*1 Employee Stockholders David Zastrow, Kopplin, Perry Printing, Larry C. Gocker, J. Neal Thompson Weihert, and Eunice Catherine Plaintiffs-Appellants-Cross-Respondents-P
etitioners,† v. Journal Communications, Inc.,
Journal (JESTA) Employees Trust Stock Employees Stock, Trustees of Journal Defendants-Respondents-Cross-Appellants, Northstar Division n/k/a
Perry Printing Printgroup, M. Bonaiuto, M. Keith Inc., Paul Indemnity, Spore, Inc., A. Robert Executive Risk Karavakis, Thomas M. Smith, Steven J. Kahlor, Douglas Kiel, G. P Jarzembinski Peter Defendants-Respondents.
Supreme Court argument February 2006. Oral No. 2004AP276. Decided June 2006WI 72 51.) (Also reported 718 N.W.2d 7-6-06, 10-3-06. for reconsideration filed denied † Motion *5 For plaintiffs-appellants-cross-respondents- Demet, petitioners there were briefs Kevin Donal by Demet, SC, Milwaukee, and Demet & Demet and oral Kevin Demet. argument by
For the defendants-respondents-cross-appellants Jr., Shriner, there was a Thomas by brief L. David W. Simon, LLP, Milwaukee, & Foley Lardner and oral Shriner, Thomas Jr. argument by L. An curiae filed L. amicus brief was Jennifer Kahn, Godfrey Madison,
Peterson LaFollette & behalf Wisconsin Manufacturers and Commerce. ROGGENSACK, DRAKE In PATIENCE J. this review of a court of decision that appeals reversed plaintiffs' to dismiss circuit court1
and remanded on statute based claims for breach whether to determine are asked defense, we limitations *6 be must claim for breach negli- also be based it can intentional, or whether gence. court found the circuit We conclude (Trustees) Employees cre- Stock of Journal Trustees plain- adversely affected circumstances ated incomplete by giving informa- tiffs' interests holdings, plaintiffs' conclude is which we relative to tion loyalty, an intentional of the a breach two-year of limitations statute result, As tort. (2003-04),2 appli- which is 893.57 in Stat. found Wis. requires of the dismissal torts, to intentional cable Accordingly, the court the decision of affirm we lawsuit. appeals.
I. BACKGROUND Perry employees of former Plaintiffs are 2. subsidiary wholly Printing (Perry), owned which was (Journal Communica- Communications, Inc. of Journal tions). percent Communica- of Journal 1937, 90 Since Employees Journal held has been tions' stock (Trust). Administration that Trust is Trust Stock Agree- Employees' governed Stock Trust the Journal (JESTA) managed by of the the Trustees ment Trust. employ- employee part benefits, their As a 3. pur- Perry circumstances, certain cоuld, under
ees of (Trust-units) price at a of the Trust chase units Ullsvik, Judge for Court M. Circuit The Honorable John appeal. County, presided prior Jefferson Statutes are to the Wisconsin references to subsequent All noted. otherwise unless the 2003-04 version formulaically required was determined. The JESTA employees employ- who owned Trust-units and whose any ment terminated for reason other than retirement immediately persons offer for sale to who were eligible purchasers under the JESTA all Trust-units at price. pro- then-current formula The JESTA also employee employee vided that when an retired, the was permitted to offer his or her Trust-units for sale over a period years, percent of ten with not less than ten year. Having Trust-units offered for sale in each an opportunity extended sell-back is claimed to be benefi- always appreciated cial because the Trust-units have value. part corporate restructuring, In 1995 as of its Perry's
Journal Communications sold assets. The sale agreement required buyer operate to continue to *7 positions compa- the business and to offer similar with compensation Perry employees. rable and benefits to all employees by the closed, When sale all were terminated Perry buyer Perry's and rehired assets. employment
¶ 5. Because their with a Journal company Perry Communications terminated when was employees sold, under the JESTA, the former had to immediately, offer to sell back their Trust-units unless they In case, retired. the JESTA accorded them ten years accomplish employ- to the sell-back. None of the actually any retired, ees and the Trustees did not treat Perry employees though retirees, as even some accepted employment buyer who new with the were eligible Instead, to retire. the Trustees told the former employees Perry they years, depend- had one to five ing long person on how each had owned the Trust- during they units, which had to re-sell them. April Perry employees In of 2000, former who employed Perry
had been on the date of the sale asset time of the at the their Trust-units had sold and who corporate against restructuring, action filеd class Trustees Communications, Trust, its Journal defendants). alleged complaint (collectively, to entitled under the JESTA be were right their Trust- to sell retirees with treated as ten-year period, the Trustees but that units over right. claims included Plaintiffs' them this denied rights fiduciary duty, of contractual breach breach wages statutory right under ch. 109. and denial of a partial summary for moved 7. The defendants reject asking judgment, theo- court to these the circuit eligible many plaintiffs to retire were not ries because eligible, none had retired. and of those who were reaching Eventually, initial a decision on that after followed, the other motions that motion and several request granted to dismiss the defendants' circuit court complaint, part.3 complaint It and amended employees to those former all claims relative denied Perry's eligible retire assets were not when who were except relief, claims for sold, and it all other dismissed fiduciary duty. for those breach they part motions, as- of the defendants' 8. As two-year for statute of limitations serted plain- 893.57, barred the torts, Wis. Stat. intentional The circuit court claim. tiffs' agree. all concluded that not breaches Instead, not it did reasoning torts, are intentional negligent between claims based there is a distinction intentional con- that are based on conduct and claims *8 disregard that evinces a reckless duct or conduct summary narrative recited herein is procedural repeat It not meant to each in circuit court. the actions eventually only to the trial of the claim step that led procedural fiduciary duty. of breach of rights. negligent
