Opinion
1 CA-CV 10-0578
01-10-2012
ARIZONA WATER COMPANY, an Arizona corporation, Plaintiff/Appellant, v. CITY OF MESA, a political subdivision of the State of Arizona, Defendant/Appellee.
Sherman & Howard, L.L.C. by Arthur W. Pederson David W. Garbarino Attorneys for Plaintiff/Appellant Jones Skelton & Hochuli, P.L.C. by Kathleen L. Wieneke Nicholas D. Acedo Attorneys for Defendant/Appellee
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED
EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c) ;
Ariz. R. Crim. P. 31.24
MEMORANDUM DECISION
(Not for Publication -Rule 28, Arizona Rules of Civil Appellate Procedure)
Appeal from the Superior Court in Maricopa County
Cause No. CV2009-010129
The Honorable Eileen S. Willett, Judge
AFFIRMED
Sherman & Howard, L.L.C.
by Arthur W. Pederson
David W. Garbarino
Attorneys for Plaintiff/Appellant
Phoenix
Jones Skelton & Hochuli, P.L.C.
by Kathleen L. Wieneke
Nicholas D. Acedo
Attorneys for Defendant/Appellee
Phoenix
THOMPSON, Presiding Judge
¶1 Arizona Water Company (AWC) appeals from the dismissal of its claims for injunctive and declaratory relief and from the denial of its motion for new trial. The superior court rejected AWC's arguments after finding, as a matter of law, that Arizona Revised Statutes (A.R.S.) § 12-821 (2003) barred its claims. For the reasons that follow, we affirm the dismissal of the complaint.
FACTS AND PROCEDURAL BACKGROUND
I. The Water Delivery Agreement And The Lease.
¶2 AWC supplies public utility water to customers in eight Arizona counties. On April 2, 1987, AWC and the City of Mesa (City) entered the "Agreement for Treatment and Transportation of Central Arizona Project Water" (Agreement). The Agreement provides for the City to accept delivery of AWC's allocation of Central Arizona Project (CAP) water, transport it to a City plant for treatment, and then return it to AWC for distribution to AWC's customers.
¶3 Article II of the Agreement states:
TERM
This Agreement will be effective for an initial term beginning as of the date first written above and continuing for a period of twenty (20) years after the Commencement Date as defined in Section IV.B herein. Upon expiration of the initial term, this Agreement will be extended for successive twenty (20) year terms unless, at least one hundred twenty (120) days prior to the expiration date of the initial term or any subsequent twenty (20) year term of the Agreement, either party gives notice to the
other party of its desire to renegotiate the terms of this Agreement.
¶4 The parties contemporaneously executed the "Lease of Real Property" (Lease), which also contains a twenty-year term. The Lease provides for AWC's use of City real property for the "construction, operation and maintenance of facilities [AWC] deems necessary . . . to accept deliveries of water of any type from City . . .." Section 10 of the Lease refers to the Agreement but contains its own termination terms, including a thirty-day notice provision.
II. This Litigation.
¶5 According to AWC's complaint: "On March 30, 2006, at least 120 days prior to the expiration of the initial term of the Agreement, the City gave the Water Company notice of its desire to renegotiate terms of the Agreement before the extension of the Agreement." Notification came in the form of a letter, signed by City Manager Christopher J. Brady (Brady), which is Exhibit C to the complaint. The City subsequently submitted a revised agreement, proposing what the complaint claims is a restructuring of the cost-sharing agreement to a fee-for-service arrangement. The parties were unable to negotiate a new contract.
¶6 AWC sued the City for declaratory and injunctive relief on March 30, 2009. According to AWC's complaint, declaratory relief is warranted because a controversy exists between the parties as to "their respective rights, status, and legal relations in connection with the Agreement and the Lease and, in particular, whether the Agreement and the Lease each extends for successive twenty-year terms pursuant to their terms and conditions." AWC also sought injunctive relief to assure the City's performance of Agreement obligations to continue to treat AWC's CAP water and to extend the Lease.
