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FILED

DEC 21 2017

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. AZ-16-1425-SKuF

)

DENNIS L. KOLODIN and ) Bk. No. 2:15-bk-07843-BKM

CATHERINE KOLODIN, )

) Adv. No. 2:15-ap-00793-BKM

Debtors. )

______________________________)

)

TAPESTRY ON CENTRAL, L.L.C., )

)

Appellant, )

)

v. ) MEMORANDUM*

)

DENNIS L. KOLODIN; CATHERINE )

KOLODIN, )

)

Appellees. )

______________________________)

Argued and Submitted on October 26, 2017

at Phoenix, Arizona

Filed – December 21, 2017

Appeal from the United States Bankruptcy Court

for the District of Arizona

Honorable Brenda K. Martin, Bankruptcy Judge, Presiding

 

Appearances: Ryan J. Lorenz of Clark Hill PLC argued for

appellant; Evan P. Schube of Manning & Kass,

Ellrod, Ramirez, Trester LLP argued for appellees.

 

Before: SPRAKER, KURTZ, and FARIS, Bankruptcy Judges.

* This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may

have (see Fed. R. App. P. 32.1), it has no precedential value. 

See 9th Cir. BAP Rule 8024-1.
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INTRODUCTION

Tapestry on Central, L.L.C. (“TOC”) appeals from the

bankruptcy court’s summary judgment in favor of chapter 71

debtors Dennis and Katherine Kolodin denying TOC any relief on

its nondischargeability claims under § 523(a)(2), (4) and (6). 

TOC also appeals from the denial of its motion to alter or amend

that judgment. 

TOC asserts that the bankruptcy court erred when it ruled

that TOC’s claims were barred by the applicable statute of

limitations. According to TOC, the statute did not run because

its damages were not sufficiently certain until May 2013 – less

than three years before TOC commenced its litigation. TOC also

asserts that the bankruptcy court erred in concluding that

equitable estoppel was inapplicable as a matter of law and in

holding that Mr. Kolodin did not owe a continuing fiduciary duty

to TOC.

None of TOC’s arguments on appeal justify reversal. 

Accordingly, we AFFIRM.

FACTS

This appeal concerns a mixed use commercial and residential

development in Phoenix, Arizona. Under a series of seven

purchase contracts entered into in 2005, TOC, as the nominee

designated by Yair Ben Moshe (TOC’s managing member), agreed to

buy seven commercial units located on the first floor of

1 Unless specified otherwise, all chapter and section

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

all "Rule" references are to the Federal Rules of Bankruptcy

Procedure, Rules 1001-9037. All "Civil Rule" references are to

the Federal Rules of Civil Procedure.

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building C of the development from developer Willowalk Property

Limited Partnership. At the time, TOC believed it was purchasing

all but one of the development’s commercial units. The eighth

commercial unit, on the far north side of building C, was to be

purchased by Mr. Kolodin, who was acting as the joint broker for

both the buyer and the seller.

While the architectural drawing relied upon in drafting the

contracts showed eight commercial units, a replat recorded in

2004 showed the commercial space on the first floor of building C

reconfigured into 12 commercial units. When the sale closed in

2007, as a result of the way the deeds were prepared and

interlineated, TOC ended up with title to only seven of the 12

commercial units. Title to commercial unit numbers 9-12 remained

with the developer Willowalk, and Kolodin ended up with title to

commercial unit number 8, in the middle of the building, instead

of receiving the unit farthest north, unit 12. 

TOC discovered in 2010 that there was a discrepancy between

the seven units it purchased and the additional units that

actually existed but were not transferred from Willowalk at

closing. Ben Moshe told a representative of the Tapestry on

Central Condominium Association (“Association”) that he intended

“to sue Kolodin for incompetence and negligence, and the Seller

to obtain title to the units.” However, the Association and

Kolodin worked to address the title defects and corrected most of

the defects relating to the additional units in April or May 2011

when Willowalk deeded to TOC commercial unit numbers 9-11. 

Kolodin deeded commercial unit number 8 to TOC in February 2012,

thereby completing the correction of the title defects. 

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Although TOC eventually received all of the commercial units

it thought it had purchased, Ben Moshe did not believe that the

transfers of the additional units addressed the harm caused by

the title defects. He later described TOC’s situation as

follows:

Since title to units 8 to 11 had never been conveyed to

TOC, it could not sell the units, it could not lease

the units, it could not build the space out, and to the

day it actually acquired title, the space was vacant

and still in the original grey shell condition it was

in on the day it should have been conveyed in 2007.

