Guarantee Trust Life Insurance Co. v. Kribbs ( 2016 )

2016 IL App (1st) 160672
FIRST DIVISION
December 29, 2016
No. 1-16-0672
GUARANTEE TRUST LIFE INSURANCE CO., )
) Appeal from the
Plaintiff-Appellant, ) Circuit Court of
) Cook County.
v. )
) No. 13 L 2143
ROBERT KRIBBS, KEITH LINDVIG, and ) (Renumbered as:
LARRY GRAVES, ) 15 L 11262)
)
Defendants, ) Honorable
) John. C. Griffin,
(Keith Lindvig and Larry Graves, Defendants-Appellees). ) Judge Presiding.
)
JUSTICE MIKVA delivered the judgment of the court, with opinion.
Justice Harris and Justice Simon concurred in the judgment and the opinion.
OPINION
¶1 This is an appeal from an order dismissing claims against certain defendants as untimely.
Plaintiff Guarantee Trust Life Insurance Company (Guarantee) entered into a reinsurance
agreement with Somerset Reinsurance, Ltd. (Somerset), a company formed by an independent
insurance producer for the sole purpose of reinsuring policies issued by Guarantee. Under the
agreement, Guarantee forwarded premium payments to Somerset to hold in a custodial account
for the payment of claims. Guarantee initially sued the founder of the reinsurance company,
Robert Kribbs, alleging that he acted in concert with “an employee” inside Guarantee’s
organization both to secure the agreement and later to improperly obtain authorization for the
No. 16-0672
release of funds from the account to Mr. Kribbs for his own use. Nearly six years after filing its
initial complaint, while taking discovery depositions in the case, Guarantee discovered the
identity of two of its own employees, Keith Lindvig and Larry Graves, who it claims participated
in the scheme and sought to name them in the suit. Mr. Graves and Mr. Lindvig moved to
dismiss the claims against them as untimely and the circuit court granted their motion. For the
reasons that follow, we affirm the judgment of the circuit court.
¶2 BACKGROUND
¶3 Reinsurance is a contract of indemnity in which one insurer agrees to protect another
insurer from a risk it has already assumed. Vial v. Norwich Union Fire Insurance Society of
Norwich, England, 257 Ill. 355, 358 (1913). The original policyholder is generally not a party to
such an agreement. In re Liquidations of Reserve Insurance Co., 122 Ill. 2d 555, 561 (1988). In
this case, plaintiff Guarantee entered into a reinsurance agreement with Somerset, a reinsurance
company formed by licensed insurance producer Robert Kribbs to reinsure credit life and
disability policies issued by Guarantee.
¶4 A. Guarantee’s Initial Lawsuit
¶5 On December 12, 2006, Guarantee brought a five-count complaint against Mr. Kribbs for
unjust enrichment, conversion, constructive fraud, concert of action, and civil conspiracy (the
2006 Complaint). Guarantee alleged that it entered into the reinsurance agreement with Somerset
to reinsure policies sold by Mr. Kribbs and others, pursuant to which it agreed to deposit
premiums paid on the policies into a custodial account controlled by Somerset and Mr. Kribbs.
Guarantee further alleged that, “[w]ithout regard to the contractually and statutorily mandated
reserve requirements applicable to both [Guarantee] and Somerset, [Mr. Kribbs] authorized and
requested the release of the ceded premiums to be paid directly to [Mr. Kribbs],” leaving
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insufficient remaining funds to pay claims on the policies. As a result, Guarantee alleged that it
was forced to indemnify policyholders, using its other reserves and premiums, for claims that
should have been paid by Somerset from the custodial account.
¶6 Although Mr. Kribbs was the only individual defendant originally named in this case,
Guarantee specifically alleged in count IV of the 2006 Complaint, entitled “Concert of Action,”
that Mr. Kribbs could not have unilaterally withdrawn funds from the custodial account.
According to count IV of the 2006 Complaint, “[t]he approval of an employee of Guarantee was
required for Kribbs to allow the premium funds to be paid personally to Kribbs” and “[b]oth
Kribbs and the employee of Guarantee knew that the release of funds directly to Kribbs
constituted a breach of the employee’s duty of loyalty to [Guarantee] and its duty to protect its
policyholders.”
