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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Williams v. Williams (01/20/2006) sp-5973
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| CHRISTINE M. WILLIAMS, | ) |
| ) Supreme Court No. S- 11499 | |
| Appellant, | ) |
| ) Superior Court No. | |
| v. | ) 3VA-03-00014 CI |
| ) | |
| JAMES MICHAEL WILLIAMS | ) O P I N I O N |
| and CONNIE BALLOW, f/k/a | ) |
| CONNIE HARRISON, | ) [No. 5973 - January 20, 2006] |
| ) | |
| Appellees. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Valdez,
Joel H. Bolger, Judge.
Appearances: Michael W. Flanigan, Walther &
Flanigan, Anchorage, for Appellant. Randall
E. Farleigh, Choquette & Farleigh, LLC,
Anchorage, for Appellees.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
FABE, Justice.
I. INTRODUCTION
Seventeen years after her fathers death, one of four
siblings challenges an inter vivos transfer of stock in the
family business from her father to two of her siblings. This
transfer was made shortly before her fathers death and
effectively removed the stock from his estate. The case was
dismissed on statute of limitations grounds. The daughter
Christina appeals, arguing that (1) her suit was timely because
the statutes of limitations for her claims should have been
tolled under the doctrine of equitable estoppel; and (2) her suit
was timely under the statutory fraud discovery provision of AS
13.06.030. We hold that the suit was untimely and affirm the
judgment of the superior court.
II. FACTS AND PROCEEDINGS
James Victor Pete Williams married Patricia Williams
and had four children: Connie, James Michael Mike, Haze, and
Christine. Pete executed a will in 1970 leaving his estate to
Patricia, and in her absence to his four children in equal
shares. In 1971 Pete and Patricia moved to Valdez. A few years
later Pete built and began operating the Totem Inn, a hotel and
restaurant in Valdez. Pete and Patricia divorced in 1978.
Following the divorce, Mike and Connie remained in Alaska while
Haze and Christine moved out of state with Patricia. At the time
of the divorce, Pete held all the shares of stock issued in the
Totem Inn.
In 1982 Pete discussed with his attorney transferring
his stock in the Totem Inn to Mike and Connie, but did not do so.
In 1983 he discussed gifting $10,000 worth of stock to each of
his four children in equal shares. Pete and Connie (as corporate
secretary) signed four stock certificates in December 1983 with
the names of each of the four children but without the stock
share amounts. The shares were never transferred. By 1984 Pete
was living in Florida and the day-to-day business of the Totem
Inn was conducted by Mike and Connie.
In 1984 and 1985 Pete discussed using an annuity
agreement to transfer his Totem Inn stock free of gift tax and to
remove the corporation from the estate. The parties dispute
whether Pete made a final decision on how to allocate the stock,
but the superior court found that Pete eventually decided to
transfer all of his shares in Totem Inn, Inc. to Mike and Connie
in return for a monthly annuity payment based on his life
expectancy in order to avoid federal estate taxes. The superior
court further found that Pete asked his attorney to prepare an
annuity agreement and a new will, and originally intended to fly
to Anchorage to sign the documents, but he did not take the trip
because he was diagnosed with cancer in early January 1986.
On January 18, 1986, Connie traveled to Florida to
visit her father and brought with her the stock certificate and
annuity agreement. On January 20 Pete signed the transfer form
on the back of the stock certificate. The form was otherwise
blank and did not include the names of the transferees. The
superior court found that Pete also signed the annuity agreement
on January 20, despite Christines allegation that the signature
was forged.
Pete died on February 2, 1986. Mike, Haze, and
Christine arrived in Florida after Petes death. On the advice of
one of the family attorneys, Mike signed the annuity agreement
even though Pete was already dead. Connie later returned the
stock certificate and the signed annuity agreement to the
attorney, who transferred Petes shares to Mike and Connie using
two of the four stock certificates that were created and signed
in 1983.
While in Florida, soon after Petes death, Christine
asked Connie if Pete had a will. Christine alleges that Connie
told her that Pete had not made a will; Connie maintains that she
told her sister it was an inappropriate time to discuss it, and
told her that she did not know if there was a will. Christine
further alleges that Mike and Connie never told her about the
annuity agreement or the stock transfer. Connie told Christine
that it was Petes dying wish that all of his children work at the
Totem Inn and get an equal share, and promised that Christine
would receive an ownership interest in the Totem Inn if she
worked there.