Ben Moshe Decl. (Jan. 20, 2015) at ¶ 67. When he summarized the

history of TOC’s dispute with Kolodin and the Association, Ben

Moshe reiterated that the delay in obtaining title to commercial

unit numbers 8-11 effectively precluded TOC from leasing those

units, and he further stated that, as a result, “I have lost

millions in revenue from that space. . . .” Ben Moshe Letter to

Neal Hansen (July 27, 2015) at p. 2.

Another issue eventually arose from the title defects. The

Association insisted that TOC was liable for the assessments on

commercial unit numbers 8-11 that accrued before TOC obtained

title to those units. As described in more detail below, the

parties initially attempted to negotiate a resolution of the preownership assessment issue, but that resolution eventually fell

apart.

In addition to the title defects and the assessment issue,

the 2005 purchase entitled TOC to a certain number of surface and

garage parking places to be allocated by the Association. Ben

Moshe states that under the purchase agreements TOC was to

receive 38 underground and 20 adjacent parking spaces upon the

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purchase of the units. According to him, problems with the

parking spaces began shortly after the sale closed in 2007 when

the Association misappropriated some of TOC’s parking spaces by

reallocating them to the residential condominium owners. 

Ultimately, the amended governing Covenants, Conditions &

Restrictions (“CC&Rs”) recorded for the development allocated

20 parking spaces to TOC adjacent to the building. By the end of

April 2007, the Association had substantially reduced TOC’s

parking spaces, leaving the commercial units without sufficient

parking spaces for customers.

According to Ben Moshe, the Association’s reduction of TOC’s

parking spaces “severely impacted” TOC’s ability to obtain

tenants for the commercial units. The problem with the parking

spaces remained unresolved as of the time Willowalk and Kolodin

conveyed the additional units to TOC. In Ben Moshe’s view, the

failure to provide the promised parking spaces effectively

precluded TOC from leasing the commercial units:

[W]ithout close and adequate parking, a tenant could

not hope to generate enough patronage to turn a profit. 

This parking space grab has been the difference between

a successful commercial aspect of the development and

vacant space. 

* * *

[Prospective tenants] have not been interested in such

a horrific parking situation and occupancy of the

commercial units has been virtually zero for eight

years because of it.

Ben Moshe Decl. (Aug. 15, 2016) at ¶¶ 20-21; see also Ben Moshe

Decl. (Jan. 20, 2015) at ¶ 45 (“Specifically, the parking and

[construction] defects issues had still not been addressed and

the [commercial units] could not be rented until these issues

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were addressed as well.”).

In support of Ben Moshe’s generalized statements of harm,

the record includes a letter dated September 3, 2010, to TOC from

a prospective purchaser of the commercial units withdrawing its

purchase offer, in part, because of insufficient parking for the

units.

Despite these problems, and the ongoing harm they were

causing, TOC did not immediately sue the Association, Willowalk

or Kolodin. Ben Moshe maintains that the Association persuaded

TOC to postpone the commencement of litigation. According to

Ben Moshe, the Association was concerned that litigation would

interfere with its efforts to reach a consensual resolution of

the construction defect issues with Willowalk and the builders of

the development.2 Beginning in 2011, TOC and the Association

2 Ben Moshe stated that the construction defects were

“rampant throughout the Tapestry development since 2007.” Ben

Moshe Decl. (Aug. 15, 2016) at ¶ 24. He specifically described

the defects as follows:

1) a lack of firestopping between units and floors for

plumbing and electrical penetrations; 2) on [sic]

overheated and intolerable [sic] moist garage, which

has been vented out of sidewalk vent towers on the

storefronts of TOC's commercial units; 3) a defective

rooftop HVAC chiller unit, which is supposed to provide

adequate cooling for building C, and which to this day

still cannot cool the entire commercial space; 4) a

crack in a wall which was just fixed in October 2015 on

a structural wall. The garage situation actually

caused a large bay window to buckle in place.

Id. at ¶ 23. Initially, TOC suggested that the construction

defects were part of its claims against Kolodin. TOC effectively

claimed that Kolodin concealed the construction defects from TOC. 

However, at the summary judgment oral argument, TOC conceded that

(continued...)

