# Petition for Writ of Certiorari — First Team Auction, Inc. v. First State Bank of Clay County > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_1933%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1987 - **Citation:** 481 U.S. 1017 ## Text 86 -1445 Sf egteew MAR? 1987 BOSEPH F. SPANIOL, UR, CLERK NO. IN THE SUPREME COURT OF THE UNITED STATES October Term 1986 FIRST TEAM AUCTION, INC., Petitioner, Vv. FIRST STATE BANK OF CLAY COUNTY (FORMERLY FIRST STATE BANK OF LINEVILLE), Respondent PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT Ben F. Easterlin IV Ellis, Easterlin, Peagler & Gatewood, P.C. P.O. Box 488 Americus, Georgia 31709 (912) 924-9316 Attorney for Petitioner QUESTION PRESENTED FOR REVIEW Whether the courts below exceeded their jurisdiction and statutory authority when they resolved disputed and genuine issues of material fact in favor of the respondent-movant on a mo- tion for summary judgment. CERTIFICATE OF INTERESTED PERSONS The undersigned counsel of record certifies that the following listed persons have an inter- est in the outcome of the case. These represen- tations are made in order that the Judges of this Court may evaluate possible disqualifications or recusal: First Team Auction, the Petitioner herein Ellis, Easterlin, Peagler & Gatewood, P.c. Ben F. Easterlin IV, attorney for Petitioner Larry Morris, attorney for Petitioner Thomas Reuben Bell, attorney for Respondent James J. Odom, Jr., attorney for Respondent inh Sms QUESTION PRESENTED FOR REVIEW .... CERTIFICATE OF INTERESTED PERSONS .... TABLE OF CONTENTS ......-. LIST OF AUTHORITIES . ...... oe a I kg ke gs ef mf lll CONSTITUTIONAL AND STATUTORY PROVISIONS ERVOLVED . « « 2 © « ener SP OE OE klk tl lt ltl REASONS FOR GRANTING CERTIORARI ..... EEE « ¢ « e 8 «© « « APPENDICES A. The opinion of the Court of ee B. The opinion of the district court C. Excerpts from the affidavit of Carlus D. Gay, Jr., dated November 4, 1985. . D. Excerpts from the affidavit of Carlus D. Gay, Jr., dated February 14, I Weta as 5 Bide te & Se. ti) GS! Le -iii- LIST OF AUTHORITIES CASES Page Adickes v. S.H. Kress & Co., 398 U.S. [As (eee 4 4 ee ee 14 Admiralty Fund v. Jones, 677 F.2d 1289 (9th Cir. 1982) . . - ++ 4+ 2 «© + 22 Allen v. A.H. Robins Co., 752 F.2d 1365 (9th Cir. 1985) ..- ++ +++ +++ 21 Amason v. First State Bank of Lineville, 369 So. 2d 547 (Ala. 1979) - -+-s. + 17 Bajalia v. Jim Magill Chevrolet, Inc., 497 So. 2d 489 (Ala. 1986) ... - 12 Braxton-Secret v. A.H. Robins Co., 769 F.2d 528 (9th Cir. 1985) <— ok so 21 Celotex Corp. v. Catrett, 106 S. Ct. 2548 (1986) ee ee oe oe oe a ae McMillan & Niemeyer, Inc. Vv. Earle, Dekle, 418 So. 2d 97 (Ala. CS a ee ee 19, 25 Elrod v. Ford, 489 So. 2d 534 gg 8 Se ee eee ee Emmet v. Eastern Dispensary & Casualty Hospital, 396 F.2d 931 (D.C. Ger. SEs a at oe ie a 8 oe we el ee 23 Erie Railroad v. Tompkins, 304 U.S. 64 re 6 og a ks) ee nee eae ae niga CASES (Cont. ) Page Exnicious v. United States, 563 F.2d S26. (3008 Cis. 2977) «ot sc cnnenr irst Team Auction v irs ate of Clay County, No. CV85-H-2383-E (N.D. Ala. Apr. 24, 1986) ..... 2 First Team Auction v. First State Bank of Lineville, 808 F.2d 60 (llth Cir. 1986) . 2 Gates Rubber Co. v. USM Corp., 508 F.2d 603 (7th Cir. Seen bh ao alates & 23 Hartford Life Insurance Co. v. Title Guarantee Co., 520 F.2d 1170 - Cc. Cle. S970) 2c « ° a ae Hunt v. American Bank & Trust Co. of Baton Rouge, 783 F.2d 1011 (11th Cir. 1986) * > . — .* . . * _ > >. _ — . * 25 n re Bee st Antitrust Litigation, 600 F.2d 1148 (Sth 1979), cert. denied, 449 U.S. 905 (1980) . 22 Lund; v. Union Carbide, 695 F.2d 394 (9am Clee Beet + ow bes ee ee OS Robertson v. Seidman & Seidman, 609 F.2d 583 (2d Cir. fy ) a eT Sartor v. Arkansas Natural Gas Corp., ous Guns: Gee eee): «+ se ce ee Sewers v. A.H. Robins Co., 715 F.2d 1559 (11th Cir. 1983) . . > * * .* . *. . . 24 -V- CASES (Cont. ) Page Sperry v. Ba , 523 F.2d 708 (7th Cir. 1975) > @. ae ee ee 23 Tyson v. Johns-Manville Sales Corp., 399 So. 2d 263 (Ala. 1981) ..-.--. 