396 P.3d 623
Ariz. Ct. App.2017Background
- ASRS invoiced Arizona State University (ASU) $1,149,103 for an alleged actuarial unfunded liability tied to a termination incentive program; invoice demanded payment within 90 days and specified interest on any balance.
- ASU paid the invoice, administratively appealed, and this court previously held ASRS unlawfully enforced the policy without proper rulemaking and ordered a refund (ASU v. ASRS).
- The superior court entered judgment ordering the refund plus prejudgment interest at 4.25% (prime + 1%).
- The sole issue on this appeal was which interest rate under A.R.S. § 44-1201 applies to the refund: 10% (subsection A, for loans/indebtedness) or the lesser of 10% or prime+1% (subsection B, for judgments).
- The court analyzed statutory language and precedent to decide whether the overcollection created an "indebtedness" (debt independent of judgment) or a liability that "depends on a judgment for its existence."
Issues
| Issue | Plaintiff's Argument (ASU) | Defendant's Argument (ASRS) | Held |
|---|---|---|---|
| Applicable prejudgment interest rate under A.R.S. § 44-1201 | The overpayment created an "indebtedness" owed by ASRS; subsection (A) applies so prejudgment interest = 10% | The superior court correctly treated the refund as a "judgment"-dependent liability; subsection (B) applies so prejudgment interest = prime+1% (4.25%) | The refund is an "indebtedness" independent of judgment; subsection (A) governs and prejudgment interest is 10% |
Key Cases Cited
- Metzler v. BCI Coca-Cola Bottling Co. of Los Angeles, 235 Ariz. 141 (interpreting § 44-1201 distinctions between indebtedness and judgment)
- Arizona State Univ. v. Arizona State Ret. Sys., 237 Ariz. 246 (prior opinion ordering refund and remanding for interest determination)
- Hall v. Elected Officials’ Ret. Plan, 241 Ariz. 33 (standards for de novo review cited)
- Newman v. Select Specialty Hosp.-Ariz., Inc., 239 Ariz. 558 (statutory interpretation principles)
- In re Estate of Zaritsky, 198 Ariz. 599 (avoidance of surplusage in statutory construction)
- Precision Heavy Haul, Inc. v. Trail King Indus., Inc., 224 Ariz. 159 (distinction between liquidated damages and indebtedness)
- Employer’s Mut. Cas. Co. v. McKeon, 170 Ariz. 75 (prejudgment interest on liquidated claims is a matter of right)
- Carrillo v. State, 169 Ariz. 126 (procedural waiver of issues not raised in earlier appeal)