Court Opinion

ID: 2688889
Source: CourtListenerOpinion
Date Created: 2014-08-01 14:53:32.863996+00
Date Added: 2024-06-11T08:33:06.018626
License: Public Domain

FILED BY CLERK
                                                                         JUN 28 2007
                             IN THE COURT OF APPEALS
                                                                         COURT OF APPEALS
                                 STATE OF ARIZONA                          DIVISION TWO
                                   DIVISION TWO

MANU DUBE,                                    )        2 CA-CV 2006-0176
                                              )        DEPARTMENT A
                       Plaintiff/Appellant,   )
                                              )        OPINION
                  v.                          )
                                              )
PETER LIKINS and JANE DOE LIKINS,             )
husband and wife; RICHARD C.                  )
POWELL and JANE DOE POWELL,                   )
husband and wife; THOMAS J. HIXON             )
and JANE DOE HIXON, husband and               )
wife; and STATE OF ARIZONA BOARD              )
OF REGENTS,                                   )
                                              )
                 Defendants/Appellees.        )
                                              )

           APPEAL FROM THE SUPERIOR COURT OF PIMA COUNTY

                                 Cause No. C20044924

                           Honorable Deborah Bernini, Judge

                             AFFIRMED IN PART;
                       REVERSED IN PART AND REMANDED

Raven, Awerkamp & Clancy, P.C.
 By Don Awerkamp and Ivelisse Bonilla-Torrado                                    Tucson
                                                       Attorneys for Plaintiff/Appellant

Terry Goddard, Arizona Attorney General
 By Rebecca J. Herbst                                                        Phoenix
                                                   Attorneys for Defendants/Appellees

H O W A R D, Presiding Judge.
¶1            Appellant Manu Dube appeals from the trial court’s judgment dismissing his

complaint pursuant to Rule 12(b)(6), Ariz. R. Civ. P., 16 A.R.S., Pt. 1, and granting

judgment in favor of appellees Peter Likins, former President of the University of Arizona;

Richard Powell, Vice President for Research and Graduate Studies; Thomas Hixon,

Associate Vice President for Research and Graduate Studies; and the State of Arizona Board

of Regents (“the University Officials”). Dube argues the trial court erred when it found his

claims were untimely and that his allegations of defamation and tortious interference with

a business expectancy failed to state a claim upon which relief can be granted. He also

argues that even if his complaint was insufficient he should have been afforded the

opportunity to amend it. We affirm in part, reverse in part, and remand the case for further

proceedings consistent with this opinion.

                                        Background

¶2            When reviewing the trial court’s grant of a motion to dismiss a complaint for

failure to state a claim, “‘we must take the alleged facts as true.’” Riddle v. Ariz. Oncology

Servs., Inc., 186 Ariz. 464, 465, 924 P.2d 468, 469 (App. 1996), quoting Petolicchio v.

Santa Cruz County Fair & Rodeo Ass’n, 177 Ariz. 256, 258, 866 P.2d 1342, 1344 (1994).

In 1998, Dube transferred to the University of Arizona as a post-graduate student. Dr.

Chandra Desai was Dube’s advisor for his dissertation work. In October 2002, Dube

complained to the University that Desai had acted improperly and requested a change in

advisor. The University “investigated and evaluated Dube’s allegations” and, “[a]fter

analyzing the information provided by Dube,” it “removed Desai from the Ph.D. committee

                                              2
that would evaluate Dube’s dissertation work and replaced [him] with another faculty

member.” Dube obtained his doctoral degree in May 2004.

¶3            In September 2004, Dube sued Desai and C. Desai, Inc., alleging Desai had

tortiously interfered with him “obtaining his Ph.D. at the University of Arizona and with his

opportunities to obtain employment.” In May or June 2005, in the course of discovery,

Dube obtained documents from the University of Arizona. He claims the documents

“revealed that various University of Arizona administrators had improperly assisted Desai

in his interference with Dube’s efforts to obtain his Ph.D. and pursue his career.”

¶4            On February 23, 2006, Dube moved to amend his complaint, which the trial

court granted, to assert a claim of tortious interference against the University Officials and

defamation claims against Likins. Dube filed his amended complaint on March 27, 2006.

The University Officials then moved to dismiss the complaint on the ground that both claims

were barred by the statute of limitations and failed as a matter of law. The trial court

granted the motion and entered final judgment against Dube and in favor of the University

Officials.

                   Tortious Interference With Business Expectancy

¶5            Dube first argues that the trial court erred when it dismissed his claim for

tortious interference with a business expectancy against the University Officials as untimely.

He contends he did not know the facts underlying this claim until he received certain

documents in discovery during this litigation. We review de novo a trial court’s dismissal

of a complaint pursuant to Rule 12(b)(6), Ariz. R. Civ. P., based on its application of a

                                              3
statute of limitations. Andrews ex rel. Woodard v. Eddie’s Place, Inc., 199 Ariz. 240, ¶ 1,

16 P.3d 801, 801-02 (App. 2000).

¶6            The trial court determined that “many of the claims asserted against [the

University Officials were] based upon facts that were known to [Dube] when he filed his first

[c]omplaint [on] September 8, 2004, including his claim regarding incorrect information

provided to the [Immigration and Naturalization Service (INS)] from 1998 to 2002.”

Therefore, the court concluded, the discovery rule did not extend the time for filing the

amended complaint, and the claim was untimely.

¶7            Under A.R.S. § 12-821, “[a]ll actions against any public entity or public

employee shall be brought within one year after the cause of action accrues and not

afterward.” Accrual for causes of action under § 12-821 is statutorily defined as “when the

damaged party realizes he or she has been damaged and knows or reasonably should know

the cause, source, act, event, instrumentality or condition which caused or contributed to

the damage.”1 A.R.S. § 12-821.01(B); see also Long v. City of Glendale, 208 Ariz. 319,

       1
        Relying on Lawhon v. L.B.J. Institutional Supply Inc., 159 Ariz. 179, 765 P.2d
1003 (App. 1988), Dube argues the trial court erred when it did not apply the discovery rule
to his case. In Lawhon, Division One of this court held that

              a cause of action “accrues” when the plaintiff discovers or by
              the exercise of reasonable diligence should have discovered that
              he or she has been injured by a particular defendant’s negligent
              conduct. The cause of action does not accrue until the plaintiff
              knows or should have known of both the what and who
              elements of causation.