After Petes death, Haze worked at the Totem Inn for
several years and was given a one-third share of the Inn.1
Christine was seventeen and still in high school at the time of
her fathers death in 1986. She returned to Valdez to work at the
Totem Inn for brief periods in 1987 and 1989. For the next nine
years she pursued intermittent periods of higher education and
other employment opportunities.
Mike hired a Florida attorney several years after Petes
death to probate the estate, which included the property on which
Pete had been living when he died. The inter vivos stock
transfer was not included as part of the estate. Mike was
appointed personal representative of Petes estate in 1992.
Christine alleges that she did not receive a copy of Petes will
during the Florida probate proceedings. But the probate attorney
testified that it was his normal practice to mail copies of the
will to the heirs. In 1995 Christine executed a document
acknowledging her receipt of one-fourth of the entire estate and
consenting to discharge Mike as personal representative.
In 1998 Christine returned to Valdez to work at the
Totem Inn, but was told by her siblings that it was now too late
for her to expect to receive shares of the Inn. Christine worked
intermittently as an employee of the Totem Inn from 1998 to 2001.
In March 2003 Christine filed suit against Mike and
Connie for fraud. She later amended her complaint, alleging,
inter alia, undue influence, false and fraudulent misstatements
to Pete, lack of mental competence, lack of consideration, false
and fraudulent misrepresentations, fraudulent concealment, and
breach of fiduciary duty. In August 2003 Mike and Connie moved
for summary judgment on the basis of the statute of limitations.
The superior court denied this motion in January 2004, concluding
that an evidentiary hearing was necessary to resolve the factual
issues involved in the application of the statutes of
limitations.
In March 2004, after a two-day evidentiary hearing, the
superior court granted summary judgment, concluding that
Christine did not commence suit within the applicable statutes of
limitations. The court issued findings of fact and conclusions
of law, as well as a final judgment for the defendants dismissing
the complaint with prejudice in April 2004. Christine appeals.
III. DISCUSSION
Christines complaint includes claims of undue
influence, lack of mental competence, lack of consideration,
fraudulent misrepresentations, and breach of fiduciary duty.
Christine argues that the superior courts finding that her
lawsuit was untimely was erroneous because (1) the statutes of
limitations for her claims should have been tolled under the
doctrine of equitable estoppel; and (2) her suit was timely under
the statutory fraud discovery provision of AS 13.06.030.2
The parties do not agree on which statutes of
limitations apply. Christine argues that a variety of
limitations statutes apply, ranging from two to six years. Mike
and Connie argue that the gravamen of Christines complaint is an
action to recover fraudulently obtained personal property, namely
her share in the Totem Inn, and therefore that the two-year tort
statute applicable to claims accruing after August 7, 1997
applies.3 But the parties disagreement over the applicable
statutes of limitations does not affect the outcome of this case.
Even if the equitable estoppel doctrine applies, Christine should
have discovered the grounds for her claim more than six years
before she filed suit.
A. Standard of Review
In this case, the superior court held an evidentiary
hearing because resolution of the statute of limitations issues
was dependent on factual questions.4 We review findings of fact
under the clearly erroneous standard.5 Questions of law are
reviewed de novo.6
B. The Trial Courts Evidentiary Hearing
As we concluded in Johns Heating Service v. Lamb, when
the date on which the statute of limitations begins to run
presents a factual question, it ordinarily should not be resolved
as a matter of law.7 In Johns, we noted that this question
should usually be resolved at a preliminary hearing in advance of
trial.8 The superior court in the present case properly held
such a hearing upon determining that genuine issues of material
fact were raised on the question whether the various statutes of
limitations had run. But we also recognize that addressing the
substantive merits of a case in such a preliminary evidentiary
hearing can create considerable tension with the procedural
rights to which parties are entitled, including the right to a
jury trial.9 In this case, the superior court found it necessary
to reach the underlying question of fraud in order to resolve
Christines statutory tolling argument. But the superior court
also reached a number of alternative conclusions on the various
claims, determining that even if the facts were as alleged by
Christine, the statute of limitations would still have run well
prior to the filing of her lawsuit. Because Christine did not
object to the procedure used by the superior court, we need not
address the question whether the superior court properly held an
evidentiary hearing reaching the merits of the underlying claim
here.
