Opinion
1 CA-CV 97-0329
Filed July 21, 1998
Appeal from the Superior Court of Maricopa County Cause No. CV 96-19699
The Honorable Paul A. Katz, Judge
AFFIRMED
Treon, Strick, Lucia Aguirre, P.A. by Arthur G. Newman, Jr. and Michael P. Stark for Plaintiff-Appellant, Phoenix.
Jennings, Strouss Salmon, P.C. by James M. Ackerman and Michael J. O'Connor for Defendant-Appellee, Phoenix.
OPINION
¶ 1 Joseph Hendel appeals from the trial court's dismissal of his complaint for damages against Salt River Project Agricultural Improvement and Power District (SRP) based on Hendel's failure to file a notice of claim as required by Arizona Revised Statutes (A.R.S.) section 12-821.01(A) (the notice of claim statute). We reject Hendel's argument that the notice of claim statute violates the Arizona and federal constitution equal protection clauses, and we affirm the trial court's judgment.
FACTS AND PROCEDURAL HISTORY
¶ 2 On October 31, 1996, Joseph Hendel filed a complaint against SRP alleging that he had been seriously injured by an electric shock on November 3, 1995, when a roofing tool he was using contacted a power line next to the building on which he was working.
¶ 3 The notice of claim statute requires that, in addition to filing a lawsuit within the one-year statute of limitations, a party with a claim against a public entity must also file a claim with the public entity within 180 days after the cause of action accrues, or the claim will be barred. A.R.S. § 12-821.01(A). Hendel did not file a notice of claim pursuant to this requirement.
¶ 4 SRP moved to dismiss the complaint, arguing that it is a public entity within the meaning of the notice of claim statute and therefore Hendel's claim is barred because he failed to comply with the statute. The trial court granted the motion to dismiss and entered judgment in SRP's favor. Hendel timely appealed.
DISCUSSION
¶ 5 Arizona's notice of claim statute provides, in relevant part, as follows:
Persons who have claims against a public entity . . . shall file claims with the person or persons authorized to accept service for the public entity . . . as set forth in the Arizona rules of civil procedure within one hundred eighty days after the cause of action accrues. The claim shall contain facts sufficient to permit the public entity . . .
to understand the basis upon which liability is claimed. The claim shall also contain a specific amount for which the claim can be settled and the facts supporting that amount.
Any claim which is not filed within one hundred eighty days after the cause of action accrues is barred and no action may be maintained thereon.
A.R.S. § 12-821.01(A). The term "public entity" is defined as including "this state and any political subdivision of this state." A.R.S. § 12-820(6) (emphasis added).
¶ 6 The Arizona Constitution provides that agricultural improvement districts (such as SRP) "shall be political subdivisions of the State, and vested with all the rights, privileges and benefits, and entitled to the immunities and exemptions granted municipalities and political subdivisions under this Constitution or any law of the State or of the United States . . . ." Ariz. Const., art. 13, § 7 (emphasis added). Thus, a plain reading of the Arizona Constitution together with the notice of claim statute compels the conclusion that SRP is entitled to the notice required by the notice of claim statute. Hendel does not dispute this conclusion.
¶ 7 Hendel asserts that, because entities such as SRP do not have a governmental purpose or function, requiring tort victims of entities such as SRP to comply with the notice of claim statute denies such tort victims equal protection under the state and/or federal constitutions by unequally burdening their right to sue this subgroup of corporate entities which have caused injury.
¶ 8 We presume statutes are constitutional; the party asserting that a statute is unconstitutional has the burden to clearly demonstrate that it is. Pike v. Arizona Department of Transportation, 261 Ariz. Adv. Rep. 29 (App. Jan. 29, 1998). With these principles in mind, we consider Hendel's claim.
A. Arizona's Equal Protection Clause
¶ 9 The Arizona Constitution's equal protection clause provides that "[n]o law shall be enacted granting to any citizen, class of citizens, or corporation other than municipal, privileges or immunities which, upon the same terms, shall not equally belong to all citizens or corporations." Ariz. Const., art. 2, § 13.
¶ 10 SRP asserts that, by its terms, this clause does not apply because the equal protection clause prohibits the legislature from granting special privileges or immunities only to corporations "other than municipal," and SRP is a municipal corporation because it is "invested with all the rights, privileges and benefits, and entitled to the immunities and exemptions granted municipalities" under article 13, section 7 of the Arizona Constitution. Thus, SRP asserts, the legislature may grant special privileges and immunities to agricultural improvement districts such as SRP, because the Arizona Constitution expressly allows it to do so, regardless of any unequal burden placed on others.
