mesa/williams v. Hon ryan/rogers

IN THE

SUPREME COURT OF THE STATE OF ARIZONA

CITY OF MESA; GUSTAVO WILLIAMS,
Petitioners,

v.

THE HONORABLE TIMOTHY RYAN, JUDGE OF THE SUPERIOR COURT OF THE
STATE OF ARIZONA, IN AND FOR THE COUNTY OF MARICOPA,
Respondent Judge,

PHILIP ROGERS,
Real Party in Interest.

No. CV-23-0284-PR
Filed October 17, 2024

Petition for Special Action from the Superior Court in Maricopa County
The Honorable Timothy J. Ryan, Judge
No. CV2022-014378

REVERSED AND REMANDED WITH INSTRUCTIONS

Opinion of the Court of Appeals,
Division One
256 Ariz. 350 (App. 2023)

AFFIRMED IN PART, VACATED IN PART

COUNSEL:

David L. Abney (argued), Ahwatukee Legal Office, P.C., Phoenix; Mark P.
Breyer, Richard Reed, Breyer Law Offices, P.C., Phoenix, Attorneys for
Philip Rogers
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Opinion of the Court

Duncan J. Stoutner (argued), Alexander J. Lindvall, City of Mesa Attorney’s
Office, Mesa, Attorneys for City of Mesa and Gustavo Williams

Joshua D. Bendor, Alexander W. Samuels, Daniel P. Schaack, Luci D. Davis
(argued), Office of the Attorney General, Phoenix, Attorneys for Amicus
Curiae the State of Arizona

Patricia E. Ronan, Mick Levin, PLC, Phoenix, Attorneys for Amicus Curiae
Arizona Association for Justice

Nancy L. Davidson, League of Arizona Cities and Towns, Phoenix;
Nicholas D. Acedo, Struck Love Bojanowski & Acedo, PLC, Chandler,
Attorneys for Amici Curiae League of Arizona Cities and Towns, Arizona
Counties Insurance Pool, Arizona Municipal Risk Retention Pool, and
Arizona School Risk Retention Trust, Inc.

CHIEF JUSTICE TIMMER authored the Opinion of the Court, in which
VICE CHIEF JUSTICE LOPEZ, JUSTICES BRUTINEL, BOLICK, BEENE,
MONTGOMERY, and KING joined.

CHIEF JUSTICE TIMMER, Opinion of the Court:

¶1 Under A.R.S. § 12-821.01(A), a person with a claim against a

public entity or a public employee must timely serve a notice of claim that

describes the claim and “contain[s] a specific amount for which the claim can be

settled and the facts supporting that amount.” (Emphasis added.) If a

notice of claim fails to comply with § 12-821.01(A), the person is barred

from suing the public entity or employee on the claim. § 12-821.01(A);

Deer Valley Unified Sch. Dist. No. 97 v. Houser, 214 Ariz. 293, 295 ¶ 6 (2007).

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¶2 Here, we decide whether Philip Rogers complied with

§ 12-821.01(A) by serving notices of claim on the City of Mesa and its

employee, Gustavo Williams, that offered to settle Rogers’ personal injury

claim against them for “$1,000,000 or the applicable [insurance] policy

limits, whichever are greater.” We conclude that the settlement offer was

insufficiently specific to comply with § 12-821.01(A). Because Rogers did

not timely file a statutorily compliant notice of claim, he is barred from

maintaining this lawsuit.

BACKGROUND

¶3 On November 19, 2021, Williams, a City of Mesa police

officer, was driving his patrol car when he was involved in a multi-vehicle

accident. The collision caused Williams’ car to strike and injure Rogers as

he was legally crossing the street on a bicycle. Rogers alleges that

Williams’ negligent driving caused the accident.

¶4 On May 16 and May 18, 2022, Rogers timely served notices of

claim on the City of Mesa and Williams, respectively, setting forth the basis

for Rogers’ claims and extending his settlement offer. See § 12-821.01(A)

(requiring a claimant to serve a notice of claim within 180 days of the date

the claim accrues). On June 23, following a change in counsel and after

expiration of the time to file a notice of claim under § 12-821.01(A), Rogers

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served amended notices stating he would be willing to settle his claims “for

the total sum of $1,000,000.” The parties did not settle.