12 Williams v. Bedenbaugh, 215 Ala. 200, 110 So. 286 (1926) a” ee a 18, 19 CONSTITUTIONAL PROVISION U.S. Const. amend. VII STATUTES Ala. Code § 6-2-3 (1975 & Supp. 1986) Ala. Code § 6-2-39 (1975) (repealed) Ala. Code § 6-2-38 (Supp. 1986) FEDERAL RULES OF CIVIL PROCEDURE Teas. BP. Civ. BP, BS -vi- No. IN THE SUPREME COURT OF THE UNITED STATES October Term 1986 FIRST TEAM AUCTION, INC., Petitioner, Vv. FIRST STATE BANK OF CLAY COUNTY (FORMERLY FIRST STATE BANK OF LINEVILLE), Respondent. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT To the Honorable Chief Justice and Associate Justices of the Supreme Court of the United States: Petitioner, FIRST TEAM AUCTION, INC., prays that a writ of certiorari issue to review the December 10, 1986 judgment of the United States Court of Appeals for the Eleventh Circuit. OPINIONS WwW The opinion of the Court of Appeals, First Team Auction v. First State Bank of Lineville, 808 F.2d 60 (11th Cir. 1986), is a per curiam affirmation of the district court opinion. A copy of the order of the Court of Appeals is attached hereto as Appendix A. The opinion and order of the district court, First Team Auction vy. First State Bank of Clay County, No. CV85-H- 2383-E (N.D. Ala. Apr. 24, 1986) is attached hereto as Appendix B. JURISDICTION The judgment of the district court in favor of Respondent was entered April 24, 1986. The Court of Appeals affirmed the district court’s judgment, per curiam, on December 10, 1986. The jurisdiction of this court is involved pursuant to 28 U.S.C. § 1254(1). CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED U.S. Const. amend. VII provides, in pertinent part: In Suits at common law, where the value in controversy shall exceed twen- ty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any Court of the United States, than according to the rules of the common law. Fed. R. Civ. P. 56(c) provides, in pertinent part: Motion and proceedings thereon The motion shall be served at least 10 days before the time fixed for the hearing. The adverse party prior to the day of hearing may serve oppos- ing affidavits. The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine Fed. issue as to any material fact and that the moving party is entitled to a judg- ment as a matter of law. A summary judgment, interlocutory in character, may be rendered on the issue of liability alone although there is a genuine issue as to the amount of damages. R. Civ. P. 56(e) provides, in pertinent part: Form of affidavits; further testimony; defense required Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is com- petent to testify to the matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith. The court may permit affidavits to be supple- mented or opposed by depositions, answers to interrogatories, or further affidavits. When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him. Ala. Code § 6-2-3 (1975) provided, in pertinent part: Accrual of claim--Fraud. In actions seeking relief on the ground of fraud where the statute has created a bar, the claim must not be considered as having accrued until the discovery by the aggrieved party of the fact constituting the fraud, after which he must have one year within which to prosecute his action. (Code 1852, § 2492; Code 1867, § 2916; Code 1876, § 3242; Code 1886, § 2630; Code 1896, § 2813; Code 1907, § 4852; Code 1923, § 8966; Code 1940, T.7, § 42.) Ala. Code § 6-2-3 (Supp. 1986) provides, in per- tinent part: Accrual of claim--Fraud. In actions seeking relief on the ground of fraud where the statute has created a bar, the claim must not be considered as having accrued until the discovery by the aggrieved party of the fact constituting the fraud, after which he must have two years within which to prosecute his action. (Code = 1852, § 2492; Code 1867, § 2916; Code 1876, § 3242; Code 1886, § 2630; Code 1896, § 2813; Code 1907, § 4852; Code 1923, § 8966; Code 1940, T. 7, § 42; Acts 1984, 2nd Ex. Sess., No. 85-39, p. 40, § 2.