In a letter, attorneys for the city of Prescott informed the attorney of both Marcia McKee and the homeowners that the claims had been rejected.
The city gave a two-fold reason for rejecting McKee's claim. The first explanation detailed that McKee's son, Grant, was a city employee at the time of his death. Claims against an employer are barred by Arizona worker's compensation laws.
Attorneys also said that a report cited in McKee's claim from the Arizona Division of Occupational Safety and Health cleared the city of wrongdoing.
The report was also cited as the reason for rejecting the homeowners' claim.
McKee also filed a claim with the state and Yavapai County seeking $48 million in damages. McKee's attorney, Craig Knapp, said the claim was not about money but answers.
KTAR legal analyst Monica Lindstrom said the rejected claims do not signify the end of the conversation.
"At this point, if the plaintiffs want to proceed they'll file a lawsuit in civil court," she said.
Lindstrom said she is nearly certain both McKee and the homeowners continue their cases.
"They can still settle with the government agencies. These matters do not have to go to trial," she said.
KTAR's Martha Maurer contributed to this report.