Opinion
No. 1 CA-CV 13-0253
02-18-2014
WILL GRAVEN, Plaintiff/Appellant, v. JAMES J. SIENICKI and JANE DOE SIENICKI; MARK and JANE DOE OHRE; MIKE and JANE DOE DONAHEY; SNELL AND WILMER, L.L.P., Defendants/Appellees.
Will Graven, Flagstaff Plaintiff/Appellant In Propria Persona Snell & Wilmer, L.L.P., Phoenix By Lisa M. Coulter, Martha E. Gibbs Counsel for Defendants/Appellees
NOTICE: NOT FOR PUBLICATION.
UNDER ARIZ. R. SUP. CT. 111(c), THIS DECISION DOES NOT CREATE LEGAL PRECEDENT
AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.
Appeal from the Superior Court in Maricopa County
No. CV2011-095807
The Honorable David M. Talamante, Judge
The Honorable Linda A. Akers, Judge
AFFIRMED
COUNSEL
Will Graven, Flagstaff
Plaintiff/Appellant In Propria Persona
Snell & Wilmer, L.L.P., Phoenix
By Lisa M. Coulter, Martha E. Gibbs
Counsel for Defendants/Appellees
MEMORANDUM DECISION
Judge Jon W. Thompson delivered the decision of the Court, in which Judge Peter B. Swann and Chief Judge Diane M. Johnsen joined. THOMPSON, Judge:
¶1 Will Graven appeals from a judgment dismissing his fifteen-count complaint against Snell & Wilmer, L.L.P. (Snell) with prejudice. We affirm the dismissal because Graven is not entitled to relief under any interpretation of the facts.
BACKGROUND
When reviewing a dismissal for failure to state a claim, this court deems admitted all well-pleaded material allegations in the complaint. Aldabbagh v. Ariz. Dep't of Liquor Licenses & Control, 162 Ariz. 415, 417, 783 P.2d 1207, 1209 (App. 1989).
¶2 According to the complaint, Graven was the 90.1 percent owner of Arizona Building Systems, Inc. (ABS). In July 2005, ABS engaged Snell to file suit against E-Crete, Inc., with defendant James Sienicki providing initial representation. Thereafter, other Snell attorneys, including defendants Mike Donahey and Mark Ohre, represented other entities in which Graven held an interest. Snell also represented Graven with respect to such "personal/non corporate matters" as his pre-nuptial agreement and trust and estate planning. When writing to Snell concerning his personal legal representation, Graven copied Daniel Esposito, general counsel for ABS and North American Building and Development.
¶3 On April 26, 2006, Esposito sent the following email to Ohre:
No sweat MarkOn May 17, 2006, Donahey responded by summarizing the duties of a general counsel and officer to a company. He then advised: "Snell & Wilmer, as counsel to the Company, is not in a position to advise you regarding your personal liability or responsibilities. We encourage you to obtain separate counsel to advise you on those issues." Donahey also requested that Esposito disclose as soon as possible "the facts that gave rise to your emails so that we may properly advise the Company about remedying any problems." ¶4 Esposito responded to Donahey on the same day, stating: "The source of my emails were purely hypothetical and just a basis for me to be enlightened as to my position. I explained this to Mark Ohre when I first inquired into the matter."
Confidential!
On a side note. Personally, my position as General Counsel/Corporate Secretary is both challenging and nerve-racking [sic] at the same
time. I am growing concerned as what liability/responsibility I may have undertaken if this Will Graven express goes belly up. Now, at the present we are not going bust. However, if in the future we do? I have the ability to sign checks, but, for most part, Will signs most of the checks. I have no control over the spending of the money, no input, no control. I have no idea what he spends/misappropriates money on or for. This goes for all companies, Az/Ca et all! Look into this for me pal. Thanks.
Regards,
Dan
¶5 On May 7, 2007, Graven discovered that a former officer of another company, in which he held a 90.1 percent interest, had launched new companies, with the help of several former employees, and all were still in Graven's network. "A few months after . . . May 7, 2007" Graven found the email exchange between Esposito and Donahey.
