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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Moffitt v. Moffitt (8/8/2014) sp-6936

Moffitt v. Moffitt (8/8/2014) sp-6936

         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  

                                                                                      

         corrections@appellate.courts.state.ak.us.  



                   THE SUPREME COURT OF THE STATE OF ALASKA  



LINDA R. MOFFITT, as Guardian                          )  

and Conservator for her Mother,                        )        Supreme Court No. S-14495  

BETTY SCHROEDER-MOFFITT,                               )  

Successor Trustee of the                               )        Superior Court No. 3PA-06-01070CI  

LEONARD E. MOFFIT FAMILY                               )  

TRUST, and Successor Trustee of the                    )        O P I N I O N  

                                                      

BETTY SCHROEDER-MOFFITT                                )  

FAMILY TRUST,                                          )        No. 6936 - August 8, 2014  

                                                       )  

                           Appellant,                  )  

                                                       )  

         v.                                            )  

                                                       )  

TRACY A. MOFFITT and                                   )  

KATHRYN A. MOFFITT,                                    )  

                                                       )  

                           Appellees.                  )  

                                                       )  



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

                  Judicial District, Palmer, Eric Smith, Judge.  



                  Appearances:   Cynthia L. Ducey and Kendra E. Bowman,  

                                                                                   

                                       

                  Delaney Wiles, Inc., and Peter C. Gamache, Law Offices of  

                  Peter  C.  Gamache,  Anchorage,  for  Appellant.    Chris  D.  

                  Gronning, Bankston Gronning O'Hara, P.C., Anchorage, for  

                                                                                 

                  Appellees.  



                  Before:  Fabe, Chief Justice, Winfree, Stowers, Maassen, and  

                                                                                   

                  Bolger, Justices.  



                  BOLGER, Justice.  


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

I.        INTRODUCTION  



                   Linda Moffitt filed a lawsuit as her mother's guardian and conservator and  

                                                                                     



the successor trustee of her parents' living trusts, seeking to rescind or reform a deed  



they executed in 1995 and a contract they signed in 1998.   The superior court dismissed  



Linda's claims, reasoning that the statutes of limitations had run before Linda filed her  



                                                                                                    

lawsuit  in  2005.    The  primary  question  in  this  appeal  is  whether  the  superior  court  



properly applied the statutes of limitations.  We conclude that Linda's mostly equitable  



                                                                                                          

claims are subject to the defense of laches, and the statutes of limitations do not apply to  



these claims.  



II.       FACTS AND PROCEEDINGS  



                   In 1992 Leonard and Betty Moffitt created two trusts to provide lifetime  



                                                                                                  

support for the surviving spouse, and then to pass the trusts' assets to their children.  In  



                                                        

1995 Leonard and Betty agreed to sell their family farm to their son, Tracy, and his wife,  



                                                                             

Kathy, and deeded part of the property to Tracy and Kathy.  In 1998 Leonard and Betty  



signed a contract memorializing the 1995 agreement and providing that the rest of the  



                                                                                

farm would be sold to Tracy and Kathy after Leonard and Betty died.  Leonard died in  



                               

2000 and Betty was diagnosed with dementia in 2001.  Their daughter, Linda Moffitt,  



                                                                              

became personal representative of Leonard's estate, Betty's guardian and conservator,  



and successor trustee of Leonard's and Betty's trusts.  



                                                                                                             

                   In  2005  Linda,  in  her  capacity  as  guardian,  conservator,  and  trustee,  



                                                                                  

brought a civil suit against Tracy and Kathy seeking  damages and rescission of the  



contract.  In 2009 Linda filed an amended complaint, adding an alternate request for  



reformation  and  containing  five  counts:    conversion,  diminished  capacity,  undue  



                                                                                                  

influence, unconscionability, and unjust enrichment.  In Leonard's probate proceeding,  



                                                                                           

Linda petitioned the court for the sale of the real property free of contract.  The probate  



                                                             -2-                                                       6936
  


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

court denied the petition.  In 2010 Linda moved to consolidate the civil case with the  

                             



probate case, but the motion was denied.  



                                                      

                      The superior court ultimately dismissed part of the civil case on summary  



judgment, concluding that, although the limitations periods were tolled during Leonard's  



and  Betty's  disabilities,  Linda's  claims  were  barred  by  the  two-year  tort  statute  of  



                                                                                                                    

limitations and the three-year contract statute of limitations. The court noted Linda may  



                                                                          

retain claims for certain profits received by Tracy and Kathy and for repayment of an  



                                                                                                       

allegedly unpaid loan, and it denied summary judgment as to those collateral matters.  