¶7 On January 8, 2008, Mr. Kribbs disclosed in his responses to Guarantee’s interrogatories
the names of five individuals with knowledge of the losses allegedly suffered by Guarantee as a
result of the transactions described in the 2006 Complaint, including Guarantee employees Larry
Graves, Keith Lindvig, and Arthur Fess.
¶8 In the fall of 2012, nearly six years after originally filing the lawsuit, Guarantee took the
discovery depositions of Mr. Kribbs, Mr. Fess, and Mr. Lindvig. Mr. Kribbs testified that he and
Mr. Lindvig were both working for Guarantee—Mr. Kribbs as an insurance agent and Mr.
Lindvig as a sales manager—when they were approached by vice president Larry Graves about
forming Somerset. Mr. Kribbs stated that Mr. Graves explained how Mr. Kribbs could request
“dividends” from the custodial account. During discovery, Mr. Kribbs produced copies of letters
signed by both Mr. Graves and Guarantee’s senior vice president of finance, Arthur Fess,
instructing the bank to disburse funds from the custodial account directly to Mr. Kribbs.
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¶9 Mr. Fess was also deposed and described how Mr. Graves prepared the letters and
supporting documentation for Mr. Fess’s signature.
¶ 10 Mr. Lindvig, who was at the time of his deposition the national sales manager for
Guarantee’s credit life division, testified that, at Mr. Graves’s direction, it was he who initially
approached Mr. Kribbs regarding forming a reinsurance company. Mr. Lindvig confirmed that,
as the line-of-business manager, Mr. Graves was the one who reviewed quarterly statements to
determine if sufficient excess was available in the custodial account to make a distribution. Mr.
Lindvig also disclosed during his deposition that he had been receiving commissions from Mr.
Kribbs “for many, many years back and forth.”
¶ 11 B. The Re-Filed Action
¶ 12 On October 2, 2012, the circuit court granted Guarantee’s request for a voluntary
dismissal of the 2006 Complaint and, on February 7, 2013, Guarantee re-filed the action, this
time naming both Mr. Kribbs and Mr. Lindvig as defendants and Mr. Graves as a respondent in
discovery.
¶ 13 Guarantee filed a first amended complaint on July 31, 2013, in which it detailed Mr.
Graves’s involvement in the alleged scheme to wrongfully withdraw funds from the custodial
account. On October 16, 2013, the circuit court granted Guarantee’s motion to convert Mr.
Graves from a respondent in discovery to a party defendant.
¶ 14 On January 6, 2014, Mr. Graves moved to dismiss the first amended complaint against
him pursuant to sections 2-615 and 2-619 of the Code of Civil Procedure (Code) (see 735 ILCS
5/2-615, 2-619 (West 2012)), a motion that was later joined by Mr. Lindvig. The two argued that
each of Guarantee’s claims against them was barred by the five-year limitations period set out in
section 13-205 of the Code (735 ILCS 5/13-205 (West 2006)), which they contended began to
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run when Guarantee first learned of its injury, something that could have happened no later than
the filing of the 2006 Complaint.
¶ 15 In response, Guarantee argued that its awareness of one cause of its injury—wrongdoing
by Mr. Kribbs—did not trigger the statute of limitations for claims based on other causes—i.e.,
wrongdoing by Mr. Graves and Mr. Lindvig—that it did not and could not have discovered
sooner. Guarantee additionally argued that its claims were tolled because it alleged that Mr.
Graves and Mr. Lindvig were fiduciaries as a matter of law who not only failed to disclose their
involvement in the scheme, as they were bound to do, but engaged in acts of fraudulent
concealment preventing Guarantee from discovering that it had claims against them. Attached to
the motion to dismiss was the affidavit of Guarantee’s general counsel, Robert Baluk, who stated
that, before the deposition of Mr. Lindvig, no one at Guarantee besides Mr. Graves and Mr.
Lindvig “had any knowledge that the defendant Lindvig was involved or received money from
defendant Kribbs in connection with the facts alleged in the complaint.” According to Mr. Baluk,
it was only “after reviewing the deposition transcript of Kribbs” that he “began suspecting that
Larry Graves may also have been involved in and received financial benefit from the scheme
described in the Complaint.”