¶ 11 There is some support for this proposition in our case law. For example, SRP cites Pinetop-Lakeside Sanitary District v. Ferguson, in which our supreme court held that, by its plain wording, a statute exempting political subdivisions of the state from paying a fee to file a complaint likewise exempted the sanitary district from the fee requirement. 129 Ariz. 300, 303, 630 P.2d 1032, 1035 (1981). The court explained, "The question is not whether public policy will be served by recognizing an exemption for appellant. The decision is controlled by the language of Article 13, Section 7." Id. We note, however, that this case did not involve a challenge based on the equal protection clause.
¶ 12 Hendel asserts that SRP has misconstrued the equal protection clause, citing a case from Division Two of this court, which states that "equal protection of the law is a right afforded citizens other than municipal corporations, which are specifically excluded from article 2, § 13 of the Arizona Constitution." Picture Rocks Fire Dist. v. Pima County, 152 Ariz. 442, 446, 733 P.2d 639, 643 (App. 1986). Hendel essentially asserts that the phrase "other than municipal" allows the legislature to unequally burden the rights of municipal corporations, not to unequally burden the rights of private citizens by enacting a law that favors a class of municipal corporations. The court in Picture Rocks, however, did not address whether the legislature could grant municipal corporations privileges and immunities not granted to other citizens or corporations, but merely held that the municipal corporation had no equal protection complaint regarding its own unequal treatment when compared to other municipal corporations.
¶ 13 In general, when interpreting a constitutional provision, we "must give meaning to each word, phrase, clause, and sentence of the provision so that no part will be void, inert, redundant, or trivial." See In re Cameron T., 190 Ariz. 456, 460, 949 P.2d 545, 549 (App. 1997) (interpreting constitutional amendment). Applying this rule of construction, we conclude that, although the equal protection clause allows the legislature to grant municipal corporations certain privileges or immunities that other corporations or citizens may not enjoy, the clause nevertheless provides that the legislature may not grant any citizen (or class of citizens) privileges or immunities not enjoyed by other citizens, unless, of course, the law meets the required standards, discussed below. As the Washington Supreme Court noted in interpreting its nearly identical equal protection clause, "more is involved here than just the classification of governmental units. Those persons who are injured by the negligence of particular governmental units are also classified. . . ." Jenkins v. State, 540 P.2d 1363, 1369 (Wash. 1975) (quoting Harvey v. Clyde Park Dist., 203 N.E.2d 573, 576 (Ill. 1964)).
¶ 14 We assume, for purposes of this discussion, that the legislature may constitutionally provide municipal corporations with privileges and immunities that other citizens or corporations do not enjoy, such as the right to impose taxes on citizens within their districts. Nevertheless, the privileges and immunities granted to municipal corporations may not also create classes of citizens who have unequal privileges and immunities, nor may they burden fundamental rights, absent a constitutionally sufficient justification for the unequal treatment of the different classes of citizens, or the burden on their fundamental rights.
¶ 15 The legislature has provided that public entities are entitled to notice of claims against them within 180 days and that the penalty for failure to file a notice of claim is that claimants lose their right to bring a cause of action. A.R.S. § 12-821.01(A). This provision, however, creates a separate class of claimants — those who have claims against public entities — and subjects them to a burden not required of other claimants: the filing of a notice of claim. Cf. Kenyon v. Hammer, 142 Ariz. 69, 77, 688 P.2d 961, 969 (1984) (statute requiring suit to be brought within three years of date of injury "imposes a special burden upon a very limited class of tort claimants — those who have claims against licensed health care providers . . ."). We therefore must analyze the statute to determine whether it violates Hendel's right to equal protection.
B. Equal Protection — Standard of Review
¶ 16 Three tests are utilized to determine the constitutionality of a statute under an equal protection analysis: the rational basis test, intermediate scrutiny, and strict scrutiny. Pike, 261 Ariz. Adv. Rep. at 30; Kenyon, 142 Ariz. at 78-79, 688 P.2d at 970-71. Which test applies depends upon the nature of the classification under the statute or the type of right at issue, and the type of state interest the statute advances. Pike, 261 Ariz. Adv. Rep. at 30; Kenyon, 142 Ariz. at 79, 688 P.2d at 971.
