IN THE SUPREME COURT, STATE OF WYOMING
2015 WY 127
APRIL TERM, A.D. 2015
September 17, 2015
ROBERT L. KROENLEIN TRUST by
and through DEBORAH ALDEN,
Successor Trustee, and CHUGWATER
BREWING COMPANY, INC., a
Wyoming Corporation,
Appellants
(Plaintiffs),
v. S-14-0296
GARY BRUCE KIRCHHEFER,
COMMODORE BAR, INC., RICK L.
BOWEN, SILVER DOLLAR BAR OF
LUSK, LLC., and LARRY H.
HALLIGAN
Appellees
(Defendants).
Appeal from the District Court of Goshen County
The Honorable William J. Edelman, Judge
Representing Appellants:
Patrick J. Crank of Crank Legal Group, P.C., Cheyenne, WY.
Representing Appellees:
Matthew R. Sorenson and Madison M. Brown of Daly & Sorenson, LLC, Gillette,
WY for Appellee Gary B. Kirchhefer; and Frank J. Jones, Wheatland, WY, for
Appellees Commodore Bar, Inc. and Rick L. Bowen; and Robert Todd Ingram and
Scott J. Olheiser of Ingram/Olheiser, P.C., Casper, WY, for Appellees Silver
Dollar Bar of Lusk, LLC and Larry R. Halligan. Argument by Ms. Brown.
Before BURKE, C.J., and HILL, *KITE, DAVIS, and FOX, JJ.
* Justice Kite retired from judicial office effective August 3, 2015, and pursuant to Article 5, § 5 of the
Wyoming Constitution and Wyo. Stat. Ann. § 5-1-106(f) (LexisNexis 2015) she was reassigned to act on
this matter on August 4, 2015.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.
Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building,
Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be
made before final publication in the permanent volume.
HILL, Justice.
[¶1] Plaintiffs, the Robert L. Kroenlein Trust and Chugwater Brewing Co., Inc.,
brought an action against Defendants alleging claims for conversion and fraud arising out
of Defendant Gary Kirchhefer’s alleged theft of beer from Plaintiffs’ store and his
subsequent sale of that stolen beer to the other named Defendants. The district court
found Plaintiffs’ claims barred by the governing statutes of limitation and granted
Defendants’ motion for summary judgment. In so ruling, the district court applied the
discovery rule, found no disputed issues of material fact, and concluded that based upon
when Plaintiffs knew or should have known of their losses, the four-year statutes of
limitation for fraud and conversion barred their action. The district court further
concluded that the doctrine of collateral estoppel barred Plaintiffs from litigating the
question of when the statutes of limitation began to run because a federal court had
dismissed Plaintiffs’ federal claims as time-barred based on application of the discovery
rule.
[¶2] On appeal, Plaintiffs contend that the district court erred in applying the discovery
rule to the fraud and conversion statutes of limitation. Alternatively, they contend that if
the discovery rule does apply, the doctrine of collateral estoppel is inapplicable and
disputed issues of fact precluded summary judgment. We hold that the discovery rule
does apply to the fraud and conversion statutes of limitation. We agree with Plaintiffs,
however, and conclude that the doctrine of collateral estoppel does not apply and that
disputed issues of fact precluded summary judgment. We therefore reverse.
ISSUES
[¶3] Plaintiffs frame the issues on appeal as follows:
I. Does the “discovery rule” apply to W.S. § 1-3-106
which explicitly provides that a plaintiff’s cause of action
does not accrue until “the wrongdoer is discovered?”
II. Did the trial court correctly rely on the doctrine of
collateral estoppel in granting summary judgment?
III. Has the trial court failed to follow decisions of this
Court by failing to recognize that Defendants engaged in a
series of continuing tortious acts?
FACTS
[¶4] J&B Package Liquor (J&B) is a liquor store located in Torrington, Wyoming.
J&B was originally owned by the Robert L. Kroenlein Trust (Kroenlein Trust), and prior
1
to November 2004, was operated and managed by Robert Kroenlein and his wife, Betty
Kroenlein. In November 2004, both Robert and Betty Kroenlein passed away and their
daughter, Deborah Alden, became the successor trustee of the Kroenlein Trust. The
Kroenlein Trust assets were distributed in December 2005, and at that time, Ms. Alden
received ownership of J&B. In March 2006, Ms. Alden transferred ownership of J&B to
Chugwater Brewing Company, Inc., a Wyoming corporation owned by Ms. Alden and
her husband, Eric Alden.
[¶5] Eric Alden is an attorney, and at the time of his in-laws Robert and Betty
Kroenlein’s deaths in 2004, he was serving as the Platte County Attorney and living and
working in Wheatland, Wyoming. Mr. Alden acted as attorney for the estates of Robert
and Betty Kroenlein, and from the date of their deaths in November 2004 until his term
as Platte County Attorney ended at the close of 2006, Mr. Alden oversaw J&B’s
operations from Wheatland. In particular, from November 2004 to the close of 2006, Mr.
Alden would usually speak daily with J&B’s manager, Margaret Hauf, and on weekends
he would travel to Torrington to check in on the store. Mr. Alden also met with J&B’s
accountant every few months during this period.
[¶6] In mid-2005, Mr. Alden found inconsistencies in some of J&B’s accounting
reports. Specifically, Mr. Alden observed that in some months, the amounts J&B was
spending on beer purchases exceeded the revenue J&B derived from beer sales. These
discrepancies continued off and on through 2005 and 2006, and Mr. Alden took a number
of steps in an effort to identify the cause of the beer losses, including discussions with
J&B’s bookkeeper, review of the manner in which beer sales were keyed into the register
and adjustments to that procedure, review of beer delivery schedules and its impact on
revenue reports, and review of video taken by J&B’s existing videotape recording
system.
[¶7] In January 2007, Mr. Alden moved to Torrington. J&B’s accounting reports
continued to reflect beer shortfalls, and Mr. Alden continued to investigate the cause of
these losses. J&B had one distributor that delivered Coors products to the store and
another distributor, Orrison Distributing (Orrison), that delivered Budweiser and Miller
products to the store. By the end of the summer of 2007, Mr. Alden had concluded that
the shortfall stemmed from the Orrison deliveries. In October 2007, Mr. Alden had
additional surveillance cameras installed to monitor the back of the store where Orrison
deliveries were made. With that surveillance system, Mr. Alden discovered that
Defendant Gary Kirchhefer, an Orrison employee, was stealing beer paid for by J&B and
intended for delivery to J&B. In its order dismissing Plaintiffs’ federal claims, the
federal district court described the scheme to which Defendant Kirchhefer admitted:
As the beer salesman, Kirchhefer would order (presale) the
beer for J & B Liquors the day before it was delivered,
making an electronic order via his computer to Orrison. The
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following day a delivery truck driver for Orrison would off-
load the beer in the alley next to the back door of J & B
Liquors. Kirchhefer would then arrive and dismiss the
delivery driver and “kindly” take what J & B actually needed
into the store coolers and put the excess beer, ordered and
paid for by J & B, into his van. Kirchhefer would then take
the beer he had stolen from J & B Liquors and give it away to
customers in exchange for keeping and ordering some of the
less popular products, such as Tequiza or sell it.
Robert L. Kroenlein Trust v. Kirchhefer, 2013 WL 1337385, * 2 (D. Wyo. 2013)
(citations omitted).