¶ 16 On March 27, 2014, the circuit court dismissed each of Guarantee’s claims against Mr.
Graves and Mr. Lindvig. The court concluded that Guarantee could have discovered that it had
claims against these defendants within the statutory period for bringing those claims because
Guarantee already knew that one of its own employees was involved in the alleged scheme,
received information as to persons with knowledge who worked at Guarantee in early 2008 as a
part of interrogatory responses provided by Mr. Kribbs, and chose to wait six years after filing its
lawsuit to take any depositions. The court likewise rejected both the notion that Guarantee’s
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conclusory allegations of fraudulent concealment were sufficient to toll the claims against Mr.
Graves and Mr. Lindvig and Guarantee’s argument that the two were fiduciaries who
fraudulently concealed information simply by remaining silent. According to the court, there was
“no factual support” for the existence of a fiduciary relationship and the fiduciary exception did
not apply.
¶ 17 Guarantee moved for reconsideration of the dismissal, arguing that Mr. Graves and Mr.
Lindvig were fiduciaries as a matter of law because Mr. Graves was employed as a vice
president of Guarantee and Mr. Lindvig was an insurance producer who was alleged to have
misappropriated insurance premiums it received from Guarantee. Guarantee insisted that its
allegations of fraudulent concealment should be taken as true for purposes of the section 2-619
motion and that what it knew about the involvement of these two individuals during the
limitations period was a question of fact for the jury.
¶ 18 On July 2, 2014, the circuit court denied the motion for reconsideration, finding that
Guarantee had failed to present any new evidence, changes in the law, or errors in the court’s
application of the law. The court reiterated its view that, “in order for the statute of limitations to
be extended under [the fraudulent concealment statute], the cause of action must have been
concealed, not the identity of the tortfeasor.”
¶ 19 JURISDICTION
¶ 20 On February 10, 2016, after two unsuccessful attempts by Guarantee to bring this appeal
which failed because there was no proper order made pursuant to Illinois Supreme Court Rule
304(a) (eff. Feb. 26, 2010), the following order was issued:
“IT IS HEREBY ORDERED that the Court finds that its
March 27, 2014 order dismissing Keith Lindvig and Larry Graves
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is final and appealable and that there is no just cause for delaying
either enforcement or appeal of the March 27, 2014 order.”
This appeal was then timely filed on March 8, 2016.
¶ 21 Rule 304 states that the finding necessary to confer appellate jurisdiction over a final
order disposing of some but not all of the claims in a case “may be made at the time of the entry
of the judgment or thereafter on the court’s own motion or on motion of any party.” Ill. S. Ct. R.
304(a) (eff. Feb. 26, 2010). Accordingly, the circuit court’s order of February 10, 2016, properly
conferred appellate jurisdiction over this matter.
¶ 22 ANALYSIS
¶ 23 On appeal, Guarantee challenges the circuit court’s March 27, 2014, order dismissing as
time-barred the claims against Mr. Graves and Mr. Lindvig asserted in Guarantee’s first
amended complaint. With the exception of equitable arguments raised by Guarantee in the
alternative, which are addressed later in this opinion, the parties agree that the relevant
limitations period is the five-year period set out in section 13-205 of the Code for conversion and
“all civil actions not otherwise provided for.” 735 ILCS 5/13-205 (West 2006). The parties
disagree as to when the limitations period began to run.
¶ 24 Mr. Graves and Mr. Lindvig contend that the statute of limitations was triggered no later
than the filing of Guarantee’s 2006 Complaint—in which Guarantee specifically alleged that the
scheme could not have been carried out without the assistance of one of its own employees—and
expired on December 13, 2011, more than a year before Guarantee took any legal action against
Mr. Graves or Mr. Lindvig.
¶ 25 Guarantee, on the other hand, relies on caselaw applying the discovery rule and section
13-215 of the Code governing fraudulent concealment (735 ILCS 5/13-215 (West 2012)) to
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argue that its claims against Mr. Graves and Mr. Lindvig did not accrue until September 26,
2012, when it first learned that Mr. Kribbs was paying kickbacks to Mr. Lindvig, a revelation
that Guarantee claims first caused it to become suspicious of Mr. Graves. Guarantee contends
that it was not required to allege affirmative acts of fraudulent concealment or establish that it
acted diligently in discovering its causes of action against Mr. Graves and Mr. Lindvig because
these defendants were fiduciaries. Guarantee further argues that principles of equitable tolling
and estoppel prevent application of the statute of limitations in this case.