¶6 On June 13, 2011, Graven filed suit against Snell, Ohre, Donahey, Sienicki, and their spouses alleging legal malpractice (Count One), breach of fiduciary duty (Count Two), breach of the duty of loyalty (Count Three), breach of the duty of care (Count Four), breach of the "duty to inform" (Count Five), "conflict of interest" (Count Six), breach of contract (Count Seven), negligent supervision (Count Eight), constructive fraud (Count Nine), fraudulent concealment (Count Ten), conspiracy to commit fraudulent concealment (Count Eleven), intentional infliction of emotional distress (Count Twelve), breach of the covenant of good faith and fair dealing (Count Thirteen), "bad faith" (Count Fourteen), and violation of "various attorney rules of ethics" (Count Fifteen). The defendants moved to dismiss pursuant to Rule 12(b)(6) of the Arizona Rules of Civil Procedure.
¶7 After briefing and oral argument, the superior court dismissed all counts, but granted leave to amend Counts 7 and 13. When Graven failed to do so, the superior court dismissed those claims and entered a signed judgment dismissing all claims with prejudice.
¶8 This appeal followed. We have jurisdiction pursuant to Arizona Revised Statutes (A.R.S.) section 12-2101(A)(1) (Supp. 2013).
DISCUSSION
I. A.R.S. §§ 12-542 And 12-543 Bar Counts 1-6, 8-12, And 14.
A. The Negligence Claims (Counts 1-6 And 8) Accrued In 2007.
¶9 Graven contends that the superior court improperly dismissed twelve of his claims as time-barred. We review dismissals for failure to state a claim de novo. Jeter v. Mayo Clinic Ariz., 211 Ariz. 386, 391, ¶ 18, 121 P.3d 1256, 1261 (App. 2005).
¶10 A court may appropriately dismiss a complaint when the plaintiff "would not be entitled to relief under any interpretation of the facts susceptible of proof." Turley v. Ethington, 213 Ariz. 640, 643, ¶ 6, 146 P.3d 1282, 1285 (App. 2006). Although we accept as true all well-pleaded material allegations of the complaint, any "conclusions of law or unwarranted deductions of fact are not" deemed admitted. Aldabbagh, 162 Ariz. at 417, 783 P.2d at 1209.
¶11 Section 12-542 (2003) provides the applicable limitations period for the negligence claims in Counts 1 through 6 and 8. The period expires "two years after the cause of action accrues." A.R.S. § 12-542(1). A cause of action accrues when one party is able to sue the other, or when the plaintiff knows or, through the exercise of reasonable diligence, should know the facts underlying the cause of action. Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 182 Ariz. 586, 588, 898 P.2d 964, 966 (1995).
¶12 "[W]hen discovery occurs and a cause of action accrues 'are usually and necessarily questions of fact for the jury.'" Walk v. Ring, 202 Ariz. 310, 316, ¶ 23, 44 P.3d 990, 996 (2002) (citation omitted). But when the plaintiff "is aware of the injury and its causative agent (the 'what and who' elements)," judgment is warranted as a matter of law if the failure to go forward is not reasonably justified. Id. Notwithstanding Graven's argument, "[a] plaintiff need not know all the facts underlying a cause of action to trigger accrual. . . . But the plaintiff must at least possess a minimum requisite of knowledge sufficient to identify that a wrong occurred and caused injury." Doe v. Roe, 191 Ariz. 313, 323, ¶ 32, 955 P.2d 951, 961 (1998).
¶13 In his complaint, Graven acknowledged that he discovered the emailed response from Esposito to Donahey a few months after May 7, 2007. As alleged in the complaint, Graven considered Donahey's response "clearly indicative of genuine concern over the allegations in Esposito's April 26 email to Defendant Ohre." "[A]ngrily, and somewhat in shock," Graven approached Sienicki with the Donahey-Esposito e-mails and asked "why-the-hell he [Plaintiff] had not been informed of this Red-Flag communication." (Emphasis omitted.)
¶14 These allegations reflect that Graven knew in 2007 of the acts by the former officer and other former employees, as well as the May 17, 2006 Esposito-Donahey communications. At that point, Graven knew of the damage his former employees had done to ABS and affiliated companies. He also knew that Snell attorneys had the May 17, 2006 emails but had not disclosed those communications or the communications referenced in them.
¶15 Armed with these facts, a reasonable person would realize the need to investigate and to act within the limitations period. Even assuming that Graven did not discover all the emails in 2007, his complaint establishes he had the requisite knowledge needed to trigger the limitations periods, yet did not bring suit until June 13, 2011. Because Graven's causes of action had accrued in 2007, the superior court correctly concluded that his negligence claims were time-barred under A.R.S. § 12542. See Thompson v. Pima County, 226 Ariz. 42, 46-47, ¶¶ 13-14, 243 P.3d 1024, 1028-29 (App. 2010) (upholding dismissal on statute of limitations grounds given the plaintiff's admissions demonstrating knowledge of facts essential to the cause of action); see also Keonjian v. Olcott, 216 Ariz. 563, 565-66, ¶¶ 9-16, 169 P.3d 927, 929-30 (App. 2007) (finding legal malpractice claim barred under A.R.S. § 12-542).
