                               IN THE
             ARIZONA COURT OF APPEALS
                            DIVISION ONE


  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
                          FILED 03/13/2014


          Appeal from the Superior Court in Maricopa County
                         No. CV2011-017812
              The Honorable Arthur T. Anderson, Judge

                             AFFIRMED


                              COUNSEL

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
                          PIVOTAL et al. v. PSPRS
                            Opinion of the Court



                                  OPINION

Presiding Judge Donn Kessler delivered the opinion of the Court, in which
Chief Judge Diane M. Johnsen and Judge Patricia K. Norris joined.


K E S S L E R, 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


1 Plaintiffs/Appellants included Millard R. Seldin, Scott A. Seldin, and
numerous Seldin-controlled entities, including Pivotal Colorado II, L.L.C.
2 We cite the most recent versions of statutes when no revisions material

to this decision have since occurred.



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                         PIVOTAL et al. v. PSPRS
                           Opinion of the Court

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.




3 We note that the statute does not restrict the definition of “public entity”
to the state or a political subdivision. The word “includes” suggests that
other organizational forms could be considered public entities for notice
of claim purposes. PSPRS, however, does not raise any argument in this
regard.



                                      3
                          PIVOTAL et al. v. PSPRS
                            Opinion of the Court

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. Dep’t 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.




                                       4
                          PIVOTAL et al. v. PSPRS
                            Opinion of the Court

       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; see A.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.



4 We cite the 2011 version of the statute for ease of reference because its
language is the same as the version in effect at the time of ADOA.



                                      5
                           PIVOTAL et al. v. PSPRS
                             Opinion of the Court

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 . . . [apply
       to PSPRS’s board].

Id.

¶14            In 1987, the Legislature amended PSPRS’s enabling
legislation to exempt its board from A.R.S. § 38-611 and the procurement
code. A.R.S. § 38-848(M) (2011).5 The Seldins argue that the 1987
amendment superseded both our determination that PSPRS’s board is
subject to A.R.S. § 38-611 and the procurement code, and our conclusion
that PSPRS is a state agency. However, nothing in that amendment
disturbs the underpinnings of our conclusion that PSPRS is a state agency.
The rationale that led us to conclude PSPRS is a state agency in ADOA and
Fund Manager remains valid today. The State Legislature created PSPRS
and did so to allow the State and other public entities to satisfy their
contractual obligations to public safety retirees, and its board is appointed
by the Governor with the consent of the Senate.

¶15           The Seldins make too much of the 1987 amendment. Instead
of classifying PSPRS as something other than a state agency, that
amendment simply exempted PSPRS’s board from A.R.S. § 38-611 and the
procurement code. “There is nothing unique about a state agency being


5 We cite the 2011 version of the statute for ease of reference because its
language reflects the version effected by the 1987 amendment. The section
has since been amended to remove this language. See A.R.S. § 38-848(M)
(Supp. 2013).



                                     6
                         PIVOTAL et al. v. PSPRS
                           Opinion of the Court

exempt from the personnel system.” ADOA, 151 Ariz. at 95, 725 P.2d at
1129. Nor is there anything unique about a state agency being exempt
from the procurement code. Fund Manager, 152 Ariz. at 259, 731 P.2d at
624 (noting that the procurement code exempts a number of agencies from
its coverage). Thus, although the 1987 amendment superseded ADOA’s
and Fund Manager’s determinations that PSPRS’s board is subject to the
Personnel Board’s salary recommendations and the procurement code, it
did not affect our conclusion that PSPRS is a state agency.

¶16           Our conclusion is further supported by the fact that,
although the Legislature has exempted PSPRS from certain statutes
otherwise applicable to state agencies, see A.R.S. § 38-848(M), it has not
exempted PSPRS from the liability/immunity provisions of Title 12,
which include the notice of claim requirement and the one-year statute of
limitations applicable to public entities.6 “The provision of one exemption
in a statute implicitly denies the existence of other unstated exemptions.”
State Comp. Fund v. Superior Court (EnerGCorp, Inc.), 190 Ariz. 371, 375, 948
P.2d 499, 503 (App. 1997). Furthermore, the Legislature would not have
expressly exempted PSPRS from the procurement code and the Personnel
Board, two sets of statutes otherwise applicable to state agencies, unless it
viewed PSPRS as a state agency. See id. at 376, 948 P.2d at 504.
Accordingly, PSPRS remains a state agency covered by Title 12’s
liability/immunity provisions.

¶17        We are not persuaded by the Seldins’ argument that entities
such as private insurers and charter schools are subject to state

6 The Seldins point out that PSPRS’s enabling legislation uses the words
“not subject to,” A.R.S. § 38-848(M), rather than the word “exempt,” and
argue that there is a meaningful distinction between the two. In this
context, we discern no meaningful difference between exempting PSPRS’s
board from the state procurement code or the jurisdiction of the Personnel
Board, and stating that it “is not subject to” the procurement code or the
jurisdiction of the Personnel Board. See, e.g., State Comp. Fund v. Superior
Court (EnerGCorp, Inc.), 190 Ariz. 371, 375, 948 P.2d 499, 503 (App. 1997)
(citing State Comp. Fund v. Symington, 174 Ariz. 188, 194, 848 P.2d 273, 279
(1993) and using “not subject to” and “exempt” interchangeably when
explaining that the State Fund is exempt from some statutes otherwise
applicable to state agencies). Furthermore, the 1987 amendment was
enacted as “[a]n act . . . prescribing an exemption from the procurement
code . . . .” 1987 Ariz. Sess. Laws., ch. 180 (1st Reg. Sess.) (emphasis
added).