[¶8] On August 15, 2011, Plaintiffs filed a complaint against Defendants in the federal
district court for the district of Wyoming. The complaint asserted federal claims for
violation of the Racketeer Influenced and Corrupt Organization Act (RICO) and state
claims for conversion and fraud. On March 31, 2013, the federal district court granted
Defendants summary judgment on the federal claims, finding that as a matter of law
those claims were time-barred. The court reasoned:
Plaintiffs assert that it was only upon Kirchhefer’s arrest and
subsequent interview that they learned of Bowen and
Halligan’s “involvement” and scheme. However, as noted in
Dummar v. Lummis, 543 F.3d at 621, a plaintiff need not be
aware of the pattern of racketeering activity before the statute
of limitations begins to run. Moreover, Plaintiffs’ argument
was expressly, if not implicitly rejected in Rotella v. Wood,
528 U.S. 549 (2000) (discovery of injury caused to the
business triggers start of statute of limitations not discovery
of other elements of claim—such as pattern of RICO
activity). The undisputed facts establish that in the Fall of
2005 Plaintiffs were aware of the injury to their business and,
had they then exercised due diligence, they would have
known of their cause of action. Accordingly, having failed to
bring their RICO claims until August 15, 2011, they are
barred by the four-year statute of limitations.
Robert L. Kroenlein Trust, 2013 WL 1337385, * 8.
[¶9] The federal court entered its summary judgment order on March 31, 2013. The
federal court’s order did not address the statutes of limitation for the state law claims for
conversion and fraud, and the court dismissed those claims without prejudice. Kroenlein,
2013 WL 1337385, * 9. On April 10, 2013, Plaintiffs filed a complaint in the state
3
district court for the Eighth Judicial District asserting claims against Defendants for
conversion and fraud. Through their complaint, Plaintiffs alleged that Defendant
Kirchhefer stole approximately $337,326.00 in Orrison products from J&B during the
years 2002 through 2007.
[¶10] Defendants filed separate motions for summary judgment and joinders in each
others’ motions, and then on June 9, 2014, Defendants filed a joint motion for summary
judgment. They argued: 1) Plaintiffs’ fraud claim was barred by the statute of limitations
because Plaintiffs could have, with a reasonably diligent investigation, discovered the
fraud as early as 1997; 2) Plaintiffs’ conversion claim was barred by the statute of
limitations because they could have discovered the wrongdoing as early as 2002; 3) the
doctrine of continuing torts does not apply; and 4) the doctrine of collateral estoppel bars
Plaintiffs from re-litigating the discoverability of the beer conversion and the failure to
exercise reasonable diligence to discover the beer theft. Plaintiffs opposed the summary
judgment motions, asserting, among other arguments, that the discovery rule does not
apply to the statutes of limitation for conversion and fraud and that the Wyoming
Supreme Court decisions holding otherwise should be overturned.
[¶11] On October 14, 2014, the district court entered its Order Granting Summary
Judgment. The district court rejected Plaintiffs’ argument concerning the applicability of
the discovery rule, and without recitation of the particular undisputed facts and
supporting evidence the court found material to its decision, the court concluded:
Plaintiffs knew that they had been injured years before they
made any efforts to discover by whom. In fact, they were put
on notice by their accountant – arguably a rather reliable
source of information in matters involving discrepancies in
bookkeeping – several years before they took any steps to
locate the source of the discrepancy. It took several
additional years for them to take inventory of their goods, yet
Plaintiffs state had it not been for their “extraordinary
investigative efforts” the wrongdoer would never have been
discovered. This Court reaches the same conclusion as the
Federal District Court regarding the facts of this case and the
discovery of Defendant Kirchhefer’s actions. The scheme
employed by Kirchhefer was not complex, certainly was not
carried out in hiding, and was easily discoverable by Aldens,
had they chosen to look. Thus, this Court finds the statute of
limitations has run, because the Plaintiffs knew or should
have known of the claim well before four years prior to
commencement of this action.
Moreover, this Court holds Plaintiffs are precluded
from litigating the above issues anyway as they were recently
4
determined by the Federal District Court, and such
determination triggered the application of the doctrine of
collateral estoppel. The Wyoming Supreme Court has noted
collateral estoppel applies when “a right, question or fact
distinctly put in issue and directly determined by a court of
competent jurisdiction ... cannot be disputed in a subsequent
suit between the same parties or their privies.” Goodman v.
Voss, 2011 WY 33, 248 P.3d 1120, 1126 (Wyo. 2011). In the
present case, the parties to the Federal action were identical,
the issues of both the discovery of the fraud and the actions of
the parties were determined on the merits by the Federal
District Court after affording the parties an opportunity to be
heard; therefore, this Court is not at liberty to allow Plaintiffs
the opportunity to relitigate this case.
[¶12] On November 12, 2014, Plaintiffs timely filed their notice of appeal to this Court.
STANDARD OF REVIEW
[¶13] Our standard for reviewing a district court’s entry of summary judgment is well
established:
We review a summary judgment in the same light as the
district court, using the same materials and following the
same standards. [Snyder v. Lovercheck, 992 P.2d 1079, 1083
(Wyo.1999)]; 40 North Corp. v. Morrell, 964 P.2d 423, 426
(Wyo.1998). We examine the record from the vantage point
most favorable to the party opposing the motion, and we give
that party the benefit of all favorable inferences that may
fairly be drawn from the record. Id. A material fact is one
which, if proved, would have the effect of establishing or
refuting an essential element of the cause of action or defense
asserted by the parties. Id. If the moving party presents
supporting summary judgment materials demonstrating no
genuine issue of material fact exists, the burden is shifted to
the non-moving party to present appropriate supporting
materials posing a genuine issue of a material fact for trial.
Roberts v. Klinkosh, 986 P.2d 153, 155 (Wyo.1999); Downen
v. Sinclair Oil Corp., 887 P.2d 515, 519 (Wyo.1994). We
review a grant of summary judgment deciding a question of
law de novo and afford no deference to the district court’s
ruling. Roberts v. Klinkosh, 986 P.2d at 156; Blagrove v. JB
Mechanical, Inc., 934 P.2d 1273, 1275 (Wyo.1997).
5
Moats v. Prof’l Assistance, LLC, 2014 WY 6, ¶ 17, 319 P.3d 892, 896 (Wyo. 2014)
(quoting DiFelici v. City of Lander, 2013 WY 141, ¶ 7, 312 P.3d 816, 819 (Wyo. 2013)).
[¶14] Questions of statutory interpretation are questions of law that we review de novo.
Adekale v. State, 2015 WY 30, ¶ 12, 344 P.3d 761, 765 (Wyo. 2015) (citing Crain v.
State, 2009 WY 128, ¶ 8, 218 P.3d 934, 938 (Wyo. 2009)).
DISCUSSION
[¶15] We address first Plaintiffs’ argument that, by statute, a claim for fraud accrues
only upon a plaintiff’s actual discovery of the fraud and a claim for conversion accrues
only upon a plaintiff’s actual discovery of the wrongdoer, and the district court therefore
erred in applying the discovery rule and its due diligence requirement. We will then turn
to Plaintiffs’ remaining issues, including whether questions of fact precluded summary
judgment on the application of the discovery rule and whether the district court erred in
applying the doctrine of collateral estoppel.
A. Applicability of the Discovery Rule
[¶16] “Wyoming is a discovery jurisdiction, which means that a statute of limitation is
triggered when a plaintiff knows or has reason to know of the existence of a cause of
action.” Redland v. Redland, 2012 WY 148, ¶ 54, 288 P.3d 1173, 1186 (Wyo. 2012)
(quoting Carnahan v. Lewis, 2012 WY 45, ¶ 27, 273 P.3d 1065, 1073 (Wyo. 2012)). In
other words, the discovery rule triggers a statute of limitation “when a reasonable person
should have been placed on notice of his claim.” Moats, ¶ 21, 319 P.3d at 897 (quoting
Heimer v. Antelope Valley Improvement, 2010 WY 29, ¶ 18, 226 P.3d 860, 864 (Wyo.
2010)). The discovery rule applies where a statute of limitation either expressly adopts
the rule or specifies that a limitation period runs only after the cause of action accrues.
Corkill v. Knowles, 955 P.2d 438, 443 (Wyo. 1998).
[¶17] A civil action for fraud or conversion must be brought within four years after the
cause of action accrues. Wyo. Stat. Ann. § 1-3-105(a)(iv)(B), (D) (LexisNexis 2015).