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discussed and negotiated resolution of the parking, title and

assessment issues at length. Ben Moshe claims that in exchange

for TOC’s forebearance and after many months of discussions and

negotiations, TOC and the Association reached an agreement in

January 2013 to resolve all issues. According to Ben Moshe, the

Association promised that it would release TOC from any

condominium owner assessment obligations for commercial unit

numbers 8-11 for the period before TOC received legal title to

those units. The Association also promised to remediate the

construction defects and to address the parking space issue once

it completed a settlement with Willowalk and the builders.3

Ben Moshe contends that the Association reneged on its

agreement in April or May 2013 by charging TOC for the preownership assessments on commercial unit numbers 8-11 and by

refusing to remediate the parking issue and the construction

defects. This led to a plethora of litigation.

In January 2014, TOC sued the Association, Willowalk,

Kolodin and others in the Maricopa County Superior Court for,

among other things, breach of contract, breach of the implied

covenant of good faith and fair dealing, tortious interference 

with business expectancy and breach of fiduciary duty. But TOC

only sued Kolodin in his capacity as a member of the

2(...continued)

Kolodin had no responsibility for any damages arising from the

construction defects and has reiterated that position on appeal.

3 According to Ben Moshe, the construction defects dispute

with Willowalk and the builders settled in early 2014, and the

Association received the funds to fix the construction defects at

that time.

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Association’s board of directors.

In January 2015, TOC sued Kolodin for the first time in his

individual capacity for, among other things, fraud, breach of

contract and breach of fiduciary duty. TOC claimed that Kolodin

induced it not to hire an attorney to look over transaction

documents (including the defective deeds). It also claimed that

Kolodin should have but failed to obtain from TOC an effective

waiver, after getting TOC’s informed consent, regarding the

conflicts inherent in Kolodin’s dual representation of both

Willowalk and TOC. TOC further alleged that Kolodin committed

fraud by misrepresenting the number of commercial units on the

first floor of building C and by misrepresenting the number of

parking spaces that were to be assigned to it. TOC also asserted

that Kolodin fraudulently concealed the development’s

construction defects. Finally, TOC complained that Kolodin

breached the fiduciary duty he owed to TOC as its broker on the

2007 purchase transaction by serving on the Association’s board

of directors and actively siding with the board in the 2014

dispute regarding TOC’s assessment obligations. 

In June 2015, Kolodin and his wife filed their chapter 11

bankruptcy petition. Shortly thereafter, TOC commenced its

nondischargeability action under § 523(a)(2), (4) and (6),

relying upon the same allegations and claims it made in its state

court action against Kolodin.4

4 At no point either in the bankruptcy court or on appeal

has TOC attempted to justify its nondischargeability claims

against Kolodin’s wife. Consequently, we will not address the

bankruptcy court’s grant of summary judgment in her favor.

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In July 2016, Kolodin filed his motion for summary judgment

focusing solely on statute of limitations issues. At the hearing

on the summary judgment motion, TOC conceded all of its alleged

losses as against Kolodin, except for the losses arising from the

Association’s failure to honor its January 2013 promises. Those

promises included: (1) the promise to restore the parking spaces;

and (2) the promise to release TOC from any liability for preownership Association assessments. This was a critical aspect of

TOC’s defense against summary judgment. By conceding or ignoring

the other damages allegedly caused by Kolodin’s misfeasance, TOC

argued there were no damages and its claims did not accrue until

the Association repudiated its January 2013 promises in May

2013.5

The bankruptcy court was not persuaded. Relying mostly on

TOC’s and Ben Moshe’s admissions, the bankruptcy court determined

that Kolodin knew about the title defects, the assessment issues,

and the parking issues certainly by no later than 2011. From

these admissions and other undisputed facts in the summary

judgment record, the court further determined that, by the time

TOC discovered these three issues, it must have known about

Kolodin’s potential responsibility for these issues and the harm

arising from them. Because it was undisputed that TOC learned of

these issues no later than 2011 and did not file its tort action

against Kolodin until 2015, the court held that its claims were

5 On appeal, TOC has reiterated the same damages position: 

“If the Association had given TOC back its parking and accepted

TOC’s [limited] assessment payment[s], there would have been

little or no reason to sue Mr. Kolodin.” Appellant’s Opening

Brief (Mar. 1, 2017) at p. 21.

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barred by the applicable Arizona statutes of limitations.6

Additionally, the court rejected TOC’s argument that its

damages did not arise, and its claims did not accrue, until its

January 2013 agreement with the Association fell apart in May

2013. As the bankruptcy court explained, “. . . the very reason

[TOC] was having [these] negotiations is because it had

damages it was trying to offset against claims the HOA was

asserting against it.” Hr’g Tr. (Sept. 29, 2016) at 51:15-18.

