MALONEY v. DEMOFF

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

TOBY MALONEY, Plaintiff/CounterDefendant/Appellant,

v.

TONJA LYNN DEMOFF, et al., Defendants/CounterClaimants/Appellees.

No. 1 CA-CV 25-0835
FILED 06-02-2026

Appeal from the Superior Court in Yavapai County
No. V1300CV202280256
The Honorable Linda Wallace, Judge Pro Tempore

AFFIRMED

COUNSEL

Nearhood Law Offices, PLC, Scottsdale, AZ
By Patricia A. Premeau
Counsel for Plaintiff/CounterDefendant/Appellant

Meagher + Geer, P.L.L.P., Scottsdale, AZ
By Wyatt M. Bailey
Co-Counsel for Defendants/CounterClaimants/Appellees

Duggan Bertsch, LLC, Chicago, IL
By Brian Konkel (Pro Hac Vice)
Co-Counsel for Defendants/CounterClaimants/Appellees
MALONEY v. DEMOFF, et al.
Decision of the Court

MEMORANDUM DECISION

Judge Veronika Fabian delivered the decision of the Court, in which
Presiding Judge Michael J. Brown and Chief Judge Randall M. Howe joined.

F A B I A N, Judge:

¶1 Toby Maloney appeals from the superior court’s dismissal of
her fraud claims against Tonja Demoff and grant of summary judgment
against her on her contract claims and some of Demoff’s counterclaims. For
the following reasons, this Court affirms.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 In reviewing the dismissal of a claim, this Court will “assume
the truth of all well-pleaded factual allegations and indulge all reasonable
inferences from those facts,” and in reviewing a grant of summary
judgment on a claim, this Court examines the facts “in a light most
favorable to the non-moving party.” Coleman v. City of Mesa, 230 Ariz. 352,
355 ¶ 9 (2012); Read v. Phx. Newspapers, Inc., 169 Ariz. 353, 356 (1991).

¶3 Maloney and Demoff were involved in an intimate
relationship from the 1990s until the late 2000s. During that period, the pair
were also involved in multiple joint real estate ventures.

¶4 In October 2022, Maloney sued Demoff for fraudulent
misrepresentation, unjust enrichment, breach of contract, and breach of the
covenant of good faith and fair dealing arising out of a dispute over a house
in Sedona (“the property”). Maloney bought the property in 2005 and
added Demoff to the title as a joint tenant. In early 2017, Demoff asked
Maloney to take out a home equity line of credit for $245,000 secured by the
property. In exchange, Demoff promised to pay back the loan and remove
herself from title to the property.

¶5 Demoff signed for the loan and made monthly payments but
never removed herself from title to the property. Demoff then instead
proposed transferring the property into a limited liability company
(“K&L”), in which Demoff and Maloney both had 50 percent interest, and
selling her interests in K&L to Maloney. The parties conveyed the property
to K&L in June 2017, and Maloney signed an agreement conveying
Demoff’s interest in the company to Maloney, believing she now owned

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K&L in its entirety. However, Demoff never signed that agreement and did
not relinquish control of K&L.

¶6 After the lawsuit was filed in 2022, Demoff moved to dismiss
the fraud and unjust enrichment claims based on the applicable statute of
limitations. Demoff filed counterclaims for breach of contract, breach of
fiduciary duty, breach of the covenant of good faith and fair dealing, and
unjust enrichment. Demoff also requested an equitable accounting and that
K&L, which now owned the property, be dissolved and the property be
sold.

¶7 The superior court dismissed the fraud claims, finding they
were barred by the statute of limitations. The court denied the motion to
dismiss the unjust enrichment claim.

¶8 In 2024, Demoff moved for summary judgment on Maloney’s
remaining claims and on Demoff’s counterclaims. Maloney did not contest
Demoff’s request for dissolution of K&L. The superior court granted
summary judgment on the remainder of Maloney’s claims, with the
exception of her unjust enrichment claim, and granted summary judgment
in favor of Demoff on her request for a dissolution of K&L and an equitable
accounting. Upon Demoff’s request, the court entered a Rule 54(b)
judgment incorporating the initial dismissals and the subsequent summary
judgments. Maloney timely appealed. This Court has jurisdiction pursuant
to Article VI, Section 9 of the Arizona Constitution and A.R.S. §§ 12-
120.21(A)(1) and 2101(A)(1), (6).

