City of Phoenix v. Glenayre Electronics, Inc.

IN THE
SUPREME COURT OF THE STATE OF ARIZONA
CITY OF PHOENIX,
Third-Party Plaintiff/Appellant,
v.
GLENAYRE ELECTRONICS, INC.; WILLIAM LYON HOMES, INC.; KB HOME HOLDINGS, INC.;
RICHMOND AMERICAN HOMES, INC.; MDC/WOOD, INC.; UDC HOMES, INC., NKA SHEA
HOMES OF PHOENIX, INC. (FN) AND ELLIOTT HOMES, INC.; SWENGEL-ROBBINS
CONTRACTING CO., INC.; AZTEC CONSTRUCTION, INC.; JNC, INC.; UH HOLDINGS, INC.;
LOS PAISANOS DEVELOPMENT, INC.; MICHAEL NEWSOME; CHI CONSTRUCTION CO.;
CONTINENTAL HOMES, INC.; PULTE HOME CORP.; DEL WEBB CORP.; WITTMAN
CONTRACTING CO.; JEFF BLANDFORD INVESTMENTS, INC.,
Third-Party Defendants/Appellees.
No. CV-16-0126-PR
Filed May 10, 2017
Appeal from the Superior Court in Maricopa County
The Honorable Douglas L. Rayes, Judge
The Honorable Randall H. Warner, Judge
The Honorable Lori Horn Bustamante, Judge
No. CV2013-001762
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED
Opinion of the Court of Appeals, Division One
240 Ariz. 80, 375 P.3d 1189 (App. 2016)
VACATED IN PART
COUNSEL:
Mary O’Grady (argued), Eric M. Fraser, Jana L. Sutton, Osborn Maledon, P.A., Phoenix;
and Brad Holm, Phoenix City Attorney, Phoenix, Attorneys for City of Phoenix
CITY OF PHOENIX V. GLENAYRE ELECTRONICS, INC.
Opinion of the Court
Kevin E. O’Malley (argued), Mark A. Fuller, Thomas A. Maraz, Gallagher & Kennedy,
P.A., Phoenix, Attorneys for CHI Construction Company and Continental Homes, Inc.
Dennis I. Wilenchik, John D. Wilenchik, Colleen C. Thomas, Wilenchik & Bartness, P.C.,
Phoenix, Attorneys for Jeff Blandford Investments, Inc.
Eileen Dennis GilBride, Jones, Skelton & Hochuli, P.L.C., Phoenix, Attorneys for Amici
Curiae Apache, Cochise, Coconino, Graham, Greenlee, La Paz, Maricopa, Navajo, Pinal,
Yavapai, and Yuma Counties, the Town of Gilbert, the League of Arizona Cities and
Towns and the Arizona Municipal Risk Retention Pool
Thomas J. Shorall Jr., Jason J. Boblick, Shorall McGoldrick Brinkmann, Phoenix,
Attorneys for Wittman Contracting Company
Richard K. Mahrle, Gammage & Burnham, P.L.C., Phoenix, Attorneys for Swengel-
Robbins Contracting Co., Inc.
Katherine E. Baker, Green & Baker Ltd., Scottsdale, Attorneys for Glenayre Electronics
Inc.
Brad D. Bleichner, Berkes Crane Robinson & Seal LLP, Los Angeles, CA, Attorneys for
William Lyon Homes, Inc.
Holly P. Davies, Alexix G. Terriquez, Lorber Greenfield & Polito LLP, Phoenix,
Attorneys for KB Home Holdings, Inc., Richmond American Homes, Inc. and
MDC/Wood, Inc.
Jill Ann Herman, Wood Smith Henning & Berman LLP, Phoenix, Attorneys for UDC
Homes Inc., nka Shea Homes of Phoenix Inc. (FN) and Elliot Homes Inc.
Joseph A. Kula, Benjamin R. Eid, Law Office of Amy M. Hamilton, Scottsdale, Attorneys
for Aztec Construction, Inc.
Daniel D. Maynard, Maynard Cronin Erickson Curran & Reiter PLC, Phoenix,
Attorneys for JNC, Inc. and UH Holdings, Inc.
Vincent J. Montell, Michael J. Ponzo, Quintairos Prieto Wood & Boyer PA, Phoenix,
Attorneys for Los Paisanos Development, Inc.
Michael S. Rubin, Stephen E. Richman, Dickinson Wright PLLC, Phoenix, Attorneys for
Pulte Home Corporation and Del Webb Corporation
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CITY OF PHOENIX V. GLENAYRE ELECTRONICS, INC.
Opinion of the Court
VICE CHIEF JUSTICE PELANDER authored the opinion of the Court, in which CHIEF
JUSTICE BALES and JUSTICES BRUTINEL, BOLICK, GOULD, LOPEZ, and BERCH
(RETIRED) joined.