C. Equitable Estoppel
Christine argues that her delay in filing suit was
caused by her reliance on misrepresentations by Mike and Connie
about the existence and content of their fathers will, the
existence of and circumstances surrounding the stock transfer,
and their allegedly false statement that, in keeping with their
fathers testamentary intent, Christine would be given an equal
share in the Totem Inn if she worked at the Inn for an
unspecified time. Christine argues that her suit was timely under
the doctrine of equitable estoppel.
A party who fraudulently conceals from a plaintiff the
existence of a cause of action may be estopped to plead the
statute of limitation if the plaintiffs delay in bringing suit
was occasioned by reliance on the false or fraudulent
representation.10 To establish equitable estoppel, the plaintiff
must show (1) fraudulent conduct, which may take the form of
either an affirmative misrepresentation or a failure to disclose
facts where there is a duty to do so; (2) justifiable reliance;
and (3) damage.11 Plaintiffs cannot invoke estoppel unless [they
have] exercised due diligence in attempting to uncover the
concealed facts.12 In Palmer, this court stated:
In the context of alleged fraudulent
concealment, whether in the form of an action
for deceit or in the context of a claim for
equitable estoppel, the due diligence
requirement involves a determination of when
the plaintiff discovered or reasonably should
have discovered the fact that evidence of a
potential cause of action had been
fraudulently concealed. . . . [A] party
should be charged with knowledge of the
fraudulent misrepresentation or concealment
only when it would be utterly unreasonable
for the party not to be aware of the
deception.[13]
1. Concealment of the 1970 will
Christines estoppel claim is based on three alleged
misrepresentations and acts of concealment. First, she alleges
that Mike and Connie concealed the existence and content of the
1970 will. Christine points in particular to a conversation she
had with Connie soon after their fathers death that led Christine
to believe that her father had not made a will. Christines
argument appears to be that if she had known that the will
provided for each sibling to be treated equally,14 she would not
have accepted Mike and Connies ownership of the Totem Inn and the
requirement that she work at the Inn to receive a share. The
superior court found that neither Mike nor Connie concealed or
misrepresented Petes 1970 will. The superior court also found
that [t]he representation which Christine alleges was made by
Connie to her on the day of her fathers death, to the effect that
Pete left no will, was not made; rather, Connie told her that it
was not the time to make such an inquiry.
There is substantial evidence in the record to support
these findings. There was conflicting testimony about the
substance of the conversation between Connie and Christine after
their fathers death. The superior court did not clearly err in
making a credibility determination by accepting Connies assertion
that she was unaware of the will at the time of the conversation
and that she did not tell Christine definitively that there was
no will. Christine testified that after that conversation she
did not ask Mike or Connie about a will. Christine alleges that
she did not receive a copy of the will during the Florida probate
proceedings and seems to suggest that this constitutes
concealment by Mike because as personal representative of the
estate he had a duty to give her a copy. But the estate attorney
stated in his deposition that it was his normal practice to mail
copies of the will to the heirs and that although he did not have
a copy of the correspondence and was not required under Florida
law to file proof of this mailing he was almost certain that I
mailed it to the four [siblings]. There is no evidence in the
record suggesting that Mike concealed the contents of the will
from Christine during the probate proceedings.
Even assuming that Mike and Connie concealed or
misrepresented the will, Christine should have known in 1995 when
she received one-fourth of the estate through the Florida probate
process and executed a consent to discharge Mike as personal
representative of the estate that the will existed, that under
the probate proceedings she received a share equal to her
siblings, and that the Totem Inn was not a part of the probated
estate. For this reason, the superior court did not err in
holding that it was unreasonable for Christine to delay making an
inquiry or filing suit challenging the ownership of the Totem Inn
based on the will after she had concluded her participation in
the probate process. If Christine should have been aware of any
concealment or misrepresentation concerning the existence or
content of the will in 1995, her suit filed in March 2003 would
be untimely even if, as she claims, a six-year statute of
limitations is applicable.
2. Concealment of the stock transfer
Christine also argues that equitable estoppel applies
because Mike and Connie concealed the stock transfer that gave
them ownership of the Totem Inn and the details of that transfer.
The superior court held that Mike had no duty as personal
representative of the estate to disclose the stock transfer.
Even assuming that he did have such a duty, Christine should have
known by 1995 that she had received an equal share of the
probated estate and that the Totem Inn was not included in that
estate. At that point Christine should have inquired about the
legal basis for Mike and Connies ownership of the Totem Inn.
