James C. Sell v. Hon. gama/squire & Company
295 P.3d 421
Ariz.2013Background
- Sell, trustee for investors in Mathon Fund, sues multiple defendants under the Arizona Securities Act (ASA) including professionals who allegedly aided the fraud.
- Plaintiff asserts primary liability under ASA §§ 44-1991 and -2003 and secondary aiding-and-abetting liability under § 44-2003(A).
- Superior Court dismissed Count One as to Lewis & Roca and all counts against Squire, and dismissed or failed to recognize Count Two aiding-and-abetting claim. Sell sought reconsideration and then special action review.
- Arizona Supreme Court granted review to resolve whether aiding and abetting liability exists under the ASA, a question with statewide importance due to conflicting lower-court rulings.
- The Court overrules Davis to the extent it recognized aiding-and-abetting under the ASA, aligning with Central Bank’s federal-law interpretation that aiding and abetting is not implied by the statute.
- The Court emphasizes the ASA’s express private remedy under § 44-2001 and the Legislature’s silence on aiding and abetting, preferring legislative, not judicial, creation of such liability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ASA expressly authorizes aiding and abetting liability. | Sell relies on Davis conceding aiding-and-abetting liability under the ASA. | Defense argues the ASA does not expressly authorize aiding and abetting and Central Bank limits implied liability. | No; ASA does not authorize aiding and abetting claims. |
| Should Central Bank v. First Interstate Bank govern aiding-and-abetting scope under the ASA despite the ASA’s remedial purpose? | Sell contends liberal construction extends liability consistent with remedial purpose. | Defendants urge adherence to Central Bank, showing no express authorization by statute. | Central Bank controls; aiding and abetting not recognized under ASA. |
| May common-law aiding-and-abetting principles be applied to the ASA despite lack of express statutory authorization? | Sell posits Restatement-based or tort-inspired aiding-and-abetting liability should apply. | Defendants urge no common-law extension; ASA text governs remedies and liability. | No; common-law aiding-and-abetting cannot be imposed under ASA without express statutory basis. |
Key Cases Cited
- Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164 (1994) (aiding and abetting not covered by private § 10(b) unless express)
- Davis, 123 Ariz. 324 (1979) (initially recognized aiding and abetting under ASA; later overruled)
- Gunnison, 127 Ariz. 110 (1980) (overruled Davis as to scienter in ASA actions)
- Grand v. Nacchio, 225 Ariz. 171 (2010) (recognizes private action under ASA § 44-2001; differentiates from federal acts)
- Aaron v. Fromkin, 196 Ariz. 224 (2000) (cites interpretive framework for ASA elements; supports plain-text focus)
- Estate of Braden ex rel. Gabaldon v. State, 228 Ariz. 323 (2011) (statutory interpretation with respect to public policy and legislative intent)