GOBLE et al v. ACC et al

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NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24 IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE RONALD GOBLE, individually and as Trustee of THE RONALD L. GOBLE and KATHLEEN K. GOBLE ESTATE TRUST; WALLACE BUTTERWORTH, a single man; MARK and SUSAN MELKOWSKI, husband and wife; WILLIAM and ROBIN L. BERGH, husband and wife; GARY and ROBERTA CHRISTIAN, husband and wife; ROGER and KAY LANCETTE, husband and wife; and HYLAND STOKES and DIANE WHELEN, husband and wife, ) ) ) ) ) ) ) ) ) ) ) ) ) ) Plaintiffs/Appellants, ) ) v. ) ) ARIZONA CORPORATION COMMISSION, ) an Arizona governmental agency; ) PAMELA T. JOHNSEN, Commission ) Senior Counsel, in her personal ) capacity, and JOHN DOE JOHNSEN, ) her husband; KRISTIN K. MAYES, ) Corporation Commissioner, in her ) official capacity; JEFFREY ) HATCH-MILLER, former Corporation ) Commissioner, in his personal ) capacity, and ANITA HATCH-MILLER, ) his wife; WILLIAM A. MUNDELL, ) former Corporation Commissioner, ) in his personal capacity, ) BARBARA R. MUNDELL, his wife; ) MARC SPITZER, former Corporation ) Commissioner, in his personal ) capacity, and JACQUELINE RAUB ) SPITZER, his wife; LOWELL S. ) DIVISION ONE FILED: 12/18/2012 RUTH A. WILLINGHAM, CLERK BY: mjt 1 CA-CV 11-0565 DEPARTMENT D MEMORANDUM DECISION (Not for Publication (Rule 28, Arizona Rules of Civil Appellate Procedure) GLEASON, former Corporation Commissioner, in his personal capacity, and JANE DOE GLEASON, his wife; BOB STUMP, Corporation Commissioner, in his official and personal capacities; PAUL NEWMAN, Corporation Commissioner, in his official and personal capacities, and JANE DOE NEWMAN, his wife; GARY PIERCE, Corporation Commissioner, in his official and personal capacities, and SHERRY PIERCE, his wife; SANDRA D. KENNEDY, Corporation Commissioner, in her official and personal capacities, and JOHN DOE KENNEDY, her husband, ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Defendants/Appellees. ) __________________________________) Appeal from the Superior Court in Maricopa County Cause No. CV2010-052110 The Honorable Michael R. McVey AFFIRMED Kenneth W. Schutt, Jr., P.L.C. By Kenneth W. Schutt, Jr. Attorneys for Plaintiffs/Appellants Scottsdale Thomas C. Horne, Arizona Attorney General By Mark Bookholder, Assistant Attorney General Attorneys for Defendants/Appellees Phoenix K E S S L E R, Judge ¶1 The Plaintiffs/Appellants ( Plaintiffs ) appeal the dismissal of their 42 U.S.C. § 1983 claim against the Arizona 2 Corporation Commission and the other Defendants/Appellees (collectively ACC ) as barred by the statute of limitations. For the following reasons, we affirm. FACTUAL AND PROCEDURAL HISTORY ¶2 The Plaintiffs sold investments based on their legal counsel s opinion securities. securities The and that certain business ACC determined that entered Cease Plaintiffs and others. Consent Orders restitution. with The the Desist were investments Orders against not were the In 2001, the Plaintiffs entered into the ACC and offerings ACC filed in the which they Consent agreed Orders in to pay superior court, reducing the Orders to a transcript judgment in 2002. However, the ACC failed to timely renew that judgment. ¶3 The settlement. Plaintiffs sued their attorneys and obtained a As discussed in more detail below, in 2006, the Plaintiffs entered into an Amended Consent Order with the ACC to pay the settlement amount reducing their liability. to the ACC and the State, thus Upon payment of slightly more than $2 million from the settlement to the State and the ACC, the ACC agreed to eliminate the Plaintiffs liabilities connected with two of the offerings, but the Amended Consent Order expressly confirmed the Plaintiffs continuing liability in connection with a third offering (the Hotel Connect offering) under the 3 original Orders. The Amended Consent Order expressly provided that upon payment of the settlement, the Amended Order would replace and supersede the original Consent Orders.1 later, in 2008, the ACC filed the Amended Consent Two years Order in superior court to reduce it to a transcript judgment. ¶4 Two years after that, in 2010, the Plaintiffs filed their complaint against the ACC. In their complaint, the Plaintiffs alleged an action under 42 U.S.C. § 1983, claiming that the ACC, acting as part of a conspiracy, denied Plaintiffs due process rights by assessing excessive restitution from them and from community property for the Plaintiff-husbands separate 1 The Amended Consent Order stated the following: This Amended Order is intended to, and shall operate to, supercede [sic] and amend [Plaintiffs ] liabilities to the State of Arizona previously set forth in Decisions and Orders in Docket Numbers S-03396A-010000, S-03441A-01-0000 and S-03444A-01-0000, wherein these [Plaintiffs] Consented to Entry of Orders Numbered 64185, 64203, 64202, 64040, 64184, 64006 and 63851 . . . The Commission and [Plaintiffs] agree that the Commission s jurisdiction, if any, over [Plaintiffs ] marital communities is governed by the law in effect as of the dates of the original Orders. The Amended Order also provided that if the $2,177,500 is not received directly from the [settlement], this Amended Order shall be of no force or effect and [Plaintiffs] shall remain bound by the original Orders. 