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) https://www.azcourts.gov/Portals/0/OpinionFiles/Div1/2020/1%20CA-CV%2019-0411.pdf
WHERE PARTIES ARE CONTRACTUALLY OBLIGATED TO SUBMIT TO ALTERNATIVE DISPUTE RESOLUTION NOC DEADLINE IS TOLLED UNTIL ADR PROCEDURE IS “EXHAUSTED”
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.