Finally, the bankruptcy court sua sponte considered whether

TOC’s claims were equitably tolled. But, as a matter of law, the

court found that the doctrine could not be applied to save TOC’s

claims from the statute of limitations because TOC did not sue

Kolodin within a reasonable amount of time after the January 2013

agreement with the Association fell apart.

The bankruptcy court entered summary judgment in favor of

Kolodin on October 7, 2016. TOC timely filed a motion to alter

or amend the judgment on October 21, 2016, which largely rehashed

the issues addressed in the bankruptcy court’s oral ruling. 

After the bankruptcy court denied TOC’s reconsideration motion,

TOC timely appealed both the summary judgment ruling and the

6 Claims for negligent misrepresentation or negligence are

subject to the two year statute of limitations under Arizona law.

Ariz. Rev. Stat. § 12-542(3); Hullett v. Cousin, 63 P.3d 1029,

1034 (Ariz. 2003); Elm Ret. Ctr., LP v. Callaway, 246 P.3d 938,

941 (Ariz. App. 2010). Claims for breach of a fiduciary duty are

also subject to a two year limitations period. Coulter v. Grant

Thornton, LLP, 388 P.3d 834, 838 (Ariz. App. 2017). Claims for

fraud are subject to a three year limitations period. Ariz. Rev.

Stat. § 12-543; Elm Ret. Ctr., LP, 246 P.3d at 941.

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order denying reconsideration.7

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157(b)(2)(I), and we have jurisdiction under

28 U.S.C. § 158.

ISSUES

1. When did TOC’s causes of action accrue for statute of

limitations purposes?

2. As a matter of law, is equitable estoppel inapplicable to

Kolodin’s assertion of his statute of limitations defense?

3. Was Kolodin’s alleged continuing fiduciary duty actionable

under § 523(a)(4)? 

STANDARDS OF REVIEW

We review de novo the bankruptcy court’s grant of summary

judgment. Salven v. Galli (In re Pass), 553 B.R. 749, 756 (9th

Cir. BAP 2016). Under de novo review, the bankruptcy court’s

ruling is not entitled to any deference. Ulrich v. Schian

Walker, P.L.C. (In re Boates), 551 B.R. 428, 433 (9th Cir. BAP

2016); Barnes v. Belice (In re Belice), 461 B.R. 564, 572 (9th

Cir. BAP 2011).

DISCUSSION

A. General Summary Judgment Standards

Summary judgment is appropriate when there are no genuine

issues of material fact and when the movant is entitled to

7 TOC did not address in its opening brief the bankruptcy

court’s denial of its reconsideration motion. Consequently, we

decline to consider it. See Christian Legal Soc'y v. Wu,

626 F.3d 483, 485 (9th Cir. 2010); Brownfield v. City of Yakima,

612 F.3d 1140, 1149 n.4 (9th Cir. 2010).

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judgment as a matter of law. Rule 7056 (incorporating Civil

Rule 56); Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986).

Material facts are those that can affect the disposition of the

case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

Genuine issues are those the trier reasonably could find in favor

of the nonmoving party. Far Out Prods., Inc. v. Oskar, 247 F.3d

986, 992 (9th Cir. 1997).

To succeed on summary judgment, “[w]here the moving party

will have the burden of proof on an issue at trial, the movant

must affirmatively demonstrate that no reasonable trier of fact

could find other than for the moving party.” Soremekun v.

Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). 

Kolodin moved for summary judgment and bore the burden of proof

on his statute of limitations defense.8 See Olmos v. Ryan,

2013 WL 394879, at *2 (D. Ariz. 2013) (citing Kerwin v. Bank of

Douglas, 379 P.2d 978, 981 (Ariz. 1963)); but see also Cytron v.

PHH Mortg. Corp., 2016 WL 7187933, at *4 (D. Ariz. Dec. 12, 2016)

(whereas the running of the statute of limitations is an

affirmative defense, plaintiff bears the burden of proving any

claim that the statute of limitations has been tolled or that the

discovery rule applies). This was the sole basis on which

8 The parties do not dispute that the substantive rule of

law governing this matter is Arizona law. See generally Gaughan

v. Edward Dittlof Revocable Tr. (In re Costas), 555 F.3d 790, 793

(9th Cir. 2009) (citing Butner v. United States, 440 U.S. 48, 54,

(1979), and stating that the parties’ rights and property rights

in bankruptcy ordinarily are determined with reference to state

law). When state law provides the applicable substantive law, it

also provides the governing burdens of proof. Johnston v. Pierce

Packing Co., 550 F.2d 474, 476 n.1 (9th Cir. 1977).

