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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Deverette L. Williams v violeta Baker, Last Frontier Assisted Living, LLC (8/2/2019) sp-7389

Deverette L. Williams v violeta Baker, Last Frontier Assisted Living, LLC (8/2/2019) sp-7389

           Notice:   This opinion is subject to correction before publication in the P                    ACIFIC  REPORTER.  

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                       THE SUPREME COURT OF THE STATE OF ALASKA                                      

DEvERETTE  L.  WILLIAMS,                                         )  

                                                                 )    Supreme Court No. S-16951  


                                Appellant,                       )  

                                                                 )    Superior Court No. 3AN-11-11648 CI  


           v.                                                    )  


                                                                 )    O P I N I O N  


vIOLETA BAKER; LAST                                              )  



FRONTIER ASSISTED LIvING,                                        )    No. 7389 - August 2, 2019  


LLC.; JOHNNY LEE WILLIAMS;                                       )  




and PERSONALIZED TAX                                             )


SOLUTIONS, LLC.,                                                 )


                                Appellees.                       )




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


                     Judicial District, Anchorage, Eric A. Aarseth, Judge.  


                     Appearances: Ronald A. Offret and J.E. Wiederholt, Aglietti  


                      Offret & Woofter, LLC, Anchorage, for Appellant.  Thomas  


                      S. Gingras and Debra J. Fitzgerald, Eide & Gingras, P.C.,  


                     Anchorage, for Appellees violeta Baker and Last Frontier  


                     Assisted Living, LLC. No appearances by Appellees Johnny  


                     Lee Williams, Personalized Tax Solutions, and Personalized  


                      Tax Solutions, LLC.  


                     Before:  Bolger, Chief Justice, Winfree, Stowers, Maassen,  


                      and Carney, Justices.  


                     BOLGER, Chief Justice.  

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


                    The  superior  court  found  Deverette  and  Johnny  Williams  liable  for  


defrauding Johnny's employer, violeta Baker, after concluding that both owed her  


fiduciary duties and therefore had the burden of persuasion to show the absence of fraud.  


The court totaled fraud damages at nearly five million dollars and trebled this amount  


under Alaska's Unfair Trade Practices and Consumer Protection Act (UTPA).  After  


final judgment was entered against Deverette and Johnny, Johnny died.  Deverette now  


appeals her liability for the fraud.  We affirm Deverette's liability for the portion of the  


fraud damages that the superior court otherwise identified as her unjust enrichment. But  


we reverse the superior court's conclusion that she owed Baker a fiduciary duty, and we  


reverse the UTPA treble damages against Deverette.  We vacate the superior court's  


fraud conclusion as to Deverette and remand for further proceedings.  




                    Johnny  Williams  worked  for  violeta  Baker  and  her  home  healthcare  


services company, Last Frontier Assisted Living, LLC (Last Frontier), from 2004 to  


2009.  Baker hired Johnny to provide payroll, tax-preparation, bookkeeping, and bill- 


paying services.  She authorized him to make payments from her accounts, both for tax  


purposes and business expenses, such as payroll.  She also gave him general authority  


to  access  her  checking  account  and  to  execute  automated  clearing  house  (ACH)  


transactions from her accounts.  Finally, Baker allowed Johnny to write checks bearing  


her electronic signature.  


                    Johnny did not invoice Baker for his labor. Rather he and Baker had a tacit  


understanding that he would pay himself a salary from Baker's payroll for his services.  


Baker and Johnny never discussed a precise amount for this salary, and Johnny did not  


keep a record of the hours he worked for Baker.  Johnny presented himself as working  


                                                               -2-                                                        7389

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for Baker in a personal capacity, but he also maintained the business Personalized Tax                                                       



                       Deverette Williams, Johnny's wife, was not an employee of Baker, Last  


Frontier, Johnny, or Personalized Tax Solutions.  During Johnny's employment with  


Baker, Deverette primarily managed their home, though at times she also ran her own  


part-time businesses from home.  Deverette discussed Johnny's business with him; she  


knew of advice he had given and services he had provided Baker. She witnessed Johnny  


using their home printer and computers in his work for Baker, and she relayed Baker's  


phone messages to him.  