¶ 26 In response, Mr. Graves and Mr. Lindvig contend that Guarantee’s conclusory allegations
were insufficient to establish fraudulent concealment. They further insist that Guarantee could
not, as a matter of law, establish fraudulent concealment beyond the filing of its initial complaint
on December 12, 2006, because that complaint demonstrated on its face that Guarantee knew
that one or more of its own employees was involved in the alleged scheme. Mr. Graves and Mr.
Lindvig further argue that Guarantee forfeited its arguments based on equitable principles by
failing to raise them in the circuit court and that, even if it did not, those arguments lack merit.
¶ 27 A motion to dismiss filed pursuant to section 2-619 of the Code “admits the legal
sufficiency of a plaintiff’s complaint but raises defects, defenses, or other affirmative matters
that appear on the complaint’s face or that are established by external submissions acting to
defeat the complaint’s allegations.” Burton v. Airborne Express, Inc., 367 Ill. App. 3d 1026,
1029 (2006). One such defense is “[t]hat the action was not commenced within the time limited
by law.” 735 ILCS 5/2-619(a)(5) (West 2012). Although “[t]he point at which [an] injured
person becomes possessed of sufficient information concerning his injury and its cause to trigger
the running of the limitations period is usually a question of fact,” it becomes an issue of law
where “the facts are undisputed and only one conclusion may be drawn from them.” Janetis v.
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Christensen, 200 Ill. App. 3d 581, 586 (1990). A motion made pursuant to section 2-619 should
be granted where “a plaintiff’s claim can be defeated as a matter of law or on the basis of easily
proven issues of fact.” Gadson v. Among Friends Adult Day Care, Inc., 2015 IL App (1st)
141967, ¶ 14. We review a circuit court’s ruling on a section 2-619 motion de novo. Freeman v.
Williamson, 383 Ill. App. 3d 933, 936 (2008).
¶ 28 A. The Discovery Rule
¶ 29 At common law, the discovery rule postpones the starting of the statute of limitations
until the injured party knows or should have known of his injury. Knox College v. Celotex Corp.,
88 Ill. 2d 407, 414 (1981). The purpose of the rule is to “ameliorate the potentially harsh effect
of a mechanical application of the statute of limitations that would result in it expiring before a
plaintiff even knows of his cause of action.” Henderson Square Condominium Ass’n v. LAB
Townhomes, LLC, 2015 IL 118139, ¶ 52. Pursuant to the rule, “the event which triggers the
running of the statutory period is n[either] the first knowledge the injured person has of his
injury” nor “at the other extreme *** the acquisition of knowledge that one has a cause of action
against another for an injury he has suffered.” Knox College, 88 Ill. 2d at 415. Instead, “the
statute starts to run when a person knows or reasonably should know of his injury and also
knows or reasonably should know that it was wrongfully caused.” Id. (citing Witherell v.
Weimer, 85 Ill. 2d 146, 156 (1981)). As our supreme court has noted, “[a]t some point the injured
person becomes possessed of sufficient information concerning his injury and its cause to put a
reasonable person on inquiry to determine whether actionable conduct is involved. At that point,
under the discovery rule, the running of the limitations period commences.” Id. at 416.
¶ 30 Guarantee overstates the discovery rule when it suggests that “the identity of the party
who caused [the plaintiff’s] injury is a prerequisite to the commencement of the running of the
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statute of limitations.” (Internal quotation marks omitted.) This proposition has been repeatedly
rejected by our courts. See, e.g., McCormick v. Uppuluri, 250 Ill. App. 3d 386, 390 (1993)
(rejecting the notion that the plaintiff’s ignorance of a doctor’s role in his injury tolled the
running of the limitations period where the doctor was identified in the plaintiff’s medical
records and “[a]ny reasonable discovery attempts should have included ascertaining [the
doctor]’s involvement”); Guebard v. Jabaay, 65 Ill. App. 3d 255, 257-59 (1978) (holding the
limitations period commenced when the plaintiff knew her injury was caused by an improperly
performed operation, not when the plaintiff discovered the identity of the doctor who performed
the operation).
