Pima County by City of Tucson v. Maya Const. Co., CV-87-0001-PR

• Decision Date: 13 September 1988
• Docket Number: No. CV-87-0001-PR,CV-87-0001-PR
• Parties: PIMA COUNTY, a body politic by CITY OF TUCSON, an Arizona municipal corporation, in its capacity as agent for Pima County, Plaintiff/Appellant, v. MAYA CONSTRUCTION COMPANY, an Arizona corporation, Defendant/Appellee.
• Court: Arizona Supreme Court

Page 1055

761 P.2d 1055

158 Ariz. 151

PIMA COUNTY, a body politic by CITY OF TUCSON, an Arizona municipal corporation, in its capacity as agent for Pima County, Plaintiff/Appellant, v. MAYA CONSTRUCTION COMPANY, an Arizona corporation, Defendant/Appellee.

No. CV-87-0001-PR.

Supreme Court of Arizona, In Banc.

Sept. 13, 1988.

Frederick S. Dean, Tucson City Atty. by Loretta Humphrey, Louise B. Stratton, Asst. City Attys., Tucson, Lewis and Roca by Joseph McGarry, Susan M. Freeman and Alexandra M. Shafer, Phoenix, for plaintiff/appellant.

Chandler, Tullar, Udall & Redhair by Christopher J. Roads and S. Thomas Chandler, Tucson, for defendant/appellee.

MOELLER, Justice.

JURISDICTION

In 1983, Pima County, acting through its agent, the City of Tucson, entered into a public works contract with Maya Construction Company (Maya) for the construction of a wastewater treatment plant. Because of disputes which arose between the parties over amounts allegedly owed under the contract, both Pima County and Maya demanded arbitration pursuant to their contract's provisions. Maya contends that it was entitled to substantial additional monies under the contract for extras and changes, and Pima County contends that it was entitled to liquidated damages by reason of delay in completion.

Shortly before the arbitration proceedings were to begin, approximately eighteen months after the county had demanded arbitration and eleven months after Maya had demanded arbitration, Pima County filed this case in superior court. The county sought a judicial declaration permanently enjoining the arbitration proceedings. The county claimed that Maya was barred from proceeding with arbitration under the county claims statute, A.R.S. § 11-622, which requires that claims against counties be presented to the board of supervisors within six months "after the last item of the account accrues." The trial court denied the requested relief, and division two of the court of appeals affirmed the trial court's judgment in a split opinion. 158 Ariz. 147, 761 P.2d 1051. We granted review to resolve an issue of first impression in Arizona concerning the interplay between the public claims statutes and the arbitration statutes. We have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3) and Rule 23, Ariz.R.Civ.App.P., 17B A.R.S.

THE STATUTES

In the trial court, the county relied on A.R.S. §§ 11-622 and 11-630, which provide:

§ 11-622. Demand; time limit for presentation of claim.

A person having a claim against a county shall, within six months after the last item of the account accrues, present to the board of supervisors of the county against which the demand is held, a written itemized claim executed by him under penalties of perjury, stating minutely what the claim is for, specifying each item, the date and amount thereof, and stating that the claim and each item thereof is justly due. The board shall not consider a claim unless the demand therefor is presented within such time.

§ 11-630. Action upon rejected or partially allowed demand.

A. A claimant dissatisfied with the rejection of his demand, or with the amount allowed thereon, may sue the county therefor at any time within six months after final action of the board, but not afterward....

In its opinion the court of appeals also noted that in 1984 the legislature enacted additional statutes relating to actions against "public entities." They provide:

§ 12-821. Authorization of claim against public entity or public employee; definition.

A. Persons who have claims against a public entity or public employee shall file such claims in the same manner as that prescribed in the Arizona Rules of Civil Procedure, Rule 4(D) within twelve months after the cause of action accrues. Any claim which is not filed within twelve months after the cause of action accrues is barred and no action may be maintained....

12-822. Service of summons; change of venue.

A. Service of summons in an action authorized in § 12-821 shall be made pursuant to Arizona Rules of Civil Procedure, Rule 4(D).

B. In an action against this state upon written demand of the attorney general, made at or before the time of answering, served upon the opposing party and filed with the court where the action is pending, the place of trial of any such action shall be changed to Maricopa County.

Section 12-820(6) defines a "public entity" as "this state and any political subdivision of this state." The lower courts did not undertake to decide whether the 1984 statutes might apply to some or all of plaintiff's claims and neither do we.

