A settlement demand containing two different dollar amounts can end a claim against an Arizona public entity before the parties ever litigate liability. In Terborg v. Town of Payson, No. CV-25-0317-PR, 2026 WL 2871550 (Ariz. Sept. 24, 2026), the Arizona Supreme Court held that a notice offering to settle for "one hundred thousand dollars ($250,000)" failed to satisfy A.R.S. section 12-821.01(A). Neither ordinary drafting conventions nor admittedly clerical nature of the mistake saved the claim.
The unanimous decision reinforces a consequential distinction between a statutory notice of claim and an ordinary settlement communication. The question is whether the notice itself states a definite amount that will resolve the claim. A public entity need not determine which of the two conflicting figures the claimant intended, and it has no obligation to request a correction.
A Conflicting Demand Becomes Dispositive
Joseph Terborg sustained injuries after a Payson Police Department dog mistakenly attacked him while chasing a suspect. He submitted a notice of claim describing the incident and offering to settle. The written demand, however, identified $100,000 in words and $250,000 in numerals.
After the Town did not accept the offer during the statutory 60-day period, Terborg sued. The Town challenged the notice's compliance with the specific amount requirement. Treating the Town's motion to dismiss as a motion for summary judgment, the superior court entered judgment for the Town. The court of appeals reversed. Applying contract principles and conventions of legal writing, it concluded that the written amount controlled over the numerical amount in parentheses. On that reasoning, Terborg had unequivocally offered to settle for $100,000. The Supreme Court rejected that approach, vacated the appellate opinion, and affirmed summary judgment. The notice left the Town unable to identify a single settlement amount without first resolving the contradiction. In the end, the defect was sufficient to bar the lawsuit.
Strict Compliance Remains the Governing Standard
Section 12-821.01(A) requires a notice to include a specific amount for which the claim can be settled. The Court treated that requirement as a substantive condition of proceeding against a public entity, rather than a drafting preference subject to substantial compliance. The decision follows City of Mesa v. Ryan in & for Cnty. of Maricopa, 258 Ariz. 297, 557 P.3d 316 (2024, where a claimant offered to settle for $1 million or applicable insurance policy limits, whichever was greater. Multiple potentially applicable policies prevented the city from determining a precise settlement figure from the notice alone. The offer therefore failed to meet the statutory requirement.
Although Terborg involved inconsistent figures rather than uncertain insurance limits, the underlying problem was the same. The public entity could not identify the amount necessary to settle the notice itself. A complaint notice must state a definite figure or provide a basis for calculating that figure precisely.
The Court also declined Terborg's invitation to replace strict compliance with a substantial compliance standard. Relying on Deer Valley Unified School District No. 97 v. Houser, 214 Ariz. 293 (2007), and Falcon ex rel. Sandoval v. Maricopa County, 213 Ariz. 525 (2006), it reaffirmed that actual notice and general reasonableness cannot substitute for satisfaction of the statutory requirements. Providing two inconsistent amounts does not establish the required certainty.
Contract Interpretation Cannot Supply the Missing Certainty
The court of appeals' analysis offered a solution, but the Supreme Court concluded that this reasoning addressed the wrong question. A notice of claim is a statutory prerequisite to a damages action against a public entity. Its compliance turns on the statute, not whether a court could resolve contradictory language under contract law. As the Court explained through its reliance on Backus v. State, 220 Ariz. 101, 203 P.3d 499 (2009), the statutory inquiry does not require the entity to reconstruct the claimant's intent.
The Court also identified a broader procedural concern. Under Arizona contract law, interpretation may involve evidence outside the document. Importing that approach into notice-of-claim review could generate factual disputes over subjective intent before the underlying injury claim is ever considered. That additional litigation would undermine the certainty the specific amount requirement was designed to provide.
The decision did not reject every reference to contract principles in the notice-of-claim context. It distinguished Yollin v. City of Glendale, 219 Ariz. 24 (App. 2008), which used those principles to confirm the existence of an unambiguous offer. Using interpretation to establish that an offer exists differs from using it to repair an offer containing incompatible settlement amounts.
Nor did the rule that words prevail over numbers resolve the problem. Arizona expressly adopts that rule for contradictory terms in negotiable instruments, but the Court identified no comparable statutory direction for notices of claim. An interpretative convention cannot relieve a claimant of the obligation to state an unequivocal settlement amount in the first instance.
A Clerical Error with Substantive Consequences
The Court accepted that Terborg's inconsistent demand resulted from a clerical mistake. It nevertheless rejected the argument that the mistake was merely technical. An error can be clerical in origin while also defeating an essential statutory requirement. Here, nothing in the notice established whether the words or the numerals were mistaken. The factual explanation supporting the demand was broad enough to accommodate either amount. General policies favoring decisions on the merits did not change the result. The notice requirement precedes litigation; it is not a pleading or proceeding governed by the constitutional and procedural harmless-error provisions Terborg invoked. The specific statutory bar therefore controlled over those broader policies.
The Town's ability to obtain clarification likewise did not create an obligation to do so. A public entity may ask questions or request additional information, but it need not assist a claimant in achieving statutory compliance. The Court left any policy change imposing such a duty to the Legislature.
Practical Consequences for Claims Handling and Litigation
For public entities and defense counsel, Terborg supports examining the notice itself at the outset of a claim. Review should address whether the settlement language communicates one certain amount, whether repeated figures agree, and whether any proposed calculation actually produces a precise result. The analysis should remain distinct from the merits of liability and damages. A detailed account of an injury does not resolve an internally inconsistent demand. The decision also supports considering a threshold compliance defense before substantial merits litigation. In Terborg, the contradiction appeared on the face of the notice and supported summary judgment without adjudication of the dog attack claim. The ruling does not, however, establish that every drafting irregularity is fatal. Its holding concerns conflicting settlement amounts that prevent the entity from identifying the offer with certainty.
For claimant's counsel, final review of the demand deserves the same attention as the factual allegations. Repeating an amount in words and numerals creates an additional opportunity for inconsistency. If both formats are used, they must agree, and counsel should not assume that a court will choose the intended figure or that the recipient will request clarification.