VICE CHIEF JUSTICE PELANDER, opinion of the Court:
¶1 Under A.R.S. § 12-510, claims by governmental entities generally are not
barred by statutes of limitations. For actions relating to real property, however,
Arizona’s statute of repose provides that, “notwithstanding any other statute,” an
action “based in contract” against certain identified parties must be filed within “eight
years after substantial completion of the improvement of real property.” A.R.S.
§ 12-552(A). We hold that governmental entities’ contract-based actions (including
claims for indemnification) that fall within § 12-552(A) are subject to that statute’s
proscription, notwithstanding § 12-510 or the common law doctrine known as “nullum
tempus occurit regi” (time does not run against the king). For the contractors in this
case having the requisite contractual relationship with the City of Phoenix, we hold that
the statute of repose applies; but for the developers whose only relationship with the
City is as permittees, the statute of repose does not apply.
I.
¶2 The superior court dismissed the City of Phoenix’s indemnity claims
under Arizona Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which
relief can be granted. On review, therefore, we “assume the truth of all well-pleaded
factual allegations” in the City’s pleading and “indulge all reasonable inferences from
those facts.” Coleman v. City of Mesa, 230 Ariz. 352, 356 ¶ 9, 284 P.3d 863, 867 (2012); see
also Watts v. Medicis Pharm. Corp., 239 Ariz. 19, 22 ¶ 2, 365 P.3d 944, 947 (2016).
¶3 In 2013, Carlos Tarazon sued the City and numerous co-defendants after
he developed mesothelioma, allegedly resulting from long-term exposure to asbestos
while installing and repairing water piping for the various defendants. (After Tarazon
died in 2014, the personal injury action was converted to one for wrongful death.) The
City filed a third-party complaint against eighty-two developers (the “Developers”) and
eight contractors (the “Contractors”), alleging that they had agreed to defend and
indemnify the City against negligence claims arising from the construction projects on
which Tarazon worked.
 Justice Ann A. Scott Timmer has recused herself from this case. Pursuant to article 6,
section 3 of the Arizona Constitution, the Honorable Rebecca White Berch, Justice of the
Arizona Supreme Court (Retired), was designated to sit in this matter.
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CITY OF PHOENIX V. GLENAYRE ELECTRONICS, INC.
Opinion of the Court
¶4 The City alleged that the Contractors separately contracted with it to
perform certain water infrastructure projects between 1960 and 2000. The contracts
include a provision stating, “[t]he Contractor agrees to indemnify and save harmless the
City of Phoenix . . . from all suits, including attorneys’ fees and cost of litigation . . . of
any character or any nature arising out of the work done in fulfillment of the terms of
this contract.”
¶5 The Developers undertook their own water-system projects, but only after
applying for and obtaining right-of-way permits from the City, as required by Phoenix
City Code § 31-35. As permittees, the Developers were subject to Phoenix City Code
§ 31-40, which provides:
The permittee agrees to indemnify and save harmless the
City of Phoenix . . . from all suits . . . arising out of or in
connection with any act or omission of the permittee, his
agents and employees, and of any subcontractor . . . which
results directly or indirectly in the injury to or death of any
person or persons . . . .
¶6 The permits also incorporated the Developers’ project plans and
specifications, which included the Maricopa Association of Governments Specifications
(the “MAGS”). The MAGS obligated the Developers to “at all times observe and
comply with all such laws, ordinances, regulations, codes, orders, and decrees.” By
incorporating the MAGS, the permits memorialized the Developers’ preexisting
obligation to comply with the City’s laws, including City Code § 31-40.
¶7 The Developers and Contractors moved to dismiss the City’s third-party
claims under Rule 12(b)(6), arguing that those claims were based in contract and barred
by the eight-year statute of repose in § 12-552(A). The City responded that the statute
does not apply to the state’s political subdivisions and that the Developers’ indemnity
obligation was not based in contract but instead arose under City Code § 31-40. The
superior court rejected those arguments, ruled that § 12-552(A) applied to bar the City’s
claims, granted the motion to dismiss, and certified its decision as final under Arizona
Rule of Civil Procedure 54(b).
¶8 The court of appeals affirmed, holding that the City’s indemnity claims
are “time-barred” because “A.R.S. § 12-552 applies to governmental entities and . . . the
City’s claims are based in contract within the meaning of A.R.S. § 12-552(F).” City of
Phoenix v. Glenayre Elec., Inc., 240 Ariz. 80, 82-83 ¶ 1, 375 P.3d 1189, 1191-92 (App. 2016).
The court concluded that the phrase “[n]otwithstanding any other statute” in
§ 12-552(A) plainly and “explicitly renders inapplicable the nullum tempus doctrine
reflected in A.R.S. § 12-510.” Id. at 84-85 ¶ 11, 375 P.3d at 1193-94. The court also
agreed with the superior court that the Developers’ permits contractually obligated
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CITY OF PHOENIX V. GLENAYRE ELECTRONICS, INC.
