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Notice of Claim Deadline Tolled Until Failure of Mediation

Posted by Ted A. Schmidt | Sep 08, 2020 | 0 Comments

Notice of Claim Deadline Tolled Until Failure of Mediation

Standard Constr. Co. Inc. v. State, No. 1 CA-CV 19-0411 (App. Div. I, September 3, 2020) (J. Swann)


Contractor sues City of Glendale for breach of contract. Before suit contractor exercises his unilateral right to require both parties participate in nonbinding mediation. The mediation failed. Contractor serves a notice of claim [NOC} withing 180 days of the conclusion of the failed mediation and files suit within the one year statute of limitations. The City moved to dismiss under Rule 12(b)(6) “Failure to State a Claim” Ariz. R. Civ. Pro. arguing the NOC deadline ran from the date the State Engineer denied the Contractor's claim. Contractor appeals and the Arizona Court of Appeals reverses and remands.

Accrual  is delayed,  however,  when  the parties  are  contractually  obligated  to submit to non-judicial  dispute resolution processes—A.R.S. §12-821.01(C) provides that “any claim  that must  be  submitted  to a  binding or nonbinding dispute resolution process or an administrative claims  process  or  review process pursuant  to   a . . . contractual   term   shall   not   accrue . . . until all such procedures, processes or remedies have been exhausted” and  “a  final decision or notice of disposition is issued in [the] alternative dispute resolution procedure, administrative claim process or review process,” or until such later time as the parties may agree .This  tolling  provision recognize[s]  the  tension  between  the  purposes  of  alternative  dispute resolution  procedures  and  the  time  limits  of  claims  statutes,  and . . . preserve[s] the public policies inherent in both.”  Tolling  ensures  that  the parties' opportunity to engage in the alternative dispute resolution process is  meaningful, which advances our state's strong public policy of encouraging  settlement.  

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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