Legacy Crossing, L.L.C. v. Travis Wolff & Co.

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES CO URT O F APPEALS
April 9, 2007
TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court
LEGACY CROSSIN G, L.L.C.,
Plaintiff - Appellant,
No. 06-6210
v. (D.C. No. 05-CV -455-L)
(W .D. Okla.)
TR AV IS WO L FF & C O MPA N Y,
L.L.P.,
Defendant - Appellee.
OR D ER AND JUDGM ENT *
Before KELLY, EBEL, Circuit Judges and M URGUIA, ** District Judge.
In this diversity action, Plaintiff-Appellant Legacy Crossing, LLC (“Legacy
Crossing”) appeals from the district court’s grant of summary judgment in favor
of Defendant-Appellee Travis W olff & Company, LLP (“TW C”). The district
court held that Legacy Crossing’s state law claims against TW C for fraud,
negligence/professional malpractice, and violation of the Oklahoma Consumer
Protection Act were barred as untimely under the applicable Oklahoma statute of
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
**
The Honorable Carlos M urguia, District Judge, United States District
Court for the District of Kansas, sitting by designation.
limitations. The district court also declined Legacy Crossing’s invitation to toll
the statute of limitations. O ur jurisdiction arises under 28 U.S.C. § 1291, and we
affirm.
Background
Legacy Crossing is the owner and operator of an apartment complex in
Oklahoma City. As an LLC, it is organized under the law s of Oklahoma with its
principal place of business in Oklahoma. TW C is an accounting and financial
advisory firm organized under the laws of Texas with a principal place of
business in Dallas, Texas.
Construction of Legacy Crossing’s apartment complex began in February
2000, and was completed in August 2001. Legacy Crossing employed Barry,
Bette & Led Duke, Inc. (“BB& L”) as the contractor on the project. In
conjunction with construction, Legacy Crossing obtained a commitment from the
United States D epartment of Housing and Urban Development (“HUD”) to
guarantee a construction loan for the project. One requirement of that
comm itment was that Legacy Crossing and BB& L enter into a form contract that
required BB& L to furnish a “Contractor’s Certificate of Actual Cost” before
BB& L could receive final payment. BB& L was further required to furnish a
report from an independent public accountant that BB& L’s certification of the
actual costs was true and accurate. On February 9, 2000, Legacy Crossing and
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BB& L entered into a construction contract.
BB& L thereafter hired TW C to conduct an independent audit, and on
February 18, 2002, TW C submitted a final revised report to HUD certifying that
the Contractor’s Actual Cost of Construction submitted by BB& L was correct.
Legacy Crossing also received a copy of the report at that time. Legacy Crossing
was nonetheless unhappy with, and questioned, the amount charged for “General
Requirements” 1 expenses. At $1.952 million, the amount charged for general
requirements was nearly $900,000 above prior estimates. Consequently, Legacy
Crossing disputed the general requirement charges and requested supporting
documentation from BB& L regarding the amount of overhead.
On M arch 6, 2002, BB& L attempted to respond to Legacy Crossing’s
concerns by sending it a letter enclosing a copy of an auditor’s worksheet
showing items of expense by trade, a letter to TW C explaining BB& L’s reasons
for several variances from the original HUD budget, and a copy of a detailed
computer report showing expenses by line item. Legacy Crossing deemed
BB& L’s letter unresponsive. Legacy Crossing expressed its displeasure with the
amount of the general requirements expenses to HUD representatives, who found
nothing improper about TW C’s report. Despite Legacy Crossing’s dissatisfaction,
on M arch 14, 2002, it went forward with the HUD closing because it believed that
1
The account for general requirements expenses represents general items
of overhead that BB& L charged to the project.
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further delays would harm the construction project.
Instead of holding up the construction project, Legacy Crossing refused to
pay an identity of interest fee 2 to BB& L. In response, BB& L filed suit against
Legacy Crossing in federal court alleging that Legacy Crossing had breached
several agreements it had entered into w ith BB& L. Legacy Crossing then cross-
claimed for breach of contract and “[a]ccounting, [r]estitution, and [d]amages.”
In its cross-complaint, filed M ay 16, 2002, Legacy Crossing alleged:
34. Legacy Crossing believes that some portion of the
“General Requirement” charges that were paid to Plaintiff included
charges for general overhead expenses that were not directly connected
to the construction of the project. Legacy Crossing previously
requested that Plaintiff provide supporting documentation for such
charges to resolve the issue, but Plaintiff refused the request.
