The Arizona Court of Appeals Division One holds that a notice of claim is not required to be filed before seeking receivership as an exclusively equitable action.

A charter school with a secured loan in bond proceeds was unable to make its payments. Following a dispute with the loan’s trustee, the trustee filed an action for appointment for a receiver. The school moved to dismiss, arguing that because the charter school is a public entity, the successor had to submit a notice of claim under A.R.S. § 12-821.01 before suing. The superior court denied the motion and also limited the receiver to making current debt payments, not past-due debt.

The Court of Appeals affirmed. Under A.R.S. § 12-821.01, a claimant seeking monetary damages must submit a notice of claim to a public entity before filing a lawsuit. A claim for purely equitable relief is not subject to the statute’s requirement, unless the equitable claims are only a predicate to a damages claim. A claim to appoint a receiver is an equitable remedy. Moreover, because the receivership could not seek past-due debt, it was not a predicate to recover monetary damages.

Judge Swann authored the opinion; Judges Bailey and Williams joined.

Posted by:  BriAnne Illich Meeds