Because the statutes of limitation for conversion and fraud claims run from their date of
accrual, this Court has consistently applied the discovery rule to determine when the
limitation period began to run. See, e.g., Erdelyi v. Lott, 2014 WY 48, ¶ 26, 326 P.3d
165, 172 (Wyo. 2014) (applying discovery rule to fraud claim); Lieberman v. Mossbrook,
2009 WY 65, ¶¶ 22-23, 208 P.3d 1296, 1304 (Wyo. 2009) (applying discovery rule to
conversion claim); Retz v. Siebrandt, 2008 WY 44, ¶ 12, 181 P.3d 84, 89-90 (Wyo. 2008)
(applying discovery rules to conversion and fraud claims); Cross v. Berg Lumber Co., 7
P.3d 922, 930 (Wyo. 2000) (applying discovery rule to conversion claim); Taylor v.
Estate of Taylor, 719 P.2d 234, 239 (Wyo. 1986) (applying discovery rule to fraud
6
claim); Mason v. Laramie Rivers Co., 490 P.2d 1062, 1064 (Wyo. 1971) (applying
discovery rule to fraud claim).
[¶18] Plaintiffs contend that this Court has erred in applying the discovery rule to fraud
and conversion claims. In so arguing, Plaintiffs point to the language of Wyo. Stat. Ann.
§ 1-3-106, which provides:
A cause of action for the wrongful taking of personal property
is not deemed to have accrued until the wrongdoer is
discovered. A cause of action on the ground of fraud is not
deemed to have accrued until the discovery of the fraud.
Wyo. Stat. Ann. § 1-3-106 (LexisNexis 2015) (emphasis added).
[¶19] Plaintiffs argue that in applying the discovery rule to fraud and conversion claims,
this Court has done so with little true analysis and no consideration given to the language
of Wyo. Stat. Ann. § 1-3-106. Plaintiffs further argue that pursuant to the plain terms of
section 106, claims for conversion and fraud do not accrue until, for conversion, the
wrongdoer is actually discovered, and for fraud, until the actual discovery of the fraud.
We disagree both with Plaintiffs’ premise that this Court’s application of the discovery
rule has been without consideration of the language used in section 106 and with
Plaintiffs’ proffered interpretation of the terms “discovered” and “discovery.”
[¶20] First, contrary to Plaintiffs’ contention that our application of the discovery rule to
fraud and conversion claims has been without consideration of the terms used by the
legislature, this Court, in Mason, expressly addressed the statutory use of the term
discovery as it related to the accrual of a fraud claim. Indeed, it was in relation to § 1-3-
106’s predecessor that we interpreted the meaning of the term discovery and explained
the basis for our interpretation:
Section 1-18 in pertinent part provides:
‘Within four years, an * * * action for relief on the
ground of fraud; but the case (sic) of action in such
case shall not be deemed to have accrued until the
discovery of the fraud.’
The basic principle recognized by plaintiffs and prevailing in
most jurisdictions, applicable to both law and equity, is that
the statute begins to run in fraud cases when there is
discovery by the aggrieved party of the facts constituting the
fraud. Actual knowledge of the fraud will be inferred if the
aggrieved party by the exercise of due diligence could have
7
discovered it. Some representative cases out of many in the
western states showing its various applications and
demonstrating the rule are Tovrea Land and Cattle Company
v. Linsenmeyer, 100 Ariz. 107, 412 P.2d 47; Condos v.
Felder, 92 Ariz. 366, 377 P.2d 305; Bainbridge v. Stoner, 16
Cal. 2d 423, 106 P.2d 423; Greco v. Pullara, 166 Colo. 465,
444 P.2d 383; Gerlach v. Schultz, 72 Idaho 507, 244 P.2d
1095; Jones v. Jones, Okl., 459 P.2d 603; Widger v. Union
Oil Co. of Oklahoma, 205 Okl. 614, 239 P.2d 789; Dilley v.
Farmers Insurance Group, 250 Or. 207, 441 P.2d 594; Heard
v. Coffey, 218 Or. 275, 344 P.2d 751; Huycke v. Latourette,
215 Or. 173, 332 P.2d 606; Taylor v. Moore, 87 Utah 493, 51
P.2d 222; Strong v. Clark, 56 Wash.2d 230, 352 P.2d 183;
and Davis v. Harrison, 25, Wash.2d 1, 167 P.2d 1015.
We hold that the words ‘until the discovery of the fraud’
appearing in § 1-18 mean from the time the fraud was known
or could have been discovered in the exercise of reasonable
diligence. They do not necessarily mean until the party
complaining had actual notice of the fraud alleged to have
been committed.
Mason, 490 P.2d at 1064.
[¶21] The meaning this Court gave the term discovery in Mason is reflected in our cases
applying the discovery rule to fraud and conversion claims. See Retz, ¶ 12, 181 P.3d at
89-90 (citing Mason for the meaning of “discovery” when considering conversion claim);
Lieberman, ¶ 23, 208 P.3d at 1304 (citing Retz for the meaning of “discovery” when
considering conversion claim); Erdelyi, ¶ 26, 326 P.3d at 172 (citing Retz and Mason for
the meaning of “discovery” when considering fraud claim). We thus find it clear that our
application of the discovery rule to determine when a claim for fraud or conversion
accrues was deliberate and not happenstance. We next consider then whether the
meaning we gave the statutory term “discovery” in Mason is supported by our principles
of statutory interpretation.
[¶22] In any question of statutory interpretation, our primary objective is to give effect
to the legislature’s intent. L&L Enters. v. Arellano (In re Arellano), 2015 WY 21, ¶ 13,
344 P.3d 249, 252 (Wyo. 2015). “Where legislative intent is discernible a court should
give effect to the ‘most likely, most reasonable, interpretation of the statute, given its
design and purpose.’” Adekale, ¶ 12, 344 P.3d at 765 (quoting Rodriguez v. Casey, 2002
WY 111, ¶ 20, 50 P.3d 323, 329 (Wyo. 2002)). In light of this objective, we have said:
8
We therefore construe each statutory provision in pari
materia, giving effect to every word, clause, and sentence
according to their arrangement and connection. To ascertain
the meaning of a given law, we also consider all statutes
relating to the same subject or having the same general
purpose and strive to interpret them harmoniously. We
presume that the legislature has acted in a thoughtful and
rational manner with full knowledge of existing law, and that
it intended new statutory provisions to be read in harmony
with existing law and as part of an overall and uniform
system of jurisprudence. When the words used convey a
specific and obvious meaning, we need not go farther and
engage in statutory construction.
Nicodemus v. Lampert, 2014 WY 135, ¶ 13, 336 P.3d 671, 674 (Wyo. 2014) (citing
Estate of Dahlke ex rel. Jubie v. Dahlke, 2014 WY 29, ¶¶ 36–37, 319 P.3d 116, 125–26
(Wyo. 2014)).
[¶23] Because our primary consideration in interpreting statutory terms is legislative
intent, we look first to the legislature’s objectives in creating statutes of limitation. This
is not a new question. We have stated:
Statutes of limitation have long been a part of the
jurisprudence of the United States, all its states and the State
of Wyoming. They are pragmatic devices to save courts from
stale claim litigation and spare citizens from having to defend
when memories have faded, witnesses are unavailable by
death or disappearance and evidence is lost. Statutes of
limitation are arbitrary by their very nature and do not
discriminate between the just and unjust claim. They are not
judicially made but represent legislative and public policy
controlling the right to litigate. The statutes operate against
even the most meritorious of claims and courts have no right
to deny their application. When considering the statute of
limitations, the nature of injury, its extent, the amount of
money damages involved, social considerations, and the
emotional appeal the facts may have must pass to the
background. The circumstances are only significant in the
bearing they may have on where the cause of action arose,
when it arose and when the time expired for pursing the
applicable judicial remedy.