35. Legacy Crossing is entitled to an equitable accounting to
determine whether such costs were proper and/or directly connected to
Plaintiff’s construction of the apartment complex.
Aplt. App. at 183. In apprising the owners of Legacy Crossing about the
litigation, M ike Henderson, M anaging Partner of Legacy Crossing, wrote in M ay
2002:
[BB& L] ha[s] been paid approximately one-half of their profit as
2
Legacy Crossing and BB& L entered into an Identity of Interest
Agreement whereby Legacy Crossing would pay a preestablished fee in set
increments when BB& L met certain construction thresholds. Under the
Agreement, BB& L was also entitled to a 25% share of the difference between the
actual cost of construction and $19,267,000 (assuming the cost of the project
came in below $19,267,000). Finally, any amount owed to BB& L would be
reduced by $750 per day for each building that was not completed by a specified
deadline.
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called for in the Identity of Interest A greement. We are now in
litigation over the balance of this profit. W e have refused to pay this
additional profit as called for in the Identity of Interest Agreement
until we get a proper accounting of w hy the general conditions cost
ended up being so high. It is my suspicion that their cost certifier
[(TW C )] included the general overhead, as allowed by HUD
regulations, in the general conditions. Then when the report was
initially sent to HUD and HUD noted that there was no general
overhead requested in the cost certification BB& L then redid the cost
certification adding general overhead back in and redoing the cost
certification which HUD allowed. W hen I questioned HUD on this re-
certification they said they did not want to make waves because the
contractor had done a good job of construction. W hile I agree that
they did a good job of construction they should not ask us to pay costs
twice. As part of our defense on [sic] this litigation we are counter
claiming that some of the buildings were completed late and that we
can invoke a penalty clause in the Identity of Interest Agreement. W e
had not intended to invoke this clause until these double-charging
suspicions arose.
Id. at 146.
On November 27, 2002, Legacy Crossing responded to interrogatories from
BB& L. In response to BB& L’s request for the identities of all persons having
discoverable information, Legacy Crossing provided the name of Ed W olff, of
TW C, as someone who would have information about “[f]acts relating to certified
costs.” Id. at 221-22. M oreover, interrogatory 13 was asked and answ ered, in
relevant part, as follow s:
INTERRO G ATO RY NO . 13: Describe in detail w hy the audit
relating to the Construction Project performed by [TW C] is not a
sufficient accounting so that you are demanding in your counterclaim
an equitable accounting from [BB& L].
ANSW ER: . . . Legacy Crossing believes that some portion of the
“General Requirement” charges that were paid to [BB& L] included
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charges for general overhead expenses that were not directly connected
to the construction of the project. . . . Legacy Crossing is entitled to an
equitable accounting to determine whether such costs were proper
and/or directly connected to Plaintiff’s construction of the apartment
complex. In the event such charges were not appropriate, Legacy
Crossing is entitled to restitution or damages for all of such over
payments.
Id. at 227-28.
M r. H enderson admits that, on D ecember 20, 2002, counsel for BB& L
delivered some documents to counsel for Legacy Crossing. Those documents
included TW C work papers underlying its audit of the Legacy Crossing project;
counsel for BB& L so informed counsel for Legacy Crossing. M r. Henderson
contends in his affidavit, however, that “until the deposition [of two TW C
employees on April 3, 2003], Legacy Crossing did not know that no other work
papers existed.” Id. at 524 (emphasis added). Nonetheless, by January 2, 2003
Legacy Crossing had hired Harry J. Potter as an expert witness to opine on the
propriety of TW C’s audit. See id. at 251. In a later response to a motion in
limine, Legacy Crossing specifically stated that it had hired M r. Potter “to address
. . . the deficiencies of an audit conducted by [TW C] . . . .” Id. at 257. And
lastly, in deposition testimony, M r. Potter admitted that “if you gave me this audit
and access to people in mid-February and say, ‘Can you find out in a week? . . .
‘Can you arrive at your opinion whether this is a good audit or not,’ I could do it.
So I guess it’s possible.” Id. at 582.