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Kolodin sought and obtained summary judgment. Thus, Kolodin was

required to establish that there was no genuine issue of material

fact as to his affirmative defense.

B. General Statute of Limitations and Discovery Rule

Considerations

Arizona courts enforce the state’s statutes of limitations

“to ‘protect defendants and courts from stale claims where

plaintiffs have slept on their rights.’” Doe v. Roe, 955 P.2d

951, 960 (Ariz. 1998) (citing Gust, Rosenfeld & Henderson v.

Prudential Ins. Co., 898 P.2d 964, 968 (Ariz. 1995)). On the

other hand, under the discovery rule, “a plaintiff’s cause of

action does not accrue until the plaintiff knows or, in the

exercise of reasonable diligence, should know the facts

underlying the cause.” Gust, 898 P.2d at 966. The discovery

rule prevents statutes of limitations from beginning to run until

“the plaintiff has a reasonable basis for believing that a claim

exists.” Doe, 955 P.2d at 960 (citing Gust, 898 P.2d at 967). 

The discovery rule applies not only to the plaintiff’s discovery

of the defendant’s tortious conduct but also to all elements

necessary to state a claim including the discovery of causation

and damages. Commercial Union Ins. Co. v. Lewis & Roca, 902 P.2d

1354, 1358 (Ariz. App. 1995). 

C. TOC’s Arguments – and Concessions – on Appeal 

TOC’s appellate arguments are narrow and technical in

nature. TOC primarily argues that it could not have discovered

its claims against Kolodin, for statute of limitations purposes,

until the damages allegedly resulting therefrom were fixed and

irrevocable. TOC also argues that, as a matter of law, it did

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not wait an unreasonable amount of time in pursuing its claims

against Kolodin after its January 2013 agreement with the

Association collapsed, so the bankruptcy court erred when it

determined on summary judgment that equitable estoppel could not

preserve its claims. Finally, TOC argues that Kolodin owed a

continuing fiduciary duty to TOC, even after the sale closed, and

thus the statute of limitations could not have run on TOC’s

breach of fiduciary duty claim.

We will address each of TOC's appellate arguments in turn. 

But, before we do so, we should note some of TOC’s key

concessions. For instance, TOC has not disputed on appeal that,

except for its damages argument, the bankruptcy court correctly

applied the discovery rule and correctly held that all other

aspects of its claims were known to it more than three years

before it filed suit against Kolodin in January 2015. In

addition, TOC has not challenged on appeal the determinations of

the bankruptcy court that: (1) Arizona law applies to Kolodin’s

statute of limitations defense; (2) Arizona’s statute of

limitations for breach of fiduciary duty is two years;

(3) Arizona’s statue of limitations for fraud is three years;

(4) no other statutes of limitations apply to TOC’s claims

against Kolodin; and (5) TOC did not commence litigation against

Kolodin on the relevant claims until January 2015. Because of

these concessions on appeal, we will accept as correct all of

these determinations of the bankruptcy court. See Christian

Legal Soc'y, 626 F.3d at 485; Brownfield, 612 F.3d at 1149 n.4.

1. Accrual of Causes of Action – Occurrence of Damages

In light of TOC’s concessions, the merits of TOC’s appeal

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largely turn on its argument that its damages did not become

sufficiently certain, for claim accrual purposes, until its

agreement with the Association fell apart in May 2013.

To support its argument, TOC relies on a series of four

Arizona cases. Amfac Distrib. Corp. v. Miller, 673 P.2d 792

(Ariz. 1983); CDT, Inc. v. Addison, Roberts & Ludwig, C.P.A.

P.C., 7 P.3d 979 (Ariz. App. 2000); Commercial Union Ins. Co.,

902 P.2d at 1354; Tullar v. Walter L. Henderson, P.C., 816 P.2d

234 (Ariz. App. 1991). These cases stand for the unremarkable

proposition that malpractice causes of action do not accrue until

the harm or damage from the defendant’s conduct actually occurs. 

Amfac, 673 P.2d at 793-94; CDT, 7 P.3d at 982; Commercial Union

Ins. Co., 902 P.2d at 1360; Tullar, 816 P.2d at 236. For

purposes of the discovery rule, the plaintiff must sustain actual

and appreciable harm before a cause of action accrues. 

Commercial Union Ins. Co., 902 P.2d at 1358. This occurs when

the harm becomes irremediable or irrevocable. Id.9

However, the occurrence of harm and the extent of damages

sustained are “two distinct concepts” not to be confused. Id. 