Id. at 183, 765 P.2d at 1007 (emphasis in original). But § 12-821.01 defines when a cause
of action accrues in lawsuits where the defendant is a public entity or employee as when the

                                             4
¶ 9, 93 P.3d 519, 525 (App. 2004). To determine when a cause of action accrues, an

analysis of the elements of tortious interference with a business expectancy is necessary. See

Glaze v. Larsen, 207 Ariz. 26, ¶ 10, 83 P.3d 26, 29 (2004) (“The determination of when a

cause of action accrues requires an analysis of the elements of the claim presented.”).

¶8            A plaintiff asserting a claim for tortious interference must allege “‘the existence

of a valid contractual relationship or business expectancy; the interferer’s knowledge of the

relationship or expectancy; intentional interference inducing or causing a breach or

termination of the relationship or expectancy; and resultant damage to the party whose

relationship or expectancy has been disrupted.’” Miller v. Hehlen, 209 Ariz. 462, ¶ 32, 104
P.3d 193, 202 (App. 2005), quoting Wallace v. Casa Grande Union High Sch. Dist. No.

82 Bd. of Governors, 184 Ariz. 419, 427, 909 P.2d 486, 494 (App. 1995). Accordingly,

a cause of action for tortious interference accrues when the plaintiff knew or reasonably

should have known of the intentional interference with the plaintiff’s business expectancy,

resulting in its termination; and the plaintiff realized he or she was damaged by that

termination. See id.; see also A.R.S. § 12-821.01(B); Glaze, 207 Ariz. 26, ¶ 10, 83 P.3d

at 29. And “[w]hen discovery occurs and a cause of action accrues are usually and

necessarily questions of fact for the jury.” Doe v. Roe, 191 Ariz. 313, ¶ 32, 955 P.2d 951,

961 (1998).

plaintiff “realizes he or she has been damaged and knows or reasonably should know the
cause . . . .” Because the statute defines “accrual” where the defendant is a public entity or
public employee, we need not apply the common-law discovery rule or analyze any
potential differences.

                                               5
¶9            Dube claims that while he was a student at the University from 1998 through

2004, the University Officials reported incorrect information to the INS, failed to share the

findings of their investigation of Desai with him, misled him into believing that the

investigation was ongoing, and ignored their obligations to conduct an adequate

investigation. Dube claims the University Officials’ conduct resulted in a delay in obtaining

his doctoral degree and his inability to find employment while in school and also after

graduation in May 2004. Finally, Dube alleges he was unaware of the University Officials’

actions until after discovery began in his case against Desai.

¶10           Dube specifically stated in his original complaint, filed in September 2004,

that the University had reported incorrect information to the INS. And some University

employees were necessarily involved in reporting that information. Because he filed his

amended complaint in March 2006, more than one year after his initial complaint, this claim

is barred by the statute of limitations. But this claim is discrete from Dube’s other claims

of tortious interference.

¶11           Given the nature of the remaining allegations of tortious interference with a

business expectancy, Dube had no reason to know of the University Officials’ alleged

involvement or realize that any of his claimed damages were attributable to anyone other

than Desai. Based solely on Dube’s allegations, the cause of action did not accrue until May

2005, when Dube learned of the University Officials’ involvement. And Dube filed an

amended complaint in March 2006, within the one-year limitation period set forth in § 12-

821. Because Dube’s allegations must be taken as true, see Riddle, 186 Ariz. at 465, 924
6
P.2d at 469, it was error to dismiss the remainder of Dube’s tortious interference claim as

untimely. See Doe, 191 Ariz. 313, ¶ 32, 955 P.2d at 961.

¶12           Nevertheless, the University Officials claim that Dube had an obligation to

investigate his claim in a timely fashion. But whether Dube reasonably investigated and

whether a reasonable investigation would have revealed the alleged tortious acts is not

apparent on the face of the complaint and gives rise to factual questions that would need to

be explored in greater detail than contemplated under Rule 12(b)(6) before they are

resolved.

¶13           Dube next argues that the trial court erred when it found that his allegation of

tortious interference with a business expectancy failed to state a claim upon which relief can

be granted. The University Officials, on the other hand, claim Dube failed to properly allege

that they had tortiously interfered with Dube’s alleged business expectancy or that he even

had one. When reviewing a trial court’s dismissal of a complaint for failure to state a claim,

we must affirm the dismissal when the allegations of the complaint, which are assumed to

be true, do not entitle the plaintiff to any relief. See Savard v. Selby, 19 Ariz. App. 514,

515, 508 P.2d 773, 774 (1973). “[B]ecause Arizona is a notice pleading state, a complaint

need only have ‘a statement of the ground upon which the court’s jurisdiction depends, a

statement of the claim showing that the pleader is entitled to relief[,] and a demand for

judgment.” Rowland v. Kellogg Brown & Root, Inc., 210 Ariz. 530, ¶ 10, 115 P.3d 124,

127 (App. 2005), quoting Morn v. City of Phoenix, 152 Ariz. 164, 166, 730 P.2d 873, 875

(App. 1986); see also Ariz. R. Civ. P. 8(a), 16 A.R.S., Pt. 1.