}- Ala. Code § 6-2-39(a)(5) (1975) (repealed) provided, in pertinent part: (a) The following must be commenced within one year: (5) Actions for any injury to the person or rights of another not arising from contract and not specifically enumerated in this section[.] Ala. Code § 6-2-38(1) (Supp. 1986) provides, in pertinent part: (1) All actions for any injury to the person or rights of another not arising from contract and not specifi- cally enumerated in this section must be brought within two years. STATEMENT OF THE CASE On September 6, 1985, Petitioner filed a complaint in the United States District Court for the Northern District of Alabama alleging that in July 1983, Appellee fraudulently misrepresented the value of certain real property securing a note sold at that time to Petitioner by Respon- dent. Jurisdiction was founded on diversity of citizenship and jurisdictional amount in con- troversy. 28 U.S.C. § 1332. Respondent defended on the grounds, inter alia, that the complaint was barred by the Alabama statute of limitations. Subsequently, Respondent filed a motion for sum- mary judgment on the grounds that Petitioner knew, or should have known, of any fraud as of January 9, 1984, and that Petitioner’s complaint was violative of the Alabama one-year statute of limitations for fraud claims. The district court granted summary judgment to Respondent, and the court of appeals subsequently affirmed, per curiam, the district court’s judgment. FACTS: First Team Auction, Inc. [hereinafter “"Petitioner”] is an auction company located in Americus, Georgia and is in the business of con- ducting consignment auctions of farm equipment, construction equipment, livestock and real es- tate. R1-11-2.1 prior to July 1983, Petitioner operated almost exclusively in the State of Geor- gia and had never sold any real property in Alabama. R1-14-6. In the spring of 1983, Petitioner began negotiating with Madison H. Hooton, Sr., Marion P. Hooton, Madison H. Hooton, Jr., and Marion E. Hooton d/b/a The Hooton Com- pany (“Hooton”) to sell approximately three thousand acres of timberland (“the timberland”) owned by Hooton in Randolph, Clay, and Tallapoosa lReferences are, unless otherwise noted, to the record as it was labelled in the Court of Appeals. Counties, Alabama. At the time, Hooton was primarily engaged in the production and sale of chickens and eggs and had accumulated large in- debtedness to certain lenders and to certain suppliers of chickens, feed and other similar items. These creditors ("the lienholders”) had secured Hooton’s indebtedness to them through mortgages and judgments on the timberland. Hooton expressed to Petitioner a desire to sell some of the timberland in order to reduce his total indebtedness. In early or middle June 1983, Hooton and Petitioner agreed that Petitioner would auction the timberland in July 1983. R1-11-2. At the same time, Hooton and Petitioner executed a second contract whereby Petitioner was to auction other property of Hooton in the spring of 1984. This property was residential and recreational development property on a lake (the “lakefront property”), and it was mortgaged to the First State Bank of Lineville (“Respondent”). R1-11-3. Respondent agreed to release its mortgage to facilitate the spring 1984 auction. R1-11-3, 4. R1-11-2. On or about July 5, 1983, Ken Vaughn, Presi- dent of Respondent bank, informed Petitioner that, despite its earlier agreement to release its lien on the lakefront property in the spring of 1984, that foreclosure of Respondent’s mortgage on the lakefront property was now im- minent. Hooton, Petitioner and Respondent then entered into negotiations to forestall the foreclosure. R1-11-4. During these negotiations Respondent showed Petitioner an MAI? appraisal representing the fair market value of the lakefront property to be in excess of one million 2”Member Appraisal Institute” denotes an or- ganization for real estate appraisers of the highest standards. -lli- dollars. Respondent emphasized that this was a MAI appraisal and that the appraisal was there- fore totally reliable as an indication of the value of the property. R1-11-5. Concerned that Respondent’s threatened foreclosure of Hooton’s lakefront property would chill the sale of the timberland in the July 1983 auction, Petitioner purchased the Hooton mortgage to Respondent. R- 11-6, 7. In purchasing this mortgage, Petitioner dic not have time to make an independent determina- tion of the value of the lakefront property and relied entirely on the MAI appraisal and the representations of Respondent. On July 23, 1983 First Team conducted the auction