another's For breaches of based on six-year conduct, the circuit court reasoned that the §§ statute of limitations in either Wis. Stat. 893.52 or applied. 893.53 The circuit court determined that the applicable moment at which to toll the statute of limita- plaintiffs tions was the date of each sale of or his her last any depend upon Trust-unit, and that time-bar would plaintiff. that date for each individual ¶ 9. The breach of claims of the plaintiffs eligible Perry's who were to retire when assets Subsequent were sold were tried to the court. to the triаl, following findings the court made the and conclu- (1) plaintiffs sions: none of the had intended to retire; (2) plaintiffs they the Trustees told the had to sell back year period their Trust-units over a one to five after (3) leaving employment Perry; their with the defendants fiduciary obligation plaintiffs they had to tell the Perry could retire from before closed, the sale which eligible ten-year would have made them for sell-back (4) period; retirement would mean those who made that by employment choicewould not be entitled to automatic buyer, apply employment; but would have to for such (5) plaintiffs three of the retired, would have if the (6) they Trustees had told them so; could do the same plaintiffs ten-year three did not know about sell-back (7) opportunity; the Trustees had a conflict of interest respect advising with a choice of about employment either retirement or immediate with buyer employees because the Trustees, as of Journal right purchase Communications, had the some of the (8) plaintiffs; neg- Trust-units sold the Trustees ligently plaintiffs; failed to fulfill their to advise (9) six-year аpplies.4 statute of limitations damages The court awarded employees three who it determined ten-year did not know about the opportu- sell-back *9 challenging appealed,
¶ defendants 10. The six-year application of limi- of a statute circuit court's raising of the JESTA5 as bar Clause 33 tations and negligence asserted claims. The defendants all proof plaintiffs' by circuit court as found conduct the Trustees' a violation of claims was plaintiffs. an intentional tort such, As it is two-year of limitations. statute barred appeals that Beloit ¶ The court of reasoned Liquidating Grade, 39, 270 2d 2004 WI Trust v. after the circuit we decided 298, which 356, 677 N.W.2d Liquidating because Beloit decision, controlled court's two-year of limitations for statute concluded that the applies to torts intentional Communications, Inc., 2005 Zastrow v. Journal claims. App The 2, 416, 703 N.W.2d673. 178, 286 Wis. WI two-year dispute appeal that if the did not applies, their claims were not limitations statute of Accordingly, appeals timely brought. the court of Id. court and remanded with directions the circuit reversed complaint. Id. to dismiss
II. DISCUSSION A. Standard Review apply requires choose and us to 12. Our review plaintiffs' appropriate statute Wisconsin Choosing they if are time-barred.
claims to determine then for applied retired and nity for retirees and would have By they if had known. company the new employment with employee. to a fourth damages were awarded stipulation, attorney's fees. circuit court also awarded 33, clause, liability limitation Clause The JESTA has against claims the Trustees. negligence precludes which question the correct statute of limitations involves a independently Hegarty law that we Estate v. review. App Beauchaine, 2001 WI 2dWis. 638 N.W.2d355. one Whether breached *10 question independently. also a is of law that we review Jorgensen App Works, Inc., v. Water 2001 WI 2dWis. 630 N.W.2d230. §§ B. Wisconsin Stat. 893.57 and 893.43 question A13. in our review of the court of appeals applies decision is which statute of limitations plaintiffs' two-year to the claims: limi- statute of § six-year 893.57, tations Wis. Stat. or the limit found §§ question in either Stat. or 893.43 893.52. This is ques- answered the answers to two broader (1) tions: whether a (2)
loyalty always is an intentional tort and whether the circuit court found that the Trustees breached their loyalty.
¶ 14. 893.57, Wisconsin Stat. the statute of limi- torts, tations for intentional states: libel, slander, assault, damages An action to recover for battery, privacy, imprisonment invasion of false or person other intentional tort to the shall be commenced years within 2 after the cause of action or accrues be barred. parties dispute meaning do not the overall they question
statute, rather, but ask us to answer the plaintiffs' claims, of whether the which the circuit court plaintiffs proved, time-barred found the are because they are intentional torts. plaintiffs
¶ 15. The contend that the defendants negligently duty. breached their Based on that theory, plaintiffs six-year claim that statute of or 893.53 applies §§ Stat. 893.52
limitations Wis. states: their claims.6 Section 893.52 contract, action, damages arising An not recover shall be injury personal property an to real or for action years after the cause of commenced within barred, in the case where a except accrues or be period expressly prescribed. different is 893.53 states: Section injury damages for an
An action to recover contract, another, arising on rights or not character years after the cause of shall be commenced within accrues, a different ex- except period where action pressly prescribed, or be barred. that the Trustees com- 16. The assert an duty: of fiduciary
mitted two breaches types They argue and a breach. negligent intentional breach *11 made an artificial distinction that the court appeals of a fidu- negligent and the negligence between that where a sum, argument implies In their ciary duty. all errors of fiduciary duty, potential trustee has a fiduciary duty, although are of a judgment breaches can negligent. some can be intentional some be 6 suggest in their brief that Stat. Plaintiffs also Wis. claims, claims, thereby § 893.43 could to their as contract apply § six-year of limitations. Section 893.43 providing a statute reads, pertinent part: in contract, liability, upon any obligation express or or
An action including professional implied, for an action to recover fees ser- yeаrs ... 6 after the cause of vices shall be commenced within action accrues or be barred. However, the circuit court dismissed the breach of we note that claims, brought not been contract and that decision has before us.
438 17. Plaintiffs argue that con- defendants' duct contravened their duties as fiduciaries because acted in their own they self-interest due to their ability to purchase some of the Trust-units plaintiffs sold. assert, and the They found, circuit court telling had to sell they back their Trust-units over a one to five year period, while not telling them that JESTA for a provided ten-year sell-back if opportunity retired, was not in they done faith. good At the same time, plaintiffs assert these actions constitute negligent breaches of are not fiduciary duty, intentional acts, and therefore their claims come under the six-year statute of limitations §§ either Wis. Stat. 893.52 or 893.53.7
7 In support
position,
of their
plaintiffs cite an extensive list
of Wisconsin
they
cases which
contend
applied
the courts
six-year statute of
limitations to a breach of
on the part of
Howevеr,
a trustee.
are
point.