                                              7
¶14           As stated above, a plaintiff asserting a claim of tortious interference with a

business expectancy must allege (1) the existence of a valid business expectancy; (2) the

interferer’s knowledge of the business expectancy; (3) the interferer intentionally induced

or caused termination of the business expectancy; and (4) damage suffered as a result of

termination of the business expectancy. Miller, 209 Ariz. 462, ¶ 32, 104 P.3d at 202. A

claim for tortious interference with a business expectancy is insufficient unless the plaintiff

alleges facts showing the expectancy constitutes more than a mere “hope.” Marmis v. Solot

Co., 117 Ariz. 499, 502, 573 P.2d 899, 902 (App. 1977) (plaintiff’s expectancy of purchase

“amounted only to a hope” because conditioned upon absence of bidders and upon court

approval). Finally, the intentional interference must be a “[w]rongful interference [that]

rests on improper conduct by the defendant . . . not on whether a breach [or termination of

the expectancy] followed.” Bar J Bar Cattle Co. v. Pace, 158 Ariz. 481, 483, 763 P.2d
545, 547 (App. 1988); see also Miller, 209 Ariz. 462, ¶ 32, 104 P.3d at 202 (“The

interference must be ‘improper’ before liability will attach.”), quoting id.

¶15           At oral argument in this court, Dube relied exclusively on an aiding and

abetting theory of liability. “‘For harm resulting to a third person from the tortious conduct

of another, one is subject to liability if he . . . does a tortious act in concert with the other

or pursuant to a common design with him.’” Estate of Hernandez by Hernandez-Wheeler

v. Flavio, 187 Ariz. 506, 511, 930 P.2d 1309, 1314 (1997), quoting Restatement (Second)

of Torts § 876(a) (1979) (emphasis in Flavio omitted). And, the defendants must know that

the act they are aiding is a tort and must substantially aid its commission. Wells Fargo Bank

                                               8
v. Ariz. Laborers, Teamsters & Cement Masons Local No. 395 Pension Trust Fund, 201
Ariz. 474, ¶¶ 33-34, 38 P.3d 12, 23 (2002). Similarly, for there to be liability based on a

civil conspiracy, two or more people must agree to accomplish a particular tortious act. Id.

¶ 99.

¶16            In his complaint, Dube claims that while he was a student at the University

from 1998 through 2004, the University Officials failed to share the findings of their

investigation of Desai with him, misled him into believing that the investigation was ongoing,

and ignored their obligations to conduct an adequate investigation. Dube further alleges that

the University Officials’ actions “were in bad faith in reckless disregard of the harm they

knew or should have known that their actions would cause to Dube’s reputation and his

right to pursue an occupation.” He also alleged that “[t]he intentional improper actions of

[the University Officials] . . . trivializ[ed] Desai’s actions and assist[ed] Desai in his acts of

tortious interference,” and that Likins’s improper actions supported Desai. Dube states that

the University Officials “allowed Desai to continue interfering with Dube’s dissertation and

career.”

¶17            Although Dube conclusorily asserts that the University Officials failed to take

action they should have and in some way assisted Desai, he did not plead any factual

allegations supporting his claim that the University Officials had knowingly assisted Desai

in interfering with Dube’s alleged business expectancy. Dube’s actual factual allegations,

that the officials failed to disclose the report and minimized Desai’s alleged transgressions,

do not demonstrate that the University Officials entered into a “common design” with Desai

                                                9
to interfere with Dube’s business expectancy, knowingly “substantially aided” Desai’s

intentional interference, or agreed to do so. In short, they lack the required nexus to Desai’s

alleged intentional tort.

¶18           Also at oral argument, Dube argued that the University Officials’ failure to

disclose the report of their investigation demonstrated their intent to interfere with his

business expectancy, reasoning that had he possessed the report he could have presented it

to potential employers. He relied on Wells Fargo Bank, in support of this argument. In

Wells Fargo Bank, the court stated that if a “‘transaction is atypical or lacks business

justification, it may be possible to infer the knowledge necessary for aiding and abetting

liability.’” Id. ¶ 51, quoting Woodward v. Metro Bank of Dallas, 522 F.2d 84, 97 (5th Cir.

1975). The University Officials countered that they had no duty to disclose the report to

Dube, and thus the transaction was not atypical and could not give rise to an inference.

Dube’s contention—that the University Officials failed to give him the report because they

were aiding Desai’s efforts to prevent Dube from obtaining a job—is neither supported by

the facts alleged in his complaint nor a reasonable inference from those facts. Therefore, we

do not find this argument persuasive.

¶19           Dube has also failed to allege that he had a valid business expectancy.

Although the tort of tortious interference with a business expectancy covers situations that

the tort of intentional interference with a contract does not, the former has only been

available in those situations where the plaintiff can identify the specific relationship with

which the defendant interfered. See Stewart Title Guar. Co. v. Am. Abstract & Title Co.,

                                              10
215 S.W.3d 596, 603 (Ark. 2005) (“some precise business expectancy or contractual

relationship must be obstructed” to state tortious interference claim); Pac. Nw. Shooting

Park Ass’n v. City of Sequim, 144 P.3d 276, ¶ 40 (Wash. 2006) (plaintiff claiming tortious

interference with business expectancy must show “‘a relationship between parties

contemplating a contract’”), quoting Scymanski v. Dufault, 491 P.2d 1050, 1055 (Wash.

1971). “As a general rule, an action for tortious interference with a business relationship

requires a business relationship evidenced by an actual and identifiable understanding or

agreement which in all probability would have been completed if the defendant had not

interfered.” Ethan Allen, Inc. v. Georgetown Manor, Inc., 647 So. 2d 812, 815 (Fla. 1994);

see also Schuler v. Abbott Labs., 639 N.E.2d 144, 147 (Ill. App. Ct. 1993) (“Plaintiff states

a cause of action only if he alleges a business expectancy with a specific third party.”).

“Although [the business relationship] need not be a contractual relationship, an existing

relationship is required.” Roth v. Rhodes, 30 Cal. Rptr. 2d 706, 715 (Cal. Ct. App. 1994).