It is not necessary for a plaintiff to know the exact amount of

its damages before the cause of action accrues, only that it has

been damaged. Id. at 1359. “[A]ccrual requires only actual or

constructive knowledge of the fact of damage, rather than of the

total extent or calculated amount of damage.” CDT, 7 P.3d at

9 TOC’s appellate argument assumes that Kolodin’s alleged

misfeasance falls within the ambit of professional malpratice

and, hence, Amfac, Commercial Union Ins. Co., CDT and Tullar

apply. For purposes of our analysis, we have assumed (without

deciding) the same thing.

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982.10

Here, by TOC’s own admission, it knew Kolodin had caused it

to suffer actionable harm long before its settlement with the

Association fell apart. As Ben Moshe stated in his declarations,

Kolodin’s allegedly shoddy job in preparing the purchase

contracts and the deeds directly led to the title defects, and to

the Association’s parking space misappropriation. Ben Moshe has

steadfastly maintained that the title defects and lack of parking

spaces have directly harmed TOC by severely impeding its ability

to build out and rent the commercial units since the closing of

its purchase in 2007. TOC admits that it knew of these defects

since at least 2010.11 Ben Moshe has been equally adamant that

TOC’s inability to rent out the commercial units cost it millions

of dollars in revenue. TOC’s damages for lost rents trace back

to Ben Moshe’s discovery of the title problems and the loss of

parking spaces. Indeed, the title and parking problems were the

impetus for TOC’s settlement negotiations with the Association. 

That the specific amount of damages/lost rent was not fixed did

not stop TOC’s causes of action from accruing. 

Moreover, TOC, through Ben Moshe, further admitted that it

10 The scenario in which damages are not immediate is the

exception to the rule. Commercial Union Ins. Co., 902 P.2d at

1360; see also Keonjian v. Olcott, 169 P.3d 927, 930 (Ariz. App.

2007) (“In the majority of malpractice cases, the damage or

injury occurs contemporaneously with the malpractice.”). Accord

DeBoer v. Brown, 673 P.2d 912, 914 (Ariz. 1983).

11 At page 4 of its opening appeal brief, TOC concedes it

discovered in 2010 that it did not own commercial unit numbers

8-11 as a result of the defective 2007 deeds. At page 6 of the

opening brief, TOC concedes it discovered in April 2007 the

Association’s misappropriation of its parking places.

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already had connected its losses to Kolodin’s alleged misfeasance

before entering into settlement negotiations with the

Association. As Ben Moshe put it, as soon as TOC learned of the

title defects and the parking dispute, it wanted to sue Kolodin

and Willowalk immediately, but the Association persuaded TOC to

postpone such litigation. 

Perhaps most telling, TOC has never explained how and why

its third party settlement negotiations with the Association

could affect the accrual of its claims against Kolodin. Nor are

we aware of any legally sound explanation. TOC attempted to use

its existing claims for damages to settle the Association’s

pre-ownership assessment claims against it. While the

pre-ownership assessments may constitute a part of TOC’s

injuries, such harm arose from the title defects rather than the

failed settlement.

In sum, as a result of TOC’s own admissions, TOC obviously

was aware that it had been damaged – and the alleged cause of

those damages (Kolodin) – no later than 2010. By that point, TOC

knew of the title defects and the misappropriated parking

spaces.12 Therefore, TOC’s argument that it did not suffer

appreciable damages until the Association reneged on its January

12 In its summary judgment ruling, the bankruptcy court

stated that TOC and Ben Moshe knew of the title defects and the

parking issues certainly by no later than 2011. The bankruptcy

court apparently referenced 2011 out of an abundance of caution. 

As our factual recitation set forth above reflects, Ben Moshe

admitted knowledge of the title defects and the parking issues

well before 2011, in 2010 and earlier. In any event, regardless

of whether TOC’s causes of action accrued in 2010 or 2011, the

applicable statutes of limitations fully ran before TOC filed its

state court lawsuit against Kolodin in January 2015.

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2013 promises regarding the assessments and the parking spaces is

without merit.

2. Equitable Estoppel13

The Arizona Supreme Court has identified the following

factors as relevant in determining whether a defendant is

equitably estopped from raising a statute of limitations defense:

(1) whether the defendant engaged in affirmative

conduct intended to cause the plaintiff's forbearance;

(2) whether the defendant's conduct actually caused the

plaintiff's failure to file a timely action;

(3) whether the defendant's conduct reasonably could be

expected to induce forbearance; and (4) whether the

plaintiff brought the action within a reasonable time

after termination of the objectionable conduct.

