Legal Corner: Why the Notice of Claim and Statute of Limitations Statutes Are Important to Cities and Towns

Conflicts are part of our society and sometimes disputes against a city or town can only be resolved in court. However, before a claim can be litigated there are certain rules that must be followed when a person brings an action against any public entity, including a city or town.

Notice of Claim – A.R.S. §12-821.01

Arizona law requires a person with a claim against a city or town to file the claim with the municipality within 180 days after the cause of action accrues. The statute specifies that a cause of action accrues “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.” If the claim is subject to a dispute resolution process or administrative claims procedure pursuant to law, the claim does not accrue until the final decision or notice of disposition is issued.

The claim must include facts sufficient for the city or town to understand the basis for any lawsuit and contain a specific settlement amount and the facts supporting that amount. If done properly, this information notifies the city or town that a lawsuit may be filed, the reason for the potential lawsuit, and the amount of money that the city or town may rely upon to settle the dispute before a lawsuit is filed. However, every public entity, including cities and towns may refuse the claim and if no action is taken by the municipality, the claim is automatically deemed denied 60 days after its filing. The 60-day period allows the municipality to research and investigate if the claim is valid and determine whether the city or town can settle for the amount contained in the claim.

As expected, disputes arise about when a claim accrues, especially if the matter is filed years after the alleged damage. As a matter of fairness, it is important that claims be brought within the proper time periods since cities and towns are subject to record retention laws and are required to destroy records according to the retention schedule, key employees may have left municipal service, and there may be minimal information remaining to defend a claim from years in the past. These issues are litigated to determine when the claimant knew or reasonably should have known the source of the injury the claim alleges was the fault of the city or town.

Statute of Limitations – A.R.S. § 12-821

The cause of action continues to be a key component when examining whether the statute of limitations has expired. Arizona law states that all actions against a city or town or a municipal employee “shall be brought within one year after the cause of action accrues and not afterward.” This deadline to file an action works in tandem with the Notice of Claim statute, which puts the city or town on notice that a claim has been filed and a lawsuit may follow within the year. Any litigation filed after the statute of limitations deadline is barred.

Conclusion

The Notice of Claim and Statute of Limitations laws protects all public entities and taxpayers from lawsuits that are filed outside of the statutory deadlines. These laws are paramount to help inform the city or town of potential litigation, provide time to investigate and research the claim, determine if the matter warrants settlement, and if the budget exists to settle the claim. If the claim does not contain the required information or the city or town does not believe it is a valid claim, city or town significant resources are not expended unless the claimant files the lawsuit. This upfront notice and dedicated time period for an action to be filed minimizes the expenditure of municipal funds on frivolous claims, aids the cities and towns with the ability to settle the matter if possible, and helps to prepare the municipality for any potential litigation.