¶ 31 Guarantee relies on a refinement of the discovery rule expressed in Mitsias v. I-Flow
Corp., 2011 IL App (1st) 101126, which held that the statute of limitations is tolled when the
alleged injury is the result of multiple causes but the plaintiff has only discovered one of the
causes. In Mitsias, the plaintiff sued her doctor for injuries she suffered as a result of surgery that
he performed on her shoulder. Id. ¶ 2. Several years later, the plaintiff’s expert testified at his
discovery deposition that new medical literature published after the plaintiff filed her case
suggested a link between the plaintiff’s condition and the use of continuous infusion devices
known as “pain pumps.” Id. The plaintiff voluntarily dismissed the case and re-filed it against
both the doctor and the manufacturers of the pain pump used in her surgery. Id. ¶ 3. The circuit
court dismissed the claims against the manufacturers as untimely but the appellate court reversed
Id. ¶ 4. Noting that the discovery rule “is intended to encourage diligent investigation on the part
of potential plaintiffs without foreclosing claims of which plaintiffs could not have been aware”
(id. ¶ 21), the court held that a statute of limitations is tolled “when a plaintiff is aware that her
injury might have been wrongfully caused by one source but is unaware that [it] might have been
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caused by another source and, in fact, could not be aware of that source because the causal link
was as yet unknown to science” (id. ¶¶ 19, 43).
¶ 32 For the first time in its reply brief Guarantee also argues that, because it alleged Mr.
Graves and Mr. Lindvig breached their fiduciary duties, it is “entitled to restitution from Graves
and Lindvig independent of the injury caused by the misappropriation of funds,” i.e., forfeiture
of the salaries these defendants received from Guarantee for the period during which they
breached their fiduciary duties. Guarantee makes no mention of this remedy in its amended
complaint. In any event, we disagree that the existence of such a remedy, which is based on the
same breaches of fiduciary duty alleged in the 2006 Complaint, constitutes a separate and
unknowable cause of Guarantee’s injury like the one at issue in Mitsias.
¶ 33 Even in the absence of such a remedy, Guarantee maintains that Mitsias applies because
the wrongful conduct of Mr. Graves and Mr. Lindvig in this case constituted a separate source of
Guarantee’s injuries; a source that Guarantee was not aware of when it filed its initial complaint
against Mr. Kribbs. We assume that the identity of a new defendant—as opposed to the existence
of a different causal mechanism as in Mitsias—could in some instances be considered a distinct
“source” of a plaintiff’s injury. However, the point the court underscored in Mitsias was that the
plaintiff not only was not aware, but could not have been aware of the second cause of her injury.
Id. ¶ 19. Here, by contrast, Guarantee knew when it filed its 2006 Complaint that one of its own
employees was involved in the wrongdoing that it alleged caused its injuries and was provided in
2008 with discovery responses disclosing a short list of potential witnesses that included Mr.
Graves and Mr. Lindvig. Guarantee has provided no reason why it could not have discovered its
claims against Mr. Graves and Mr. Lindvig sooner through “reasonable diligence.” Id. at ¶ 43.
Thus, even assuming that Mitsias applies to situations involving undiscoverable defendants, as
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well as to undiscoverable causal mechanisms, the holding in Mitsias is of no assistance to
Guarantee in this case.
¶ 34 B. Fraudulent Concealment
¶ 35 Guarantee next argues that, pursuant to section 13-215 of the Code (735 ILCS 5/13-215
(West 2012)), its claims against Mr. Graves and Mr. Lindvig are tolled by fraudulent
concealment. That section applies if “a plaintiff pleads and proves that fraud prevented discovery
of the cause of action.” DeLuna v. Burciaga, 223 Ill. 2d 49, 76 (2006). Mr. Graves and Mr.