9
Nowotny v. L&B Contract Indus., 933 P.2d 452, 458 (Wyo. 1997) (quoting Duke v.
Housen, 589 P.2d 334, 340 (Wyo. 1979)) (emphasis in original).
[¶24] More recently, we have observed:
The purpose of statutes of limitation is to save courts
from stale claim litigation; spare citizens from having to
defend when memories have faded, witnesses have died or
disappeared and evidence is lost; prevent parties from
sleeping on their rights; and require diligence.
Lieberman, ¶ 25, 208 P.3d at 1305 (citing Swinney v. Jones, 2008 WY 150, ¶ 7, 199 P.3d
512, 515 (Wyo. 2008)) (emphasis added).
[¶25] The meaning this Court gave the term discovery in Mason is consistent with these
legislative objectives. Interpreting discovery to mean the time the fraud or conversion, or
in the case of conversion, the identity of the wrongdoer, was actually discovered or could
have been discovered in the exercise of reasonable diligence serves the goals of requiring
parties to be diligent in pursuing their claims and avoiding litigation of stale claims. On
the other hand, the interpretation Plaintiffs advocate would leave reasonable diligence out
of the equation and allow a party to pursue a stale claim that could have been brought
earlier with the exercise of reasonable diligence, contrary to the objectives of a statute of
limitations.
[¶26] We find additional support for the meaning we have assigned the terms
“discovered” and “discovery” in our presumption “that the legislature has acted in a
thoughtful and rational manner with full knowledge of existing law, and that it intended
new statutory provisions to be read in harmony with existing law and as part of an overall
and uniform system of jurisprudence.” Nicodemus, ¶ 13, 336 P.3d at 674. Wyoming has
long been a discovery state, meaning a statute of limitations is triggered when a party
knows or should know his claim has accrued. See Nowotny, 933 P.2d at 456 (“The
acceptance of the discovery rule in Wyoming is attributed to Duke v. Housen, 589 P.2d
334 (Wyo. 1979)[.]”). Wyo. Stat. Ann. § 1-3-106 does nothing more than define when
conversion and fraud claims accrue. It does not speak to when the triggering discoveries
are deemed to have been made, and it contains no terms to preclude application of the
discovery rule.
[¶27] Along these same lines, we have held that “[w]hen this Court interprets a statute
and the legislature makes no material legislative change in the provision thereafter, the
legislature is presumed to acquiesce in the Court’s interpretation.” Wyo. Dep’t of
Revenue v. Qwest Corp., 2011 WY 146, ¶ 23, 263 P.3d 622, 629 (Wyo. 2011) (quoting
SLB v. JEO, 2006 WY 74, ¶ 14, 136 P.3d 797, 801 (Wyo. 2006)). Here again, we have
long applied the discovery rule to fraud and conversion claims, and the legislature has
10
taken no steps to revise the statute to reject that application. We therefore presume that
the legislature has acquiesced in our interpretation of § 1-3-106.1
[¶28] Finally, we observe that our interpretation of the terms “discovery” and
“discovered” is consistent with the interpretation other jurisdictions have given these
terms in similar statutes. For example, Ohio has a statute governing the accrual of fraud
and conversion claims, which provides that “[i]f the action is * * * for the wrongful
taking of personal property, the causes thereof shall not accrue until the wrongdoer is
discovered; nor, if it is for fraud, until the fraud is discovered.” Ohio Rev. Code Ann.
§ 2305.09(E) (West 2014). The Ohio Supreme Court has interpreted this language to be
a statutory incorporation of the discovery rule. Investors REIT One v. Jacobs, 546
N.E.2d 206, 211 (Ohio 1989); see also, e.g., Wilde v. Westland Dev. Co., Inc., 2010
NMCA-085, 148 N.M. 627, ¶ 18, 241 P.3d 628, 635 (N.M. Ct. App. 2010) (discovery as
used in fraud/conversion claim accrual statute means discovery of such facts as would, on
reasonable diligent investigation, lead to knowledge of the fraud or other injury); Nerco
Minerals Co. v. Morrison Knudsen Corp., 90 P.3d 894, 901 (Idaho 2004) (discovery as
used in fraud claim accrual statute means actual discovery or time fraud could have been
discovered with reasonable diligence); Thomas v. Sifers, 535 F. Supp. 2d 1200, 1206 (D.
Kan. 2007) (discovery as used in fraud claim accrual statute means actual discovery or
time fraud could have been discovered with reasonable diligence); Allen v. Lawyers Mut.
1
Plaintiffs argue against application of this rule of interpretation, and in fact any rule of interpretation,
contending that because the Wyo. Stat. Ann. § 1-3-106 is clear and unambiguous, there is no room for
this Court to apply rules of interpretation. Although we agree that the statute is clear and unambiguous,
we reject Plaintiffs’ argument as a misunderstanding of statutory interpretation. There is nothing
inconsistent in finding a statute unambiguous and also using our rules of interpretation. We do not use
the rules to supplement or change the terms of a statute, but rather to aid in confirming the meaning the
legislature intended for the terms it used. We have explained:
Against this backdrop of “legisprudence (the jurisprudence of
legislation),” a useful outline of this court’s method of statutory
interpretation emerges. We read the text of the statute and pay attention
to its internal structure and the functional relation between the parts and
the whole. We make the determination as to meaning, that is, whether the
statute’s meaning is subject to varying interpretations. If we determine
that the meaning is not subject to varying interpretations, that may end
the exercise, although we may resort to extrinsic aids of interpretation,
such as legislative history if available and rules of construction, to
confirm the determination.
Parker Land & Cattle Co. v. Wyo. Game and Fish Comm’n, 845 P.2d 1040, 1045 (Wyo. 1993) (footnote
omitted); see also Arellano, ¶¶ 13-21, 344 P.3d at 252-54 (finding provision of workers’ compensation
act unambiguous but applying rules of interpretation to ascertain its meaning); Walker v. State, 2013 WY
58, ¶¶ 21-23, 302 P.3d 182, 188-89 (Wyo. 2013) (finding felony stalking statute unambiguous but
applying rules of interpretation to determine its meaning).
11
Ins. Co. of Kentucky, 216 S.W.3d 657, 661-62 (Ky. Ct. App. 2007) (discovery as used in
fraud claim accrual statute means actual discovery or time fraud could have been
discovered with ordinary diligence); Gilmore v. Chicago Title Ins. Co., 926 S.W.2d 695,
698 (Mo. Ct. App. 1996) (discovery as used in fraud claim accrual statute means actual
discovery or time fraud could have been discovered with due diligence); Fitzgerald v.
Cmty. Redevelopment Corp., 811 N.W.2d 178, 193-94 (Neb. 2012) (discovery as used in
fraud claim accrual statute means discovery of facts sufficient to put a person of ordinary
intelligence and prudence on inquiry); Mountain Land Properties, Inc. v. Lovell, 46
F. Supp. 3d 609, 624 (W.D. N.C. 2014) (discovery as used in fraud claim accrual statute
means actual discovery or time fraud could have been discovered with reasonable
diligence); Bixby v. KBR, Inc., 895 F. Supp. 2d 1075, 1090 (D. Oregon 2012) (discovery as
used in fraud claim accrual statute operates in conjunction with discovery rule); Shiozawa
v. Duke, 2015 UT App. 40, ¶ 13, 344 P.3d 1174, 1179 (Utah Ct. App. 2015) (discovery as
used in fraud claim accrual statute means actual discovery or time fraud could have been
discovered with reasonable diligence); Shepard v. Holmes, 185 Wash.App. 730, ¶ 26, 345
P.3d 786, 790 (Wash. Ct. App. 2014) (statute providing for accrual of fraud claim upon
discovery “effectively codifies the discovery rule as the basis on which a claim for fraud
* * * accrues”). 2
[¶29] Based on the foregoing, we conclude that pursuant to § 1-3-106, a claim for
conversion accrues when a plaintiff actually discovers the wrongdoer’s identity or could
have discovered that identity through the exercise of reasonable diligence. Likewise, we
conclude that a claim for fraud accrues when a plaintiff actually discovers the fraud or
could have discovered the fraud through the exercise of reasonable diligence. We thus
adhere to our prior decisions holding that the discovery rule applies to the running of the
limitation periods for conversion and fraud claims.