of the timber- land, but shortly thereafter Hooton filed a Chap ter 11 petition in the United States Bankruptcy Court, nullifying all sales at this auction. In August 1984, Appellant was finally able -12- to obtain a release of both the timberland and the lakefront properties from the Bankruptcy Court and sell them at auction. The lakefront property sold for considerably less than the value represented to Petitioner by Respondent, and Petitioner did not recover the sum it paid to Respondent to purchase the mortgage on this pro- perty. This was Petitioner’s first indication or knowledge that the lakefront property was worth less than the value represented by Respondent in July 1983. R1-11-9, 10. In May of 1985, Hooton told Petitioner that Respondent knew in July 1983 that the MAI appraisal of the lakefront property overstated its value and the Respondent tricked Petitioner into purchasing this mortgage in order to transfer the potential loss on Hooton’s debt to Petitioner. R1-11-11. This was Appeilant’s first knowledge of Appellee’s fraudulent mis- representation of the value of the lakefront -13- property. R1-11-11. The parties and the trial judge below were all in agreement that January 9, 1984 was the critical date for determining whether or not Petitioner’s fraud cause of action was time- barred. When the contract for sale of the mortgage was entered into in July 1983, the Alabama statute of limitations for action based on fraud was one year. Ala. Code § 6-2-39(a) (5) (1975) (repealed by Act No. 85-39, 1984-85 Ala. Acts (2nd Special Sess. 40). As of January 9, 1985, fraud claims are governed by the two-year statute of limitations of Ala. Code § 6-2-38(1) (Supp. 1986). Because of the Alabama fraudulent concealment statute, Ala. Code § 6-2-3 (1975 & Supp. 1986), a cause of action for fraud is tolled until the fraud either is discovered, or should have been discovered. Again, the parties agreed that, if -14- Petitioner did not, utilizing due diligence, discover the fraud perpetrated by the Respondent before January 9, 1984, Petitioner would gain the benefit of the new two-year provision of both Ala. Code §§ 6-2-38(1) and 6-2-3, and the cause of action would not be time-barred. See Tyson v. Johns- vi orp., 399 So. 2d 263, 268- 69 (Ala. 1981) (limitations period may be ex- tended by legislature retroactively as long as claim not already time-barred when legislature acts). Cf. Bajalia v. Jim Magill Chevrolet, Inc., 497 So. 2d 489, 491 (Ala. 1986) (cause of action for fraud filed after expiration of one- year period following discovery of fraud not revived by subsequent amendment of Ala. Code § 6- 2-39 (Supp. 1986)). The critical issue, there- fore, is whether the district court, and court of appeals properly concluded that, as a matter of law, Petitioner should have discovered the fraud -15- of Respondent prior to January 9, 1984. REASONS FOR GRANTING CERTIORARI In reaching its per curiam decision affirn- ing the judgment of the district court granting the Respondent summary judgment, the court of appeals has decided a question of federal law in conflict with past decisions of this Court and other courts of appeals; furthermore, the court below “has so far departed from the accepted and usual course of proceedings, or so far sanctioned such a departure by a lower court, as to call for an exercise of this Court’s power of super- vision.” Sup. Ct. R. 17.1(a). It has always been clear that Fed. R. Civ. P. 56, which governs the procedure of summary judgment, may not sanction a violation of U.S. Const. amend VII: i.e., a trial judge may not, under the guise of a summary judgment motion, -16- “cut litigants off from their right of trial by jury_if they really have issues to try.” Sartor Vv. s N as , 321 U.S. 620, 627 (1944) (finding summary judgment inappropriate where it invaded province of the jury). There- fore, in order to ensure that a litigant’s right to trial is not violated, Fed. R. Civ. P. 56 must be interpreted to foreclose summary judgment where there do exist disputed issues material to the resolution of the case. Furthermore, even if the nonmoving party will bear the ultimate burden of persuasion at trial with respect to an issue, summary