By Kent Berk on August 28th, 2021 in Elder Abuse, Elder Law, FINANCIAL EXPLOITATION, PROBATE LITIGATION
On August 10, 2021, the Court of Appeals issued its decision in In Re Norvelle. The case offers some interesting lessons, although it gives us very little guidance on the issue we have been waiting for the Court to address – what constitutes “actual discovery of the cause of action?” Read our statutes of limitation article for an introduction to statutes of limitation in financial exploitation, abuse and neglect cases.
In Norvelle, Sisters sued their Brother for allegedly financially exploiting their Father. Father had suffered a stroke in 2012. Due to Father’s impairments, Brother moved in with Father to assist him until Father died in 2016. The parties seem to have agreed that Father was a vulnerable adult, entitled to protection of Arizona’s Adult Protective Services Act.
In 2017, Brother’s attorney sent Sisters a letter informing them of the status of the Father’s trust, disclosing that it only held assets worth about $196,000 and that other unidentified assets had been transferred outside of the trust. The value of the trust was substantially less than what Sisters expected.
Sisters were concerned that Brother had taken financial advantage of Father. So, in July 2017, Sister’s attorney sent a letter to Brother’s attorney detailing their concerns and demanding further disclosure of information and documents. Crucially, “Brother’s counsel responded in a letter dated August 24, 2017. It set forth the details of all Father’s assets, including the amounts of each account and insurance policy, and what had been transferred to [Brother] upon Father’s death. Sisters concede that they received this letter, but they did not respond.”
Brother evenly distributed the balance of the trust assets among the beneficiaries, including Sisters. Although it appear that he was not required to do so, Brother also undertook to distribute the assets that he received outside of trust among all of the beneficiaries and made appropriate distributions to most beneficiaries, but stopped making payments to one of them when the Sisters started legal proceedings against him.
Later, in January 2019, after all of the lump sum payments had been made, Sister’s counsel again wrote to Brother’s counsel, “repeating their concerns and demanding an accounting and distribution schedule for Father’s remaining assets.” Brother’s counsel responded that there would be no additional payments since all assets had been distributed.
On July 15, 2019, Sisters filed a “Petition for Leave to File a Financial Exploitation Claim.” Sisters had to request permission to file their complaint for financial exploitation because they did not have automatic standing to do so without the Court’s advance permission. Read more about standing.
On October 8, 2019, the Court granted Sister’s Petition for Leave. They filed their Complaint on December 5, 2019.
Presumably after they conducted some discovery, in September 2020, Brother asked the trial court to summarily dismiss Sister’s Complaint. He argued that it was filed beyond Arizona’s two-year statute of limitation. Although Sisters responded to that motion, they did not oppose Brother’s statement of facts. They also failed to provide any evidence showing that there was a disputed fact requiring trial as to whether they “actually discovered the cause of action” more than two years before they filed their Complaint.
The Trial Court found for Brother and dismissed the case
The trial court agreed with Brother and dismissed the Complaint. The court found that the August 24, 2017 letter from Brother’s counsel started the running of the two-year period. The trial court made two “adjustments” before concluding that the two-year period began running no later than September 1, 2017:
First, the court added mailing time following the date that the August 24, 2017 letter was mailed. As such, the court found that the two year period started running on September 1, 2017.
Second, the trial court “equitably excluded” from the calculation of the period a total of 47 days from July 15, 2019 (when Sisters filed their Petition for Leave) and October 8, 20219 (the date that the court granted that Petition and gave Sisters permission to file their Complaint). The Court of Appeals did not address whether this equitable exclusion was proper, since it was irrelevant to the determination of that case – Sisters’ Complaint was untimely even with the benefit of the additional 47 days.
As such, the court found that the statute of limitation expired on November 25, 2019. However, Sisters did not file their Complaint until December 5, 2019, after the limitation period expired. Therefore, the court dismissed the Sisters’ Complaint. Sisters appealed.
The Court of Appeals Affirmed the Trial Court
First, Sisters argued that there was a disputed question over when Sisters had “actual knowledge” of their claim, such that the court was required to hold a trial. However, at the hearing on summary judgment, the court “expressly asked Sisters’ counsel to confirm that the August 2017 letter was ‘the triggering date for [the] statute because at that point you knew everything you needed to know.'” The Sisters’ attorney agreed.
Given the Sisters’ agreement that they had actual knowledge of their causes of action when they received the August 2017 letter, the trial court concluded that they had “sufficient notice of the basis of their claim not later than August 31, 2017.”
Second, Sisters argued that they initiated their lawsuit by filing their Petition for Leave in July 2019, within the two year period. The trial court and Court of Appeals rejected that argument.
A claim for financial exploitation is asserted through a civil action. A.R.S. §§ 46-455(K) and 46-456(B). In turn, civil actions are governed by the Arizona Rules of Civil Procedure. The Rules provide that Civil actions are initiated by the filing of a complaint with the court.
So, the filing of Sisters’ Petition for Leave did not constitute the initiation of a civil action. The filing date of the Complaint, not the Petition, was the relevant date to determine whether Sisters filed within the two year statute of limitation. Sisters filed their Complaint after the adjusted two year period expired. As such, the Court of Appeals affirmed the trial court and found in favor of Brother.
Unfortunately, the Court of Appeals did not delineate, in general, what information will constitute “actual discovery of the cause of action” to trigger the statute of limitation. The Court just found that the information Sisters received was sufficient to be actual discovery and start the clock running in that case.
The Court also did not identify who must have “actual knowledge” to start the time. Typically, the statute of limitation begins running under the “discovery rule” when the plaintiff knows or with reasonable diligence should have known about the claim. But that can get tricky when dealing with claims on behalf of vulnerable adults. They often do not know that they have been abused, neglected or exploited and certainly do not typically have the ability or resources to hire an attorney to prosecute an action. So, someone else (such as an agent under a power of attorney or conservator) will pursue the action on behalf of the vulnerable adult. Does the statute of limitation for such claims start when the victim (the vulnerable adult) or the person who is bringing the claim on behalf of the vulnerable adult has “actually discovered the cause of action”? We currently do not know the answer to that question. The Arizona Adult Protective Services Act does not specify. The Norvelle Court did not address that issue. Rather, the Court implicitly accepted that it was Sisters’, not Father’s, actual discovery of the cause of action that began the two year period in that case.
In Re Norvelle Takeaways
The Norvelle opinion is a memorandum decision, not a published opinion, so it has limited effect.
But, it still provides some helpful takeaways:
- If you are or you represent the trustee, personal representative or other person being accused of exploitation, providing full disclosure, like Brother, may trigger the running of the limitation period.
- The date of filing a complaint for exploitation, not the date of filing a petition for leave, will likely be the date for the court to determine whether the claim was timely filed.
- However, the court may equitably stop the running of the statute of limitation from the date of filing any petition for leave until the date that the petition is granted.
- If you have a basis to do so, fully respond to any motion and provide a proper list of contested facts and supporting evidence.
- What constitutes “actual discovery of the cause of action” has not been defined.
- The Court has not identified “who” must actually discover the cause of action.
Our Firm is Here to Help
If you have any questions about claims for financial exploitation or abuse/neglect of vulnerable adults in Arizona, including the statutes of limitation, please don’t hesitate to contact us. Our experienced caring attorneys are here to help.