On November 12, 2003, the lawsuit involving BB& L and Legacy Crossing
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was settled, and the parties dismissed their claims with prejudice. Legacy
Crossing thereafter filed the present law suit against TW C on M arch 30, 2005 in
Oklahoma state court. On April 22, 2005, TW C removed the case to the federal
district court based on diversity of citizenship. See 28 U.S.C. § 1332. In its
original complaint, Legacy Crossing pressed claims for fraud and
negligence/professional malpractice. On June 16, 2005, Legacy Crossing filed an
amended complaint, adding a cause of action against TW C for alleged violation of
the Oklahoma Consumer Protection Act (OCPA). On September 19, 2005, TW C
filed a motion for summary judgment, arguing that all of Legacy Crossing’s
claims were barred by the applicable statute of limitations and also that Legacy
Crossing’s claims were barred under the doctrine of claim preclusion. TW C also
simultaneously filed a motion to dismiss, arguing that Legacy Crossing’s OCPA
claim should be dismissed because Legacy Crossing’s allegations as to that claim
did not satisfy the pleading requirements of Fed. R. Civ. P. 8(a), the OCPA does
not apply to professional services or non-customers, and the claim was barred by
the applicable statute of limitations.
As mentioned, the district court granted TW C’s motion for summary
judgment on the grounds that Legacy Crossing’s claims w ere not brought within
the requisite statute of limitations. In so doing, it applied the discovery rule for
determining when the statute of limitations began to run and determined that
Legacy Crossing had the means of discovering or suspecting fraud and negligence
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on TW C’s part no later than December 2002. The district court declined to apply
the doctrine of fraudulent concealment to toll the statute of limitations. Finally, it
held that the statute of limitations period for bringing Legacy Crossing’s OCPA
claim began to run on February 15, 2002 and that fraudulent concealment
similarly did not toll that period. As a result of its granting TW C’s motion for
summary judgment on statute of limitations grounds, the district court did not
address the parties’ arguments regarding claim preclusion, and it denied TW C’s
motion to dismiss as moot.
On appeal, Legacy Crossing contends that summary judgment should not
have been granted in TW C’s favor because there is a genuine issue of material
fact as to when Legacy Crossing had the means of discovering the basis for all of
its claims. It also maintains that the district court erred in holding as a matter of
law that Legacy Crossing had adduced insufficient evidence of fraudulent
concealment by TWC.
Discussion
W e review the district court’s grant of summary judgment on statute of
limitations grounds de novo. Cory v. Aztec Steel Bldg., Inc., 468 F.3d 1226,
1233 (10th Cir. 2006). Summary judgment may be granted where there exists no
genuine issue of material fact and the moving party is entitled to judgment as a
matter of law. Fed. R. Civ. P. 56(c); Hackworth v. Progressive Cas. Ins. Co., 468
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F.3d 722, 725 (10th Cir. 2006). In the statute of limitations context, the initial
burden is on the moving party to demonstrate that there is no genuine issue of
material fact as to the running of the statute of limitations. See Tiberi v. Cigna
Corp., 89 F.3d 1423, 1428 (10th Cir. 1996). If that initial burden is met, it then
becomes the non-moving party’s “burden of proving the existence of facts which,
if proven true, would warrant a tolling of the statute[] of limitation[s].” Id.Because our jurisdiction in this case is premised upon diversity of
citizenship, we apply the familiar rule of Erie Railroad Co. v. Tompkins, 304 U.S.
64 (1938), and look to Oklahoma law to resolve whether claims are barred by the
statute of limitations, see Guaranty Trust v. York, 326 U.S. 99, 110 (1945)
(holding that statutes of limitations are considered substantive matters for
purposes of the Erie doctrine). In so doing, we are “required to apply the most
recent statement of applicable substantive state law as pronounced by
[Oklahoma’s] highest court.” M urphy Oil USA , Inc. v. W ood, 438 F.3d 1008,
1012 (10th Cir. 2006). Even if Oklahoma courts have not squarely addressed the
very question we confront, “we can anticipate the reaction of the [Oklahoma]
courts by the principles of [O klahoma] case law.” Sawtell v. E.I. Du Pont De
Nemours & Co., 22 F.3d 248, 250 (10th Cir. 1994). W e may also look to the
substantive law from other jurisdictions to anticipate w hat the Oklahoma courts
would do if faced with the same predicament. Id.-9-
I. Legacy Crossing’s Fraud Claim
Beginning with Legacy Crossing’s fraud claim, the Oklahoma statute of
limitations provides that “an action for relief on the ground of fraud” shall be
brought within two years “after the cause of action shall have accrued,” but that
“the cause of action in such case shall not be deemed to have accrued until the
discovery of the fraud.” O kla. Stat. tit. 12, § 95(A)(3) (2004); see Sade v. N.