judgment is only appropriate in the ab- sence of a conflict in the materials considered on the motion. Celotex Corp. v. Catrett, 106 S. Ct. 2548 (1986); Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970). In deciding whether there is a genuine issue of material fact, the court must view the evidence presented in the light most -17< favorable to the nonmoving party and resolve all conflicts in favor of that side. Id. This is precisely what the courts below failed to do. This is not a case such as Celotex, in which the nonmoving party introduced no summary judgment evidence in support of the position it bore the burden to establish at trial. Here, the allega- tions of Respondent--that the Petitioner should have discovered the fraud prior to January 9, 1984--were rebutted by the affidavits submitted to the court by Carlus D. Gay, Jr., the President of First Team Auction, the Petitioner (excerpts from which are attached hereto as Appendices C and D). The key to the controversy is contained in the meaning of Ala. Code § 6-2-3 (1975 & Supp. 1986). This is a fraudulent concealment statute, but it is clear that it operates in the same manner as a “discovery rule” when the underlying basis of the cause of action is fraud itself: Under § 6-2-3, Code 1975, an ac- tion for fraud must be brought within one year from the discovery of the fraud. The statute of limittions will not begin to run until the plaintiff knows of facts which would have put a reasonable mind on notice of tne pos- sible existence of fraud. Facts showing a fraud are con- sidered to be discovered when they should have been discovered by one who has acquired knowledge sufficient to provoke inquiry in the mind of a person of ordinary prudence. Butler v. Guaranty Savings & Loan Ass’n, 251 Ala. 449, 37 So.2d 638 (1948). One who is being deceived, however, may be lulled into a false sense of security. Conse- quently, “[a] party thus situated is not required to presume fraud or suspect it, until something comes to him leading a just person to suspect and make inquiry.” Williams v. Beden- baugh, 215 Ala. 200, 110 So. 286 (1926). Earle, McMillan & Niemeyer, Inc. v. Dekle, 418 So. 2d 97, 99-100 (Ala. 1982) (emphasis added) (holding that purchasers of real property who alleged fraudulent misrepresentations of PO cae -19- brokerage firm and real estate salesman fell within fraudulent concealment exception where there was no reason for plaintiffs to have ques- tioned representations). While it is true that the ultimate burden of persuasion at trial regarding the tolling of the statute is upon the plaintiff relying on the exception, Amason v. First State Bank of Lineville, 369 So. 2d 547, 550-51 (Ala. 1979), the question of whether plaintiffs should have discovered the fraud in question within a certain time is one for the jury when plaintiff’s evidence is “sufficient to raise a reasonable inference in support of their position that they did not discover a condition which put them on notice of possible fraud[.]” Elrod v. Ford, 489 So. 2d 534, 537 (Ala. 1986). Furthermore, whether tne Petitioners in the case sub judice exercised due diligence in discovering the fraud must be analyzed in the following -20- statement of the law in Alabama: Broadly speaking, the facts con- stituting the fraud are to be con- sidered as discovered when they ought to be discovered, when such facts come to knowledge as provoke inquiry in a person of ordinary prudence, and which, if followed up, would lead to the dis- covery of the fraud. But this rule is not to be so applied as to defeat the ends of the statute. Fraud, in the nature of it, implies that the party as en mi nd WwW i se sen j A_part thus situated is not required to esum ud or sus it ti something comes to him leading a just person to suspect and make inquiry. Dealing with the case before us, only a period of some four months elapsed from the time of the purchase of the stock until the twelve months’ period provided by the saving clause of the statute began. This is not per se an unreasonable time for the discovery of the fraud or such time as calis for explanation of long acquiescence and delay. In such case, we think the rule stated in Maxwell