Lindvig note that “Illinois courts have consistently interpreted section 13-215 to apply only to
fraudulent concealment of causes of action” and not to the identity of a defendant. Levine v. EBI,
LLC, 2013 IL App (1st) 121049, ¶ 21; see also Pratt v. Sears Roebuck & Co., 71 Ill. App. 3d
825, 830 (1979) (noting that the predecessor section “applie[d] to fraudulent concealment of
causes of action; it d[id] not apply to fraudulent concealment of the identity of tort-feasors”);
Guebard, 65 Ill. App. 3d at 260 (“ ‘[u]nder the Limitations Act, the only concealment which
postpones the running of the statute of limitations is fraudulent concealment by the defendant of
the cause of action[;] *** [c]oncealment of the identity of a party liable is not deemed the
same’ ”) (quoting 25 Ill. L. & Prac. Limitations s 92 (1956)). Guarantee would apparently have
us create an exception to this rule, perhaps by reading Mitsias in conjunction with section 13-
215. However, we need not entertain this suggestion because Guarantee failed to adequately
allege even that Mr. Graves’s and Mr. Lindvig’s identities, much less its claims against them,
were fraudulently concealed from Guarantee.
¶ 36 Generally, affirmative acts of fraud must be alleged to support allegations of fraudulent
concealment. Hagney v. Lopeman, 147 Ill. 2d 458, 462 (1992). Here, Guarantee alleged in its
most recent complaint that “[Mr. Lindvig] and upon information and belief [Mr. Graves],
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provided false information to [Guarantee]’s senior management and accountants to facilitate the
release of the monies” from the custodial account and “assured [Guarantee]’s management that
the transfers of monies directly to [Mr. Kribbs] were appropriate and that the distributions would
not jeopardize Somerset’s ability to reinsure claims.” Guarantee further alleged that it “was
prevented from learning of the actions of [Mr. Kribbs], [Mr. Lindvig] and [Mr. Graves] because
[Mr. Kribbs], [Mr. Lindvig] and upon information and belief [Mr. Graves], falsified and
destroyed documentation and repeatedly assured [Guarantee] that their actions were proper.”
These allegations are unsupported by details regarding any specific false statements made by
defendants or examples of documents that were falsified or destroyed. Lacking factual support,
such conclusory statements are not taken as true in connection with a 2-619 motion to dismiss.
Buckner v. O’Brien, 287 Ill. App. 3d 173, 176 (1997).
¶ 37 Guarantee asserts, however, that it need not allege specific acts of fraud where it has
established that Mr. Graves and Mr. Lindvig were fiduciaries who owed Guarantee a duty of
candor. Our supreme court has held that a fiduciary enjoying the trust and confidence of another
is under a duty to reveal material facts to his principal “and that his silence when he ought to
speak, or his failure to disclose what he ought to disclose, is as much a fraud at law as an actual
affirmative false representation or act.” Chicago Park District v. Kenroy, Inc., 78 Ill. 2d 555,
560-61 (1980). A fiduciary relationship may arise as a matter of fact, “where one party reposes
special trust and confidence and thereby gains superiority and influence over the subservient
party.” (Internal quotation marks omitted.) Khan v. BDO Seidman, LLP, 408 Ill. App. 3d 564,
585 (2011). A fiduciary relationship may also arise as a matter of law, such as between a
securities broker and his customer (id. at 592) or a lawyer and his client (In re Imming, 131 Ill.
2d 239, 252-53 (1989)).
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¶ 38 Guarantee contends that the circuit court erroneously faulted it for failing to allege facts
establishing a fiduciary relationship when the relationship it relied on was one arising as a matter
of law between an employer and its employees. As an initial matter, it is not clear from
Guarantee’s allegations exactly when Mr. Graves and Mr. Lindvig were employed by Guarantee.
The allegations merely state that “[Mr. Graves] was formerly employed by [Guarantee] as a Vice
President” and “[Mr. Graves] hired [Mr. Lindvig] to work at [Guarantee] as a sales manager.”
Moreover, the caselaw suggests that employees owe duties of fidelity and loyalty to their
employers; not necessarily a duty of candor. See, e.g., Corroon & Black of Illinois, Inc. v.
Magner, 145 Ill. App. 3d 151, 160 (1986) (“While acting as an agent or employee of another,
one owes the duty of fidelity and loyalty. Accordingly, a fiduciary cannot act inconsistently with
his agency or trust; for example, an employee cannot solicit his employer’s customers for
himself.”).