Natural Gas Co., 483 F.2d 230, 235 (10th Cir. 1973). “The phrase ‘Until the
discovery of the fraud,’ does not necessarily mean until the party has actual
notice of the fraud.” W alker v. W alker, 310 P.2d 760, 763 (Okla. 1957). Rather,
“[f]raud is deemed to be discovered . . . when in the exercise of reasonable
diligence it could have been discovered.” Id.; Farmers’ State Bank of Ada v.
Keen, 167 P. 207, 209 (Okla. 1917). In fact, the Oklahoma Supreme Court has
explained:
W here means of discovering fraud are in hands of party defrauded and
defrauding party has not covered up his fraud to extent it would be
difficult or impossible to discover, party defrauded will be deemed to
have had notice of fraud from date means of discovering such fraud
came into his hands and fraud will be deemed to have been discovered
upon that date.
M atter of W oodward, 549 P.2d 1207, 1209 (Okla. 1976).
Exemplary of these principles is the Oklahoma Supreme Court’s decision in
M cCain v. Combined Commc’ns. Corp. of Okla., 975 P.2d 865 (1998). In that
case, two brothers who were terminated from their positions as local television
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anchors sued their former employer in July 1996 for fraud in the inducement of a
contract. Id. at 866. Despite being terminated in M ay 1994, the brothers had
continued to receive pay through September 1994. Id. The brothers alleged in
their lawsuit that their former employer “failed to disclose to them the termination
provisions of the[ir] 1992 [employment] contract and that the oral representations
regarding termination were . . . different from those contained in the contract.”
Id. In order to avoid being barred by the two year statute of limitations, the
brothers argued that the September 1994 stoppage in their pay (as opposed to
their M ay 1994 terminations) was the date upon which accrual of the limitations
period began. Id. at 867. The court rejected that argument, explaining that
“[i]nasmuch as the employees had in their possession . . . copies of all the
relevant documents, they clearly had the means and perhaps should have
discovered the difference between the terms of negotiations and those of the
printed form (or contract).” Id.Based on the foregoing, it is abundantly clear that Legacy Crossing
possessed the means to discover TW C’s alleged fraud, at the latest, on January 2,
2003. As of that date, Legacy Crossing had in its possession a copy of the final
revised audit report sent by TW C to HUD, the underlying audit w orkpapers, a
copy of an auditor’s worksheet showing items of expense by trade, a letter to
TW C explaining B B&L’s reasons for several variances from the original HUD
budget, and a copy of a detailed computer report showing expenses by line item.
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M oreover, Legacy Crossing had also hired an expert in accounting specifically to
analyze the methods and accuracy of TW C’s audit. Consequently, “the means of
discovering fraud” were in Legacy Crossing’s hands no later than that time. 3
M oreover, contrary to Legacy Crossing’s contention, it was not completely
ignorant of its potential claims during the period leading up to January 2, 2003.
In M ay 2002, M r. Henderson explained to Legacy Crossing owners that the
company had suspicions of double-charging, that he suspected that BB& L’s “cost
certifier included the general overhead . . . in the general conditions,” and that
“when . . . HUD noted that there was no general overhead requested in the cost
certification BB& L then redid the cost certification adding general overhead back
in and redoing the cost certification . . . .” Aplt. App. at 146. During litigation
with BB& L, Legacy Crossing stated that it believed “that some portion of the
‘General Requirement’ charges that were paid to [BB& L] included charges for
general overhead expenses that were not directly connected to the construction of
the project.” Id. at 183. And, on November 27, 2002, Legacy Crossing alleged
the same in response to BB& L’s interrogatory 13. See id. at 228. Thus, it is
abundantly clear that Legacy Crossing suspected it had paid expenses unrelated to
3
W e, of course, express no opinion as to whether Legacy Crossing might
have had the means to discover its fraud claim even earlier than January 2, 2003.
