A plaintiff discovers that a trusted financial adviser may have engaged in misconduct years earlier. The plaintiff files suit within the applicable limitations period, measured from when the wrongdoing reasonably should have been discovered. Can the court nevertheless exclude older transactions from the damages calculation simply because they occurred more than four years before the lawsuit?
The California Court of Appeal addressed this issue in DeVone v. Morgan Stanley & Co. LLC (Oct. 8, 2026, B339219), certified for publication on October 29, 2026.
The court reversed a judgment that had substantially restricted the plaintiffs’ claims for breach of fiduciary duty and financial elder abuse. Although the trial court concluded that the claims were timely under the delayed discovery rule, it imposed a separate cutoff that excluded earlier conduct from the damages analysis.
The appellate court held that this approach improperly treated the statute of limitations as a rolling damages window. It also addressed how courts determine the scope of a professional’s fiduciary obligations and whether profitable investment accounts necessarily defeat a claim for financial elder abuse.
The Dispute Involved Decades of Financial Advice
Maurice Voce was a self-taught investor who began trading stock options in the 1970s.
He maintained a longstanding relationship with Morgan Stanley and financial adviser John Privitelli. By the time Maurice died in 2012 at age 93, his estate included investment accounts worth approximately $18 million.
Maurice’s family alleged that Privitelli continued facilitating risky options trading and collecting commissions despite knowing that Maurice’s cognitive abilities had declined.
The family also alleged that Privitelli provided advice extending beyond securities transactions, including tax and estate-planning matters.
According to the plaintiffs, that advice resulted in substantial financial consequences, including approximately $640,000 in interest and tax penalties and more than $700,000 in alleged losses associated with a life insurance arrangement and related professional fees.
The plaintiffs, acting in their capacities as trustees and estate representatives, pursued claims for breach of fiduciary duty and financial elder abuse.
After an earlier arbitration proceeding, they filed suit in Los Angeles Superior Court.
The defendants disputed liability and asserted that the claims were barred, at least in part, by the applicable statutes of limitations.
The Trial Court Found the Claims Timely but Excluded Older Conduct
At trial, the court determined that both causes of action were governed by a four-year limitations period.
Applying the delayed discovery rule, the court concluded that the claims had been filed on time.
However, the court then calculated the portion of the limitations period that remained unexpired when the claims accrued and projected that period backward.
Using this approach, it barred the plaintiffs from seeking damages based on conduct occurring on or before September 11, 2010.
That ruling excluded substantial portions of the alleged misconduct.
The trial court later granted the defendants’ motion for nonsuit, dismissing both causes of action after the plaintiffs presented their evidence.
The plaintiffs appealed.
The Statute of Limitations Does Not Automatically Create a Separate Damages Cutoff
The Court of Appeal rejected the trial court’s limitations analysis.
Under California’s delayed discovery rule, a cause of action may accrue when the plaintiff discovers, or reasonably should have discovered, facts giving rise to suspicion of wrongdoing.
The rule addresses when the limitations period begins to run.
Once a claim is determined to be timely, the court cannot automatically impose an additional damages cutoff by projecting the limitations period backward from the accrual date.
The appellate court explained that the trial court had effectively converted the limitations period into a shrinking window of recoverable conduct.
That was inconsistent with the delayed discovery framework.
The distinction is particularly relevant where alleged misconduct occurs over an extended relationship.
A financial adviser, business partner, corporate officer, or other fiduciary may engage in transactions over several years. The plaintiff may learn of those transactions without having reason to suspect that they were wrongful.
If the cause of action accrued later under the discovery rule and was timely filed, earlier conduct may remain relevant to liability and damages, subject to the elements of the claim and other applicable limitations.
The court distinguished this analysis from the doctrine of continuous accrual, which can apply when recurring wrongful acts give rise to separate causes of action.
The doctrines should not be treated interchangeably.
When Should the Plaintiffs Have Suspected Wrongdoing?
The appellate court also concluded that the trial court should not have resolved the accrual date as a matter of law.
The record contained evidence supporting competing conclusions.
The defendants pointed to account statements, trade confirmations, and the trustees’ ability to monitor or terminate trading authority.
They also relied on evidence that concerns about trading risks and commissions had been raised years earlier.
A jury could infer that this information placed the plaintiffs on notice of possible wrongdoing.
However, the evidence also supported a different inference.
Maurice had been an experienced investor for decades. His familiarity with options trading and his willingness to accept investment risk did not necessarily mean that he or his family had reason to suspect misconduct by his financial adviser.
The Court of Appeal emphasized that knowledge of a transaction is different from knowledge of facts giving rise to suspicion that the transaction was wrongful.
Because reasonable jurors could reach different conclusions about when the plaintiffs should have suspected wrongdoing, the accrual question should have been submitted to the jury.
This distinction can be significant in business litigation.
A shareholder may know that company funds were transferred to an affiliated entity without knowing that the transaction involved self-dealing.
A business partner may receive financial statements without understanding that particular entries conceal improper payments.
Whether those circumstances should have triggered an investigation depends on the evidence, including the information available to the plaintiff and the nature of the parties’ relationship.
The discovery rule does not permit a plaintiff to disregard warning signs indefinitely. But the existence of records or transactions does not always establish, as a matter of law, that the plaintiff should have discovered the wrongdoing.