¶7 The City successfully moved to dismiss AWC's complaint. During this phase of the litigation, the superior court struck two declarations attached to AWC's response opposing dismissal and then denied AWC's ensuing motion for summary judgment. In addition, the court denied AWC's motion for leave to file an amended complaint and its Rule 59 motion for new trial attacking the dismissal of AWC's claim with respect to the Lease. In addition, the superior court struck AWC's motion for summary judgment.
¶8 The superior court entered a signed judgment dismissing the complaint and awarding attorneys' fees and costs to the City on June 22, 2010. AWC appealed. Next, the superior court filed a signed order on July 27, 2010 denying the motions for new trial and to amend the complaint. AWC then filed an amended notice of appeal.
DISCUSSION
I. The Trial Court Did Not Abuse Its Discretion In Dismissing AWC's Complaint.
¶9 This court reviews issues of law in an order granting a motion to dismiss de novo. City of Tucson v. Clear Channel Outdoor, Inc., 218 Ariz. 172, 180, ¶ 16, 181 P.3d 219, 227 (App. 2008). In reviewing the dismissal for failure to state a claim, "well-pleaded material allegations of the complaint are taken as admitted, but conclusions of law or unwarranted deductions of fact are not." Aldabbagh v. Ariz. Dep't of Liquor Licenses and Control, 162 Ariz. 415, 417, 783 P.2d 1207, 1209 (App. 1989).
A superior court must treat a Rule 12(b)(6) motion to dismiss as one for summary judgment if "matters outside the pleading" are presented and not excluded by the court. Ariz. R. Civ. P. 12(b). In this case, the complaint incorporated: (1) the Agreement, (2) an April 22, 1987 letter from Karl F. Kohlhoff, the City's water resources management coordinator, to AWC signaling the City's readiness to "accept and treat deliveries of the Company's CAP water," (3) Brady's March 30, 2006 letter, and (4) the Lease. Because these documents are not "outside the pleading" for purposes of Rule 12(b), they do not trigger Rule 56. See Strategic Dev. & Constr., Inc. v. 7th & Roosevelt Ptrs., L.L.C., 224 Ariz. 60, 63, ¶ 10, 226 P.3d 1046, 1049 (App. 2010) (holding that a contract or another document attached to a complaint is not outside the pleadings for purposes of Rule 12(b)); see generally Ariz. R. Civ. P. 10(c) ("A copy of a written instrument which is an exhibit to a pleading is a part thereof for all purposes."); cf. Biltmore Assocs., L.L.C. v. Twin City Fire Ins. Co., 572 F.3d 663, 665 n.1 (9th Cir. 2009) (similarly interpreting analogous Federal Rule of Civil Procedure 12(b)).
AWC points out that it attached two declarations to its response to the motion to dismiss, supplied by AWC President William M. Garfield (Garfield) and Vice President and General Counsel Robert W. Geake (Geake). The superior court struck both exhibits, however, so they likewise failed to convert the Rule 12(b)(6) motion to one for summary judgment. See Ariz. R. Civ. P. 12(b) (explaining that a Rule 56 conversion occurs when matters outside the pleadings are presented and the court does not exclude them). We affirm the decision to strike in Section I(B) of this decision.
¶10 Arizona requires a complaint to contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Ariz. R. Civ. P. 8(a)(2). "For the purpose of testing the sufficiency of a pleading, averments of time and place are material and shall be considered like all other averments of material matter." Ariz. R. Civ. P. 9(f). A defendant properly moves for a Rule 12(b)(6) dismissal when the face of the complaint indicates that a claim is time-barred. Anson v. Am. Motors Corp., 155 Ariz. 420, 421, 747 P.2d 581, 582 (App. 1987); Engle Bros., Inc. v. Superior Ct., 23 Ariz. App. 406, 408, 533 P.2d 714, 716 (1975).
