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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Gefre v. Davis Wright Tremaine, LLP (8/2/2013) sp-6804

Gefre v. Davis Wright Tremaine, LLP (8/2/2013) sp-6804

         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, email  



NICHOLAS A. GEFRE and CHARLES                          )  

T. BECK, individually and as a derivative )  

action on behalf of PETRO ALASKA,                      )  

INC., an Alaskan corporation,                          )  

                                                       )    Supreme Court Nos. S-13675/13745  

                          Appellants,                  )  

                                                       )    Superior Court No. 1KE-07-00370 CI  

         v.                                            )  

                                                       )    O P I N I O N  

DAVIS WRIGHT TREMAINE, LLP;                            )  

JON S. DAWSON; RICHARD A.                              )  

KLOBUCHER; BURR PEASE &                                )  

KURTZ; and JOHN C. SIEMERS,                            )  

                                                       )    No. 6804 - August 2, 2013  

                          Appellees.                   )  



BURR PEASE & KURTZ and JOHN C.                         )  

SIEMERS,                                               )  


                          Cross-Appellants,            )  


         v.                                            )  


NICHOLAS A. GEFRE and CHARLES                          )  

T. BECK, individually and as a derivative )  

action on behalf of PETRO ALASKA,                      )  

INC., an Alaskan corporation,                          ) 


                          Cross-Appellees.             )  


----------------------- Page 2-----------------------

                  Appeal from the Superior Court of the State of Alaska, First  


                  Judicial District, Ketchikan, Trevor Stephens, Judge.  

                  Appearances:    Daniel  W.  Hickey  and  Anne  M.  Preston,  


                  Gruenstein & Hickey, Anchorage, and James J. Ragen and  


                  Gail M. Ragen, Ragen & Ragen, Seattle, Washington, for  

                  Appellants   and   Cross-Appellees.      Patrick   B.   Gilmore,  

                  Atkinson,  Conway  &  Gagnon,  Anchorage,  for  Appellees  

                  Davis Wright Tremaine, LLP, Jon S. Dawson, and Richard  

                  A.  Klobucher.    Clay  A.  Young  and  Kendra  E.  Bowman,  

                  Delaney Wiles, Inc., Anchorage, for Appellees and Cross- 


                  Appellants Burr Pease & Kurtz and John C. Siemers.  

                  Before:      Carpeneti,   Chief   Justice,   Fabe,   Winfree,   and  

                  Stowers,  Justices. [Christen, Justice, not participating.]  

                  WINFREE, Justice.  


                  Shareholders of a closely held corporation brought a derivative suit against  


a  shareholder-director  and  the  corporation's  former  attorneys  for  fiduciary  fraud,  

fraudulent conveyance, legal malpractice, and civil conspiracy.  After an evidentiary  

hearing, the superior court ruled all the claims were time-barred.  We affirm the superior  


court's dismissal of most claims, but reverse its dismissal of two claims and remand  


those claims for further proceedings.  


         A.       Facts  

                  1.       Gefre, Beck, and Steffen form Island Fuel (Petro Alaska).  

                  Nicholas Gefre, Charles Beck, and Edward Steffen, who were friends and  


co-workers, formed Island Fuel, Inc. (Petro Alaska) in 1985.  Steffen took 52% of the  


corporation's stock; Gefre and Beck took 24% each.  Each became a member of the  

Board of Directors.  The Board appointed Steffen President, Gefre Vice-President, and  

                                                        -2-                                                   6804

----------------------- Page 3-----------------------


Beck Secretary and Treasurer.  None had prior corporate experience, and despite his title  


as Secretary, Beck did not maintain the corporate books or minutes. Steffen acted as the  


company manager and Gefre and Beck worked in the company's day-to-day operations.  

                    Petro Alaska was successful and there was agreement to expand operations.  


In January 1988 Steffen and his wife leased a Ketchikan property (the Property) from  



Stephen and Cheryl Day.   Steffen executed the lease in his name, although the lease  


referenced him as an individual doing business as Petro Alaska; the lease also indicated  

that  Petro  Alaska  would  make  improvements  on  the  Property.    The  Board  met  in  

December 1988 and ratified the lease and authorized Steffen to pursue, on Petro Alaska's  

behalf, a lease with an option to purchase the Property.  

                    2.        Steffen retains Davis Wright Tremaine.  


                    In December 1988 Steffen contacted the law firm Davis Wright Tremaine  


(DWT) to represent Petro Alaska.  The initial engagement letter from DWT partner  

Richard  Klobucher  stated  DWT  would  provide  Petro  Alaska  general  corporate  


representation and "eventually [represent] all of the shareholders in personal estate and  

estate tax planning matters."  The corporate representation specifically included a review  

of current corporate affairs.  DWT then prepared the December 1988 Board meeting  


minutes,  which  reflected  that  the  Property  was  a  corporate  opportunity  Steffen  was  

pursuing on Petro Alaska's behalf.  DWT soon began estate planning for Steffen, but had  

no direct contact with Gefre or Beck.  


                    DWT partner Judith Nevins helped Steffen pursue a lease of the Property  

          1         Both Steffen's and his wife's names were on the Property lease and later  

on the Property's title when it was purchased.  Both were also named as defendants in  


this suit.  But for ease of reference we use "Steffen" to refer both to Steffen individually  


when discussing his actions and to the Steffens collectively when discussing the Property  



                                                              -3-                                                        6804

----------------------- Page 4-----------------------

with an option to purchase.  Nevins understood DWT represented Petro Alaska, and  


advised Steffen that the lease should be in Petro Alaska's name.  Steffen initially agreed,  


but later told Nevins that the Days wanted the lease made in Steffen's name.  Believing  


it was an accommodation  to  the Days, Nevins drafted a letter to the Days' attorney  

stating  Steffen,  rather  than  Petro  Alaska,  would  be  the  lessee.    Nevins  did  not  

communicate this change to Gefre or Beck because she believed Steffen would do so.  

                    Nevins finalized the lease in January 1990.  The lease granted Steffen an  


option to purchase the Property, with a rebate on the purchase price equivalent to rent  


paid.  It did not memorialize Nevins's understanding that Steffen held the Property for  

Petro  Alaska's  benefit;  instead,  it  provided  that  the  Property  could  be  subleased  by  

Steffen  to  Petro  Alaska  only  if  Steffen  maintained  at  least  52%  ownership  of  Petro  

Alaska.  DWT billed Petro Alaska for its lease-related legal fees.  

                    Steffen  informed  Gefre  and  Petro  Alaska's  bookkeeper  that  he  had  


negotiated a five-year lease for the company with a purchase option. He did not disclose  


that the lease was in his name.  The Board did not formally adopt or ratify the lease at  


Petro Alaska's December 1991 Board meeting, which was its last official meeting prior  


to this litigation.  Petro Alaska paid the lease rent, and its financial statements for 1990  

through  1992  indicated  that  Petro  Alaska  leased  and  had  an  option  to  purchase  the  


                    3.        Steffen exercises the purchase option.  


                    Steffen exercised the purchase option in December 1993 and took title to  


the Property.  He received credit against the purchase price for Petro Alaska's lease  


payments.  Petro Alaska's 1993 financial statement stated: "Effective January 1, 1994,  

the  company's  majority  stockholder  acquired  the  property  on  which  its  Ketchikan,  


Alaska  operations  are  located.    Effective  January  1,  1994  the  company  leased  this  

property from the majority stockholder."  Petro Alaska's financial statements from 1994  

                                                             -4-                                                        6804

----------------------- Page 5-----------------------

to 2006 included the lease payments to Steffen.  Petro Alaska's bookkeeper was aware  


that Steffen had purchased the Property and was leasing it to Petro Alaska.  Gefre and  

Beck were not told.  

                    DWT prepared consent minutes in lieu of Board meetings for 1992 through  


1994.    The  1993  consent  indicated  Petro  Alaska  had  purchased  the  Property  for  

$750,000.  The 1994 consent contained a provision on the first page approving the lease  


between Steffen and Petro Alaska.  Gefre and Beck signed the second page, but later  

denied seeing or approving the provision ratifying the lease between Steffen and Petro         



                    Gefre  discovered  by  early  1995  that  Steffen  owned  the  Property.    He  


confronted Steffen, who claimed he purchased it for Petro Alaska because the Days did  

not want to sell to a corporation.  Steffen assured Gefre that he held the Property for  


Petro Alaska and would transfer title.  Steffen repeatedly promised Gefre that he would  

transfer the title, but did not.  

                    4.        Gefre retains attorney Clay Keene.  


                    Gefre retained Ketchikan attorney Clay Keene in 1997 to help secure title  

to the Property for Petro Alaska.  Keene advised Gefre that he had fiduciary duties as a  


Board member and could be personally liable to Petro Alaska for not fulfilling those  


duties.  Specifically, Keene informed Gefre that his fiduciary duties included ensuring  

Petro Alaska received title to the Property.  


