Court Opinion

ID: 867388
Source: CourtListenerOpinion
Date Created: 2013-05-11 22:44:46.027138+00
Date Added: 2024-06-11T09:06:48.444367
License: Public Domain

SUPREME COURT OF ARIZONA
                             En Banc

DEER VALLEY UNIFIED SCHOOL        )   Arizona Supreme Court
DISTRICT NO. 97, a political      )   No. CV-06-0275-PR
subdivision of the State of       )
Arizona,                          )   Court of Appeals
                                  )   Division One
                      Petitioner, )   No. 1 CA-SA 06-0143
                                  )
                 v.               )   Maricopa County
                                  )   Superior Court
HON. ROBERT C. HOUSER, JUDGE OF   )   No. CV 2006-050755
THE SUPERIOR COURT OF THE STATE   )
OF ARIZONA, in and for the        )
County of Maricopa,               )
                                  )   O P I N I O N
                Respondent Judge, )
                                  )
PAMELA McDONALD,                  )
                                  )
          Real Party in Interest. )
                                  )
__________________________________)

         Order of the Superior Court in Maricopa County
              The Honorable Robert C. Houser, Judge

                        REVERSED; REMANDED
________________________________________________________________

LEWIS AND ROCA LLP                                          Phoenix
     By   Mary Ellen Simonson
          Justin S. Pierce
Attorneys for Deer Valley Unified School District #97

LAW OFFICES OF MARSHALL A. MARTIN                       Scottsdale
     By   Marshall A. Martin
Attorney for Pamela McDonald

CITY OF PHOENIX                                             Phoenix
     By   Gary Verburg, City Attorney
          Stephen J. Craig
Attorneys for Amicus Curiae City of Phoenix

MOYES STOREY LTD                                            Phoenix
     By   William J. Sims, III
          C. Brad Woodford
Attorneys for Amicus Curiae Arizona Municipal Risk
Retention Pool

LEAGUE OF ARIZONA CITIES AND TOWNS                                              Tempe
     By   David R. Merkel
Attorney for Amicus Curiae League of Arizona Cities
and Towns

MANGUM WALL STOOPS & WARDEN PLLC                                          Flagstaff
     By   A. Dean Pickett
Attorneys for Amicus Curiae Arizona School Risk
Retention Trust

DECONCINI MCDONALD YETWIN & LACY PC                                            Tucson
     By   John C. Richardson
Attorneys for Amici Curiae Pima County Community College
District, Graham County Community College District aka
Eastern Arizona College, Yuma-La Paz Counties Community
College District aka Arizona Western College

ARIZONA SCHOOL BOARDS ASSOCIATION                        Phoenix
     By   Christopher P. Thomas
Attorney for Amicus Curiae Arizona School Boards
Association
________________________________________________________________

M c G R E G O R, Chief Justice

¶1             Before   initiating     an       action   for   damages   against    a

public entity, a claimant must provide a notice of claim to the

entity    in    compliance      with   Arizona      Revised    Statutes    (A.R.S.)

section 12-821.01 (2003).              Added in 1994, section 12-821.01.A

requires, in part, that a notice of claim include “a specific

amount    for    which    the    claim      can    be    settled   and   the    facts

supporting that amount.”           The question presented is whether the

claim letter submitted by respondent Pamela McDonald conforms

with section 12-821.01.A.          We hold that it does not.

                                            2
                                                     I.

¶2              On September 6, 2005, petitioner Deer Valley Unified

School District No. 97 (the District) received a “claim letter”

sent   pursuant         to    A.R.S.       §    12-821.01         from       McDonald.           In   the

letter,         McDonald          asserted           that        the     District           wrongfully

terminated        her        as     an     assistant         high       school           principal     in

violation of the Arizona Employment Protection Act, specifically

A.R.S.      §   23-1501           (Supp.    2006).           McDonald             alleged    that     the

District        retaliated          against      her        efforts          to    resolve       several

illegalities and deficiencies involving counselors at the high

school by giving her the choice of either taking a position as a

teacher at a substantially lower salary or being fired.