B. Application of the Discovery Rule
[¶30] The parties do not necessarily dispute the facts insofar as they concern the manner
of Defendant Kirchhefer’s theft or the approximate dates when J&B accountants
informed Plaintiffs of discrepancies related to beer costs and revenues. They do dispute
whether Plaintiffs exercised reasonable diligence in investigating and discovering their
claims for conversion and fraud.
[¶31] The application of the discovery rule is a mixed question of fact and law, making
it a difficult candidate for summary judgment:
The application of the discovery rule to a statute of
limitations involves a mixed question of law and fact;
2
In our review of claim accrual statutes from other states that use the term “discovery” to trigger the
accrual, we were unable to find any interpretation of the term that differed from the interpretation we have
given the term, and Plaintiffs have directed the Court to no such decisions.
12
consequently, the entry of summary judgment on the issue of
when a statute of limitations commences to run is typically
inappropriate. See, e.g., Cathcart v. Meyer, 2004 WY 49,
¶ 30, 88 P.3d 1050, 1062–63 (Wyo.2004); Murphy v. Housel
& Housel, 955 P.2d 880, 883 (Wyo.1998). The question can
only be resolved as a matter of law if uncontroverted facts
establish when a reasonable person should have been placed
on notice of his claim. Hiltz v. Robert W. Horn, P.C., 910
P.2d 566, 569 (Wyo.1996).
Moats, ¶ 21, 319 P.3d at 897 (quoting Heimer v. Antelope Valley Improvement, 2010 WY
29, ¶ 18, 226 P.3d 860, 864 (Wyo. 2010)).
[¶32] This Court recently addressed what constitutes due diligence in the context of the
discovery rule. We defined it as:
Such a measure of prudence, activity, or assiduity, as is
properly to be expected from, and ordinarily exercised by, a
reasonable and prudent [person] under the particular
circumstances; not measured by any absolute standard, but
depending on the relative facts of the special case.
Moats, ¶ 22, 319 P.2d at 897 (quoting In Re Estate of Novakovich, 2004 WY 158, ¶ 27,
101 P.3d 931, 938 (Wyo. 2004)).
[¶33] We stated further in Moats that due diligence is that diligence "which is reasonable
under the circumstances and not all possible diligence which may be conceived." Moats,
¶ 22, 319 P.2d at 897 (quoting In re Adoption of CAM, 861 P.2d 1102, 1105 (Wyo.
1993)). “Due diligence must be tailored to fit the circumstances of each case. It is that
diligence which is appropriate to accomplish the end sought and which is reasonably
calculated to do so.” Id.
[¶34] Defendants cite to the dates when J&B’s accountant informed Plaintiffs of losses
on the store’s beer sale (as early as 1997 for Robert Kroenlein) and the lack of
complexity in Defendant Kirchhefer’s thefts to support their argument that Plaintiffs
knew or should have known of their fraud and conversion claims by 2002 at the latest.
Specifically, Defendants assert that “[a]s operator of the Liquor Store, Kroenlein had
reports from his accountant in 2002 showing a loss on beer as well as the Orrison
invoices, and access to the inventory−all of the information that he would have relied on
in determining fraud.” The district court essentially echoed this argument in granting
summary judgment, concluding that “[t]he scheme employed by Kirchhefer was not
complex, certainly was not carried out in hiding, and was easily discoverable by [the]
Aldens, had they chosen to look.”
13
[¶35] In contrast to this view that determining the cause of J&B’s beer losses was a
simple matter of just looking, Eric Alden described, in his affidavit opposing summary
judgment, the efforts he undertook to identify the cause of the beer losses. He attested:
3. In mid-2005, I became aware that the accounting had
apparent inconsistencies. The most major of the
inconsistencies involved monthly beer costs and income.
Some documents I examined showed the amount spent on
beer purchases was greater than the revenue derived from the
sale of beer. I talked to the bookkeeper at the accounting firm
and learned that the beer cost numbers came from a totaling
of the invoices from the three beer distributors and the beer
income numbers came from a total of the charges run up on
the cash register on the “beer” key and an estimated fraction
of the bar sales attributed to beer. I suspected that the
accounting system was inaccurate. * * *
4. I first questioned the source of the information used to
estimate the fraction of bar sales attributed to beer. This
appeared to be a simple guess. I had the store manager and
employees keep track of the income from bar sales separating
beer sales from liquor sales. Simultaneously, I had the
manager determine whether products received from beer
distributors was being improperly keyed into the register as
liquor products. This was a possibility because certain malt
beverage products bear the names of liquor companies.
Products like wine coolers, Smirnoff and Bacardi flavored
drinks and other flavored drinks like Mike’s Hard Lemonade
are actually malt beverages and are distributed through beer
distributors while wines and Smirnoff vodka and Bacardi rum
are distributed through the Wyoming Liquor Commission. If
products purchased from beer distributors were being
reported as sales of liquor products purchased from the state,
then the system would under-report the actual income from
beer products.
5. I instructed the manager to go over the categories of
products and make sure all items received from beer
distributors were keyed into the register as beer sales and to
retrain the staff to make sure this was being done properly. I
also had the bar register reset to report beer sales separately
from sales of mixed drinks and had the actual numbers
reported to the bookkeeper rather than estimates. The next
month’s report no longer showed beer purchases greater than
14
beer sales. I thought I had identified and dealt with the
problem.
6. Several months later the discrepancy between beer
sales and purchases appeared again. Then it went away for
two months then it came back again. I looked into the
question further. I determined that the schedule of beer
deliveries influenced the report. For the suspect months there
were only four weekends but there were five Tuesdays. This
was significant because most beer was sold on weekends and
was delivered and paid for on Tuesdays. A month with only
four weekends resulted in lower monthly beer sales and one
with more Tuesdays resulted in greater beer costs. Because
these months fall on a three month cycle the months with
shortage only appeared every third month. I again thought
that I had identified the source of the problem.
****
8. In 2006 I received a report for the entire year of 2005
in connection with the tax return. The beer numbers still
looked wrong. The income from beer sales was not
commensurate with the amount the store was spending on
beer. I kept track of the numbers for the first few months of
the year and the problem was not happening, then as beer
sales increased in the late spring and summer the
discrepancies reappeared. I then suspected that this was not
simply an accounting problem and might be a theft problem.
My initial concern was employee theft. Because I was not
sure who might be involved, I did not share my concerns with
the store manager or any employees. Instead, I observed
employees both when I was present and also on the videotape
recording system which was in the store.
****
10. Once I moved to Torrington in January, 2007, I
continued to examine the books and observe the activities at
the store looking for signs of thefts. As winter ended and the
summer season began the beer shortfalls began to appear
again, especially in months with five delivery dates. The
store was equipped with an old videotape surveillance system
which I reviewed with increasing frequency. That system
required me to watch an eight hour video tape at a maximum
speed of double actual speed so it took four hours to view an
eight hour tape. There were two cameras and only one would
record at a time so I would watch one or the other every few
days.
15
11. On several occasions during the spring and summer of
2007 I spot-checked the beer deliveries to see if the invoiced
amounts were correct. For Coors deliveries I watched the
video of the front door during deliveries and counted the beer
as it was brought in. For the deliveries coming from Orrison
Distributing I counted the beer as it was stacked in the alley
from the truck. Because I did not want the thief to know I
was investigating, I would count three of four selected items
and later compare my count to the invoice presented by Gary
Kirchhefer after the delivery was complete. The items I
chose to count were the larger orders such as cases of Bud
Light bottles or twelve packs of Bud Light cans. I did these
spot checks four or five times and the amounts I counted in
the alley were always identical to amounts shown on the
invoices.