Younger
cases cited
not on
See
Co.,
Paper
v. Rosenow
& Supply
619, 626,
51 Wis. 2d
188 N.W.2d
(1971) (analyzing
507
claim);
breach of contract
Hammes v.
Racine,
First
355, 359,
Nat'l Bank & Trust Co.
79 Wis. 2d
255
(1977)
555
(concluding
summary
N.W.2d
judgment
was
improperly granted
negligence
on
and breach of
claims,
making
any
but
no determination of
statute of limita
issue);
tions
Policemen's Annuity &
Fund Milwaukee
Benefit
Milwaukee,
City
v.
App
2001 WI
246 Wis. 2d
(concluding
439
argue
hand,
defendants,
18. The
on the other
according
Liquidating
to our decisions
Beloit
Co.,
and Warmka v. Hartland Cicero Mutual Insurance
(1987),
31,
136
¶ 19. The defendants
the court of
appeals
concluding
Liquidat-
was correct in
that Beloit
ing
Liquidating,
controlled. In Beloit
2dWis.
§
¶ 40, we held that
Stat. 893.57 barred a claim for
liquidating
breach of
where a
trust that
Chapter
plan
was
under a
established
debtor's
brought
against
an
action
the debtor's officers
alleged
directors. It was
that the officers and directors
corporation
money-losing
had
to enter
"allowed
into
[had]
keep adequate accounting
contracts,
systems
failed to
[had]
opera-
losses,
to deal with the
continued
prudent managers
after
tions
would have shut
corporation
[had]
down, and
failed to disclose the
contract, governs");
for
actions
Jensen v. Janesville Sand &
(Ct.
Co.,
521, 527-28,
Gravel
141 Wis. 2d
¶ 22. in Wisconsin that It is well established duty managing a trust. trustees have Hatleberg Wis., WI 109, 21, 283 Norwest Bank 2005 v. (citing v. 2d Sensenbrenner 234, 700 N.W.2d
Wis. Sensenbrenner, 252 N.W.2d (1977)). Uni- has enacted the Furthermore, Wisconsin "fiduciary" Act,
form Fiduciaries which defines to in- any clude "a trustee under trust. . . Wis. Stat. 112.01(l)(b). issue, 23. What is at and what we must deter- mine, is whether the claims the *14 plaintiffs proved properly circuit found court were two-year dismissed because the statute of limitations applies them. to The circuit court found Trustees plaintiffs breached their because plaintiffs "they told Trustees to had sell-back year period, their Trust units 1 to оver a and no provided writing information was availability in about the 10-year right upon of the sell-back retire- (Jefferson County ment." Mem. Decision Trial 15 After 2003). Cir. Ct. Mar. The circuit court's factual find- ings legal regard conclusion are not con- tested. Fiduciary Duty
C. In 24. order to better understand the claims begin by examining here, tried we the nature of a fiduciary duty. by scholarly We are assisted various by principles fiduciary sources and established law appellate set out in Wisconsin court decisions. fiduciary originated 25. foundations law equity developed in courts of where it was to address by accepted position claimed abuses one had who a authority regard with to the affairs of another. Eileen A. Betrayed: Scallen, Promises Broken vs. Promises Meta- phor,;Analogy, Fiduciary Principle, and The New (hereinafter, U. Ill. L. Rev. 905-06 Promises Broken Betrayed). "fiduciary" vs. Promises The term has been applied many types relationships to different varying obligations, e.g., beneficiary, have "trustee to attorney agent principal, guardian to client." ward, to to developed Id., have law at 905 n.22. Courts by identifying paradigm analogy: in which a cases examining fiduciary relationship found to exist and was relationship under consideration "is suffi- whether the support paradigm ciently an like in the cases those relationship." obligation Debo- extension Analysis Beyond Metaphor: An DeMott, rah A. (herein- Fiduciary Obligation, L.J. 1988 Duke Beyond Metaphor). after, long Perhaps evolution, of this as result particular
clearly defining in a the duties of aptly A. ex- difficult, as Deborah DeMott situation is plained: [fiduciary obligation is one of the most elusive
[ A] variety in a Anglo-American Applicable law. concepts through juris contexts, developed apparently *15 fiduciary principle, than the analogy of rather prudence pursue discretion to self-interest party's constraint on Although identify one can tidy categorization. resists fiduciary obligation, these principles common core of greater or lesser force different apply with principles rela types parties of involving different contexts fiduciary obliga Recognition that the law of tionships. starting pоint the for situation-specific should be tion is analysis. any further
Id. any analysis of a claimed breach
¶ However, in 27. questions duty, fiduciary are two central of there relationship, fiduciary relationship a address: was the fiduciary duty that so, and if what is the nature Betrayed, Promises Promises Broken vs. is at issue? supra, question is no Because there at 905. managed
Trustees who
the Trust under the terms set
regard
out in the JESTA were fiduciaries, at least in
plaintiffs,
explore
question.
the
we
the second
expression,
fiduciary duty,
28. The
relates to
obligations
peculiar
fiduciary
those
that are
to a
and are
undertaking
special position
based on the conscious
of a
regard
Gregory,
with
to another. William A.
The Fidu-
ciary Duty Care: A
Words,
Perversion
38 Akron L.
of
of
(2005)
Fiduciary
181,
Rev.
185-86
[hereinafter, The
Duty
A consistent facet of a
is
Carel.
of
fiduciary's
the constraint on the
discretion to act in his
by accepting
obligation
own self-interest because
the
of
fiduciary
consciously
he
sets another's interests be-
Beyond Metaphor, supra,
fore his own.
at 882.
acting
29. This constraint on
in one's own self-
fiduciary's duty
interest has been described
aas
of
lоyalty.
duty
loyalty
Id. However, the
of
is broader than
simply requiring
acting
to refrain from
Fiduciary Duty
his own self-interest.8 The
Care,
8 The concurrence takes issue with the assertion that
loyalty
is broader
than requiring that
fiduciary not act in his own self-interest. Concurrence,
¶ We
stand
Recently,
statement.
the court
appeals
examined
alleged
an
disclosure of confidential
information as a claimed
duty
breach of the
loyalty.