¶3              McDonald’s letter stated that she “lost her previous

salary of $68,000.00 per year and an additional $7,000.00 per

year     for     summer       school”          and        that    she    had        “anticipated        a

$6,000.00        raise       for    [the       upcoming]          school          year    and    similar

appropriate       pay        increases         thereafter.              As    a     teacher      in   the

District,       she     will       earn     $36,800.00           this    year.”            The   letter

subsequently identified several claim amounts in the following

manner:

       1.       All economic damages arising as a result of her
                removal   from  the   position  in   an  amount
                anticipated to be approximately $35,000.00 per
                year or more going forward over the next 18
                years;

                                                     3
      2.        Compensatory   damages  for   emotional distress
                suffered as a result of the wrongful termination
                in an amount no less than $300,000.00;

      3.        General damages, compensating Ms. McDonald for
                damage to her reputation of employment in an
                amount of no less than $200,000.00.

The letter provided no additional information to support these

amounts and concluded by stating that “Ms. McDonald hereby makes

demand on the District for payment of these said amounts.”

¶4              McDonald never received a response from the District

and, on March 2, 2006, she filed a complaint in the Maricopa

County     Superior      Court    alleging     wrongful     termination.        The

District moved to dismiss the claim for failure to comply with

A.R.S.     §    12-821.01.       After   the     superior    court   denied     the

District’s motion, the District filed a petition for special

action     in    the    court    of   appeals,    which   declined   to    accept

jurisdiction.

¶5              The District then petitioned this Court for review,

which we granted because the issue presented involves a matter

of public significance that occurs often and has important legal

and   practical        consequences    for    political   subdivisions     of   the

state.     Furthermore, the decisions rendered on this issue by the

court of appeals are not consistent.1              We have jurisdiction under

1
     Compare Barth v. Cochise County, 213 Ariz. 59, 63-64 ¶ 17,
138 P.3d 1186, 1190-91 (App. 2006) (concluding that notice of
claim did not satisfy A.R.S. § 12-821.01 because the claim was
not filed after the action accrued and did not provide a “sum

                                          4
Article 6, Section 5, Clause 3 of the Arizona Constitution and

A.R.S. § 12-120.24 (2003).

                                            II.

¶6          In addition to describing the proper method and time

frame for filing claims, the notice of claim statute directs

that all claims “shall contain facts sufficient to permit the

public entity . . . to understand the basis upon which liability

is claimed” and “shall also contain a specific amount for which

the claim can be settled and the facts supporting that amount.”

A.R.S. § 12-821.01.A.            The statutory requirements serve several

important       functions:        They      “allow        the     public       entity   to

investigate and assess liability, . . . permit the possibility

of settlement prior to litigation, and . . . assist the public

entity in financial planning and budgeting.”                             Falcon ex rel.

Sandoval v. Maricopa County, 213 Ariz. 525, 527 ¶ 9, 144 P.3d

1254, 1256 (2006) (quoting Martineau v. Maricopa County, 207

Ariz.    332,    335-36     ¶    19,   86   P.3d        912,    915-16    (App.   2004)).

Claims    that    do    not      comply     with        A.R.S.    §   12-821.01.A       are

statutorily barred.             A.R.S. § 12-821.01.A (“Any claim which is

not filed within one hundred eighty days after the cause of

action    accrues      is   barred       and       no   action    may     be   maintained

certain”), with Young v. City of Scottsdale, 193 Ariz. 110, 114
¶ 13, 970 P.2d 942, 946 (App. 1998) (holding that a claim that
“did not state a ‘specific amount’” was nevertheless adequate).

                                               5
thereon.”); Falcon, 213 Ariz. at 527 ¶ 10, 144 P.3d at 1256

(“Actual notice and substantial compliance do not excuse failure

to   comply    with       the    statutory       requirements     of    A.R.S.   §    12-

821.01(A).”).

¶7            The District argues that McDonald’s claim letter lacks

both the “specific amount for which the claim can be settled and

the facts supporting that amount.”                    A.R.S. § 12-821.01.A.           The

District asserts that, by using phrases such as “approximately,”

“or more going forward,” “similar appropriate pay increases,”

and “no less than,” McDonald’s letter fails to identify any

“specific amount,” let alone an amount “for which the claim can

be settled.”          The District concludes that McDonald’s use of

qualifying language makes it impossible to calculate the amount

that will settle the claim and thus fails to comply with the

plain    language     of    A.R.S.    §   12-821.01.A.           The    District     also

argues that, even if the various amounts in her claim letter

could    be   regarded      as    defining       a   specific    amount,   McDonald’s

letter    does      not    include    “the       facts   supporting”       the   amount

claimed.      Id.

