City of Chandler v. Roosevelt Water Conservation District, No. 1 CA-CV 23-0744 (App. Div. I, October 31, 2024) (J. Catlett)

A.R.S. § 12-821 ONE YEAR STATUTE OF LIMITATIONS APPLIES TO PUBLIC ENTITY SUING ANOTHER PUBLIC ENTITY DESPITE NULLUM TEMPUS OCCURRIT REGI/STATUTE OF LIMITATIONS ACCRUES WHEN PLAINTIFF KNEW OR REASONABLY SHOULD HAVE KNOWN A WRONG HAS OCCURRED CAUSING PLAINTIFF HARM/DOCTRINE OF CONTINUING TORT DOES NOT APPLY

 The City of Chandler [Chandler] had a contract with the Roosevelt Water Conservation District [District] whereby the District was to supply water for irrigation to Chandler when there was enough provided for this purpose by the Salt River Project. Chandler and the District came at odds resulting in the District declaring the contract terminated on May 26, 2018.  Thereafter Chandler made several attempts to get water from the District to no avail as the District persisted in declaring the contract terminated. Chandler ordered water for the last time in 2020 but again the District declared the contract terminated and failed to deliver water. Chandler sued the District for declaratory relief and breach of contract. The trial court granted Chandler's motion for summary judgment finding that while the one-year statute of limitations(A.R.S. § 12-821 ) for bringing suit against a public entity applied, the breach of contract by the District was continuous, occurring every year it failed to provide Chandler water, so suit was filed within a year of the last breach. The Arizona Court of Appeals reversed and remanded.

The doctrine of nullum tempus occurrit regi (time does not run against the king) while good common law in Arizona does not save Chandler from applicability of the one-year statute of limitations.  A.R.S. § 12-821 states it applies to “[a]ll actions against any public entity.”  “All means all—not less than all.” Other statutes of limitations are more specific as to whom they apply. Here the legislature, by stating “all” demonstrated its intent to apply the limitation period even to a public entity suing another public entity despite nullum tempus occurrit regi. Interestingly, the court of appeals concludes this analysis by stating, “In so concluding, we do not suggest that every statute of limitations using the phrase “all actions” overrides the nullum tempus doctrine. We conclude only that the text, history, and purpose of § 12-821 overrides the nullum tempus doctrine.

Addressing the question of accrual of the limitations period, the court found a “claim accrues under § 12-821 when the damaged party realizes he or she has been damaged and knows or reasonably should know

the cause, source, act, event, instrumentality or condition that caused or contributed to the damage.”  This court has previously held that the “continuing wrong” exception does not apply to A.R.S. § 12-821. Watkins v. Arpaio, 367 P3d 72 (App. 2016), “limitations rules in §§ 12-821 and 12-821.01 “are creatures of statute, not the common law, and . . . do not allow [a plaintiff] to wait to bring suit until more than a year after acts sufficient to state a claim occur.” 

Although plaintiff could have brought a declaratory relief action (A.R.S. § 12-1832) when the District first declared the contract terminated, that fact does not establish the date of accrual. Declaratory relief actions may be brought to declare the rights of parties before the plaintiff is actually harmed. A.R.S. § 12-1832 only requires there be a “justiciable controversy” to bring a declaratory relief action. Such an action can be filed before the contract is even breached in order to avoid the breach.

Similarly, while the District's claim the contract was terminated may have been an anticipatory breach of the contract,  Chandler had the right to "continue to treat the contract as operable and urge

performance by the repudiating party without waiving any right to sue for that repudiation.”  When Chandler did just that the District had an ongoing ability to retract the repudiation and treat the contract as in force thus nullifying the breach.  “Because anticipatory repudiation is not a breach of contract until the innocent party treats it as final, repudiation does not automatically start the statute of limitations.” Here, when Chandler refused to provide water per the contract, Chandler was damaged, and accrual applies. Certainly, when Chandler last ordered water for 2020 and the District failed to provide the water in 2020, the statute of limitations had accrued.  This action was not brought within a year of January 1, 2021, so it is time barred.