Arizona Court of Appeals, Division One holds that seeking “applicable policy limits” does not comply with the notice of claim statute.

In November 2021, a City of Mesa police officer ran a red light and struck a bicyclist. The bicyclist was injured, and he sought to recover damages from his injury from the City and the officer. So, pursuant to Arizona’s notice of claim statute that governs suits against government entities and their employees, the bicyclist served a notice of claim on both the City and the officer. In those notices, the bicyclist stated that the matter could “be settled at this time for $1,000,000 or the applicable policy limits, whichever are greater.” Later, after the time to serve notices had run, the bicyclist sought to amend his notices by removing the reference to “applicable policy limits.”

After the notices failed to resolve the issue and the bicyclist filed a lawsuit, the City moved to dismiss, arguing that the timely notices had failed to state a specific amount for which the case could be settled, a requirement of the notice of claim statute. The superior court rejected this argument, finding that the man had satisfied the notice of claim statute. The City sought special action relief in the Arizona Court of Appeals.

Noting that notice of claim issues were a recurring issue of statewide importance, the court of appeals accepted special action jurisdiction, reversed the superior court’s determination, and remanded for dismissal of the case. The notice of claim statute, the court explained, required a statement of a settlement amount that was either explicit or could be reasonably calculated from the notice of claim. That is, if a notice of claim sought a certain amount plus interest, that could be a definite amount if it was a matter of simple calculation. Here, in contrast, the bicyclist had sought the greater of $1,000,000 or applicable insurance policy limits. Because what policy limits applied was a difficult legal problem, rather than a math problem, the bicyclist had failed to state a definite amount for which his claim could be settled and had thus failed to comply with the notice of claim statute.

The court also rejected the argument that the bicyclist’s amended notice saved his claim. A late compliant notice does not cure a defect of a timely but deficient notice, and the bicyclist could not rely on the “discovery rule” because his later notice provided no new facts that the bicyclist had learned after his initial notice.

Judge Jacobs authored the opinion for the court, joined by Chief Judge Gass and Judge Brown.

Posted by: Joshua J. Messer