Background
During Joseph Farmer’s 2018 divorce proceedings, his ex-wife was represented by attorney Michael Schloss of Clark & Schloss Family Law. Farmer twice failed to submit a hair follicle drug test because he had shaved all his body hair. Schloss filed court materials on behalf of the ex-wife arguing that Farmer had never shaved his body and must therefore have done so specifically to evade testing. The court credited that argument, found Farmer “dirty” for illicit substances, and ordered twice-a-week drug testing.
Years later — in 2024 or 2025 — Farmer discovered an old cell phone still logged into his ex-wife’s email account. Reading those messages, he found privileged attorney-client communications in which Schloss allegedly acknowledged possessing photos of Farmer with shaved arms and chest while deliberately selecting only photos showing no shaving, in order to “solidify the narrative” that Farmer had never shaved. Farmer contended this proved Schloss knowingly misrepresented facts to the court.
In April 2025, Farmer filed suit against Schloss in Maricopa County Superior Court, asserting claims for intentional infliction of emotional distress, fraud, and loss of parental relationship with his children. Schloss moved to dismiss under Rule 12(b)(6), and the superior court granted the motion with prejudice, finding all claims time-barred. Farmer timely appealed.
The Court’s Holding
The Court of Appeals affirmed, applying de novo review of the Rule 12(b)(6) dismissal. The central dispute was whether Arizona’s discovery rule — which delays accrual of a fraud claim until the plaintiff knows or with reasonable diligence should know of the wrongful conduct — saved Farmer’s claims from the three-year limitations period under A.R.S. § 12-543(3). The court held it did not.
Because Farmer was present during the 2018 dissolution proceedings when Schloss made the allegedly false arguments about his grooming habits, he necessarily knew at that time that the statements were false and harmful to him. The court further reasoned that if other photos existed that would have refuted Schloss’s representations, Farmer would have known about those photos as well. The emails discovered roughly seven years later contained no new material facts — they merely corroborated what Farmer already knew or should have known. Accordingly, Farmer’s fraud claim accrued no later than the original 2018 proceedings, making his 2025 lawsuit plainly untimely. The court also noted that Farmer waived any appellate challenge to the dismissal of his non-fraud claims by failing to brief them on appeal.
On the question of attorney fees, the court declined Schloss’s request under A.R.S. § 12-349(A). Although the claims ultimately failed, the court could not conclude that Farmer knew, should have known, or was indifferent to their invalidity — a requirement for a finding that the suit lacked substantial justification and was not brought in good faith.
Key Takeaways
- Under Arizona’s discovery rule, a fraud claim accrues when the plaintiff knows or reasonably should know of the wrongful conduct — not when the plaintiff later uncovers additional evidence confirming what was already knowable at the time.
- A plaintiff who is present during allegedly fraudulent court proceedings and knows the statements made were false cannot later toll the limitations period by pointing to documents discovered years later that add no new material facts.
- To obtain attorney fees under A.R.S. § 12-349(A) for a groundless claim, the moving party must show not only that the claim lacked a rational basis but also that the opposing party knew, should have known, or was indifferent to that groundlessness — an objective, two-pronged test.
- This decision is non-precedential under Arizona Rule of the Supreme Court 111(c) and may be cited only as authorized by rule.
Why It Matters
The decision reinforces how strictly Arizona courts apply the discovery rule’s “knew or should have known” standard in the litigation-misconduct context. Litigants who believe opposing counsel misrepresented facts during proceedings cannot warehouse potential claims indefinitely; the limitations clock begins running at the moment the plaintiff has enough information to recognize the alleged wrong — even if inculpatory evidence confirming it surfaces years later.
For attorneys and their clients, the case also illustrates the limits of A.R.S. § 12-349 fee sanctions. Courts will not penalize a losing party merely because the claim was a long shot or ultimately meritless; the statute requires an objective showing of groundlessness combined with bad faith or willful indifference. That two-part bar protected Farmer from a fee award despite the straightforward untimeliness of his suit.