Opinion of the Court
them to indemnify the City, and thus the City’s indemnity claims were based in contract
and subject to § 12-552(A). Id. at 87 ¶ 18, 88 ¶ 22, 375 P.3d at 1196, 1197. We granted
review because application of the statute of repose to governmental entities and
interpretation of § 12-552(F) are issues of statewide importance that are likely to recur.
We have jurisdiction pursuant to article 6, section 5(3) of the Arizona Constitution and
A.R.S. § 12-120.24.
II.
¶9 We review the superior court’s dismissal of claims under Rule 12(b)(6) de
novo, as we do the interpretation of statutes. Watts, 239 Ariz. at 23 ¶ 9, 365 P.3d at 948.
A.
¶10 Arizona case law has consistently recognized the common law doctrine
“nullum tempus occurrit regi”—time does not run against the king. See, e.g., Kerby v.
State ex rel. Frohmiller, 62 Ariz. 294, 307, 157 P.2d 698, 704 (1945) (noting the established
rule that statutes of limitations “do not run or operate against the state”); City of Bisbee v.
Cochise County (Bisbee III), 52 Ariz. 1, 9, 78 P.2d 982, 985 (1938) (finding “ample
justification for the rule, stated in the ancient maxim and confirmed by our Legislature
from time to time, that statutes of limitations which govern between private individuals
do not apply in proceedings on behalf of the state”). The doctrine is based on the
premise that, although time limitations apply to private parties so as to prevent
fraudulent, stale claims, time stands still, as it were, for the state because “[t]he officers
who are charged with the active duty of enforcing [the] rights [of the state] have no
personal profit to gain thereby, and therefore no inducement for the bringing of false
and unwarranted actions.” Bisbee III, 52 Ariz. at 9, 78 P.2d at 985.
¶11 In Bisbee III, this Court held, in the last of three opinions in that case, that
the nullum tempus doctrine generally “applies not only to the state itself when suing in
its own name, but to all of its subdivisions,” including municipalities acting with a
public purpose to recover tax-related monies. Id. at 18, 78 P.2d at 989. In that case,
Bisbee sued Cochise County to recover certain penalties and fees on delinquent taxes
collected by the county but allegedly owed to the city. Id. at 3, 78 P.2d at 983. In
defense, the county unsuccessfully argued that the city’s claim was time-barred by a
general statute of limitations requiring actions “[u]pon a liability created by statute” to
be commenced within one year after the cause of action accrued. City of Bisbee v. Cochise
Cty., 44 Ariz. 233, 243, 36 P.2d 559, 563 (1934) (quoting Ariz. Rev. Code § 2058(3) (1928),
now A.R.S. § 12-541(5)). On a second appeal after the case was remanded and tried, this
Court again rejected the county’s statute-of-limitations defense against the city’s
attempted collection of tax revenues, finding the nullum tempus doctrine applied
“unless the Legislature has expressly permitted such a [defense].” City of Bisbee v.
Cochise Cty., 50 Ariz. 360, 369, 72 P.2d 439, 443 (1937). In Bisbee III, on which the City
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CITY OF PHOENIX V. GLENAYRE ELECTRONICS, INC.
Opinion of the Court
here primarily relies, we confirmed that the nullum tempus doctrine generally applies
to municipalities and therefore denied the petition for rehearing. 52 Ariz. at 18, 78 P.2d
at 989.
¶12 For well over a century, our state’s common law and statutes on this
subject have overlapped. Even before statehood, Arizona’s territorial legislature
codified the nullum tempus doctrine. See Rev. Stat. Ariz. Territory § 44-2306 (Sec. 10)
(1887). And as this Court observed in Bisbee III, the doctrine “has been re-enacted by
our Legislature every time it has recodified the law.” 52 Ariz. at 8, 78 P.2d at 985.
¶13 Entitled “Exemption of state from limitations,” A.R.S. § 12-510 is the most
recent codification and states: “Except as provided in § 12-529, the state shall not be
barred by the limitations of actions prescribed in [chapter 5 of Title 12].” The exception
found in § 12-529, relating to actions involving public trust lands and navigable
watercourses, is not applicable here. But directly at issue is another provision in
chapter 5 of Title 12, the statute of repose, which states in part:
Notwithstanding any other statute, no action or arbitration
based in contract may be instituted or maintained against a
person who develops or develops and sells real property, or
performs or furnishes the design, specifications, surveying,
planning, supervision, testing, construction or observation of
construction of an improvement to real property more than
eight years after substantial completion of the improvement
to real property.