                                     7
                         PIVOTAL et al. v. PSPRS
                           Opinion of the Court

supervision and regulation, yet are not state entities. The Seldins’
argument ignores that private insurers and charter schools are not created
by the Legislature. It is the bundle of statutes that create and regulate an
entity that makes it a public entity for purposes of the notice of claim and
corresponding limitations statutes. PSPRS is a creature of statute, its
board is appointed by the Governor, and it is subject to various levels of
state control while being expressly exempted from other controls, yet not
exempted from the immunity provisions of Title 12. That combination of
factors makes it a state agency subject to the notice of claim and
limitations statutes.

       B.     The 2006 Amendment

¶18           The Seldins offer two additional arguments related to a 2006
amendment to PSPRS’s enabling legislation that designates it as an
“independent trust fund whose assets are separate and apart from all
other funds of this state” and specifies that PSPRS is not subject to the
debt limits of Article 9, Sections 5 and 8, of the Arizona Constitution.
A.R.S. § 38-848(M). The Seldins argue, first, that PSPRS cannot be a state
agency because it is designated as an “independent trust fund” and its
assets are separate from state funds. Second, the Seldins argue that
holding otherwise would render the 2006 amendment unconstitutional
because the Legislature cannot statutorily exempt a state agency from
applicable constitutional provisions. We do not find these arguments
persuasive.

¶19            The language designating PSPRS as an “independent trust
fund,” A.R.S. § 38-848(M), merely codifies part of the Arizona
Constitution. Article 29, Section 1(B), of the Arizona Constitution states
that “[t]he assets of public retirement systems . . . are separate and
independent trust funds and shall be invested, administered and
distributed as determined by law solely in the interests of the members
and beneficiaries of the public retirement systems.” That the Legislature
statutorily reiterated this constitutional designation does not demonstrate
its intent to render PSPRS something other than a state agency. We
understand the Seldins’ argument to be that PSPRS is not a state agency
because its assets are not state money. PSPRS’s assets admittedly are not
state money. But this means only that its assets are separate from the state
treasury. See Grant v. Bd. of Regents, 133 Ariz. 527, 529, 652 P.2d 1374, 1376
(1982) (“‘state money’ is money in the state treasury credited to a
particular fund therein”). PSPRS’s assets are still public money. See
McClead, 174 Ariz. at 352, 849 P.2d at 1382 (concluding that plaintiffs had
taxpayer standing to challenge increases in PSPRS retirement benefits


                                      8
                         PIVOTAL et al. v. PSPRS
                           Opinion of the Court

because PSPRS expends public money). Public money is “all [money]
coming into the lawful possession, custody or control of state agencies,
boards, commissions, or departments or a state officer, employee or agent
in his official capacity, irrespective of the source from which, or the
manner in which, the [money is] received.” Id.; see also A.R.S. § 35-212(B)
(2011). State money is a subset of public money, which encompasses a
broad range of funds lawfully in the State’s possession or under its
control, including state employee retirement funds held in independent
trust. That PSPRS manages an independent public trust fund rather than
a fund appropriated from the state treasury does not defeat its status as a
state agency.7

¶20           As for the Seldins’ contention that holding PSPRS is a state
agency for purposes of the notice of claim and one-year limitations period
would render the 2006 amendment unconstitutional, we determined in
other cases that certain public entities that are otherwise covered by Title
12’s immunity provisions were not subject to constitutional debt
limitations when the debt incurred did not impose a liability on the state
general fund. See Bd. of Regents of Univ. of Ariz. v. Sullivan, 45 Ariz. 245,
260, 42 P.2d 619, 625 (1935); see also Arizona State Highway Comm’n v.
Nelson, 105 Ariz. 76, 79-80, 459 P.2d 509, 512-13 (1969). Because the
constitutionality of the 2006 amendment is not at issue in this case, we
decline to address the matter further.

¶21           PSPRS requested attorneys’ fees incurred on appeal
pursuant to A.R.S. § 12-341.01(A) (Supp. 2013). In the exercise of our
discretion, we decline to award attorneys’ fees. However, pursuant to
A.R.S. § 12-342 (2003), PSPRS is entitled to its taxable costs on appeal upon
timely compliance with ARCAP 21.


7 Nor are we persuaded by the Seldins’ argument that applying the notice
of claim statute to PSPRS would not serve the statute’s purpose because
PSPRS’s fund is independent from the state treasury. The purpose of the
notice of claims statute is to assist public entities from incurring excess or
unwarranted liability and to facilitate settlement by allowing the public
entity to investigate the claim and to budget accordingly. See Yollin, 219
Ariz. at 29, ¶ 11, 191 P.3d at 1045. That PSPRS’s fund is segregated from
the state treasury does not change the public nature of the entity or the
public nature of the fund it manages. Further, by the plain language of
A.R.S. § 12-821.01 (Supp. 2013), application of the statute is contingent on
the nature of the entity, not the nature of its fund.



                                      9
                       PIVOTAL et al. v. PSPRS
                         Opinion of the Court

                            CONCLUSION

¶22           For the foregoing reasons, PSPRS is a state agency covered
by the notice of claim statute and the one-year statute of limitations
applicable to public entities. The Seldins did not provide PSPRS with a
notice of claim, nor did they file suit within the one-year limitations
period. Accordingly, the superior court properly dismissed the Seldins’
claims against PSPRS and we affirm that judgment.




                                :gsh




                                  10