v. Lauderdale, supra, quite strict enough; viz., the replica- tion should show how and when the facts constituting the fraud became known, with a general denial of the knowledge of such facts theretofore. -21- Williams v. Bedenbaugh, 215 Ala. 200, 110 So. 286, 289 (1926) (emphasis added). The district court, in holding that Respon- dent was entitled to summary judgment, does not even refer to the affidavits of Petitioner’s president filed in opposition to summary judgment [Appendices C-D]. The district court in essence held that Petitioner should have discovered the fraud prior to January 9, 1984 because: (1) an agent of the Petitioner purchased certain lakefront property in July 1983 that should have put Petitioner on notice of the fraud (Appendix B-6); (2) Petitioner is a “sophisticated cor- poration with considerable experience in the purchase, sale and development of real estate,” (Appendix B-7); and (3) Petitioner had its representatives on the land involved by July 1983 (Appendix B-7). The court concluded that Petitioner should have attempted to discover the -22- fraud before 1984. However, it is clear that under Alabama substantive law which the district court was constitutionally bound to apply in this diversity case, j ailro Vv fe) ins, 304 U.S. 64 (1938); that the Petitioner was under no absolute duty to investigate possible fraud where there was no indication, until well into 1984, that any fraud existed. a cMillan & Niemeyer, Inc. v. Dekle, supra; Williams v. Bedenbaugh, supra. Furthermore, on most of the “facts” found by the district court in reaching its conclusion, the court was just plain wrong, as demonstrated by the affidavits by Petitioner’s president. For example, Petitioner denied that any lakefront property was sold in July 1983 (Appendix C-1). Thus, Petitioner, contrary to the finding of the court, did not have construc- tive knowledge that the lakefront property would sell for less than the appraisal. Second, aot ty pe a -23- Petitioner denied that it had any experience in the sale of lakefront property, and did not have “considerable oxpexiance in the purchase, sale and development of real estate” (Appendix B-7; C-2). Finally, Petitioner denied that any of its representatives inspected the lakefront property until the spring of 1984; a fact which Respondent was aware of (Appendix D-1-3; C-2-3). Thus, all of the basis of the district court’s decision were the subject of hotly-dis- puted issues. By resolving the disputes in favor of the moving party the district court, and the court of appeals in affirming the trial court’s decision, violated the meaning and spirit of Fed. R. Civ, PP. 56. Other circuit courts of appeals, in con- sidering whether summary judgment was appropriate when the nonmoving party claimed that the injury was not discoverable before a particular point in -24- time, have disagreed with the analysis of the district court in this case. For example, in Braxton-Secret v. A.H. Robins Co., 769 F.2d 528 (9th Cir. 1985), it is stated that questions involving a person’s state of mind are generally factual issues inappropriate for summary judg- ment, and such judgment should not be granted where contradictory inferences can be drawn from even undisputed facts. Id. at 531 (concluding that plaintiff’s fraudulent concealment defense did not preclude summary judgment where plaintiff gained actual independent knowledge of the wrong dispute concealment); see also Allen v. A.H. Robins Co., 752 F.2d 1365 (9th Cir. 1985) (re- versing summary judgment in favor of manufacturer to permit plaintiff to set up fraudulent conceal- ment defenses); Lundy v. Union Carbide, 695 F.2d 394 (9th Cir. 1982) (trial court’s grant of sum- mary judgment improper where there existed fac- aa a een Ce -25- tual dispute as to whether plaintiff should have discovered medical injury prior to a particular date); Admiralty Fund v. Jones, 677 F.2d 1289 (9th Cir. 1982) (it was not clearly shown in securities fraud action that buyer was put on notice of defendant’s alleged misrepresentations regarding corporate shares; thus, plaintiff’s due diligence, or lack thereof, was substantial issue of material fact, precluding summary judgment). Other