A. As A Matter Of Law, A.R.S. § 12-821 Applies To Suits For Declaratory And Injunctive Relief.
¶11 Our analysis of the superior court's dismissal ruling turns on whether A.R.S. § 12-821 bars AWC's complaint. We review this question of law de novo. City of Tucson v. Clear Channel Outdoor, Inc., 209 Ariz. 544, 547, ¶ 8, 105 P.3d 1163, 1166 (2005).
¶12 The trial court identified the applicable statute as A.R.S. § 12-821, which provides: "All actions against any public entity or pubic employee shall be brought within one year after the cause of action accrues and not afterward." A.R.S. § 12-821. This court has held that A.R.S. § 12-821 is an unambiguous statute and must be interpreted according to its plain meaning. Flood Control Dist. v. Gaines, 202 Ariz. 248, 252, ¶ 9, 43 P.3d 196, 200 (App. 2002); see also U.S. Parking Sys. v. City of Phoenix, 160 Ariz. 210, 211, 772 P.2d 33, 34 (App. 1989) (requiring an unambiguous statute to be interpreted to mean plainly what it says unless absurdity results). The words "all actions" do not lend themselves to a limited construction. Indeed, there is no "more comprehensive word" than "all" in the English language. Flood Control Dist., 202 Ariz, at 252, ¶ 9, 43 P.3d at 200 (quoting Estate of Tovrea v. Nolan, 173 Ariz. 568, 572, 845 P.2d 494, 498 (App. 1992)).
¶13 Notwithstanding the statute's express application to "[a]ll actions," AWC maintains that A.R.S. § 12-821 does not govern this action for declaratory and injunctive relief. It argues that we must construe A.R.S. § 12-821 in pari materia with A.R.S. § 12-821.01, the notice of claim statute, which provides in relevant part:
Persons who have claims against a public entity or a public employee shall file claims with the person or persons authorized to accept service for the public entity or public employee as set forth in the Arizona rules of civil procedure within one hundred eighty days after the cause of action accrues.
¶14 Based upon our consistent holdings that A.R.S. § 12-821.01 does not apply to "claims" for injunctive and declaratory relief against public entities, AWC contends that A.R.S. § 12-821 does not supply the limitations period for its injunctive and declaratory relief claims. E.g., State v. Mabery Ranch Co., L.L.C., 216 Ariz. 233, 245, ¶¶ 48-53, 165 P.3d 211, 223 (App. 2007) (holding that A.R.S. § 12-821.01 does not apply to claims for injunctive relief); Martineau v. Maricopa County, 207 Ariz. 332, 335-37, ¶¶ 18-24, 86 P.3d 912, 915-17 (App. 2004) (holding that A.R.S. § 12-821.01 does not apply to claims for declaratory relief).
¶15 This court recently came to the opposite conclusion when construing A.R.S. § 12-821 in Canyon Del Rio Investors, L.L.C. v. City of Flagstaff, 227 Ariz. 336, 340, ¶¶ 24-26, 258 P.3d 154, 160 (App. 2011). In Canyon Del Rio , the parties agreed, and this court held, that A.R.S. § 12-821 applied to claims for declaratory relief against a municipal defendant. Id. at ¶ 24. We hold that the "all actions" provision of A.R.S. § 12-821 likewise extends to the claims for declaratory and injunctive relief in this case. See id.; cf. Flood Control Dist., 202 Ariz, at 252, ¶ 9, 43 P.3d at 200 (explaining that the words "[a]ll actions" in A.R.S. § 12-821 "do not lend themselves to an interpretation that would exclude an inverse condemnation action").
¶16 Nor can we agree that construing A.R.S. § 12-821 in pari materia with A.R.S. § 12-821.01(A) requires a different result. The word "claim" in A.R.S. § 12-821.01(A) signifies "money damages." Mabery, 216 Ariz, at 245, ¶ 52, 165 P.3d at 223. A statute requiring a statement of a "sum certain" for settlement purposes cannot logically apply to claims such as these for which no money is sought. See Martineau, 207 Ariz, at 336, ¶ 20, 86 P.3d at 916.
