I. Statutes of Limitation, Generally.
The purpose of a statute of limitations is to protect defendants and courts from stale claims where plaintiffs have slept on their rights. Chapter 5 of Title 12 of the Arizona Revised Statutes sets out the general limitations provisions which govern most civil actions. 2 Ariz. Prac., Civil Trial Practice Sec. 14.3 (2d ed.)(2005). Because a defense based upon the statute of limitations is generally disfavored, the longer of two periods is used if there is a question about which statute to apply.
II. A.R.S. 44-1991 - Fraud in Purchase or Sale of Securities.
The statute of limitations for securities fraud claims provides that such a claim is barred "unless brought within two years after discovery of the fraudulent action on which the liability is based, or after the discovery should have been made by the exercise of reasonable diligence." A.R.S. 44-2204(B). The only thing that needs to be discovered, to commence running of the limitations period for a securities fraud claim, is the fraudulent practice, and there is no requirement that the plaintiff discover he or she was damaged. Aaron v. Fromkin, 196 Ariz. 224, 994 P.2d 1039 (App. 2000). See also Washington Nat. Corp. v. Thomas, 117 Ariz. 95, 570 P.2d 1268 (Div. 2 1977) (cause of action for alleged security violations and alleged misrepresentations, arising out of claimed unauthorized sale of trust beneficiary's stock and purchase of mutual funds from proceeds, did not accrue until beneficiary's stock was sold thus alerting his widow, rather than at time original trust agreements were executed and alleged misrepresentations made). Also possibly noteworthy, the 1977 amendment substituted "two years" for "one year" in subsec. B, and deleted "and in no event shall such action be brought more than three years after the fraudulent practice occurred" at the end of the subsection, possibly showing intent in favor of enlarging, rather than diminishing, the statute of limitations in securities fraud period.
III. Common Law Fraud.
A.R.S. 12-543, in pertinent part: There shall be commenced and prosecuted within three years after the cause of action accrues, and not afterward, the following actions: [emphasis added] 3. For relief on the ground of fraud or mistake, which cause of action shall not be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud or mistake. Consider also constructive fraud, wherein the running of the statute of limitations may be tolled where the plaintiff presents evidence that the defendant concealed the facts giving rise to the cause of action and thereby prevented the plaintiff from filing the claim in a timely manner. Walk v. Ring, 202 Ariz. 310, 44 P.3d 990 (2002); Mohave Electric Cooperative, Inc. v. Byers, 189 Ariz. 292, 942 P.2d 451 (App. 1997). In addition, constructive fraud is sufficient to toll the running of the statute of limitations until the plaintiff either knows, or through the exercise of due diligence should have known, of the fraud. Lasley v. Helms, 179 Ariz. 589, 880 P.2d 1135 (App. 1994). Constructive fraud requires the existence of a confidential relationship, but does not require a showing of either intent to deceive or dishonesty of purpose. Further still, consider fraudulent concealment wherein the plaintiff is relieved of the duty of diligent investigation required by the discovery rule and the statute of limitations is tolled until the concealment is discovered. Walk v. Ring, 202 Ariz. 310, 44 P.3d 990 (2002).
IV. Common Law Negligence.
Negligence claims carry a two-year statute of limitation. A.R.S. 12-541-542; Sato v. Van Denburgh, 123 Ariz. 225, 599 P.2d 181 (1979); Hatch v. Reliance Ins. Co., 758 F.2d 40 (9th Cir. 1985) cert. denied 474 U.S. 1021, 106 S.Ct. 571. Further, accrual of a negligence claim, for limitations purposes, requires not only negligence but also damage. Commercial Union Inc. Co. v. Lewis and Roca, 183 Ariz. 250, 902 P.2d 1354 (Div. 1 1995) reconsideration denied, review denied; Owens v. City of Phoenix, 180 Ariz. 402, 884 P.2d 1100 (Div. 1 1994).
V. Breach of Fiduciary Duty.
A.R.S. 12-542 indicates that Sec.there shall be commenced and prosecuted within two years after the cause of action accrues, and not afterwardSec.. Case law interprets breach of fiduciary duty claims to fall under the purview of A.R.S. Sec. 12-542 and requires actual or constructive knowledge of damages. See Mohave Elec. Co-op, Inc. v. Byers, 189 Ariz. 292, 942 P.2d 451 (Div. 1 1997) (holding that for notice to be sufficient to begin statute of limitations, plaintiff must have knowledge of both what and who caused its damage; further, wrongful concealment typically tolls the statute of limitation); CDT, Inc. v. Addison, Roberts & Ludwig, C.P.A., P.C., 198 Ariz. 173, 7 P.3d 979 (Div. 2 2000).