Johnson_ et al v Clarke_ et al

Document Sample
Johnson_ et al v Clarke_ et al Powered By Docstoc
                See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
                            Ariz. R. Crim. P. 31.24

                                                                     DIVISION ONE
                                                                 FILED: 11/10/09
                         IN THE COURT OF APPEALS                 PHILIP G. URRY,CLERK
                             STATE OF ARIZONA                    BY: DN
                               DIVISION ONE

JOHN CLARK JOHNSON, Trustee of   )         1 CA-CV 08-0571
the Paul Johnson Testamentary    )
married person dealing with sole )
and separate property; PAUL      )         MEMORANDUM DECISION
Arizona corporation,             )         (Not for Publication –
                                 )         Rule 28, Arizona Rules of
          Plaintiffs/Appellants, )         Civil Appellate Procedure)
          v.                     )
RAGAN, P.L.L.C., an Arizona      )
professional corporation,        )
           Defendants/Appellees. )

           Appeal from the Superior Court in Maricopa County

                         Cause No. CV 2007-000934

                 The Honorable Robert E. Miles, Judge


Law Offices of Kevin Koelbel, PC                                    Chandler
     By   Kevin Koelbel
Co-Counsel for Plaintiffs/Appellants
Stanley R. Lerner, PC                                                                Phoenix
     By   Stanley R. Lerner
Co-Counsel for Plaintiffs/Appellants

Jerome L. Froimson, PLLC                                                             Phoenix
     By   Jerome L. Froimson
Co-Counsel for Plaintiffs/Appellants

Meagher & Geer, PLLP                                                            Scottsdale
     By   Thomas H. Crouch
          Kevin T. Minchey
          Kurt M. Zitzer
Attorneys for Defendant/Appellee

S W A N N, Judge

¶1            Plaintiffs-appellants John Clark Johnson, Paul Johnson

Jewelers, Inc., and the Paul Johnson Testamentary Trust appeal

from the trial court’s decision granting summary judgment in

favor    of    defendants-appellees              William      A.     Clarke    and    Carson,

Messinger, Elliott, Laughlin & Ragan, Clarke’s employer. Clarke

was the attorney for Barbara Johnson, the life beneficiary and

trustee of the Paul Johnson Testamentary Trust.                                Plaintiffs-

appellants      brought     a    professional            negligence      action       against

Clarke   and    his   law   firm       to    recover         funds    they    claimed    were

wrongfully      withdrawn       from   the           trust   by    Barbara.      The    court

concluded      that   the   statute         of       limitations      barred    the    claim.

Plaintiffs-appellants contend that the cause of action did not

accrue more than two years before the action was filed because

only the trustee could have brought a claim against Clarke at

that time.       They further argue that Johnson’s cause of action

did    not    accrue      until      Barbara       died,   because        as    a   remainder

beneficiary Johnson had no actual and appreciable damages until

that time.         For the following reasons, we affirm.

                           FACTS AND PROCEDURAL HISTORY

¶2            Plaintiff-appellant John Clark Johnson (“Johnson”) was

the son of Paul Johnson (“Paul”) by Paul’s first wife.                                     Paul

incorporated Paul Johnson Jewelers, Inc. (“PJJ”), which owned

and operated several jewelry stores, one of which was located in

a    commercial      building        owned    by    PJJ    (“PJJ    Building”).            Paul

closed    all      the    stores     by   1996,     redeeming       all    shares     of    the

company and thereby becoming PJJ’s sole shareholder.                                After the

jewelry stores were closed, PJJ continued to pay its officers’

salaries from the income the company received from leasing the

PJJ Building.            Barbara Johnson (“Barbara”), Paul’s second wife,

was a PJJ officer.

¶3            Paul       died   on     July     29,    1998.         Defendant-appellee

William      Clarke      (“Clarke”)       drafted      Paul’s      will.        Paul’s     will

provided that his shares in PJJ would be placed in the Paul

Johnson Testamentary Trust (“PJ Trust”) and named Barbara as the

trustee      and    Clarke      as   successor        trustee.       The       will   further

provided that during her lifetime, Barbara was to receive the

income from the PJ Trust, but that she could not receive any

distribution from the principal unless she ceased to be trustee

and    the    successor         trustee       determined     that      a       payment     from

principal was necessary or advisable.                   At her death, the PJ

Trust was to be divided equally among Paul’s children, Clyde

Eugene Johnson, Paul Curtis Johnson, plaintiff-appellant John

Clark Johnson, and Cindy Anne Johnson Fierros.

