Crook v. Anderson , 115 Ariz. 402 ( 1977 )

EUBANK, Judge,

dissenting.

I must dissent from the majority because the dismissal occurred too early in the pleading stage for the trial court to determine the issue raised.

The issue raised is whether the trial court properly granted appellees’ motion to dismiss appellant’s complaint on the basis of appellees’ defense of statute of limitations. For the reasons stated, it is my opinion that the court erred and the order of dismissal should be reversed.

For the purpose of reviewing the dismissal¹ of a complaint, pursuant to Rule 12(b), Rules of Civil Procedure, 16 A.R.S., all allegations of the complaint must be taken as true, Sierra Madre Dev., Inc. v. Via Entrada Townehouses Ass'n, 20 Ariz.App. 550, 514 P.2d 503 (1973), except the prayer, which is not considered at all. See Citizens’ Committee, Recall of Jack Williams v. Marston, 109 Ariz. 188, 507 P.2d 113 (1973).

Appellant’s complaint, taken in the light most favorable to plaintiff, Savard v. Selby, 19 Ariz.App. 514, 508 P.2d 773 (1973), shows that on June 7, 1968, the appellant and the appellees, on behalf of Globe Insurance and as its president, entered into an “Agency Agreement” whereby Globe was granted full power as managing agent for Arizona to sell and bind the appellant’s line of insurance. All premiums received by Globe from sales of insurance were to be held by Globe in a fiduciary capacity as trustee in a separate trust account until delivered to the appellant. On June 4, 1971, the appellant was placed in permanent receivership in Texas. Thereafter demand was made for the trust funds and when they were not delivered to the receiver, this suit was filed on February 11, 1975. In Count Two, Paragraph V, the appellees are charged in the complaint as follows:

The failure of the above Defendants to retain said premium funds in a trust account and to remit the same to Trans Plains, was a breach of fiduciary duty, and a willful and fraudulent conversion of funds belonging to the said Trans Plains Casualty Company. As a result thereof, punitive damages should be assessed against the Defendants.

On March 19, 1975, appellees answered the complaint admitting the agreement but denying the indebtedness. In addition, they raised several affirmative defenses, among which were the statutes of limitations, A.R.S. §§ 12-542, 12-543. Appellees then filed their motion to dismiss the complaint on May 15, 1975, addressed entirely to the statute of limitations issue: that either the two-year statute relating to conversion (A.R.S. § 12-542) or the three-year statute for fraud (A.R.S. § 12-543) applied, which in either case barred the action. In opposition appellant contended that since an express trust was involved no statute of limitations applied, but if the court found as a matter of law that one statute was applicable, A.R.S. § 12-550, the four-year statute, would be the statute for a breach of the trust and a breach of appellees’ fiduciary duties. No mention was made by either side to the applicability of A.R.S. § 14-7307.

Statute of Limitations may be raised by a motion to dismiss under Rule 12(b), Rules of Civil Procedure, 16 A.R.S., and granted where it appears conclusively from the face of the complaint that the claim is barred. Ross v. Ross, 96 Ariz. 249, 393 P.2d 933 (1964); Engle Brothers, Inc. v. Superior Court, 23 Ariz.App. 406, 533 P.2d 714 (1975); 2A Moore’s Federal Practice, ¶ 12.10, p. 2313.

In the case at bar, an express trust relationship is alleged to exist between the parties. The question of fact not alleged in the complaint or other pleadings is: when would the applicable statute of limitations, if any, begin to run? This fact is not “conclusively” alleged in the complaint nor raised by affidavit in the motion to dismiss. The June 4, 1971 date alleged in the complaint actually relates to the receivership creation date and does not relate to a breach of trust date. This is important because in a voluntary trust the cause of action does not arise until the trustee repudiates the trust, Gabitzch v. Cole, 95 Ariz. 15, 386 P.2d 23 (1963); in an express trust the cause of action accrues when the beneficiary has notice of the repudiation by the trustee or where a reasonable person under the circumstances would have been put on notice. Jack Waite Mining Co. v. Charles C. West, 55 Ariz. 301, 101 P.2d 202 (1940); in the conversion of a guardianship fund, the statute would run from the time the beneficiary “knew or by the exercise of reasonable diligence should have known of the fiduciary conversion,” Walker v. Walker, 18 Ariz.App. 113, 500 P.2d 898 (1972); or where there is fraudulent concealment by one occupying a position of trust, the statute of limitations is tolled until the other party discovers the concealment or is put on reasonable notice of the breach of trust, Taylor v. Betts, 59 Ariz. 172, 124 P.2d 764 (1942); or an action must be filed by a beneficiary within six months after a beneficiary has received a final account fully disclosing the matter and showing termination of the Trust — A.R.S. § 14-7303. The complaint does not contain a notice allegation, and consequently it is impossible to tell when A.R.S. §§ 12-542, 12-543, or 14-7307, if applicable, would begin to run against the appellant.

This issue is a question of fact which must be proved by appellee as an affirmative defense. Where issues of fact exist it is error to grant a motion to dismiss. Allison v. State, 101 Ariz. 418, 420 P.2d 289 (1966); 2A Moore’s Federal Practice, supra.

Taking all the allegations of the complaint as true for the purpose of determining whether the complaint was properly dismissed, it is my opinion that the dismissal was premature since the exact legal relationship existing between the parties upon which one of the statutes of limitations operated was not established and remains a fact and law question.

1 . I treat this matter as a dismissal because the trial judge treated it as a dismissal. The majority treats it as a summary judgment. The rules for review are essentially the same in either case.