Pivotal Colo. Ii, L.L.C. v. Ariz. Pub. Safety Pers. Ret. Sys.

• Decision Date: 13 March 2014
• Docket Number: No. 1 CA–CV 13–0089.,1 CA–CV 13–0089.
• Citation: 234 Ariz. 369,322 P.3d 186
• Parties: PIVOTAL COLORADO II, L.L.C., a Delaware limited liability company; Millard R. Seldin, an Arizona resident; Scott A. Seldin, an Arizona resident; Scott–Seldin Broadway, L.L.C., a Delaware limited liability company; KCI–Broadway, L.L.C., a Delaware limited liability company; Belmont–Broadway, L.L.C., a Delaware limited liability company; Belmont Investments, L.L.C., a Delaware liability company; PC 2SUN, L.L.C., an Arizona limited liability company, and North Parker Investments, L.L.C., an Arizona limited liability Company, Plaintiffs/Appellants, v. ARIZONA PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM, Defendant/Appellee.
• Court: Arizona Court of Appeals

234 Ariz. 369

322 P.3d 186

PIVOTAL COLORADO II, L.L.C., a Delaware limited liability company; Millard R. Seldin, an Arizona resident; Scott A. Seldin, an Arizona resident; Scott–Seldin Broadway, L.L.C., a Delaware limited liability company; KCI–Broadway, L.L.C., a Delaware limited liability company; Belmont–Broadway, L.L.C., a Delaware limited liability company; Belmont Investments, L.L.C., a Delaware liability company; PC 2SUN, L.L.C., an Arizona limited liability company, and North Parker Investments, L.L.C., an Arizona limited liability Company, Plaintiffs/Appellants,

v.ARIZONA PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM, Defendant/Appellee.

No. 1 CA–CV 13–0089.

Court of Appeals of Arizona, Division 1.

March 13, 2014.

Cohen Kennedy Dowd & Quigley, P.C., Phoenix By Ronald Jay Cohen, Laura H. Kennedy, Daniel P. Quigley, Rebecca L. Van Doren, Counsel for Plaintiffs/Appellants.

Kutak Rock, LLP, Scottsdale By Michael W. Sillyman, Paige A. Martin, Counsel for Defendant/Appellee.

Presiding Judge DONN KESSLER delivered the opinion of the Court, in which Chief Judge DIANE M. JOHNSEN and Judge PATRICIA K. NORRIS joined.

OPINION

KESSLER, Presiding Judge:

¶ 1 Plaintiffs/Appellants (collectively “the Seldins”) ¹ appeal from the superior court's order dismissing their claims against Appellee Arizona Public Safety Personnel Retirement System (“PSPRS”). We affirm because PSPRS is a state agency for purposes of the notice of claim statute, and the Seldins admittedly failed to provide PSPRS with a notice of claim or to file suit within the one-year statute of limitations period applicable to claims against public entities.

FACTUAL AND PROCEDURAL HISTORY

¶ 2 In September 2011, the Seldins sued PSPRS, alleging, among other things, aiding and abetting fraud and aiding and abetting breach of fiduciary duty. The claims arose out of a real estate investment gone awry, the specifics of which are not relevant to this appeal. PSPRS moved to dismiss the claims against it under Arizona Rule of Civil Procedure 12(b)(6), arguing that it is a state agency covered by Arizona's notice of claim statute, Arizona Revised Statutes (“A.R.S.”) section 12–821.01 (Supp. 2013),² and the one-year statute of limitations applicable to claims against public entities, A.R.S. § 12–821 (2003). The Seldins admittedly did not provide PSPRS with a notice of claim, nor did they file the lawsuit within the one-year limitations period. Instead, the Seldins argued that PSPRS is not a state agency and, therefore, neither the notice of claim statute nor the one-year limitations period applied.

¶ 3 The superior court granted PSPRS's motion to dismiss, concluding that PSPRS is a state agency covered by the notice of claim statute and the one-year statute of limitations. The Seldins timely appealed. We have jurisdiction pursuant to A.R.S. § 12–2101(A)(1) (Supp.2013).

DISCUSSION

¶ 4 We review the superior court's grant of a motion to dismiss for failure to state a claim de novo. See N. Peak Constr., LLC v. Architecture Plus, Ltd., 227 Ariz. 165, 167, ¶ 13, 254 P.3d 404, 406 (App.2011). The sole issue on review is whether PSPRS is a state agency for purposes of the notice of claim statute and the one-year statute of limitations applicable to public entities. We conclude that it is.

I. Notice of Claim and Limitations Statutes

¶ 5 “Persons who have claims against a public entity ... shall file claims with the person or persons authorized to accept service for the public entity ... within one hundred eighty days after the cause of action accrues.” A.R.S. § 12–821.01(A). The claim must include facts sufficient to allow the public entity to understand and assess liability. Id. “Any claim that is not filed within one hundred eighty days after the cause of action accrues is barred....” Id. The claim statute assists the government from incurring “excess or unwarranted liability and facilitates settlement of claims by allowing the government to investigate the claim ... and budget for settlement or payment of large claims.” Yollin v. City of Glendale, 219 Ariz. 24, 29, ¶ 11, 191 P.3d 1040, 1045 (App.2008). Additionally, “[a]ll actions against any public entity ... shall be brought within one year after the cause of action accrues....” A.R.S. § 12–821.