¶17 Moreover, the scope of A.R.S. § 12-821 extends not only to "claims" but also to "[a]ll actions." The limitations rationale of preventing litigation of stale claims applies equally to claims for damages and to those for injunctive/declaratory relief. See Nolde v. Frankie, 192 Ariz. 276, 279, ¶ 12, 964 P.2d 477, 480 (1998) (explaining that the rationale of the limitations statutes is to prevent litigation of any claims in which "plaintiffs have slept on their rights and evidence may have been lost or witnesses' memories faded").
Equally unavailing is AWC's reliance upon Lee v. State, 225 Ariz. 576, 579, ¶ 13, 242 P.3d 175, 178 (App. 2010). This court's observation that the notice of claim statute and limitations statute are similar and provide affirmative defenses, id., does not mean that they are coextensive.
B. The Face Of The Complaint Reflects AWC's Failure To Comply With A.R.S. § 12-821 With Respect To Relief Sought Under The Agreement.
1. AWC Knew Or Should Have Known In 2006 That The Agreement Did Not Automatically Renew.
¶18 Having concluded that A.R.S. § 12-821 supplies the relevant limitations period, we now determine whether dismissal was warranted in light of the complaint's allegations. " [D]eterminations of the time when discovery occurs and a cause of action accrues 'are usually and necessarily questions of fact for the jury.'" Walk v. Ring, 202 Ariz. 310, 316, ¶ 23, 44 P.3d 990, 996 (2002). "[A] plaintiff need not know all the facts to trigger accrual[,] [b]ut the plaintiff must at least possess a minimum requisite of knowledge sufficient to identify that a wrong occurred and caused injury." Cannon v. Hirsch Law Office, P.C., 222 Ariz. 171, 181-82, ¶ 34, 213 P.3d 320, 330-31 (App. 2009) (citation omitted) (emphasis in original).
¶19 When a complaint contains a claim for declaratory relief, the court also looks for affirmative conduct by a party that removes the claim from "the realm of mere possibility" and creates an "actual controversy." W. Cas. & Sur. Co. v. Evans, 130 Ariz. 333, 337, 636 P.2d 111, 115 (App. 1981) (citation omitted) (holding that a reservation of right created a justiciable controversy, but the limitations period began to run only when the insurer denied that coverage existed). The "question of whether and when statutes of limitation are applicable to declaratory relief actions is a less than clear area of the law." Id. at 335, 636 P.2d at 113. "For an action to accrue for limitation purposes, some event in the nature of a breach of contract must have occurred." Id. at 336, 636 P.2d at 114 .
¶20 AWC filed its complaint on March 30, 2009. To be timely, AWC's claims would have to have accrued after March 30, 2008. The complaint acknowledges that AWC received notice of the City's desire to renegotiate the Agreement's terms before the Agreement's extension date of May 1, 2007. Brady's letter, attached as Exhibit C to the complaint, states in part: "this letter serves as notice that Mesa desires to renegotiate the terms of the Agreement prior to any extension of the term of the Agreement." AWC's complaint further alleges that the City submitted an "untimely" proposed agreement in mid-May 2007 that "would directly conflict" with the parties' expressed intent in the Agreement. Further, AWC contended that the City "failed to comply with Article XVI of the Agreement" by not meeting with AWC and resolving concerns. Notwithstanding its obligation of good faith and stated intention, the City also failed to furnish information or engage in discussions to "follow up on negotiations" any time prior to the Agreement's extension.
