advisor and that due to his fiduciary position, Hernandez lacked any reason to question Childers' investment activity. The mere existence of a fiduciary relationship, however, is insufficient to relieve plaintiff of the necessity to exercise due diligence in order to invoke tolling. Hupp, 500 F.2d at 997. Rather, open evasion by a fiduciary in response to numerous inquiries puts one on notice that something may be amiss.
In claiming that he exercised reasonable diligence in uncovering Childers' alleged fraud, Hernandez states that he lacked the means and resources to investigate Childers' actions regarding the investment. Hernandez states that he was unsophisticated about securities. Such a lack of sophistication, however, is not sufficient to warrant tolling of the statute of limitation. The time to file suit begins to run when the investor either knows or in the exercise of reasonable diligence could have discovered the facts on which the suit is based Norris, 818 F.2d at 1334. "The investor need not actually know the facts or appreciate their significance; the 'could have discovered' branch of the test is objective." Id. Hernandez's lack of sophistication, therefore, is irrelevant. The statute begins to run when a reasonable person would have appreciated the need for further inquiry. Id. An objectively reasonable person would have appreciated the need for further inquiry when he was unable to obtain either responses to his questions or documents regarding Sealock from Childers. Hernandez proffers no basis for tolling between 1980 and September, 1985. Even assuming that the statute of limitation was tolled (did not expire in September of 1983 three years after the "purchase") Hernandez knew or should have known of his claim as of September, 1985. Therefore, any tolling ended and the three year limitations period expired in September of 1988, prior to when the date of this action.
Because Hernandez has not sufficiently alleged reasonable diligence in uncovering Childers' alleged fraud, his Section 10(b) and Rule 10b-5 claims filed more than three years after the date of purchase are time-barred, unless Hernandez can avail himself of the second tolling provision.
In order to invoke the second tolling provision, Hernandez must allege that Childers actively concealed the alleged fraud. To do so, Hernandez must specifically allege "some fraudulent action by the defendant, subsequent to the initial wrong, . . . ." Gieringer v. Silverman, 731 F.2d 1272, 1278 (7th Cir. 1984); See also Tomera, 511 F.2d at 510 (quoting Smith v. Blachley, 198 Pa. 173, 47 A. 985 (1901) ("affirmative efforts to divert or mislead or prevent discovery of the original fraudulent act.")).
In an attempt to establish active concealment, Hernandez states that he asked Childers for information regarding his own IRS case, but that Childers responded by deflecting his questions with information about other potential investments. Simply providing answers that Hernandez considered unsatisfactory or evasive is not sufficient to allege active concealment. Specific affirmative efforts to conceal the fraud must be alleged. Tomera, 511 F.2d at 510. Evasiveness, once it becomes obvious, is the exact opposite of active concealment.
Finally, Hernandez's characterization of Childers' conduct as "concealing from [Hernandez] the facts pertaining to the IRS challenge," (Complaint para. 27), is simply a conclusion of law that the court is not required to accept. Carl Sandburg Village Condominium Ass'n No. 1, 758 F.2d at 207. Moreover, such a general allegation of a continuing scheme to defraud lacks the specificity needed to establish fraudulent concealment. Fink v. Meserve, Mumper & Hughes, No. 84 C 10382, Lexis slip op., at 5 (N.D.Ill. June 19, 1986).
Because he has not sufficiently alleged active concealment, Hernandez may not avail himself of the second tolling provision. Therefore, the 10(b) and Rule 10b-5 claims are time-barred and, accordingly, Count III is dismissed.
Defendants also seek to have Count IV, which alleges a violation of Section 12(2) of the Securities Act of 1933, dismissed on statute of limitations grounds. Section 13 of the 1933 Act prescribes the limitations period applicable to claims brought under Section 12(2). Under Section 13, a 12(2) claim must be brought within:
one year after discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence, (but) in no event . . . more than three years after the date of sale.
Flournoy v. Peyson, 701 F. Supp. 1370, 1379 (N.D.Ill.1988). Unlike a 10(b) or 10b-5 claim, the doctrine of equitable tolling does not apply to the limitations period applicable to 12(2) claims. Rosin v. ETX Petroleum Corp., No. 84 C 3579, Lexis slip op. at 3 (N.D.Ill., October 29, 1985) (citing Summer v. Land & Leisure, Inc., 664 F.2d 965, 968 (5th Cir. 1981). Therefore, the three year limitations period is an absolute bar to a 12(2) claim. Rosin, No. 84 C 3589 at 3. Because Hernandez purchased the securities in 1980, he should have, with the exercise of reasonable diligence, discovered the alleged misstatements and omissions by late 1985. Since he did not file this suit within three years thereafter, his 12(2) claim is dismissed as time-barred.
Count V, which asserts a claim under Section 17(a) of the Securities Act of 1933, 15 U.S.C. § 77l(2), is likewise dismissed. The Seventh Circuit has refused to imply a private right of action under this statute. See Schlifke v. Seafirst Corp., 866 F.2d 935, 942-43 (7th Cir. 1989).
Defendants also seek to have Hernandez's breach of fiduciary duty claim dismissed on statute of limitations grounds. The Illinois statute of limitations applicable to a claim for breach of fiduciary duty is five years. Ill.Rev.Stat. ch. 110, para. 13-205. The limitations period begins to run when the plaintiff "discovers or reasonably should have discovered the breach of fiduciary duty." Mitchell v. Simms, 79 Ill. App. 3d 215, 220, 398 N.E.2d 211, 215, 34 Ill.Dec. 536 (1st Dist. 1979).
In his complaint, Hernandez states that in about September, 1988, he learned for the first time that the "tax shelter features of Sealock were improper and that the entire venture was an abject failure." (para. 19). Presumably, it was at this time that Hernandez discovered Childers' alleged breach of fiduciary duty. Since Hernandez filed suit in February, 1989, less than five years later, the suit was timely filed unless Childers can show that Hernandez should reasonably have discovered the breach of fiduciary duty more than five years earlier. Id. Childers claims that in his complaint Hernandez admits having knowledge of the IRS challenge by July, 1983 and that this knowledge furnished him with a basis to assert the breach of fiduciary duty claim at that time. Consequently, Childers argues, Hernandez's claim asserted five and one half years later is untimely.
We do not agree with Childers' assertion that Hernandez admits having knowledge of the IRS challenge by July, 1983. Childers points to paragraph 18 of Hernandez complaint which states that:
Throughout the time the tax case [the IRS challenge] was pending, virtually all information that was furnished by those defending the case was sent to Childers as plaintiff's agent and in spite of plaintiff's inquiries, it was not then forwarded to him. Throughout that period, Childers . . . did not provide any alarming information about their case.