¶ 6 A public entity “includes this state and any political subdivision of this state.” A.R.S. § 12–820(7) (Supp.2013).³ “ ‘State’ means this state and any state agency, board, commission or department.” A.R.S. § 12–820(8) (emphasis added). Thus, the notice of claim statute and the accompanying limitations period apply to PSPRS if it is a state agency, board, commission or department.

II. PSPRS Is a State Agency

¶ 7 PSPRS “is the state agency responsible for administering the pensions of Arizona's police and fire fighters.” McClead v. Pima Cnty., 174 Ariz. 348, 353, 849 P.2d 1378, 1383 (App.1992). Before July 1968, public safety employees “were covered under various local, municipal and state retirement programs.” A.R.S. § 38–841(A)–(B) (2011). Consequently, benefits paid to different groups of public safety employees varied widely. Id. Our Legislature created PSPRS “[i]n order to provide a uniform, consistent and equitable statewide program for public safety personnel who are regularly assigned hazardous duty....” A.R.S. § 38–841(B).

¶ 8 PSPRS is managed by a board of trustees (“PSPRS's board”), whose members are appointed by the Governor with the consent of the Senate through the statutory procedures for appointment of state officers. A.R.S. §§ 38–848(A) (2011), –211(A) (2011). PSPRS's board invests and manages PSPRS's assets, A.R.S. § 38–848(D), which are derived exclusively from deductions from the salaries of public safety employees and contributions by their employers, A.R.S. § 38–843 (Supp.2013).

¶ 9 This Court previously concluded that PSPRS is a state agency based on the fact that it was created by the Legislature, its board is appointed by the Governor, it manages pension funds for state and local public safety employees, the Arizona Attorney General serves as its counsel, and it is subject to state agency sunset laws. See Fund Manager, Pub. Safety Pers. Ret. Sys. v. Ariz. Dept. of Admin., 151 Ariz. 93, 95, 725 P.2d 1127, 1129 (App.1986) (hereinafter “ADOA ”) (“[W]e conclude that the Fund Manager [the title formerly used for PSPRS's board] is a state agency.”); Fund Manager, Pub. Safety Pers. Ret. Sys. v. Cnty. of Maricopa, 152 Ariz. 255, 259, 731 P.2d 620, 624 (App.1986) (hereinafter “ Fund Manager ”) (“The trial court correctly held that the fund manager is a state agency.”); see also McClead, 174 Ariz. at 353, 849 P.2d at 1383.

¶ 10 The thrust of the Seldins' argument is that subsequent legislative amendments to A.R.S. § 38–848—PSPRS's enabling legislation—effectively overruled our prior decisions, necessitating a reevaluation of PSPRS's status as a state agency, and that PSPRS cannot be a state agency because its assets are not derived from the State's general revenues. We conclude otherwise.

A. ADOA,Fund Manager, and the 1987 Amendment to A.R.S. § 38–848

¶ 11 In ADOA, we concluded that PSPRS's board was subject to the salary recommendations of the Arizona Department of Administration's Personnel Board (“Personnel Board”). 151 Ariz. at 95–96, 725 P.2d at 1129–30. The Personnel Board “annually recommends a salary range for [state] agency heads and certain other [state] employees” that governs the salaries that can be paid to those individuals. Id. at 94, 725 P.2d at 1128;seeA.R.S. §§ 41–743(B)(4) (2013), –751(B)(4) (2013). At the time, PSPRS's enabling legislation stated that “[t]he administrator and other employees hired by [PSPRS's board] are not under the jurisdiction of the state personnel board or subject to title 41, chapter 4, articles 5 and 6.” A.R.S. § 38–848(J)(6) (1985); see also ADOA, 151 Ariz. at 94, 725 P.2d at 1128. PSPRS argued that its exemption from the jurisdiction of the Personnel Board also exempted it from the salary recommendations. ADOA, 151 Ariz. at 94, 725 P.2d at 1128.

¶ 12 A.R.S. § 38–611 (2011) ⁴ gave the Personnel Board the authority to make salary recommendations for state agencies otherwise exempt from the state personnel system. Id. PSPRS argued that A.R.S. § 38–611 was inapplicable because PSPRS is not a state agency. Id. at 95, 725 P.2d at 1129. We rejected PSPRS's argument and concluded that it is a state agency based upon how it was created, who appointed its members, its duties, its legal counsel, and it being subject to sunset laws:

[PSPRS's board] consists of ... individuals appointed by the Governor. The appointment is made pursuant to A.R.S. § 38–211 which pertains to the appointment of state officers. [Its] purpose is to manage monies in the Public Safety Personnel Retirement System fund consisting of deductions taken from the salaries of public safety personnel and contributions by their employers. The Attorney General, being the ‘chief legal officer’ of the state is a legal representative of [PSPRS's board]. Further, [PSPRS's board is subject to] the Sunset Review Laws, which pertain only to state agencies.... Based on these statutes, we conclude that [PSPRS's board] is a state agency.

Id. (citations omitted).

¶ 13 Later that year, we held in Fund Manager that PSPRS must comply with the procurement code when it hires outside counsel. 152 Ariz. at 260, 731 P.2d at 625. PSPRS contended that it is not subject to the procurement code because it is not a state agency and does not spend public money. Id. at 259, 731 P.2d at 624. We again rejected PSPRS's argument. Acknowledging our earlier determination in ADOA, we explained:

The individual members of [PSPRS's board] are appointed by the [G]overnor under ... [statutes pertaining] to the appointment of state officers. In addition ... the [A]ttorney [G]eneral, the chief legal officer of the state, is a legal representative of [PSPRS's board]. Further, the Sunset Review Laws, which pertain only to state agencies ... ...