Thus, it remains an open possibility that in a future case an Oklahoma claimant
will be deemed to have had the means to discover fraud in the absence of hiring
an expert or possessing all of the audit w orkpapers.
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the construction of its apartment complex, and that TW C had certified those
unrelated expenses, long before January 2, 2003.
In sum, we hold that Legacy Crossing had all the information it needed to
discover TW C’s alleged fraud no later than January 2, 2003. Thus, its fraud
claim filed in this case on M arch 30, 2005 is untimely and barred under the
Oklahoma statute of limitations.
In its attempt to avoid the statute of limitations bar, Legacy Crossing
argues that it could not have possibly discovered TW C’s alleged fraud until April
1, 2003 when it deposed two employees of TW C— Edward A. W olff, Jr. and
David Burton. It contends that the testimony of those two employees revealed
that TW C could not identify how BB& L’s general requirement charges were
confirmed, which methods it used in its sampling, or which items w ere tested to
confirm the general requirement charges. It also claims that it learned during the
depositions that M r. W olff was not familiar with HUD accounting guidelines, the
original records of construction were not used in the audit, and TW C had
previously represented BB& L or its principals in other matters. Thus, Legacy
Crossing maintains that prior to the April 1 depositions it “did not know that
[TW C] had done anything wrong and/or that the [TW C] misconduct was
connected to Legacy Crossing’s dispute with BB& L.” Aplt. Br. at 8. W e
disagree.
W hile all of the new information Legacy Crossing gleaned from the April 1
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depositions might have been useful in proving a fraud claim, Legacy Crossing did
not need it in order to possess the means to discover that an alleged fraud had
occurred. In other words, Legacy Crossing seems to confuse the necessary level
of information to start the running of the statute of limitations with the necessary
level of evidence to win on the merits. W ith regard to the former, in the fraud
context, all that is required is that the plaintiff possess the means to discover that
the defendant had knowingly or recklessly made false and material
misrepresentations intending that they would be acted upon, which statements
caused the plaintiff injury. See M cCain, 975 P.2d at 867 (listing the elements of
a fraud claim in Oklahoma). Legacy Crossing had long before formed the belief
that TW C improperly certified general overhead costs unrelated to the project
under review and had obtained information to act on this belief no later than
January 2, 2003.
Legacy Crossing also argues that the determination as to when it had the
means to discover fraud is a question of fact exclusively for a jury to decide. The
Oklahoma courts have indeed explained that “[t]he question of when fraud is
discovered or should have been unearthed with the exercise of ordinary diligence
is one of fact dependent on the surrounding circumstances, the relationship of the
parties, and all other elements peculiar to the cause.” Smith v. Baptist Found. of
Okla., 50 P.3d 1132, 1138 (Okla. 2002). As demonstrated by M cCain, however,
the question of when fraud was discovered is not a jury question in absolutely all
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circumstances. See 975 P.2d at 867.
W hether an issue as to the timing of the discovery of fraud must be
submitted to a jury is instead determined by the amount and character of the
evidence that the party attempting to avoid the statute of limitations bar is able to
muster. In other words, in order to get to a jury, Legacy Crossing must come
forth with evidence from which a rational trier of fact could find that it did not
have the means to discover fraud until sometime on or after April 1, 2003. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986) (“[T]here is no
issue for trial unless there is sufficient evidence favoring the nonmoving party for
a jury to return a verdict for that party. If the evidence is merely colorable, or is
not significantly probative, summary judgment may be granted.” (internal
citations omitted)); see also Sawtell, 22 F.3d at 252. Legacy Crossing relies
exclusively on the allegedly new information it received during the April 1, 2003
deposition. But even assuming Legacy Crossing gained new information during
that deposition, that does not cast doubt on the fact that, on or before January 2,
2003, Legacy Crossing believed that TW C had certified unrelated costs, it
possessed numerous documents related to the audit, 4 and it had hired an expert to
4
In an attempt to create a fact question as to the character and content of
the documents it had received, Legacy Crossing stated in its response to TW C’s
motion for summary judgment that TW C had not submitted evidence proving that
the documents were what TW C said they were, and that TW C had submitted no
evidence that the documents provided actually supported the actual costs of
construction. See Aplt. A pp. at 498. W hat Legacy Crossing fails to grasp is that,
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review the audit. As a result, no rational jury could find that Legacy Crossing did
not have the means to discover fraud on or before January 2, 2003, and the
district court properly granted summary judgment in TW C’s favor.