¶21 Based upon these complaint allegations, the City engaged in conduct that removed AWC's claims from "mere possibility" and created an "actual controversy" as to whether the parties were bound by the Agreement for another twenty years. Brady's March 30, 2006 letter gave notice of the City's desire to renegotiate and blocked automatic renewal pursuant to Section II of the Agreement. There is no requirement that negotiations commence before May 1, 2007. AWC knew or should have known of its claims prior to March 30, 2008.
AWC further argues that Section XVI of the Agreement, attached to its complaint as Exhibit A, requires renegotiation, but its reliance on that provision is misplaced. Section XVI provides in relevant part:
If, after initiation of operations under this Agreement, either party believes this Agreement is not functioning in accordance with that party's intention, such party should notify the other party, in writing, of its desire to discuss, negotiate and resolve the perceived inequity, and the parties shall meet as often as necessary and expend all good faith efforts in order to resolve the concern of the party which provides notice of its desire for negotiations.Nothing in this provision addresses the timing of renewal; rather, it is expressly aimed at disputes arising during the Agreement's term, i.e., when the Agreement is "not functioning" according to the parties' intent.
¶22 AWC contends that additional language in Brady's March 30, 2006 letter belies the intent to renegotiate and at least creates a factual issue. Specifically, the letter provides: "We look forward to continuing our positive and mutually beneficial relationship with [AWC]." Nothing in this sentence contradicts the preceding statement that the City desired renegotiation or commits the City to any position.
¶23 Furthermore, AWC was aware that the City did not negotiate a new agreement prior to May 1, 2007, and AWC received the City's revised agreement in "mid-May 2007." The complaint states:
The Revised Agreement purported to fundamentally and materially change the relationship between the City and the Water Company from a cost-sharing arrangement as expressly provided in Article XVI of the Agreement to a fee for service agreement whereby the City would have most of the control and could collect significant service fees, which City representatives asserted to the Water Company are intended to fund other municipal services unrelated to the treatment of water.As a result, the complaint states that "[a] controversy exists .
. . ."
¶24 In light of these complaint allegations, we agree with the superior court's decision to dismiss. AWC's complaint establishes that it knew, or should have known, at least by May 1, 2007, that a controversy had arisen as to the Agreement. AWC knew, or should have known, of the grounds for the City's alleged breach of the duty of good faith and its alleged failure to comply with Section XVI of the Agreement. The City had expressed a desire to renegotiate the Agreement and sought not only unfavorable terms, but ones that would "fundamentally and materially change the relationship."
2. The Declarations Are Inadmissible Parol Evidence.
¶25 Notwithstanding the complaint's allegations, AWC points to the declarations of its officers, Garfield and Geake, as evidence that the Agreement would renew unless (1) evidence of an intent to renegotiate was received, and (2) renegotiations occurred prior to the alleged automatic renewal on May 1, 2007. According to this evidence, AWC argues, no effort to renegotiate occurred until after May 1, 2007, the parties treated the Agreement as having renewed, and no City representative stated that the Agreement terminated until July 7, 2008.
¶26 AWC protests the decision to strike the documents as inadmissible parol evidence, and claims that they are necessary to ascertain the parties' intent, the surrounding circumstances, the interrelationship between Articles II and XVI of the Agreement, and the actual accrual date. Whether or not contracts are reasonably susceptible to more than one interpretation, thereby allowing for the admission of parol evidence, is a question of law. U.S. West Comm'cs, Inc. v. Ariz. Corp. Comm'n, 185 Ariz. 277, 280, 915 P.2d 1232, 1235 (App. 1996).
¶27 Under Arizona's parol evidence rule, the court must consider the proponent's interpretation of the writing in light of the extrinsic evidence alleged. Taylor v. State Farm Mut. Auto. Ins. Co., 175 Ariz. 148, 153, 854 P.2d 1134, 1139 (1993). Next, the court considers the writing. Id.If the court determines that the writing is "reasonably susceptible" to the proponent's suggested interpretation, the court should admit that evidence. Id.at 154, 854 P.2d at 1140.