Servs.,
Aon Risk
Liebenstein,
Inc. v.
AppWI
pal acquired by during or him the course of or on account of his agency.... may require keeping supra, example, it also at 183. For beneficiary's confidential, id. at 193 a information n.107 Jeffrey Legal (citing Smith, E. Mallen & M. Ronald (4th 1996)), fully disclosing Malpractice 14.1 ed. beneficiary to to beneficiary's all information relevant id. at 183-85. defines
interest, Webster loyalty principle to and an as "tenacious adherence" obligation "based individual choice." Webster'sThird (14th 1961). Dictionary 1342 ed. New International duty loyalty imports A of breach of the something incompetence; it "con- different from mere Duty infidelity." Fiduciary disloyalty or The
fiduciary's duty loyalty solely of is "to act for the benefit principal of the agency, in all matters connected with the expense agent's
even at the
of the
own inter
App
Bank,
ests." Losee
¶
v. Marine
2005
184,
16,
WI
(citation omitted).
438,
286 Wis. 2d
contract, such as the between a trust and trustee. Prod. Credit Ass'n Lancaster Wis. v. Croft, (Ct. 1988). App. 143 Wis. 2d 752, 423 N.W.2d544 may legal Or, it relationship arise from a formal such as attorney guardian and client, and ward. Id.
¶ 33. generally When the trustee, is a agreeing the tasks that the trustee is to undertake are agreement. Hatleberg, set out in a trust 283 Wis. 2d "[T]he creating instrument the trust... is to stipulations fixing obligations be looked to for parties." (citing Bldg. Id. McGeoch Co. v. Dick & Reu (1948)). Co., teman 253 166, 175, Wis. 33 N.W.2d252 A 446 comply under terms of the trust with the must trustee perform agrees v. certain tasks. Saros he which (1943). Carlson, 84, 88, N.W.2d of a trustee reviewed 34. We Co. Bank & Trust National in Hammes v. First (1977). Hammes Racine, 355, 255 N.W.2d 79 Wis. required the breach us to consider *18 against brought former beneficiaries claims of trust claims were barred those to determine whether trustees deciding judicata. principles In Id. at 359. of res under maintained, reviewed we the claims could be whether obligations relating a trustee. of law the common allegations did that the trustees made was the One of hаve been facts that should all the material not disclose before the beneficiaries the beneficiaries disclosed to agreed lack of disclosure and that the their stock to sell explained, "It is a Id. at 367. We the trustees. benefited principle that law of trusts of the fundamental loyalty duty to a of undivided is under trustee (citing Reuteman Dick & of trust." Id. beneficiaries Doherty Realty 342, 348, 114 Co., 16 Wis. v.Co. (1962)). duty explained of this that We N.W.2d loyalty requires personally, profit, a not trustee pointed position out 368. We Id. at as trustee. from his encompasses duty loyalty a "trustee's of also duty of all facts disclosure" to make full affirmative beneficiary is about transaction the relevant to the Id. at undertake. 369. principles general of the 35. With persuaded loyalty there is
duty mind, we are of of claim for the breach difference between a distinct loyalty for the breach and a claim negligence ordinary duty claim. care, i.e., a of the assumption of conscious from the difference arises That fiduciary, imposes the role of on which the law an obligation relating of absolute in all matters object duty, e.g., the fiduciary agrees of the the beneficiaries of a trust. A position authority
to assume a regard position to the affairs of another in which fiduciary may have access to confidential information object property fiduciary's obligation. or to of the Therefore, if a trustee does not make a full disclosure of beneficiary, material facts to a that conduct ais breach loyalty. of the trustee's The law concludes this Liquidating, breach is intentional. Beloit 270 Wis. 2d Similarly, personally profits 356, 40. if a trustee from his role as a trustee, that conduct ais breach of the loyalty, trustee's and the law concludes it is Cmty. intentional. Nat'l Bank Adm'rs, v. Med. Benefit App LLC, ¶98, 2001 WI 242 Wis. 2d 626 N.W.2d concept comport 36. The can loyalty, with his but nevertheless *19 duty ordinary supported by violate the of care, also is § 112.01(l)(c), the standard set out in Wis. Stat. Wisconsin version of the Uniform Act. Fiduciaries Sec- 112.01(l)(c) thing good tion "A states: is 'in done faith' meaning within the of section, this when it is in fact honestly, negligently done whether it be done or not." 112.01(l)(c) recognizes negligent Section that conduct fiduciary duty. does not rise to the a level of breach of good encompassed We conclude that faith is within succinctly duty what we have more referred to as the loyalty fiduciary accepted. that arises when a role is Why
¶ 37.
does the law conclude that the breach
fiduciary duty
loyalty
of a
is an intentional tort? It
fiduciary consciously agreed
does so because the
to be
of those to whom the fidu-
committed to the interests
ciary
example,
special
For
this com-
assumed that
role.
agrees
overlays
to
all of the tasks that
trustee
mitment
given
agreement.
in a
Whether a breach
undertake
trust
loyalty
against
fiduciary duty
lie
a trustee
of the
will
proved.
explained
depend upon
facts are
As
will
what
ways in which this breach
above, there are a number of
e.g., self-dealing by
failing
trustee;
occur,
can
beneficiary;
material information to the
disclos-
disclose
beneficiary's
ing
confidential information.
fiduciary
that a
38. Our conclusion
duty
grounded in an intentional
tort is
is
appellate decisions that
with all Wisconsin
consistent
recently,
Liq
mеntioned the
Most
Beloit
have
issue.
uidating,
356, 40,
2d
we held Wis. Stat.
duty
fiduciary
§
applies
claims,
to breach of
893.57
reasoning
although
in detail our
for
we did not discuss
holding.
the assertion that the
Wedid have before us
rejected
negligently,
that conten
trustee acted
and we
Previously,
Id., ¶¶
Warmka,
136 Wis.
tion.