¶4           Barbara   received         compensation      from    PJJ       through

December 31, 2003.          PJJ sold the PJJ Building on November 3,


¶5           On November 13, 2003, M.A. Spellman, the accountant

for PJJ, sent to Clarke “a summary of the accounting items for

inclusion in the corporate minutes of the company” “for the

fiscal years beginning with the year including the date of Paul

Johnson’s    death.”        The   summary      listed    Barbara’s    salary    as

$118,562    annually   for     corporate       years    ending   in   June    1999

through 2003, and $59,281 from July to December 2003, for a

total of $652,091.         Clarke drafted corporate resolutions for PJJ

for those years, authorizing payment of the salary, and sent

them to Spellman the next day.               The resolutions listed Barbara

as President, Treasurer, and Secretary.                 On November 16, 2003,

Barbara     executed   the    resolutions,      dated     February    15,    1998,

February     15,   1999,     February    15,    2000,    February     15,    2001,

February 15, 2002, November 15, 2003, and February 15, 2004, as

herself and as trustee of the PJ Trust.

¶6           On December 23, 2003, Spellman transmitted to Clarke

the compiled financial statements for PJJ for the fiscal years

ending June 30, 1999 through June 30, 2003.                           On December 30,

2003, Clarke provided Johnson’s lawyer, Michael Hensley, with

the financial statements for PJJ for fiscal years 1999 through

2003, advising him that because PJJ was the trust’s only asset,

separate     financial      statements        for    the      trust    had   not     been

prepared.          Clarke      asserted    that       all       pertinent    financial

information for the PJ Trust was contained in the financial

information       for    PJJ.       The    financial          information       provided

included the salary paid to Barbara each fiscal year ending 1999

to 2003, but did not include the salary paid to Barbara after

the   sale   of    the   PJJ    Building.           Johnson     also    received     that

financial information.

¶7           By    letter   dated    January        20,     2004,     Hensley   advised

Clarke that Johnson was having an accountant review the will as

well as the financial information provided.                         He asked for the

reasons for the sale of the PJJ Building.

¶8           By letter dated January 26, 2004, Clarke explained to

Hensley that the PJJ Building had been leased to WorldCom on

favorable      terms,     but    that     WorldCom        had     sought     bankruptcy

protection and terminated the lease.                   Clarke further explained

that attempts to find another tenant had been unsuccessful and

that the monthly mortgage payment and past due taxes exceeded

the cash available in the trust, necessitating the sale.                           Clarke

noted   that      Johnson   owed    PJJ    approximately          $48,984     for    some

jewelry, the payment of which could have provided a few more

months to sell the building.

¶9         On August 13, 2004, Johnson’s new lawyer, Alisa Gray,

wrote to Clarke stating that she had reviewed Paul’s will and

the   financial   statements   of    PJJ   for    1999   to   2003.      Gray

emphasized that under the trust, Barbara was not entitled to

take any principal from the trust.          Gray further asserted that

the financial documents showed that PJJ had minimal earnings

during the years covered, but that Barbara nevertheless received

salaries totaling $467,516.      Gray continued:

           Based upon the scant information provided in
           the financial statements, it appears that
           Barbara   has   liquidated   inventory   and
           marketable securities in order to raise cash
           and pay herself a handsome salary. She has
           also received various benefits such as
           having some or all of her automobile
           expenses paid from the Corporation.       As
           such, in addition to receiving the Trust’s
           income, through rental income from the
           building, dividends and interest from the
           securities, she has received significant
           benefit from the principal of the Trust.
           Please provide a written explanation as to
           why Barbara has received these principal

As a result of Gray’s accusations that Barbara had engaged in

self-dealing   and   mismanagement,      Clarke   and    Carson   Messinger

withdrew   from   representing      Barbara.      Barbara     retained   new

counsel, Scott Burns, to represent herself and PJJ.

¶10          In   a     letter    dated    August    30,   2004    to   Burns,   Gray

requested additional information, claiming that Johnson had been

attempting        to     obtain        information    about       the    trust    for

approximately a year and noting that one document requested of

Clarke nine months earlier still had not been produced.                           She

also   accused         Barbara    of    taking   a   substantial        salary   “for

operating a skeletal holding corporation.”