                                   

The  superior  court  awarded  Tracy  and  Kathy  $80,025.75  in  attorney's  fees  and  



                                                                                                                                 

 $9,523.08 in costs.  Linda appealed.  Betty died before oral argument in the fall of 2013.  



III.       STANDARD OF REVIEW  



                                                                                                                                1  

                      "We review a grant or denial of summary judgment de novo."   "[W]e  



review   de   novo   questions   regarding   the   applicable   statute   of   limitations,   the  

              

                                                                                                                 2   We review the  

interpretation of that statute, and whether that statute bars a claim."    

denial of a motion to consolidate for abuse of discretion.3  



IV.        DISCUSSION  



           A.         The Laches Defense Applies To Linda's Equitable Claims.  



                      1.         Linda's claims are equitable claims.  



                      Linda's main claims are for rescission or reformation of the 1995 deed and  

                                                                                                                       



the 1998 agreement due to diminished capacity, undue influence, and unconscionability.  

                                  



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



(citations omitted).  



           2          Gefre v. Davis Wright Tremaine, LLP                          , 306 P.3d 1264, 1271 (Alaska 2013)     



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



           3          C.L.  v.  P.C.S.,  17  P.3d  769,  772  (Alaska  2001)  (citing  Foltz-Nelson  

                                                                                                

Architects v. Kobylk , 749 P.2d 1347, 1349 n.2 (Alaska 1988)).  



                                                                     -3-                                                              6936
  


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

She argued that the deed and the agreement are invalid and asked that the superior court  

                         



declare these transactions "null and void or voidable" or reform them "to correct any  



unconscionable terms and to avoid unjust enrichment."  



                                                                                                                               

                    A claim for rescission may be either legal or equitable.  "Rescission at law  

                                                                                4   "Rescission at law occurs where  

is a suit based upon rescission already accomplished."                                                    



at least one of the parties to a contract rescinds the contract and then turns to a court for  

                                                                                                                       



                                                                                         5  

enforcement of that rescission and an award of damages."   In contrast, "rescission in  

                         



equity occurs only upon a court's decree.  In those cases, the court must intervene both  



                                                                              6  

to  rescind  the  agreement  and  to  award  damages."     In  other  words:    "Rescission  is  



equitable if the complaint asks the court to order rescission of the contract, and is legal  

                                                                                               

if the court is asked to enforce a completed rescission."7  

                                                                                       



                    Here,  Linda  had  not  rescinded  the  contract  when  she  filed  her  claim.  



Rather, she asked the court for an order declaring both transactions null and void, that  



                                                                                                                            8 

is, rescinded.  And Linda alleged adequate grounds for rescission:  undue influence  and 

                                                                                                               



                                9  

diminished  capacity.     Thus,  it  appears  that  she  has  pleaded  claims  for  equitable  

                                                                                      



rescission.   



          4         Knaebel v. Heiner , 663 P.2d 551, 554 (Alaska 1983) (emphasis in original).  



          5         Commercial Recycling Ctr., Ltd. v. Hobbs Indus., Inc.                               , 228 P.3d 93, 98  



(Alaska 2010) (citation omitted).  



          6         Id. at 99 (citation omitted).  



          7          12A C.J.S. Cancellation of Instruments  5 (2014) (citation omitted).  



          8         Id.  46 ("Alone, or accompanied by other inequitable circumstances, undue  



influence is a ground for the cancellation of instruments.").  



          9         Id.    62  ("As  a  general  rule,  total  incapacity  to  contract  because  of  



unsoundness of mind constitutes a ground for the rescission and cancellation of contracts  

                                                                     

executed by persons in that condition.").  



                                                               -4-                                                         6936
  


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

                   Linda's complaint also requested the remedy of reformation.  "Reformation  



                       

is an equitable remedy by which a court alters the terms of a written instrument to make  

                                                                                                  10   As noted above,  

the writing conform with the meaning that the parties agreed upon."     



Linda's complaint specifically requested that the court reform the 1995 deed and the  



1998 agreement.  Linda's reformation claims are also equitable in nature.  



                   2.	       Linda's   equitable   claims   are   not   subject   to   a   statute   of  

                             limitations, but are subject to laches.  