¶16 Graven also argues that the superior court should not have dismissed the claims without first determining whether he had standing to bring them. The superior court correctly held that it had no need to address standing because the negligence claims were time-barred in any event. Like the superior court, we find that the limitations bar applies and obviates the need to address the standing argument.
B. The Fraud Claims (Counts 9-11) Accrued in 2007.
¶17 Graven's complaint also alleges three fraud claims (Counts 9-11). The three-year limitations period in A.R.S. § 12-543(3) (2003) applies to these claims and states that a claim accrues upon "the discovery by the aggrieved party of the facts constituting the fraud or mistake." In light of the complaint's allegations, Graven knew or should have known of the factual basis for these claims in 2007, and consequently they are barred. See Thompson, 226 Ariz. at 46-47, ¶¶ 13-14, 243 P.3d at 1028-29; Tovrea Land & Cattle Co. v. Linsenmeyer, 100 Ariz. 107, 130-31, 412 P.2d 47, 63-64 (1966) (dismissing fraud claims as time-barred).
C. The Emotional Distress And Bad Faith Claims (Counts 12 and 14) Accrued in 2007.
¶18 The superior court also dismissed the emotional distress and bad faith claims (Counts 12 and 14). It correctly concluded that the two-year limitation period in A.R.S. § 12-542(1) governs these claims. Because Graven knew or should have known the basis for these claims in 2007, they are also time-barred. See Thompson, 226 Ariz. at 46-47, ¶¶ 13-14, 243 P.3d at 1028-29; Hansen v. Stoll, 130 Ariz. 454, 460, 636 P.2d 1236, 1242 (App. 1981) (holding emotional distress claims time-barred); see also Taylor v. State Farm Mut. Auto. Ins. Co., 185 Ariz. 174, 177, 913 P.2d 1092, 1095 (1996) (applying A.R.S. § 12-542 to a claim for bad faith); see also Clark v. Airesearch Mfg. Co., 138 Ariz. 240, 244, 673 P.2d 984, 988 (App. 1983) (holding that A.R.S. § 12-542(1) or (3) applies to an interference-with-contract claim based upon an injury to a person or property).
II. Graven Failed To Preserve The Tolling Argument.
¶19 Graven argues that the superior court erroneously failed to recognize that the relevant statutes of limitation were tolled, and a remand is required to allow the court to address this issue. Whether to apply the tolling doctrine is a legal question for the court. McCloud v. State, 217 Ariz. 82, 86, ¶ 9, 170 P.3d 691, 695 (App. 2007) (citation omitted).
¶20 The record reflects that the parties briefed Graven's tolling argument in the superior court. We assume that the superior court considered the issue, and implicitly ruled Graven's claims were not tolled. See Occidental Chem. Co. v. Connor, 124 Ariz. 341, 344, 604 P.2d 605, 608 (1979).
¶21 On appeal, Graven alludes to tolling but fails to develop the basis for the argument as required by the Arizona Rules of Civil Appellate Procedure. See Ariz. R. Civ. App. P. 13(a)(6) (party asserting an argument must provide the "reasons therefor, with citations to the authorities, statutes and parts of the record relied on"). We could, therefore, decline to address the argument. See Polanco v. Indus. Comm'n, 214 Ariz. 489, 49192 n.2, ¶ 6, 154 P.3d 391, 393-94 n.2 (App. 2007). However, the equitable tolling argument, as articulated to the superior court, also fails on the merits.
¶22 The doctrine's elements are: (1) specific promises, threats or inducements that prevented the plaintiff from filing suit, (2) the promises, threats, or representations actually induced the plaintiff to forbear filing suit; (3) the conduct reasonably caused the plaintiff to forbear filing a timely action; and (4) the plaintiff filed suit within a reasonable time after the estoppel-inducing conduct ended. Nolde v. Frankie, 192 Ariz. 276, 280, ¶¶ 16-19, 964 P.2d 477, 481 (1998) (citations omitted). On appeal, Graven identifies no specific promise, threat, or representation by the defendants that prevented him from filing a timely suit.