                    In November 1997 Keene ghostwrote a letter to Steffen for Gefre and Beck.  

In this letter Gefre and Beck acknowledged Petro Alaska had not maintained required  


corporate formalities, including Board meetings, and stated a desire to begin doing so.  

They also acknowledged Steffen held title to the Property as an accommodation to Petro  


Alaska, and asked Steffen to transfer the Property to Petro Alaska by the end of 1997.  

They  requested  that  Gefre,  Beck,  and  Steffen  meet  with  Petro  Alaska's  outside  

                                                               -5-                                                         6804

----------------------- Page 6-----------------------

accountant, Peter Hogan, to discuss tax consequences of transferring the Property to  


Petro Alaska.  

                     Gefre, Beck, and Steffen met with Hogan in November 1997.  They agreed   

Steffen would transfer title to Petro Alaska and the shareholders as individuals.                                          Steffen  

stated he would work with Hogan to transfer the title, and Hogan memorialized the  


meeting.  Neither Gefre nor Beck contacted  Hogan to verify whether title had been  

transferred.  Nothing changed with respect to how Petro Alaska's directors conducted  


corporate affairs.  In 1998 Steffen contacted DWT about establishing a limited liability  

company into which he could transfer his real estate holdings, including the Property.  

Petro Alaska was billed for at least some of this work.  

                     5.        Beck requests a buyout, and Steffen destroys records.  

                     Beck's health deteriorated in the late 1990s and he left Alaska for medical  


treatment.  He asked for a buyout of his Petro Alaska shares in 2000, but this did not  


occur.  Petro Alaska continued to pay Beck's wages and health insurance for a time, but  

these payments eventually were discontinued.  


                     In 2000 Beck contacted Connie Williams, Petro Alaska's bookkeeper from  


1986 to 1997, regarding possible corporate wrongdoing by Steffen.  She provided Beck  

a list of suspected improprieties, including appropriating corporate money to acquire  

personal  property,  funding  personal  real  estate  ventures  with  corporate  funds,  and  

personally purchasing the Property with Petro Alaska making the loan payments coded  


as "rent." Beck believed Williams, but did not show the list to Gefre or Hogan.  Near the  

same  time,  a  Petro  Alaska  employee  informed  Beck  that  Steffen  was  destroying  

corporate records.  

                     In the early 2000s Gefre became  aware that Steffen had directed Petro  

Alaska staff not to send Gefre financial statements.  Gefre nonetheless knew he had a  


right to review corporate records.  Both Beck and Gefre repeatedly requested corporate  

                                                                 -6-                                                          6804

----------------------- Page 7-----------------------

records from Steffen, but he ignored or put off their requests.  Beck concluded before  

June 2002 that Steffen would not transfer the Property's title to Petro Alaska.  

                     6.         Beck retains attorney Clay Keene and considers suit.  

                     Beck retained Keene in May 2002 regarding Steffen's self-dealing and the  


Property.  He told Keene about Williams's information on Steffen's self-dealing.  He  

also gave Keene copies of corporate records he had received from Gefre.  In June 2002             

Keene ghostwrote a letter for Beck to send to Steffen.  In this letter Beck requested  

copies of 30 categories of corporate records, including Property-related records, and  


requested that all corporate documents be preserved. Beck also informed Steffen that his  

failing health required him to liquidate his Petro Alaska shares and offered to sell them  

for $500,000.  A copy of the letter was sent to Gefre.  

                     In July 2002 Beck received a reply from Petro Alaska, including documents  


enabling Beck to resign as a director and officer.  In a response ghostwritten by Keene,  

Beck declined to resign until his concerns about the company were resolved.  He also  

requested copies of all corporate minutes and bylaws.  


                     Keene ghostwrote another letter for Beck in late July 2002.  This letter to  


Steffen reiterated Beck's demands for corporate records, including records related to the  

Property, stated his intent to remain a director, and expressed his concern with Steffen's  


record-request obstruction.  Beck copied Gefre and a Petro Alaska employee, asking the  

employee to send him copies of certain records.  

                     Steffen  referred  Beck's  letters  to  attorney  Jonathan  Michaels  at  DWT.  


Michaels did not know former DWT partner Nevins, who had left DWT before he joined  

the  law  firm,  and  had  had  no  prior  contact  with  Petro  Alaska.    Michaels  drafted  a  

response to Beck's second letter for Steffen, which Steffen modified.  Steffen's response  

included certain corporate records and stated that:  (1) he purchased the Property and  

leased it to Petro Alaska; (2) the other requested records could be reviewed at Petro  

                                                                  -7-                                                            6804

----------------------- Page 8-----------------------

Alaska's offices; (3) neither Petro Alaska nor its shareholders were able to purchase  


Beck's shares; and (4) Petro Alaska requested Beck's resignation because he had not  

actively participated in managing Petro Alaska.  

                   In   August   2002   Beck   contacted   Keene   to   express   concerns   about  

incomplete corporate minutes.  He also stated his fear that Steffen might attempt to  


bankrupt Petro Alaska and leave.  Keene ghostwrote another letter for Beck to send to  

Steffen, reiterating Beck's demands for corporate records, stating Steffen's purchase of  


the Property was a misappropriation of Petro Alaska's corporate opportunity, and stating  

Beck could not be removed as a director or officer.  Gefre was sent a copy.  


                   At this time Beck began considering legal action against Steffen.  He again  

contacted  former  bookkeeper  Williams  and  asked  for  information  on  Steffen's  self- 

dealing.    She  responded  with  information  about  several  instances  of  Steffen's  self- 

dealing and offered further assistance.  Beck never followed up with Williams.  

                   Beck consulted further with Keene, who advised him that although he could  


be removed as a director, Beck retained access to the Board's records as a shareholder.  

In August Beck had Keene ghostwrite more letters to Steffen, containing demands and  


statements similar to Beck's previous letters.  Keene advised Beck that a suit against  

Steffen was possible, but suggested that contacting the Alaska Department of Labor  


(DOL) to file a complaint might yield the same results as litigation.  He also noted that  


if Beck personally pursued an action against Steffen, Steffen could avail himself of Petro  


Alaska's assets to defend himself at the company's expense.  In September 2002 Beck  


contacted DOL about investigating Steffen.  He emphasized that Steffen had "essentially  

stol[en]" the Property from Petro Alaska, but DOL declined to investigate.  


                   DWT referred Beck's August 2002 inquiries to the law firm Burr Pease &  


Kurtz (BPK).  In October John Siemers of BPK ghostwrote a letter for Steffen to send  


to Beck stating that Steffen owned the Property, Petro Alaska owned the improvements  

                                                             -8-                                                       6804

----------------------- Page 9-----------------------


on the Property, and the purchase was reflected in Petro Alaska's records.  The letter also  

stated that Petro Alaska would consider replacing Beck at its next Board meeting.  


                    In November 2002 Keene ghostwrote two more letters for Beck to send to  


Steffen, asserting Steffen had breached his fiduciary duties to Petro Alaska by engaging  


in self-dealing.  Siemers ghostwrote Steffen's response to these two letters, describing  

Beck's allegations as "reckless" and lacking a basis in fact.  The letter also advised Beck  

to retain an attorney if Beck believed he had "a claim against the company."  The letter  


stated Petro Alaska was "prepared to defend itself in a court of law, if necessary."  BPK  


did no further legal work for Petro Alaska after 2002.  It closed its file on Petro Alaska  

in 2004 and destroyed its Petro Alaska records in August 2005.  


                    In November 2002 Steffen formed Steffen Properties, LLC (the LLC) with  

DWT's help.  He then transferred the Property to the LLC.  

                    Because he was indicted on an unrelated criminal matter and because Keene  


would not accept the case on a contingent fee basis, Beck did not bring suit in 2002 or  


2003.  Afraid of "rock[ing] the boat," Gefre did not join Beck's efforts, review corporate  


records, take efforts to hold the required Board meetings, or further investigate the self- 


dealing assertions made by Williams.  In December 2002 Gefre and Steffen accepted  

Beck's resignation as a Petro Alaska officer and removed him as a director.  

                    Petro  Alaska  retained  copies  of  its  pre-2000  records  until  2006.    An  

employee destroyed these records in 2006 because she had heard nothing further from  


Beck regarding corporate records.  Beck and Gefre did not further pursue their concerns  


until Beck contacted a new attorney in May 2006.  That attorney briefly reviewed Beck's  

files and concluded Beck required litigation counsel; Beck and Gefre then retained a new  


law firm.  Through counsel, Gefre and Beck made a corporate records inspection demand  


to Steffen in February 2007 requesting all documents related to the Property.  DWT  

provided copies of all Property-related records.  