                   Equitable claims for rescission or reformation of a contract may be barred  

                                                                                                          



                                      11  

by the doctrine of laches.                This doctrine "creates an equitable defense when a party  

           



                                                                                  12  

delays asserting a claim for an unconscionable period."                               To apply this defense, "[a]  



court must find both an unreasonable delay in seeking relief and resulting prejudice to  

                                                                    

the defendant."13  

                           



                   Several courts have held that statutes of limitations do not control the time  



                                                    14  

limit for asserting equitable claims.                   For example, the Pennsylvania Supreme Court  



          10        Wasser & Winters Co. v. Ritchie Bros. Auctioneers (Am.), 185 P.3d 73, 77   



(Alaska 2008) (citing RESTATEMENT (SECOND) OF CONTRACTS   155 cmt. a (1981)).  



          11       Cf. Vockner v. Erickson, 712 P.2d 379, 384 (Alaska 1986) (evaluating  

                                                          

laches defense to a claim for reformation where no prejudice from delay was shown).  



          12       Offshore Sys.-Kenai v. State, Dep't of Transp. & Pub. Facilities, 282 P.3d  

                                                  

348, 354 (Alaska 2012) (quoting State, Dep't of Commerce & Econ. Dev. v. Schnell, 8  

                                                                                            

P.3d 351, 358-59 (Alaska 2000) (internal quotation marks omitted)).  



          13       Id. (alteration in original) (quoting Schnell, 8 P.3d at 358-59) (internal  



quotation marks omitted).  



          14       E.g., Holmberg v. Armbrecht , 327 U.S. 392, 396 (1946) ("Traditionally and  



                                                                                                    

for good reasons, statutes of limitation are not controlling measures of equitable relief.");  

Castner v. First Nat'l Bank of Anchorage, 278 F.2d 376, 385 (9th Cir. 1960); see also  

30A  C.J.S. Equity    164  (2014)  (citations  omitted)  ("Statutes  of  limitations,  .  .  .  as  

                                

                                                                                                          (continued...)  



                                                             -5-	                                                     6936
  


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

stated:  "[B]ecause statutes of limitation are not controlling in equity, but only provide  



                                                                                                                   

guidance in determining the reasonableness of any delay, this Court has allowed suits in  



                                                                                                    15  

                                                                                                        Similarly, the  

equity to proceed despite significant delays in bringing the action." 



                                                                     

South Carolina Supreme Court noted "that the statute of limitations does not apply to  

actions in equity."16  



                   This  rule  was  applied  by  the  Ninth  Circuit  to  a  dispute  in  the  Alaska  



                                                                        17  

                                                                              And  it  is  consistent  with  our  

territorial  court  around  the  time  of  statehood. 



                                                             

determination in the inverse situation that the defense of laches does not apply to a legal  

                                                           18  We are not aware of any statutory provision  

claim governed by a statute of limitations. 



that would conflict with our decision to apply the defense of laches to this case.  We  



                                                                                                         

therefore  conclude  that  Linda's  equitable  claims  for  reformation  and  rescission  are  



controlled  by  the  doctrine  of  laches.    The  laches  defense  should  also  apply  to  any  

associated restitution claims.19  



          14(...continued)  



ordinarily enacted, apply only to actions at law, and do not in terms apply to suits in  

                                                                                                               

equity.").  



          15       United Nat'l Ins. Co. v. J.H. France Refractories Co., 668 A.2d 120, 124  

                                                                                                  

(Pa. 1995) ( citations and internal quotation marks omitted).  



          16       Dixon v. Dixon , 608 S.E.2d 849, 855 (S.C. 2005).  



          17       Castner, 278 F.2d at 385 (holding that the statute of limitations did not  



apply to an equitable claim).  



          18  

                                                                                                 

                   Kodiak  Elec.  Ass'n,  Inc.  v.  DeLaval  Turbine,  Inc .,  694  P.2d  150,  157  

(Alaska 1984) ("The defense of laches is inapplicable to an action at law.").  



          19       See RESTATEMENT (THIRD) OF RESTITUTION AND UNJUST ENRICHMENT    



70 (2011).  



                                                            -6-                                                      6936
  


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

                                                                               

                    In the superior court, Tracy and Kathy moved for summary judgment based  



                                                                                      

on the statutes of limitations for tort and contract claims.  In response, Linda asserted that  



                                                                                      

these statutes did not apply to her equitable claims.  But neither party raised the issue of  



                                                                                                                     

laches in the motion papers, so the superior court did not have the occasion to address  



                                                                    

this doctrine.  And we cannot determine on appeal whether there are factual issues that  



                       

may preclude summary judgment on the laches defense.  We must therefore reverse the  



summary judgment order as to the equitable claims and remand this case for further  



proceedings.  



                                                                             

          B.	       The Contract  And  Tort Statutes Of Limitations Apply  To  Linda's  

                    Legal Claims.  