4 debt; that the ACC violated the Eighth Amendment by refusing to limit the fines to the amount of the Plaintiffs commission; and that the ACC conspired with intent to deny Plaintiffs equal protection of laws and their rights, privileges, and immunities as guaranteed by the Fifth, Eighth and Fourteenth Amendments. 2 ¶5 the The ACC moved to dismiss the § 1983 claim as barred by statute of limitations. dismissed the complaint. The trial court agreed and The Plaintiffs filed a motion for new trial and an amended motion for new trial. The trial court denied The the appealed. amended motion We jurisdiction have for new trial. pursuant to Plaintiffs Arizona Revised Statutes ( A.R.S. ) § 12-2101(A)(1) and (A)(5)(a) (Supp. 2012). 2 Specifically, Plaintiffs complain that: (1) the ACC ordered the Plaintiffs to pay restitution in an amount which far exceeded the commissions they earned in connection with the illegal sales of securities; (2) the ACC failed to consider the Plaintiffs financial ability to pay the restitution demanded when it set the amount of restitution; (3) the ACC should have released the Plaintiffs from liability for the Hotel Connect offering when they paid the settlement because the amount paid exceeded the gross amount the Plaintiffs received from the sales for all three business offerings, but the ACC refused to release them with respect to the Hotel Connect offering; (4) the ACC s transcript judgment in connection with the Amended Consent Order was only against the Plaintiffs and not their spouses; (5) the wives of the Plaintiffs did not consent to the payment of the settlement to the ACC under the terms of the Amended Consent Order which was improper because the settlement was a community asset used to pay the separate debts of the Plaintiff-husbands; and (6) that in 2010 the Plaintiffs demanded the return of these community assets to no avail. 5 DISCUSSION ¶6 We review a dismissal of a complaint under Arizona Rule of Civil Procedure 12(b)(6) de novo. Coleman v. City of Mesa, 230 Ariz. 352, 355, ¶ 7, 284 P.3d 863, 866 (2012). In reviewing the dismissal of a complaint for failure to state a claim pursuant to Rule 12(b)(6), we accept as true the wellpleaded facts alleged in the complaint and will affirm the dismissal only if the plaintiff would not be entitled to relief under any interpretation of the facts susceptible of proof. Fid. Sec. Life Ins. Co. v. State, 191 Ariz. 222, 224, ¶ 4, 954 P.2d 580, 582 (1998); Jeter v. Mayo Clinic Ariz., 211 Ariz. 386, 389, ¶ 4, 121 P.3d 1256, 1259 (App. 2005) ( [W]e review the well-pleaded facts alleged in the complaint as true. However, we do not accept as true allegations consisting of conclusions of law, unreasonable inferences or unsupported conclusions from such facts, or legal conclusions alleged as facts. (internal citation omitted)). ¶7 Plaintiffs contend that the superior court erred in dismissing their § 1983 claim as time-barred. Section 1983 claims are deemed to be personal injury actions and we apply state law for purposes of the statute of limitations, federal law for purposes of when a claim accrued. but Wilson v. Garcia, 471 U.S. 261, 279 (1985) (providing that § 1983 actions 6 are personal injury actions to identify the state statute of limitations period), superseded by statute on other grounds as recognized in Jones v. R.R. Donnelley & Sons Co., 541 U.S. 369, 377-82 (2004); Madden-Tyler v. Maricopa County, 189 Ariz. 462, 465-66, 943 P.2d 822, 825-26 (App. 1997) (stating that we look to Arizona law for determining the limitations period); see also Venegas v. Wagner, 704 F.2d 1144, 1145 (9th Cir. 1983) (using federal law to determine the time of accrual of the action). The applicable statute of limitations for personal injury claims in Arizona is two years. See A.R.S. § 12-542 (2003); see also Cholla Ready Mix, Inc. v. Civish, 382 F.3d 969, 974 (9th Cir. 2004). ¶8 Accrual of civil conspiracies for statute of limitations purposes is determined in accordance with the last overt act doctrine, under which injury and damage in a civil conspiracy action flow from the overt acts, not from the mere continuance of a conspiracy. Gibson v. United States, 781 F.2d 1334, 1340 (9th Cir. 1986) (internal brackets omitted). The limitation period for conspiracies in violation of § 1983 accrues when a party knows or has reason to know of the injury which is the basis of the cause of action. F.3d 1121, omitted). 