Pospisil Swift LLC March 12, 2018

When clients come to us for help, the first thing we do is determine the applicable statute of limitations for all potential claims. A statute of limitations is the time period during which a claim must be filed in a court of law or other legal tribunal. The purpose of a statute of limitations is twofold: (1) it provides potential plaintiffs a clear picture of when they must assert their claims and (2) it provides certainty to potential defendants that they may not be liable for actions taken many years ago.

In Missouri, statutes of limitations for various claims are set by the legislature. These statutory periods vary based on the type of claim at issue. For example, the statute of limitations for a medical malpractice claim is a short two years, whereas a breach of a contract has a limitations period of five, and sometimes even ten years. See RSMo. §§ 516.105 and 516.120.

Determining the length of the appropriate statute of limitations is only the first step. The next and often more important question is “when does the Missouri statute of limitation begin to run?” The answer is often more complicated than many assume.

The Missouri Court of Appeals recently discussed how to determine when a statute of limitations begins to run in Richard Aguilar v. Thompson Coburn LLP, et al. (Mo. App. E.D. March 6, 2018). The plaintiffs in the case were seventy-eight individuals who fell prey to a fraudulent investment scheme that was, in reality, a Ponzi scheme. The scheme was operated by Martin Sigillito, a St. Louis attorney. Sigillito used an unwitting bank – Allegiant Bank – to facilitate his fraudulent investment scheme.

Allegiant Bank was represented by the law firm of Thompson Coburn. In 2001, Allegiant uncovered irregularities with the investment scheme that violated Internal Revenue Service rules and procedures. With the assistance of its lawyers at Thompson Coburn, Allegiant Bank exited its involvement in the scheme. The role of Allegiant Bank was subsequently assumed by another unwitting party. Neither Allegiant Bank nor Thompson Coburn informed any of the seventy-eight investors of their concerns with Sigillito’s investment scheme.

In 2010 the Ponzi scheme collapsed. Sigillito was arrested and charged with money laundering, fraud, and mail fraud. His indictment was unsealed and made public in May 2011.

The seventy-eight defrauded plaintiffs filed suit against Thompson Coburn on October 31, 2016. They asserted claims for: (1) aiding and abetting Sigillito’s breach of fiduciary duty; (2) conspiring with Sigillito and Allegiant Bank to breach Sigillito’s breach of fiduciary duty; (3) conspiring with Sigillito and Allegiant Bank to perform and conceal unlawful acts; and (4) aiding and abetting Allegiant’s violations of Missouri’s Uniform Fiduciaries Law. The allegations against Thompson Coburn focused on events that occurred in 2001. Plaintiffs asserted that they only discovered Thompson Coburn’s involvement when they uncovered specific documents in 2015.

The parties agreed the applicable statute of limitations was five years. They disagreed on when that period of time began to run. Plaintiffs contended that the five-year limitation period started in 2015 – when they discovered the involvement of Thompson Coburn. Conversely, Thompson Coburn argued the case was filed too late because the statute began to run in 2001 – when it assisted Allegiant Bank. Since the case was not filed until 2016, Thompson Coburn filed a motion to dismiss the case as barred by the statute of limitations. The lower court granted the motion and dismissed the action. Plaintiffs appealed to the Missouri Court of Appeals.

On appeal, the Court began its analysis by noting that in Missouri a cause of action accrues – meaning the statute of limitations begins to run – when the damage resulting from the action is “sustained and capable of ascertainment.” The applicable statute is RSMo. § 516.100 and provides, in relevant part:

Civil actions . . . shall not be deemed to accrue when the wrong is done or the technical breach of contract or duty occurs, but when the damage resulting therefrom is sustained and is capable of ascertainment, and, if more than one item of damage, then the last item, so that all resulting damage may be recovered, and full and complete relief obtained.

The Missouri Supreme Court has expounded on when an action accrues, creating a so-called “capable-of-ascertainment” analysis. Under this analysis, the determinative factor of when a statute of limitations begins to run is whether “a reasonable person would have been put on notice that an injury and substantial damages may have occurred and would have undertaken to ascertain the extent of damages.” Powel v. Chaminade Coll. Preparatory, Inc., 197 S.W.3d 576, 580 (Mo. banc. 2006) (emphasis added).

Plaintiffs in the Thompson Coburn case argued they did not “have sufficient knowledge” of the complained-of actions taken by Thompson Coburn. Further, plaintiffs argued they had no specific knowledge that Thompson Coburn was even involved with Allegiant Bank or the investment scheme until they uncovered documents identifying the firm in 2015.

The Court of Appeals rejected plaintiffs’ argument, noting the test is an “objective” test of reasonableness, not a “subjective” test. In other words, it does not matter when the actual plaintiffs became aware of the actual actions of Thompson Coburn. The question is whether a “reasonably prudent person” would have been put on notice of injury and resulting damages. The Court reiterated the rule of when a cause of action accrues and the statute of limitations begins to run:

Critically, the capable-of-ascertainment test is an objective one, and damages are ascertainable “when the fact of damage can be discovered or made known, not when the plaintiff actually discovers injury or wrongful conduct.” Farrow v. St. Francis Med. Ctr., 407 S.W.3d 579, 599 (Mo. banc 2013) (emphasis added) (quoting Klemme v. Best, 941 S.W.2d 493, 497 (Mo. banc. 1997). Stated differently, the plaintiff’s knowledge of subjective discovery of the injury and the cause of that injury are not required to trigger the statute of limitations under Section 516.100. Graham v. McGrath, 243 S.W.3d 459, 462 (Mo. App. E.D. 2007). The plaintiff’s unreasonable failure to recognize the harmful nature of the purported tortfeasors wrongful conduct will not prevent the accrual of his or her cause of action. Id. at 463.

Applying this test, the Court upheld the dismissal of plaintiffs’ claims against Thompson Coburn as untimely. The Court held that the investors’ injuries and damages were capable of ascertainment by May 2011. By that time the investment scheme had collapsed and plaintiffs had lost significant money. More importantly, however, Sigillito’s indictment was made public in May 2011. According to the Court, the facts in that indictment should have alerted plaintiffs to investigate the potential involvement of Allegiant Bank and others. The Court recognized that plaintiffs did not have any clue about Thompson Coburn’s involvement at that time, but that did not matter, because “Missouri jurisprudence clearly mandates that the statute of limitations commences to run when the plaintiff has notice of actionable injury resulting from the wrongful conduct, notwithstanding the plaintiff’s inability to identify the particular defendant and connect him or her to the damaging misconduct.”

The bottom line from the Thompson Coburn ruling is this: ascertaining when a statute of limitations begins to run is based on an objective test of whether a reasonable person would ascertain whether injury and resulting damages has occurred. As the facts in Thompson Coburn make clear, however, even the use of an objective test can involve complicated issues that are best examined by experienced attorneys.

Statutes of limitations should never be taken lightly. Once a statute period runs, an untimely claim or action can be lost forever. If you or someone you know has a potential cause of action, but you are uncertain as to when that action must be filed, please contact Pospisil Swift by reaching out to Mike Pospisil (816.895.9015) or Matt Swift (816.895.9107) for a free initial consultation.

The information contained on this website is informational only and not intended to be, and does not constitute, legal advice. While we attempt to update our site regularly, the information does not necessarily reflect the most current legal developments. You should not act or refrain from acting based upon information provided on this site without first consulting legal counsel.