Court Opinion

ID: 2716463
Source: CourtListenerOpinion
Date Created: 2014-08-08 17:01:02.291584+00
Date Added: 2024-06-11T15:23:58.216689
License: Public Domain

Notice: This opinion is subject to correction before publication in the P ACIFIC R EPORTER .
      Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
      303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
      corrections@appellate.courts.state.ak.us.

               THE SUPREME COURT OF THE STATE OF ALASKA

LINDA R. MOFFITT, as Guardian                  )
and Conservator for her Mother,                )        Supreme Court No. S-14495
BETTY SCHROEDER-MOFFITT,                       )
Successor Trustee of the                       )        Superior Court No. 3PA-06-01070CI
LEONARD E. MOFFIT FAMILY                       )
TRUST, and Successor Trustee of the            )        OPINION
BETTY SCHROEDER-MOFFITT                        )
FAMILY TRUST,                                  )        No. 6936 – August 8, 2014
                                               )
                      Appellant,               )
                                               )
      v.                                       )
                                               )
TRACY A. MOFFITT and                           )
KATHRYN A. MOFFITT,                            )
                                               )
                      Appellees.               )
                                               )

              Appeal from the Superior Court of the State of Alaska, Third
              Judicial District, Palmer, Eric Smith, Judge.

              Appearances: Cynthia L. Ducey and Kendra E. Bowman,
              Delaney Wiles, Inc., and Peter C. Gamache, Law Offices of
              Peter C. Gamache, Anchorage, for Appellant. Chris D.
              Gronning, Bankston Gronning O’Hara, P.C., Anchorage, for
              Appellees.

              Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and
              Bolger, Justices.

              BOLGER, Justice.
I.     INTRODUCTION
                Linda Moffitt filed a lawsuit as her mother’s guardian and conservator and
the successor trustee of her parents’ living trusts, seeking to rescind or reform a deed
they executed in 1995 and a contract they signed in 1998. The superior court dismissed
Linda’s claims, reasoning that the statutes of limitations had run before Linda filed her
lawsuit in 2005. The primary question in this appeal is whether the superior court
properly applied the statutes of limitations. We conclude that Linda’s mostly equitable
claims are subject to the defense of laches, and the statutes of limitations do not apply to
these claims.
II.    FACTS AND PROCEEDINGS
                In 1992 Leonard and Betty Moffitt created two trusts to provide lifetime
support for the surviving spouse, and then to pass the trusts’ assets to their children. In
1995 Leonard and Betty agreed to sell their family farm to their son, Tracy, and his wife,
Kathy, and deeded part of the property to Tracy and Kathy. In 1998 Leonard and Betty
signed a contract memorializing the 1995 agreement and providing that the rest of the
farm would be sold to Tracy and Kathy after Leonard and Betty died. Leonard died in
2000 and Betty was diagnosed with dementia in 2001. Their daughter, Linda Moffitt,
became personal representative of Leonard’s estate, Betty’s guardian and conservator,
and successor trustee of Leonard’s and Betty’s trusts.
                In 2005 Linda, in her capacity as guardian, conservator, and trustee,
brought a civil suit against Tracy and Kathy seeking damages and rescission of the
contract. In 2009 Linda filed an amended complaint, adding an alternate request for
reformation and containing five counts:           conversion, diminished capacity, undue
influence, unconscionability, and unjust enrichment. In Leonard’s probate proceeding,
Linda petitioned the court for the sale of the real property free of contract. The probate

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court denied the petition. In 2010 Linda moved to consolidate the civil case with the
probate case, but the motion was denied.
             The superior court ultimately dismissed part of the civil case on summary
judgment, concluding that, although the limitations periods were tolled during Leonard’s
and Betty’s disabilities, Linda’s claims were barred by the two-year tort statute of
limitations and the three-year contract statute of limitations. The court noted Linda may
retain claims for certain profits received by Tracy and Kathy and for repayment of an
allegedly unpaid loan, and it denied summary judgment as to those collateral matters.
The superior court awarded Tracy and Kathy $80,025.75 in attorney’s fees and
$9,523.08 in costs. Linda appealed. Betty died before oral argument in the fall of 2013.
III.   STANDARD OF REVIEW
             “We review a grant or denial of summary judgment de novo.”1 “[W]e
review de novo questions regarding the applicable statute of limitations, the
interpretation of that statute, and whether that statute bars a claim.”2 We review the
denial of a motion to consolidate for abuse of discretion.3
IV.    DISCUSSION
       A.    The Laches Defense Applies To Linda’s Equitable Claims.
             1.     Linda’s claims are equitable claims.
             Linda’s main claims are for rescission or reformation of the 1995 deed and
the 1998 agreement due to diminished capacity, undue influence, and unconscionability.

       1
             Alaska Civil Liberties Union v. State, 122 P.3d 781, 785 (Alaska 2005)
(citations omitted).
       2
            Gefre v. Davis Wright Tremaine, LLP, 306 P.3d 1264, 1271 (Alaska 2013)
(citing Weimer v. Cont’l Car & Truck, LLC, 237 P.3d 610, 613 (Alaska 2010)).
       3
              C.L. v. P.C.S., 17 P.3d 769, 772 (Alaska 2001) (citing Foltz-Nelson
Architects v. Kobylk, 749 P.2d 1347, 1349 n.2 (Alaska 1988)).