                       In  2009  the  Internal  Revenue  Service  (IRS)  notified  Baker  that  her  


third-quarter taxes had  not  been  filed and she owed a penalty and interest.   Baker  


contacted Johnny to find out why the taxes had not been filed.   When he could not  


produce a confirmation that he had e-filed them, Baker contacted her son for help.  


Baker's son discovered that several checks had been written from Baker's accounts to  


Personalized Tax Solutions and Deverette.  Baker hired Mary Jones, a certified public  


accountant, to perform an audit of her accounts from 2004 to 2009.  


                       Jones  concluded  that  payments  from  Baker's  accounts  to  Johnny,  


Personalized Tax  Solutions,  and  Deverette totaled  a little over  one million  dollars.  


Transfers from Baker to Deverette equaled $135,125.  The final destination of some  


ACH  transfers  from  Baker's  accounts  could  not  be  verified;  these  "unidentified"  


transfers totaled $3,644,978. Jones estimated that Johnny's services over the time period  


could  be  valued  between  $47,500  and  $55,000.                                      Subtracting  this  from the  total  in  


transfers  to  Johnny,  Deverette,  and  Personalized  Tax  Solutions  resulted  in  an  




                       Johnny filed to establish Personalized Tax Solutions as a limited liability  


company in early 2011.  

                                                                       -3-                                                                     7389  

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overpayment to the Williamses of approximately $950,000.                                                                       Jones also documented     

damages resulting from mistakes in Johnny's tax filings for Baker.                                                                       

                           In light of Jones's findings, Baker sued Johnny, individually and doing                                                                  

business as PersonalizedTaxSolutions                                          andPersonalized                    Tax Solutions,                LLC, in October  

            2   Baker amended the complaint in December, adding Deverette as a defendant.  


Theamended complaintalleged negligence, breach ofcontract, andunfairtradepractices  


against Johnny, Personalized  Tax Solutions, and Personalized Tax Solutions, LLC;  


unjust enrichment against Deverette; and fraud and punitive damages against all four  




                           In December 2014 Baker asked the court to shift to Johnny and Deverette  


the burden of proving by clear and convincing evidence (1) where Baker's lost money  


had gone and (2) that it was properly spent. Baker argued that this shift in the burden of  


proof was warranted because both Johnny and Deverette owed Baker fiduciary duties.  


In response the superior court issued an order for a two-part trial format.  In "Phase I"  


of trial, Baker would have the burden of proving that a fiduciary relationship existed  


between one or both of the Williamses and Baker.  If the court found any such fiduciary  


duty, in "Phase II" the burden would be on Johnny and/or Deverette to prove by clear  


and convincing evidence that they did not breach the duty.  Otherwise the burden of  


proof would remain with Baker.  


              2            Baker's company, Last Frontier Assisted Living, was also a plaintiff in the                                                                    

lawsuit.   For convenience we refer to the two plaintiffs collectively as "Baker."                                                             

              3            The  superior  court  entered  default  judgment  against  Personalized  Tax  


Solutions, LLC in October 2012. Because the Williamses chose to represent themselves  


and neither was a licensed attorney, they could not file an answer on behalf of the limited  


liability company.  