1128 (9th Cir. 1996) Kimes v. Stone, 84 (internal quotation marks To determine the timeliness of a claim, a court must 7 establish whether a plaintiff has alleged discrete acts that would be unconstitutional occurring within the limitations period. Normandeau v. City of Phoenix, 516 F. Supp. 2d 1054, 1065 Ariz. (D. 2005) (citing RK Ventures, Inc. v. City of Seattle, 307 F.3d 1045, 1058 (9th Cir. 2002)). ¶9 In the Ninth Circuit the last overt act doctrine determines the point of accrual for civil conspiracies, and the cause of action runs separately from each overt act that is alleged to cause damage to the plaintiff. 1340. When determining when an act Gibson, 781 F.2d at occurs for statute of limitations purposes, the key inquiry is when the operative decision occurred. Courts separate from the operative decisions the inevitable consequences that are not actionable in their own (1981). right. See Chardon v. Fernandez, 454 U.S. 6, 8 The Supreme Court, citing Delaware State College v. Ricks, 449 U.S. 250, 258 (1980), explained that the proper focus is on the time of the illegal act, not the point at which the consequences of the act become painful. Chardon, 454 U.S. at 8. ¶10 The parties disagree as to when the Plaintiffs cause of action accrued. Plaintiffs contend the claim accrued in August of 2008 when the ACC filed the Amended Consent Order with the superior court to convert 8 the Order into a transcript judgment, making the filing of their complaint in July of 2010 timely. The Plaintiffs characterize ACC s filing of the Amended Consent Order in superior court as the last overt act in the ACC s conspiracy against them because, they argue, at that time the prior 2002 transcript judgment had expired so the ACC had no ability to Consent Order maintains execute was that against their filed with reducing the assets the until superior Amended the court. Consent Amended The Order to ACC a transcript judgment was not an overt act which caused any injury to Plaintiffs. Rather, it was a ministerial act which the ACC was entitled to do by law. According to the ACC, the last overt act, if any, would have been the entry of the Amended Consent Order in June of 2006, as this is the act that caused Plaintiffs alleged injury. ¶11 We agree with the ACC because the filing of the Amended Consent Order in 2008 was not an improper attempt to resurrect the 2002 expired judgment.3 Thus, it did not qualify as the last overt act in the alleged conspiracy. And, since Plaintiffs knew of the 2006 Amended Consent Order when they 3 A civil judgment can only be executed upon for five years after its entry unless it is renewed by action or affidavit under A.R.S. §§ 12-1611 (2003) or -1612 (2003). State ex rel. Indus. Comm'n v. Word, 223 Ariz. 353, 357, ¶ 27, 224 P.3d 169, 173 (2010). We assume without deciding that the five-year renewal period applies to the ACC. 9 entered into it, they knew of any alleged damage to them by any conspiracy as of that date. ¶12 The Plaintiffs entered into the Amended Consent Order in June of 2006. To execute on the Amended Consent Order the ACC filed the Amended Consent Order with the superior court to reduce it to a transcript judgment as authorized by A.R.S. § 442036(C) (2003). This filing was not a wrongful or illegal act because it was not an attempt by the ACC to resurrect an expired judgment. Rather, it was merely to permit the ACC to be able to execute on the Amended Consent Order which expressly superseded the original Consent Orders. Since the only alleged last overt act in any conspiracy was the Amended Consent Order in 2006, and Plaintiffs knew of that Order when they consented to it, their action accrued in 2006 and the statute of limitations barred the 2010 complaint. ¶13 To avoid that result, Plaintiffs argue that the following language in the Amended Consent Order shows that the ACC was trying to resurrect the original judgment: The Commission, in issuing this Amended Order, and [Plaintiffs] in consenting to this Amended Order, further intend that this Amended Order does not, and shall not be used to, impair, improve or otherwise affect the respective positions of the State and [Plaintiffs] listed in paragraph 11 with respect to the issues of: (a) any joint and several liability for the liabilities to the 10 State as reflected in this Amended Order, and (b) any liability of the individual [Plaintiffs ] marital communities for the liabilities to the State as reflected in this Amended Order. (Emphasis added.) ¶14 Plaintiffs characterize the ACC s filing of the Amended Consent Order as an attempt to expand its rights in contravention of the parties agreement that the Amended Consent Order shall affect the Plaintiffs not be used respective to[] impair, positions