KDC Foods, Inc. v. Gray, Plant, Mooty, Mooty & Bennett, P.A., 763 F.3d 743

KDC Foods, Inc. is a bankrupt corporation whose estate sues former outside counsel GPM and three GPM attorneys for fraud/conspiracy relating to an insider scheme to bankrupt KDC.
GPM was engaged in 2004 for restructuring, IP, and recapitalization; conflicts arose due to Johnson’s related entities (CIC) and prior relationships.
KDC faced cash-flow problems and unpaid fees; GPM resigned as counsel in November 2004.
KDC filed for Chapter 11 bankruptcy in December 2004; assets were sold to First Products, Inc. and the case moved to Chapter 7 liquidation.
The initial shareholder derivative action was filed pre-bankruptcy and converted to a direct action, with Sullivan as special counsel for the estate.
KDC filed seven claims in the post-bankruptcy action against GPM in 2012; three remain: common-law fraud, conspiracy to commit theft by fraud, and civil conspiracy.

Issue	Plaintiff's Argument	Defendant's Argument	Held
When did the six-year statute oflimitations accrue for KDC’s fraud-based claims?	KDC contends accrual began in 2008 at depositions.	GPM argues accrual occurred earlier under the discovery rule.	Accrual began when KDC had information indicating where fraud could be discovered, i.e., by June 2006.
Does Wisconsin discovery rule apply to corporate fraud claims against a law firm?	KDC argues discovery occurred in 2008, delaying accrual.	Court should apply standard discovery rule as codified in Wis. Stat. § 893.93(1)(b).	Yes; discovery rule applies, but discovery occurred by June 2006 based on the client file.
Is KDC estopped from claiming statute of limitations due to late disclosure of documents?	Gray Plant allegedly concealed documents that would have triggered earlier discovery.	KDC’s awareness and internal warnings negate estoppel grounds.	No estoppel; KDC had knowledge within the statutory period.
Should the six-year period apply to the theft-by-fraud claim under Wis. Stat. § 893.57?		GPM contends § 893.57 applies to an intentional tort; the district court did not decide.	Irrelevant because the six-year period governs the other fraud/conspiracy claims, and those are timely or untimely accordingly.

John Doe 1 v. Archdiocese of Milwaukee, 734 N.W.2d 827 (Wis. 2007) (discovery rule codified in § 893.93(1)(b) allowing discovery-based accrual)
Doe, 734 N.W.2d 827 (Wis. 2007) (discovery rule; need for flexible inquiry in corporate context)
Goff v. Seldera, 550 N.W.2d 144 (Wis. App. 1996) (variable certainty for accrual under discovery rule)
Owen v. Wangerin, 985 F.2d 312 (7th Cir. 1993) (Wisconsin imputation of knowledge to defendant(s) when inquiry warranted)
Koehler v. Haechler, 133 N.W.2d 731 (Wis. 1965) (discovery rule interpretation for fraud claims)
O’Dell v. Burnham, 21 N.W. 635 (Wis. 1884) (origin of discovery rule language for fraud actions)
Stockman v. LaCroix, 790 F.2d 584 (7th Cir. 1986) (discovery starts when plaintiff has information to pursue fraud)
City of Madison v. Hyland, Hall & Co., 243 N.W.2d 422 (Wis. 1976) (estoppel and discovery-related considerations in certain concealment cases)
Hester v. Williams, 345 N.W.2d 426 (Wis. 1984) (timeliness and discovery-based accrual principles)
Stroh Die Casting Co. v. Monsanto Co., 502 N.W.2d 132 (Wis. App. 1993) (corporate knowledge and discovery implications)