Nolde, 964 P.2d at 482.

Here, the bankruptcy court found, as a matter of law, that

the amount of time it took TOC to bring its action against

Kolodin was unreasonable. As the bankruptcy court pointed out,

13 At the summary judgment hearing, the bankruptcy court

stated that it sua sponte was raising the issue of “equitable

tolling.” But the principal case it relied upon, Nolde v.

Frankie, 964 P.2d 477 (Ariz. 1988), dealt with the issue of

whether the defendant was equitably estopped by his conduct from

raising the statute of limitations defense. Under Arizona law,

equitable tolling generally requires consideration of different

factors than equitable estoppel. Compare McCloud v. Ariz. Dep't

of Pub. Safety, 170 P.3d 691, 696–97 (Ariz. App. 2007), with

Nolde, 964 P.2d at 481-82; see generally Hosogai v. Kadota,

700 P.2d 1327, 1331 (Ariz. 1985), partially superseded by statute

as stated in, Jepson v. New, 792 P.2d 728, 734 (Ariz. 1990). 

Because neither the bankruptcy court nor the parties addressed

the equitable tolling factors as part of the summary judgment

proceedings, we decline to consider them on appeal. Absent

exceptional circumstances not present here, we will not consider

issues raised for the first time on appeal. See Rhoades v.

Henry, 598 F.3d 495, 501 n.7 (9th Cir. 2010); El Paso v. Am. W.

Airlines, Inc. (In re Am. W. Airlines), 217 F.3d 1161, 1165 (9th

Cir. 2000).

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the settlement with the Association fell apart in May 2013, and

yet TOC did not commence its litigation against Kolodin until

January 2015. According to the bankruptcy court, this twentymonth delay was per se unreasonable. 

TOC takes issue with this determination. In essence, TOC

contends that the reasonableness of a plaintiff’s delay must be

considered on a case-by-case basis and depends on all of the

surrounding circumstances, which makes the issue ill suited for

determination on summary judgment. However, we can affirm on any

ground supported by the record. Fresno Motors, LLC v. Mercedes

Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014). We decline

to decide the issue of whether the twenty-month delay was per se

unreasonable because we can affirm on an alternate ground.

The Association’s settlement conduct, on which TOC’s

estoppel argument relies, was insufficient as a matter of law to

equitably estop Kolodin from raising his statute of limitations

defense. As a threshold matter, it is far from clear whether a

third party’s settlement conduct – in this case the Association’s

– can or should serve as the foundation for estoppel against a

separate litigant – in this case Kolodin. The only specific

conduct TOC has attributed directly to Kolodin is cooperating in

the settlement process and advocating on TOC’s behalf with the

Association’s board. This is a slender reed on which to base

estoppel, and TOC has cited no authority imposing estoppel based

on such limited conduct.

Even if all of the Association’s settlement conduct is

somehow attributed to Kolodin, that conduct was insufficient to

justify estoppel. A defendant will be estopped from asserting a

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statute of limitations defense only if its conduct induced the

plaintiff to forbear from litigation “by leading plaintiff to

believe a settlement or adjustment of the claim will be effected

without the necessity of bringing suit.” Roer v. Buckeye Irr.

Co., 809 P.2d 970, 972 (Ariz. App. 1990), cited with approval in,

Nolde 964 P.2d at 481. When the defendant’s conduct does not

actually and reasonably induce the plaintiff to believe that its

claim will be satisfied without the necessity of litigation,

estoppel is inappropriate. Id. 

Roer is instructive. In Roer, the plaintiffs sued an

irrigation company and a canal company alleging that both

companies’ negligence had caused the plaintiffs’ farmland to

become waterlogged and useless as farmland. Id. at 971. As

early as 1974, the plaintiffs had complained to the irrigation

company that much of their land had been rendered unfarmable as a

result of waterlogging. Id. at 972. Meanwhile, the canal

company was responsible for a canal which traversed the

plaintiffs’ land and which exacerbated the waterlogging problem

because it was not properly cleaned and maintained. Id. Over

the course of several years, up until the time the plaintiffs

commenced litigation in 1986, the defendants made various

promises that they would look into the problem and take steps to

ameliorate the conditions that were causing the waterlogging, but

they never did so. Id. A jury returned a $1.3 million verdict

against the defendants for the damage done to the plaintiffs’

land, but the trial court granted the defendants’ motion for

judgment notwithstanding the verdict based on, among other

things, the expiration of a two-year statute of limitations. Id.