¶5 Rogers filed a complaint against the City of Mesa, the City of

Mesa Police Department, and Williams (collectively, the “City”). The City

moved to dismiss the complaint, arguing that Rogers had failed to comply

with § 12-821.01(A). Specifically, the City argued that because the only

timely filed notices of claim offered to settle for a non-specific

amount—“$1,000,000 or the applicable policy limits”—§ 12-821.01 barred

his claim.1 The superior court denied the City’s motion.

¶6 The court of appeals accepted the City’s subsequently filed

petition for special action review and granted the City relief by reversing

the superior court’s order and directing that court to dismiss the complaint.

See City of Mesa v. Ryan, 256 Ariz. 350, 352 ¶ 1 (App. 2023). The court

characterized Rogers’ May 2022 notices of claim as presenting alternative

offers: (1) $1 million; or (2) the City’s applicable policy limits. Id. at 353

¶ 10. In the court’s view, neither alternative “provide[d] a means to

readily compute the amount for which he would settle,” and therefore the

notice of claim failed to state “a specific amount for which the claim can be

1 Because the parties and the superior court interpret the reference to
“policy limits” as referring to “insurance policy limits,” we likewise give
the term this meaning.

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settled,” as required by § 12-821.01(A). See id. at 354 ¶ 16 (quoting

§ 12-821.01(A)). The court further concluded that Rogers’ June 2022

amended notices of claim were untimely and therefore did not cure the

deficiency in the original notices. See id. at 355 ¶ 20.

¶7 We granted review to decide whether Rogers’ May 2022

notices of claim complied with § 12-821.01(A) by offering to settle for

“$1,000,000 or the applicable policy limits, whichever is greater,” an issue

of statewide importance that is capable of repetition. 2 We have

jurisdiction pursuant to article 6, section 5(3) of the Arizona Constitution.

DISCUSSION

¶8 We review the grant of a motion to dismiss de novo.

Shepherd v. Costco Wholesale Corp., 250 Ariz. 511, 513 ¶ 11 (2021). We also

review issues of statutory construction de novo. James v. City of Peoria, 253

Ariz. 301, 303 ¶ 9 (2022). If a statute is subject to only one reasonable

interpretation, we apply that interpretation without further analysis. Id.

A. A.R.S. § 12-821.01(A) Requires A Settlement Offer That Sets Forth
Either A Specific Amount Or A Basis For Precisely Calculating A Specific
Amount.

¶9 Section 12-821.01(A) provides:

Persons who have claims against a public entity, public school
or a public employee shall file claims with the person or

2 We declined to review whether the court of appeals correctly decided
that Rogers’ June 2022 notices of claim were untimely.
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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.

(Emphasis added.) The notice of claim requirements serve important

functions. They permit the public entity to investigate the claim, assess

liability, consider settlement before litigation, and budget for possible

future litigation. See Deer Valley, 214 Ariz. at 295 ¶ 6. To further these

goals, claimants must strictly comply with the statute. See Falcon ex rel.

Sandoval v. Maricopa County, 213 Ariz. 525, 527 ¶ 10 (2006) (“Actual notice

and substantial compliance do not excuse failure to comply with the

statutory requirements of A.R.S. § 12-821.01(A).”); Swenson v. County of

Pinal, 243 Ariz. 122, 125 ¶7 (App. 2017) (“Strict compliance

with . . . [§] 12-821.01(A) is generally required.”).

¶10 Here, we are concerned with § 12-821.01(A)’s requirement

that a notice of claim “contain a specific amount for which the claim can be

settled and the facts supporting that amount.” We have said that this

requirement is “clear and unequivocal” and “unmistakably instructs

claimants to include a particular and certain amount of money that, if
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agreed to by the government entity, will settle the claim.” Deer Valley, 214

Ariz. at 296 ¶ 9. The settlement amount need not be apportioned among

multiple parties or causes of action. See Donovan v. Yavapai Cnty. Cmty.

Coll. Dist., 244 Ariz. 608, 611 ¶ 9 (App. 2018). And it can be a pie-in-the-

sky number. See id. at 611 ¶ 10 (“The notice of claim statute does not

require that the proffered settlement amount be objectively reasonable.”).

All that is required is that the claimant offer a specific settlement amount

that leaves no room for debate about what the public entity must pay to

settle the claim. See Deer Valley, 214 Ariz. at 296 ¶ 9.