33.
"[t]he
held that
breach of the
at
we
provides
appli
an intentional tort" and that 893.57
Warmka,
limitations.
an
In
we reviewed
cable statute of
against an insurer for breach of
cause of action
insured's
question
faith,
and also addressed
contract
bad
applicable statute of limitations was
which
duty
that the insurer had
claims. We concluded
analogous
to the insured
owed
was
tort,
is an intentional
and that a breach
governed
§by
held that it was the
Therefore, we
893.57.
presented.
applicable
claim
of limitations for the
statute
have followed these
Twice,
federal courts
two-year
applying
statute of limitations to
cases in
See McMahon v. Pa.
breach of
claims.
*20
(7th
1989)
Cir.
Co.,
F.2d
1255
Ins.
891
Life
449
(affirming the district court's dismissal of the breach of
fiduciary duty
Warmka);
claim
based on our decisiоn
Supp.
Co.,
see also Lewis v.Paul Revere
Ins.
80 F.
Life
(E.D.
2000) (concluding
978, 1004
that insurer's
fiduciary duty
against
breach of
policy,
claim
who
broker
sold
fully
but did not
disclose all facts relevant to the
Warmka).
proposed insured, was time barred under
¶ 40. Our conclusion that a breach of the fidu-
ciary duty
an intentional
tort
is also
many
consistent with the decisions of
courts
other
jurisdictions.
example,
For
in Brosted v. Unum Life
(7th
2005),
America,
Insurance Co.
D. Plaintiffs' Claims fiduciary relationship plain-
¶ 41. The between the by contract, created tiffs and the Trustees was the accordingly, agreed JESTA; the tasks that the Trustees are in However, to undertake as set out the JESTA. the required employ state of mind that the were Trustees to they contractually agreed upon as undertook their tasks loyalty one Trust, of absolute to the beneficiaries of the plaintiffs. the Their which includes re- quired Perry the Trustees to make a full disclosure to the employees, group, of all material as facts that related to consequences Perry. the of retirement before the sale of plaintiffs of those that if the One facts was who were eligible Perry for retirement retired before the sale they eligible ten-year closed, would be for a sell-back opportunity for their Trust-units. Because Trust- always appreciated plaintiffs value, have in units they needed to could retain the know Trust-units they they longer period over a of time could decide if so Any opportunity. in wished to retire order to have this required employee apply who retired would be to for buyer Perry's employment assets, rather with than having employment by immediately the new owner available on the terms and conditions as the same employee Perry. had at
¶ 42. The circuit court found that the Trustees duty by telling breached their "they a 1 to 5 had to sell-back their Trust units over year provided plaintiffs period, and no information was availability 10-year writing about the sell-back right upon Decision, retirement." Mem. at 15.9 These had not put The circuit court also found Trustees aside the discretion of one who is not a to act his created circum- the Trustees prove found facts ability affected the to adversely plaintiffs' stances that to retire and make an informed decision about whether or whether for work with the new owner apply then with the new immediately employment proceed of the Trustees' This constitutes owner. undertook when voluntarily which the Trustees loyalty, such, Trustees of the Trust. As agreed to be they *22 which the fiduciary duty loyalty, plaintiffs breach of by an intentional tort that is precluded proved, of limitations set out Wis. Stat. two-year statute § 893.57.10
III. CONCLUSION conclude that the circuit court found 43. We ¶ adversely that the Trustees created circumstances by giving plaintiffs affected the interests plaintiffs' aside, self-interest, put own that one who is a must eligible purchase the Trustees were to some of the because However, forced to sell back. plaintiffs Trust-units that the were finding any Trustee had done so. the circuit court made no Therefore,, findings had actu- there were no that the Trustees fiduciary duty by self-dealing. ally breached their 10 rule, argued discovery plaintiffs before us Milwaukee, explained John Doe 67C v. Archdiocese WI 123, 180, apply should to Wis. N.W.2d negligence. the accrual of their claims of Plaintiffs assert that sold, rather their claims accrued when last Trust-unit was given incomplete than on the date that the informatiоn was to them, do not address this issue as defendants assert. We loyalty because we conclude that the breach of the two-year statute of the trial court found is controlled § plaintiffs limitations of Stat. 893.57. The commenced this 7, 2000, they sold their last Trust-unit before April action and Therefore, do contend that if the April not two-year applies, statute of limitations their claims survive. incomplete plaintiffs' holdings, information relative to fiduciary duty which we conclude loyalty, ais breach of the two-year an intentional result, tort. As a statute of limitations found in 893.57, Wis. Stat. applicable requires which is torts, intentional dis- Accordingly, missal of the lawsuit. we affirm the deci- appeals. sion of the court of
By appeals the Court.—The decision of the court is affirmed. {concur- 44. SHIRLEY S. ABRAHAMSON,C.J. (1)
ring). separately I write to set forth the issue (2) presented my provide thereto; answer regarding context for the case claims of a trustee's negligence. breach of and claims of
I majority opinion begins by stating 45. The presented issue of law in the instant case as "whether a claim for breach of must be negli- intentional, or whether it can also be based on *23 gence."1 plaintiffs present
¶ 46. The the issue as follows: negligent fiduciary duty whether a claim a for breach of governed by two-year the statute of in limitations § by six-year Wis. Stat. 893.57, or the statute of limita- § tions in either Wis. Stat. 893.52 or 893.43.2 The 1 Majority op., Compare 1. with a ¶ different statement of majority the issue at op., fiduciary 23: "whether the breach of ¶ duty claims the circuit court found the plaintiffs proved were properly two-year dismissed because the statute of limitations applies to them." majority The opinion further by misstates the issue lim
iting holding "fiduciary duty loyalty." its to the I of As in discuss accept respond to and the amicus briefs and
defendants by plaintiffs. the stated the issue as by agree stated the issue as I with require present this court parties. not case does The of Trustees' breach claim for the a determine whether may fiduciary duty or be intentional must be of only negligence. what need determine We based applies for limitations the claim breach statute duty presented case.3 in the instant Trust- circuit court determined 48. The fiduciary duty applied the six- and their ees breached negligence year The circuit court of limitations. statute had a The Trustees follows: reasoned as self-dealing Ordinarily duty loyalty. a is violation loyalty. fiduciary duty The trust instrument employees Commu- of Journal the Trustees as allowed might buy plaintiffs' stock, which be nications to self-dealing. court concluded The circuit considered heightened were under result, the Trustees that, as plaintiffs in order to information to disclose loyalty. The Trust- fulfill the Trustees' correctly fully employees as did not inform ees by heightened required The to disclose. their correctly plaintiffs was failure to inform the Trustees' fiduciary duty of only not opinion, II this case is Part of this of other Rather, allege breaches loyalty case. fiduciary duties. plain states that because majority opinion also solely on fiduciary duty "are focused breach of
tiffs' claims for analyze ... need of the Trustees we the actions and omissions questions to decide the of the Trustees order only the action complaint 21. The Majority op., this review." presented case, however, allеges breach of also the instant majority the trust itself. The by Journal Communications is silent. opinion
454 just negligent, accordingly, intentional, not and, ruled six-year negligence court, the circuit statute applied. limitations majority opinion
¶ contrast, 49. In concludes two-year statute of limitations for intentional applies torts, 893.57, Wis. Stat. to claims for breach of fiduciary duty fiduciary duty based on breach loyalty. Liquidating Grade, 50. Beloit Trust v. 2004 WI appears
39,
356,
298,
270 Wis. 2d
677 N.W.2d
to control
the outcome of the instant case.4 See
v.