In a final effort to avoid the statute of limitations bar on its fraud claim,
Legacy Crossing argues that the limitations period should be tolled because of
fraudulent concealment. M ore specifically, Legacy Crossing contends that TW C
concealed its fraud by issuing the fraudulent audit report in the first place and by
authorizing BB& L to use the audit report as its expert witness report in the
Legacy Crossing/BB& L litigation. There is no doubt that the doctrine of
fraudulent concealment operates under Oklahoma law to toll the two-year
limitations period for fraud. See Richey v. W estinghouse Credit Corp., 667 F.
Supp. 752, 755 (W .D. Okla. 1986); see also W oodward, 549 P.2d at 1209
(explaining that the statute of limitations period begins to run on the date the
party defrauded possesses the means of discovering the fraud so long as the
“defrauding party has not covered up his fraud”). In order for fraudulent
concealment to toll the limitations period, however, the defendant must have
(. . . continued)
as the non-moving party, it bore the burden of demonstrating that there existed a
genuine issue of material fact. See Anderson, 477 U.S. at 248-50 & n.4. Thus, it
was tasked with bringing forth sufficient evidence from which a jury could find
that the documents provided were not what they were purported to be or that they
did not actually support the costs of construction. Because Legacy Crossing
adduced no such evidence, no genuine issue of material fact as to the character
and content of the documents arose.
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“commit[ted] some actual artifice to prevent knowledge or some affirmative act
of concealment or some misrepresentation to exclude suspicion and prevent
inquiry . . . .” W ills v. Black & W est, Architects, 344 P.2d 581, 584 (Okla.
1959). Additionally, “the mere failure to disclose that a cause of action exists is
not sufficient to prevent the running of the statute.” Id.Neither of the acts of which Legacy Crossing complains w ere sufficient to
constitute fraudulent concealment. The original issuance of the audit report is the
very act upon which Legacy Crossing bases its fraud claim. Essentially, Legacy
Crossing argues that one act can constitute both fraud and fraudulent concealment
at the same time. W e believe that under the fraudulent concealment doctrine
there must be a separate affirmative act of concealment intended to cover up the
original fraudulent act. Otherwise, the exception (tolling for fraudulent
concealment) would become the rule. In fraud cases, the limitations period would
never begin to run until the defrauding party committed an affirmative act to
reveal his fraud. Of course, if the nature of the original fraudulent act was such
that it hid the fraud from the defrauded party, then the limitations period would
not begin until the fraud was uncovered. See Brookshire v. Burkhart, 283 P. 571,
577-78 (Okla. 1929). But that situation is governed by the statute’s instruction
that causes of action for fraud do not accrue until the fraud is discovered, not by
the fraudulent concealment doctrine. Regardless, that situation is not present
here. If anything, TW C’s original issuance of the audit report facilitated, rather
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than concealed, Legacy Crossing’s discovering the fraud.
TW C’s allowing BB& L to issue the audit as an expert report in prior
litigation is also not fraudulent concealment. Legacy Crossing argues that it
“could draw no other conclusion from this action than that [TW C] did in fact
conduct an independent audit pursuant to HUD requirements.” Aplt. Br. at 12.
W e do not find this argument persuasive. Legacy Crossing never explains exactly
how BB& L’s use of the audit report in the BB& L/Legacy Crossing litigation
forced it to conclude that TW C’s audit was properly conducted. Use of the audit
report likely meant that TW C and BB& L thought the audit was proper, but
Legacy Crossing was nevertheless free to disagree. And apparently it did
disagree as evidenced by its hiring of M r. Potter to conduct his own independent
analysis. M oreover, BB& L’s use of the audit report in no way concealed the fact
that TW C had certified approximately $900,000 in overhead expenses that Legacy
Crossing believed were unconnected to its project. In sum, BB& L’s use of the
audit report in prior litigation was not an actual artifice, active concealment, or
misrepresentation sufficient to toll the statute of limitations.