12. As the summer of 2007 went on it appeared that beer
was still somehow “leaking” from the store and the amounts
were too large to be simply pilferage. I decided that the beer
could not be leaving during the day because I would have
seen that so I guessed that it was being taken out at night. I
hypothesized that the beer must be being taken out of the
store after hours. This would have been occurring through
the back door because the front door opened on a main street
and any activity like that would have been open to
observation. Because the back door was secured by a bar on
the inside I assumed the thief must have been entering
through the front door using a key. Over the years a number
of former employees had been entrusted with keys and even
though these had all been returned I thought that someone
might have duplicated one of them and thereby had access to
the store.
13. For several weeks in late July 2007, I went to the store
after closing each evening and counted and observed the beer
inventory surreptitiously. I would return the next morning
and compare the situation with my observations from the
night before. On no occasions did I observe any change in
the beer status. The only days that I was unable to get a clean
count the next morning were the days that deliveries were
made. These occurred on Tuesdays and Fridays. On those
days the Orrison beer truck was already there before the store
opened at 7:00. The truck would arrive around 6:00 and
unload beer onto the ground in the alley and as soon as the
manager arrived at 6:30 she would open the back door so
16
Gary Kirchhefer could start loading beer into the store while
she got ready to open up. The Coors deliveries would come
in through the front door starting at 7:00 or a little earlier.
14. At that time I was completely convinced that the
“missing” beer was actually arriving at the store and then
being secretly taken from the store. I did not imagine that the
beer was not being delivered at all. The Orrison deliveries
were being made by two employees on the truck. Then Gary
Kirchhefer, the regional representative, would arrive as well.
I did not believe it possible that multiple employees of
Orrison were colluding in diverting the beer. The employees
on the truck would change periodically with a different helper
assisting the driver. I believed this would prevent any
coordinated efforts at theft. Also, Mr. Kirchhefer was a
trusted employee of Orrison and a person of good reputation
and appearance. Because Orrison had its complete business
and reputation at risk, I believed that it would take every
precaution to avoid theft problems with its business. I did not
and could not believe that my beer supplier was
systematically stealing from me.
15. Because I believed the beer was being taken from the
store and the only times available for such major thefts were
the nightimes (sic) immediately before delivery days I spent
the month of August 2007, watching the videotapes of the
front door during the hours from closing on Monday and
Thursday until opening on Tuesday and Friday each week.
This required sitting in the office for four hours watching
video twice a week of a door in the dark looking for someone
sneaking into the store. Nothing happened on any of these
videotapes.
16. By late August 2007, I felt that the store was not being
entered at night to steal the beer. In order to confirm that, I
decided to surreptitiously inventory the beer at night after
closing on the nights before delivery days and then again the
next morning and compare the differences to the amounts
shown on the invoices. At this point I was still concerned that
my manager or one of my employees was involved in the
thefts. Because I did not want anyone to know what I was
doing I waited until about half an hour after the store closed,
then went back to the store and parked in the back where no
one could see me. I walked around to the front door and let
myself in avoiding turning on any lights. I was concerned
that someone, either the thief or the police, would see me in
17
the store after hours so I went around the store with a
flashlight and a pad of paper counting a dozen or so popular
packaging items like cases and twelve packs of Bud and Bud
Light and Coors. I did this for the last delivery in August and
found that while the Coors numbers were identical to the
invoiced amounts, the Orrison numbers were not.
Considerably less beer appeared in the store than the invoices
indicated in a number of the product categories I had
inventoried.
17. After a few weeks of doing this new process, it became
apparent that no shortfall was occurring with Coors products
but that a number of Orrison products were coming up short.
I added a number of Orrison products to the list I was
inventorying and identified that the shortfalls were coming in
both Budweiser and Miller products and in a variety of
packaging sizes, i.e., six packs, twelve packs cases and thirty
packs but always in multiple case quantities. I decided that I
needed a better surveillance system to record what was
happening so I contacted the contractor who had installed the
surveillance system at my laundromat and ordered a system
for the liquor store. I did notice one week in September that
there were no discrepancies with the Orrison delivery on an
occasion where Gary Kirchhefer was on vacation and a
substitute filled in for him.
18. At that point in time, September and October 2007, I
believed that the shortfall was coming in Orrison products
and I believed that Gary Kirchhefer was involved but I could
not figure exactly how he was doing it. I could not figure
how Kirchhefer could accomplish this without the other
Orrison employees knowing it and reporting him. I suspected
some sort of double billing scheme with beer being delivered
to someone else but invoiced to my store. The security
system contractor scheduled his installation for the end of
October. He was from Denver and I wanted the installation
done on a Sunday morning when the store was closed because
I didn’t want the installation discovered before it had an
opportunity to record the actual thefts. I was still concerned
that someone inside my store was working with Mr.
Kirchhefer. In the meantime I continued to surreptitiously
inventory on delivery days.
19. The inventory numbers indicated that the thefts were
far larger than a single person or group of people could
consume. I suspected that Mr. Kirchhefer was reselling the
18
beer, either to other customers within his three county district
or across state lines into Nebraska or elsewhere. Once the
surveillance system was installed Mr. Kirchhefer’s method
immediately became apparent. I immediately hired a private
investigator to attempt to find out where Mr. Kirchhefer was
disposing of the stolen beer and who his coconspirators were.
From November 2007 through March 2008 private
investigators I had hired attempted to trail Mr. Kirchhefer
without success. They reported to me that they observed him
stealing beer but were unable to tail him to the point of
disposal.
20. Also in November 2007 I learned that Mr. Kirchhefer
was the son of a deputy sheriff at the Goshen County
Sheriff’s Office. This made it especially delicate to report his
thefts before I had ironclad proof of his crimes. I discussed
the investigation with Rick Scott, the investigator from the
Goshen County Attorney’s office who advised me that bad
feelings between the sheriff’s office and the city police might
cause a problem if the case was investigated by the police.
Mr. Scott told me he could not handle the investigation
because he worked closely with Mr. Kirchhefer’s father. I
told him I would prefer to use private investigators from out
of town and he agreed that was an acceptable alternative.
21. My private investigators were never able to determine
who was purchasing the stolen beer from Mr. Kirchhefer.
After Mr. Kirchhefer was fired by Orrison in April of 2008 I
turned my investigation information over to the Goshen
County Attorney. As feared, Mr. Kirchhefer’s father
protested the involvement of any Goshen County law
enforcement entities investigating the case and the Goshen
County Attorney prosecuting it. For that reason DCI agents
from the western part of the state had to handle the
investigation and a special prosecutor had to be appointed.
This resulted in considerable delay to the prosecution of Mr.
Kirchhefer. Eventually Mr. Kirchhefer entered into a plea
agreement which required him to disclose his co-conspirators.
It was only when Mr. Kirchhefer disclosed as part of a sworn
statement that he had been selling the stolen beer to Bowen
and Halligan that I became aware of their involvement in his
beer stealing operation. That deposition occurred on
December 18, 2010.
22. I believe that my efforts to investigate the
inconsistencies in the beer accounts at J&B Liquor were
19
diligent and logical. I examined possible accounting system
explanations first. I identified a number of possible
mechanisms for the discrepancies and investigated each. The
fact that the monthly numbers varied depending on the
number of weekends or delivery days each month made it
difficult to track what was going on. So did the fact that
Kirchhefer slowed down his thefts in the winter. Problems
that I identified would appear to eliminate the shortfall only
to have it pop up again later. I looked for thefts from
employees, former employees and associates of former
employees before I looked at thefts by my suppliers. I
believe this was a logical and appropriate approach. Orrison
Distributing is a substantial company with a major presence
in the beer business in Wyoming and Colorado. Mr.
Kirchhefer was their trusted and well paid employee. I was
astounded when I eventually learned he was behind the thefts.