A.R.S. § 12-552(A). Added by the legislature in 1989, this statute defines a substantive
right limiting the “indeterminable period of liability exposure” faced by those engaged
in development and construction activities traditionally. Albano v. Shea Homes Ltd.
P’ship, 227 Ariz. 121, 126, ¶ 19, 127 ¶ 26, 254 P.3d 360, 365, 366 (2011).
¶14 The subject construction projects on which Mr. Tarazon worked were
completed more than eight years before the City filed its third-party complaint. The
statute of repose in § 12-552(A) applies, then, unless the City is exempt from that
provision. Based largely on Bisbee III, the City argues that the statute of repose does not
apply to it and thus cannot bar its indemnity claims. In Bisbee III, this Court
acknowledged the then-applicable predecessor statute to § 12-510 (Ariz. Rev. Code
§ 2056 (1928)) and remarked that the statute “does not add to []or subtract from the
common-law rule, but is merely a legislative recognition and approval thereof.” 52
Ariz. at 8, 78 P.2d at 985. We also observed that “statutes of limitations do not and
should not apply to the state, in the absence of an express declaration to the contrary by
the Legislature,” id. at 8–9, 78 P.2d at 985, that is, “unless the Legislature has expressly
and definitely declared that they do.” Id. at 10, 78 P.2d at 985.
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CITY OF PHOENIX V. GLENAYRE ELECTRONICS, INC.
Opinion of the Court
¶15 Relying on that language in Bisbee III, the City argues that the legislature
has not “expressly and definitely declared” that § 12-552(A)’s limitation applies to
governmental entities and, absent such an expression, the City is not bound by that
statute. According to the City, the legislature could have met that standard in either of
two ways, but did neither. First, the legislature could have expressly provided in
§ 12-510 an exception for § 12-552, just as § 12-510 does for § 12-529. Or second, the
legislature could have expressly declared in § 12-552 that the state and its political
subdivisions are subject to its provisions. Cf. State ex rel. Condon v. City of Columbia, 528
S.E.2d 408, 412 (S.C. 2000) (stating that “the Legislature abandoned the nullum tempus
doctrine long ago” by statutorily providing “‘the limitations prescribed in this
chapter . . . shall apply to actions brought in the name of the State’”); see also A.R.S.
§ 12-529 (stating that “any action brought by this state . . . based on a claim of
navigability of any watercourse . . . is subject to all legal and equitable defenses which
would be available if the claimant were not this state”).
¶16 Although the legislature could have followed one of the avenues the City
identifies, it was not required to do so to apply the statute of repose to all parties,
including the state. Section 12-552(A)’s introductory phrase, “[n]otwithstanding any
other statute,” makes clear that the statute of repose controls over other, potentially
conflicting state laws. By using that phrase in § 12-552(A), the legislature “has expressly
and definitely declared” that the statute of repose controls over § 12-510’s general
exemption of governmental entities from statutes of limitations. Bisbee III, 52 Ariz. at 10,
78 P.2d at 985; see State v. Jones, 232 Ariz. 448, 450 ¶ 11, 306 P.3d 105, 107 (App. 2013),
vacated on other grounds by State v. Jones, 235 Ariz. 501, 334 P.3d 191 (2014) (noting that
“the legislature has often used language such as ‘notwithstanding any other statute’ . . .
to indicate that a particular provision will trump any conflicting statutes”). We also
note that the statute of limitations at issue in Bisbee III, unlike § 12-552, did not broadly
apply “notwithstanding any other statute,” see supra ¶ 11.
¶17 The City, however, asserts that the phrase “[n]otwithstanding any other
statute” “is inherently generic” and “does not expressly and specifically limit the
government’s rights.” But the word “any” is “broadly inclusive.” City of Phoenix v.
Tanner, 63 Ariz. 278, 280, 161 P.2d 923, 924 (1945); see also United States v. Gonzales, 520
U.S. 1, 5 (1997) (“Read naturally, the word ‘any’ has an expansive meaning, that is, ‘one
or some indiscriminately of whatever kind.’”) (quoting Webster’s Third New International
Dictionary 97 (1976)); Mapoy v. Carroll, 185 F.3d 224, 229 (4th Cir. 1999) (interpreting the
word “any” to mean “all” when used in the phrase “notwithstanding any other
provision of law”); United States v. Fernandez (Appeal of U.S. by Atty. Gen.), 887 F.2d 465,
468 (4th Cir. 1989) (explaining the provision “notwithstanding any other provision of
law . . . naturally means” the provision “should not be limited by other statutes”).
¶18 In addition, the word “notwithstanding” means “without prevention or
obstruction from or by; in spite of.” Premier Car Rental, Inc. v. Gov’t Emps. Ins. Co., 637
7
CITY OF PHOENIX V. GLENAYRE ELECTRONICS, INC.