¶8            When    analyzing        statutes,         we     apply    “fundamental

principles of statutory construction, the cornerstone of which

is the rule that the best and most reliable index of a statute’s

meaning is its language and, when the language is clear and

unequivocal, it is determinative of the statute’s construction.”

                                             6
Janson ex rel. Janson v. Christensen, 167 Ariz. 470, 471, 808

P.2d    1222,     1223   (1991).          “Each      word,       phrase,    clause,     and

sentence [of a statute] must be given meaning so that no part

will be void, inert, redundant, or trivial.”                        Williams v. Thude,

188 Ariz. 257, 259, 934 P.2d 1349, 1351 (1997) (alteration in

original) (emphasis omitted) (quoting City of Phoenix v. Yates,

69 Ariz. 68, 72, 208 P.2d 1147, 1149 (1949)).

¶9             The notice of claim statute is clear and unequivocal:

The     statute    instructs    that      a       claim    “shall     also      contain   a

specific amount for which the claim can be settled and the facts

supporting that amount.”           A.R.S. § 12-821.01.A (emphasis added).

This    language     unmistakably      instructs          claimants        to   include   a

particular and certain amount of money that, if agreed to by the

government        entity,   will    settle         the     claim.       The       attendant

statutory obligation that claimants present “facts supporting

that     amount”     requires      that       claimants      explain        the     amounts

identified in the claim by providing the government entity with

a factual foundation to permit the entity to evaluate the amount

claimed.       This latter requirement ensures that claimants will

not demand unfounded amounts that constitute “quick unrealistic

exaggerated demands.”           Hollingsworth v. City of Phoenix, 164

Ariz. 462, 466, 793 P.2d 1129, 1133 (App. 1990).                                In tandem,

these    two    statutory   mandates       ensure         that    government       entities

will be able to realistically consider a claim.                        Compliance with

                                              7
this statute is not difficult; the statute does not require that

claimants reveal the amount that they will demand at trial if

litigation ensues but simply requires that claimants identify

the specific amount for which they will settle and provide facts

supporting that amount.

¶10           We    agree    with       the   District       that    McDonald’s       claim

letter does not include a specific amount for which her claim

can be settled.         McDonald’s repeated use of qualifying language

makes it impossible to ascertain the precise amount for which

the District could have settled her claim.                        McDonald defines her

economic damages as being “approximately $35,000.00 per year or

more   going       forward   over       the   next    18   years.”         McDonald      also

refers   to    a    raise    of    $6,000     and    notes    that       she   anticipated

“similar      appropriate         pay    increases”        over    the    next     eighteen

years. Her letter then states that her damages for emotional

distress and harm to her reputation are “no less than” $300,000

and    $200,000,      respectively.           These    statements         simply    do   not

define a specific amount that McDonald would have accepted to

resolve her dispute with the District.

¶11           It is unclear whether McDonald would have resolved her

claim for economic damages for payment of $630,000, the total

reached by multiplying $35,000 by eighteen years, whether she

would have demanded the “more” she states applies to her claim,

or whether she would have accepted an amount reduced to present

                                              8
value.    It is likewise impossible to discern whether she would

have settled her emotional distress and reputation claims for

$500,000 or some number less than that amount or whether her

statement   that      her   damages    are    “no   less   than”   that   amount

indicates that the District would need to pay more to avoid

litigation.     Contrary to McDonald’s assertion, it is not at all

clear    from   her    letter   that    the    claim   can   be    settled   for

$1,130,000, as the sum of all of the alleged damages referenced

in   McDonald’s    letter    appears    to     be   $2,321,600,    a   sum   that

includes the total difference between her salary as an assistant

principal coupled with anticipated pay raises compounded over

the course of eighteen years, and the salary McDonald will earn

as a teacher in the District during the same period.2                  In light

of this substantial variation in potential value and the absence

of any clear aggregate claim amount in her letter, the amounts

identified in McDonald’s letter cannot be considered “specific.”