¶ 17 The most exacting standard of review is the "strict scrutiny" test, under which "a discriminatory statute may be upheld only if there is a 'compelling state interest' to be served and the regulation is 'necessary' to achieve the legislative objective." Kenyon, 142 Ariz. at 78, 688 P.2d at 970. This test generally is confined to "cases in which the statute imposes a burden upon a 'suspect' classification (e.g., race or religion) or impinges upon and limits a 'fundamental right.'" Id. at 78-79, 688 P.2d at 970-71.
¶ 18 The intermediate level test is also known as the "means-scrutiny analysis." This test is used "only in narrow areas involving classifications such as those based upon gender and illegitimacy of birth." Id. Under this test, the court will uphold the statute if the state's interest is "important" and the statute is "reasonable, not arbitrary," and has "a fair and substantial relation" to the goal of the legislation. Id.
¶ 19 The most lenient standard is the "rational basis" test. This test "upholds legislative regulation which imposes burdens on one class but not another so long as (1) the court can find some legitimate state interest to be served by the legislation and (2) the facts permit the court to conclude that the legislative classification rationally furthers the state's legitimate interest." Id. Under this test, the equal protection requirement is violated "only if the classification rests on grounds wholly irrelevant to the achievement of the state's objective." Id. (citing McGowan v. Maryland, 366 U.S. 420, 425 (1961)).
¶ 20 Hendel does not allege, and we do not find, that the statute employs a "suspect classification," such as race, religion, or even gender or illegitimacy. Thus, absent infringement of a fundamental right, the rational basis standard of review will apply. Hendel asserts, however, that the statute must be reviewed under the strict scrutiny standard because the right to bring an action for damages is fundamental in Arizona, citing Eastin v. Broomfield, 116 Ariz. 576, 570 P.2d 744 (1977); Kenyon v. Hammer, 142 Ariz. 69, 688 P.2d 961 (1984); and Hunter Contracting Co. v. Superior Court, 190 Ariz. 318, 947 P.2d 892 (App. 1997).
C. Does Hendel Have A Fundamental Right To Sue SRP?
¶ 21 Hendel is correct that, in general, the Arizona Constitution provides a fundamental right to sue for damages for bodily injury. Kenyon, 142 Ariz. at 83, 661 P.2d at 975; see Ariz. Const., art. 18, § 6; art. 2, § 13; and art. 2, § 31. In Pike, however, this court held that the Arizona Constitution does not grant a fundamental right to sue the State for negligence. Pike, 261 Ariz. Adv. Rep. at 31 (upholding, over equal protection challenge, the one-year statute of limitations for tort actions against governmental entities). Moreover, the Arizona Constitution provides that SRP is a "political subdivision of the state," presumably leading to the conclusion that Hendel has no fundamental right to sue SRP, and the rational basis standard of review applies. See Ariz. Const., art. 13, § 7.
¶ 22 Hendel, however, asserts that SRP is not a "political and governmental" entity, but rather is a "purely business and economic" entity, which should be treated the same as any other private corporation for purposes of equal protection analysis. If SRP is a private corporation rather than a political subdivision, Hendel has a fundamental right to sue SRP for damages. See Kenyon, 142 Ariz. at 83, 688 P.2d at 975.
¶ 23 Hendel cites a number of cases discussing the nature of agricultural improvement, power, and similar districts in arguing that SRP is a business entity, not a political entity. See Taylor v. Roosevelt Irr. Dist., 71 Ariz. 254, 226 P.2d 154 (1950) (Taylor I), on rehearing, Taylor v. Roosevelt Irr. Dist., 72 Ariz. 160, 232 P.2d 107 (1951) (Taylor II); Local 266, International Brotherhood of Electrical Workers v. Salt River Project Agr. Imp. Power Dist., 78 Ariz. 30, 275 P.2d 393 (1954); City of Mesa v. Salt River Project Agr. Imp. Power Dist., 92 Ariz. 91, 373 P.2d 722 (1962); and Santa Cruz Irr. Dist. v. City of Tucson, 108 Ariz. 154, 494 P.2d 26 (1972). These cases do contain language discussing the nature of the various districts as having a business and economic purpose.
For example, the court in Taylor I stated:
We are of the opinion that the primary functions of these irrigation districts have not been changed by the Constitutional Amendment, supra, and in the conduct of their ordinary business, they are not exercising governmental or political prerogatives as they are not operated for the direct benefit of the general public but only of those inhabitants of the district itself.