Opinion of the Court
N.Y.S.2d 177, 178-79 (NY App. Div. 1996) (quoting Notwithstanding, Webster’s Third New
International Dictionary 1545 (3d ed. 1961)). Thus, the limitation in § 12-552(A) applies
broadly and inclusively to all other statutes. Like the United States Supreme Court, we
do not require the legislature “to employ magical passwords” to accomplish its
manifest intent. Marcello v. Bonds, 349 U.S. 302, 310 (1955) (concluding that a
deportation statute’s “sole and exclusive procedure” expressly superseded a different
procedure under the Administrative Procedure Act even though the statute did not
mention the Act, which required any modifications to its procedure to be express).
¶19 The history of the pertinent statutes supports our conclusion that § 12-552
overrides § 12-510’s general provision exempting the state from limitations of actions.
As noted above, § 12-510 and its predecessor territorial and state statutes date to the late
1800s. Against that longstanding backdrop, the legislature enacted § 12-552, including
its “[n]otwithstanding any other statute” preface, in 1989. We presume that the
legislature was aware that this more recent and specific statute, added to the same
chapter in which § 12-510 appears, would effectively prevail over the former statute and
govern actions and parties covered by the latter. Cf. Daou v. Harris, 139 Ariz. 353, 357,
678 P.2d 934, 938 (1984) (stating “we presume that the legislature, when it passes a
statute, knows the existing laws”).
¶20 In addition, the legislature amended § 12-552 in 1992 by adding subsection
(G). Under that amendment, subsection (A)’s eight-year limitation period begins to run
on September 15, 1989, for any “improvement to real property that was substantially
complete on or before” that date. A.R.S. § 12-552(G). The history behind this
amendment strongly suggests that the legislature recognized that § 12-552 otherwise
time-barred the Central Arizona Water Conservation District (CAWCD) from bringing
a nearly $150 million claim against parties that, according to the CAWCD, negligently
constructed the underground piping for transporting water to central Arizona. See S.
Fact Sheet (May 27, 1992), S.B. 1478, 40th Leg., 2d Reg. Sess. (Ariz. 1992). The legislative
history convincingly reveals that the legislature added subsection (G) so that CAWCD
could file its claims against the constructors within the eight-year time limit. See also
Minutes of S. Comm. on Judiciary at 30-32 (April 7, 1992), 40th Leg., 2d Reg. Sess. (Ariz.
1992).
¶21 If, as the City asserts, § 12-552 neither applied to governmental entities
such as CAWCD nor otherwise trumped § 12-510, the legislature (albeit the 1992
legislature, not the 1989 legislature that passed § 12-552) would not have needed to add
subsection (G); that is, under the City’s view, subsection (G) would be superfluous
because even without any amendment, CAWCD, as a political subdivision of the state,
was already exempt from § 12-552. We agree with the court of appeals that this history
“is particularly compelling.” Glenayre, 240 Ariz. at 86 ¶ 15, 375 P.3d at 1195.
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CITY OF PHOENIX V. GLENAYRE ELECTRONICS, INC.
Opinion of the Court
¶22 The City alternatively argues that, separate and apart from § 12-510, the
common law nullum tempus doctrine applies to exempt governmental entities from
§ 12-552. See A.R.S. § 1-201 (stating that the common law applies insofar “as it is
consistent with . . . and not repugnant to or inconsistent with the . . . laws of this state”);
Pleak v. Entrada Prop. Owners’ Ass’n, 207 Ariz. 418, 422 ¶ 12, 87 P.3d 831, 835 (2004) (“[I]f
the common law is to be changed or abrogated by statute, the legislature must do so
expressly or by necessary implication.”); Tucson Gas & Elec. Co. v. Schantz, 5 Ariz. App.
511, 515, 428 P.2d 686, 690-91 (1967) (concluding that a narrow statute regarding record
inspections did not supersede the broader common law right to inspect corporate
records and noting that “the mere fact that a statute partially codifies the common law
does not necessarily abolish the remainder of the common law rule”). We are not
persuaded by this argument.
¶23 This Court has observed that § 12-510 “is merely a partial codification” of
the nullum tempus doctrine. State ex rel. Dep’t of Health Servs. v. Cochise Cty., 166 Ariz.
75, 77 n.3, 800 P.2d 578, 580 n.3 (1990). But that observation simply referred to “the fact
that [§ 12-510] limits its provisions to statutes of limitations in ‘this chapter,’ referring to
chapter 5, title 12.” Id.; see also Bisbee III, 52 Ariz. at 8, 78 P.2d at 985 (noting that § 12-
510’s predecessor statute, which likewise referred to only “the limitations of actions
prescribed in this chapter,” “does not add to []or subtract from the common-law rule,
but is merely a legislative recognition and approval thereof”).