also Warmka
Co.,
Hartland
31,
Cicero Mut. Ins.
136
34-35,
(1987) (cause
400 N.W.2d923
of action for
bad
insurer's
duty
analogized
faith; insurer's
to insured
to
duty;
breach of
is intentional tort under
limitations).
Liquidating,
statute of
In Beloit
this court
allegations
corporate
considered
that
officers and direc-
negligently
corporation
tors
allowed the
to
into
enter
money-losing
keep adequate
failed
contracts,
ac-
counting systems,
operations
prudent
continued
after
managers
corporation,
would have shut down the
corporate
allegations
failed to disclose
fit
losses.5 These
within several
duties of officers and directors
corporations, including
keep
and render
accounts and the
to furnish information. It does
appear
Liquidating
not
in Beloit
alleged
loyalty.
breach of the
This
Liquidating, despite
court held Beloit
the fact the claim was that
officers
directors were
negligent
performing fiduciary
duties,
"a
Commc'ns, Inc.,
See Zastrow v. Journal
178,
2005 WI App
2,
416,
286 Wis. 2d
703 N.W.2d
Grade,
Beloit Liquidating
Trust v.
2004 WI
Wis. 2d
of claim two-year statute of The therefore held court § 893.57, Stat. torts, for intentional limitations claims in that case.7 barred the appeals ¶ As the of observed the 51. court Liquidating case, this in Beloit "described instant court of claim as an intentional tort the breach alleged though the in that was even conduct case failing negligently allowing and certain contracts prudently keep adequate accounts, act and disclose type losses, than faith conduct or rather the bad intentionally wrongful circuit here conduct the court application of considered essential to the 893.57."8 simply appeals Beloit Thus the court concluded that Liquidating case. controlled the outcome of instant Liquidating
¶ Beloit involved numerous is- 52. length. sues this at This court did court discussed regarding not how it its discuss reached conclusion application two-year and statute of limitations authority cited no for its conclusion breach two-year is an or that the intentional tort applied statute of limitations that case. plaintiffs distinguish ¶ in the 53. instant case asserting Liquidating, Beloit it did not involve negligent claims of breach duties because prevented judgment and rule the statutes the business negligent action for breach. The assert that Liquidating simply corporate Beloit found that no and owed to the creditors. officers directors 6 Wis. 2d 40. Liquidating, Beloit 7Id., 40; see Warmka v. Hartland Cicero Mut. Ins. also (1987). Co., 31, 34-35, 136 Wis. N.W.2d 923 8Zastrow, 2dWis. relying
¶ 54. In the interest stare decisis Liquidating, text of Beloit I conclude that Beloit Liquidating controls the outcome of the instant case predictable a uniform, creates rule that the statute applicable any of limitations in all claims of two-year statute. This conclusion majority opinion should end in the instant case.