A Profitable Account Does Not Necessarily Defeat Financial Elder Abuse
The Court of Appeal separately addressed the plaintiffs’ financial elder abuse claim.
The trial court had concluded that the claim failed because Maurice’s investment accounts increased in value.
The defendants argued that the profitable trading demonstrated the absence of financial harm.
The appellate court disagreed with that reasoning.
Under Welfare and Institutions Code section 15610.30, financial elder abuse may occur when a person or entity takes or obtains an elder’s property for a wrongful use or with intent to defraud.
The statute’s wrongful-use standard considers whether the defendant knew or should have known that the conduct was likely to harm the elder.
That inquiry focuses on the circumstances existing when the challenged conduct occurred.
The plaintiffs presented evidence that Privitelli continued facilitating trades and collecting commissions after becoming aware of Maurice’s cognitive impairment.
The appellate court concluded that the commissions could support a finding of wrongful taking even though the investment accounts ultimately generated substantial gains.
The profitable performance of an account did not automatically eliminate the possibility that commissions were obtained through conduct violating the elder abuse statute.
The court therefore reversed the nonsuit on that claim.
This holding is specific to the statutory elements of financial elder abuse. It should not be understood as eliminating the ordinary requirement to prove actual damage in a common-law breach of fiduciary duty action.
The Scope of Fiduciary Duties Depends on the Actual Relationship
The plaintiffs also alleged that Privitelli’s fiduciary obligations extended beyond securities trading.
They claimed that he provided tax and estate-planning advice that contributed to substantial financial losses.
The trial court rejected those theories because the defendants had not been formally retained or separately compensated to provide tax or estate-planning services.
The Court of Appeal concluded that this analysis was too narrow.
The existence and scope of a fiduciary obligation depend on the nature of the relationship and the parties’ actual course of dealing.
Relevant considerations include the duration of the relationship, the degree of control exercised by the professional, the client’s reliance on the professional’s advice, and whether the professional undertook responsibilities beyond the formal engagement.
The absence of a separate fee agreement does not necessarily establish that the professional owed no fiduciary obligations concerning the additional services.
In this case, the court concluded that the evidence concerning the broader advisory relationship should not have been excluded solely because the defendants were not formally hired to provide tax or estate-planning advice.
The court did not determine that the defendants actually breached those duties. That issue remained for further proceedings.
The analysis may have broader relevance to commercial relationships involving fiduciary obligations.
For example, a corporate officer or business adviser may undertake responsibilities beyond those expressly described in a written agreement.
Whether those activities give rise to additional fiduciary obligations depends on the governing legal relationship and the surrounding facts.
A party’s informal advice does not automatically create a fiduciary duty. The question is whether the relationship and conduct support the particular obligation alleged.
The Excessive-Trading Claim Still Failed
The appellate court did not accept every theory advanced by the plaintiffs.
The family alleged that the defendants engaged in excessive options trading, sometimes referred to as churning, to generate unnecessary commissions.
The court affirmed nonsuit on that theory.
Unlike the financial elder abuse claim, the breach of fiduciary duty claim required proof of actual damage caused by the alleged breach.
The plaintiffs did not present sufficient expert evidence establishing that the trading activity or commissions were excessive under an appropriate industry standard or methodology.
Their securities expert did not offer an opinion establishing excessive trading.
Without that evidence, a jury would have been left to speculate about whether the commissions were improper or caused compensable losses.
The court therefore upheld dismissal of the excessive-trading theory while allowing the other claims and theories to proceed.
This aspect of the decision is important because it demonstrates that a timely claim still requires sufficient evidence of each element.
The discovery rule addresses timeliness. It does not relieve the plaintiff of the burden to prove breach, causation, and damages where those elements are required.
Implications for California Business and Fiduciary Litigation
DeVone provides useful guidance for disputes involving longstanding fiduciary relationships and alleged misconduct discovered years after the underlying transactions.
For plaintiffs, the decision supports a careful distinction between the date of the challenged conduct and the date when the plaintiff had reason to suspect wrongdoing.
When the delayed discovery rule applies, older conduct is not automatically excluded from consideration merely because it falls outside a backward-looking limitations period.
For defendants, the opinion underscores the importance of evidence showing when the plaintiff possessed information sufficient to trigger a duty to investigate.
Account statements, correspondence, warnings, and access to company records may be relevant. Their significance depends on the circumstances and the inferences reasonably drawn from them.
The decision also illustrates why the scope of a fiduciary relationship cannot always be determined solely from a formal engagement agreement.
Courts may consider the parties’ actual conduct when evaluating whether a fiduciary undertook additional responsibilities.
Finally, DeVone preserves the distinction between proving a claim is timely and proving that the defendant is liable.
The appellate court reinstated substantial portions of the plaintiffs’ case, but it did not establish liability or award damages. Those matters remain subject to further proceedings.
Elpis Law represents businesses, shareholders, and individuals in California commercial litigation, including fiduciary-duty disputes, corporate governance litigation, and claims involving alleged financial misconduct.
Legal Authorities
- DeVone v. Morgan Stanley & Co. LLC (Oct. 8, 2026, B339219), Cal. Ct. App., 2d Dist., Div. 3, certified for publication Oct. 29, 2026 — official opinion
- Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797
- Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185
- Welfare and Institutions Code § 15610.30 — official text
Related practice areas: Partnership and Shareholder Disputes · Civil Litigation