826 F.3d 1074
8th Cir.2016Background
- Whitney and Morrison entered into a business relationship involving several corporations; Whitney alleged shareholder and partnership-related fiduciary claims arising from denial of access to records and distributions.
- On prior appeal, some claims were dismissed but Whitney survived pleading-stage dismissal on certain Delaware shareholder-rights claims.
- On remand defendants asserted counterclaims about diverted payments; parties filed cross-motions for summary judgment.
- District court applied Delaware law, a three-year statute of limitations, and used the filing date of the original complaint (Oct. 2010) to set the accrual cutoff at Oct. 2007.
- The court relied on a July 20, 2007 email from Whitney complaining about lack of financials, lack of distributions, and being ‘‘screwed out of my share,’’ along with deposition testimony that the email followed months of requests and led him to consult an attorney—holding he was on inquiry notice by July/August 2007.
- The court also held subsequent denials of shareholder rights did not re-start accrual (Whitney did not argue tolling or continuing-violation doctrines); summary judgment was entered for defendants as time-barred, and Whitney appeals only the timeliness ruling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Whitney’s shareholder/fiduciary claims are time-barred under Delaware’s 3-year statute | Whitney: He was not on inquiry/actual notice before Oct. 2007; later documents (2011) repudiating his status supplied notice | Defendants: July 20, 2007 email and prior requests put Whitney on inquiry notice by July/Aug 2007, so claims accrued then | Court: Affirmed—Whitney was on inquiry notice by July/Aug 2007; claims barred as untimely |
| Whether each allegedly wrongful corporate act re-accrues a new claim (continuing violation) | Whitney: Implicitly argued later denials could create new accrual dates (no developed argument) | Defendants: Claims accrue when plaintiff is on inquiry notice; subsequent acts do not restart limitations absent argument/evidence of continuing accrual | Court: Held Whitney failed to argue ongoing accrual; subsequent denials did not re-accrue new claims |
| Whether an express repudiation (2011 memorandum) is required for inquiry or actual notice | Whitney: Claimed 2011 memorandum was first definite repudiation; earlier actions were inconclusive | Defendants: Repudiation not required; failure to honor rights and lack of records suffice for inquiry notice | Court: Rejected Whitney—express repudiation not required; prior conduct and lack of treatment as shareholder suffice for inquiry notice |
| Whether accounting or partnership fiduciary claims survive despite statute-barred shareholder claims | Whitney: Sought accounting and asserted partnership fiduciary breach alternative | Defendants: If substantive claims are time-barred or no enforceable stock/right exists, remedies like accounting fail | Court: Accounting is a remedy not an independent cause; partnership fiduciary claims are also time-barred; those claims dismissed |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading-standards for plausibility at motion-to-dismiss stage)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading-standards decision foundational to Iqbal)
- Hitt v. Harsco Corp., 356 F.3d 920 (8th Cir. 2004) (standard of review for summary judgment)
- Grage v. N. States Power Co.-Minn., 813 F.3d 1051 (8th Cir. 2015) (no genuine issue where record cannot lead a rational trier of fact for nonmovant)
- Torgerson v. City of Rochester, 643 F.3d 1031 (8th Cir. 2011) (en banc) (summary judgment and reasonable-juror standard)
- Egner v. Talbots, Inc., 214 P.3d 272 (Alaska 2009) (question whether knowledge sufficient to trigger inquiry notice does not depend on unresolved ownership dispute)