By failing to state a specific amount that she would accept to

settle her claims, McDonald failed to comply with that statutory

requirement.3

2
     This latter sum also reflects the inference that an annual
raise of $6,000 would constitute an “appropriate pay increase[]”
because $6,000 was identified in McDonald’s letter as the
anticipated raise amount for the upcoming school year.
3
     Because McDonald’s letter does not include a specific sum,
we need not reach the District’s argument that McDonald’s letter
also fails to provide facts supporting the amount claimed.    We

                                        9
                                   III.

¶12         McDonald    contends   that,    notwithstanding       the     plain

language of A.R.S. § 12-821.01.A, a “reasonableness standard”

governs the “specific amount” requirement and urges us to adopt

the interpretation given to the statutory language in Young v.

City of Scottsdale, 193 Ariz. 110, 970 P.2d 942 (App. 1998).

Under    this   approach,   McDonald     argues,   a   claimant    need    not

present a specific amount for which a claim can be settled as

long as the claim letter satisfies the purposes underlying the

notice    of    claim   statute.    Therefore,     McDonald   submits,       a

claimant need provide a government entity only with notice of a

claim and its estimated value.           For the following reasons, we

reject this argument and expressly disapprove of the analysis in

Young.

¶13         In State v. Brooks, the court of appeals considered

the predecessor to the current claim statute, which provided

only that “[p]ersons having claims on contract or for negligence

against the state, which have been disallowed, may on the terms

and conditions set forth in this article, bring action thereon

against the state and prosecute the action to final judgment.”

23 Ariz. App. 463, 466, 534 P.2d 271, 274 (1975) (quoting A.R.S.

note, however, that the claim letter does not provide any facts
supporting the claimed amounts for emotional distress and for
damages to McDonald’s reputation.

                                    10
§ 12-821 (1956)).      Because A.R.S. § 12-821 did not, “by its

terms, define what constitutes a claim,” it was “necessary for

[the court of appeals] to determine what constitutes a claim

within the meaning of A.R.S. § 12-821.”            Id.

¶14          The court noted that “of prime importance to the State

in making a determination of whether to allow or disallow a

claim is knowledge of the amount which is claimed to be due the

injured   party.”     Id.   at   467,    534   P.2d   at    275.     The   court

explained:

       Numerous settlements of litigation are based not upon
       the question of liability alone, but upon the amount
       for which the suit can be settled.     Thus, suits of
       questionable liability are settled because of the
       potential damages that may be assessed.    Conversely,
       suits of no liability may be settled because the cost
       of defense may exceed the settlement.

Id.    Consequently, the Brooks court concluded that “tort claims

against the sovereign” should “contain an amount prayed for.”

Id.

¶15          In Dassinger v. Oden, the court of appeals reaffirmed

its holding that a claim requires a specific amount and noted

that   “[w]ithout   this    information,       a   claim    letter   is    not   a

‘claim’ within the meaning of the statute.”                124 Ariz. 551, 552,

606 P.2d 41, 42 (App. 1979).            The Dassinger court considered a

claim letter that “itemized $1,300 for medical expenses, $1,800

for future medical expenses and $200 for mileage.                  However, the

letter also [claimed] that plaintiff had suffered loss of wages

                                    11
in    an    unspecified       amount      and      that    he        had   also      suffered

substantial        pain,      mental      anguish,        and        inconvenience     which

resulted in an unspecified amount of damages.”                             Id. at 552-53,

606 P.2d at 42-43.            The court concluded that “[t]here is no sum

certain contained in the letter which plaintiffs would have been

satisfied to settle for.”              Id. at 553, 606 P.2d at 43.4

¶16             More   than    a    decade      later,      the        court    of    appeals

abandoned its requirement that a valid notice of claim include a

settlement demand for a sum certain.                            In    Hollingsworth, 164

Ariz.      at   463-64,    793     P.2d   at      1130-31,      the     court     considered

whether a claim letter that provided an “educated estimate” that

damages would be “not less than $125,000” satisfied the sum

certain requirement.5            The Hollingsworth court noted that Brooks

and Dassinger had relied in part on the Federal Tort Claims Act

(FTCA), and specifically 28 U.S.C. § 2675(a).                              Hollingsworth,

164     Ariz.     at   465,      793    P.2d      at   1132.            Accordingly,       the

Hollingsworth court turned to the “history of the [FTCA] and

4
     In a special concurrence in Dassinger, Judge Rosenblatt
called for legislative action to define the requirements of
valid claim letters.    124 Ariz. at 554, 606 P.2d at 44.    In
1984, the Legislature amended A.R.S. § 12-821 and provided more
detail as to the mechanics for filing claim letters.   See 1984
Ariz. Sess. Laws 1091, 1093-94, ch. 285, § 5. The amendment did
not, however, provide any statutory guidance regarding the sum
certain requirement.
5
     The Hollingsworth court construed                          A.R.S.      §     12-821   as
amended in 1984. See supra note 4.