¶28 Because the superior court made the determination at the motion to dismiss stage, it was "obliged to accept all of the factual allegations of the proponent of the evidence as true." Long v. City of Glendale, 208 Ariz. 319, 328, g 31, 93 P.3d 519, 528 (App. 2004). Nevertheless, "whether written language is 'reasonably susceptible' to the meaning asserted is a matter of law, not of fact." Id.
¶29 Even accepting the complaint's allegations as true, we conclude that the Agreement is not susceptible to AWC's interpretation. The evidence in the declarations of the parties' alleged intent does not change our conclusion, as there is no Agreement language supporting it. Section II plainly states that the Agreement does not renew once a party signals its intent to renegotiate. The declarations, however, provide that the Agreement would automatically renew unless two conditions were satisfied: (1) timely notice of intent to renegotiate was received, and (2) renegotiations occurred prior to the conclusion of the first twenty-year term. As a matter of law, the proffered evidence of intent contradicts the Agreement language and is inadmissible. See Taylor, 175 Ariz, at 152, 854 P.2d at 1138 ("the parol evidence rule prohibits extrinsic evidence to vary or contradict, . . . the agreement") (citing 3 Corbin § 543, at 130-34).
¶30 Accordingly, AWC's claims accrued no later than "mid-May 2007, " when the City presented the proposed agreement following notice of its desire to renegotiate. See W. Cas., 130 Ariz, at 337, 636 P.2d at 115 (holding that a declaratory relief claim began to run against an insurer when the latter actually denied that coverage existed). Dismissal was warranted. See C ELM Retirement Ctr., LP v. Callaway, 226 Ariz. 287, 291-92, ¶¶ 21-24, 246 P.3d 938, 942-43 (App. 2010) (upholding the complaint's dismissal and ruling that the parol evidence rule barred submission of evidence that the party understood it could comply with the verification agreement by asking the sellers about square footage).
The accrual analysis in this case differs markedly from that in Canyon Del Rio, 227 Ariz. 336, 258 P.3d 154. We held in the latter case that the declaratory judgment action had not accrued because the City of Flagstaff had taken no final action on the plaintiff's plan and had merely issued a staff opinion. Id. at 340, ¶ 25, 258 P.3d 160. Although the City's staff opinion supported a justiciable controversy, no "breach or injury necessary to support a coercive cause of action" had occurred. Id.In contrast, this complaint indicates that the Agreement had not renewed and that the defendants had engaged in an effort to materially alter the parties' relationship. We further note that the Canyon Del Rio complaint contained a damages claim, but this complaint does not.
Our holding obviates the need to determine whether the declarations were also inadmissible pursuant to Arizona Rule of Evidence 408 and E.R. 3.7.
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¶31 AWC counters that it lacked sufficient knowledge of the basis for its claims until the July 7, 2008 meeting of party representatives. According to AWC, during that meeting the City stated for the first time that it considered the Agreement terminated. But for AWC to recognize its claim, it merely needed to comprehend that the City had given notice of its desire to renegotiate the Agreement. See Mabery 216 Ariz, at 247-48, ¶¶ 66-67, 165 P.3d at 225-26 (holding that the A.R.S. § 12-821 limitations period on a recission/reformation claim began to run when a party learned that language in a deed was modified). The plain terms of the complaint establish that AWC knew or should have known the basis for its claims.
¶32 Even assuming that AWC's evidence concerning the July 7, 2008 meeting were admissible, the notice supplied at that time merely acknowledged the parties' already changed relationship. AWC had already received the Brady letter and knew that the City had not attempted to renegotiate by May 1, 2007. In mid-may 2007, AWC received the unacceptable proposal that would have "fundamentally and materially change[d] the relationship." Therefore, the trial court correctly concluded that AWC is bound by the complaint's admissions regarding the City's notification on March 30, 2006, and receipt of a proposed agreement in mid-May 2007. We affirm its dismissal of the complaint based upon AWC's failure to comply with A.R.S. § 12-821.