                                                              -9-                                                        6804

----------------------- Page 10-----------------------

          B.       Proceedings  

                   In August 2007 Gefre and Beck, individually and derivatively on behalf of  


Petro Alaska (collectively the Shareholders), filed suit against Steffen, the LLC, DWT,  


and DWT partner Jon Dawson.  The complaint alleged:  (1) fiduciary fraud by DWT and  

Steffen; (2) misappropriation of corporate opportunities by Steffen; (3) participation by  


DWT in Steffen's tortious conduct; (4) legal malpractice by DWT; and (5) fraudulent  

conveyance  of  the  Property  by  DWT  and  Steffen.    The  Shareholders  requested  


imposition of a constructive trust on the Property, an accounting by Steffen, and punitive  

damages.  The Shareholders also requested that DWT and Steffen be estopped from  

asserting a statute-of-limitations defense.  


                   The Shareholders did not sue BPK because they were unaware of its 2002  

involvement on behalf of Petro Alaska.  BPK initially represented Steffen in the suit.  


The Shareholders' counsel then came upon a 2002 BPK billing in Petro Alaska's general  


ledger,  and  in  January  2008  BPK  disclosed  the  nature  of  its  2002  assistance  with  


Steffen's responses to Beck's letters.  In February 2008 the Shareholders amended their  

complaint to add Klobucher, Siemers, and BPK as defendants.  The Shareholders also  

added an intentional spoliation of evidence claim against Steffen and BPK for destruction  


of  records.    Steffen  settled  with  the  Shareholders  in  May  2008  and  transferred  the  

Property to Petro Alaska.  


                   Both DWT and BPK moved for summary judgment based on statutes-of- 

limitations  defenses.    The  superior  court  denied  DWT's  and  BPK's  motions,  but  


scheduled an evidentiary hearing on the statutes-of-limitations issues.  The Shareholders  


objected to the evidentiary hearing.  In July 2009 the superior court held the evidentiary  

hearing, and in October 2009 the court dismissed the Shareholders' claims as time-barred  

and entered final judgment.  

                                                            -10-                                                      6804

----------------------- Page 11-----------------------

                    The Shareholders appeal the dismissal of all the claims against the attorneys  


as time-barred.  BPK cross-appeals the superior court's refusal to recognize an offer of  

judgment in awarding fees and costs.  


                    The date on which a claim accrues is a factual question, which we review  


for clear error.    However, we review de novo the legal standard used to determine  


accrual dates,   and we review de novo questions regarding the applicable statute of  


limitations, the interpretation of that statute, and whether that statute bars a claim.   

                    We apply our independent judgment to questions of constitutional law,5  

including questions regarding the extent of the right to a trial by jury and the right to  


equal protection.   We "adopt the rule of law that is most persuasive in light of precedent,  

reason, and policy."7  

          2         Sengupta v. Wickwire, 124 P.3d 748, 752 (Alaska 2005) (citing Alderman  

v. Iditarod Props., Inc. , 104 P.3d 136, 140 (Alaska 2004)).  

          3         See  City  of  Fairbanks  v.  Amoco  Chem.  Co.,  952  P.2d  1173,  1178-80  

(Alaska 1998) (reviewing de novo applicable accrual standards).  




                     Weimer v. Cont'l Car & Truck, LLC, 237 P.3d 610, 613 (Alaska 2010)  

(citing Smallwood v. Cent. Peninsula Gen. Hosp., 151 P.3d 319, 322-23 (Alaska 2006)).  



                    Fraternal Order of Eagles v. City & Borough of Juneau , 254 P.3d 348, 352  


(Alaska 2011) (citing State, Dep't of Health & Soc. Servs. v. Planned Parenthood of  

Alaska, Inc. , 28 P.3d 904, 908 (Alaska 2001)).  

          6         See, e.g., Pomeroy v. Rizzo ex rel. C.R., 182 P.3d 1125, 1128 (Alaska 2008)  

(reviewing by independent judgment constitutional right to trial by jury); Pub. Emps.'  

Ret. Sys. v. Gallant , 153 P.3d 346, 349 (Alaska 2007) ("The equal protection challenge  


presents a question of law to which this court applies its independent judgment." (citing  


Alaska Civil Liberties Union v. State , 122 P.3d 781, 785 (Alaska 2005))).  



                    Fraternal Order of Eagles , 254 P.3d at 352 (quoting Alaskans for Efficient  


                                                              -11-                                                         6804

----------------------- Page 12-----------------------


         A.	      Statutes-Of-Limitations Rulings  

                  1.	      Overview  

                  The Shareholders raise several arguments regarding the superior court's  


statutes-of-limitations rulings.  To analyze these arguments, we must address the statutes  

of limitations applicable to the Shareholders' claims, the proper rule for determining  

when the claims accrued, and whether the claims' accrual should be delayed.  We then  

address whether equitable estoppel forecloses the statutes-of-limitations defenses.  

                  2.	      Applicable statutes of limitations  


                  The Shareholders claim the superior court erred by:  (1) refusing to apply  

AS  09.10.230's  ten-year  statute  of  limitations  to  the  conspiracy  and  fraudulent  

conveyance  claims;  and  (2)  applying  the  two-year  tort  statute  of  limitations  to  the  

fiduciary fraud and intentional spoliation claims.  

                           a.	     Alaska Statute 09.10.230 does not apply to the conspiracy  

                                    and fraudulent conveyance claims.  


                  Alaska Statute 09.10.230  provides that actions to determine a person's  

"right or claim to or interest in real property" must be brought within ten years.8                           The  


superior court ruled AS 09.10.230  applied to the Shareholders' misappropriation of  

corporate opportunities claim, which directly related to Petro Alaska's interest in the  

Property, but not to the Shareholders' other claims indirectly related to the Property.  

         7        (...continued)  

Gov't, Inc. v. State, 153 P.3d 296, 298 (Alaska 2007)).  

         8        AS 09.10.230 incorporates the ten-year limitations period provided in AS     

09.10.030.  See AS 09.10.230 (providing action for determination of right or claim to or  

interest in real property must be "commenced within the limitations provided for actions  

for the recovery of the possession of real property"); AS 09.10.030 (providing action for  

recovery of possession of real property must be commenced within ten years).  

                                                       -12-	                                                 6804

----------------------- Page 13-----------------------

                    The Shareholders argue that a civil conspiracy claim for depriving an owner  


of  real  property  is  subject  to  AS  09.10.230's  ten-year  limitations  period.                                      The  


Shareholders state the superior court correctly applied AS 09.10.230 to claims against  


Steffen  for  his  wrongful  acquisition  and  retention  of  title  to  the  Property.    But  the  


Shareholders then contend that because the "nature of the unlawful conduct underlying  

the conspiracy determines the applicable statute," the conspiracy claims against DWT  


related to Steffen's acquisition of the Property must also be subject to AS 09.10.230.  


The Shareholders also argue that a direct fraudulent conveyance claim against DWT  


(under AS 34.40.010 ) specifically requires application of AS 09.10.230. 


                    We agree with the superior court's conclusion that the ten-year statute of  


limitations under AS 09.10.230 does not apply to the Shareholders' civil conspiracy and  

fraudulent conveyance claims.  Because "[AS] 09.10.230 contemplates a dispute over  

an interest in real property,"10 we have previously applied it where the nature of the  



ownership interest was the central issue.                      We have not applied AS 09.10.230 where the  


"issue [was] not the ownership interest itself but [rather] improprieties in the bargaining  

that resulted in the conveyance of that interest."12  To invoke AS 09.10.230's limitations  

period, it is not enough for a claim to be merely attendant to an underlying conveyance  

          9         AS 34.40.010 provides in relevant part that "a conveyance or assignment                 

. . . of an estate or interest in land . . . or of rents or profits issuing from them . . . made  

with the intent to hinder, delay, or defraud creditors . . . is void."  

          10        Bauman v. Day , 892 P.2d 817, 825 (Alaska 1995).  

          11        Carter  v.  Hoblit,  755  P.2d  1084,  1085-86  (Alaska  1988)  (applying  

AS 09.10.230 to equitable request for one-third interest in property that three individuals  


had intended to purchase and hold title to jointly, where group member conducting the  

transaction took deed in his name alone and fraudulently concealed his action).  See also  


Bauman , 892 P.2d at 825 (discussing Carter).  

