800 F.Supp.3d 752
E.D. Ky.2025Background
- Bernard Tew (Kentucky resident and trustee of Bluegrass Retirement Group Trust) contracted with ED&F/MCML for dividend-arbitrage trading (2012–2015); ED&F allegedly used Bluegrass as a conduit for a European “cum-ex” tax-refund fraud that resulted in over $70 million taken from Bluegrass.
- ED&F allegedly submitted fraudulent tax vouchers to foreign tax authorities and provided doctored account statements to Tew; Bluegrass’s brokerage account was closed in January 2015 with a zero balance.
- SKAT (Denmark) later sued Tew and Bluegrass in MDL litigation; Tew settled SKAT’s claims (approx. $34 million), defended numerous suits, and filed Chapter 11 in 2020.
- Tew sued ED&F in December 2023. The Court previously dismissed federal RICO claims as time-barred but allowed certain state-law claims to proceed, relying on a confidential-relationship/fraudulent-concealment tolling doctrine.
- ED&F moved for reconsideration, arguing (1) Kentucky’s tolling statute KRS § 413.190(2) applies only to Kentucky residents and thus the Court erred in tolling claims against a nonresident, and (2) new bankruptcy developments undercut Tew’s equitable indemnity claim.
- The Court (1) clarified it relied on a common-law confidential-relationship/fraudulent-concealment tolling doctrine (not KRS § 413.190(2)), declined to reconsider tolling at the motion-to-dismiss stage, but (2) granted reconsideration as to equitable indemnity and dismissed that claim because Tew no longer plausibly alleged actual, certain liability to SKAT.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether tolling applies despite ED&F being a nonresident | Tolling via the common-law confidential-relationship/fraudulent-concealment doctrine delays accrual until actual discovery; doctrine is broader than KRS § 413.190(2) and can apply to nonresidents | KRS § 413.190(2) on its face applies only to Kentucky residents, so tolling cannot apply to a nonresident defendant | Court: Declined to reconsider; common-law confidential-relationship/fraudulent-concealment plausibly tolls limitations at motion-to-dismiss stage (statute inapplicable but equitable doctrine may apply) |
| Whether the Court clearly erred by citing KRS § 413.190(2) | Tew: Court relied on the broader common-law doctrine, not the statutory provision | ED&F: Court misapplied § 413.190(2) because ED&F is nonresident | Court: Clarified it relied on common-law doctrine and that § 413.190(2) does not apply to nonresidents; no reversal of prior tolling determination |
| Whether recent Bankruptcy Court filings negate Tew’s equitable indemnity claim | Tew: Bankruptcy remains open; uncertainty whether SKAT’s allowed claim will be paid; thus liability remains possible and claim may proceed | ED&F: Tew’s bankruptcy filings state SKAT’s allowed claim will go unpaid and no plan payments were made to SKAT, undermining assertion of actual liability | Court: Granted reconsideration and dismissed equitable indemnity; Tew failed to allege actual, certain legal liability to SKAT needed for indemnity |
| Whether motion-to-dismiss is proper vehicle to resolve statute-of-limitations here | Tew: At motion-to-dismiss stage, pleadings controls and tolling is a factual/ equitable matter inappropriate for dismissal | ED&F: Limitations defense should bar some claims now | Court: Noted Rule 12(b)(6) is generally inappropriate to resolve limitations questions where equitable tolling/fraudulent concealment is pleaded; declined to dismiss on that basis at this stage |
Key Cases Cited
- Munday v. Mayfair Diagnostic Lab., 831 S.W.2d 912 (Ky. 1992) (when confidential relationship exists, statute does not run until actual discovery)
- Boone v. Gonzalez, 550 S.W.2d 571 (Ky. Ct. App. 1977) (fiduciary/confidential relationships excuse duty to exercise diligence to discover fraud)
- McMurray v. McMurray, 410 S.W.2d 139 (Ky. 1966) (parties in confidential relationships lack occasion to ‘‘check up’’ on each other)
- Hernandez v. Daniel, 471 S.W.2d 25 (Ky. 1971) (actual discovery triggers limitations when confidential relationship exists)
- Fluke Corp. v. LeMaster, 306 S.W.3d 55 (Ky. 2010) (KRS § 413.190(2) applies only to residents of Kentucky)
- Cataldo v. U.S. Steel Corp., 676 F.3d 542 (6th Cir. 2012) (Rule 12(b)(6) is generally an inappropriate vehicle for disposition based on the statute of limitations)