71 Ariz. at 258, 226 P.2d at 156 (holding that the irrigation district may be held liable for its torts when engaged in proprietary functions); see also City of Mesa, 92 Ariz. at 103, 373 P.2d at 731. Similarly, the court in Local 266 held that SRP's employees may strike, noting that SRP, "as a business entity, is subject to the hazards of the economy as are its possible competitors." Local 266, 78 Ariz. at 44, 275 P.2d at 403. And in City of Mesa, the court noted that SRP "is essentially a business corporation with attributes of sovereignty which are only incidental, conferred for the purposes of better enabling it to function and accomplish the business and economic purposes for which it was organized." 92 Ariz. at 103-04, 373 P.2d at 731 (holding that the City could exercise power of condemnation to acquire the interests of SRP).
¶ 24 These cases, however, do not hold that SRP is not a "political subdivision of the state," nor do they hold that SRP is entitled to less than the constitutionally mandated "all" of the rights, privileges, and immunities to which political subdivisions are entitled. For example, the court in Taylor II explained that "at no time in this jurisdiction, so far as we are aware, have municipal corporations been immune from liability for their torts committed in the performance of proprietary pursuits." 72 Ariz. at 164, 232 P.2d at 110. Thus, in allowing Taylor to sue the irrigation district, the court was merely applying to the district the same principle it would apply to any municipality: if the municipality is engaged in business pursuits, it is subject to tort liability.
Similarly, in Local 266, the court stated:
a plain reading of the constitutional provision unequivocally defines agricultural improvement districts of the state as political subdivisions of the state and vested with all the rights, privileges and benefits, and entitled to the immunities and exemptions granted municipalities and political subdivisions under the constitution or any law of the state or of the United States.
78 Ariz. at 35, 275 P.2d at 396. In determining whether SRP was empowered to enter into collective bargaining negotiations and agreements, the court expressly noted that "the question is whether the statutory provisions which define and authorize such districts to exist intend to deny the District the power of entering into such agreements with its employees." Id. at 38, 275 P.2d at 398. The court found the necessary statutory authorization for SRP to enter into such contracts. In considering whether SRP's employees were allowed to strike, the court noted, "If the power to enter a collective bargaining agreement is denied to a municipal corporation, a strike by its employees for such purpose would be illegal as contrary to the policy of the law." Id. Because SRP's powers to enter such agreements were not so restricted, and no statute prohibited the strike, the court declined to "imply a public policy against peaceful striking and picketing for this legal purpose." Id. The court based this public policy decision on SRP's nature as a business entity, rather than as a purely public or government entity. Id. at 42-44, 275 P.2d at 401-02. Thus, the court looked first to relevant statutes to determine SRP's rights, privileges, and immunities, and only in the absence of a statute did the court consider the "nature" of SRP as a business entity whose employees should be allowed to strike. Throughout, the court made clear that these considerations would apply to all municipal corporations.
¶ 25 Finally, in City of Mesa, the City asserted a right to serve electricity in certain areas within and adjacent to the City, and SRP refused to discontinue its own service to those customers. The court began its analysis by noting that, although SRP is entitled to the privileges and immunities granted to municipalities, SRP "may not claim . . . more than a municipality could under like circumstances." 92 Ariz. at 97, 373 P.2d at 727. The court noted, in that case, that both the City of Mesa and SRP were "engaged in what is normally considered to be a proprietary or business function," and concluded that SRP's power to sell electricity is incidental to its primary purpose of providing irrigation water. Id. at 100, 373 P.2d at 729. Thus, the City could, upon payment of just compensation to SRP, exercise its power of condemnation to acquire SRP's facilities within the City because "[p]roperty may be taken which is already appropriated to some public use if it appears that the public use to which it is to be applied is a more necessary use." Id. at 104, 373 P.2d at 731.
¶ 26 Thus, these cases support SRP's assertion that it is entitled to the same rights, privileges, and immunities as all other municipalities and political subdivisions of the state. Where those rights are determined by statute, the statute controls. Only if no statute directly addresses the rights of a municipality or political subdivision does the court consider the nature of the political subdivision and the nature of the right asserted.
¶ 27 In this case, the Arizona Constitution clearly provides that SRP is a "political subdivision of the state." This court in Pike held that there is no fundamental right to sue the state for negligence. We need not consider the nature of SRP to hold that there is no fundamental right to sue SRP for negligence.
¶ 28 Because the notice of claim statute does not infringe upon a fundamental right, and no suspect classification is alleged or apparent, we review the statute under the rational basis standard of review.
D. Rational Basis Review
¶ 29 As noted above, under the rational basis test, we will uphold legislation if (1) some legitimate state interest is served by the legislation and (2) the legislative classification rationally furthers the state's legitimate interest. Kenyon, 142 Ariz. at 78, 688 P.2d at 970. We will find an equal protection violation "only if the classification rests on grounds wholly irrelevant to the achievement of the state's objective." Id. at 78, 688 P.2d at 970 (citing McGowan v. Maryland, 366 U.S. 420, 425, 81 S.Ct. 1101, 1105 (1961)).