¶ 39 But there is a more significant problem with Gaurantee’s argument. Even if we were to
accept as true that, at all relevant times, Mr. Graves and Mr. Lindvig were fiduciaries who owed
Guarantee a duty of candor and that this duty, together with their failure to come forward and
admit involvement in the alleged scheme, established the affirmative acts of fraud necessary for
fraudulent concealment, Guarantee has failed to show any causal connection between that breach
and Guarantee’s failure to discover the alleged fraud. For fraudulent concealment to apply, a
plaintiff must include allegations that “ ‘attribute the failure to discover to the trust and
confidence placed in the fiduciary.’ ” Kheirkhahvash v. Baniassadi, 407 Ill. App. 3d 171, 180-81
(2011) (quoting Hagney, 147 Ill. 2d at 464). This is an “essential element” that our supreme
court has held “must be alleged in [the] plaintiff’s pleadings.” Hagney, 147 Ill. 2d at 464.
¶ 40 The closest Guarantee comes to establishing such a causal connection is its assertion on
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appeal that it was not until Mr. Lindvig’s deposition in 2012 that Guarantee first learned that Mr.
Lindvig (and likely Mr. Graves as well) had accepted kickback payments in exchange for his
participation in the alleged scheme. Guarantee insists that, by failing to disclose the kickbacks,
Mr. Graves and Mr. Lindvig prevented Guarantee from discovering its claims against them. This
is not a link that is specifically alleged in Guarantee’s amended complaint. Even if it were,
Guarantee has not established how concealment of the alleged kickbacks, which are merely one
detail of the alleged scheme, prevented Guarantee from learning of the scheme itself.
¶ 41 Indeed, any causal connection between the silence of Mr. Graves or Mr. Lindvig and
Guarantee’s failure to timely assert its claims against them is simply incompatible with
Guarantee’s primary allegations. Guarantee alleged in the 2006 Complaint both that improper
withdrawals were depleting the custodial account established in connection with the reinsurance
agreement with Somerset and that one of Guarantee’s own employees had improperly authorized
the withdrawals. Silence by a fiduciary does not relieve a plaintiff from acting on knowledge that
it already possesses. As the court made clear in Melko v. Dionisio, 219 Ill. App. 3d 1048, 1062
(1991), “although the existence of a fiduciary relationship may excuse a plaintiff's failure to
investigate diligently to ascertain facts that would put her on notice of possible injury, there is
plainly a difference between the failure to ascertain facts through diligent inquiry and the failure
to act upon facts of which the plaintiff already has actual knowledge.” (Emphasis in original.)
¶ 42 Guarantee’s reliance on Ostendorf v. International Harvester Co., 89 Ill. 2d 273 (1982),
for the proposition that Guarantee’s failure to investigate its claims is somehow excused because
of the conduct of Mr. Graves and Mr. Lindvig during discovery is also misplaced. In Ostendorf,
the plaintiff was injured while operating a tractor and brought a products liability suit against the
manufacturer. Id. at 278. When asked in written discovery requests if certain tests had been
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conducted on the product in question or if the defendant’s employees had ever stated certain
opinions, the defendant responded, respectively, that “[d]etailed records concerning specific tests
[we]re no longer available” and “[n]ot to our knowledge.” Id. at 280-81. The jury found in favor
of the defendant and, several years later, the plaintiff filed a petition to set aside the judgment. Id.
at 278. The filing was not made within the two-year time limitation for such petitions but the
plaintiff argued that evidence not considered at trial had been fraudulently concealed from him.
Id. at 278, 281. The plaintiff attached responsive internal documents of the defendant’s which
were obtained by the plaintiff’s counsel during his representation of another client in similar
litigation. Id. at 281. Upon reviewing these documents, our supreme court concluded that the
defendant’s discovery responses were “if not outright falsehoods, half-truths *** hav[ing] the
effect of affirmative concealment, since they impl[ied] that there [wa]s no information or
evidence to be sought.” Id. at 282.