¶11          On September 3, 2004, Clarke delivered a number of

documents related to PJJ and the PJ Trust.                        On September 20,

2004, Burns sent an email to Gray indicating he would deliver

documents to her office.           He further stated:

                  In light of the liberal language in the
             Will and Testamentary Trust (which allows
             the   principal   to   be   exhausted),  I’m
             surprised Clark [Johnson] believes Barbara
             has exceeded her authority.     If he really
             wants to file a Petition as indicated he
             should. . . .   It also seems like a lot of
             legal fees which just reduces the balance of
             the Trust. . . . [T]he balance in the Trust
             is about $300,000.    Clark’s contingent 1/4
             interest, many years down the road, which is
             off-set by his current obligation seems to
             be a small to non existent amount.

Gray responded:

             The terms [of the trust] are not that
             liberal.   No principal may be invaded while
             Mrs. Johnson is the Trustee.    I understand
             that she is the Trustee at this point and
             has been since Mr. Johnson died. Therefore,
             she is not entitled to Trust principal and
             the salaries are simply an “end run” around
             the trust standards. . . .

           Also, I am concerned about your copying Mr.
           Clarke with these emails.       Mr. Clarke has
           several conflicts in this matter.           He
           represented the Trustee, President of the
           Corporation    and   the    beneficiary,  Mrs.
           Johnson.     He also represented my client
           regarding his business, the entity which
           owes on the jewelry.        As I see it, Mr.
           Clarke’s role is that of a witness.         He
           should have no further dealings with the
           Trustee   or    corporation   unless   he  has
           received the necessary waivers.

           Finally, . . . I recognize that the trust is
           relatively small, but we see that as a
           function of Mrs. Johnson’s mismanagement and
           self-dealing    based     upon  what    little
           information   we    have.      If   you   have
           information which will convince me that she
           has acted appropriately as trustee and
           president, I will certainly recommend that
           my client refrain from any court action.
           But, thus far, nothing we have received
           indicates that such is the case.

¶12        In a subsequent letter to Burns, dated October 12,

2004,   Gray   expressed   frustration    that   Barbara   had   still   not

explained or justified the salaries she had taken from PJJ,

noting that Johnson had asked for the information two months

earlier.       Gray   suggested,   “One    obvious    reason     for     this

unwillingness or inability to respond is that Mrs. Johnson has

no plausible explanation for her salary and it is, as I suspect,

an attempt to avoid the strict standards.”

¶13        Barbara died on January 17, 2005.               On January 20,

2005, Clarke advised the beneficiaries of the PJ Trust that he

would decline to act as successor trustee, as provided in Paul’s

will.     Cindy Ann Johnson Fierros became the successor trustee.

On June 29, 2006, Johnson was appointed successor trustee of the

PJ Trust and awarded all shares of PJ Jewelers.

¶14          On January 12, 2007, Johnson filed a complaint against

Clarke     and     Clarke’s        employer          Carson,       Messinger,          Elliott,

Laughlin    &    Ragan,     P.L.L.C.          Johnson           filed    suit    on    his    own

behalf, on behalf of PJJ, and as Trustee of the PJ Trust.                                     The

complaint       alleged    that       Barbara       engaged        in    self-dealing         and

mismanagement       of    the    PJ    Trust        and    PJJ    in     violation      of    her

fiduciary        duties     to     those        entities          and      to     the      trust

beneficiaries,       causing       them      damage.             The    complaint       further

alleged     that    the    defendants         knew        or     should    have       known    of

Barbara’s       conduct,    and       that    they        wrongly       favored       Barbara’s

interests over the interests of the other beneficiaries.                                      The

complaint       further    alleged       that       the     defendants          assisted      and

encouraged       Barbara     in       breaching           her    fiduciary       duties       and

concealed    her     conduct,      and      that     Carson       Messinger       negligently

failed to supervise Clarke, causing damage to the plaintiffs.