¶11 To be clear, providing “a specific amount for which the claim

can be settled” does not always require recitation of a single, exact number.

Setting forth a basis for the public entity to precisely calculate the settlement

offer amount also constitutes a “specific amount” in satisfaction of

§ 12-821.01(A). See generally A. Miner Contracting, Inc. v. City of Flagstaff,

No. 1 CA-CV 14-0249, 2015 WL 5770603, at *2 ¶ 12 (Ariz. App. Oct. 1, 2015)

(mem. decision) (stating that a claimant complies with § 12-821.01(A) “by

requesting an unspecified amount of ‘additional accrued interest’ if the

method for calculating the additional interest is clearly identified in the

notice”). Of course, claimants would be well served by eschewing use of

a formula and instead specifying a sum certain to avoid any contests

concerning compliance with § 12-821.01(A).
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¶12 Section 12-821.01(A)’s attendant obligation to provide the

“facts supporting” the settlement amount compels claimants to provide a

“factual foundation to permit the entity to evaluate the amount claimed,”

thus ensuring that “claimants will not demand unfounded amounts that

constitute ‘quick unrealistic exaggerated demands.’” Deer Valley, 214

Ariz. at 296 ¶ 9 (quoting Hollingsworth v. City of Phoenix, 164 Ariz. 462, 466

(App. 1990)); see also Backus v. State, 220 Ariz. 101, 107 ¶ 23 (2009) (stating

that a claimant complies with § 12-821.01(A) “by providing the factual

foundation that the claimant [subjectively] regards as adequate to permit

the public entity to evaluate the specific amount claimed”). Together, the

requirements for a specific settlement amount and a factual basis

supporting that amount “ensure that government entities will be able to

realistically consider a claim.” Deer Valley, 214 Ariz. at 296 ¶ 9.

B. Rogers’ May 2022 Notices Of Claim Failed To Set Forth “Specific
Amount[s]” For Which His Claims Could Be Settled.

¶13 Rogers argues that offering to settle for the greater of $1

million or the “applicable policy limits” stated a single “specific amount”

under § 12-821.01(A). He emphasizes that the City could immediately

check its policies to determine their limits. Rogers asserts that, if the policy

limits are less than $1 million, the notices explicitly offered to settle for $1

million. But if the policy limits exceed $1 million, he contends, the notices

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clearly offered to settle for this greater amount. The City counters it could

not identify a specific amount because the applicability of the City’s

insurance policies and their limits depends on various factors. Therefore,

the City argues, Rogers did not offer a specific amount for which his claims

could be settled because a single amount could not be determined from

reading the notices alone.

¶14 We begin by examining the City’s insurance policies. Lisa

Lorts, a risk management claims analyst for the City, submitted a

declaration describing the City’s policies. She stated that the City has (1) a

self-insured retention limit of $3 million; (2) an automobile-liability policy

with a $1 million limit; and (3) an excess-carrier policy with a maximum

limit of $50 million. Within the excess-carrier policy, there are “several

different ‘layers’ of coverage that apply under certain circumstances,” so

that this coverage could range from $10 million to $50 million “depending

on the circumstances.” The insurance carriers—not the City—determine

which “layer” applies to a particular claim.

¶15 Lorts stated that when she received Rogers’ notice of claim for

the City, she was unable to determine whether Rogers was willing to settle

for the $3 million self-insured retention limit, the $1 million

automobile-liability policy, or the $10 million to $50 million excess-carrier

policy. Rogers argues that the City could readily pinpoint $54 million as
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the specific amount for which he was willing to settle his claim. He arrives

at this sum by adding together the City’s self-insured retention limit ($3

million), the automobile-liability policy limit ($1 million), and the

excess-carrier policy’s maximum limit ($50 million). Thus, he contends,

the City was notified that his claim could be settled for $54 million—the

greater of $1 million or “applicable policy limits.”

¶16 We agree with the City that Rogers’ notices of claim did not

state a “specific amount” for which his claim could be settled, and he

therefore failed to comply with § 12-821.01(A). Simply put, the City could

not be certain from reading the notices what specific amount Rogers would

be willing to accept to settle his claims. The questions raised by the notices

of claim evidence this uncertainty.