Christine did not exercise the due diligence required to maintain
an equitable estoppel claim based on the alleged concealment of
the stock transfer.15
3. Misrepresentations about Christines share of the
Totem Inn
Finally, Christine argues that equitable estoppel
applies because of alleged misrepresentations made by Mike and
Connie that she would be given an equal share of the Totem Inn if
she worked for an unspecified time in the business. The superior
court found that the statements by Mike and Connie that they
would give Christine an equal share of the Totem Inn if she
worked for a substantial period of time were true and therefore
not misrepresentations. This finding is supported by the record.
Christine acknowledges that she worked at the Totem Inn
intermittently, with no continuous period of employment of more
than eight months. Mike and Connie did give Haze, the fourth
sibling, an equal share of the Totem Inn after he had worked
there for several years. And from her own testimony, it is clear
that Christine understood that the promise that she would receive
shares if she worked at the Inn represented Mike and Connies
attempt to implement their fathers last wishes as orally
communicated to them, not a legal arrangement arising from a will
or other document.
Christine also alleges that Mike and Connie did not
inform her that there was a time limit on when she could work at
the Totem Inn and redeem her shares, and she claims to have been
under the impression that this option would always be open to
her. To the extent that Christines claim can be viewed as a
breach of contract action based on the oral promise, that claim
is time-barred. She was informed in 1998 by Mike, Connie, and
Haze that it was too late for her to expect to receive shares if
she worked at the Inn. The statute of limitations for contract
actions accruing on or after August 7, 1997 is three years.16 Any
contract claim in Christines 2003 complaint based on Mike and
Connies breach of their promise in 1998 is untimely.
We therefore hold that the superior court did not err
in concluding that equitable estoppel does not apply to toll the
statute of limitations for Christines claims.
D. Statutory Fraud Tolling Provision
Christine also argues that her suit is timely under the
statutory fraud tolling provision in AS 13.06.030. This statute
provides that where fraud has been perpetrated in connection with
a probate proceeding, any claim against the perpetrator of the
fraud must be brought within two years after the discovery of the
fraud.17 Unlike the doctrine of equitable estoppel, AS 13.06.030
does not include a due diligence requirement. Christine argues
that the inter vivos stock transfer was carried out illegally,
pointing to the unusual circumstances surrounding the transfer:
the transfer occurred just days before Petes death and in the
presence of Connie, one of the beneficiaries of the transfer; the
back of the stock certificate that Pete signed did not include
the names of the beneficiaries, which were later added by his
attorneys; and Mike did not sign the annuity agreement until
after Petes death. She argues that not including the Totem Inn
stock as part of the probated estate constituted fraud in
connection with the probate proceeding. She contends that she
did not learn of the alleged fraud until after she filed the
complaint in this case, and that her complaint was therefore
timely under AS 13.06.030.
The superior courts order appears to have resolved the
factual questions regarding whether the transfer was fraudulent
in favor of the defendants.18 The court found that Pete decided
to transfer all his shares in the Totem Inn to Mike and Connie in
return for a monthly annuity payment from them, which suggests
that even though Pete signed blank forms he was not defrauded
since they were later filled out according to his instructions.
The superior court also found that Mike and Connie did not
conceal the annuity agreement that transferred the Totem Inn to
them and stated that it [found] no fraud, misrepresentation, or
inadequate disclosure related to settlement of Petes Florida
estate by Mike. Christine did not provide evidence to challenge
that finding as clearly erroneous.
Furthermore, Pete transferred the stock legally before
his death. Since the superior court found that the transfer was
consistent with Petes wishes and his prior instructions to his
attorneys, Pete was not defrauded. And under Alaska law,
endorsing a stock certificate in blank and delivering it to the
transferee is sufficient to effect the transfer. Alaska Statute
45.01.201 defines a purchaser to include a person who takes
through a sale, gift, or other voluntary transaction. Alaska
Statute 45.08.304 provides that an endorsement may be made in
blank, and that such an endorsement constitutes a transfer upon
delivery. Under AS 45.08.301, delivery to a purchaser occurs
when the purchaser acquires possession of the security
certificate. Under AS 45.08.206, [if] a security certificate
contains the signatures necessary to its issue or transfer but is
incomplete in another respect . . . a person may complete it by
filling in the blanks as authorized.19 Thus, by endorsing the
certificate in blank and giving it to Connie, Pete effectively
transferred the stock.20
Christine points out that properly executed stock
transfers made as a result of fraud or undue influence can be
found invalid. But here the superior court found that the stock
transfer was consistent with Petes wishes; the potential fraud at
issue here involves the manner in which the transfer was
accomplished, not whether Pete was fraudulently induced to make
the transfer. If Petes endorsement on the stock certificate was
sufficient to transfer the stock, that stock was properly
excluded from the estate probated in Florida. For that reason,
the Totem Inn was not part of Petes estate at the time of his
death, and no fraud was committed in connection with the estate
as required for tolling under AS 13.06.030. We therefore hold
that the tolling exception in AS 13.06.030 does not apply to
Christines claims.