II. The City Did Not Abuse Its Discretion In Denying AWC's Motion For New Trial.
¶33 Having affirmed the dismissal with respect to relief sought under the Agreement, we turn to the claim for declaratory relief under the Lease. AWC used its motion for new trial to challenge the decision to dismiss the Lease claim. We review the motion's denial for abuse of discretion. See Mullin v. Brown, 210 Ariz. 545, 547, ¶ 2, 115 P.3d 139, 141 (App. 2005). A court abuses its discretion when it commits legal error in the course of exercising its discretion. Fuentes v. Fuentes, 209 Ariz. 51, 56, ¶ 23, 97 P.3d 876, 881 (App. 2004).
¶34 Section 10 of the Lease, attached as Exhibit D to the complaint, contains the following provision for termination:
City and Company have entered into a separate Agreement for Treatment and Transportation of Central Arizona Project water. Should that Agreement be terminated for any reason prior to the termination of this Lease, it is agreed and understood that this Lease, in that event, may be terminated by either party upon thirty (30) days written notice to the affected party, unless, prior to the expiration of the thirty (30) day notice of termination period, Company has informed City in writing
of Company's desire to continue to use the Leased Premises for the purpose of accepting other water deliveries from City, in which event this Lease shall continue in force and effect so long as the Company continues to accept other water deliveries from City. If for any reason the Company ceases to receive other water deliveries from City, then either party may terminate the Lease upon giving the thirty (30) day written notice above referred to. Should either party exercise its option of termination provided by this Section 10, this Lease shall become null and void, and the rights and obligations of City and Company under this Lease shall be at an end, notwithstanding the provisions of Section 2 of this Lease.
¶35 Neither the complaint nor the Lease exhibit provides for termination of the Lease upon service of notice to renegotiate the Agreement. Rather, the Lease states that if the Agreement terminates, "this Lease, in that event may be terminated by either party upon thirty (30) days written notice to the affected party, unless . . . Company has informed City in writing of Company's desire to continue to use the Leased Premises for the purpose of accepting other water deliveries from City . . . ." Id.(emphasis supplied). We find no evidence in the complaint that any party took any action to terminate the Lease pursuant to Section 10. Brady's letter, the sole correspondence from the City, states:
Pursuant to Section II of the Agreement for Treatment and Transportation of Central Arizona Project Water (Agreement) between Arizona Water Company (AWC) and the City of Mesa (Mesa), this letter serves as noticeThis document expressly comports with the Agreement section on termination, but is silent with respect to the Lease termination provision. Indeed, the City's counsel conceded at oral argument in the superior court that "as plaintiff stated, there was no notice given. Therefore, the lease goes on."
that Mesa desires to renegotiate the terms of the Agreement prior to any extension of the term of the Agreement.
¶36 In our view, the issue here is one of justiciability, not limitations. "[A] justiciable controversy exists if there is 'an assertion of a right, status or legal relation in which the plaintiff has a definite interest and a denial of it by the opposing party.'" Keggi v. Northbrook Prop. & Cas. Ins. Co., 199 Ariz. 43, 45, ¶ 10, 13 P.3d 785, 787 (App. 2000) (quoting Samaritan Health Servs. v. City of Glendale, 148 Ariz. 394, 395, 714 P.2d 887, 888 (App. 1986)). Nowhere in the complaint does AWC identify any effort to terminate the parties' obligations under the Lease. Further, the Lease provides for its own continuation even if the Agreement terminates, and allows AWC to receive deliveries of non-CAP water.