To state a claim for tortious interference upon which relief may be granted, “‘there must be

a colorable economic relationship between the plaintiff and a third party with the potential

to develop into a full contractual relationship.’” Hawaii Med. Ass’n v. Hawaii Med. Serv.

Ass’n, 148 P.3d 1179, 1217-18 (Haw. 2006), quoting Locricchio v. Legal Servs. Corp.,

833 F.2d 1352, 1357 (9th Cir. 1987) (emphasis in Hawaii Med. Ass’n omitted).

¶20           Even when the business expectancy is with a group, such as customers, and

courts have allowed the plaintiff to allege a business expectancy with a class of individuals,

they have required that the group be specifically identifiable.         See id. at 1219-20

                                             11
(interference with relationship with a company’s “enrollees” or “patients” is sufficient);

Ferguson Transp., Inc. v. N. Am. Van Lines, Inc., 687 So. 2d 821, 821 (Fla. 1996)

(“business relationship with identifiable customers” required for tort of tortious interference

with business relationship); Trau-Med of Am., Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 701

(Tenn. 2002) (plaintiff must demonstrate “an existing business relationship with specific

third parties or a prospective relationship with an identifiable class of third persons”).

¶21           We do not need to determine today the outer boundaries of the tort of tortious

interference with a business expectancy because Dube has not alleged a valid claim under

any of the formulations. We presume he would have worked for a single employer, not a

class of employers. Therefore, the cases regarding classes of individuals are inapposite.

Additionally, in his complaint he has not identified any specific employer with whom he

sought employment and who was dissuaded from hiring him by acts for which the University

Officials could be held responsible. Nor has he properly identified an employer of which

the University Officials were aware.

¶22           Dube’s only allegation is that he has been unable “to find employment even

though he graduated with a 4.0 [grade point average].” This statement merely suggests that

Dube had a “hope” of employment after graduation rather than an expectancy because he

has not identified any prospective relationship. See Marmis, 117 Ariz. at 502, 573 P.2d at

902; see also Trau-Med., 71 S.W.3d at 701. A claim for intentional interference with a

business expectancy is not a substitute for a defamation claim. And even assuming Dube did

have a business expectancy, he has not, as we stated above, alleged any facts supporting his

                                              12
statement that the University Officials knew of, and intentionally interfered with, that

expectancy.

¶23              Nevertheless, Dube relies heavily on Antwerp Diamond Exchange of America

v. Better Business Bureau of Maricopa County, Inc., 130 Ariz. 523, 637 P.2d 733 (1981),

and Edwards v. Anaconda Co., 115 Ariz. 313, 565 P.2d 190 (App. 1977), to support his

proposition that “a [p]laintiff [only] needs to establish . . . the mere opportunity of obtaining

a business relationship or economic advantage.” But Antwerp and Edwards are factually

distinguishable from this case. In Antwerp, the plaintiff was in the business of selling

diamonds and precious stones to customers it generated through advertising and solicitation.
130 Ariz. at 525-26, 637 P.2d at 735-36. The supreme court did not focus on the

requirement of a business relationship, but stated that “purchasers” might be dissuaded from

doing business with the plaintiff. Id. at 530, 637 P.2d at 740. Here, Dube would work for

a single employer and he had not even alleged an identifiable class of employers with whom

he had a relationship with which the University Officials could have interfered. And in

Edwards, the plaintiff there had begun negotiations with Conoco. 115 Ariz. at 314, 565

P.2d at 191. Dube has not alleged in his complaint that he had begun negotiations with any

prospective employers, nor had he identified any employers that may have had an interest

in hiring him.

¶24              Dube next argues that the trial court erred when it dismissed his complaint

because he should have had the opportunity to amend it to cure any deficiencies. We review

the denial of a motion to amend for an abuse of discretion. MacCollum v. Perkinson, 185

                                               13
Ariz. 179, 185, 913 P.2d 1097, 1103 (App. 1996). Rule 15(a), Ariz. R. Civ. P., 16 A.R.S.,

Pt. 1, provides that a party may amend its pleadings “once . . . at any time before a

responsive pleading is served.” After that, a party may amend its pleading “only by leave

of court.” Id. Leave to amend, although discretionary, should be liberally granted. Owen

v. Superior Court, 133 Ariz. 75, 79, 649 P.2d 278, 282 (1982). “Before the trial court

grants a Rule 12(b)(6) motion to dismiss, the non-moving party should be given an

opportunity to amend the complaint if such an amendment cures its defects.” Wigglesworth

v. Mauldin, 195 Ariz. 432, ¶ 26, 990 P.2d 26, 33 (App. 1999).

¶25           In his opposition to the University Officials’ motion to dismiss, Dube argued

he was entitled to amend his complaint to include the statement, “Plaintiff had the

expectancy of finding a job in engineering and Defendants knew it.” As noted earlier, the

trial court dismissed Dube’s claim of intentional interference because it was barred by the

statute of limitations, and in doing so, the court implicitly denied Dube’s request to amend

his complaint. See Modla v. Parker, 17 Ariz. App. 54, 58, 495 P.2d 494, 498 (1972). Even

though the court did not address Dube’s request to amend his complaint, the proposed

amendment does not cure the defects in the complaint as detailed above. Consequently,

although generally a trial court should give a party the opportunity to amend its complaint

prior to a Rule 12(b)(6) dismissal, the court was not required to do so here because the

proposed amendment did not cure the complaint’s defects. See Wigglesworth, 195 Ariz.
432, ¶ 26, 990 P.2d at 33.

                                            14
¶26           Finally, Dube notes that Arizona is a notice pleading state and that he is only

required to set forth a statement of the claim showing he is entitled to relief. See Rowland,

210 Ariz. 530, ¶ 10, 115 P.3d at 127. Although we agree with that general proposition, and

discourage the granting of premature motions to dismiss, Dube has been given the

opportunity here and below to state what other facts he could prove or potentially discover

and he has still been unable to state a claim against the University Officials. Therefore, we

see no reason to allow this particular claim to continue.