                                             12
decisions interpreting it” to assess whether the claim letter in

question satisfied section 12-821.             Id.

¶17          Noting that “[s]ome federal circuits construe the ‘sum

certain’ requirement as placing a reasonable total value on the

claim,”      the    court   adopted      a    “reasonableness       standard   for

determining whether a claimant has stated a sum certain in a

claim letter filed pursuant to A.R.S. § 12-821.”                   Id. at 465-66,

793 P.2d at 1132-33.          The court of appeals explained that “the

critical factor in determining whether a claim satisfied this

standard is whether the claimant places a total value on the

claim,” and therefore a claim should not fail merely because it

includes modifying language such as “in excess of,” “presently,”

or “approximately.”         Id.   at 466, 793 P.2d at 1133 (citations

omitted).          The   Hollingsworth        court    further     justified   its

conclusion that an initial claim amount need not be specific by

construing the notice of claim statute as performing primarily a

notice function.         See id.       The court concluded by interpreting

literally the Brooks language stating that a notice of claim

need provide only an “opportunity to arrive at a settlement.”

Id. (emphasis omitted).           With this understanding, the court held

that   the    claim      letter   in    question      adequately    provided   the

defendant city with “sufficient information to investigate the

merits of the claim, assess its potential liability, and arrive

                                         13
at an amount to settle the controversy so as to avoid litigation

between it and one of its citizens.”            Id.

¶18        In a strong dissent, Judge Brooks asserted that the

majority    erroneously     confused       “‘exactness’          of   damages       with

‘certainty’ of the amount for which a claimant is willing to

settle.”    Id. at 467, 793 P.2d at 1134.                Judge Brooks understood

the meaning of “claim” in A.R.S. § 12-821 to require that the

claim letter “include an amount for which the claimant will

settle.”    Id.    Because “an educated estimate, of not less than

$125,000.00” cannot be understood to be an offer to settle for

$125,000, Judge Brooks concluded that the letter in question

should have been deemed inadequate.            Id.

¶19        Four    years     after       Hollingsworth       was      decided,       the

Legislature   amended      A.R.S.    §   12-8216     and    added     A.R.S.    §   12-

821.01,    which   statutorily       defined       for     the    first   time       the

information needed to comprise a claim.                    See 1994 Ariz. Sess.

6
     As amended in 1994, A.R.S. § 12-821 provides: “All actions
against any public entity or public employee shall be brought
within one year after the cause of action accrues and not
afterward.”   1994 Ariz. Sess. Laws 436, 436-37, ch. 162, § 1
(codified at A.R.S. § 12-821). This language reflected a minor
change to section 12-821, as amended in 1993.          The 1993
amendment of A.R.S. § 12-821 repealed the language construed in
Hollingsworth as part of a broader scheme of tort reform, and
provided: “All personal injury actions against any public entity
or public employee involving acts that are alleged to have
occurred within the scope of the public employee’s employment
shall be brought within one year after the cause of action
accrues and not afterward.” 1993 Ariz. Sess. Laws 250, 254, ch.
90, § 8 (amended 1994).

                                         14
Laws 436, 436-37, ch. 162, §§ 1-2 (codified at A.R.S. §§ 12-821

to -821.01).     The addition of A.R.S. § 12-821.01 constitutes the

most     detailed     effort       by   the      Legislature       to     define      the

information necessary to provide a valid notice of claim and

includes the statutory language at issue, which requires that

“[t]he claim shall also contain a specific amount for which the

claim can be settled and the facts supporting that amount.”