construction fails to of improve or otherwise the [parties]. acknowledge the But qualifying subsections that the Amended Order only preserves the status quo for the parties with respect to any legal arguments related to the issues of joint and several liability and community property liability. ¶15 In other words, the parties agreed that, when the ACC attempted to collect the Plaintiffs, each Hotel Connect party s rights as liabilities4 to joint and from the several liability and community property issues were preserved as those issues would have been determined 4 in 2001 when the parties For the reasons set forth below, Plaintiffs are barred by the statute of limitations from raising arguments regarding joint and several liability or community property as to the payment of the settlement because they made the payment in 2006, and failed to raise it within the two-year limitation period. 11 entered into the original Consent Orders. This must be the case, as the Hotel Connect liabilities are the only liabilities not eliminated under the Amended Consent Order. ¶16 Here, Plaintiffs § 1983 claim stems directly from the terms of the original 2001 Consent Orders and the 2006 Amended Consent Order. Putting aside the fact that the Plaintiffs voluntarily consented to both the original Consent Orders and the Amended Consent Order, the Plaintiffs knew all of the facts in 2001 and 2006 that they complain of in connection with the § 1983 claim filed in 2010. ¶17 Our conclusion is further supported by Ricks. In Ricks, a teacher (Ricks) alleged that the college at which he taught denied him tenure for discriminatory reasons. The college notified him that he would not be offered tenure but, as was the college s policy, they offered teach for one more year. him a terminal to At the end of that one-year contract, Ricks understood that he would be terminated. at 252-53. contract Ricks, 449 U.S. Ricks filed his civil rights lawsuit within three years after the actual date of his termination, but more than three years after he had been informed by the college that he would not be given tenure. The Supreme Court explained that the only alleged discrimination that occurred was at the time the tenure decision was made and communicated to Ricks, so 12 that is the date on which the limitations period commenced. That is so even though one of the effects of the denial of tenure the eventual loss of a later. Id. at 258. teaching position did not occur until The Supreme Court held that Ricks claim was barred by the statute of limitations because his cause of action accrued when he was given notice of decision that he would not be granted tenure. tenure was the alleged discriminatory, the operative The refusal of illegal act. The university had every legal right to terminate him at the end of his one-year terminal contract. ¶18 The same is true here. Id. The ACC s acts which allegedly violated the Plaintiffs constitutional rights, all took place in 2001 and 2006 with the Plaintiffs full knowledge. The only act by the ACC that took place within the two years preceding the filing of Plaintiffs complaint was the filing of the Amended Consent Order to reduce it to a transcript judgment. This was the delayed, but inevitable, effect of the ACC s acts. See id. at 257-58. For the reasons articulated above, this was a legitimate act which the ACC was authorized to take under A.R.S. § 44-2036.5 5 The Plaintiffs do not allege it to be an illegal act in their complaint. 13 ¶19 All of the alleged damages Plaintiffs complain of resulted from the pre-limitations acts by the ACC, and no new cause of action accrues for the ACC s subsequent act of reducing the Amended Consent Order to a transcript judgment because this act, which was the only act committed by the ACC during the limitations period, did not injure the Plaintiffs. See In re Multidistrict Vehicle Air Pollution, 591 F.2d 68, 72 (9th Cir. 1979) ( [W]here all the damages complained of necessarily result from a pre-limitations act by defendant, no new cause of action accrues for any subsequent acts committed by defendant within the limitations period [b]ecause those acts do not injure plaintiff. ). ¶20 Because we agree with the trial court that the Plaintiffs claims are barred by the statute of limitations, we need not reach the other grounds on which the ACC argues that the trial court s dismissal of the Plaintiffs § 1983 claim was appropriate. 14 CONCLUSION ¶21 dismissal For the foregoing reasons, we affirm the trial court s of the Plaintiffs claim under 42 U.S.C. § 1983. Because the Plaintiffs are not the successful parties on appeal, we deny their request for attorneys fees pursuant to 42 U.S.C. § 1988. /s/ DONN KESSLER, Judge CONCURRING: /s/ MICHAEL J. BROWN, Presiding Judge /s/ ANDREW W. GOULD, Judge 15

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