may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Keith Breitbarth, individually and
as special administrator of the Estate of
Dorothy L. Breitbarth Pierce; et al.,
Peoples State Bank of Truman,
Lowell D. Williamson,
Erickson, Zierke, Kuderer, Madsen and Wollschlager, P.A.,
Filed September 2, 1997
Reversed and remanded
Martin County District Court
File No. C792677
LaMar T. Piper, Piper Law Firm, 615 Second Avenue South, P.O. Box 109, St. James, MN 56081 (for Appellants)
Kenneth R. White, Farrish, Johnson & Maschka, 201 North Broad Street, Suite 200, P.O. Box 550, Mankato, MN 565002-0550 (for Respondent)
Elton A. Kuderer, Erickson, Zierke, Kuderer & Madsen, 114 West Second Street, P.O. Box 571, Fairmont, MN 56031-0571 (for Respondent Erickson, Zierke, Kuderer, Madsen & Wollschlager)
Considered and decided by Willis, Presiding Judge, Huspeni, Judge, and Crippen, Judge.
Appellants dispute the trial court's ruling that the six-year statute of limitations barred their fraud claim against respondent Peoples State Bank of Truman. We reverse and remand to permit the trial court to determine when appellants should have discovered the damage they attribute to the commission of fraud by respondent's agent.
The parties do not dispute that Williamson stole from appellants' parents while managing their property, including the proceeds owed to the mother from the sale in 1980 of farmland owned by the father. Williamson's accountings of the father's property also contained some questionable transactions.
At the closing of the father's guardianship in March 1986, the district court accepted Williamson's final account. In April 1988, Williamson filed the final account on the father's estate. In January 1989, Williamson mailed one appellant copies of the guardianship and estate accounts. After the mother died a few months later, appellants began to investigate Williamson's possible misconduct. At the closing of the father's estate in November 1989, the court accepted the final account over appellants' objections.
In February 1990, Williamson was charged with felony theft from another person's estate, and the investigation revealed that he had misappropriated funds from 12 other persons, including appellants' father. Appellants' subsequent inquiry suggested that he had taken over $200,000 from the parents.
On October 12, 1992, appellants commenced this action against respondent bank, alleging negligent supervision and, under a theory of respondeat superior, fraud, breach of a fiduciary duty, conversion, and unjust enrichment. The trial court granted summary judgment for the bank, finding (1) that the statute of limitations had run because the wrongdoing occurred more than six years before the commencement of the lawsuit and (2) that no grounds existed to enlarge the limitations period under the doctrine of tolling, which would have applied if the bank itself had wrongfully concealed the fraud. On appeal, the Breitbarths argue solely that the statute of limitations had not expired on the fraud claim. They do not dispute the trial court's decision on the inapplicability of tolling.
A six-year statute of limitations governs fraud claims, and the cause of action does not accrue until "the discovery by the aggrieved party of the facts constituting the fraud." Minn. Stat. § 541.05, subd. 1(6) (1996). When the fraud prevents the aggrieved party from learning of the claim, the six-year period does not begin to run until the party, acting with "reasonable diligence," should have discovered the facts underlying the fraud. Toombs, 361 N.W.2d at 809; Couillard v. Charles T. Miller Hosp., Inc., 253 Minn. 418, 428, 92 N.W.2d 96, 103 (1958).
Parties alleging fraud have the burden of proving that they could not have discovered the concealment sooner by reasonable diligence and that their failure to discover it was not the result of their own negligence. Buller v. A.O. Smith Harvestore Prods., Inc., 518 N.W.2d 537, 542-43 (Minn. 1994). "A party need not know the details of the evidence establishing the cause of action, only that the cause of action exists." Hydra-Mac, Inc. v. Onan Corp., 450 N.W.2d 913, 919 (Minn. 1990). Suspicions about fraudulent activity trigger the limitations period even though the party does not act immediately on those suspicions. Kassan v. Kassan, 400 N.W.2d 346, 350 (Minn. App. 1987), review denied (Minn. Apr. 23, 1987).
The trial court made neither findings nor conclusions on when appellants discovered or should have discovered the fraud. Because this discovery issue begs for findings of fact and is an inappropriate subject for summary judgment, we reverse and remand for the trial court's determination of when appellants should have discovered the fraud.
Appellants also challenge the trial court's denial of their motion to extend the deadline for disclosing expert witnesses. On remand, the trial court should modify the discovery schedule so that appellants are not prejudiced in presenting evidence on the preliminary issue of when they should have discovered the fraud and in other subsequent proceedings that occur in the event the trial court finds that the statue of limitations does not bar appellants' action.
Reversed and remanded.
Dated: August 26, 1997
[ ]1Appellants also sued Williamson and the law firm that had prepared the legal documents relating to the father's guardianship and estate. Issues involving these parties are not part of this appeal.
[ ]2Although appellants generally dispute the application of the statute of limitations to bar all respondeat superior claims against the bank, their briefing only addresses the reasons to preserve the fraud and negligence claims. As to negligence, they contend on appeal that the statute of limitations does not apply because the bank committed continuing negligence, but appellants waived this argument by not raising it before the trial court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).
[ ]3Both parties agree that the six-year statute of limitations applies to the bank under respondeat superior. Oelschlager v. Magnuson, 528 N.W.2d 895, 902 (Minn. App. 1995) (stating that the same statute of limitations ordinarily applies for respondeat superior claim as for underlying cause of action), review denied (Minn. Apr. 27, 1995).