                                        Defamation

¶27           Dube alleges that Likins made defamatory statements about Dube in three

letters. First, he alleges that Likins defamed him in a letter to Desai by stating that Desai

“cover[ed] [Dube’s] transgressions.” Second, Dube alleges that Likins defamed him in

another letter to Desai by stating that Dube’s allegations were “unconfirmed.” Finally, Dube

alleges that Likins defamed him in a letter to a student of Desai’s by referring to “Dube’s

indiscretion” and to “unhappy people,” which Dube alleges was a reference to him.

¶28           Dube first argues the trial court erred when it found his defamation claims were

barred by the statute of limitations. The University Officials counter that, because the

statements were not “published in a manner in which it is peculiarly likely to be concealed

from the plaintiff, such as in a confidential memorandum or a credit report,” Clark v.

AiResearch Manufacturing Co. of Arizona, 138 Ariz. 240, 242, 673 P.2d 984, 986 (App.

1983), the cause of action accrued when the statements were published and the statute of

limitations bars Dube’s defamation claims. We review de novo a trial court’s dismissal of

                                             15
a complaint based on its application of a statute of limitations. Andrews ex rel. Woodard

v. Eddie’s Place, Inc., 199 Ariz. 240, ¶ 1, 16 P.3d 801, 801-02 (App. 2000).

¶29           The statute of limitations contained in A.R.S. § 12-821 applies to actions

against a public entity or public employee. “All actions against any public entity or public

employee shall be brought within one year after the cause of action accrues and not

afterward.” § 12-821. And A.R.S. § 12-821.01 defines when such a cause of action

accrues: “when the damaged party realizes he or she has been damaged and knows or

reasonably should know the cause, source, act, event, instrumentality or condition which

caused or contributed to the damage.” A.R.S. § 12-821.01(B).

¶30           The applicable statute of limitations in Clark was the general statute of

limitations for defamation claims, see A.R.S. § 12-541(1), not § 12-821. See Clark, 138
Ariz. at 241, 673 P.2d at 985. Section 12-821.01(B), however, provides its own definition

of accrual for claims against public entities or public employees. It does not provide that

defamation actions accrue on the date of publication unless published in a manner peculiarly

likely to be concealed from the plaintiff. Therefore, Dube was not required to meet that

requirement for the definition of accrual in § 12-821.01(B) to apply.

¶31           Here, the complaint does not suggest that Dube had any reason to believe

Likins would have made allegedly defamatory statements to third parties. Rather, it alleges

that Likins defamed Dube in letters to Desai and a student of Desai’s. According to the

complaint, Desai was antagonistic to Dube and thus may have been unlikely to communicate

Likins’s letters to Dube. The complaint contains no information about the student, but does

                                            16
not indicate that the student had any relationship with Dube. Dube alleges that he did not

discover the existence of the letters until May 2005, while engaged in discovery in his

lawsuit against Desai. Taken as true, the allegations in the complaint could support a finding

that Dube filed his complaint within one year from the time he knew or should have known

of the allegedly defamatory letters. Therefore, the claims are not barred by the statute of

limitations.

¶32            At oral argument in this court, the University Officials contended for the first

time that, even assuming the discovery rule applies here, Dube’s action regarding the letter

to the student, dated September 20, 2004, is still barred because Dube discovered it during

the limitations period. They rely on the statement in Clark that the issue was “whether the

statute of limitations is tolled prior to . . . discovery.” 183 Ariz. at 242, 673 P.2d at 986

(emphasis added). From the use of the word “tolled,” the University Officials arrive at the

conclusion that, if discovery occurs during the limitations period, the action must also be

brought within that period.

¶33            But the situation here is controlled by the statutes. Section 12-821 provides

that a claim against a public entity or official must be filed within one year from the date the

cause of action accrues. And § 12-821.01 states that such a cause of action accrues “when

the damaged party realizes he or she has been damaged and knows or reasonably should

know the cause, source, act, event, instrumentality or condition which caused or contributed

to the damage.” Therefore, Dube had one year from when he discovered or should have

discovered the defamation to file the action.

                                              17
¶34           Dube next argues the trial court erred when it dismissed his defamation claim,

pursuant to Rule 12(b)(6), Ariz. R. Civ. P., 16 A.R.S., Pt. 1, for failure to state a claim upon

which relief can be granted. In reviewing such a dismissal, “we view the alleged facts as

true.” Turley v. Ethington, 213 Ariz. 640, ¶ 2, 146 P.3d 1282, 1284 (App. 2006). “The

dismissal of a complaint is only appropriate when the ‘plaintiff[] would not be entitled to

relief under any interpretation of the facts susceptible of proof.’” Id. ¶ 6, quoting Fid. Sec.

Life Ins. Co. v. State Dep’t of Ins., 191 Ariz. 222, ¶ 4, 954 P.2d 580, 582 (1998).2

¶35           “‘One who publishes a false and defamatory communication concerning a

private person . . . is subject to liability, if, but only if, he (a) knows that the statement is

false and it defames the other, (b) acts in reckless disregard of these matters, or (c) acts

negligently in failing to ascertain them.’” Rowland v. Union Hills Country Club, 157 Ariz.
301, 306, 757 P.2d 105, 110 (App. 1988), quoting Restatement (Second) of Torts § 580(B)

(1977) (alteration in Rowland; emphasis in Rowland omitted); see also Peagler v. Phoenix

Newspapers, Inc., 114 Ariz. 309, 315, 560 P.2d 1216, 1222 (1977).