II. Legacy Crossing’s N egligence/Professional M alpractice Claim
Our disposition as to the untimeliness of Legacy Crossing’s fraud claim
largely resolves the timeliness issue as to its negligence and OCPA claims as
w ell. In O klahoma, the applicable limitations period for negligence claims is tw o
years. See Okla. Stat. tit. 12, § 95(A)(3); Cochran v. Buddy Spencer M obile
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Homes, Inc., 618 P.2d 947, 950 (Okla. 1980). Unlike fraud claims, negligence
claims accrue for purposes of the limitations period at the moment in time “when
a litigant first could have maintained his action to a successful conclusion.”
Sherw ood Forest No. 2 Corp. v. City of N orman, 632 P.2d 368, 370 (Okla. 1980).
Legacy Crossing’s negligence claim in this case accrued on M arch 14, 2002, the
date on which the HUD closing and full payment to BB& L occurred, because that
is the date upon which Legacy Crossing could have potentially stated a claim for
negligence against TW C. See W ynn v. Estate of Holmes, 815 P.2d 1231, 1233
(Okla. 1991) overruled on other grounds by Stroud v. Arthur Andersen & Co., 37
P.3d 783, 795 n.58 (Okla. 2001). Consequently, Legacy Crossing’s negligence
claim brought on M arch 30, 2005 is untimely unless the limitations period was
tolled.
“[T]he Oklahoma discovery rule tolls the statute of limitations ‘until an
injured party knows of, or in the exercise of reasonable diligence, should have
known of or discovered the injury, and resulting cause of action.’” 5 Alexander v.
5
W hile the Oklahoma legislature specifically incorporated the discovery
rule into the statute of limitations pertaining to fraud claims, see Okla. Stat. tit.
12, § 95(A)(3), the discovery rule only operates as to other types of claims by
judicial fiat, see Lovelace, 831 P.2d at 1217 (“[W ]hether the discovery rule
should apply to professional negligence actions is a judicial determination which
must be made on a case by case basis.”). The Oklahoma Supreme Court,
however, has “not applied the discovery rule in a broad range of negligence
actions.” Id. Nonetheless, we need not decide whether the discovery rule applies
to Legacy Crossing’s negligence claim because even if we apply the rule, that
claim is untimely.
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Oklahoma, 382 F.3d 1206, 1217 (10th Cir. 2004) (quoting Lovelace v. Keohane,
831 P.2d 624, 629 (Okla. 1992)) (emphasis omitted). Similar to its fraud claim,
Legacy Crossing posits that it could not have known of or discovered the basis for
its negligence claim until the A pril 1, 2003 deposition of M r. W olff and M r.
Burton. It also argues that TW C fraudulently concealed its negligence in the
same manner it concealed its fraud. W e reject Legacy Crossing’s argument
regarding discovery of its negligence claim for the same reason we rejected that
identical argument as to its fraud claim— namely, that Legacy Crossing,
exercising reasonable diligence, could have known of TW C’s negligence no later
than January 2, 2003. W e also reject Legacy Crossing’s fraudulent concealment
argument because neither of the actions on TW C’s part of which Legacy Crossing
complains constitutes “‘false, fraudulent, or misleading conduct’ calculated to lull
plaintiffs into sitting on their rights.” Alexander, 382 F.3d at 1217.
III. Legacy Crossing’s O CPA Claim
Lastly, Legacy Crossing’s OCPA claim is governed by the three year
limitations period found within Okla. Stat. tit. 12, § 95(A)(2) because it is “an
action upon a liability created by statute other than a forfeiture or penalty.” See
Brashears v. Sight ‘N Sound A ppliance Ctrs., Inc., 981 P.2d 1270, 1273-74 (Okla.
Civ. App. 1999). That cause of action accrued, at the latest, on February 18,
2002, when TW C sent its final revised audit report to HUD, which is alleged to
have contained misrepresentations. See Sherwood Forest No. 2 Corp., 632 P.2d at
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370; Okla. Stat. tit. 15, § 753 (2006). Resultingly, Legacy Crossing’s OCPA
claim, which was not brought until June 16, 2005, is barred unless the limitations
period was somehow tolled until at least June 16, 2002. Tolling, however, will
not save Legacy Crossing’s O CPA claim because it could have discovered its
injury with reasonable diligence, at the latest, on M arch 6, 2002, at w hich time it
possessed several supporting documents for the audit and had formed the belief
that TW C had certified improper costs. M oreover, TW C’s actions did not rise to
the level of fraudulent concealment.
A FFIR ME D.
Entered for the Court
Paul J. Kelly, Jr.
Circuit Judge
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