Arizona Court of Appeals Division One Holds That, To Comply With A.R.S. § 12-821.01, a Claimant’s Settlement Offer Must Remain Open for Sixty Days Unless the Public Entity or Employee Denies the Claim Before the Sixty-Day Period Expires.

Dr. Robert P. Drew and Sheila King (collectively “Plaintiffs”) offer speech therapy services through their business, Arizona Speech & Hearing Professionals, LLC (“ASHP”). In 2010, Plaintiffs submitted a bid in response to the Prescott Unified School District’s request for proposal to provide professional special education services. ASHP made the District’s list of approved service providers for the 2010-11 school year and was awarded “a possible five-year term of contract,” renewable on an annual basis. Although the District’s governing board subsequently approved renewal of ASHP’s contract for the 2011-12 school year, the District’s special education director allegedly intercepted the renewal letter and instructed the District not to renew ASHP’s contract. 

On December 15, 2011, Plaintiffs served the District with a notice of claim stating they planned to seek damages totaling $921,600 and offering to accept a settlement in the amount of $120,200 plus reinstatement of their status as a service provider. The letter stated that Plaintiffs’ settlement offer would remain open until December 30, 2011, unless earlier withdrawn.

In March 2012, Plaintiffs filed their complaint against Defendants. The superior court dismissed the complaint for failure to comply with A.R.S. § 12-821.01, which requires persons with a claim against a public entity to file a notice of claim within 180 days after the cause of action accrues. Plaintiffs timely appealed and the Court of Appeals upheld the dismissal.

A.R.S. § 12-821.01(E) provides that a claim made pursuant to A.R.S. § 12-821.01(A) “is deemed denied sixty days after the filing of the claim unless the claimant is advised of the denial in writing before the expiration of sixty days.” In this case, Plaintiffs failed to make a settlement offer that complied with A.R.S. § 12-821.01 because their offer explicitly lapsed after no more than fifteen days. 

Judge Winthrop authored the opinion; Judges Downie and Thompson concurred.