          12        Bauman , 892 P.2d at 825.  

                                                             -13-                                                        6804

----------------------- Page 14-----------------------


of a property interest - it must directly involve "the determination of a right or claim  


to or interest in real property."                     The ten-year statute of limitations under AS 09.10.230  


applied  to  the  Shareholders'  misappropriation  claim  against  Steffen  because  the  


misappropriated opportunity was the lease and ownership of the Property and the relief  


sought was recovery of the Property.  Because the conspiracy claims against DWT and  

BPK involve only improprieties regarding Steffen's acquisition and retention of the  


Property, and not the ownership interest itself, AS 09.10.230 is not applicable to these  



                      We similarly conclude that AS 09.10.230 is not applicable to the fraudulent  

conveyance claim against DWT.  Alaska Statute 34.40.010 does not create a special  

mechanism to recover land, but rather creates a method by which a creditor may reach  


                                                                                                           The direct fraudulent  

assets in a third-party's hands by voiding an improper transfer. 

conveyance  claim  concerns  DWT's  conduct  relating  to  Steffen's  retention  of  the  

Property, not Petro Alaska's interest in the Property.  Accordingly AS 09.10.230 is  

inapplicable to the direct fraudulent conveyance claim.  


                                 b.	        Alaska  Statute  09.10.053  applies  to  all  claims  against  

                                            DWT and BPK.  

                      Contract  claims  are  subject  to  a  three-year  statute  of  limitations  under  

           13	        AS 09.10.230.  

           14         See Bauman, 892 P.2d at 825 (finding AS 09.10.230 inapplicable because       

"[t]he dispute over title and possession arose from the foreclosure sale, while the contract     

and fraud claims arose from the original sale of the property").  



                      See AS 34.40.010; see also Gabaig v. Gabaig , 717 P.2d 835, 838 (Alaska  


1986) (stating under AS 34.40.010, "[a] conveyance intended to hinder, delay or defraud  

creditors or other persons in their lawful suits is void").  

                                                                    -14-	                                                             6804

----------------------- Page 15-----------------------



AS 09.10.053.             We have held previously that actions for a breach of a fiduciary duty  

arising   out   of   a   professional   services   relationship   generally   are   governed   by  


AS  09.10.053.             In contrast, tort claims generally must be brought within two years  

under AS  


                    The Shareholders argue AS 09.10.053 should apply to the fiduciary fraud  


claims against DWT and BPK.  But the superior court did apply AS 09.10.053 to these  


claims.  The court initially stated that "[m]ost of [the Shareholders'] causes of action  


against DWT [and BPK] are subject to" AS 09.10.053, and then listed only the spoliation  

and fraudulent conveyance claims as subject to AS 09.10.070.  

                    The Shareholders also  argue the court incorrectly applied the two-year  

statute  of  limitations  under  AS  09.10.070  to  the  claims  for  spoliation  by  BPK  and  

fraudulent  conveyance  by  DWT.    The  Shareholders  contend  the  court  should  have  

applied AS 09.10.053's three-year statute of limitations to these claims.  


                                                                                                               the spoliation  

                    Although intentional spoliation of evidence is a tort claim, 

claim in this case arises in connection with the assertion of BPK's breach of fiduciary  


duty in a legal malpractice claim.  Similarly the fraudulent conveyance claim in this case  

          16        AS 09.10.053 provides that "[u]nless the action is commenced within three   

years, a person may not bring an action upon a contract or liability, express or implied."  

          17        See Lee Houston & Assocs., Ltd. v. Racine, 806 P.2d 848, 854 (Alaska  


1991) (construing former AS 09.10.050, now codified at AS 09.10.053).  

          18        AS 09.10.070 is a residual statute of limitations in that it governs all claims  


"for personal injury . . . not arising on contract and not specifically provided otherwise."  


AS 09.10.070(a)(2).  See Austin v. Fulton Ins. Co., 444 P.2d 536, 538 (Alaska 1968)  


(stating "it is clear that the two-year statute of limitations respecting torts is applicable"  


to negligence claims); Silverton v. Marler, 389 P.2d 3, 5 (Alaska 1964) ("A tort action  


must be commenced within two years . . . ." (citing AS 09.10.070)).  

          19        See Allstate Ins. Co. v. Dooley, 243 P.3d 197, 200-01 (Alaska 2010).  

                                                              -15-                                                         6804

----------------------- Page 16-----------------------

arises in connection with the assertion of DWT's breach of fiduciary duty in a legal  

malpractice claim.  Because we give preference to the longer limitations statute when  

two may reasonably apply,20 AS 09.10.053 provides the appropriate limitations period  


for these claims.  It was error to apply AS 09.10.070 to the Shareholders' spoliation and  

fraudulent conveyance claims.  


                       3.         Accrual and timely filing of two claims  


                       The  Shareholders  argue  the  superior  court  made  errors  in  its  accrual  


findings  and  conclusions.                      The  general  rule  is  that  "accrual  of  a  cause  of  action  is  



established at the time of the injury."                             Under this rule, we determine whether a claim  


was timely filed by computing the time period between when the cause of action accrued  


and when the plaintiff filed a claim.  If this time period does not exceed the applicable  

statute of limitations, then the claim is timely filed.22  

            20         City of Fairbanks v. Amoco Chem. Co.                            , 952 P.2d 1173, 1181 (Alaska 1998)     

("If two limitations statutes may reasonably apply, preference is given to the longer  

limitations period.").  



                       Cameron v. State, 822 P.2d 1362, 1365 (Alaska 1991).  See also John's  


Heating Serv. v. Lamb , 46 P.3d 1024, 1031 n.14 (Alaska 2002) ("The date on which the  

statute of limitations begins to run is usually the 'date on which the plaintiff incurs  

injury.' " (quoting Russell v. Municipality of Anchorage , 743 P.2d 372, 375 (Alaska  



            22         The Shareholders argue the superior court erred by applying the accrual  


rule, and not an "express trust" method of accrual, which delays accrual until a trustee  


clearly repudiates an express trust.  See Arneman v. Arneman, 264 P.2d 256, 262 (Wash.  


 1953) ("[T]he statute of limitations begins to run on a resulting trust, not when such trust  


comes into being, but when the trustee repudiates the trust and notice of such repudiation  


is brought home to the beneficiary.").  The Shareholders contend that under this method  


the limitations period on the breach of fiduciary duty claims could not have begun to run  


before Steffen's unequivocal 2002 disavowal of holding the Property in trust for Petro  


Alaska.  But the Shareholders never claimed that Steffen held the Property in express  


                                                                      -16-                                                                 6804

----------------------- Page 17-----------------------

                              a.       Spoliation claim  

                    The  record  destruction  underlying  the  spoliation  claim  against  BPK  


occurred in August 2005.  As discussed above, we agree with the Shareholders that this  


                                                                                                              Because  the  

claim  is  subject  to  AS  09.10.053's  three-year  statute  of  limitations. 

Shareholders added this claim in February 2008, before the three-year period expired,  

this claim was timely filed.  We therefore reverse the dismissal of this claim on statute- 

of-limitations grounds.  

                             b.        Legal malpractice claims  


                    The Shareholders challenge the court's dismissal of the legal malpractice  


claims against DWT and BPK.  The superior court ruled that the claims against Steffen  


for an interest in the Property accrued by mid-1996, indicating the limitations period  


under AS 09.10.230 expired in mid-2006.  The Shareholders argued at the evidentiary  


hearing that DWT and BPK committed legal malpractice by not warning Petro Alaska  


that potential causes of action against Steffen were set to be statutorily barred.  Because  

the court found the statute of limitations on the AS 09.10.230 claims against Steffen  

expired in 2006, the Shareholders argue Petro Alaska suffered a new harm at this point  


and that the claims for legal malpractice based thereon could not have expired until 2009.  


In contrast, BPK argues that under the discovery rule the applicable statute of limitations  

          22        (...continued)  

trust;  the  Shareholders  claimed  Steffen  held  the  Property  in  constructive  trust.    Cf.  

D.A.W. v. State, 699 P.2d 340, 342 (Alaska 1985) ("A party may not raise for the first  

time on appeal an alleged error to which he failed to object to in the [superior] court."  


(quoting Chugach Elec. Assoc. v. Lewis, 453 P.2d 345, 349 (Alaska 1969))).  And even  


if  we  were  to  consider  the  express  trust  argument  for  the  first  time  on  appeal,  it  is  


unavailing - because the claims are subject to a three-year statute of limitations they  


would have expired in 2005, two years before suit was brought in 2007.  We therefore  


decline to consider adopting an express-trust accrual rule.  

          23        See Part IV.A.2.b, above.  

                                                             -17-                                                       6804

----------------------- Page 18-----------------------

began  running  once  Gefre  and  Beck  became  aware  of  all  the  elements  of  the  legal  

malpractice claims.  

                    The  expiration  of  claims  against  Steffen  is  a  legal  harm  distinct  from  

Steffen's misappropriation of the corporate opportunity.  Because a claim generally does  

not accrue until the plaintiff suffers the harm giving rise to it, the legal malpractice claims  


against  DWT  and  BPK  for  failing  to  warn  Petro  Alaska  of  the  expiration  of  the  


limitations period did not accrue until 2006.  Contrary to BPK's argument and for the  


reasons we discuss below, the discovery rule operates only to lengthen - and never to  


                                                       Given the three-year limitations period under AS  

shorten - the limitations period. 