¶15          After       answering,       the       defendants          moved    for    summary

judgment,       arguing     that      the    applicable           two-year       statute       of

limitations barred the complaint.                    They contended that the cause

of action accrued no later than September 20, 2004 when Gray

asserted that Clarke should not be copied on any emails because

of conflicts of interest, and it likely accrued as early as

December    30,     2003    when     Johnson        received     the     PJJ     financial

statements showing Barbara’s salary.                   The defendants argued that

Johnson knew Clarke was Barbara’s lawyer, and that Johnson’s

knowledge    of     facts    supporting         a     claim    against       Barbara   was

sufficient to put him on notice to investigate potential claims

against her lawyer.          The defendants also noted that during his

deposition Johnson had stated that he thought Clarke withdrew as

Barbara’s lawyer because Clarke was trying to protect himself

from a lawsuit Johnson might bring against Clarke.1

¶16          Johnson       argued    that       the     claims        accrued,    at   the

earliest,    when    Barbara        died   on       January     17,    2005.       Johnson

asserted that until Barbara died, the beneficiaries of the trust

were not entitled to anything from the trust and so had not yet

suffered    the    actual,     appreciable,           and     non-speculative      damage

required for the cause of action to accrue.                      Johnson also argued

that because Clarke concealed his conduct, which prevented the

discovery of the claims, the statute of limitations was tolled.

In addition, Johnson argued that only Barbara could sue Clarke

during her lifetime, but because she insulated him from suit,

Clarke     was    thereby    estopped       from      asserting        the   limitations


  Johnson was advised that Clarke had withdrawn at least on or
around August 24, 2004. He was copied on a letter dated August
24 sent by Gray to Carson Messinger confirming the withdrawal of
Clarke and that firm.

¶17            At oral argument, Johnson agreed that once a plaintiff

knows a trustee or fiduciary is involved in wrongdoing, the

plaintiff must investigate the lawyers, accountants and other

professionals          that      might       have       provided      advice.           Johnson’s

argument       focused         on     the     contention          that      as     a     remainder

beneficiary he had no damages until Barbara died; he conceded

that    if    the     court      found       that       Johnson     had   sustained       damages

before Barbara died, the court had to enter summary judgment.

¶18            The     trial         court    granted         summary      judgment        against

Johnson.        Regarding Johnson’s argument that the damages were

speculative, the court noted that any beneficiary can sue a

trustee to enforce duties of the trustee or obtain redress for

breaches of the trust, citing Restatement (Second) of Trusts §

214(1)       (1959)    (hereafter            “Restatement”).              The    court    further

noted    that    under         the    Restatement         §   326,    a    third       party   that

participates          in   a    breach        of    trust      is    also       liable    to    the

beneficiary for any loss.

¶19            Johnson filed a motion for reconsideration, and when

the motion was denied and judgment entered, Johnson filed a

motion for new trial.                  He reiterated his earlier arguments and

asserted that the claims of the three plaintiffs should have

been considered separately.                    He argued that his knowledge could

not be imputed to the PJ Trust or PJJ because he was not an

agent of those entities while Barbara was still alive.

¶20         The trial court denied the motion for new trial, and

Johnson filed a timely notice of appeal.                   We have jurisdiction

pursuant    to    Arizona     Revised   Statutes        (“A.R.S.”)    section         12-

2101(B) (2003).


¶21         Summary      judgment   may     be   granted    when     “there      is    no

genuine issue as to any material fact and [] the moving party is

entitled to a judgment as a matter of law.”                   Ariz. R. Civ. P.

56(c).     In reviewing a motion for summary judgment, we determine

de novo whether any genuine issues of material fact exist and

whether the trial court properly applied the law.                         Eller Media

Co. v. City of Tucson, 198 Ariz. 127, 130, ¶ 4, 7 P.3d 136, 139

(App. 2000).       We view the facts and the inferences to be drawn

from   those     facts   in   the   light      most    favorable     to    the   party

against whom judgment was entered.                    Prince v. City of Apache

Junction, 185 Ariz. 43, 45, 912 P.2d 47, 49 (App. 1996).

¶22         An action for legal malpractice must be brought within

two years of the accrual of the claim.                      Kiley v. Jennings,

Strouss & Salmon, 187 Ariz. 136, 139, 927 P.2d 796, 799 (App.

1996).     The cause of action accrues when “the plaintiff knows or

reasonably should know of the attorney’s negligent conduct[,]

and . . . the plaintiff’s damages are ascertainable, and not

speculative or contingent.”          Id. (citation omitted).               The client

must sustain actual and appreciable harm, which is harm that is

“irremedial” or irrevocable, before the cause of action accrues.