¶24 Here, unlike the situation in Tucson Gas, the common law nullum tempus
doctrine and the related statute (§ 12-510) do not differ in substance or scope. With
respect to limitations in chapter 5 of title 12, the common law and § 12-510 are
coterminous. See In re Diamond Benefits Life Ins. Co. v. Resolute Holdings, Inc., 184 Ariz.
94, 96, 907 P.2d 63, 65 (1995) (noting that the common law nullum tempus doctrine is
codified in § 12-510); State ex rel. Conway v. Versluis, 58 Ariz. 368, 380, 120 P.2d 410, 415
(1941) (describing § 12-510’s predecessor statute as “merely a reenactment of the old
common law”). Thus, for purposes of the limitation provisions in that chapter, the
legislature’s “notwithstanding” clause in § 12-552(A), at the least, overrides not only §
12-510 but also by “necessary implication” its common law nullum tempus counterpart.
Pleak, 207 Ariz. at 422 ¶ 12, 87 P.3d at 835.
¶25 Finally, the City cites several out of state cases in which courts applied the
nullum tempus doctrine not only to statutes of limitations but also to statutes of repose.
See, e.g., State v. Lombardo Bros. Mason Contractors, Inc., 54 A.3d 1005, 1022 (Conn. 2012);
Rutgers, State Univ. of N.J. v. Grad P’ship, 634 A.2d 1053, 1054-55, 1056 (N.J. Super. App.
Div. 1993); Rowan County Bd. of Educ. v. U.S. Gypsum Co., 418 S.E.2d 648, 657 (N.C. 1992).
But unlike § 12-552, none of the statutes at issue in those cases stated they applied
“notwithstanding any other statute” or contained other express language overriding the
nullum tempus doctrine. Therefore, we find those cases inapposite and in some tension
with Albano’s differentiation between statutes of limitations and statutes of repose. 227
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CITY OF PHOENIX V. GLENAYRE ELECTRONICS, INC.
Opinion of the Court
Ariz. at 127 ¶¶ 23–24, 254 P.3d at 366. In sum, the superior court and court of appeals
did not err in concluding that § 12-552 applies to the City’s contract-based indemnity
claims that fall within that statute’s scope, notwithstanding § 12-510 or the common law
nullum tempus doctrine.
B.
¶26 The City also argues that, contrary to the court of appeals’ opinion, its
indemnity claims against the Developers are not “based in contract” within the
meaning of § 12-552(A) and (F) and thus are not barred by that statute. We agree that
dismissal of those claims under Rule 12(b)(6) was error.
¶27 The eight-year limitation in § 12-552(A) applies to an action “based in
contract.” Subsection (F) defines the types of agreements that are “based in contract”
and thereby limits the statute of repose to only those agreements. It states: “In this
section an action based in contract is an action based on a written real estate contract,
sales agreement, construction agreement, conveyance or written agreement for
construction or for the services set forth in subsection A of this section.” The issue is
whether the indemnification provision in Phoenix Code § 31-40 creates a contract or
agreement contemplated in subsection (F). That indemnification provision under which
the City’s claim against the Developers arises is not based on any of the agreements the
legislature listed in subsection (F). Accordingly, the statute of repose does not bar the
City from bringing its indemnity claims arising from Phoenix City Code § 31-40.1
¶28 In ruling that § 12-552 barred the City’s claims against the Developers, the
court of appeals stated, “[t]he nature of the instrument bearing the indemnification
agreement . . . is immaterial to whether a claim under the agreement is based in
contract.” Glenayre, 240 Ariz. at 87 ¶ 17, 375 P.3d at 1196. The court noted the statute’s
“broad” language and said it expressed “the legislature’s . . . obvious intent to
encompass any ‘written agreement . . . for the services set forth in subsection A.’” Id. It
then held that the permits required and issued by the City created a contractual
1 The allegations in the City’s third-party complaint arguably could also be read as
asserting a contractual indemnity claim against both the Contractors and Developers.
However, we must accord all reasonable inferences to the City’s complaint, and in
doing so, we conclude that the City has sufficiently pleaded an indemnity claim against
the Developers arising from § 31-40 of the Code. See Cullen v. Auto-Owners Ins. Co., 218
Ariz. 417, 419, ¶ 7, 189 P.3d 344, 346 (2008) (explaining that courts “must assume the
truth of the well-pled factual allegations and indulge all reasonable inferences
therefrom”). If any further questions exist regarding the source or basis of the City’s
indemnity claims against the Developers, they can be addressed on remand.
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Opinion of the Court
relationship from which the City sought indemnification. Id. Based on the statutory
language and the City Code, however, we reach a different conclusion.