                                                                                     -4-                                                                             7389

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                                       In Phase I of trial, Deverette and Johnny characterized the sums of money                                                                                                                       

Johnny transferred to Deverette as "allotments"fromhissalary,i.e., portions of Johnny's                                                                                                                                          

lawful salary that were allotted and paid directly to Deverette.                                                                                                                           The court found that                                

Johnny had a fiduciary duty to manage Baker's payroll and other funds to which he was                                                                                                                                                           

given access; to record all related transactions; to provide competent payroll, IT, and tax                                                                                                                                                       

advice; and to affirmatively advise Baker as to the limits of his fiduciary duty. The court                                                                                                                                                 

found that Deverette did not owe Baker a direct fiduciary duty.                                                                                                                          

                                       The court shifted the burden of proof to Johnny but not Deverette on all but                                                                                                                               

Baker's fraud and unjust enrichment claims.                                                                                       With respect to the fraud claim, the court                                                                

                                                                                                                                                                       4     It stated that this claim had  

shifted the burden of proof to both Deverette and Johnny.                                                                                                                                                                                       

a "broader scope" than the others because it alleged the taking of money and improper  


use of those funds, not just their negligent mismanagement. According to the court, such  


alleged fraud would violate Johnny's "direct fiduciary duty" and Deverette's "indirect  


duty"  to  "not  take  any  actions  that  would  result  in  .  .  .  or  assist  in  .  .  .  [Johnny]  


improperly using [Baker's] funds."  


                                       Phase II of trial took place in July 2015 and 2016.   In June 2017 the  


superior court issued oral findings of fact and conclusions of law.  It made extensive  


findings about Johnny's culpability but very few findings about Deverette. It found that  


Johnny had committed negligence, breach of contract, UTPA violations, and fraud. The  


court concluded that Deverette was unjustly enriched by Johnny's payments to her from  


Baker's  accounts.                                          And  it  found  that  Deverette's  acceptance  of  these  funds  was  


inconsistent with Johnny's fiduciary duties.  The court concluded that both defendants  


had "acted in bad faith and with little regard to [Baker's] interests" and were liable for  




                                       Because unjust enrichment liability does not depend on the existence of a  


fiduciary duty, the court did not reverse the burden of proof on this claim.  

                                                                                                                         -5-                                                                                                                            7389  

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fraud.  This fraud consisted of Johnny's misrepresentations about his competency and  

trustworthiness as a fiduciary and tax preparer.  The court made no specific findings  


providing the basis for its conclusion that Deverette had also committed fraud.  


                    In November 2017 the court adopted Jones's final damages calculation of  


$4,956,774.  It trebled the damages since it concluded that the acts causing them were  


violations of Alaska's UTPA.  The court entered a final judgment of $20,274,763.77  


jointly  and  severally  against  the  Williamses,  individually  and  doing  business  as  


Personalized Tax Solutions and Personalized Tax Solutions, LLC.  


                    Johnny died later in November 2017, and Deverette notified the court of  


this fact in December.  In early 2018 she filed this appeal.  



                    Deverettearguesthat thesuperior courterred in concludingsheowed Baker  


fiduciary duties and that the record does not support her liability for the fraud claim.  


Reviewing the superior court's legal conclusions de novo and its factual findings for  


clear error,5 we agree that the record does not support a conclusion that Deverette was  


a fiduciary of Baker. We reverse that conclusion and remand for further proceedings on  


the fraud claim.  


          A.	       The Superior Court Erred When It Concluded That Deverette Owed  


                    Fiduciary Duties To Baker.  


                    The superior court concluded that Deverette owed an "indirect" fiduciary  


duty to Baker based on the following findings:  first, that Deverette represented herself  


to Baker as an agent of Johnny on the jobs he performed; second, that Deverette knew  


of the scope of work performed by Johnny and of the level of trust placed in Johnny by  


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


348, 354 (Alaska 2012) (citing Labrenz v. Burnett, 218 P.3d 993, 997 (Alaska 2009)).  


