OWNER-OPERATOR INDEPENDENT DRIVERS ASSOCIATION, a Missouri corporation; THOMAS and KAREN MOORE, a California partnership, dba TOM MOORE TRANSPORTATION; JASMINE, LLC, a Missouri limited liability company; and K&S TRUCKING LLC, a Wyoming limited liability company, on behalf of themselves and others similarly situated, Plaintiffs/Appellants,
PACIFIC FINANCIAL ASSOCIATION, INC., a California corporation; and FEDERAL SERVICE CORPORATION, an Arizona corporation, Defendants/Appellees.
from the Superior Court in Maricopa County No. CV2013-000615
The Honorable J. Richard Gama, Judge Retired
IN PART, REVERSED IN PART AND REMANDED
Campbell Law Group Chartered, Phoenix By Brian J. Campbell
Counsel for Plaintiffs/Appellants.
Cullen Law Firm, PLLC, Washington, D.C. By Daniel E. Cohen
Counsel Pro Hac Vice for Plaintiffs/Appellants.
Stinson Leonard Street LLP, Phoenix By Lonnie J. Williams,
Jr. Counsel for Defendants/Appellees.
Presiding Judge Donn Kessler delivered the opinion of the
Court, in which Judge Patricia K. Norris and Judge Andrew W.
Appellants Owner-Operator Independent Drivers Association
("Association") and several of its members
(collectively, "Owner-Operator") appeal the
superior court's dismissal of their complaint pursuant to
Arizona Rules of Civil Procedure ("Rule") 12(b)(6),
refusal to allow them to amend their complaint, and award of
attorneys' fees. For the following reasons, we affirm the
dismissal of Owner-Operator's statutory claims; reverse
and remand to allow Owner-Operator to assert common law
claims of breach of fiduciary duty and negligence; and vacate
the award of attorneys' fees.
AND PROCEDURAL HISTORY
Appellants, with the exception of the Association, are motor
carriers that hauled freight pursuant to contractual
agreements with a freight broker, Alliance Transportation,
Inc. ("Alliance"). As a condition of federal
registration under 49 U.S.C. § 13904, freight brokers
must file with the United States Secretary of Transportation
a "bond, insurance policy, or other type of security
approved by the Secretary." 49 U.S.C. §§
13904, 13906(b) (2005). Federal Motor Carrier Safety
Administration ("FMCSA") regulations specify that a
broker may choose either to file a surety bond or establish a
trust fund of $10, 000 to satisfy this security requirement.
49 C.F.R. § 387.307 (2008). In addition to providing the
surety bond or trust fund as security, brokers must file
evidence of the security's existence with the Secretary
using the FMCSA's prescribed Form BMC 85 ("BMC 85
Form"). 49 C.F.R. § 387.307(b).
Alliance chose to provide the required $10, 000 security by
way of a trust fund. Alliance and Appellee Pacific Financial
Association, Inc. ("Pacific") executed a BMC 85
Form in April 2008 (the "Agreement"), creating a
trust fund ("Trust"). Pursuant to the express terms
of the Agreement, Alliance was Trustor and Pacific was
Trustee. Motor carriers who had contracted with Alliance and
to whom Alliance was liable for damages pursuant to the
Agreement were the beneficiaries.
Alliance stopped paying motor carriers who had transported
freight pursuant to their contracts with Alliance in the fall
of 2011. As of October 19, 2011, the aggregate of unpaid
claims against the Trust, premised upon deliveries before
that date, exceeded the $10, 000 balance of the Trust.
Pacific did not notify any Trust beneficiaries that the
security had been exhausted, take steps to trigger
Alliance's duty to replenish the Trust, or serve notice
to terminate the Trust. In December 2011 and January 2012,
Appellants, with the exception of the Association, delivered
loads entitling them to payment from Alliance. These invoices
were not paid, however, and the carriers filed claims with
Pacific against the Trust during January and February 2012.
Meanwhile, Alliance filed for bankruptcy protection on
January 11, 2012.
Pacific filed a notice of cancellation of the Trust with the
FMCSA on January 23, 2012, at least ninety-six days after
Pacific knew that the aggregate claims exceeded the $10, 000
balance. The Trust was cancelled on February 22, 2012. As of
March 2012, Pacific had made no payments from the Trust on
Owner-Operator filed this action seeking declaratory relief,
injunctive relief, and damages. The complaint alleged that
Pacific owed the motor carriers, as beneficiaries, certain
duties set forth in the Agreement; in Arizona Revised
Statutes ("A.R.S.") sections 14-10801, 14-10802,
14-10803, 14-10811, 14-10813, and 14-10817; and by virtue of
its "special relationship" with the Appellants. It
also alleged that Federal Service Corporation aided and
abetted Pacific's tortious conduct and acted negligently
by failing to properly pay claims against the
Trust. The complaint asserted claims for breach
of fiduciary duty, breach of the duty of good faith and fair
dealing, negligence, and aiding and abetting tortious
Appellees moved to dismiss the complaint under Rule 12(b)(6).
Appellees argued that the Agreement was not a
"trust" under Arizona law and that, accordingly,
Appellants were not "beneficiaries" and were not
owed any of the duties alleged in the
The superior court dismissed the complaint on the grounds
that the Agreement did not create a "trust" under
the Arizona Trust Code, A.R.S. § 14-10101, et seq.
(2015) ("Trust Code"). It found that the Agreement
was a "trust for the primary purpose of paying debts,
" a category of trust excluded from the Trust Code
pursuant to A.R.S. § 14-1201(58), and that "even if
[the Agreement was] an 'express trust, ' it [was] not
a 'trust' under A.R.S. § 14-1201(58)."
Section 14-1201(58) provides that while the definition of a
trust includes an express trust, it excludes "security
arrangements, liquidation trusts and trusts for the
primary purpose of paying debts, dividends, interest,
salaries, wages, profits, pensions or employee benefits of
any kind." (emphasis added).
Owner-Operator filed a Motion for a New Trial and a Motion to
Amend Complaint to specifically assert claims based on
Arizona common law and the Trust Code. In their Joint
Response, Appellees argued that amendment would be futile
because (1) the definition in A.R.S. § 14-1201(58)
expressly or by necessary implication supersedes any contrary
definition of what a trust is in Arizona, and (2) that the
BMC 85 Form is not a trust at all, but rather a contract for
the payment of debt. The superior court denied both motions
"for the reasons stated in [Appellees'] Joint
Response" to the motions.
Appellees then filed an Application for an Award of
Attorneys' Fees and Costs. The superior court awarded
Appellees' attorneys' fees pursuant to A.R.S. §
12-341.01, stating "the claims asserted by [Appellants]
were based on agreements entered into by these parties and
thus 'arose out of contract.'"
Owner-Operator timely appealed. We have jurisdiction pursuant
to A.R.S. § 12-2101(A)(1) and (A)(9) (2016).
Owner-Operator argues the superior court erred in dismissing
their claims alleging breach of fiduciary duty and
negligence, refusing to allow their claims to proceed under
common law, and awarding attorneys' fees to Appellees.
Motion to Dismiss
We review dismissal of a complaint under Rule 12(b)(6) de
novo. Coleman v. City of Mesa,230 Ariz. 352, 355,
¶ 7 (2012). We assume the truth of all well-pled factual
allegations in the complaint and all reasonable inferences
therefrom. Cullen v. Auto-Owners Ins. Co., 218 Ariz.
417, 419, ¶ 7 (2008) (citations omitted). We will affirm
the dismissal only if "as a matter of law . . .
plaintiffs would not be entitled to relief under any
interpretation of the facts ...