claims process or review process pursuant to a 

statute . . . shall not accrue for the purposes of this section until all such 

procedures, processes or remedies have been exhausted.” However, this 

subsection does not apply because France’s insurance bad faith claim, 

unlike his workers’ compensation claim, is not subject to an administrative 

claims process. See Merkens, 237 Ariz. 274, ¶ 18 (recognizing workers’ 

compensation claims, over which ICA has exclusive jurisdiction, are 

separate from bad faith claims); see also Manterola v. Farmers Ins. Exch., 200 

Ariz. 572, ¶ 18 (App. 2001) (bad faith claims have “independent standing, 

irrespective of coverage”).

¶13 ACIP disagrees with the accrual date urged by France, 

arguing that the pending appeal concerning compensability did not delay 

the accrual of France’s claim and that France’s claim accrued on March 27, 

2018, when the ICA issued its decision and award. In its motion to dismiss, 

ACIP argued that France’s claim had accrued when it denied France’s 

workers’ compensation claim on August 7, 2017. Now on appeal, it argues 

that under Merkens and § 12-821.01(C), France’s claim did not accrue until 

the ICA made its compensability determination. We generally prohibit a 

party from advancing a new theory for the first time on appeal. See Pima 

County v. Testin, 173 Ariz. 117, 119 (App. 1992). However, in granting 

ACIP’s motion, the trial court ruled that France failed to file his notice of 

claim or bad faith claim within the statutory requirements “from either the 

denial of his claim by ACIP on August 7, 2017 or the ICA on March 27, 

2018.” Because the court considered both dates, we will consider ACIP’s 

new argument on appeal. See Noriega, 243 Ariz. 320, ¶ 27 (while arguments 

not raised below are generally not considered on appeal, “the doctrine 

of waiver is discretionary”).

¶14 Both parties’ reliance on Merkens is misplaced. In Merkens, a 

claimant filed a workers’ compensation claim after sustaining an injury 

from inhaling a toxic substance. 237 Ariz. 274, ¶ 2. Her employer’s insurer 

initially covered the claim but later terminated her benefits after 
FRANCE v. ARIZ. CNTYS. INS. POOL

Opinion of the Court

6

independent medical examinations. Id. ¶¶ 2-5. Instead of challenging the 

termination with the ICA, she filed a bad faith lawsuit against her 

employer’s insurer. Id. ¶ 5. This court concluded the ICA has “exclusive 

jurisdiction to determine whether the injured worker is entitled to benefits 

and the amount of those benefits.” Id. ¶ 18. Therefore, the trial court lacked 

jurisdiction to consider her bad faith claim because a claimant “must first 

have at least sought a compensability determination from the” ICA. Id.

(emphasis added). Merkens, however, did not address when a bad faith 

claim accrues for statute-of-limitations purposes, but was decided on a 

jurisdictional issue. Accordingly, we look for guidance elsewhere.

¶15 Although neither party cites Manterola v. Farmers Insurance 

Exchange, 200 Ariz. 572, we find it instructive on the issue before us. 

Manterola addressed whether an insurance bad faith claim accrues “when a 

judgment in the underlying personal injury action against the insured 

becomes final, or when a final determination of coverage is later made in 

the [declaratory relief action].” Id. ¶ 1. There, Manterola filed a personal

injury case. Id. ¶ 3. The defendants were insured by Farmers, which then 

contested coverage in a separate declaratory relief action. Id. ¶¶ 4-5.

¶16 In January 1996, the defendants in the personal injury action

stipulated to a judgment against them and assigned Manterola their rights

under the Farmers’ policies. Id. ¶ 4. In May 1999, in the declaratory relief 

action, a judgment against Farmers was entered pursuant to this court’s 

mandate. Id. ¶ 5. In September 1999, Manterola filed a bad faith claim

against Farmers, alleging it had improperly denied coverage. Id. ¶ 6.

Farmers successfully moved to dismiss, arguing it was time-barred. Id.

¶¶ 6-7. This court affirmed, rejecting Manterola’s argument that her bad 

faith claim had not accrued until May 1999, when there was “a final 

determination of coverage.” Id. ¶¶ 12, 34. Instead, the court noted 

Manterola was an assignee of the defendants in the personal injury action, 

meaning her bad faith claim accrued in 1996, when the judgment in the 

personal injury case became final. Id. ¶ 24.

¶17 In reaching that conclusion, this court agreed with Manterola 

that “a bad faith claim based solely on a carrier’s denial of coverage will fail 

on the merits if a final determination of noncoverage ultimately is made.” 