09.10.053, the  legal malpractice claims  based  on  the  alleged  failure  to  advise  Petro  


Alaska of the expiration of the limitations period against Steffen were timely filed in  


2007 and 2008.25  It therefore was error to dismiss these limited legal malpractice claims.  


                    4.        Discovery rule and remaining claims  

                              a.        Doctrinal framework  

                    Although a cause of action generally accrues when the plaintiff incurs an  


injury, accrual can be delayed under a statutory or common-law discovery rule.  For  


example,  in  AS  09.10.230  the  legislature  adopted  a  statutory  discovery  rule  for  

fraudulent conveyance actions, delaying accrual of the ten-year statute of limitations until  

the  fraud  is  discovered.    The  Shareholders  assert,  based  on  the  argument  that  the  

conspiracy and fraudulent conveyance claims against DWT and BPK arise under AS  


09.10.230, that accrual of these claims should be statutorily delayed.  But because we  


          24        Jarvill v. Porky's Equip., Inc. , 189 P.3d 335, 339 (Alaska 2008).  

          25        Because we conclude these limited legal malpractice claims against DWT                      

and BPK are not time-barred, we do not need to address the Shareholders' argument that   

a continuous representation rule should have been applied to toll these claims.  

                                                              -18-                                                             6804  

----------------------- Page 19-----------------------


conclude the claims are not subject to AS 09.10.230,                           the superior court correctly ruled  

this statutory discovery rule is not applicable.  


                    The common-law discovery rule tolls the running of an applicable statute  

of limitations "[w]here an element of a cause of action is not immediately apparent."27  


It "developed as a means to mitigate the harshness that can result from the [accrual]  


rule's preclusion of claims where the injury provided insufficient notice of the cause of  


action to the plaintiff."             As we have explained:  

                    [T]he statute of limitations does not begin to run until the  

                    claimant discovers, or reasonably should have discovered, the  

                    existence  of  all  elements  essential  to  the  cause  of  action.  

                    Thus we have said the relevant inquiry is the date when the  

                    claimant   reasonably   should   have   known                       of   the   facts  


                    supporting her cause of action.  We look to the date when a  


                    reasonable person has enough information to alert that person  

                    that he or she has a potential cause of action or should begin  



                    an inquiry to protect his or her rights.  


                    Accordingly the discovery rule may provide different possible dates on  

          26        See Part IV.A.2.a, above.  

          27       John's Heating Serv. v. Lamb , 46 P.3d 1024, 1031 (Alaska 2002) (citing   

Pedersen v. Zielski , 822 P.2d 903, 906-07 (Alaska 1991)).  

          28        Cameron v. State, 822 P.2d 1362, 1365 (Alaska 1991) (citing Hanebuth v.  


Bell  Helicopter  Int'l,  694  P.2d  143,  146  (Alaska  1984));  see  also  id.  at  1365  n.5  


("[R]ather than characterize the discovery rule as a mitigating, pseudo-equitable doctrine,  

it  is  more  appropriate  to  view  it  as  specifying  the  meaning  of  'accrual'  under  the  


          29       Mine Safety Appliances Co. v. Stiles , 756 P.2d 288, 291 (Alaska 1988)  

(internal editing marks and citations omitted).  

                                                             -19-                                                       6804

----------------------- Page 20-----------------------


which a statute of limitations can begin to run.                                 First is the inquiry-notice date, "the date  


when the plaintiff has information which is sufficient to alert a reasonable person to  

                                                                31   Second is the actual-notice date, "the date when  


begin an inquiry to protect his rights." 

[the] plaintiff reasonably should have discovered the existence of all essential elements  


of the cause of action."                     

                       We have held the inquiry-notice date, rather than the actual-notice date, is  



generally the date from which the statutory period begins to run.                                                  But we have noted  


this general rule may produce unjust results because inquiry "may be a time-consuming  

process," which "may not produce knowledge of the elements of a cause of action within  

the statutory period, or it may produce knowledge of the elements of a cause of action  


only relatively late in the statutory period."                                 


                       If an inquiry has not been made, we ask in the abstract whether a reasonable  


inquiry would have produced knowledge of the cause of action.                                                      This focuses on an  


ideal inquiry with the realization that time for a reasonable investigation is included in  

            30         John's Heating , 46 P.3d at 1031 (citing Waage v. Cutter Biological Div. of  

Miles Labs., Inc. , 926 P.2d 1145, 1148 (Alaska 1996)).  

            31         Id . (citing Cameron, 822 P.2d at 1366).  

            32         Id . (citing Cameron, 822 P.2d at 1366).  

            33         Waage, 926 P.2d at 1148; Cameron, 822 P.2d at 1366.  

            34         Cameron, 822 P.2d at 1366 ("Either way it is possible that a litigant may                             

be deprived of his right to bring a lawsuit before he has had a reasonable opportunity to       

do so.").  

            35         Pedersen v. Zielski , 822 P.2d 903, 908 (Alaska 1991).  

                                                                      -20-                                                                 6804

----------------------- Page 21-----------------------

the length of the statute of limitations.36  



                        We recognize some inquiries will be productive and some will not be.                                                           If  


an unproductive inquiry has been made, the analysis changes and we ask whether the  

                                                             38    If the inquiry was not reasonable, then the cause  

plaintiff's inquiry was reasonable.       

of action accrues at the inquiry-notice date "unless a reasonable inquiry would not have  


                                                                              39  But if a reasonable inquiry was made, the  

been productive within the statutory period."                                                    

limitations period is tolled until the plaintiff either:  (1) "received actual knowledge of"  


the facts giving rise to the cause of action; or (2) "received new information which would  

prompt a reasonable person to inquire further."40  

                                    b.         Application of common-law discovery rule  

                        The superior court assumed the Shareholders' initial inquiry in 1995, which  

disclosed Steffen held title to the Property, was reasonable.  Because Gefre and Beck  


individually only periodically asked Steffen about the status of the title transfer, the court  


found "the reasonableness [of their inquiry] dissipated over time."   Due to Steffen's  


repeated  promises  and  failures  to  transfer  title,  the  court  found  it  should  have  been  


apparent to the Shareholders by mid-1996  that Steffen was not going to voluntarily  


transfer title.  

            36          See Palmer v. Borg-Warner Corp.                               (Palmer I), 818 P.2d 632, 636 (Alaska  

 1990) ("Indeed, the length of a limitations period reflects legislative awareness that time            

is needed to investigate a course of action before filing suit.").  

            37          Pedersen , 822 P.2d at 908.  

            38          Id.  






                        Cameron v. State, 822 P.2d 1362, 1367 (Alaska 1991) (quoting Pedersen ,  

822 P.2d at 908).  

                                                                         -21-                                                                    6804

----------------------- Page 22-----------------------

                   As to claims against DWT, the superior court found that upon learning  


Steffen held title to the Property, a reasonable inquiry into "when, how, and why" he  

held  title  "would  have  led  directly  to  DWT  and  DWT's  involvement."    The  court  

concluded the Shareholders should have discovered the existence of causes of action  

against DWT by mid-1996.  


                   As to claims against BPK, the superior court found that based on Gefre and  

Beck's ongoing obligation to conduct a reasonable inquiry concerning Steffen and DWT,  


a reasonable investigation would have resulted in discovery of BPK's role in 2002.  The  


court found several Petro Alaska employees knew of BPK's involvement in 2002 and  


a "simple computer search of Petro Alaska's General Ledger would have resulted in the  

discovery of BPK and its detailed billing for the 2002 work."  

                   The Shareholders argue the superior court erred in finding they did not  

engage in a reasonable inquiry.  The Shareholders assert they engaged in a reasonable  


but unsuccessful inquiry, and the causes of action should have accrued on the actual- 

notice date.  


                   When either or both Gefre and Beck were on inquiry notice is a question  

                                                                                          41 and is reviewed for  

of fact that "depends upon all of the surrounding circumstances" 


clear error.        Both Gefre and Beck knew the Property's acquisition was an important  

corporate opportunity, and they knew by 1995 that the Property was in Steffen's name.  

They also knew that Steffen had lied and therefore were aware of their injury.  Upon  


being  placed  on  inquiry  notice  in  1995,  Gefre  and  Beck  were  charged  with  "an  

affirmative  duty  to  investigate  all  potential  causes  of  action  before  the  statute  of  

         41       Preblich v. Zorea , 996 P.2d 730, 736 (Alaska 2000) (quoting Breck v.  

Moore , 910 P.2d 599, 604 (Alaska 1996)).  