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She argued that the deed and the agreement are invalid and asked that the superior court
declare these transactions “null and void or voidable” or reform them “to correct any
unconscionable terms and to avoid unjust enrichment.”
              A claim for rescission may be either legal or equitable. “Rescission at law
is a suit based upon rescission already accomplished.”4 “Rescission at law occurs where
at least one of the parties to a contract rescinds the contract and then turns to a court for
enforcement of that rescission and an award of damages.”5 In contrast, “rescission in
equity occurs only upon a court’s decree. In those cases, the court must intervene both
to rescind the agreement and to award damages.”6 In other words: “Rescission is
equitable if the complaint asks the court to order rescission of the contract, and is legal
if the court is asked to enforce a completed rescission.”7
              Here, Linda had not rescinded the contract when she filed her claim.
Rather, she asked the court for an order declaring both transactions null and void, that
is, rescinded. And Linda alleged adequate grounds for rescission: undue influence8 and
diminished capacity.9 Thus, it appears that she has pleaded claims for equitable
rescission.

       4
              Knaebel v. Heiner, 663 P.2d 551, 554 (Alaska 1983) (emphasis in original).
       5
            Commercial Recycling Ctr., Ltd. v. Hobbs Indus., Inc., 228 P.3d 93, 98
(Alaska 2010) (citation omitted).
       6
              Id. at 99 (citation omitted).
       7
              12A C.J.S. Cancellation of Instruments § 5 (2014) (citation omitted).
       8
              Id. § 46 (“Alone, or accompanied by other inequitable circumstances, undue
influence is a ground for the cancellation of instruments.”).
       9
            Id. § 62 (“As a general rule, total incapacity to contract because of
unsoundness of mind constitutes a ground for the rescission and cancellation of contracts
executed by persons in that condition.”).

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              Linda’s complaint also requested the remedy of reformation. “Reformation
is an equitable remedy by which a court alters the terms of a written instrument to make
the writing conform with the meaning that the parties agreed upon.”10 As noted above,
Linda’s complaint specifically requested that the court reform the 1995 deed and the
1998 agreement. Linda’s reformation claims are also equitable in nature.
              2.	    Linda’s equitable claims are not subject to a statute of
                     limitations, but are subject to laches.
              Equitable claims for rescission or reformation of a contract may be barred
by the doctrine of laches.11 This doctrine “creates an equitable defense when a party
delays asserting a claim for an unconscionable period.”12 To apply this defense, “[a]
court must find both an unreasonable delay in seeking relief and resulting prejudice to
the defendant.”13
              Several courts have held that statutes of limitations do not control the time
limit for asserting equitable claims.14 For example, the Pennsylvania Supreme Court

       10
            Wasser & Winters Co. v. Ritchie Bros. Auctioneers (Am.), 185 P.3d 73, 77
(Alaska 2008) (citing RESTATEMENT (SECOND ) OF CONTRACTS § 155 cmt. a (1981)).
       11
             Cf. Vockner v. Erickson, 712 P.2d 379, 384 (Alaska 1986) (evaluating
laches defense to a claim for reformation where no prejudice from delay was shown).
       12
            Offshore Sys.-Kenai v. State, Dep’t of Transp. & Pub. Facilities, 282 P.3d
348, 354 (Alaska 2012) (quoting State, Dep’t of Commerce & Econ. Dev. v. Schnell, 8
P.3d 351, 358-59 (Alaska 2000) (internal quotation marks omitted)).
       13
            Id. (alteration in original) (quoting Schnell, 8 P.3d at 358-59) (internal
quotation marks omitted).
       14
             E.g., Holmberg v. Armbrecht, 327 U.S. 392, 396 (1946) (“Traditionally and
for good reasons, statutes of limitation are not controlling measures of equitable relief.”);
Castner v. First Nat’l Bank of Anchorage, 278 F.2d 376, 385 (9th Cir. 1960); see also
30A C.J.S. Equity § 164 (2014) (citations omitted) (“Statutes of limitations, . . . as
                                                                             (continued...)

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stated: “[B]ecause statutes of limitation are not controlling in equity, but only provide
guidance in determining the reasonableness of any delay, this Court has allowed suits in
equity to proceed despite significant delays in bringing the action.”15 Similarly, the
South Carolina Supreme Court noted “that the statute of limitations does not apply to
actions in equity.”16
              This rule was applied by the Ninth Circuit to a dispute in the Alaska
territorial court around the time of statehood.17        And it is consistent with our
determination in the inverse situation that the defense of laches does not apply to a legal
claim governed by a statute of limitations.18 We are not aware of any statutory provision
that would conflict with our decision to apply the defense of laches to this case. We
therefore conclude that Linda’s equitable claims for reformation and rescission are
controlled by the doctrine of laches. The laches defense should also apply to any
associated restitution claims.19