       2
        The trial court relied in part on copies of the letters in dismissing, but did not treat
the motion to dismiss as a motion for summary judgment. Ordinarily, reliance on evidence
extrinsic to the pleadings requires the court to treat the motion to dismiss as a motion for
summary judgment. See Ariz. R. Civ. P. 12(b), 16 A.R.S., Pt. 1; Smith v. CIGNA
HealthPlan of Ariz., 203 Ariz. 173, ¶ 8, 52 P.3d 205, 208 (App. 2002); Blanchard v. Show
Low Planning & Zoning Comm’n, 196 Ariz. 114, ¶ 11, 993 P.2d 1078, 1081 (App. 1999).
But here the complaint quotes the allegedly defamatory portions of the letters and states
who sent and received them. The letters “neither add to nor subtract from the deficiency of
the pleading,” Brosie v. Stockton, 105 Ariz. 574, 576, 468 P.2d 933, 935 (1970), and
neither party argues the court erred in not treating the motion to dismiss as a motion for
summary judgment. We thus review the trial court’s judgment as a motion to dismiss
pursuant to Rule 12(b)(6). See Brosie, 105 Ariz. at 576, 468 P.2d at 935.

                                               18
¶36           As a threshold issue, we address whether the two letters to Desai were

“published” for the purposes of a defamation claim.3 See Peagler, 114 Ariz. at 315, 560

P.2d at 1222 (defamatory statement must be published); Restatement § 558. Publication for

defamation purposes is communication to a third party. See Morris v. Warner, 160 Ariz.
55, 62, 770 P.2d 359, 366 (App. 1988); Restatement § 577.

¶37           Citing Spratt v. Northern Automotive Corp., 958 F. Supp. 456 (D. Ariz.

1996), the University Officials contend Dube failed to state a claim as to the two letters to

Desai because they were internal communications “regarding business related matters,” and

thus there was no publication. We are aware of no authority in the Arizona state courts that

supports the University Officials’ position. Although the federal district court in Spratt did

seem to say that internal communications could not constitute publication, that case actually

involved publication to the plaintiff, who then felt obligated to republish to a third party.

See id. at 465. Thus, Spratt does not stand for an unqualified acceptance of a rule that a

communication between two agents of the same principal does not constitute publication.

And, in any event, federal decisions on state law issues do not bind us. See MacCollum v.

Perkinson, 185 Ariz. 179, 184, 913 P.2d 1097, 1102 (App. 1996).

¶38           The issue of whether communication between two agents of the same principal

constitutes publication has led to a split in authority. See Wallulis v. Dymowski, 918 P.2d
3
       Although the University Officials raised this issue below, the trial court did not
address it in its ruling. The University Officials raise the issue here, and we address it
because we may affirm the trial court if it is correct for any reason. See Espil Sheep Co. v.
Black Bill & Doney Parks Water Users Ass’n, 16 Ariz. App. 201, 203-04, 492 P.2d 450,
452-53 (1972).

                                             19
755, 759 (Or. 1996). In some states, courts have held that this type of communication does

not constitute publication for defamation purposes. See, e.g., Dixon v. Econ. Co., 477
So. 2d 353, 354 (Ala. 1985); Williams v. Cook, 386 S.E.2d 665, 666 (Ga. Ct. App. 1989);

Cangelosi v. Schwegmann Bros. Giant Super Mkts., 390 So. 2d 196, 198 (La. 1980);

Lovelace v. Long John Silver’s, Inc., 841 S.W.2d 682, 684 (Mo. Ct. App. 1992); Magnolia

Petroleum Co. v. Davidson, 148 P.2d 468, 471 (Okla. 1944); Woods v. Helmi, 758 S.W.2d
219, 223 (Tenn. Ct. App. 1988); Prins v. Holland-N. Am. Mortgage Co., 181 P. 680, 681

(Wash. 1919); see also Flynn v. Reinke, 225 N.W. 742, 744 (Wis. 1929) (describing

telegraph company’s intracorporate communications as “privileged”). This rule is based on

the notion that there can be no publication where a corporation merely “communicat[es]

with itself.” Prins, 181 P. at 681.

¶39           On the other hand, courts in many states have held that such communications

do constitute publication. See, e.g., Wallulis, 918 P.2d at 760 (“The legal fiction created

by the intracorporate nonpublication rule is inconsistent with the purpose for which the

common law recognizes defamation claims.”); see also Kelly v. Gen. Tel. Co., 186 Cal. Rptr.
184, 186 (App. 1982); Torosyan v. Boehringer Ingelheim Pharms., Inc., 662 A.2d 89, 103

(Conn. 1995); S. Bell Tel. & Tel. Co. v. Barnes, 443 So. 2d 1085, 1086 (Fla. Dist. Ct. App.

1984); Popko v. Cont’l Cas. Co., 823 N.E.2d 184, 191-92 (Ill. App. Ct. 2005); Bals v.

Verduzco, 600 N.E.2d 1353, 1355-56 (Ind. 1992); Luttrell v. United Tel. Sys., Inc., 683
P.2d 1292, 1294 (Kan. Ct. App. 1984); Bander v. Metro. Life Ins. Co., 47 N.E.2d 595, 602

(Mass. 1943); Bacon v. Mich. Cent. R. Co., 21 N.W. 324, 326 (Mich. 1884); Frankson v.

                                            20
Design Space Intern., 394 N.W.2d 140, 144 (Minn. 1986); Simpson v. Mars Inc., 929 P.2d
966, 968 (Nev. 1997); Hagebak v. Stone, 61 P.3d 201, 208 (N.M. Ct. App. 2002); Kennedy

v. James Butler, 156 N.E. 666, 667 (N.Y. 1927); Rickbeil v. Grafton Deaconess Hosp., 23
N.W.2d 247, 256 (N.D. 1946).

¶40          A leading treatise on torts describes the latter view as the “contemporary

view.” 2 Dan B. Dobbs, The Law of Torts § 402, at 1126 (2001). Under that view, the

communication constitutes publication, but a privilege prevents recovery where the

statements are made in good faith. See Hagebak, 61 P.3d at 205. The former approach,

however, “may cloud the concept of publication without directly addressing the real

concerns of privilege.” Dobbs, supra, at 1126.

