Case of the Week: Statute of Repose Applies to Government Entities

In City of Phoenix v. Glenayre Elecs., Inc., 242 Ariz. 139, 393 P.3d 919 (2017), the Arizona Supreme Court held that A.R.S. § 12-552(A)’s eight-year statute of repose applies to contract-based actions brought by governmental entities, but not to actions between parties without a contractual relationship. This case departs from the general rule that governmental entities are not barred by statutes of limitations. A.R.S. § 12-510.

Carlos Tarazon brought an action against the City of Phoenix (“the City”) after he developed mesothelioma from asbestos exposure. The City filed a third-party complaint against 82 contractors and developers, claiming that they had agreed to indemnify the City against negligence claims related to the construction projects on which Tarazon worked.

The developers and contractors moved to dismiss because the action was time barred by A.R.S. § 12-552(A), which provides for an eight-year statute of limitations for actions based on contract against a person who develops or constructs real property. The superior court granted the motion to dismiss, finding that the statute of limitations applied to government entities.

The phrase “[N]otwithstanding any other statute,” found in  A.R.S. § 12-552(A), convinced the Supreme Court that the legislature intended to have this statute control over other conflicting laws. Legislative history also supported the court’s conclusion.

The Court found that the statute of repose applied only to the contractors, because they had indemnity contracts with the City, and not the developers whose indemnity was based on a City Code provision. This statute applies only to actions arising out of a contract, including “written real estate contract, sales agreement, construction agreement, conveyance or written agreement for construction or for the services set forth in subsection A of this section.” A.R.S § 12-552(F).

The dismissal of the cases against the contractors was affirmed, while the dismissal of the cases against the developers was vacated.

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