         42        Sengupta v. Wickwire, 124 P.3d 748, 752 (Alaska 2005).  

                                                         -22-                                                       6804  

----------------------- Page 23-----------------------

limitations expire[d],"43 not merely those directly related to Steffen's acquisition of the  

              44                                                                                     45 


Property.          Their inquiry also must have been prompt and diligent.                                The superior court  


found that Gefre and Beck's initial inquiry requesting that Steffen transfer the Property's  


title to Petro Alaska was reasonable, but that a reasonable and diligent inquiry would  

have  required  further  action  when  it  became  clear  in  1996  that  Steffen  would  not  


voluntarily transfer title.  The superior court also found that a reasonable  and diligent  


inquiry would have disclosed to Gefre and Beck the existence of a cause of action against  


DWT  and  BPK.    The  Shareholders  argue  that  their  inquiry  was  reasonable  but  


unsuccessful and that, in any event, Steffen's oft-repeated assurances that he held the  

Property in trust for the corporation equitably estopped Steffen, and the corporation's  

attorneys, from relying on the statute of limitations.   

                     We do not need to resolve this conflict because even if the superior court  


erred  in  concluding  the  accrual  date  for  some  of  the  Shareholders'  claims  was  in  


mid-1996, the accrual date could not possibly have been later than the end of 2002, when  


Steffen unequivocally reneged on his position that he held the Property in trust for the  


corporation.  But the Shareholders did not bring their lawsuit until 2007.  Their inquiry  

          43        Palmer v. Borg-Warner Corp. (Palmer I), 818 P.2d 632, 634 (Alaska 1990)               

(emphasis in original) (citing Mine Safety Appliances Co. v. Stiles , 756 P.2d 288, 292  

(Alaska 1988)).  



                     Gefre and Beck were directors with corporate fiduciary duties to act "with  


the care, including reasonable inquiry, that an ordinarily prudent person in a like position  

would use under similar circumstances."  AS 10.06.450(b).  This included a duty to  

know Petro Alaska's business dealings and activities.  



                    See id . at 634-35 n.4 ("[W]e do not insist that a claimant actually know the  


precise cause of action at the time of the injury, rather we conclude that a claimant must  


begin an inquiry as to the cause of injury promptly and diligently once it is apparent that  

an injury has occurred due to the possible negligence of another.").  

                                                               -23-                                                          6804

----------------------- Page 24-----------------------


was therefore unreasonable after 2002.  The Shareholders did not satisfy the three-year  

statute of limitations for their legal-malpractice-based claims.  


                            The Shareholders nonetheless argue that the accrual of the causes of action  

should have been delayed because of their relative lack of sophistication.  A party's  



relative sophistication is considered in a court's accrual findings,                                                                    but the party does not  


have to understand the legal explanation for or significance of an injury before having  


knowledge sufficient for a cause of action to accrue.                                                             By 2002 Gefre and Beck knew  


the Property's acquisition represented an important corporate opportunity, the Property  


was in Steffen's name, Steffen had not voluntarily transferred title, and he had withdrawn  


his statement that he was holding the property in trust for the corporation.  Because Gefre  


and Beck knew or should have known that legal action needed to be taken to protect  

Petro Alaska's rights, their lack of sophistication does not excuse their unreasonable  

inquiry after 2002.48  

                            5.           Equitable estoppel  

                            A defendant may in some situations be equitably estopped from pleading  


a  statute-of-limitations  defense.                                       Equitable  estoppel  requires  the  plaintiff  to  show:  


"(1)        fraudulent   conduct,                          which           may   take               the   form              of   either             an      affirmative  

              46            Sengupta, 124 P.3d at 753 (quoting Preblich v. Zorea , 996 P.2d 730, 736  

(Alaska 2000)).  

              47            See Mine Safety                 , 756 P.2d at 291 ("A plaintiff does not have to understand         

the technical or scientific explanation for a defect before having knowledge sufficient to   

start the statute of limitations running." (citing                                             Sharrow v. Archer, 658 P.2d 1331, 1334-  

35 (Alaska 1983))).  



                           Id. ("We look to the date when a reasonable person has enough information  

to alert that person that he or she has a potential cause of action or should begin an  

inquiry to protect his or her rights." (citing Sharrow, 658 P.2d at 1334)).  

              49            See Williams v. Williams, 129 P.3d 428, 432 (Alaska 2006).  

                                                                                     -24-                                                                                6804

----------------------- Page 25-----------------------

misrepresentation  or  a  failure  to  disclose  facts  where  there  is  a  duty  to  do  so;  

                                                         50  It cannot be invoked "unless [the person has]  

(2) justifiable reliance; and (3) damage."                                 

                                                                                                   51   In other words,  

exercised due diligence in attempting to uncover the concealed facts."  


"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."52  


                   The superior court found that DWT's and BPK's identities were known by  


Petro Alaska's employees and revealed within its general ledger.  The court also found  

Gefre and Beck both were aware that Petro Alaska had retained attorneys for some  

matters.  In addressing the Shareholders' equitable estoppel arguments, the superior court  

noted Gefre and Beck had an affirmative duty by 1995 to investigate all claims related  


to the Property.  The court stated that a reasonable investigation would have focused on  

how Steffen acquired the Property and who represented Petro Alaska during that time  


"to find out what they knew about how this very important corporate opportunity had not  

been realized by [Petro Alaska]."  The superior court stated that "[s]uch a reasonable  

initial investigation would have led directly to DWT."  The court also looked at what  


Gefre and Beck as "ordinarily prudent person[s] in similar circumstances" should have  

done  and  discovered  "in  view  of  their  own  fiduciary  duties  and  obligations  under  



AS  10.06.450."              The  superior  court  concluded  that  it  would  have  been  utterly  

          50       Id. (citing  Waage v. Cutter Biological Div. of Miles Labs., Inc., 926 P.2d  

1145, 1149 n.7 (Alaska 1996)).  

          51       Id. (quoting  Waage, 926 P.2d at 1151).  

          52        Waage,  926  P.2d  at  1149  (emphasis  added)  (quoting Palmer  v.  Borg- 

Warner Corp. (Palmer II), 838 P.2d 1243, 1251 (Alaska 1992)).  

          53       AS 10.06.450(b) provides that "[a] director shall perform [his] duties . . .                          


                                                           -25-                                                      6804

----------------------- Page 26-----------------------


unreasonable for Gefre and Beck not to be aware of DWT's and BPK's alleged deception  

and concealment by 1996 and 2002, respectively.  

                    The Shareholders argue the superior court's finding that their actions were  


utterly unreasonable is clearly erroneous, and request that we apply equitable estoppel  

to extend the limitations period of AS 09.10.053.  The Shareholders argue DWT and  


BPK effectively concealed their involvement in the Property issues, despite an ongoing  


fiduciary duty to disclose.  The Shareholders also claim the superior court's application  


                                                                                     Specifically the Shareholders  

of AS 10.06.450(b) violates the Alaska Constitution.  

argue the superior court's implicit ruling that AS 10.06.450(b) displaced the "utterly  

unreasonable" standard regarding accrual of the relevant statute of limitations is an equal  

protection violation.  


                    Again we do not need to resolve whether the Shareholders' investigation  

during the 1996-2002 period was sufficient.  Once Steffen renounced his earlier position  


that he held the Property in trust for the corporation, he was not equitably estopped from  


                                                                    Because at least starting in late 2002 the  

asserting the statute-of-limitations defense. 


Shareholders failed to "exercise[] due diligence in attempting to uncover the concealed  


facts" regarding the Property and because it would not be utterly unreasonable for them  

          53        (...continued)  

in good faith, in a manner the director reasonably believes to be in the best interests of  


the  corporation,  and  with  the  care,  including  reasonable  inquiry,  that  an  ordinarily  


prudent person in a like position would use under similar circumstances."  

          54        The Shareholders expressly limit the constitutional challenge to the superior  


court's application of AS 10.06.450(b).  The Shareholders do not argue AS 10.06.450  

is facially unconstitutional.  



                    Gudenau & Co. v. Sweeny Ins., Inc., 736 P.2d 763, 769 (Alaska 1987)  


("Plaintiff must also show that it resorted to legal action within a reasonable period after  

the circumstances ceased to justify delay.").  

                                                             -26-                                                        6804

----------------------- Page 27-----------------------

to be aware of DWT's and BPK's identity and involvement thereafter, the Shareholders         

cannot invoke equitable estoppel now.56  


                    We reject the Shareholders' equal protection violation argument.  Alaska  


Statute 10.06.450(b) required Gefre and Beck to perform their duties as directors  "with  


the care, including reasonable inquiry, that an ordinarily prudent person in a like position  


would use under similar circumstances."  Gefre and Beck's status as directors and AS  

 10.06.450(b)'s  "reasonable  inquiry"  standard  assist  in  evaluating  Gefre  and  Beck's  


investigatory diligence.  It does not hold them to a different standard - it merely holds  

them  to  a  reasonable  standard  based  "upon  all  of  the  surrounding  circumstances."57  

Accordingly the superior court did not commit an equal protection violation.  