The county claims statutes, A.R.S. §§ 11-622 and 11-630, date to territorial days. At the time of their original enactment, there were no arbitration statutes on the books, and arbitration was not an available alternative remedy. In 1962, Arizona adopted the Uniform Arbitration Act, A.R.S. §§ 12-1501--1518. That act authorized parties to agree in advance to submit contractual disputes to arbitration and provided the legal machinery to enforce such contractual obligations. The act does not refer to the preexisting county claims statutes.

In a continuing effort to expand the availability of arbitration as an alternative to litigation, the legislature, in 1971, authorized superior courts to require mandatory arbitration in certain types of cases by rule of court. A.R.S. § 12-133. Although various amendments since 1971 have generally expanded the availability of court-ordered arbitration, none of these amendments refer to the county claims statute or to any other claims statutes. In 1973, the legislature enacted A.R.S. § 12-1518, which provides:

In the discretion of any state agency, board or commission or any political subdivision of the state of Arizona, the services of the American Arbitration Association, or any other similar body, may be used as provided by this article. Any agreement to make use of arbitration shall be made either at the time of entering into a contract or by written mutual agreement at a subsequent time prior to the filing of any civil action.

This statute appears to be the first express legislative authorization for a county (and other public entities) to enter into an arbitration agreement. This statute is also totally silent with respect to the county claims statute. More recent legislation has mandated arbitration of disputes under some public works contracts for all claims under $100,000. A.R.S. § 12-1518(C). Again, there was no legislative attempt to correlate this mandatory arbitration statute with any public claims statute.

PUBLIC POLICY OF THE STATUTES

The county claims statute, A.R.S. § 11-622, requires submission of a claim "within six months after the last item of the account accrues...." The original intent of the statute was to protect county boards of supervisors from having to defend stale claims on open accounts long after the applicable information may have passed from the knowledge of county officers, making it difficult or impossible to determine the validity of the individual items of account being claimed. Cochise County v. Wilcox, 14 Ariz. 234, 238, 127 P. 758, 760 (1912); Apache County v. Barth, 6 Ariz. 13, 30, 53 P. 187, 192 (1898), rev'd on other grounds, 177 U.S. 538, 20 S.Ct. 718, 44 L.Ed. 878 (1900). Another purpose of the claims statute "is to prevent the revenue of a county from being consumed in litigation by providing an opportunity for the county to discharge or amicably adjust an obligation before it is faced with the costs of a lawsuit." Norcor of America v. Southern Ariz. Int'l. Livestock Ass'n., 122 Ariz. 542, 543, 596 P.2d 377, 378 (App.1979). Other purposes ascribed to the statutes are "to give the county prompt notice of the claim to enable the board of supervisors to investigate and inform themselves of its merits or demerits while evidence is still fresh and witnesses are available, to protect the county against imposition, and to provide a system which tends to prevent unscrupulous public officials from depleting the public treasury." Id. (Citations omitted).

The arbitration statutes, on the other hand, are expressions of public policy having a much broader scope and application than the claims statutes. They express Arizona's public policy that arbitration is a highly desirable method of resolving disputes not only between people who have agreed to arbitration but, in many cases, also to people who have not so agreed, such as in the case of court-ordered arbitration or in the case of mandatory arbitration imposed as a condition of participating in certain public works contracts. Clearly, public policy favors the available arbitration machinery as one method of dispute resolution. Allstate Ins. Co. v. Cook, 21 Ariz.App. 313, 315, 519 P.2d 66, 68 (1974). While not always achieved, the goal of arbitration is to make a final disposition of controversies in a speedier, less expensive manner than is available under normal litigation proceedings. Goldsberry v. Hohn, 120 Ariz. 40, 44, 583 P.2d 1360, 1364 (App.1978).

THE ISSUE AND ITS RESOLUTION

The issue presented in this case is whether the arbitration clause in the contract between the parties negates the application of the county claims statute. The parties and the lower courts have approached this case on the assumption that one or more claims statutes would apply to the claim sought to be arbitrated. Accordingly, we make the same assumption without deciding which, if any, claims statute would apply to this particular claim.

The issue presented is one of first impression in Arizona. Somewhat similar questions have been presented and resolved in a few other states, and each party claims support for its position in some of those other cases. Maya urges that cases from Wisconsin and Washington support its position. See Madison v. Frank Lloyd Wright Found., 20 Wis.2d 361, 122 N.W.2d 409 (1963) (word "actions" in statute prohibiting maintenance of action against city without first presenting...