II *26 majority opinion ¶ 55. The in case, however, this stop deciding does not at the of statute limitations issue Liquidating. in the instant case based Beloit It has complex application raised more than the issues of the asserting statute of limitations to all claims a breach of fiduciary duty by express a of trustee an trust. Instead explaining appears majority of law, settled it the opinion interpreted regard- making can he as new law ing the nature and content of and the duty of care. places, majority opinion puts
¶ In 56. some the only a novel forth fiduciary view of the duty duty loyalty.9 majority opinion is a of The might interpreted herding fiduciary be or all as some pasture duty loyalty. duties into the of the of majority opinion ¶ The concludes, 57. for ex- ample, duty confidentiality duty of and the to aspects duty loyalty.10 furnish information are of 9 See 22-35, majority op., 41-42. ¶¶ 10 ("[T]he Majority op., duty loyalty of is broader than simply requiring fiduciary acting the to refrain from in his own may require keeping For it example, self-interest. also a beneficiary's disclosing information confidential and fully the beneficiary all beneficiary's information relevant the inter (Citations omitted.)). est." majority opinion authority does not cited
Yet the contrary, support the cited law On the this statement. loyalty duty is of one makes clear that review article fiduciary are duties duties, but that there other of as well.11 majority opin- I am concerned whether fiduciary creating body law for trustees new of
ion is prior in case law this state is inconsistent with in the Restatement with the view taken inconsistent (Second) the law and well-known treatises on of Trusts of trusts. fiduciary scope, trustee's 59. While broad ordinary parlance,
duty loyalty trust not, of does encompass every duty.12 hornbook, It black- is many duties, has one law that a trustee letter duty duty loyalty.13 While a trustee's which is the Duty A Fiduciary Care: Gregory, See A. William Words, (citing L. Restate 38 Akron Rev. Perversion of (1958)) ("An (Second) 379-384, Agency §§ 387-398 ment principal. The agent various duties to its owes have significant expanded of them. The courts the most to disclose agent years by describing duties an over *27 omitted.)). (Footnote duty and a of candor." references 12See, First Bank & Trust Co. e.g., Hammes v. Nat'l of (1977) Racine, 355, 369, (discussing 255 N.W.2d555 79 Wis. 2d fiduciary fiduciary duty loyalty, discussing separate of then disclosure); Materials, Inc. Advanced duty of full Modern v. Inc., 435, 442, 557 Tooling 206 Wis. 2d N.W.2d835 Specialists, 1996) (Ct. 184, 190, (citing Weisflog, v. 165 Wis. 2d App. Racine 1991)) ("It (Ct. is that a App. 326 well established 477 N.W.2d loyalty, of corporate officer or director under business."). dealing corporate of faith and fair in the conduct good 13 Fratcher, Franklin 2A Austin Scott & William Wakeman 1987) (4th (listing §§ ed. 17 distinct on Trusts 169-185 Scott (Second) trustee); fiduciary of Trusts duties of a Restatement (1959) fiduciary of a (fisting §§ 17 distinct duties 169-186 trustee).
458 of be loyalty may described as most "the fundamental it is not the one. duty,"14 only (Second) § Restatement of de- Trusts the scribes as the duty loyalty duty to administer the trust in the solely interest of the beneficiary:
(1) The a duty trustee is under to the beneficiary to solely administer the in trust the interest of the benefi- ciary.
(2) The in dealing beneficiary trustee with the on the trustee's duty own account is under a beneficiary to the deal fairly to with him and to to communicate him all material facts connection with the transaction which the trustee knows or should know.15 61. The treatises and state texts the fidu- ciary duties of trustee include not only duty but to loyalty alsо administer duty trust,16 The duties listed in the Restatement and Scott Trusts are substantially clearly same. Both duty include the loyalty as a duty distinct from the other duties listed. Fratcher, 2A supra 170; Scott & George § note Bogert George Taylor & Bogert, Gleason The Law Trusts 1993). § replacement Trustees 543 at 217 2d ed. vol. (rey. 15Similarly, Scott on Trusts defines the solely as "the of a trustee to administer the trust
in the interest of the beneficiaries. permitted [A trustee] is not place position himself it where would be for own his benefit violate his 2A & beneficiaries." Scott Fratcher, supra § note 170. For another discussion duty of loyalty, Bogert Bogert, see & supra note 543-543(V). §§ Fratcher, 13, § 2A supra 169; Scott & note Restatement
(Second) (1959). of Trusts
459 duty duty keep to accounts,17 and the and render to might example, For trustee information.18 furnish by accidentally duty information to furnish breach the providing about the information incorrect or inaccurate beneficiary's rights corpus or the of the trust content under the trust. duty of a trustee to the 62. Another duty
beneficiary skill in care and is the to exercise administering to The trustee's trust. beneficiary with care and to administer trust (Second) of Trusts: in the Restatement skill is described beneficiary duty The trustee under care and skill administering the trust to exercise such ordinary would exercise prudence as a man of and if the has or dealing property; his own trustee with by representing trustee appointment his as procures ordinary a man of greater has skill than he such he is under to exercise skill.19 prudence, 17 437, 441-42, 159 Barry, v. 39 N.W.2d Richards Wis. (1968) accounts); v. 202 (duty keep Ingram, to Leonard 660 (1930) Fratcher, (same); 2A 117, 124-26, Scott & 230 N.W.715 (Second) 13, 172; § § of Trusts 172 note Restatement supra (1959).
18 ("The Fratcher, 13, § note 173 trustee is 2A & supra Scott give request them on their under a to the beneficiaries and accurate information as to the complete at reasonable times (Second) trust."); of Trusts Restatement administration (1959). § 173 duties, stating see example of the trustee's For another (exercise 14, §§ & note 541 reasonable
Bogert Bogert, supra skill), assets), preserve 582 trust 596 (protect care and (make (earmark trust separate prop- trust 611 property), (furnish beneficiary). erty information productive), 975 (Second) (1959); see § Trusts also Restatement Fratcher, 174; v. Sensenbrenner supra Scott & note *29 According ¶ 63. to the treatises, a trustee's breach fiduciary duty negligent, be or of can intentionаl and may liability in certain there circumstances be without fault.20 majority opinion might I said, 64. As have the fiduciary read to or all
be fit some the trustee's duties loyalty. within the of However, the ma- jority opinion might say also be read other thought normally fiduciary duties of aas trustee's fiduciary all, duties are not duties at hut are duties by many duty persons, ordinary owed such as the analyzed fiduciary duty. care, and are not as breach opinion majority relationship Thus, the the addresses fiduciary between a trustee's and duties the non- ordinary care. ¶ 65. If latter this view is an accurate character- majority opinion, making very ization of the it is broad fiduciary statements about the nature and content of duties. majority opinion
¶ 66. The
relies on commenta-
addressing
relationship
tors
fiduciary
cases
between
duty
non-fiduciary
duties and
of care in
appears
the context of
other
fiduciaries
than trustees. It
primarily
that this
literature
in the context of the
(1977)
Sensenbrenner,
625, 635,
76 Wis.
For
a trustee
where
under a mistake of law makes
payment
person
beneficiary,
to a
not entitled as
he is liable to
beneficiary,
though
his
neither
even
conduct was
intentional
(Md. 1909).