****
24. Mr. Kirchhefer made every effort to hide his thefts. It
was not easy to detect him. Even when I had obtained actual
video of Mr. Kirchhefer stealing beer from the back door of
my store in late October 2007, and provided that video to law
enforcement it took two and a half years with further
investigation for law enforcement to file charges against Mr.
Kirchhefer. Some of that delay was occasioned by the
protestations of Mr. Kirchhefer’s father, but some was caused
because law enforcement felt that full diligence required even
further investigation than I had performed. Even after I
determined that he was the thief it was very difficult to
determine who his co-conspirators were. Despite the efforts
of multiple private investigators, Mr. Kirchhefer was able to
conceal his network of purchasers used to dispose of the
stolen beer.
[¶36] Based upon Mr. Alden’s affidavit, it is clear that the parties dispute what steps
were necessary to determine the cause of the beer losses and to determine who was
involved in those losses. We can only conclude based upon the record before the Court
that reasonable minds might differ as to what steps were reasonably necessary to
determine both what caused J&B’s beer losses and the identity of the wrongdoers (the
knowledge of which triggers the conversion statute of limitations). Whether Mr. Alden’s
20
explanations for his delay in discovery are credible and reflect an exercise of reasonable
diligence are questions for a jury.3
[¶37] The district court did not address or discuss Mr. Alden’s affidavit and instead
ruled in a conclusory manner that all Plaintiffs had to do was “look” and they would have
discovered their causes of action. Where reasonable minds can differ on the conclusions
to be drawn from the facts in evidence, and in particular in this case where reasonable
minds might differ on what might have been learned upon looking, how much was
looking was necessary and reasonable, and how soon the looking reasonably should have
been completed, an entry of summary judgment was not warranted. See Amos v. Lincoln
County Sch. Dist. No. 2, 2015 WY 115, ¶ 19, ___ P.3d ___ (Wyo. 2015) (overturning
summary judgment where material facts were generally undisputed but reasonable minds
could draw different conclusions from those facts). 4
C. Collateral Estoppel
[¶38] The district court entered summary judgment against Plaintiffs on the additional
ground that when the federal district court ruled that Plaintiffs’ federal RICO claims were
barred by the statute of limitations, it necessarily resolved the factual issue of when
Plaintiffs should have discovered, through reasonable diligence, their claims for fraud
and conversion. On this basis, the court found that the doctrine of collateral estoppel
3
Our holdings in this opinion apply equally to all Defendants. We find particularly compelling,
however, the questions of fact regarding the discovery rule’s application to the claims against Defendants
Bowen and Halligan and their respective bars. Reasonable minds may certainly differ on whether
reasonable diligence required the hiring of a private investigator to follow Defendant Kirchhefer in his
delivery of the stolen beer. Indeed, reasonable minds would likely differ on whether Plaintiffs could have
even discovered the identities of Bowen and Halligan without Kirchhefer’s bargained for statement to law
enforcement.
4
We reject Defendants argument that the district court’s summary judgment was warranted on the fraud
claim based on this Court’s holding in Rawlinson v. Cheyenne Bd. of Pub. Utils., 2001 WY 6, 17 P.3d 13
(Wyo. 2001). In Rawlinson, a homeowner sued a public utility for property damage resulting from a
leaking fire hydrant, and we upheld a ruling that the homeowner’s claim was barred by the statute of
limitations. Rawlinson, ¶ 18, 17 P.3d at 18. In so holding, we held that pursuant to the discovery rule, the
statute of limitations was triggered when the homeowner discovered property damage, not when she
discovered the cause of the damage and the tortfeasor. Id. We explained that the discovery of the
damage triggered the statute of limitations and the limitations period then provided a reasonable period of
time for the injured party to discover both her claim and the potential tortfeasor. Id., ¶¶ 16-18, 17 P.3d at
17-18. Rawlinson is distinguishable from this case because the claim in Rawlinson was for negligence.
Pursuant to Wyo. Stat. Ann. § 1-3-106, fraud claims are treated differently. A claim for fraud does not
accrue when a party knows or should know of his injury or loss but rather when the party discovers or
through the exercise of reasonable diligence could have discovered the fraud. The question the jury must
answer in the present case is not when did Plaintiffs know of their loss or injury, but rather when through
the exercise of reasonable diligence could Plaintiffs have known of the fraud perpetrated upon them.
Defendants’ reliance on Rawlinson is therefore misplaced.
21
barred Plaintiffs from re-litigating the discovery question. We find the district court erred
in its application of collateral estoppel.
[¶39] This Court has recognized the principle of finality that is served by the doctrine of
collateral estoppel:
The doctrines of res judicata (claim preclusion) and collateral
estoppel (issue preclusion) incorporate a universal legal
principle of common-law jurisprudence to the effect that “a
right, question or fact distinctly put in issue and directly
determined by a court of competent jurisdiction ... cannot be
disputed in a subsequent suit between the same parties or
their privies.”
Goodman v. Voss, 2011 WY 33, ¶ 23, 248 P.3d 1120, 1126 (Wyo. 2011) (quoting
Wyoming Dep’t of Revenue v. Exxon Mobil Corp., 2007 WY 112, ¶ 17, 162 P.3d 515,
522 (Wyo. 2007)).
[¶40] We consider four factors in determining whether the doctrine of collateral estoppel
applies to bar consideration of an issue:
1) whether the issue decided in the prior adjudication was
identical with the issue presented in the present action; (2)
whether the prior adjudication resulted in a judgment on the
merits; (3) whether the party against whom collateral estoppel
is asserted was a party or in privity with a party to the prior
adjudication; and (4) whether the party against whom
collateral estoppel is asserted had a full and fair opportunity
to litigate the issue in the prior proceeding.
Carson v. Wyo. Workers’ Safety & Comp. Div., 2014 WY 42, ¶ 15, 322 P.3d 1261, 1265
(Wyo. 2014) (quoting Wilkinson v. State ex rel. Wyo. Workers’ Safety & Compensation
Div. (In re: Wilkinson), 991 P.2d 1228, 1234 (Wyo. 1999)) (emphasis in original).
[¶41] We reject application of collateral estoppel in this case because the issue ruled on
by the federal district court was not identical to the issues before the state district court
and this Court. As we have indicated herein, the question of when Plaintiffs’ claims for
conversion and fraud accrued depends on when Plaintiffs could have, through the
exercise of reasonable diligence, discovered that their property had been converted and
the identity of the wrongdoer (for purposes of the conversion claim), and discovered the
fraud. These are not causes of actions that accrue upon discovery of a loss or injury.
22
[¶42] The federal district court dismissed the Plaintiffs’ state conversion and fraud
claims without prejudice and, more importantly, did not address the discovery rule as
Wyoming law dictates its application to fraud and conversion claims. The discovery rule
the federal district court addressed was the rule applicable to federal RICO claims, which
looks to when a plaintiff discovers his loss or injury. The federal court described the
legal framework governing its analysis:
The Supreme Court has determined that civil federal RICO
claims are subject to a four-year statute of limitations period.
Agency Holding Corp. v. Malley–Duff & Associates, Inc., 483
U.S. 143, 156 (1987). However, the Supreme Court has yet
to definitively determine whether this four year statute begins
running: (1) when the plaintiff knew or should have known of
his injury (the injury-discovery rule); or (2) when the plaintiff
was injured, whether aware of the injury or not (the injury-
occurrence rule). See Dummar, at 621, citing Cory v. Aztec
Steel Bldg, Inc., 468 F.3d 1226, 1234 (10th Cir.2006).