DISCUSSION

I. The Statute of Limitations Bars Maloney’s Fraud Claims.

¶9 Maloney argues the superior court erred by finding that the
three-year statute of limitations barred her fraud claims because she did not
discover the fraud until 2020. This Court reviews the superior court’s
dismissal of a claim de novo. See Coleman, 230 Ariz. at 355 ¶ 7. Dismissal is
proper under Arizona Rule of Civil Procedure 12(b)(6) only when the
plaintiff would not be entitled to relief under any provable interpretation
of the facts. Id. at 356 ¶ 8. “The affirmative defense of a statute of limitations
may be raised in a motion to dismiss if it appears on the face of the
complaint that the claim is barred.” Republic Nat. Bank of N.Y. v. Pima Cnty.,
200 Ariz. 199, 204 ¶ 20 (App. 2001).

¶10 Maloney’s fraud claims stem from Demoff’s promise to
remove herself from title to the property, and her later promise to sell her

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interest in K&L to Maloney, in exchange for taking out the loan against the
property. A.R.S. § 12-543(2) provides that a fraud claim must be brought
within three years of when it accrues. A cause of action for fraud accrues
“when the defrauded party discovers or with reasonable diligence could
have discovered the fraud.” Mister Donut of Am., Inc. v. Harris, 150 Ariz. 321,
323 (1986). Therefore, the statute of limitations “may begin to run before a
person has actual knowledge of the fraud or even all the underlying details
of the alleged fraud.” Id.

¶11 Here, Maloney was aware Demoff had not removed herself
from title to the home in 2017 when Demoff proposed the conveyance to
K&L. With respect to Demoff’s failure to transfer her interest in K&L to
Maloney, with “reasonable diligence,” Maloney could have discovered the
fraud sometime in 2017. Id. At the time Maloney signed the K&L purchase
agreement, she knew Demoff had not yet signed it. When Demoff did not
return a signed copy of the purchase agreement to Maloney, she had
sufficient notice that the transfer may not be complete and to suspect fraud.
See Coronado Dev. Corp. v. Superior Court, 139 Ariz. 350, 352 (App. 1984).
Maloney, with reasonable diligence, could have discovered the fraud by
independently verifying the transfer or requesting evidence that the
transfer was complete. Thus, the three-year statute of limitations accrued
sometime in 2017. The superior court did not err by finding the statute of
limitations barred Maloney’s fraud claims filed in 2022.

II. The Statute of Limitations Bars Maloney’s Contract Claims.

¶12 Maloney argues the superior court erred in granting Demoff
summary judgment on Maloney’s breach of contract claims because neither
the statute of frauds nor the statute of limitations barred those claims. The
superior court did not specify its basis for granting summary judgment.
This Court reviews a grant of summary judgment de novo. Read, 169 Ariz. at
356. This Court will affirm the grant of a motion for summary judgment if
“the moving party shows that there is no genuine dispute as to any material
fact and the moving party is entitled to judgment as a matter of law.” Ariz.
R. Civ. P. 56(a).

¶13 Claims based on oral agreements are subject to the same
three-year statute of limitations as fraud claims. See A.R.S. § 12-543(1).
Maloney does not allege any specific time by which Demoff was required
to relinquish her interest in K&L. Where an oral contract is silent as to the
time of performance, the statute of limitations begins to accrue at the time
the contract was made. See In re Estate of Musgrove, 144 Ariz. 168, 171 (App.
1985). Here, the alleged oral agreement was made, and the cause of action

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accrued, in 2017. Thus, the three-year statute of limitations barred the
contract claims in Maloney’s 2022 lawsuit. Because this Court affirms based
on the statute of limitations, we need not reach the statute of frauds issue.
See Glaze v. Marcus, 151 Ariz. 538, 540 (App. 1986) (this Court “will affirm
the trial court’s decision if it is correct for any reason”).

III. The Superior Court Did Not Err by Not Rescinding the
Conveyance of the Property to K&L.

¶14 Maloney argues the superior court erred by dissolving K&L
without also rescinding the deed conveying the property to K&L.
Maloney’s argument is based on her fraud and contract claims. Because the
statute of limitations bars both her fraud and contract claims, this Court
cannot discern a legal basis for the superior court to rescind the deed as part
of its dissolution of K&L. Maloney has not shown the superior court erred.