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at 971. 

The Arizona Court of Appeals affirmed the trial court. In

the process, the Roer court held, as a matter of law, that the

defendants’ respective promises to take steps to ameliorate the

waterlogging problem were not sufficient to estop either of them

from asserting the statute of limitations. Id. at 972-73. Roer

explained:

Prior to the filing of this lawsuit the plaintiffs

never made any claim upon either of the defendants for

the damages to their land. At no time did they

indicate that they were holding them responsible,

financially or otherwise, for the waterlogging. As far

as [the canal company] is concerned, its statements

that it would clear and repair the canal do not

constitute conduct which would support an estoppel. It

never said that it would take care of the waterlogging

damage but only that it would repair its canal.

Id. at 972 (emphasis added). 

Like the company in Roer, the Association (and Kolodin)

allegedly promised to fix two of the problems that were causing

TOC to lose rent: the parking space misappropriation and the

title defects. However, there is absolutely nothing in the

record that could support an inference that the Association, or

more importantly Kolodin, agreed or promised to compensate TOC

for the damages TOC already had incurred. As such, the

Association’s and Kolodin’s conduct was insufficient as a matter

of law to estop Kolodin from raising the statute of limitations

defense. Neither the Association nor Kolodin led “plaintiff to

believe a settlement or adjustment of [TOC’s] claim [would] be

effected without the necessity of bringing suit.” Id. 

Accordingly, we reject TOC’s equitable estoppel argument.

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3. Continuing Breach of Fiduciary Duty

Finally, TOC contends that the bankruptcy court erroneously

determined that Kolodin’s fiduciary duty ended when the 2007

purchase transaction closed. TOC maintains that Kolodin had a

continuing fiduciary duty to rectify the title defects and the

parking space misappropriation. It further contends that,

because Kolodin continued to breach his fiduciary duty until

those errors were rectified, the statute of limitations could not

have run on its breach of fiduciary claim. TOC alternately

argues that Kolodin, at the time, was acting as a real estate

broker and as an agent for TOC in other transactions, so

Kolodin’s fiduciary duty also was continuing in that respect.

TOC cites no authority to support its continuing breach of

fiduciary duty argument. More importantly, there is another,

more fundamental flaw in TOC’s breach of fiduciary duty argument. 

The type of fiduciary obligation actionable under § 523(a)(4) is

narrow in scope. “The broad definition of fiduciary under

nonbankruptcy law — a relationship involving trust, confidence,

and good faith — is inapplicable in the dischargeability

context.” Honkanen v. Hopper (In re Honkanen), 446 B.R. 373, 378

(9th Cir. BAP 2011) (citing Cal–Micro, Inc. v. Cantrell

(In re Cantrell), 329 F.3d 1119, 1125 (9th Cir. 2003)). As

Honkanen further explained:

To fit within § 523(a)(4), the fiduciary relationship

must be one arising from an express or technical trust

that was imposed before, and without reference to, the

wrongdoing that caused the debt as opposed to a trust

ex maleficio, constructively imposed because of the act

of wrongdoing from which the debt arose.

Id. at 378-79 (citing Ragsdale v. Haller, 780 F.2d 794, 796 (9th

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Cir. 1986)). Consequently, “trusts arising as remedial devices

to breaches of implied or express contracts — such as resulting

or constructive trusts — are excluded, while statutory trusts

that bear the hallmarks of an express trust are not.” Id. at

379. 

To create an express trust under Arizona law, there must be

“a competent settlor and a trustee, clear and unequivocal intent

to create a trust, ascertainable trust res, and sufficiently

identifiable beneficiaries.” Golleher v. Horton, 715 P.2d 1225,

1231 (Ariz. App. 1985). Here, TOC never alleged – let alone

proved – the existence of an express or statutory trust. 

Instead, it is clear from TOC’s argument that it has been relying

on the more general definition of a fiduciary relationship

arising from Kolodin holding a position of trust, confidence and

good faith. As set forth in Honkanen, this type of general

fiduciary relationship is not actionable under § 523(a)(4). 

Honkanen, 446 B.R. at 378-79. Thus, TOC’s continuing fiduciary

duty argument does not support reversal of the bankruptcy court’s

summary judgment in favor of Kolodin.

CONCLUSION

Given that none of TOC’s arguments on appeal has merit, we

AFFIRM the bankruptcy court’s summary judgment denying TOC any

relief on its nondischargeability claims.

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