IV. CONCLUSION
For the reasons set forth above, we AFFIRM the judgment
of the superior court.
_______________________________
1 Haze subsequently sold his shares back to Mike and
Connie.
2 Christine also takes issue with a number of the courts
factual findings.
3 AS 09.10.070(a)(3). Actions to recover personal
property that accrued before the 1997 amendments are subject to a
six-year statute of limitations. Id.
4 See Johns Heating Serv. v. Lamb, 46 P.3d 1024, 1033
n.28 (Alaska 2002) (noting that the judge acts as factfinder in
determining the applicability of statute of limitations);
Pedersen v. Zielski, 822 P.2d 903, 907 n.4, 908 (Alaska 1991).
5 See Johns Heating Serv., 46 P.3d at 1033.
6 Lawson v. Lawson, 108 P.3d 883, 885 (Alaska 2005).
7 46 P.3d at 1031.
8 Id. at 1033 n.28.
9 See Alaska Const. art. I, 16 (In civil cases where the
amount in controversy exceeds two hundred fifty dollars, the
right of trial by a jury of twelve is preserved to the same
extent as it existed at common law.).
10 Palmer v. Borg-Warner Corp., 838 P.2d 1243, 1247
(Alaska 1992).
11 Waage v. Cutter Biological Div. of Miles Labs., Inc.,
926 P.2d 1145, 1149 n.7 (Alaska 1996).
12 Id. at 1151 (quoting Palmer, 838 P.2d at 1250).
13 Palmer, 838 P.2d at 1251.
14 The will, which was made before Petes divorce, left
everything to his wife, and secondarily to his children in equal
shares.
15 See Waage, 926 P.2d at 1149 (Once a plaintiff discovers
or reasonably should discover that evidence has been fraudulently
concealed, [the plaintiff] risks losing the protection of
equitable estoppel unless [the plaintiff] takes timely action.).
16 AS 09.10.053; ch. 26, 4, 55, SLA 1997.
17 AS 13.06.030 provides:
Whenever fraud has been perpetrated in
connection with any proceeding or in any
statement filed under AS 13.06 AS 13.36 or
if fraud is used to avoid or circumvent the
provisions or purposes of AS 13.06 AS 13.36,
any person injured thereby may obtain
appropriate relief against the perpetrator of
the fraud or restitution from any person
(other than a bona fide purchaser)
benefitting from the fraud, whether innocent
or not. Any proceeding must be commenced
within two years after the discovery of the
fraud, but no proceeding may be brought
against one not a perpetrator of the fraud
later than five years after the time of the
commission of the fraud. This section has no
bearing on remedies relating to fraud
practiced on a decedent during the decedents
lifetime that affects the succession of the
decedents estate.
18 As noted earlier, the superior court effectively
resolved the case on the merits by deciding this issue, a result
that creates considerable tension with Christines right to a jury
trial. But, as we have observed, we need not address this issue,
as Christine does not appear to have raised any objection below.
See Johns Heating Serv., 46 P.3d at 1036 n.53 (By consenting to
certain procedures or by failing to object to others, a party may
waive those rights which are arguably encompassed within due
process guarantees.) (citation omitted).
19 The statutes discussed here are the current statutes.
The statutes were somewhat different at the time of the transfer,
but include the same basic provisions that an endorsement may be
made in blank, that delivery occurs when the purchaser acquires
possession, and that an incomplete certificate may be filled in
as authorized. AS 45.08.206, .308, .313 (1986).
20 Christine argues that the court clearly erred in
finding that Pete signed the annuity agreement because she
presented testimony from a handwriting expert questioning the
authenticity of the signature. But there was testimony
supporting the courts finding that Pete signed the annuity
agreement and there was therefore no clear error.
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