In May 2015, I authored a post addressing the Arizona Court of Appeals’ then-recent decision in Cemex Construction Materials South, LLC v. Falcone Bros., Inc., 237 Ariz. 236 (App. 2015). My post can be found here. The Cemex decision will, however, cease being good law next Saturday. The case was legislatively overruled by House Bill 2268, which was signed into law by Governor Ducey on May 12, 2016 and will become effective on August 6, 2016.
As a reminder, Cemex upended the longstanding construction industry practice of mailing preliminary twenty-day notices on Little Miller Act projects via first class mail with a certificate of mailing. This had been done as a cost saving measure because: (1) Arizona’s mechanic’s lien statute requiring twenty-day notices—A.R.S. § 33-992.01—expressly provides in Subsection (F) that the notices may be provided by “first class mail sent with a certificate of mailing;” and (2) the Little Miller Act section requiring 20-day notices in certain instances—A.R.S. § 34-223(A)—incorporated by reference a significant portion of § 33-992.01. Nevertheless, Cemex held that this industry practice did not comply with § 34-223(A). Specifically, the Court found that the mailing provisions of § 33-992.01(F) were excluded from § 34-223(A), such that Little Miller Act 20-day notices were required to “to be served by registered or certified mail,” like Little Miller Act ninety-day post-completion notices.
HB 2268 amends A.R.S. § 34-223(A) to allow Little Miller Act 20-day notices to be served by first class mail with a certificate of mailing, and, in doing so, overrules the Cemex decision. The Bill accomplishes this by simply adding § 33-992.01(F) to the list of § 33-992.01 subsections that are expressly incorporated into § 34-223(A). Accordingly, it is now unequivocally clear that the legislature intends for the mailing requirements for mechanic’s lien 20-day notices to apply equally to Little Miller Act twenty-day notices. Indeed, the “Legislative findings; intent” section of the Bill states that:
The legislature also finds that the construction industry believes the Cemex decision incorrectly applied the legislature’s intent in interpreting this notice requirement. It is the intent of the legislature to clarify that under section 34‑223, Arizona Revised Statutes, as amended by this act, the written preliminary twenty‑day notice may be sent by first class mail with certificate of mailing, certified or registered mail.
In sum, Cemex will cease being good law on August 6, 2016 and would-be Little Miller Act payment bond claimants can resume serving their 20-day notices by first class mail with a certificate of mailing at that time. But until that time, Little Miller Act 20-day notices should continue to be served by registered or certified mail.
It should also be noted that HB 2268 amends A.R.S. § 34-223(A) to allow ninety-day post-completion notices to be sent “by any means that provides written, third-party verification of delivery,” rather than just “registered or certified mail.”