             The difference in the two approaches is that if there is no
             publication, the plaintiff will have no claim even when the
             statement is defamatory, does harm, and is unnecessary to the
             conduct of corporate business. If the communication is a
             publication that is privileged when appropriate, the plaintiff will
             be allowed to recover when the privilege is exceeded or abused.

Id.

¶41          The Restatement has adopted the contemporary view, providing that the

communication between two agents of the same principal is a publication, Restatement §

577 cmt. i, but also contemplating that a privilege can apply to intracorporate

communication. See Restatement § 596 cmt. d. We generally follow the Restatement in the

absence of controlling precedent, but “we will not do so blindly.” Ramirez v. Health

Partners of S. Ariz., 193 Ariz. 325, ¶ 26, 972 P.2d 658, 665 (App. 1998). Here, the

Restatement’s position protects the principal’s interest in free communication while

                                             21
providing for recovery in cases of abuse. Cf. Burns v. Davis, 196 Ariz. 155, ¶¶ 13, 15, 993
P.2d 1119, 1124-25 (App. 1999) (noting that qualified privilege balances competing policies

of protecting reputation and free communication). Additionally, it is supported by decisions

in what appears to be a majority of the jurisdictions that have addressed the issue.

Accordingly, we adopt the rule that the communication between two agents of the same

principal is a publication for defamation purposes subject to qualified privilege. The two

letters from Likins to Desai thus were “published” for defamation purposes, even if they

were written in the scope of University business.

¶42           At oral argument in this court, the University Officials contended for the first

time that we could affirm the trial court’s ruling on the ground that the letters were

conditionally privileged. But in light of the Arizona authority describing conditional

privilege as a defense to a defamation action, see Green Acres Trust v. London, 141 Ariz.
609, 616, 688 P.2d 617, 624 (1984), it would be premature to address privilege on appeal

in the context of a pre-answer motion to dismiss. We turn now to the trial court’s reason

for dismissing the claim: that the statements were not defamatory as a matter of law.

¶43           “‘To be defamatory, a publication must be false and must bring the defamed

person into disrepute, contempt, or ridicule, or must impeach plaintiff’s honesty, integrity,

virtue, or reputation.’” Turner v. Devlin, 174 Ariz. 201, 203-04, 848 P.2d 286, 288-89

(1993), quoting Godbehere v. Phoenix Newspapers, Inc., 162 Ariz. 335, 341, 783 P.2d
781, 787 (1989). Whether a statement is capable of defamatory meaning is a question of law

                                             22
for the court, but whether the meaning conveyed was defamatory is a question for the jury.

Yetman v. English, 168 Ariz. 71, 79, 811 P.2d 323, 331 (1991).

¶44           The trial court here concluded that Likins’s statements constituted his

“opinion and personal belief” and thus were not capable of defamatory meaning. We review

that decision de novo. See id. (whether statement capable of defamatory meaning question

of law); State Farm Ins. Cos. v. Premier Manufactured Sys., Inc., 213 Ariz. 419, ¶ 6, 142
P.3d 1232, 1234 (App. 2006) (court of appeals reviews questions of law de novo).

¶45           The statements alleging Dube committed an “indiscretion” or “transgressions,”

coupled with the references in the letters to use of University equipment as being “contrary

to [Desai’s] specific instructions” and “unauthorized,” could be construed as statements that

Dube committed an act in violation of University policy or authorization. This could “‘bring

[Dube] into disrepute, contempt, or ridicule, or . . . impeach [his] honesty, integrity, virtue,

or reputation.’” Turner, 174 Ariz. at 203-04, 848 P.2d at 288-89, quoting Godbehere, 162
Ariz. at 341, 783 P.2d at 787. Accordingly, we conclude these statements are capable of

defamatory meaning. Although we recognize that, given Dube’s allegations against Desai,

Likins’s statements to Desai may not have materially damaged Dube’s reputation, the jury

must decide whether defamatory meaning was actually conveyed. See Yetman, 168 Ariz.

at 79, 811 P.2d at 331.

¶46           The University Officials argue, however, that these statements constituted

Likins’s opinion that “Dube had failed to follow directions” and thus are not provable as

                                              23
false.4 But Likins’s statements regarding Dube’s “indiscretion” or “transgressions” were not

cast as his subjective belief, nor would there necessarily be blanket protection from

defamation liability if they had been. See Turner, 174 Ariz. at 204, 848 P.2d at 289. And

statements that Dube committed an “indiscretion” or “transgressions” in a way that was

“unauthorized” or “contrary to [Desai’s] specific instructions” at least imply facts upon

which the opinion are based. See id. at 208, 848 P.2d at 293 (“[S]tatements of opinion are

actionable when they ‘imply a false assertion of fact.’”), quoting Milkovich v. Lorain

Journal Co., 497 U.S. 1, 18-19, 110 S. Ct. 2695, 2706 (1990); Restatement § 566 (same).

Whether Dube in fact committed an indiscretion or transgression could be proved false.

Thus, to the extent it is a statement of opinion, it is actionable as defamatory.

¶47           For the first time at oral argument, the University Officials contended Likins’s

statements regarding Dube’s “transgressions” or “indiscretion” are not actionable because

Likins was merely summarizing or repeating prior statements of the persons to whom he was

writing. The University Officials contended, citing no authority, that repeating something

back to the person who first said it is not defamation. But, even if the University Officials

are correct as a legal matter, the limited record before us does not include the letters to

which Likins was responding. We thus have no way of knowing whether Likins was in fact

       4
        Neither party has contended, at this stage of the litigation, that Dube is a public
figure, that Likins’s statements involved a matter of public concern, or that a privilege
applies. But, in view of our disposition of this issue, we need not decide whether a private
figure must show that allegedly defamatory statements not involving matters of public
concern are provable as false. It is not clear whether this requirement applies to statements
“not involving public issues (or mere invective or hyperbole).” 2 Dan B. Dobbs, The Law
of Torts § 420, at 1186 (2001 & Supp. 2006).