¶37 This court can affirm a complaint's dismissal for any reason. See Redhair v. Kinerk, Beal, Schmidt,. Dyer & Sethi, P.C., 218 Ariz. 293, 300, ¶ 27, 183 P.3d 544, 551 (App. 2008) (affirming dismissal of complaint on limitations grounds). As to the portion of the complaint concerning the Lease, we affirm the dismissal based upon the absence of a justiciable controversy. See Kleck v. Wayland, 53 Ariz. 432, 438-39, 90 P.2d 179, 181-82 (1939) (affirming a declaratory judgment action's dismissal on the basis of the lack of a justiciable controversy as to whether future labor should be classified as agricultural or labor for which the plaintiff would be required to contribute to the unemployment compensation fund); Richey v. City of Phoenix, 18 Ariz. App. 208, 210, 501 P.2d 49, 51 (1972) (holding that a complaint seeking a determination that all manual labor performed was hazardous for purposes of future cases was not a proper subject for a declaratory judgment action and dismissal was proper); cf. Pac. Ins. Co. v. Bang, 134 Ariz. 474, 475, 657 P.2d 887, 888 (App. 1982) (dismissing an appeal from a grant of summary judgment on an insurance declaratory judgment action as the issue was premature and not justiciable).
III. The Superior Court Did Not Abuse Its Discretion In Denying AWC's Motion To Amend.
¶38 Following the complaint's dismissal, AWC unsuccessfully moved for leave to amend the complaint. We review the denial of leave to amend for abuse of discretion. Romo v. Reyes, 26 Ariz. App. 374, 375, 548 P.2d 1186, 1187 (1976).
¶39 In its motion, AWC sought leave to add the allegation that it had not discovered its claim against the City until the July 7, 2008 meeting attended by party representatives. On that occasion, AWC alleges, the City first informed AWC that the City considered the Agreement terminated. AWC also sought to add a reformation claim.
¶40 "Denying leave to amend is not an abuse of discretion . . . when the amendment would be futile." Hayden Bus. Ctr. Condos. Ass'n v. Pegasus Dev. Corp., 209 Ariz. 511, 515, ¶ 25, 105 P.3d 157, 161 (App. 2005); see also Wilson v. Byrd, 79 Ariz. 302, 306, 228 P.2d 1079, 1082-83 (1955) (upholding the motion's denial because the proposed amendment was legally insufficient); Moore v. Toshiba Int'l Corp., 160 Ariz. 205, 208, 772 P.2d 28, 31 (App. 1989) (holding that the plaintiff's proposed complaint amendment would not enable the plaintiff to avoid the applicable statute of limitations).
¶41 To satisfy A.R.S. § 12-821, AWC's cause of action would have had to accrue after March 30, 2008. In its complaint, AWC admitted receiving notice of the City's intent to renegotiate and of the City's failure to pursue renegotiation before May 1, 2007. AWC is bound by these admissions. See Armer v. Armer, 105 Ariz. 284, 288, 463 P.2d 818, 822 (1970) ("Parties are bound by their pleadings . . . .").
¶42 Because AWC could not plead around its receipt of the City's Letter and the City's failure to pursue renegotiation prior to May 1, 2007, any leave to amend would be futile. AWC had already admitted these facts in its complaint. AWC cannot now claim that it could not reasonably have known of its claims before July 7, 2008. Moreover, the one-year limitation of A.R.S. § 12-821 would also bar the reformation claim. See Mabery, 216 Ariz. at 247-48, ¶¶ 63-67, 165 P.3d at 225-26 (holding that A.R.S. § 12-821 barred a recission/reformation claim). Accordingly, the superior court acted well within its discretion when it denied AWC's motion to amend. See Moore, 160 Ariz, at 208, 772 P.2d at 31.
CONCLUSION
¶43 We affirm the dismissal of AWC's complaint and the denial of leave to amend. In addition, we deny AWC's request for attorneys' fees and costs pursuant to A.R.S. §§ 12-341 (2003), 12-341.01 (2003), and 12-342 (2003). Finally, we award the City its costs on appeal. See A.R.S. § 12-342(A).
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JON W. THOMPSON, Presiding Judge
CONCURRING:
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MAURICE PORTLEY, Judge
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JOHN C. GEMMILL, Judge