                                                               -6-	                                                          7389  

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Baker; and third, that Deverette knew that Baker trusted her to pass on correct and timely                                                                                

information and to not take actions that would be inconsistent with Johnny's fiduciary                                                                              


                            Having reviewed the entire record, we are left with a "definite and firm                                                                          


conviction" that the superior court was mistaken in reaching certain of these findings.                                                                                                  

Specifically it erred by finding that Deverette represented herself as Johnny's agent in  


all the work he performed for Baker and by finding that Deverette knew Baker trusted  


her to not take actions inconsistent with Johnny's fiduciary duties.   The evidence in  


Phase I of trial showed that while Deverette knew the scope of Johnny's fiduciary  


relationship with Baker, Deverette herself had never been an employee of Baker; had  


never assisted Johnny in, or been delegated, work for Baker; and was not perceived as  


Johnny's or Personalized Tax Solutions's agent by Baker.   There was evidence that  


Deverette took Baker's calls for Johnny and delivered messages to him, but nothing  


established that she acted or represented herself as an agent of Johnny in his fiduciary  


capacities.  And there was also no evidence that Baker had come to trust Deverette as a  


co-fiduciary with Johnny.  It was thus clear error for the court to find that Deverette  


generally  represented  herself  as  Johnny's  agent  and  to  find  that  she  was  aware  of  


elevated trust placed in her by Baker.  We reverse these findings.  


                            The  findings  that  remain  do  not  support  the  court's  conclusion  that  


Deverette owed fiduciary duties to Baker.7   We have stated that a fiduciary relationship  


              6             Labrenz, 218 P.3d at 997.                                

              7             Whether   a   fiduciary   relationship   exists  is  a   legal   question   reviewed  

de novo.               Thomas v.                Archer,   384   P.3d   791,  795  (Alaska 2016);                                                 see also           Munn   v.  

Thornton, 956 P.2d 1213, 1220 (Alaska 1998) ("We exercise our independent judgment  


in reviewing questions of law, such as whether a cost-plus contract creates a fiduciary                                       


                                                                                         -7-                                                                                 7389

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

"exists when one imposes a special confidence in another, so that the latter, in equity and                                                                     

good conscience, is bound to act in good faith and with due regard to the interests of the                                                                       

                                                          8  "Fiduciary relationships are generally defined by a level  

one imposing the confidence."                                                                                                                                

                                                                                                       9 and "[l]oyaltyand thedisavowal  

oftrust beyond that inordinary business relationships,"                                                                                             


of self interest are hallmarks of the fiduciary's role."10  The factual findings supported  


by the record do not establish the existence of such a relationship between Deverette and  


Baker.  And since the record contains no evidence supporting such a relationship, we  


reverse the superior court's erroneous conclusion.  


                          Reversing the superior court's fiduciary duty conclusion also requires us  

to reverse its ruling that shifted the burden of proof on Baker's fraud claim to Deverette.  


In a civil action,  trial courts may  shift the burden of proof to the defendant  if the  


                                                                              11    Under such circumstances burden shifting  

defendant is a fiduciary of the plaintiff.                                                                                                              


helps ensure that those entrusted with the weighty obligations of a fiduciary are held  


                                                     12  Absent special circumstances, however, burden shifting is  

responsible for those duties.                                                                                                                                       


             7            (...continued)  


             8            Seybert v. Cominco Alaska Expl.                                  , 182 P.3d 1079, 1090 (Alaska 2008)                             

(quoting  Munn, 956 P.2d at 1220).                     

             9           Munn, 956 P.2d at 1220 (citing Fiduciary duty, BLACK'S LAW DICTIONARY   


(6th ed. 1990)).  


             10          Id. (alteration in original) (quoting Wagner v. Key Bank of Alaska, 846 P.2d  


 112, 116 (Alaska 1993)).  


             11           See Miller v. Sears, 636 P.2d 1183, 1190 (Alaska 1981).  


             12           See id. (stating that once a fiduciary relationship is established, burden  


shifting is "in accord with general tenets of the duties of a fiduciary and ensures that [the  



                                                                                 -8-                                                                         7389

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not   appropriate   when   there   is   no   fiduciary   relationship,   and   there   were   no   such  

circumstances here. Because the superior court erred in concluding that Deverette owed                                                                                                                                     

fiduciary duties to Baker, its reversal of the burden of proof was also erroneous.                                                                                                                                        

                  B.                We Remand The Fraud Claim.                                             

                                    The superior court made Deverette liable for the entire judgment, but its                                                                                                                      

findings only referenced Deverette with respect to Baker's unjust enrichment and fraud                                                                                                                                     

claims. Deverette does not dispute her liability for the approximately $135,000 awarded                                                                                                                            

for  unjust   enrichment.     She   does,   however,   contest   her   liability   for   the   remaining  


damages, which are encompassed by the fraud claim.                                                                                                                                                 

                                                                                                                                                            These are the overpayments  


made to Johnny and Personalized Tax Solutions, the unverified ACH transfers, and the  


damages resulting  from improper  tax  filing,  all trebled as violations of the UTPA.  