                                             24
repeating or summarizing the others’ statements, or whether he did so accurately.

Accordingly, this argument provides no basis for affirming a Rule 12(b)(6) dismissal of the

defamation claims.

¶48           We resolve differently the question of whether the other statements are capable

of defamatory meaning. The “unconfirmed” nature of Dube’s allegations, even if a false

statement, is not defamatory as defined in Turner. At most, the term “unconfirmed” suggests

that the veracity of Dube’s allegations was not yet determined, not that the allegations were

false or baseless. This is not the type of suggestion that would bring someone into

“‘disrepute, contempt, or ridicule, or . . . impeach [his] honesty, integrity, virtue, or

reputation.’” Turner, 174 Ariz. at 204, 848 P.2d at 289, quoting Godbehere, 162 Ariz. at

341, 783 P.2d at 787.

¶49           Also, in referring to Dube’s allegations and in his letter’s next paragraph

referring to “unhappy people,” Likins did not specifically refer to Dube. To the extent the

statement can be interpreted as such a reference, this is not the type of statement that is

“capable of being reasonably interpreted as stating actual facts about [Dube].” Turner, 174
Ariz. at 207, 848 P.2d at 292. In Turner, the allegedly defamatory material included an

allegation that the plaintiff police officer’s “manner [of interrogation] bordered on police

brutality.” Id. at 209, 848 P.2d at 294. The court held that this statement was not

actionable, noting that the statement referred not to “conduct but rather . . . [to] demeanor.”

Id. at 208, 848 P.2d at 293. Similarly, Likins’s reference to “unhappy people,” to the extent

that it can be construed to refer to Dube, does not refer to or imply any factual assertion;

                                              25
instead, it is the type of “‘rhetorical hyperbole,’” id. at 207-08, 848 P.2d at 292-93, quoting

Old Dominion Branch No. 496, National Ass’n of Letter Carriers v. Austin, 418 U.S. 264,

285, 94 S. Ct. 2770, 2782 (1974), that does not “impl[y] the allegation of undisclosed

defamatory facts as the basis for the opinion.” Restatement § 566.5 Accordingly, the

statement is not actionable as a matter of law.

¶50            The University Officials argue that Likins cannot be liable for any

republication by Desai of the allegedly defamatory letters. This issue, which the trial court

did not address in its ruling, is moot as to the letter mentioning Dube’s “unconfirmed

allegations” because we have determined that statement is not capable of defamatory

meaning and thus not actionable.         And as to the other letter, referring to Dube’s

“transgressions,” at most Desai’s republication would present a damages issue. See

Restatement § 576 cmt. a (rule regarding harm caused by reasonably expected repetition

“applicable . . . when . . . the defamation is actionable per se . . . and damages for the special

harm for the repetition are sought in addition to general damages”). Accordingly, this issue

is premature and we do not address it here.

¶51            In another argument made for the first time at oral argument, the University

Officials claimed that Dube failed to allege the requisite level of fault required for

       5
        The requirement that rhetoric or epithet cannot be actionable unless it implies a
factual assertion, unlike the requirement that a statement be provable as false, appears to
apply even to cases in which the matter is not one of public concern. See Restatement § 566
(not limiting opinion rule to cases involving matters of public concern); 2 Dan B. Dobbs,
The Law of Torts § 420, at 1186 (2001) (“So far as it is a common law rule, it appears to
cover all cases.”).

                                               26
defamation liability. To state a claim for defamation where, as here, there has not yet been

any allegation that the plaintiff is a public figure, that the matter is one of public concern,

or that a privilege applies, the plaintiff must show fault at least amounting to negligence. See

Peagler, 114 Ariz. at 315, 560 P.2d at 1222. Dube’s complaint alleges fault sufficiently to

state a claim under Arizona’s liberal notice pleading rules. See Rowland v. Kellogg Brown

& Root, Inc., 210 Ariz. 530, ¶ 10, 115 P.3d 124, 127 (App. 2005).

¶52           Dube alleged in his complaint that one of “Desai’s violations” was “using

University facilities for his own personal gain,” for which Dube alleged Likins falsely blamed

him. Dube further alleged that a University audit confirmed his grievances against Desai.

The complaint states that “Likins knew Desai’s actions were illegal or at least ignored [his]

obligation to conduct an adequate investigation.” Finally, the complaint states that Likins’s

statements were false and defamatory. This is a sufficient allegation of fault to survive a

motion to dismiss under Rule 12(b)(6).

¶53           Dube lastly argues the trial court should have permitted him “to cure any

deficiency in the wording of the [a]mended [c]omplaint.” But Dube did not request the

opportunity to amend his complaint with regard to his defamation claims. Thus, that

argument, as far as it relates to his defamation claims, is waived. See Allstate Indem. Co. v.

Ridgely, 214 Ariz. 440, ¶ 7, 153 P.3d 1069, 1071 (App. 2007) (arguments not raised in trial

court waived on appeal).

                                              27
                                        Disposition

¶54           For the foregoing reasons, we affirm the trial court’s dismissal of Dube’s claim

of tortious interference with business expectancy against the University Officials and thus

affirm the dismissal of Powell and Hixon from this action. We also affirm the trial court’s

dismissal of Dube’s claims that Likins’s references to “unhappy people” and “unconfirmed

allegations” were defamatory. Accordingly, the trial court’s dismissal of any defamation

claims arising from Likins’s February 20, 2004 letter is affirmed. But we reverse the trial

court’s dismissal of Dube’s defamation claim based on Likins’s references to Dube’s

“indiscretion” and “transgressions” in the other two letters Likins authored. We remand for

further proceedings consistent with this decision.

                                              ____________________________________
                                              JOSEPH W. HOWARD, Presiding Judge

CONCURRING:

____________________________________
JOHN PELANDER, Chief Judge

____________________________________
GARYE L. VÁSQUEZ, Judge

                                             28