¶17 First, because the City is self-insured up to $3 million, an

insurance policy might not be “applicable” if Rogers’ damages are less than

$3 million. See Restatement of the L. of Liab. Ins. § 1(12) (Am. L. Inst. 2019)

(“A ‘self-insured retention’ is the amount specified in a liability insurance

policy that must be paid by or on behalf of the insured for a covered loss

before coverage under the policy begins to apply for the claim or claims to which

the self-insured retention applies.” (Emphasis added)). Does that mean

Rogers was willing to settle for $1 million if no “policy” applied? Or was

he asking for the automobile-liability policy limits? Or the excess-carrier
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limits? Or both? The City could not make that determination from

reading the notices of claim.

¶18 Second, assuming Rogers was offering to settle for the

self-insured retention amount plus “applicable policy limits,” the City

could not determine those limits from the face of the notices. Which policy

was Rogers referring to? The accident-liability policy, the excess-carrier

policy, or both?3 And if he was referring to the latter policy, which “layer”

would apply to establish the monetary limits? That determination is a

legal question because it depends on interpreting the excess-carrier policy

terms and applying them to the facts underlying the claim. See Sparks v.

Republic Nat’l Life Ins. Co., 132 Ariz. 529, 534 (1982) (stating that “[t]he

interpretation of an insurance contract is a question of law”). The notices

of claim provide no method for determining the “applicable policy limits.”

¶19 It is also worth questioning whether Rogers could comply

with § 12-821.01(A) by pegging the “specific amount for which the claim

3 Rogers himself has been inconsistent about which “applicable policy
limits” he was referring to in the notices of claim. In his response to the
City’s motion to dismiss, he stated that “applicable policy limits” could
only refer to the $1 million automobile-liability policy. In the court of
appeals and in this Court, he contends that the “applicable policy limits” is
$54 million, the total of the self-insurance amount and the maximum limits
of the two policies. Rogers’ wavering characterization of “applicable
policy limits” further evidences the imprecision of the term.

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can be settled” to unknown insurance policies with unknown limits. The

statute requires a claimant to set forth facts supporting the “specific

amount” sought. § 12-821.01(A). Although the amount does not have to

be reasonable, see Donovan, 244 Ariz. at 611 ¶ 10, it stands to reason the

claimant must have a general idea of that amount to provide “facts

supporting” the demand. That cannot occur when the claimant seeks

“policy limits” without knowing how many policies the public entity has

or the monetary limits of those policies. Rogers’ supporting facts are not

at issue in this case, but we nevertheless flag this issue to prevent future

claimants from stumbling over § 12-821.01(A)’s requirements.

¶20 In sum, Rogers’ settlement offer in his notices of claim was

imprecise and invoked variables that made it impossible for the City to

identify the “specific amount” for which he was willing to settle his claims.

When qualifying language or conflicting methods of computation trigger

alternate settlement amounts, the claimant has failed to state a “specific

amount” under § 12-821.01(A). See Deer Valley, 214 Ariz. at 296–97

¶¶ 10–11 (concluding that the claimant failed to state a “specific amount”

by using “qualifying language” such as “$35,000 per year or more” and “‘no

less than’ $300,000” (emphasis omitted)); A. Miner Contracting, 2015 WL

5770603, at *2 ¶¶ 9–10 (explaining that the claimant failed to offer to settle

for a “specific amount” by requesting accrued interest in the notice of claim
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but including conflicting interest rates and accrual dates). By failing to

comply with § 12-821.01(A), Rogers is now barred from maintaining his

claims against the City.

¶21 Where, as here, a claimant’s notice of claim fails to

communicate a specific amount for which the claim can be settled or

provide a method for calculating that specific amount, the claimant has

failed to comply with § 12-821.01(A). The takeaway from this case for

future claimants is straightforward: failure to state an exact monetary figure

in the notice of claim as the specific amount for which the claim can be

settled raises a strong risk that the claim will be found statutorily

noncompliant.

CONCLUSION

¶22 For the foregoing reasons, we generally agree with the court

of appeals’ opinion, although we do not adopt all of its reasoning.

Therefore, we vacate ¶¶ 9–19 of the opinion and affirm the remainder. We

reverse the superior court’s order denying the motion to dismiss and

remand with instructions to dismiss Rogers’ claims.

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