          B.        Validity Of The Statutes-Of-Limitations Evidentiary Hearing  

                    The Shareholders argue that use of evidentiary hearings to resolve factual  

questions underlying statutes-of-limitations issues is a violation of the constitutional right  


to a jury trial.  BPK cites several of our prior decisions as evidence that we "recognize[]  

the superior court's ability to act as fact-finder to resolve statute of limitations issues at  

an  evidentiary  hearing."    DWT  adds  that  the  Shareholders  have  failed  to  establish  

"compelling reasons" for entirely abandoning pretrial evidentiary hearings.58  

          56         Williams, 129 P.3d at 432 (quoting Waage, 926 P.2d at 1151).  

          57        Preblich v. Zorea , 996 P.2d 730, 736 (Alaska 2000) (quoting Breck v.  

Moore , 910 P.2d 599, 604 (Alaska 1996)).  

          58        See McCrary v. Ivanof Bay Vill. , 265 P.3d 337, 340-41 (Alaska 2011):  

                    Our precedent is not lightly set aside.  We have repeatedly  

                    held that a party raising a claim controlled by an existing  

                    decision   bears   a   heavy   threshold   burden   of   showing  

                    compelling reasons for reconsidering the prior ruling.  We  

                    will overrule a prior decision only when clearly convinced  


                                                              -27-                                                         6804

----------------------- Page 28-----------------------

                    1.	       Evidentiary hearings generally  


                    "The purpose of statutes of limitations is to eliminate the injustice which  


may result from the litigation of stale claims."                            To facilitate this  purpose we have  

recognized  the  propriety  of  evidentiary  hearings  to  resolve  factual  issues  regarding  


statutes of limitations.              The Shareholders are correct that article I, section 16 of the  

Alaska Constitution provides that "[i]n civil cases where the amount in controversy  


exceeds [$250], the right of trial by a jury of twelve is preserved to the same extent as  

it  existed  at  common  law."    But  "the  task  of  interpreting  and  applying  a  statute  of  



limitations traditionally falls within the province of the courts."                               We again approve the  

          58	       (...continued)

                    that the rule was originally erroneous or is no longer sound

                    because of changed conditions, and that more good than harm


                    would result from a departure from precedent.

(quoting Guerrero ex rel. Guerrero v. Alaska Hous. Fin. Corp., 123 P.3d 966, 982 n.104  


(Alaska 2005)) (footnote and internal quotation marks omitted).  

          59        Pedersen v. Zielski , 822 P.2d 903, 907 (Alaska 1991) (citing Johnson v.  


City of Fairbanks, 583 P.2d 181, 187 (Alaska 1978)).  

          60        Id. at 907 n.4 ("Holding an evidentiary hearing well in advance of trial to  

resolve fact questions goes part way toward meeting the early resolution goals of statutes  


of limitations.  We recommend such a hearing in this case.").  



                    Cikan v. ARCO Alaska, Inc., 125 P.3d 335, 339 (Alaska 2005); see also  

Ellicott v. Nichols , 7 Gill 85, 96 (Md. 1848) (stating "it is the province of the court  

authoritatively to interpret" the facts and determine whether they "take the plaintiff's  

claim out of the bar of the statute of limitations");  Sundell v. Town of New London, 409  


A.2d 1315, 1320 (N.H. 1979) ("The rule in this State is that a statute of limitations is a  


matter of procedure, the interpretation and application of which is traditionally within the  


province of the court . . . ." (citation, quotation marks, and internal editing omitted));  

Lopez v. Swyer , 300 A.2d 563, 567 (N.J. 1973) ("[T]he question as to the application of  


the statute of limitations is ordinarily a legal matter and as such is traditionally within the  



                                                              -28-	                                                        6804

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use of evidentiary hearings to determine when a cause of action accrued.                                     Specifically  


we affirm that when "a factual dispute precludes entry of summary  judgment [on a  


statute-of-limitations defense] the dispute must ordinarily be resolved by the [superior]  


court at a preliminary evidentiary hearing in advance of trial."                                

                   We  acknowledge  that  in  certain  circumstances  the  superior  court  may  


improperly reach the merits of an underlying claim within the evidentiary hearing.  For  

example, in  Williams v. Williams the superior court held an evidentiary hearing and  


found it necessary to reach the underlying question of fraud to resolve a statutory tolling  

             64  Although the court also reached alternative conclusions supporting its result,  


we recognized that "addressing the substantive merits of a case in . . . a preliminary  


evidentiary hearing can create considerable tension with the . . . right to a jury trial."65  


But to the extent the superior court does not address the substantive merits of a case, the  


use of evidentiary hearings to decide statutes-of-limitations issues is constitutional.  

                   2.        Evidentiary hearing in this case  

                    The  Shareholders  argue  that  the  superior  court  made  several  improper  

findings as a result of the evidentiary hearing.  Specifically the Shareholders challenge  

the  court's  determination  that:  (1)  the  reasonableness  of  their  reliance  on  Steffen's  

          61        (...continued)  

province of the court.").  

          62       See, e.g., Egner v. Talbot's, Inc. , 214 P.3d 272, 278 (Alaska 2009); Domke  

v. Alyeska Pipeline Serv. Co. , 137 P.3d 295, 303 n.19 (Alaska 2006).  

          63        Cikan, 125 P.3d at 339 (citing John's Heating Serv. v. Lamb                          , 46 P.3d 1024,  

1033 n.28 (Alaska 2002)).  

          64        129 P.3d 428, 431 (Alaska 2006).  

          65       Id. at 431.  

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----------------------- Page 30-----------------------

representations "dissipated over time"; and (2) "it should have been apparent to [them]   

by mid 1996 that [Steffen] was not going to voluntarily transfer title."  The Shareholders         

argue for an "inviolate right to jury trial on these issues."  


                     We conclude the superior court properly decided these issues.  The court  


had before it evidence establishing that the Shareholders had knowledge the Property's  


acquisition was an important corporate opportunity, Steffen purchased the Property in  


his name, and Steffen repeatedly failed to transfer title to Petro Alaska.  The court acted  


well within its authority to make factual findings as to when the Shareholders had inquiry  

notice of the potential causes of action arising out of Steffen's misappropriation.  In  


making these findings, the court did not address the merits of any underlying claims  

within the evidentiary hearing - the court merely addressed when the Shareholders had  

notice of these potential claims and not whether there was any merit to these claims.  

           C.        Attorney-Client Privilege Issues  

                      1.        Gefre, Beck, and Keene  


                     The Shareholders argue the superior court erred in ruling they waived their  

attorney-client  privilege  with  Keene  by  asserting  the  discovery  rule  and  equitable  


estoppel in the statutes-of-limitations disputes.  The Shareholders argue the court applied  

the  incorrect  standard  for  finding  a  waiver  of  the  attorney-client  privilege.                                             The  


Shareholders suggest the court should have adopted the waiver test established in Rhone- 


                                                                         instead of the test established in Hearn v.  

Poulenc Rorer Inc. v. Home Indemnity Co. ,                                                            


Rhay .  


                     Under the Rhone test, the attorney-client privilege is waived only if the  

           66        32 F.3d 851, 863 (3d Cir. 1994).  

           67        68 F.R.D. 574, 581 (E.D. Wash. 1975).  

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----------------------- Page 31-----------------------



litigant directly puts the attorney's advice at issue in the litigation.                                In other words, the  


privilege is waived once a party seeks to avoid or limit liability by showing reliance on  


counsel's  advice.    This  test  rejects  relevance  as  the  standard  for  waiver  because  it  

undermines the exchange of confidential and candid communications between attorney  


and client.    In contrast, under the Hearn test the attorney-client privilege is waived if:  


                     (1) assertion of the privilege was a result of some affirmative  


                     act, such as filing suit, by the asserting party; (2) through this  

                     affirmative   act,   the   asserting   party   put   the   protected  

                     information at issue by making it relevant to the case; and (3)  


                     application of the privilege would have denied the opposing  



                    party access to information vital to his defense.  


                     The superior court adopted the Hearn test based on our focus on fairness,  


finding an implied waiver of the attorney-client privilege.    The court then concluded  


that the Shareholders had "impliedly waived the attorney client privilege with respect to  


their communications with [Keene] that relate or pertain to DWT."   Accordingly the  

court stated DWT could pursue discovery from Gefre, Beck, and Keene concerning what  

they knew about Steffen and DWT.  