circuits are in accord. The Fifth Circuit, prior to the split-off and creation of the Eleventh Circuit, held in In re Beef Industry Antitrust Litigation, 600 F.2d 1148, 1170 (5th 1979), cert. denied, 449 U.S. 905 (1980), that the question of when the statute of limitations began to run in the face of a claim of fraudulent concealment “is a factual one, .. . and is therefore not determinable on a motion for sum- mary judgment” (citation omitted). -26- With respect to the Court of Appeals, Dis- trict of Columbia Circuit, see Hartford Life Insurance Co. v. Title Guarantee Co., 520 F.2d 1170 (D.C. Cir. 1975) (reversing summary judgment where issue of whether plaintiff should have learned of fraudulent conduct earlier than it did was not established as a matter of law); Emmet v. Eastern Dispensary & Casualty Hospital, 396 F.2d 931 (D.C. Cir. 1967) (genuine issue of fact remained as to plaintiff’s fraudulent concealment claim barring summary judgment). The Second Circuit is in agreement, Robertson v. Seidman & Seidman, 609 F.2d 583 (2d Cir. 1979) (summary judgment erroneously granted where conflicting inferences could be drawn from affidavits as to whether plaintiff exercised due diligence in discovering cause of action). In the Seventh Circuit, see Sperry v. Bargaren, 523 F.2d 708 (7th Cir. 1975) (whether -27- alleged fraud was concealed or was of such a nature as to conceal itself, thus tolling statute of limitations, could not be resolved on summary judgment because of questions of fact); Gates Rubber Co. v. USM Corp., 508 F.2d 603 (7th Cir. 1975) (evidence of fraudulent concealment raised factual issue, precluding summary judgment). See also Exnicious v. United States, 563 F.2d 418 (10th Cir. 1977) (material fact existed as to whether claimant should have discovered condition before he did, precluding summary judgment). The Eleventh Circuit cases cited by the district court below are clearly distinguishable. In Sewers v. A.H. Robins Co., 715 F.2d 1559 (11th Cir. 1983), the plaintiff claimant’s cause of action was products liability--not fraud. Thus, she was required, under Alabama law, to allege and plead the acts constituting fraudulent con- cealment on the part of the defendant manufac- -28- turer. This, like the plaintiff in Celotex Corp. v. Catrett, supra, she wholly failed to do. There were thus no disputed issues as to when she should have discovered the fraud, since she had not alleged any fraud at all. 715 F.2d at 1561- 62. The fraud in the case sub judice lies in the underlying cause of action; no party has sug- gested that the facts constituting that cause of action have not been alleged. Furthermore, Hunt v. American Bank & Trust Co. of Baton Rouge, 783 F.2d 1011 (11th Cir. 1986) is likewise not controlling here. In that case, the original receiver had already deter- | mined, outside the limitations period, facts | indicating that certain transactions were | fraudulent, or suspected them to be so. In the present case, Petitioner has submitted competent summary judgment evidence that there were no such suspicions until the spring of 1984. Because of nT | -29- the high reputation for accuracy attributed to MAI appraisals, Petitioner had no reason to look for fraud where none appeared on the face of the transaction, and had no duty to do so under Alabama law. Earle, McMillan & Niemeyer, Inc. v. Dekle, supra, 418 So. 2d at 100. In sanctioning per curiam the actions of the district court, it is submitted that the court of appeals has acted inconsistently with the decisions of this Court and other circuit courts of appeals. Thus, Petitioner requests that this Court exercise its supervisory authority and reverse the court of appeals. -30- CONCLUSION Wherefore, Premises Considered, Petitioner respectfully prays that a Writ of Certiorari be granted. Respectfully submitted, KX EMME Ben F. Easterlin IV Ellis, Easterlin, Peagler & Gatewood, P.C. P.O. Box 488 Americus, Georgia 31709 (912) 924-9316 Attorney for Petitioner -31- I certify that I have this date served three (3) copies each of the foregoing Petition for Writ of Certiorari upon the First State Bank of Clay County (formerly State Bank of Lineville), by mailing true and correct copies