¶29 As permittees, the Developers were subject to and governed by City Code
§ 31-40. See supra ¶ 5. The indemnity provision contained in that Code section is clearly
not a “written real estate contract,” “sales agreement,” “construction agreement,”
“conveyance,” or a “written agreement for construction.” § 12-552(F). The question,
then, is whether the Code’s indemnity provision is a “written agreement . . . for the
services set forth in subsection A.” (Emphasis added.) Interpreted broadly, “for” could
mean “in respect to” or “concerning” the services. For, Webster’s Third New International
Dictionary 886 (2002). Or, more narrowly, “for” could mean “with the purpose or object
of,” in the sense of engaging such services. Id.
¶30 We are not persuaded that a broad interpretation of the word “for”
applies here. Subsection (F)’s phrase, “written agreement . . . for the services set forth in
subsection A,” serves as a catch-all provision. Pursuant to the ejusdem generis rule, the
phrase must be construed to refer to the same type of agreement as the enumerated
agreements in subsection (F). See Bilke v. State, 206 Ariz. 462, 465 ¶ 13, 80 P.3d 269, 272
(2003) (quoting Black’s Law Dictionary 517 (6th ed. 1990), stating ejusdem generis applies
“where general words follow the enumeration of particular classes of things”). The
transactional nature of the other agreements listed in subsection (F) suggests that
subsection (A) should apply to “breach of contract and implied warranty actions
against developers, builders, and certain others.” Albano, 227 Ariz. at 126 ¶ 19, 254 P.3d
at 365 (quoting Evans Wythecombe, Inc. v. W. Innovations, Inc., 215 Ariz. 237, 239 ¶ 9, 159
P.3d 547, 549 (App. 2006)). In Albano, we also noted that “[t]he Legislature enacted
§ 12-552 to limit the ‘time period during which action may be brought against those
engaged in the development or construction of real property and activity related to the
construction of real property.’” Id. (quoting Ariz. State Senate, Fact Sheet for S.B. 1305,
39th Leg., 1st Reg. Sess. (Mar. 20, 1989)); cf. Flagstaff Affordable Housing Ltd. P’ship v.
Design Alliance, Inc., 223 Ariz. 320, 329 ¶ 44, 223 P.3d 664, 673 (2010) (stating § 12-552
applies to actions “involving the design, engineering, or construction of improvements
to real property”).
¶31 The real estate contract, sales agreement, and other listed agreements in
subsection (F) are types of transactional agreements from which could arise the
indeterminable liability that the legislature sought to prohibit for breach of contract and
implied warranty actions. See Albano, 227 Ariz. at 126 ¶ 19, 254 P.3d at 365 (“Before
§ 12-552 was enacted, developers and builders faced an indeterminable period of
liability exposure.”). Interpreting “for” broadly to mean “concerning” would extend
the statute of repose far beyond such claims and could, for example, preclude most
claims against a construction company; this is so because any contract necessarily used
for the company’s internal or external operations would broadly “concern” the
construction of real property, but would not be limited to “activit[ies] related to the
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CITY OF PHOENIX V. GLENAYRE ELECTRONICS, INC.
Opinion of the Court
construction of real property.” Id. So interpreted, the word “for” would cause the
statute to thwart the legislature’s manifest intent to limit indeterminable liability for
breach of contract and implied warranty actions. Cf. Fry’s Food Stores of Arizona, Inc. v.
Mather & Associates, Inc., 183 Ariz. 89, 91-92, 900 P.2d 1225, 1227-28 (App. 1995) (stating
that the language of § 12-552(F) “may reasonably be construed as inapplicable to
negligence actions among contracting parties”).
¶32 Moreover, if we interpret “for” to mean “concerning,” then the catch-all
phrase would incorporate each of subsection (F)’s enumerated agreements, rendering
their enumeration superfluous. See Fields v. Elected Officials’ Retirement Plan, 234 Ariz.
214, 218 ¶ 16, 320 P.3d 1160, 1164 (2014) (noting that the legislature generally avoids
redundancy). The narrow interpretation of “for” avoids redundancy and encompasses
all written agreements that have as their purpose engaging in the types of “services set
forth in subsection (A),” such as developing, selling, or surveying property for
construction projects. The narrow interpretation of “for” in subsection (F)’s catch-all
phrase also parallels that subsection’s phrase, a “written agreement for construction,”
which uses the word “for” to clearly mean “with the purpose or object of.”
¶33 The remaining question is whether Phoenix Code § 31-40 creates a written
agreement for any of the services set forth in subsection (A). Although the court of
appeals’ analysis and the Developers’ argument focus on the inclusion of the MAGS in
the permits issued to the Developers, the City’s third-party complaint alleged that the
Developers’ indemnity obligation arose from § 31-40 of the Code itself.2 See supra ¶ 5.
The incorporation of the MAGS into the permit simply memorialized a preexisting
regulatory obligation. But even if the permit created a contractual relationship between
the City and the Developers, as the court of appeals held, that would not preclude
finding an independent indemnity obligation under the City Code. Cf. Unique Equip.