Deverette argues that she is not responsible for these damages because she is not liable  


for fraud. Baker claims that Deverette can be found jointly liable, either as an agent who  



assisted Johnny in his wrongdoing or as a joint tortfeasor in Johnny's misconduct. 

                  12                (...continued)  


fiduciary] discharges his general duties of loyalty and fair play").  

                  13                In   her   reply   brief,   Deverette   also   raises   a   claim for                                                                               apportionment   of  

damages under AS 09.17.080, but this claim was not raised in the superior court.  We  


will not address this claim on appeal because it was not raised in her opening brief.                                                                                                                                         See  

Maines v. Kenworth Alaska, Inc.                                                          , 155 P.3d 318, 326 (Alaska 2007).                                                                But the superior        

court on remand is free to consider whether to allow Deverette to assert this claim.                                                                                                                          

                  14                Baker also argues that Deverette is liable for Johnny's misconduct because  


the judgment is a "marital debt" and because Deverette, as Johnny's surviving spouse,  


will inherit his judgment debt. But whether Johnny's judgment debt would be classified  


as "marital" in a divorce proceeding or whether it would be inherited by Deverette in a  


probate proceeding are questions irrelevant to the central issue in this appeal:  whether  


Deverette is legally culpable for the fraud.  


                                                                                                                 -9-                                                                                                        7389

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                                           Because we have reversed the superior court's burden-shifting ruling, on                                                                                                                                                     

 remand the burden will remain with Baker to prove by a preponderance of the evidence                                                                                                                                                                

 that Deverette is liable for fraud.                                                                       Baker may attempt to do so under a theory of direct                                                                                                

 common law fraud or on a theory that Deverette is jointly liable for Johnny's fraud.                                                                                                                                                                                             

 Should the superior court on remand find that Deverette is liable as a co-conspirator or                                                                                                                                                                                 

joint tortfeasor in Johnny's fraud, it should be mindful that co-conspirators and joint                                                                                                                                                                          

 tortfeasors are liable only for the acts of their collaborators that fall within the scope of                                                                                                                                                                            


 their common tortious design.                                                                        

                      C.                   We Reverse The Treble Damages verdict Against Deverette.  


                                           The superior court ruled that Deverette's fraud liability was sufficient to  


 support UTPA liability.  But Baker conceded at oral argument that Deverette was not  


 liable under the UTPA.  Therefore, we also reverse the court's treble damages verdict  


 against Deverette.  


 Iv.                  CONCLUSION  

                                           We AFFIRM Deverette's unjust enrichment liability.  We REvERSE the  


 superior court's fiduciary duty conclusion and the UTPA treble damages. We vACATE  


 the  superior  court's  fraud  conclusion  as  to  Deverette  and  REMAND  for  further  


 proceedings consistent with this opinion.  


                      15                   See Halberstam v. Welch                                                       , 705 F.2d 472, 484 (D.C. Cir. 1983) (stating that                                                                                          

 civil co-conspirators are liable for "acts pursuant to, in furtherance of, or within the scope                                                                                                                                                                

 of the conspiracy"); R                                                ESTATEMENT   (SECOND)  OF  TORTS    876 cmt. a (A                                                                                                            M. L          AW  INST .  


  1979) ("Whenever two or more persons commit tortious acts in concert, each becomes  


 subject to liability for the acts of the others.").  

                                                                                                                                  -10-                                                                                                                           7389

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