Commercial Union Ins. Co. v. Lewis & Roca, 183 Ariz. 250, 254,

902 P.2d 1354, 1358 (App. 1995) (citations omitted).

¶23          Johnson argues that his cause of action did not accrue

until Barbara died.          He contends that because he had no right to

the trust principal while Barbara was alive and because she

could have consumed the entire principal during her lifetime

leaving    nothing     for    him,      any     damages      from    her   mismanagement

based   on    Clarke’s       advice      were       speculative      until    she    died.

Johnson      asserts    that       if    Barbara       had     exhausted     the     trust

principal, “there would have been no cognizable claim against


¶24          In support, Johnson relies on Commercial Union.                            In

Commercial     Union,    a     law      firm    advised      Commercial      Union    that

because of a policy exclusion, their insured was not covered for

a claim against it.            183 Ariz. at 252, 902 P.2d at 1356.                      In

rendering the advice, the law firm overlooked an opinion that

held a similar policy exclusion unenforceable.                         Id.    Commercial

Union denied coverage, and after judgment was taken against the

insured, the insured’s bankruptcy trustee sued Commercial Union

for breach of contract and bad faith refusal to settle (the

“coverage     case”).        Id.         In    the    course    of    the    litigation,

Commercial Union learned of the law firm’s negligence, but its

lawyer believed that the overlooked case could be distinguished.

Id. at 253, 902 P.2d at 1357.                 The trial court denied Commercial

Union’s motion for summary judgment, relying in part on the

overlooked opinion.            Id. at 253-54, 902 P.2d at 1357-58.

¶25          After      settling       the    coverage       case,    Commercial        Union

sued the law firm for malpractice.                         The trial court dismissed

the action as barred by the statute of limitations.                           Id. at 254,

902 P.2d at 1358.               Commercial Union argued that until it had

settled     the   coverage         case,     its    damages    were      speculative      and

nonascertainable, and therefore the cause of action against the

law firm had not accrued.                   Id. at 255, 902 P.2d at 1359.                The

court found, however, that the cause of action was not deferred

until the total amount of damages was determined, noting that

accrual occurred when the plaintiff incurred “some injury” from

the malpractice.             Id.      The court also rejected the law firm’s

claim     that    the        cause     of    action    accrued        when    the      lawyer

overlooked the critical case, noting that no evidence suggested

that at that point Commercial Union knew or should have known of

the   law   firm’s      negligence.           Id.     at    256,   902     P.2d   at    1360.

Instead,    the     court      found    that       Commercial      Union’s    malpractice

cause of action accrued when the trial court in the coverage

case,     relying       in     part     on    the     overlooked       opinion,        denied

Commercial Union’s motion for new trial.                        Id. at 258, 902 P.2d

at 1362.         At that point, Commercial Union had reason to know

that the law firm’s negligence caused injury.                        Id.

¶26          Johnson     implies     that   Commercial     Union      supports   his

position that before Barbara died his damages were not actual

and appreciable.         Commercial Union does not help Johnson.                  In

that    case,    Commercial    Union    could      not   have   known    that    the

negligence      caused   injury    until     the   court   concluded      that   the

overlooked opinion supported an adverse ruling.                    Had Commercial

Union’s lawyer successfully distinguished the overlooked opinion

and obtained summary judgment in favor of Commercial Union, the

negligence would have caused no damage.

¶27          Johnson also relies on Pietz v. Toledo Trust Company,

577 N.E.2d 1118 (Ohio Ct. App. 1989), for his position that

because Barbara could consume the entire trust, Johnson might

not be entitled to any distribution at her death and therefore

his damages remained speculative until she died.                   In Pietz, the

trustor made a will that provided for his estate to be divided

between two trusts at his death.             Id. at 1120.        Trust A was for

the benefit of his widow and was to be funded in an amount

equivalent to the maximum marital deduction.                    Id.     The income

was to be distributed to his widow and the principal could be

distributed to her at the discretion of the trustee.                      Id.    She

had the power of appointment over assets remaining in Trust A at

her    death.     Id.     If   she    did    not   exercise     that    power,   the

remainder in Trust A was to be distributed to Trust B.                           Id.

Trust B was for the benefit of the widow and two sons, and the

income was to be distributed to them.                   Id.      The widow could not

receive the principal from Trust B until all of Trust A was

exhausted.      Id.      Before he died, the trustor modified his trust

on the advice of his lawyer.                 Id.     The effect of the amendment

was that upon the trustor’s death, all of his assets went into

Trust A.     Id. at 1120-21.