IV. The Superior Court Did Not Err by Ordering an Equitable
Accounting.

¶15 Maloney challenges the superior court’s order of an equitable
accounting of rental income that Maloney collected from the property on
three bases: 1) no fiduciary relationship existed between Maloney and
Demoff, 2) the court had not yet determined liability for the rental income,
and 3) the business of K&L is not complicated enough to warrant an
accounting. Although an equitable order is generally reviewed for an abuse
of discretion, here the court granted summary judgment and this Court
reviews the issue de novo. See Henderson v. Henderson, 241 Ariz. 580, 590 ¶ 31
(App. 2017); Read, 169 Ariz. at 356.

¶16 Maloney’s first argument fails because Mollohan v. Christy, 80
Ariz. 141 (1956), does not stand for the proposition that parties must be in
a fiduciary relationship to receive an equitable accounting. Instead, the case
requires a relationship “akin to a fiduciary status.” Id. at 143. An adequate
relationship exists where “the parties to the suit had been intimate friends
of many years standing” and the mix of the parties’ personal relationship
and business ventures resulted in a “mutual and confidential relationship
between defendant and plaintiff” until their falling-out. Id. at 143-44. Here,
the parties were engaged in a joint real estate venture as well as an intimate
relationship when they acquired the property, and the subsequent dispute
over the property and rental income stems from that intertwined
relationship. Other jurisdictions have similarly found that persons involved
in joint business ventures have a sufficiently close relationship to warrant
an accounting. See Mendel v. Hewitt, 585 N.Y.S.2d 832, 834 (App. Div. 1992);

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Lightsey v. Marshall, 992 P.2d 904, 909 (N.M. App. 1999). Thus, Maloney has
not shown that the court erred by ordering an equitable accounting before
dissolving K&L and its assets.

¶17 Maloney argues that under Mezey v. Fioramonti, 204 Ariz. 599
(App. 2003), the order for accounting is premature because the superior
court has not determined that Demoff is entitled to any portion of the rental
income. Maloney also argues Mezey requires reversal because K&L, as a
single asset company, is not complicated enough to warrant an accounting.
This Court disagrees.

¶18 The Mezey court, in the context of determining this Court’s
appellate jurisdiction over an equitable accounting, stated that an
accounting ordinarily occurs in two steps: “in the first, the court determines
liability (the right to the accounting); in the second, the actual accounting is
conducted.” Mezey, 204 Ariz. at 603 ¶ 13, overruled in part on other grounds by
Bilke v. State, 206 Ariz. 462 (2003). It also stated that an accounting is usually
appropriate when an account is of a “complicated nature.” Id. (quoting
Dairy Queen, Inc. v. Wood, 369 U.S. 469, 478 (1962)). However, Mezey does
not hold that these are absolute prerequisites to any equitable order for an
accounting. Instead, it generally described the nature of an equitable
accounting in support of its jurisdictional holding. Id. at 602-06 ¶¶ 8-24.

¶19 The Mollohan court, in contrast, set forth the basis for an
accounting as follows: “If the persons stood in a mutual and confidential
relation to each other, and had a joint interest in the result of an adventure,
either may demand an accounting, with a view to ascertain the profit or loss
and their respective rights.” Mollohan, 80 Ariz. at 143 (quoting Reinhard v.
Reinhard, 56 N.Y.S.2d 160, 162 (Sup. Ct. 1945)). Here, Maloney and Demoff
stood in a mutual and confidential relation to each other, they had a joint
venture in K&L, which both parties agreed to dissolve. Demoff demanded
an accounting, which Maloney refused to provide. The superior court did
not err in ordering an accounting.

V. Attorney Fees.

¶20 Maloney requests an award of attorney fees and costs under
A.R.S. § 12-341.01. Demoff requests her attorney fees and costs. This Court,
in its discretion, denies both requests for attorney fees. Because Demoff is
the successful party on appeal, she may recover her taxable costs incurred
in this appeal upon compliance with Arizona Rule of Civil Appellate
Procedure 21. See A.R.S. § 12-341.

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MALONEY v. DEMOFF, et al.
Decision of the Court

CONCLUSION

¶21 This Court affirms.

MATTHEW J. MARTIN • Clerk of the Court
FILED: JR

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