Winans,
v.
negligent.
nor
Galard
duties owed an corporate agents principals, owe to such to shareholders.21 literature confusing officers directors majority opinion criticizes cases cited attorney's to a client and an duties an attorney's duty performance due of services. care According commentators, the is the latter basis malpractice negligence action, action for not an for duty. suggest The commentators *30 types of of should be these two breach regarding analyzed separately because of differences damages, applicable proof proof causation, of of and limitations. statutes Hatleberg appears blush, in v. 67. At first it Wisconsin, 109, 2005 WI 283 Wis. 2d
Norwest Bank of regard 15, this court creаted confusion 700 N.W.2d ing relationship the a between ordinary Hatleberg non-fiduciary care. In this relating to an irrevocable court addressed claims trust necessary provisions that did not include certain liability upon tax the settlor's death. bank avoid aware of the defect but did not that was trustee was reveal it to the settlor. The settlor's estate sued the informing erroneously settlor, trustee the after bank for liability trust, tax creation of the that she would avoid annually by depositing additional funds the trust.22
21See, 11; e.g., Gregory, supra Ray Ryden Anderson note & Jr., Steele, Duty, Tort A Fiduciary W. and Contract: Walter Puzzle, L. Legal Malpractice Primer on the 47 S.M.U. Rev. 235 (also (1994) actions); Mehaffy, contract Smith v. comparing Mothew, P.3d 727 [1998] (Col. Ct. Ch. App. 1, at 17, 1996 2000); Bristol West WL & (British Bldg. Court of Soc'y v. Appeal). Wis., Hatleberg v. Norwest Bank 2005 WI 6-12, 283 Wis. 2d 700 N.W.2d ¶¶ ¶ 68. This court held that the could bank be held providing liable for the incorrect information. The court concluded that bank itself out held as an expert planning negligent in financial liable was for performance professional provided services when it false information.23 appeals
¶ 69. The court of in the instant case points Hatleberg might imply out that be read to negligence indistinguishable for claim from a claim fiduciary duty.24 breach of for appeals suggests ¶ 70. However, court of also appropriate reading Hatleberg. Hatleberg, more In negligence presented this court addressed theories plaintiff opine and did not intend on the relationship a claim for between of a fidu- ciary duty negligent performance for and a claim professional relationship services, a that was not an issue the case See before court25 the court of appeals discussing decision, the distinction between a negligence and a claim claim.26 Hatleberg,
¶ 71. I As read noted this court three might distinct duties under which the bank be liable to *31 clearly distinguishing estate, the settlor's between fiduciary duty breach of duties and the of the of ordinary Hatleberg, explained by then, care.27 be can recognizing dealing bank, that the in with the settlor
23Id., 34-39,42. The court also concluded that the bank ¶¶ Id., negligent misrepresentation. committed 40-41. ¶¶ 24Zastrow, 416, 2d 286 Wis. 22. ¶ 25Id., 23. ¶ 26Id., 23-24, 26. ¶¶ 27 ("We 234, organized See 283 Wis. 2d Hatleberg, 18 have ¶ (1) analysis categoriеs: arising our into three Duties in [the (2) trustee; undisputed capacity defendant's] as arising Duties 463 fiduciary established, owed her no after the trust was Although duty was a of the trust.28 the bank as trustee professional care, of was held to held to a standard it as it held itself out to the settlor that standard because fiduciary expert a advisor, financial not because of an relationship as trustee with the settlor.29 respect at least to the law Thus, with appears me case in this state trusts, it law fiduciary duty and a of the trustee has not confused duty ordinary non-fiduciary Indeed, care. the Hatleberg, duty care was the trustee's when the not recognized care, this dis- the court analyzed negligence the claim. tinction and claim as fiduciary duty apply principles with 73. The involving force in different contexts different different relationships. persons the I have and None of sources majority cited found, and none of the sources the opinion, Professor addresses the duties of a trustee. As explains, Deborah A. DeMott the law or disputed capacity planner as financial [the dеfendant's] (3) advisor; Duty negligently providing inaccurate avoid information."). (trustee's (Second) (1959) Restatement of Trusts beneficiary).
duty of care owed to Zastrow, 234, 38-39; 2d see Hatleberg, 283 Wis. ¶¶ 24-26. ¶¶ the noted that Hatleberg, In 283 Wis. 2d court may relationship arise between duties from However, concluded financial advisor and client. court it it need address the of such duties because not existence ordinary bank had violated the of care found negligence. be held liable for The conclusion that could may be did need to address the claim court not surrounding Hatleberg for confusion case. part of cause *32 "situation-specific."30 Litigants is and courts should identifying therefore take care in and the at issue each case because different may including duties, fiduciaries have different duty of care. In sum, that, 74. I conclude as dictated our
precedent Liquidating, two-year in Beloit statute of limitations for torts, 893.57, intentional Wis. Stat. applies fiduciary duty. to claims for breach of That analysis sufficient to decide the instant I case. would go no further. I am authorized to state that Justice ANN joins opinion
WALSH BRADLEY this and Justice N. joins opinion. PATRICK CROOKS Part I of this DeMott, Beyond Metaphor: Analysis See Deborah A. An (1988). Fiduciary Obligation, 1988 Duke L.J. notes of (citation omitted). supra, core, its Care, at 183 At a duty fiduciary's loyalty mind, a involves of so state duty goes beyond simple that a claimed breach of that lawyer negligence. example, his fidu- For a can breach by entering ciary into to a client a a full contract with client without disclosure lawyer potentially benefit disad- contract will simple vantage However, client. carelessness in savings drafting not the tax a will so that it does achieve requested negligence. is that the client Neither they just obligations. importance; are different lesser every legal arising otherwise, claim out Said "not give relationship incidents rise with will (citation duty." Id. at claim for breach omitted). have followed the 31. The courts of Wisconsin example, general principles out above. For we we set fiduciary relationship results held that have legal assumption "obligation act for another's Lynch, Smith, Pierce, Inc. & v. benefit." Merrill Fenner (1985). Boeck, 377 N.W.2d605 127, 136, 127 Wis.