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Governmental Liability: Notice of Claim “Specific Amount for Which Claim Can Be Settled”

Posted by Ted A. Schmidt | Oct 21, 2024 | 0 Comments

City of Mesa v. Ryan, No. CV23-0284-PR  (October 17, 2024) (C.J. Timmer)

A.R.S. § 12-821.01(A)   REQUIRES GOVERNMENTAL ENTITY BE SERVED A NOTICE OF CLAIM WITHIN 180 DAYS WHICH CONTAINS “A SPECIFIC AMOUNT FOR WHICH THE CLAIM CAN BE SETTLED AND FACTS SUPPORTING THAT AMOUNT”—DEMANDING $1 MILLION “OR POLICY LIMITS, WHICHEVER IS HIGHER” DOES NOT SATIFSY THIS REQUIREMENT

 A City of Mesa police officer allegedly caused an automobile collision resulting in injury to bicyclist plaintiff. Plaintiff filed a timely notice of claim pursuant to A.R.S. § 12-821.01(A) demanding “$1,000,000 or the applicable policy limits.”  A later untimely notice of claim was filed seeking only $1,000,000 without reference to “policy limits.”  In response to the subsequent lawsuit the defendant City moved to dismiss on the basis the only timely notice of claim did not comply with the requirement that the notice “contain[s] a specific amount for which the claim can be settled and the facts supporting that amount.” The superior court denied the motion. The Arizona Court of Appeals accepted defendant's petition for special action and reversed the trial court. The Arizona Supreme Court reversed and remanded with instructions to the trial court, and affirmed in part and vacated in part the Arizona Court of Appeals decision.

The settlement amount need not be apportioned among

multiple parties or causes of action. And it can be a

pie-in-the[1]sky number. (“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. 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).

Here plaintiff argued that the City could easily calculate the amount that would settle the case by simply looking to its insurance coverage to determine the policy limit. The City however, argued it was not that simple—the City's risk management claims analyst submitted a declaration 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.”  Further it is the insurance carriers and not the City that determines which “layer” of coverage applies to any given claim.”

The supreme court concluded that here it was impossible for the City to determine the precise amount for which the case could settle, and the complaint must be dismissed for that reason.  “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.”

About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".

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