Thomas & Wong, General Contractor v Jan Wallace Case No CA-CV-08-0634 In the Court of Appeals State of Arizona




20100211 Thomas and Wong v. Jan Wallace (CV080634) Memorandum Decision –

Thomas & Wong General Contractor, Inc. (“Thomas & Wong”) appeals from the grant of Wallace’s motion for new trial. Jan Wallace cross-appeals from an order denying her motion for judgment as a matter of law (“JMOL”). For the following reasons, we reverse the trial court’s grant of a new trial and affirm the denial of the motion for JMOL.

Thomas & Wong sued Wallace, alleging she breached her fiduciary and contractual duties to represent the interests of Thomas & Wong in a loan transaction for $1.5 million that Thomas & Wong made to third party BDV Investments, Inc. (“BDV”).2 Wallace denied liability and moved to dismiss, claiming that Thomas & Wong lacked standing to sue because it was a foreign corporation unauthorized to conduct business in Arizona. The trial court denied Wallace’s motion and a trial to a jury was held. Upon conclusion of Thomas & Wong’s case-in-chief, Wallace moved for JMOL asserting that in addition to lacking standing to sue under Arizona Revised Statutes (“A.R.S.”) section 10-1502(A) (2004)3, Thomas & Wong had failed to sufficiently demonstrate that Wallace acted as their agent in the transactions surrounding the loan to BVD. The trial court denied the motion as to standing, and determined the evidence on fiduciary duty was sufficient to present the case to the jury. The jury returned a verdict in favor of Thomas & Wong.

Of note: Wallace agreed to attend a gold viewing to confirm the existence of the gold on behalf of Thomas & Wong, and assured Tarapaski that the certificate of insurance and the safekeeping receipt had been assigned to Thomas & Wong. Believing the checklist to now be complete except for the viewing of the gold, coupled with Wallace’s insistence that she had protected Tarapaski well, Tarapaski agreed to fund the loan. On March 12, 2003, Tarapaski provided Wallace with written authorization to release funds from the Cane O’Neill account. Unbeknownst to Tarapaski, six days earlier, on March 6, 2007, Wallace instructed Cane O’Neill to release $275,000 to a company called L Trust, for the purchase of the Minneapolis condominium;9 Wallace never disclosed this fact to Tarapaski. On March 21, 2007, Wallace authorized an additional $20,000 disbursement to L Trust, without Tarapaski’s knowledge, for reasons she could not explain. Further, despite agreeing to do so, Wallace never personally viewed the gold to confirm its existence. (page 7)

Despite repeated assurances that the primary loan would fund, it never closed and BDV defaulted on its obligation to Thomas & Wong. The additional collateral provided by Beardmore was insufficient to cover the loan, so at Wallace’s request, Tarapaski authorized Wallace to collect the amounts due and “to act on [Thomas & Wong’s] behalf regarding the promissory note with BDV Investments, Inc., and/or any other names representing BDV Investments, Inc.” Although Wallace initially told Tarapaski that the gold had been sent to Salt Lake City to melt for sale, and then claimed that $12 million had been realized from the sale, Tarapaski ultimately learned that the gold had never been melted or sold. In Tarapaski’s subsequent personal attempt to track and seize the gold, he found containers with what appeared to be gold concentrate; but tests later revealed that the material in the containers was worthless. (page 8)

Statement of the Case: 20081201 Thomas & Wong v Blume Wallace Breach of Trust Appellate Brief