Where questions of fact remained regarding when plaintiff should have reasonably been put on notice of defendants’ fraud, summary judgment was inappropriate.
In Coffey v. Coffey, No. E2017-00988-COA-R3-CV (Tenn. Ct. App. Sept. 20, 2018), plaintiff filed suit in 2015 over an alleged fraud that dated back twenty years. In 1995, plaintiff’s husband and mother were killed in a plane crash. Plaintiff’s husband had founded and built two successful companies. The husband’s father was named executor of the estate, and through a series of complicated events, plaintiff alleged that he purchased the two companies for his own benefit and eventually sold them for $45 million, putting the money in a trust for his own heirs, which included the husband’s two children but not plaintiff as the founder’s widow.
According to the complaint, plaintiff was falsely told that there were no buyers for the company and the father’s purchase of the company was characterized as a risk and a favor. Plaintiff asserted that she never saw the full valuation that was done, and that the only copy she was ever given was in a box of documents about the plane crash, which she put into her attic without examining. Plaintiff alleged that she loved and trusted her father-in-law and had no reason to suspect he was fraudulently deceiving her. Plaintiff stated in the complaint that she was assured many times throughout the twenty-year period that everything was done legally and fairly by both the father and her late husband’s brother, who had taken on a role at the companies. Plaintiff also asserted that she asked for the valuation a few times, but that the entire thing was never provided. In 2014, plaintiff’s son, now an adult with a master’s degree in business, alerted her that the companies were being sold for $45 million. At this point, plaintiff located a copy of the valuation in the box of documents related to the crash, and when her son reviewed the documents, he “concluded there had been foul play.”
Plaintiff filed this suit for fraud and conversion, among other claims, against the father and brother, but the trial court granted the defendants’ motion for summary judgment based on the statute of limitations. All parties agreed that a three-year statute of limitations applied here, but the disagreement was over when that three-year period began to run. Plaintiff argued that it did not begin until she received the full valuation in September 2014, but the trial court held that it began running at the latest in 2010 when the father “respond[ed] to each of the Plaintiff’s requests for information[.]” The Court of Appeals overturned this holding.
The Court of Appeals ultimately held that there were too many issues of material fact in this case for disposition on a summary judgment motion. The Court ruled that the trial court had “proceeded under the erroneous assumption that plaintiff received all of the information she requested from defendants, including the valuation, and that she received accurate and complete copies of the same.” It noted, though, that plaintiff had “set forth specific facts disputing that she received the requested documents from defendant.” The Court pointed out that there was material evidence to create issues of fact regarding whether the father had “fraudulently misrepresented or concealed material facts,” whether the father had “affirmatively misrepresented facts” to plaintiff in response to her questions in 2010, and whether the father had failed to “disclose material information to her concerning the estate” since he was in a “trusted and confidential relationship with plaintiff.” The Court ruled that “[u]nder the circumstances, we cannot say as a matter of law, at this stage, that in the exercise of reasonable diligence, plaintiff should have discovered the defendant’s fraudulent concealment or sufficient facts to put her on actual or inquiry notice of her claim. Due consideration must be given to the evidence presented by plaintiff regarding defendants’ silence and/or failure to disclose known facts over the years, and the affirmative representations made to plaintiff during her 2010 inquiry.”
Because material issues of fact remained as to when plaintiff should have discovered both her fraud and conversion claims, summary judgment on those claims was reversed.