1994 Ariz. Sess. Laws at 437, ch. 162, § 2.

¶20         The court of appeals addressed the effect of these

amendments in Young, which considered a notice of claim that

provided that damages would “not exceed $100,000.00.”                       193 Ariz.

at 111 ¶ 3, 970 P.2d at 943.                 Rejecting the argument that the

1994 statutory changes required a claimant to define a “specific

amount”    for      which      a   claim     could     be    settled,      the     court

inexplicably concluded that “it seems likely that section 12-

821.01 was intended to codify Hollingsworth.”                     Id. at 114 ¶ 12,

970 P.2d at 946.       The court held that the claim letter satisfied

the notice of claim statute despite the fact that it “did not

state a ‘specific amount.’”                Id. at ¶ 13.          Because the claim

letter    provided    a       “reasonable     estimate      of   the    value    of   the

claim,” the court was content that the letter satisfied the pre-

1994 amendment “Hollingsworth reasonableness standard.”                         Id.

¶21         We reject and disapprove Young’s conclusion that the

statute    includes       a    reasonableness        standard.         First,    as    we

                                            15
discussed          above,        “fundamental           principles           of     statutory

construction”        do     not    allow        us     to   ignore       the      “clear    and

unequivocal” language of the statute, see Janson, 167 Ariz. at

471,    808   P.2d    at     1223,      which    in     this    case     requires     that    a

“specific     amount”       be    set    forth.         Contrary        to   Young,   we    are

convinced     that     the    Legislature            intended     the    1994     changes    to

establish specific requirements that must be met for a claimant

to file a valid claim with a government entity.

¶22           Proposed initially as Senate Bill (S.B.) 1284, 41st

Leg.,    2d   Reg.     Sess.       (Ariz.       1994),      the    1994      amendment      was

intended to “detail[] information that the claim must contain.”

Limitation of Actions: Minutes from Hearing on S.B. 1284 Before

the H. Comm. on Judiciary, 41st Leg., 2d Reg. Sess. at 6 (Ariz.

1994).    The provisions of S.B. 1284 were intended to:

        Specif[y] the following information which is required
        to be contained in the claim:

              1.       Facts sufficient enough to permit the
                       public entity or employee to understand the
                       basis of the action.

              2.       The specific amount for which claim can be
                       settled and facts supporting that amount.

Senate Fact Sheet for S.B. 1284, 41st Leg., 2d Reg. Sess. (Ariz.

1994).     We find nothing to suggest that the Legislature intended

anything other than to clearly define the information needed in

future claims.         These statutory requirements are more specific

than,      and       thus        inconsistent           with,      the         Hollingsworth

                                            16
reasonableness standard.             To the extent that Young perpetuates

the Hollingsworth reasonableness standard, it is irreconcilable

with A.R.S. § 12-821.01.A.               Cf. Falcon, 213 Ariz. at 527 ¶ 10,

144 P.3d at 1256 (“Actual notice and substantial compliance do

not excuse failure to comply with the statutory requirements of

A.R.S.      §    12-821.01(A).”).            Accordingly,       contrary      to     the

conclusion reached by the court of appeals in Young, we conclude

that    the     1994    amendment    repeals,      rather    than    codifies,       the

Hollingsworth standard.

                                            IV.

¶23             The   only   remaining      question   involves      the    relief    to

which the District is entitled.                   The Legislature has provided

that “[a]ny claim which is not filed within one hundred eighty

days after the cause of action accrues is barred and no action

may    be   maintained       thereon.”       A.R.S.    §   12-821.01.A.        In    her

complaint,        McDonald     alleges      that    her     wrongful       termination

occurred at a meeting held on March 10, 2005.                       As is apparent,

McDonald        can    no   longer   file    a    notice   of   claim      within    the

statute’s one hundred eighty day time frame.                     Because McDonald

did not file a valid notice of claim within the statutory time

limit, her claim is barred by statute.                 See Falcon, 213 Ariz. at

527 ¶ 10, 144 P.3d at 1256.

                                            17
                                   V.

¶24       For   these   reasons,   we   reverse   the   superior   court’s

order denying the District’s motion to dismiss and remand to the

superior court with instructions to dismiss.

                           _______________________________________
                           Ruth V. McGregor, Chief Justice

CONCURRING:

_______________________________________
Rebecca White Berch, Vice Chief Justice

_______________________________________
Michael D. Ryan, Justice

_______________________________________
Andrew D. Hurwitz, Justice

_______________________________________
W. Scott Bales, Justice

                                   18