Deer Valley Unified School District No. 97 v. Houser

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