Whether under the injury-discovery or harsher injury-
occurrence rule, a plaintiff’s awareness of the pattern of
racketeering activity is not required to trigger the running
of the statute of limitations. 543 F.3d at 621, citing Rotella
v. Wood, 528 U.S. 549, 553–54 (2000) (“discovery of the
injury, not discovery of the elements of a claim is what starts
the clock”). * * *
****
Plaintiffs assert that it was only upon Kirchhefer’s arrest and
subsequent interview that they learned of Bowen and
Halligan’s “involvement” and scheme. However, as noted in
Dummar v. Lummis, 543 F.3d at 621, a plaintiff need not be
aware of the pattern of racketeering activity before the statute
of limitations begins to run. Moreover, Plaintiffs’ argument
was expressly, if not implicitly rejected in Rotella v. Wood,
528 U.S. 549 (2000) (discovery of injury caused to the
business triggers start of statute of limitations not discovery
of other elements of claim--such as pattern of RICO activity).
Kroenlein, 2013 WL 1337385, *7-8 (emphasis in original).
[¶43] In keeping with this framework, the federal district court’s analysis focused on the
date of injury or the date on which Plaintiffs could have discovered their injury.
Kroenlein, 2013 WL 1337385, *7. We recognize that while the federal court’s focus was
on Plaintiffs’ discovery of their losses, the federal court went beyond determining the
date on which Plaintiffs should have known of their injury and made a finding that
23
“[t]here is no reason or facts before this Court to show why what was discovered in the
fall of 2007 was not discoverable in the fall of 2005.” Id. We are unwilling, however, to
give this finding preclusive effect given that it was made in a context so far afield from
our law governing the accrual of fraud claims. See Carson, ¶¶ 17-18, 322 P.3d at 1266-
68 (rejecting application of collateral estoppel and reasoning that federal jury’s finding
that employee was injured in the course of employment differs from consideration of that
same question in the context of a workers’ compensation determination).
[¶44] The federal court did not make its findings through application of state law
governing the accrual of fraud and conversion claims or through application of state law
defining reasonable diligence. The findings are therefore not entitled to the preclusive
effect dictated by collateral estoppel, and the district court erred in applying the doctrine.
D. Continuing Tort Doctrine
[¶45] As their final argument, Plaintiffs contend that the continuing tort doctrine applies
in this case. In particular, Plaintiffs argue that because the conversion in this matter
involves a series of recurring or continuous tortious acts, the cause of action accrues
anew with each act and not from the date Plaintiffs first discovered or should have
discovered the earliest acts of conversion (and wrongdoer’s identity) and fraud.
Applying this doctrine, Plaintiffs argue that because the final act of conversion alleged
occurred on March 25, 2008, the four-year statute of limitations for the conversion count
would not expire until March of 2012.
[¶46] It is premature for this Court to attempt to address the extent to which the
continuing tort doctrine applies in this case because we simply do not yet know how the
jury is going to find on the discovery rule application. See Reed v. Cloninger, 2006 WY
37, ¶ 22, 131 P.3d 359, 368 (Wyo. 2006) (questions concerning application of the
continuing tort doctrine are factual questions that must be resolved by the fact finder).
Nonetheless, we foresee that the question of the doctrine’s application may arise on
remand and we therefore address it to provide clarification on how the doctrine operates
under Wyoming law should it come into play on remand. See Erdelyi, ¶ 35, 326 P.3d at
175 (citing Glenn v. Union Pac. R.R. Co., 2011 WY 126, ¶ 30, 262 P.3d 177, 191 (Wyo.
2011)) (holding that statute of limitations issue was dispositive of appeal but addressing
jury instruction issue that was likely to arise again on remand).
[¶47] This Court addressed the continuing tort doctrine in Young v. Young, 709 P.2d
1254 (Wyo. 1985). In that case, the plaintiff filed an action for conversion against her
former husband for recovery of overriding oil and gas royalties she claimed had been
wrongfully retained by her former husband. Id. at 1255. The royalties were to be paid
beginning in 1970, and the plaintiff discovered she had not been receiving them in 1982.
Id. at 1255-56. She filed her action in 1983, and the district court dismissed the entirety
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of her claim as barred by the statute of limitations. Id. at 1256. We reversed, in part,
explaining:
As pointed out in Satterfield v. Sunny Day Resources,
Inc., supra, conversion is a tortious act. Appellee’s failure to
remit to appellant her royalty share as received was a
recurring tort of a sort which involved separate and
successive injuries from separate and successive acts. It is an
exemplification of periodic recurring wrongful acts—a series
of tortious acts, each of which could be the basis for a
separate claim, not continuing damage from an original tort.
Various types of tort cases illustrate court holdings in
such instances. The rule is that where there are recurring or
continuous tortious acts, the applicable statute of limitations
accrues from the date of each act that precipitates court action
for recovery and not on the date of the first such act.
Cacioppo v. Southwestern Bell Telephone Company,
Mo.App., 550 S.W.2d 919 (1977); Gowing v. McCandless,
219 Kan. 140, 547 P.2d 338 (1976); Shell Oil Company v.
Parker, 265 Md. 631, 291 A.2d 64 (1972); Nelson v. C & C
Plywood Corp., 154 Mont. 414, 465 P.2d 314, 39 A.L.R. 3d
893 (1970); Kearney v. Atlantic Cement Company, 33
App.Div.2d 848, 306 N.Y.S.2d 45 (1969); Freestate
Industrial Development Company v. T. & H., Inc., La., 188
So. 2d 746 (1966); Harang v. Aetna Life Insurance Company,
Tex.Civ.App., 400 S.W.2d 810 (1966); Fergerson v. Utilities
Elkhorn Coal Company, Ky., 313 S.W.2d 395 (1958). In
other words, all acts are barred for all the wrongs with injury
that accrued prior to the term of limitations running to the
date of filing an action for recovery.
It has been wisely observed that a wrongdoer cannot
and should not gain a prescriptive right to continue wrongful
and injurious acts. Devoke v. Yazoo & M.V.R. Co., 211 La.
729, 30 So. 2d 816 (1947); Nelson v. Robinson, 47 Cal. App. 2d
520, 118 P.2d 350 (1941). While appellant has had the
benefit of the statute of limitations for an extended period and
its useful purposes preserved, no permanent right is bestowed
to continue such wrongful acts during the limitations term
immediately preceding the commencement of appellee’s
action. If allowed during such term, and carrying such a
fallacious doctrine to the extreme, appellant would lose even
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a future right to her overriding royalties.
There is a caveat which must go with the doctrine just
announced. It must be realized that this Court can only apply
a rule applicable to the case at hand. For example, see Dolph
v. Mangus, Ind.App., 400 N.E.2d 189 (1980), where over a
period of years there were recurring wrongful acts and
separate injuries, but they had caused and created a
cumulative injury to a point of becoming permanent damage
before the statutory period next preceding the date of filing of
an action for recovery. The court held the claim barred. The
rule we adopt fits the facts before us, but its application is
relatively narrow and should be applied with caution.
The ultimate result of applying the rule in the case
before us is that appellant may recover for her share of
royalties received but not remitted by appellee accruing
within the four years next preceding the filing of her district
court action. As to the rest, she is barred.
Young, 709 P.2d at 1259-60.
[¶48] As the above discussion and application of the continuing torts doctrine illustrates,
the doctrine is not a mechanism to toll the statutes of limitations. Instead, the doctrine
recognizes the discrete nature of each continuing tort and allows a plaintiff to treat each
act separately for purposes of the statute of limitations, thereby preventing a defendant
from continuing wrongful conduct with impunity when the statute of limitations has run
on the earliest discrete acts. Whether and how the doctrine may operate in this case will
depend on the jury’s findings concerning when Plaintiffs discovered or should have
discovered Defendants’ fraud and conversion.
CONCLUSION
[¶49] The district court correctly held that the discovery rule applies to the fraud and
conversion statutes of limitation. The district court erred, however, in applying the
doctrine of collateral estoppel and in finding that the statutes of limitation for fraud and
conversion barred Plaintiffs’ actions as a matter of law. Disputed issues of material fact
exist concerning application of the discovery rule to Plaintiffs’ claims and those issues of
fact precluded summary judgment. We therefore reverse and remand for proceedings
consistent with this opinion.
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