Co., Inc. v. TRW Vehicle Safety Sys., Inc., 197 Ariz. 50, 55 ¶ 19, 3 P.3d 970, 975 (App. 1999)
(recognizing “an independent statutory obligation to indemnify”).
¶34 Although we question whether § 31-40 could create a written agreement
in the abstract, we need not resolve that issue in all respects. Cf. Proska v. Arizona State
Schools for the Deaf and the Blind, 205 Ariz. 627, 629 ¶¶ 11-12, 74 P.3d 939, 941 (2003)
2 In its third-party complaint, the City alleged that it “issued right-of-way permits to
the Developers and Contractors for the projects on which Mr. Tarazon allegedly
worked,” and that the City codes “require the permittee (the Developers) and the
Contractors to indemnify Phoenix against injury and death claims arising out of the
performance of the permitted work.” (Emphasis added.) But the City also alleged that,
“[g]enerally, for the projects on which Mr. Tarazon allegedly worked, the right-of-way
permits were issued to the Developers as ‘permittees.’” Despite the confusion, in this
Court the City asserts Code-based indemnity claims against only the Developers, not
the Contractors with which the City had separate contracts.
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CITY OF PHOENIX V. GLENAYRE ELECTRONICS, INC.
Opinion of the Court
(iterating the “general principle” that “statutes do not create contract rights” because
legislative “[p]olicies, unlike contracts, are inherently subject to revision and repeal”)
(internal quotation marks and citations omitted); Smith v. City of Phoenix, 175 Ariz. 509,
514, 858 P.2d 654, 659 (App. 1992) (declaring the same principle with respect to a city
ordinance and concluding “the fact that both parties knew [the judge’s] salary was
established by a city ordinance, which was naturally subject to change by the city
council” suggested the absence of an employment contract). Rather, we conclude that
the City Code, which applies solely based on an indemnitor’s status as a permittee, does
not constitute a written agreement for the services listed in § 12-552(A). The City’s
issuing a permit and the corresponding, independent indemnity obligation arising
under Code § 31-40 do not create an agreement between the City and the Developers for
either party to perform any of the services listed in subsection (A). Instead, the permit
grants the Developers a license to enter Phoenix property to undertake their
construction projects, see Phoenix City Code § 31-35; and § 31-40 provides a condition
for the permit’s issuance. The Code’s indemnity provision in a very broad sense does
“concern” a construction project. But the City did not offer or accept any of the services
prescribed in subsection (A), such as developing or selling property or furnishing
specifications for construction improvements.
¶35 Nor did an agreement for the services listed in subsection (A) arise merely
because the Developers submitted their construction plans to the City as part of the
permit application process. By reviewing those plans and issuing a permit, the City
simply performed its legal duty to issue a right-of-way permit when the Developers
satisfied all the relevant conditions. Cf. Vance v. Lassen, 82 Ariz. 188, 191, 310 P.2d 510,
512 (1957) (requiring the issuance of a permit when “there exists no legal excuse for
non-issuance”); City of Tempe v. Baseball Facilities, Inc., 23 Ariz. App. 557, 561, 534 P.2d
1056, 1060 (1975) (determining the denial of a requested business permit may not be
arbitrary and capricious). Issuance of a permit in compliance with law does not itself
evidence an “agreement” between the City and the Developers “for the services set
forth in subsection A [of § 12-552],” and neither the construction plans nor MAGS alter
that conclusion. Accordingly, the superior court erred in finding § 12-552 applicable to
the City’s indemnity claims against the Developers and dismissing those claims under
Rule 12(b)(6).
III.
¶36 We affirm the superior court’s dismissal of the City’s third-party, contract-
based claims against the Contractors because neither § 12-510 nor the common law
nullum tempus doctrine precludes application of § 12-552(A). We reverse the superior
court’s dismissal of the City’s third-party claims against the Developers because the
allegations in the City’s complaint do not establish that those claims are “based in
contract” for purposes of § 12-552(A) and (F). Accordingly, we vacate those portions of
the court of appeals’ opinion that concluded that the City’s indemnity claims against the
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CITY OF PHOENIX V. GLENAYRE ELECTRONICS, INC.
Opinion of the Court
Developers are “based in contract” and therefore subject to and barred by the statute of
repose. We also vacate the superior court and court of appeals’ attorney fee awards to
the Developers, without prejudice to their seeking fees should they ultimately prevail.
We remand the case to the superior court for further proceedings consistent with this
opinion and express no view on the merits of the City’s remaining indemnity claims or
on the potential recovery of attorney fees by the ultimate prevailing party or parties.
Finally, because the City concedes that its indemnity claims against the Contractors
arise from contract, the Contractors are awarded their reasonable attorney fees incurred
in this Court pursuant to A.R.S. § 12-341.01, upon compliance with ARCAP 21.
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