¶28          The    widow   and    sons       sued   the     trustee     and    trustor’s

lawyer.    Id. at 1121.        The trustee moved for summary judgment on

the     sons’   claim     on     the    grounds       that       their     damages     were

speculative;       the   trial     court      granted      the    motion.        Id.     On

appeal, the court noted that the widow could exhaust the assets

of both trusts.           Id. at 1122.             The court found it was not

possible to determine whether the sons would ultimately receive

more or less under the amended trust than under the original

trust     and   that     therefore          the    sons’     claimed     damages       were

speculative.       Id.

¶29          Pietz also does not support Johnson.                    As in Commercial

Union, in Pietz the question was whether and when the claimed

negligence caused harm.            The court found the damages speculative

because it could not determine whether the amount the sons would

receive under the amended trust would be more or less than under

the unamended trust.           Obviously, if the sons received more, the

claimed negligence would not have caused damage.                           Therefore, a

calculation        of    damages       at     that    point        would       have    been

speculative.      In addition, Pietz concerned a potential error in

funding the two trusts; it did not involve removing funds from

the trust.

¶30          Unlike Commercial Union and Pietz, here, the damage

from   the   alleged     malpractice   occurred    when    Barbara   took    the

salaries from PJJ and when she sold the building, allegedly on

the negligent advice of Clarke.             The assets were removed from

PJJ and therefore from the PJ Trust.            The amounts at issue were

ascertainable, and once the funds and the building had been

removed from the PJ Trust, they were gone and the harm was done.

¶31          We   note   that   Arizona     recognizes    that   remainder    or

contingent beneficiaries have an interest in protecting a trust

regardless of whether they ultimately receive any benefit from

the trust.

             Any wrongful disposal of the corpus or even
             the income of the trust res will injuriously
             affect the interest of the remaindermen as
             their interest, the enjoyment of which is
             postponed, is in all of the property subject
             to the trust which might remain after the
             deaths of the life beneficiaries, and this
             interest will take effect in possession
             immediately on the determination of the
             preceding life interests.        Nor is the
             present interest of these petitioners as
             beneficiaries less real by virtue of the
             fact that the amount of the estate remaining
             undisposed of at the expiration of the
             particular estate is uncertain.    During the
             period of a life beneficiary’s interest the
             ultimate   beneficiaries    have    sufficient
             interest to protect the trust fund and see
             that the trust is properly executed.

Johnson v. Superior Court, 68 Ariz. 68, 71, 199 P.2d 827, 829

(1948) (citations omitted).          We reject Johnson’s contention that

Clarke’s    alleged    malpractice        did   not    result       in    cognizable

damages to Johnson until Barbara’s death.

¶32         Johnson    argues     that,     although     Barbara         could   have

brought a malpractice claim against Clarke, he could bring only

an    equitable    claim   against    Barbara.        This   is     not    accurate;

Johnson could have brought an equitable claim for recovery of

lost trust assets against both Barbara and Clarke

¶33         A     beneficiary’s      remedies    against        a    trustee      are

exclusively equitable.          Restatement § 197.           A beneficiary can

bring inter alia an equitable claim against a trustee to compel

the trustee to perform a duty, prevent a trustee from committing

a breach of trust, or compel the trustee to redress a breach of

trust.     Restatement § 199.        Any beneficiary, regardless of the

vested or contingent nature of the interest, can bring such an

equitable suit.      Restatement § 214 cmt. a.

¶34         If the trustee could maintain an action at law or

equity against a third party, the beneficiary generally cannot

bring an action at law or equity against the third party, unless

the trustee fails to bring an action against the third person.

In that case, the beneficiary may bring an action in equity

against the trustee and the third party.             Restatement §§ 281-


¶35            Johnson does not dispute that he knew or had reason to

know of Clarke’s alleged malpractice more than two years before

he brought suit.        Although he correctly notes that he could not

bring an action at law against Clarke, he could have brought an

equitable claim against Barbara and Clarke to stop any improper

removal of trust assets and to recover past losses.               Whether an

action in equity or law, the claim is essentially the same--that

Clarke, either negligently or knowingly, assisted Barbara in a

breach of trust for which Johnson seeks compensation.                 Johnson

could have brought suit against Barbara and Clarke to enforce

the    trust    but   took   no   action.   The   statute   of    limitations

applies to bar his claim.