Id. ¶ 20. We also agreed that “only after Farmers’ [declaratory relief action]

had been fully litigated and had resulted in a final determination of 

coverage could Manterola prove that Farmers’ denial of coverage had been 

unreasonable, a necessary element of [her bad faith] claim.” Id. ¶ 21. 

Despite agreeing on these two points, we determined that her accrual 

argument “conflicts with well-established Arizona law that recognizes a 

bad faith claim’s independent standing, irrespective of coverage.” Id. ¶ 18. 
FRANCE v. ARIZ. CNTYS. INS. POOL

Opinion of the Court

7

¶18 Similarly, here, we reject France’s contention that before he 

could file a bad faith claim, he was required first to establish coverage for 

the industrial injury. Although whether he suffered a compensable injury

(i.e., a covered claim) is a necessary element of a bad faith claim, this does 

not answer when a bad faith claim accrues. As in Manterola, the final 

outcome of the compensability dispute “did not control when [the] bad 

faith claim accrued.” See id. And because “resolution of the merits of a bad 

faith claim presents different issues than determination of the accrual of 

that claim for statute of limitation purposes,” the absence of a final 

compensability determination does not delay the accrual of filing a bad

faith claim. See id. ¶ 23; see also Merkens, 237 Ariz. 274, ¶ 18 & n.6

(suggesting that a bad faith claim may accrue before final compensability 

determination and “there can be simultaneous proceedings in both the 

Industrial Commission and superior court”).

¶19 By contending his bad faith claim was not “ripe” until this 

court ruled in his favor, France appears to argue that the “final judgment 

accrual rule,” adopted by our supreme court in Taylor v. State Farm Mutual

Automobile Insurance Co., 185 Ariz. 174 (1996), should apply in the workers’

compensation context. Taylor, however, expressly limited application of the

rule to “third-party bad faith refusal to settle claim[s].” Id. at 176 n.3, 179. 

And Manterola noted the Taylor rule does not apply to denial-of-coverage 

bad faith claims. Manterola, 200 Ariz. 572, ¶ 27 & n.5. Here, France’s bad

faith claim is a first-party denial-of-coverage claim. See Mendoza v. 

McDonald’s Corp., 222 Ariz. 139, ¶ 32 (App. 2009) (“A bad faith claim by an 

injured employee against his or her employer’s workers’ compensation 

carrier is considered a first-party claim.”). Thus, Taylor does not apply.

¶20 Instead, in this context, a bad faith claim accrues when the 

insurer denies coverage. See Ness, 174 Ariz. at 501 (“The cause of action 

does not accrue until the insurer breaches, and the insurer does not breach 

until it denies the claim.”). Therefore, France’s bad faith claim accrued 

when ACIP denied coverage in August 2017. Thus, the statute of 

limitations expired in August 2018. Because he did not file his bad faith 

claim until August 2019 or comply with the notice-of-claim statute until 

July 2020, the trial court did not err in finding his claim time-barred. 

¶21 France maintains this conclusion “invites inefficiency and 

chaos” in addition to “burdening our court system.” We addressed similar 

concerns in Manterola and noted that it is a “fairly common practice” of 

insureds to file counterclaims alleging bad faith in declaratory relief actions. 

200 Ariz. 572, ¶ 28. We also acknowledged that the bad faith claim could 

be brought as a separate action. Id. ¶ 29. Under either scenario, if coverage 

is the deciding factor in a bad faith claim, “the parties may stipulate to, or 
FRANCE v. ARIZ. CNTYS. INS. POOL

Opinion of the Court

8

the court on proper motion may order, a stay of the bad faith claim, pending 

final resolution of the coverage issue.” Id. We stated this approach 

“arguably is the most cost effective and promotes judicial economy.” Id. In 

sum, the final coverage determination neither tolls nor affects the accrual of 

a bad faith claim. Id. “[France’s] bad faith claim accrued, for statute of 

limitations purposes, even though coverage still was uncertain.” Id. ¶ 27. 

Therefore, the trial court did not err by granting ACIP’s motion to dismiss 

on the basis that France’s claim was time-barred.

Attorney Fees on Appeal

¶22 ACIP requests its attorney fees on appeal pursuant to A.R.S. 

§ 12-341.01 and Rule 21(a), Ariz. R. Civ. App. P. Under § 12-341.01(A), we 

have the discretion to grant the “successful party reasonable attorney fees” 

in “any contested action arising out of a contract.” In our discretion, we 

deny ACIP’s request for attorney fees. But as the successful party, ACIP is 

entitled to its costs incurred on appeal under A.R.S. § 12-341, upon its

compliance with Rule 21. 

Disposition

¶23 For the foregoing reasons, we affirm the trial court’s dismissal 

of France’s bad faith claim.