                     We have previously noted a client may impliedly waive the attorney-client  


                                                                                       We stated the "purpose of the  

privilege by putting discussions with counsel at issue. 

          68        Rhone-Poulenc Rorer , 32 F.3d at 863.  

          69        Id. at 864.  

          70        Hearn , 68 F.R.D. at 581.  

          71        See Lewis v. State, 565 P.2d 846, 850 n.4 (Alaska 1977) (finding fairness     

dictated attorney-client privilege was waived when client filed motion that put into "issue  

what advice he did or did not receive from [his attorney]").  

          72        Id .  

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----------------------- Page 32-----------------------



rule implying waiver in [such a] situation is essentially fairness to the opposing party." 

In addition, "we emphasize[d] that it is not the mere filing of [a] motion, but the actual  


placing in issue of confidences covered by the privilege, that waives the attorney-client  



privilege."         Because we continue to believe fairness to the opposing party should be  

included in the implied waiver analysis, we adopt the Hearn test.75  

                   Applying the Hearn test, we conclude the superior court did not err in  

finding the Shareholders placed their communications with Keene at issue by raising the  


discovery rule and estoppel in response to DWT's statutes-of-limitations defenses.  The  


communications are material to the defenses because the Shareholders claimed they had  


no knowledge, either direct or constructive, of DWT's identity or role with regard to  

Steffen's  conduct.    The  Shareholders  cannot  be  permitted  to  thrust  their  lack  of  


knowledge into the litigation while simultaneously retaining the attorney-client privilege  


to  frustrate  proof  of  knowledge  that  negates  the  very  foundation  necessary  to  their  


positions.  The superior court correctly found fairness dictated that DWT be permitted  

to discover from Gefre, Beck, and Keene what they knew about Steffen and DWT.76  

                   2.        Petro Alaska and DWT  

                   The Shareholders also challenge the superior court's denial of a motion to  

          73       Id.  

          74       Id.  

          75       See also RESTATEMENT (THIRD) OF THE LAW GOVERNING  LAWYERS   80  

(1998) reporter's note cmt. b ("The preferred approach is to require that the client either  

permit a fair presentation of the issues raised by the client or protect the right to keep  


privileged communications secret by not raising at all an issue whose fair exposition  

requires examining the communications.").  

          76       See  League  v.  Vanice,  374  N.W.2d  849,  855-56  (Neb.  1985)  (finding  

implied waiver when plaintiff justified noncompliance with statute of limitations by  

alleging that delay was caused solely by defendant's concealment of facts).  

                                                            -32-                                                      6804

----------------------- Page 33-----------------------

waive DWT's attorney-client privilege while DWT simultaneously represented Petro  


Alaska       and     Steffen       individually.           Specifically        the    Shareholders          request      all  


communications between DWT and any inside or outside counsel relating to matters  

involved in this litigation.  


                   DWT voluntarily produced all pre-litigation documents created internally,  

thereby  rendering  Petro  Alaska's  claim  moot  as  to  internal  communications.    The  


Shareholders' claim regarding communications between DWT and outside counsel is  


waived for a failure to adequately brief it - a single conclusory sentence requesting  

DWT's communications with outside counsel without citation of any authority providing  

for such a remedy is not adequate to put the issue before this court.77  

          D.       Attorney's Fees As Special Damages  


                   The Shareholders argue the superior court incorrectly ruled that a plaintiff  


cannot recover attorney's fees incurred in bringing suit as special damages in that suit.  

Specifically the Shareholders argue DWT and BPK committed legal malpractice and  

fiduciary fraud, causing Gefre and Beck to incur attorney's fees in this litigation.  

                   The general rule is "that attorney's fees for work in the case under review  


are not recoverable as damages."                     A prevailing party's attorney's fees are generally  


recoverable only as an attorney's fee award under Alaska Civil Rule 82.  However it is  

          77       A.H. v. W.P. , 896 P.2d 240, 243-44 (Alaska 1995) (finding issue waived for  

inadequate  briefing  because  "superficial  briefing  and  the  lack  of  citations  to  any  


authority constitutes abandonment of the point on appeal"); Adamson v. Univ. of Alaska,  


819 P.2d 886, 889 n.3 (Alaska 1991) ("[W]here a point is given only a cursory statement  


in the argument portion of a brief, the point will not considered on appeal.").  



                   Sisters of Providence in Wash. v. A.A. Pain Clinic, Inc., 81 P.3d 989, 1008  

(Alaska 2003), cited in ASRC Energy Servs. Power & Commc'ns, LLC v. Golden Valley  

Elec. Ass'n, Inc., 267 P.3d 1151, 1165 (Alaska 2011); see also RESTATEMENT (SECOND)  

OF  TORTS   914(1) (1979) ("The damages in a tort action do not ordinarily include  

compensation for attorney fees or other expenses of the litigation.").  

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----------------------- Page 34-----------------------


also  generally  recognized  that "when  the  defendant has  breached  a  specific  duty  to  


protect the plaintiff from litigation expenses, the defendant is necessarily liable for those  



expenses, including attorney fees."                       "When recovery of a fee award is permitted . . . the  


fee  award  is  damages,  not  costs."                          For  example,  "where  the  negligence  of  a  

malpracticing lawyer requires the client to protect her interests by litigating with others;  


the lawyer is liable for the litigation expenses as consequential damages."                                             


                     As applicable here, we agree "that a legal malpractice plaintiff may recover  


as actual damages the attorney fees incurred as a result of the defendant's malpractice,  


so long as the plaintiff can demonstrate she would not have incurred the fees in the  



absence of the defendant's negligence."                           Therefore if the Shareholders are successful  

on  the  spoliation  and  legal  malpractice  claims  on  remand,  then  the  fact-finder  must  


determine what, if any, of their attorney's fees incurred against Steffen would not have  


been incurred in the absence of DWT's and BPK's specific wrongdoing, and, thus, are  

          79         1 D  AN  B.  DOBBS,  LAW OF REMEDIES :   DAMAGES -EQUITY-RESTITUTION    

3.10(3), at 401 (2d ed. 1993) (This "reflect[s] a willingness to award attorney fees to the  


plaintiff  when  the  defendant  should  have  protected  the  plaintiff  from  litigation  or  


litigation costs."); see also  RESTATEMENT  (SECOND)  OF  TORTS   914(2) ("One who  

through the tort of another has been required to act in the protection of his interests by  


bringing  .  .  .  an  action  against  a  third  person  is  entitled  to  recover  reasonable  


compensation  for  .  .  .  attorney  fees  .  .  .  thereby  suffered  or  incurred  in  the  earlier  


          80         DOBBS at 402 (emphasis in original).  



                    Id. at 407-08; see also Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer ,  


867 N.E.2d 385, 388 (N.Y. 2007) ("A plaintiff's damages [in a legal malpractice case]  


may include 'litigation expenses incurred in an attempt to avoid, minimize, or reduce the  


damage caused by the attorney's wrongful conduct.' " (quoting DePinto v. Rosenthal &  

Curry, 655 N.Y.S.2d 102, 102 (N.Y. App. Div. 1997))).  

          82         Nettleton v. Stogsdill , 899 N.E.2d 1252, 1261 (Ill. App. 2008).  

                                                                -34-                                                          6804

----------------------- Page 35-----------------------

recoverable as damages.  But the Shareholders may not recover as special damages  

attorney's fees incurred in asserting claims against DWT and BPK.  

          E.        Other Issues  

                    The  Shareholders  argue  the  superior  court  erred  in  denying  a  motion  


prohibiting DWT from arguing comparative fault as to the fiduciary fraud claim.  The  

Shareholders also argue the court erred in granting DWT's motion for an order that  

DWT and BPK should not be jointly and severally liable for the conspiracy and aiding  


and abetting causes of action. Because the underlying claims are time-barred, we decline  

to address these issues.  


                    The Shareholders also contend the superior court incorrectly dismissed the  

claim that DWT must disgorge fees because of alleged ethical violations.  The court  


dismissed the claim because it found the Shareholders had adequate and complete legal  


remedies  available.            Because  the  Shareholders  provide  merely  a  single  conclusory  


sentence without further discussion or citation of any authority, we find the issue waived  

for a failure to adequately brief.83  


                    On  cross-appeal,  BPK  argues  the  superior  court  erred  in  refusing  to  


recognize its October 2008 offer of judgment under Alaska Civil Rule 68.  Because we  


are  remanding  the  spoliation  claim  against  BPK  to  the  superior  court  and  BPK's  


judgment against the Shareholders must be vacated, we decline to address the Rule 68  


V.        CONCLUSION  


                   For the reasons stated above, we VACATE DWT's and BPK's judgments  

and REMAND for further proceedings consistent with the opinion.  

          83       See note 77, above.  

                                                            -35-                                                         6804  

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