III. The Superior Court Was Not Required To Treat The Defendants' Rule 12(b)(6) Motion As A Motion For Summary Judgment.
¶23 Graven argues that the superior court was required to treat the defendants' Rule 12(b)(6) motion as a motion for summary judgment because it considered and relied on extraneous material. According to Rule 12(b), if "matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Ariz. R. Civ. P. 12(b).
¶24 The rationale is that "a plaintiff must be given an opportunity to respond when a motion to dismiss for failure to state a claim includes material extraneous to the complaint." Strategic Dev. & Constr., Inc. v. 7th & Roosevelt Partners, L.L.C., 224 Ariz. 60, 64, ¶ 14, 226 P.3d 1046, 1050 (App. 2010). The defendants attached no extraneous matters to their motion to dismiss. Nevertheless, Graven seizes on defendants' argument that Snell's engagement letters did not establish an attorney-client relationship between Snell and Graven. The engagement letters, however, were not attached to the motion to dismiss, and the trial court declined to rule on the argument, stating only that it "goes beyond the motion to dismiss and asks that the Court consider facts beyond the motion to dismiss." Nothing in this ruling or the motion to dismiss required conversion under Rule 12(b). Indeed, the superior court's rejection of the defendants' alternate argument precluded any potential for conversion.
Graven has waived any other argument concerning Counts 7 and 13 by failing to raise it in his Opening Brief. See State ex rel. Montgomery v. Mathis, 231 Ariz. 103, 124, ¶ 82, 290 P.3d 1226, 1247 (App. 2012); see generally A.R.C.A.P. 13(a)(5, 6).
¶25 Finally, Graven argues that the superior court should have converted the motion to dismiss because he had filed a statement of controverting facts untethered to a motion for summary judgment. Because nothing in Graven's filings cured the deficiencies in his complaint, the superior court properly granted relief under Rule 12(b)(6). See id. (holding that Rule 56 treatment not required when the court does not rely upon the extraneous material).
IV. Graven Cannot State A Claim Based Upon Violations Of The Legal Ethics Rules (Count 15).
¶26 Finally, Graven challenges the superior court's dismissal of Count 15, which alleges broadly that the defendants had violated "various [unspecified] Attorney Rules of Ethics." The court held, as a matter of law, that "the Rules of Professional Conduct cannot form the basis for civil liability." We agree.
¶27 Paragraph 20 of the preamble to the Arizona Rules of Professional Conduct provides in relevant part:
The Rules are designed to provide guidance to lawyers and to provide a structure for regulating conduct through disciplinary agencies. [The Rules] are not designed to be a basis for civil liability. Furthermore, the
purpose of the Rules can be subverted when they are invoked by opposing parties as procedural weapons. . . . Nevertheless, since the rules do establish standards of conduct by lawyers, a lawyer's violation of a Rule may be evidence of breach of the applicable standard of conduct.
¶28 According to Graven, the Ethics 2000 Commission changed this approach with respect to the ABA Model Rules. To the contrary, that body reiterated that "[v]iolation of a Rule should not itself give rise to a cause of action against a lawyer nor should it create any presumption in such a case that a legal duty has been breached." Ethics 2000 Comm'n, Report on Model Rules of Professional Conduct at preamble, ¶ 20 (emphasis in original). "Nevertheless, since the Rules do establish standards of conduct by lawyers, a lawyer's violation of a Rule may be evidence of breach of the applicable standard of conduct." Id.
¶29 Graven also invokes two Arizona Supreme Court cases, but his reliance upon those authorities is misplaced. In Stanley v. McCarver, the court emphasized that the ethical rules supply no basis for civil liability or duty. 208 Ariz. 219, 224 n.6, ¶ 17, 92 P.3d 849, 854 n.6 (2004). Similarly, the court based a duty to disclose on an Arizona Department of Real Estate regulation, not an ethical rule, in Lombardo v. Albu, 199 Ariz. 97, 100-01, ¶ 15, 14 P.3d 288, 291-92 (2000).
Graven repeatedly complains that the superior court demonstrated "Extreme Prejudice" against him. A judge "is presumed to be free of bias and prejudice." State v. Ramsey, 211 Ariz. 529, 541, ¶ 38, 124 P.3d 756, 768 (App. 2005). We find nothing in the record that rebuts that presumption.
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CONCLUSION
¶30 We affirm the superior court's judgment.