of the same correctly addressed, and with sufficient postage affixed thereto, to the following counsel: Thomas Reuben Bell 223 North Norton Avenue Sylacauga, Alabama 35150 James J. Odom, Jr. P.O. Box 11244 Birmingham, Alabama 35202-1244 4H This 6 day of Be ‘Zz , (a br. F. Z_Caele IV Attorney for Petitioner APPENDIX A The opinion of the Court of Appeals: IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT NO. 86-7371 FIRST TEAM AUCTION, Etc., DO NOT PUBLISH Plaintiff-Appellant, versus FIRST STATE BANK OF LINEVILLE, etc., Defendant-Appellee. Appeal from the United States District Court for the Northern District of Alabama Before RONEY, Chief Judge, JOHNSON, Circuit Judge, and ESCHBACH*, Senior Circuit Judge. Irie. PER CURIAM: AFFIRMED. See Circuit Rule 25. *Honorable Jesse E. Eschbach, Senior U.S. Circuit Judge for the Seventh Circuit, sitting by desig- nation. ~~ ne ee nate Ne eee et APPENDIX B The opinion of the district court: IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA EASTERN DIVISION FIRST TEAM AUCTION, INC., ) PLAINTIFF, ) vs. ) CV85-H-2383-E FIRST STATE BANK OF CLAY ) COUNTY, DEFENDANT. | MEMORANDUM OF DECISION This cause is before the court on the motion of defendant for summary judgment in its favor on the complaint. The factual background of this case is presented in the court’s order entered January 3, 1986, detail here. and will not be reiterated in This action arises out of a transaction between plaintiff and defendant culminating in an agreement executed July 21, 1983. On September 6, 1985, plaintiff filed this suit, claiming to have been defrauded by defendant in the July 1983 transaction. Defendant’s main asserted ground for summary judgment is that plaintiff’s claim herein is time barred. Three Alabama statutes are relevant here. Before 1985, fraud claims in Alabama were governed by the one-year statute of limitations in Ala. Code §6-2-39(a) (5) (1975) (repealed by Act No.85-39, 1984-85 Ala. Acts (2nd Special Sess.) 40). Effective January 9, 1985, such claims fall under the two-year statute prescribed by Ala. Code §6-2-38(1) (Supp. 1985). The finai statute that is critical here is Ala. Code §6-2-3 (1975 and Supp. 1985), which tolls the statute of limitations on a fraud claim until such time as cA ~* Siar: NR eagle. or 28 hl a le Ait OS Tita 4 Naa | Rte lat Bis 0 MED as A ee iy ee the plaintiff should with reasonable diligence have discovered the fraud. (Before January 9, 1985, a party plaintiff had one year from the date the fraud should have been discovered to bring suit. Act No. 85-39, supra, extended that time to two years, effective January 9, 1985). The parties are in agreement that plaintiff gains the benefit of the two-year statute if it could not with reasonable diligence have dis- covered its fraud claim before January 9, 1984. See Tyson v. Johns-Manville Sales Corp., 399 So. 2d 263, 268-69 (Ala. 1981) (legislature may ex- tend limitations period for existing claim, so long as claim was not already time barred at the time of the legislative action). Thus, the cru- cial inquiry here is whether plaintiff’s alleged fraud claim arose before January 9, 1984. If it arose before that date, it would have been time barred under §6-2-39(a) (5) well before this suit was filed. If it arose on or after that date, plaintiff gained the benefit of §6-2-38(1) and the amended §6-2-3 and obtained an extra year in which to file suit. As an initial proposition, it must be noted that, but for §6-2-3, plaintiff’s claim would have arisen in July 1983, the time of the alleged fraud, and thus would have been time barred over a year before this suit was filed. The burden is on plaintiff to show that it should not have discovered defendant’s alleged fraud until such time as to make the filing of suit timely under §6-2-3. See Amason v. First State Bank, 369 So. 2d 547, 550 (Ala. 1979). In order to prove the applicability of § 6-2-3, plaintiff must show not merely that it was ignorant of the facts underly- ing the alleged fraud, but rather that its ig- norance was “superinduced by the fraud of the [defendant] in the form of active concealment, ee a ae, hn ARES ental RE rl RSS Sli a Oe ttc 6 Satine a aR ia ir Stet eee See ree