¶ 43 Ostendorf is distinguishable because Guarantee points to no discovery responses in this
case that were deceptive or misleading. When asked in 2008 who had knowledge of the
transactions at issue, Mr. Kribbs provided a list of individuals that included both Mr. Graves and
Mr. Lindvig and, in the fall of 2012 when Mr. Lindvig was deposed, he was asked and confirmed
that he had long received payments directly from Mr. Kribbs. Guarantee’s observation that “it
was only after the limitation periods against Lindvig & Graves expired that they came forward
and admitted that they had personally benefitted and had personally participated in the
misappropriations” is no doubt true. It is equally true, however, that it was not until after the
limitations period had expired that Guarantee—long possessing both the knowledge that one or
more of its own employees was involved in the scheme and a short list of witnesses that included
both Mr. Graves and Mr. Lindvig—bothered to depose either of these individuals regarding their
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involvement. There was no fraudulent concealment during discovery in this case that tolled the
statute of limitations.
¶ 44 C. Equitable Arguments
¶ 45 Guarantee makes three additional arguments based on equitable principals, contending
that (1) the statute of limitations is a purely legal defense that does not apply to actions in equity,
(2) Mr. Graves and Mr. Lindvig should be equitably estopped from deriving any benefit from
their fraud, and (3) equitable tolling applies because Mr. Graves and Mr. Lindvig caused an
“extraordinary barrier” to bar Guarantee’s assertion of its right. We agree with Mr. Graves and
Mr. Lindvig that Guarantee forfeited these arguments by failing to raise them in the circuit court
(see Helping Others Maintain Environmental Standards v. Bos, 406 Ill. App. 3d 669, 695 (2010)
(“a party who does not raise an issue in the trial court forfeits the issue and may not raise it for
the first time on appeal”)), an argument that Guarantee declined to address in its reply brief.
¶ 46 Forfeiture aside, Guarantee’s equitable arguments also lack merit. It is generally true that
statutes of limitation apply to actions at law and the doctrine of laches applies to actions in
equity. Sundance Homes, Inc. v. County of DuPage, 195 Ill. 2d 257, 270 (2001). However, the
relief Guarantee sought in connection with each of its claims was a money judgment, which is
legal in nature, not equitable. See In re Estate of O’Donnell, 8 Ill. App. 2d 348, 352 (1956)
(where relief sought was a money judgment, the action was one at law; the fact that the claim
was asserted against a trustee for a breach of trust “d[id] not convert the claim into a suit in
equity”), abrogated on other grounds as recognized in Prodromos v. Everen Securities, Inc., 389
Ill. App. 3d 157, 174 (2009).
¶ 47 Moreover, to invoke the doctrine of equitable estoppel, a “plaintiff must have relied on
acts or representations of the defendant which caused the plaintiff to refrain from filing suit
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within the applicable statute of limitations.” (Internal quotation marks omitted.) Kherkhahvash,
407 Ill. App. 3d at 182. The doctrine does not apply, however, “if [the] defendant’s conduct
terminated within ample time to allow the plaintiff an opportunity to file a cause of action within
the limitation period.” Id. Here, Guarantee fails to allege anything Mr. Graves and Mr. Lindvig
said or did after the filing of the 2006 Complaint that could reasonably have been relied on by
Guarantee as a basis for not investigating their involvement in the alleged scheme.
¶ 48 Equitable tolling is likewise inapplicable. A limitations period may be equitably tolled
where “extraordinary barriers” prevent the plaintiff from asserting its rights in a timely fashion,
such as “legal disability, an irredeemable lack of information, or situations where the plaintiff
could not learn the identity of proper defendants through the exercise of due diligence.” Thede v.
Kapsas, 386 Ill. App. 3d 396, 403 (2008). Guarantee provides no reason that it could not have
learned about the involvement in the alleged scheme of Mr. Graves and Mr. Lindvig within the
five-year limitations period. Far from suffering from an “irredeemable lack of information,”
Guarantee knew that one of its own employees approved the withdrawals from the custodial
account as early as December 2006 when it filed its initial complaint. Mr. Kribbs then disclosed
to Guarantee during discovery in early 2008 a short list of individuals with knowledge of the
transactions described in the complaint. And yet Guarantee elected not to depose any witnesses
until the fall of 2012. The record indicates that the only thing preventing Guarantee from sooner
discovering the purportedly revelatory information it learned in those depositions was its own
lack of diligence. Under these circumstances, Guarantee’s equitable arguments must fail.
¶ 49 CONCLUSION
¶ 50 For the foregoing reasons, we affirm the judgment of the circuit court.
¶ 51 Affirmed.
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