                                                                                                                      

                     Some of Linda's claims are clearly legal claims - particularly her claim  



                                  20  

for punitive damages.                 Linda argues that her complaint asserts claims regarding the  



ownership and possession of the property.  Thus, she contends the real property statutes  

                                                                            



of limitations apply.  But Alaska law prevents the application of real property statutes of  

                                                                       



limitations to this case.  

                                                  21  the superior court set aside a foreclosure where the  

                    In Bauman v. Day ,    



defaulting plaintiff buyers argued their original land sale agreement with the defendant  

                                                                                                         

sellers was invalid.22  We affirmed that decision but rejected the plaintiffs' argument that  

                                  



their separate action contesting the validity of the sales contract fell under a statute of  

         



                                            23  

limitations for real property.                  We reasoned that the salient issue there was "not the  

                                                                                                        



          20        See  Loomis Elec. Prot., Inc. v. Schaefer , 549 P.2d 1341, 1344 (Alaska   



1976) (holding action for damages is an action at law).  



          21         892 P.2d 817 (Alaska 1995).  



          22        Id. at 822-23.  



          23        Id. at 824-25.  



                                                                -7-	                                                        6936
  


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

ownership  interest  itself  but  improprieties  in  the  bargaining  that  resulted  in  the  



                                                                 24  

                                                                               

conveyance of that interest to the Baumans."                         Here, as in Bauman , Linda's claim is not  



                                                      

subject to a real property statute of limitations because, as discussed above, her claim  



attacks the legality of the land sale contracts.  



                    We  thus  affirm  the  superior  court's  decision  that  the  tort  and  contract  



                                                                                                                    

statutes of limitations apply to Linda's legal claims.  We note that in 1997 the statute of  



                                                                                                                  

limitations for contract cases changed from six years to three years under the newly  



                                  25  

adopted AS 09.10.053.                   



                    Finally, while there are substantial questions about the operation of the  



                                                                       

tolling statute, AS 09.10.140(a), they were not adequately addressed in the briefing on  



appeal.  We thus do not decide whether the cases applying the tolling statute to a minor's  



                                                                             26  

                                                                                also apply to toll an incompetent  

claims, even when the minor has competent parents, 



plaintiff's claims after appointment of a guardian.  



          C.	       It  Was  Not  An  Abuse  Of  Discretion  For  The  Superior  Court  To  

                    Decline To Consolidate This Case With The Probate Proceedings.  



                                                                                                                       

                    Linda points out that she attempted to sell the farm in probate court, but the  



                                                                                                                 

probate  court  denied  her  motion.    The  superior  court  also  denied  her  motion  to  



                                                                                                

consolidate, and Linda argues that this ruling was an abuse of discretion.  In  C.L. v.  



                                                                                                                

P.C.S. , however, we found no abuse of discretion in the trial court's denial of a motion  



          24	       Id. at 825.  



          25        The three-year contract statute of limitations applies to all claims arising on  



or after August 7, 1997, and the prior six-year statute of limitations applies to claims  

                                                                                                       

arising before that date.  See ch. 26,  55, SLA 1997; 1997 House Journal 1796.  



          26        See Grober v. State, Dep't of Revenue, 956 P.2d 1230, 1233 (Alaska 1998)  

                                                                                                    

(quoting Hanson v. Kake Tribal Corp., 939 P.2d 1320, 1326 (Alaska 1997)); see also  

                                                                                            

Sands ex rel. Sands v. Green, 156 P.3d 1130, 1133 (Alaska 2007).  



                                                              -8-	                                                       6936
  


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

to  consolidate the probate case with                        the civil case where the moving                       party  was  not  

prejudiced and the trial court had reasonably considered the moving party's arguments.                                                 27  



                     The superior court denied Linda's motion to consolidate, reasoning that:  



                        

(1) the motion was procedurally defective because venue of the probate case had not yet  



                                                                                               

been changed from Anchorage to Palmer; (2) consolidation was not appropriate because  



the probate proceedings involved issues beyond the dispute over the family farm; and (3)  



                                                                   

denying consolidation posed little risk of delay or duplicative litigation.  These reasons  



                                                                                                              

are sufficient to support the superior court's decision, and Linda has not explained how  



she has been prejudiced.  We conclude that the superior court did not abuse its discretion  



when it denied the motion for consolidation.  



V.         CONCLUSION  



                     The superior court's order of dismissal is VACATED.  The attorney's fees  



                                                                                                    

and costs awards are therefore also VACATED.  In view of our disposition, it is not  



necessary to address the other issues raised in this appeal.  



           27         17 P.3d 769, 773 (Alaska 2001).  



                                                                   -9-                                                                6936  

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