¶ 30 As we noted in Pike, most jurisdictions have concluded that notice of claim and statute of limitations rules for tort actions against governmental entities are rationally related to reasonable legislative purposes and do not violate equal protection. Pike, 261 Ariz. Adv. Rep. at 32 (citing cases). In general, reasons given for the legislature to require notice of claims against governmental entities include the following: (1) to provide an opportunity for the governmental entity to settle the claim before it is faced with the cost of a lawsuit; (2) to enable the entity to investigate while the evidence is fresh and witnesses are readily available; (3) to protect public entities against imposition; (4) to assist in budgeting; and (5) to encourage repair of any dangerous conditions. See, e.g., id.; Norcor v. Southern Arizona Internat'l Livestock Ass'n, 122 Ariz. 542, 543, 596 P.2d 377, 378 (App. 1979); City of Tucson v. Fleischman, 152 Ariz. 269, 272, 731 P.2d 634, 637 (App. 1986). All of these purposes are reasonable, and the notice of claim statute is rationally related to achieving these goals. The notice of claim statute, as applied to require that Hendel file a notice of claim regarding his claim against SRP, does not violate the equal protection clause of the Arizona Constitution.
E. The Federal Equal Protection Clause
¶ 31 Hendel asserts that, if the Arizona Constitution is "construed to require an unequal burden on a fundamental right of a subgroup of tort victims without even a rational basis for a burden on such a right, then the Arizona Constitution itself would violate the U.S. Constitution's equal protection clause." We have already held that the notice of claim statute does not unequally burden a fundamental right, and that it meets the "rational basis" test under Arizona's equal protection clause. We therefore interpret Hendel's argument to be that, even if the notice of claim statute does not violate the Arizona equal protection clause, it violates the federal equal protection clause.
¶ 32 The federal constitution does not provide a fundamental right to sue for negligence. See, e.g., Day v. Memorial Hosp., 844 F.2d 728, 731 (10th Cir. 1988); Lacey v. Bekaert Steel Wire Corp., 799 F.2d 434, 436 (8th Cir. 1986) ("The right to bring a tort suit against the government is not fundamental"). Nor is the distinction between public and private entities a suspect classification. See, e.g., Nored v. Blehm, 743 F.2d 1386, 1387 (9th Cir. 1984). Thus, the rational basis test would apply to Hendel's claim under the United States Constitution's equal protection clause, and we find, for the reasons stated above, that it meets that test.
¶ 33 Hendel argues, however, that because Arizona's Constitution provides a fundamental right to sue for damages, the United States Constitution's equal protection clause prohibits even the Arizona Constitution from denying the right to sue to any subgroup of tort victims. Our supreme court has recognized that, "once [tort] rights have been created and vested, the state may not arbitrarily abrogate them." Kenyon, 142 Ariz. at 79, 688 P.2d at 971. Nevertheless, the Arizona Constitution may define the scope of fundamental rights it grants, as long as it does not violate the federal constitution. Id.
¶ 34 Hendel's assertion that the Arizona Constitution cannot "deprive some subgroup of this fundamental right" to sue is not well-taken. As discussed above, the Arizona Constitution simply provides that entities such as SRP are "political subdivisions of the state." In Pike, this court held that the Arizona Constitution does not grant a fundamental right to sue governmental entities for negligence. Thus, the Arizona Constitution does not grant a fundamental right to sue all tortfeasors — only non-governmental tortfeasors, a group of tortfeasors that does not include SRP. The Arizona Constitution therefore has not "deprived" anyone of a fundamental right, but rather has defined the scope of the fundamental right that is granted.
¶ 35 The scope of the right to sue granted under the Arizona Constitution does not violate the federal constitution. As discussed above, the Arizona Constitution does not infringe upon a federal fundamental right, because there is no federal right to sue, nor does it involve a suspect classification. The notice of claim statute likewise does not infringe upon a federal fundamental right or involve a suspect classification. In short, the federal constitution does not invalidate the statute.
CONCLUSION
¶ 36 For the foregoing reasons, we affirm the trial court's judgment dismissing Hendel's complaint.
__________________________________ EDWARD C. VOSS, Judge
CONCURRING:
__________________________________ SHELDON H. WEISBERG, Presiding Judge, Department D
___________________________________ E. G. NOYES, JR., Judge