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 

NICHOLAS A. GEFRE and CHARLES ) 

T. BECK, individually and as a derivative ) 

action on behalf of PETRO ALASKA, ) 

INC., an Alaskan corporation, ) 

) 

Appellants, ) 

) 

v. ) 

) 

DAVIS WRIGHT TREMAINE, LLP; ) 

JON S. DAWSON; RICHARD A. ) 

KLOBUCHER; BURR PEASE & ) 

KURTZ; and JOHN C. SIEMERS, ) 

) 

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. ) 

) 

Supreme Court Nos. S-13675/13745 

Superior Court No. 1KE-07-00370 CI 

O P I N I O N 

No. 6804 - August 2, 2013 
 

 

 

 

 

 

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 CrossAppellants Burr Pease & Kurtz and John C. Siemers. 

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

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

WINFREE, Justice. 

I. INTRODUCTION 

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. 

II. FACTS AND 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 

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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.1 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 

ownership. 

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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 

Property. 

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 

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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 

Alaska. 

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 

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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
 
 

 

 

 

 

 

 

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 

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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 selfdealing. She responded with information about several instances of Steffen’s selfdealing 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
 
 

 

 

 

 

 

 

 

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 selfdealing 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. 

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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-oflimitations 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. 

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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. 

III. STANDARD OF REVIEW 

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

for clear error. 2 However, we review de novo the legal standard used to determine 

accrual dates,3 and we review de novo questions regarding the applicable statute of 

limitations, the interpretation of that statute, and whether that statute bars a claim.4 

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.6 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). 

4 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)). 

5 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))). 

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

(continued...) 

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IV.	 DISCUSSION 

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). 

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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 

9 (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.11 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. 

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of a property interest — it must directly involve “the determination of a right or claim 

to or interest in real property.”13 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 

claims.14 

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 

assets in a third-party’s hands by voiding an improper transfer.15 The direct fraudulent 

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”). 

15 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”). 

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AS 09.10.053. 16 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 09.10.053.17 In contrast, tort claims generally must be brought within two years 

under AS 09.10.070.18 

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. 

Although intentional spoliation of evidence is a tort claim,19 the spoliation 

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). 

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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.”21 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.”). 

21 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 

1987))). 

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 

(continued...) 

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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 

claim is subject to AS 09.10.053’s three-year statute of limitations.23 Because the 

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 statuteof-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. 

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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 

shorten — the limitations period.24 Given the three-year limitations period under AS 

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. 

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conclude the claims are not subject to AS 09.10.230,26 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.”28 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. 29

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 

statute.”). 

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

(internal editing marks and citations omitted). 

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which a statute of limitations can begin to run.30 First is the inquiry-notice date, “the date 

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

begin an inquiry to protect his rights.”31 Second is the actual-notice date, “the date when 

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

of the cause of action.”32 

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.33 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.”34 

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.35 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). 

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the length of the statute of limitations.36 

We recognize some inquiries will be productive and some will not be.37 If 

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

plaintiff’s inquiry was reasonable. 38 If the inquiry was not reasonable, then the cause 

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

been productive within the statutory period.”39 But if a reasonable inquiry was made, the 

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. 

39 Id. 

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

822 P.2d at 908). 

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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 actualnotice date. 

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

of fact that “depends upon all of the surrounding circumstances”41 and is reviewed for 

clear error.42 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 
 

 

 

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)). 

44 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. 

45 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.”). 

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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,46 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.47 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.49 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))). 

48 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
 
 

 

 

 

 

 

 

 

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

(2) justifiable reliance; and (3) damage.”50 It cannot be invoked “unless [the person has] 

exercised due diligence in attempting to uncover the concealed facts.” 51 In other words, 

“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.”53 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. BorgWarner Corp. (Palmer II), 838 P.2d 1243, 1251 (Alaska 1992)). 

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

(continued...) 

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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 

of AS 10.06.450(b) violates the Alaska Constitution. 54 Specifically the Shareholders 

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 

asserting the statute-of-limitations defense.55 Because at least starting in late 2002 the 

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. 

55 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.”). 

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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 

(continued...) 

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1.	 Evidentiary hearings generally 

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

may result from the litigation of stale claims.”59 To facilitate this purpose we have 

recognized the propriety of evidentiary hearings to resolve factual issues regarding 

statutes of limitations.60 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.”61 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.”). 

61 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 

(continued...) 

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use of evidentiary hearings to determine when a cause of action accrued.62 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.”63 

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 

question.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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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 RhonePoulenc Rorer Inc. v. Home Indemnity Co.,

66 instead of the test established in Hearn v. 

Rhay. 

67 

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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litigant directly puts the attorney’s advice at issue in the litigation.68 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. 69 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. 70

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

finding an implied waiver of the attorney-client privilege. 71 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 

privilege by putting discussions with counsel at issue.72 We stated the “purpose of the 

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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rule implying waiver in [such a] situation is essentially fairness to the opposing party.”73 

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.”74 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). 

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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.”78 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.”). 

78 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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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.”79 “When recovery of a fee award is permitted . . . the 

fee award is damages, not costs.”80 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.”81 

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.”82 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 DAN 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 

action.”). 

80 DOBBS at 402 (emphasis in original). 

81 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). 

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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 

issue. 

V. CONCLUSION 

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

and REMAND for further proceedings consistent with the opinion. 

See note 77, above. 

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83