       14
        (...continued)
ordinarily enacted, apply only to actions at law, and do not in terms apply to suits in
equity.”).
       15
              United Nat’l Ins. Co. v. J.H. France Refractories Co., 668 A.2d 120, 124
(Pa. 1995) ( citations and internal quotation marks omitted).
       16
              Dixon v. Dixon, 608 S.E.2d 849, 855 (S.C. 2005).
       17
             Castner, 278 F.2d at 385 (holding that the statute of limitations did not
apply to an equitable claim).
       18
            Kodiak Elec. Ass’n, Inc. v. DeLaval Turbine, Inc., 694 P.2d 150, 157
(Alaska 1984) (“The defense of laches is inapplicable to an action at law.”).
       19
              See RESTATEMENT (THIRD ) OF RESTITUTION AND U NJUST ENRICHMENT §
70 (2011).

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               In the superior court, Tracy and Kathy moved for summary judgment based
on the statutes of limitations for tort and contract claims. In response, Linda asserted that
these statutes did not apply to her equitable claims. But neither party raised the issue of
laches in the motion papers, so the superior court did not have the occasion to address
this doctrine. And we cannot determine on appeal whether there are factual issues that
may preclude summary judgment on the laches defense. We must therefore reverse the
summary judgment order as to the equitable claims and remand this case for further
proceedings.
       B.	     The Contract And Tort Statutes Of Limitations Apply To Linda’s
               Legal Claims.
               Some of Linda’s claims are clearly legal claims — particularly her claim
for punitive damages.20 Linda argues that her complaint asserts claims regarding the
ownership and possession of the property. Thus, she contends the real property statutes
of limitations apply. But Alaska law prevents the application of real property statutes of
limitations to this case.
               In Bauman v. Day,21 the superior court set aside a foreclosure where the
defaulting plaintiff buyers argued their original land sale agreement with the defendant
sellers was invalid.22 We affirmed that decision but rejected the plaintiffs’ argument that
their separate action contesting the validity of the sales contract fell under a statute of
limitations for real property.23 We reasoned that the salient issue there was “not the

       20
             See Loomis Elec. Prot., Inc. v. Schaefer, 549 P.2d 1341, 1344 (Alaska
1976) (holding action for damages is an action at law).
       21
               892 P.2d 817 (Alaska 1995).
       22
               Id. at 822-23.
       23
               Id. at 824-25.

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ownership interest itself but improprieties in the bargaining that resulted in the
conveyance of that interest to the Baumans.”24 Here, as in Bauman, Linda’s claim is not
subject to a real property statute of limitations because, as discussed above, her claim
attacks the legality of the land sale contracts.
              We thus affirm the superior court’s decision that the tort and contract
statutes of limitations apply to Linda’s legal claims. We note that in 1997 the statute of
limitations for contract cases changed from six years to three years under the newly
adopted AS 09.10.053.25
              Finally, while there are substantial questions about the operation of the
tolling statute, AS 09.10.140(a), they were not adequately addressed in the briefing on
appeal. We thus do not decide whether the cases applying the tolling statute to a minor’s
claims, even when the minor has competent parents,26 also apply to toll an incompetent
plaintiff’s claims after appointment of a guardian.
       C.	    It Was Not An Abuse Of Discretion For The Superior Court To
              Decline To Consolidate This Case With The Probate Proceedings.
              Linda points out that she attempted to sell the farm in probate court, but the
probate court denied her motion.        The superior court also denied her motion to
consolidate, and Linda argues that this ruling was an abuse of discretion. In C.L. v.
P.C.S., however, we found no abuse of discretion in the trial court’s denial of a motion

       24	
              Id. at 825.
       25
              The three-year contract statute of limitations applies to all claims arising on
or after August 7, 1997, and the prior six-year statute of limitations applies to claims
arising before that date. See ch. 26, § 55, SLA 1997; 1997 House Journal 1796.
       26
              See Grober v. State, Dep’t of Revenue, 956 P.2d 1230, 1233 (Alaska 1998)
(quoting Hanson v. Kake Tribal Corp., 939 P.2d 1320, 1326 (Alaska 1997)); see also
Sands ex rel. Sands v. Green, 156 P.3d 1130, 1133 (Alaska 2007).

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to consolidate the probate case with the civil case where the moving party was not
prejudiced and the trial court had reasonably considered the moving party’s arguments.27
             The superior court denied Linda’s motion to consolidate, reasoning that:
(1) the motion was procedurally defective because venue of the probate case had not yet
been changed from Anchorage to Palmer; (2) consolidation was not appropriate because
the probate proceedings involved issues beyond the dispute over the family farm; and (3)
denying consolidation posed little risk of delay or duplicative litigation. These reasons
are sufficient to support the superior court’s decision, and Linda has not explained how
she has been prejudiced. We conclude that the superior court did not abuse its discretion
when it denied the motion for consolidation.
V.    CONCLUSION
             The superior court’s order of dismissal is VACATED. The attorney’s fees
and costs awards are therefore also VACATED. In view of our disposition, it is not
necessary to address the other issues raised in this appeal.

      27
             17 P.3d 769, 773 (Alaska 2001).

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