¶36            Johnson argues that the statute of limitations should

not apply to his claim because Clarke fraudulently concealed

information from him.         Fraud used to conceal a cause of action

tolls the running of the statute of limitations.             Walk v. Ring,

202 Ariz. 310, 319, ¶ 34, 44 P.3d 990, 999 (2002).               The “failure

to disclose true facts leading to the plaintiff’s injury [is]

fraudulent concealment, and [] such action tolls the applicable

statute of limitations until the plaintiff discovers or was put

on reasonable notice of the breach of trust.”                Anson v. Am.

Motors Corp., 155 Ariz. 420, 428, 747 P.2d 581, 589 (App. 1987)

(citation omitted).

¶37         Johnson       asserts       that    Clarke’s      concealment        prevented

discovery    of     his       claims    and     lists     a   number     of    pieces     of

information       that    he    argues        Clarke     wrongly     withheld.        Even

assuming that Clarke wrongly withheld information, Johnson knew

about the sale of the PJ Building and the salaries withdrawn by

Barbara, which form the basis of his claim.                        In addition, as of

September 20, 2004 Johnson’s attorney had reviewed the trust and

information       provided      by     Clarke      and   concluded      that   Barbara’s

actions violated the terms of the trust. Johnson was already

contemplating       filing      suit     at    that      time.       Whether     Barbara’s

actions    were    taken       on    advice     of    counsel    would    have     been   a

logical inquiry, which Johnson conceded at oral argument in the

trial court.       The exchange of emails on September 20 demonstrate

that   Johnson’s      attorney         had     concluded      that     despite    several

conflicts of interest Clarke had represented Barbara. Johnson

also acknowledged that when he heard Clarke had withdrawn from

representing Barbara, he thought Clarke was protecting himself

from   a   lawsuit       by   Johnson.         Johnson     has   not    explained    how,

despite this knowledge, he was prevented from filing suit by

Clarke’s nondisclosures.2

  We also note that, on appeal, Johnson argues that the claim did
not accrue because of a lack of appreciable damages and because

¶38         We find no basis for concluding that any information

concealed by Clarke precluded Johnson from timely bringing suit

against Barbara and Clarke to enforce the terms of the PJ Trust.3

¶39         Johnson    argues     that      Clarke     should     be   equitably

estopped from asserting the statute of limitations as a defense

because Barbara was unlikely to bring a claim against Clarke

because she was benefiting from Clarke’s advice.

¶40         Johnson    is    unclear   as   to   whether    he    is   asserting

equitable   estoppel    or    equitable     tolling.      Equitable    estoppel

requires a showing that the party to be estopped intentionally

or negligently induced another to believe certain material facts

and the induced party acted in reliance on its reasonable belief

of those facts and was consequently injured.                    Pueblo Santa Fe

Townhomes Owners’ Ass’n v. Transcontinental Ins. Co., 218 Ariz.

13, 21, ¶ 30, 178 P.3d 485, 493 (App. 2008).                       Johnson has

presented no argument with respect to any of these elements to

support application of the doctrine to these facts.

he could not bring a claim; he has not argued that the cause of
action did not accrue because the information he had was
insufficient to put him on notice of a claim.
  In passing, Johnson asserts that Clarke’s concealment of facts
and his participation in the breaches of duty with Barbara
should toll the limitations period for PJJ and the PJ Trust. He
does not support this statement with any further argument.    We
therefore consider it abandoned.      See Modular Sys. Inc. v.
Naisbitt, 114 Ariz. 582, 587 562 P.2d 1080, 1085 (App. 1977)
(issue deemed abandoned when not argued with particularity).

¶41          Under equitable tolling, a statute of limitations may

be tolled if a plaintiff was prevented from filing the action

“due    to       sufficiently      inequitable      circumstances”       or

“extraordinary     circumstances      beyond     plaintiffs’     control.”

McCloud v. Ariz. Dep’t of Pub. Safety, 217 Ariz. 82, 87, ¶¶ 11 &

13, 170 P.3d 691, 696 (App. 2007) (citations omitted).

¶42          We do not find Johnson’s argument supports applying

equitable tolling.     That Barbara would not bring a claim against

Clarke did not prevent Johnson from filing an equitable claim

against Barbara and Clarke to enforce the terms of the PJ Trust.

The    circumstances      were      not   sufficiently         inequitable,

extraordinary, or beyond Johnson’s control.


¶43          The trial court’s judgment is affirmed.

                                      PETER B. SWANN, Presiding Judge





Shared By: