In Arizona, any claimant that seeks to bring a claim against a public entity, public school, or public employee must comply with A.R.S. § 12-821.01, Arizona’s notice of claim statute. Section 12-821.01(A) states:
“Persons who have claims against a public entity, public school or a public employee shall file claims with the person or persons authorized to accept service for the public entity, public school or public employee as set forth in the Arizona rules of civil procedure within one hundred eighty days after the cause of action accrues. The claim shall contain facts sufficient to permit the public entity, public school or public employee to understand the basis on which liability is claimed. The claim shall also contain a specific amount for which the claim can be settled and the facts supporting that amount. Any claim that is not filed within one hundred eighty days after the cause of action accrues is barred and no action may be maintained thereon.”
Arizona courts have consistently held that “a claimant must strictly comply with § 12-821.01,” Yahweh v. City of Phoenix, 243 Ariz. 21, 23 ¶ 12, and “actual notice and substantial compliance do not excuse failure to comply with the statutory requirements.” Falcon ex rel. Sandoval v. Maricopa County, 213 Ariz. 525, 527, ¶ 10 (2006). Failure to comply with the requirements in the notice of claim statute bars the claim “and no action may be maintained thereon.”
Joshua Ernst has spent years analyzing the notice of claim statute and applying it to defend against cases brought his client, a public entity in Arizona. If you have questions about how the notice of claim statute applies to your case or whether your draft notice of claim complies with the statute, call Ernst, Brown & Draper for a flat-fee review and consultation.
When analyzing whether a notice of claim complies with the statute, pay attention to the following points:
Persons Who Have Claims
Who is bringing the claim? Is it the same individual or entity that “has” the claim? In Turner v. City of Flagstaff, an individual filed a notice of claim with the City of Flagstaff in his own name, claiming damage to a parcel of land he owned. The homeowner later filed suit. The city successfully moved to dismiss because the property was actually held in the name of an LLC, of which the individual was the sole member. The court upheld the trial court’s dismissal of the action, explaining that “the superior court granted the City’s motion to dismiss because it found Turner’s notice of claim failed because it was not filed on behalf of the true owner of the West Aspen property. We agree. A limited liability company is a separate legal entity that may own real property in its own name.” Turner v. City of Flagstaff, 226 Ariz. 341, 344, ¶ 12 (App. 2011).
Person / Persons Authorized to Accept Service
Arizona Rule of Civil Procedure 4.1(h) sets forth the proper service for various governmental entities in Arizona, including the State, a county, a municipal corporation or “any other governmental entity.” Ariz. R. Civ. P. 4.1(h). If the entity is not specifically listed, you may need to review the statutory provisions relating to that entity—Rule 4.1(h)(4)(A)—or contact the entity directly to identify who is authorized to receive service. Similarly, Rule 4.1(d) lists the three ways to serve an individual: deliver a copy to the person directly; leave a copy at the person’s dwelling with someone of suitable age; deliver a copy to an agent authorized to receive service of process for that individual. Many times, employers are not authorized to accept service on behalf of their employees, and a copy served on the entity to give to the employee—even if the employee actually gets a copy of the notice of claim—is insufficient.
Timing Issues
Generally, when evaluating a notice of claim, there are three time periods to keep in mind: 60 days; 180 days; and 1 year. The 180-day and 1-year requirements are straightforward: § 12-821.01(A) requires the claim to be submitted within 180 days after accrual (more on accrual below), and § 12-821 provides that any claim against a public entity/employee must be filed in court within one year after the cause of action accrues.
The 60-day requirement can often catch practitioners unaware. Section 12-821.01(E) explains that a claim against a public entity “is deemed denied sixty days after the filing of the claim unless the claimant is advised of the denial in writing before the expiration of the sixty days.” A.R.S. § 12-821.01(E). The Court of Appeals has held that “absent an earlier response from the public entity, § 12-821.01(E) requires the settlement offer contained in the notice to be held open for sixty days.” Drew v. Prescott Unified School Dist., 233 Ariz. 522, 523, ¶¶ 1, 12 (App. 2013) (emphasis added). Ignoring this requirement can have catastrophic consequences. In 2021, a claimant submitted a notice of claim seeking $10,071,016.72 to the City of Peoria. The transmittal letter which set forth the information necessary to comply with the notice of claim stated: “This compromise to settle is valid for thirty (30) days from the date of this letter.” James v. City of Peoria, 2021 WL 1400064, at *1, ¶ 3 (Ariz. App. April 13, 2021). The City successfully moved to dismiss, and the Court of Appeals upheld the dismissal, explaining that the “purported notice of claim failed to make a settlement offer that complied with A.R.S. § 12-821.01 because [her] offer explicitly lapsed after no more than thirty days from the date of the notice, when the City of Peoria should have been given an acceptance period of not less than sixty days.” Id. at *2, ¶ 12.
Accrual
Section 12-821.01(B) states that 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.” A.R.S. § 12-821.01(B). Arizona courts have held that this language is a “codification of the discovery rule for determining when causes of action against public entities and employees accrue.” Thompson v. Pimy Cnty., 226 Ariz. 42, 46, ¶ 12 (App. 2010). This means that the statute of limitations “begins when the act on which legal action is based occurs, even though the plaintiff may be unaware of facts underlying the claim.” Trepel v. Hodgins, 2022 WL 1316198, at *2, ¶ 12 (Ariz. App. May 3, 2022). Similarly, a party may not wait until they learn all the facts or until an expert has concluded his or her report before submitting a notice of claim—a cause of action accrues when the “plaintiff knows or with reasonable diligence should know the facts underlying the cause of action.” Thompson, 226 Ariz. at 46, ¶ 12. Accrual is often a fact-intensive inquiry, but the courts can rule on the issue as a matter of law. Humphrey v. State, 249 Ariz. 57, 64, ¶¶ 24–25 (App. 2020).
Facts Sufficient to Understand Liability
The notice of claim must set forth “facts sufficient to permit the public entity or public employee to understand the basis upon which liability is claimed.” A.R.S. § 12-821.01(A). The courts have held that this requirement includes the obligation to amend and refile a notice of claim as new facts become known to the claimant and the claimant attempts to bring new claims based on those new facts. In such cases, the original notice of claim may be noncompliant as the “public entity necessarily cannot understand from a notice of claim the basis of any liability that might be based on facts that are unstated in the notice because they occur after filing of the notice. And if the facts upon which liability is claimed do not appear in a notice filed within 180 days after the claim accrues, the notice is invalid and the claim is barred.” Haab v. Cnty of Maricopa, 219 Ariz. 9, 13, ¶ 20 (App. 2008).
Sum Certain
A proper notice of claim must “contain a specific amount for which the claim can be settled and the facts supporting that amount.” A.R.S. § 12-821.01(A). 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.” Deer Valley Unified Sch. Dist. No. 97 v. Houser, 214 Ariz. 293, 296, ¶ 9 (2007). This requirement is founded on principles of contract law and a claim “is barred if the claimant fails to present a valid settlement offer to the public entity he or she wishes to sue.” Yahweh v. City of Phoenix, 243 Ariz. 21, 23, ¶ 8 (App. 2017). Thus, for example, “[s]imply reciting the amount a claimant will demand in a complaint is insufficient to satisfy § 12-821.01, because such a statement does not express a willingness to accept a specific sum in settlement.” Id.
In addition, the total amount sought by the claimant must be clear from the language set forth in the notice of claim. In A. Miner Contracting, Inc. v. City of Flagstaff, the court held that a notice of claim failed to comply with the sum certain requirement because it stated that “the City is indebted to Miner for $1,825,042.55 plus additional accrued interest” and that to “settle this claim without the need for protracted litigation, Miner is willing to accept merely the payment of amounts owed to date including all accrued interest.” A. Miner Contracting, Inc. v. City of Flagstaff, 2015 WL 5770603, at *1, ¶ 4 (Ariz. App. Oct. 1, 2015). The court explained because the particular amount of “additional accrued interest” requested by Miner “could not be readily ascertained either from the face of the notice or the documents attached to the notice,” it “made it impossible for the City to determine the precise amount for which Miner would settle its claim.” Id. at *2-3, ¶¶ 9, 13.
Facts Supporting Sum Certain
The requirement to provide facts supporting the sum certain is distinct from the requirement to provide facts “sufficient to permit” the public entity to understand the basis of liability. Because there is no sufficiency requirement, the Arizona Supreme Court has held that a claimant complies with this requirement by “providing the factual foundation that the claimant regards as adequate to permit the public entity to evaluate the specific amount claimed.” Backus v. State, 220 Ariz. 101, 107, ¶ 23 (2009) (emphasis added).
Arizona’s notice of claim statute is a necessary hurdle with which claimants must strictly comply before suing a public entity or employee. While these seven broad principles apply to each notice of claim, the extent to which and how they apply is a fact-based inquiry that every attorney must go through. Don’t risk your entire claim—call Ernst, Brown & Draper for a flat-fee review and consultation with Joshua Ernst.
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