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NELSON v. SOTHEBY'S INC.
August 23, 2000
DAVID NELSON AND RICHARD PRICE, PLAINTIFFS,
SOTHEBY'S INC., A NEW YORK CORPORATION, DEFENDANT.
The opinion of the court was delivered by: Bucklo, District Judge.
MEMORANDUM OPINION AND ORDER
David Nelson and Richard Price*fn1 filed this action alleging
the conversion of a painting which Mr. Nelson gave to Sotheby's,
Inc. ("Sotheby's") for sale in 1988 but was never sold and was
not returned to him until eleven years later. I hold that the
statute of limitations has run on the claim and grant Sotheby's
motion to dismiss. However, I also grant the plaintiffs' request
for leave to file an amended complaint within twenty-eight days
of this order.
On November 9, 1988, Mr. Nelson delivered a painting by Giorgio
de Chirico, entitled Piazza del Italia, to the Chicago office
of Sotheby's, a New York corporation engaged in the sale and
auction of fine art, for evaluation and possible sale. At the
instruction of a Sotheby's art expert, the painting was shipped
to Sotheby's New York office for such evaluation. On January 31,
1989, Mr. Nelson received a letter from Sotheby's stating that
due to a conflicting claim of ownership by Carlo Binosi,
Sotheby's would hold the painting until its ownership was
resolved or Sotheby's found it necessary to initiate an
interpleader action. Sotheby's further suggested that Mr. Nelson
"discuss a resolution of this matter with Mr. Binosi" and gave a
phone number and contact person. Mr. Nelson claims that since
February 1989, he has continually and regularly called Sotheby's
demanding the return of the painting, "but for reasons unknown
and without further correspondence or justification," Sotheby's
refused to return the painting.
Carlo Binosi sued Sotheby's and Mr. Nelson in Illinois state
court in April 1989. This case was dismissed on June 3, 1993. Mr.
Nelson claims he was never served any pleadings in that case and
was unaware of it until very recently. He claims that Sotheby's
filed a counterclaim and interpleader action in response but also
failed to serve him.
According to Mr. Nelson, on January 19, 2000, a Sotheby's
representative acknowledged during a phone call with him and
after being threatened with legal proceedings, that holding the
painting for eleven years was unduly excessive and agreed to its
immediate return to Mr. Nelson. However, the painting was not
actually returned to Mr. Nelson until March 15, 2000, one day
before this lawsuit was filed.
Sotheby's argument for dismissal is that the plaintiffs failed
to file within the five-year statute of limitations period for
conversion. In Illinois, the statute of limitations begins to run
the date the cause of action accrues, 735 ILCS 5/13-205, and an
action in conversion accrues on the date of conversion. Griggs
v. Robinson Securities, 1985 WL 1163, at *4 (N.D.Ill. 1985). In
the complaint, the plaintiffs have alleged all the elements of
conversion,*fn2 and the statute of limitations appears to have
begun in February of 1989, when Mr. Nelson first began demanding
the return of his painting and was refused, or at the latest, in
June of 1993 when the plaintiffs allege that any legitimate claim
Mr. Binosi had to the painting was terminated upon dismissal of
his lawsuit. Under either of these dates, the five year statute
of limitations has passed.
The plaintiffs make a number of arguments, in the alternative,
that the limitations period did not begin until much later, which
I deal with in turn. First, they argue that the cause of action
did not accrue until August 18, 1998, when the ten year statute
of limitations concerning the Nelson-Binosi written consignment
agreement expired. In their response to the motion to dismiss,
plaintiffs allege new facts about the relationship between Mr.
Nelson and Mr. Binosi and allege an oral consignment agreement
between the two. However, the plaintiffs do not explain the
relevance of this agreement to the statute of limitations in
their action against Sotheby's; Mr. Binosi is not a defendant
here, nor is there a contract claim. Moreover, Mr. Nelson alleges
in the complaint that he at all times owned the painting and that
any claim by Mr. Binosi was extinguished in 1993. Although I may
not dismiss a case if it is possible to hypothesize additional
facts that would allow the plaintiff to make his case, I can do
so only if these additional facts are consistent with the
complaint; I cannot rely upon new allegations in plaintiffs'
response which contradict those in the complaint. The plaintiffs
also argue that the cause of action accrued on March 15, 2000
when Sotheby's finally returned the painting. The basis of this
argument is that every day Sotheby's refused to return the
painting was an additional act of conversion. This is not the
law; there is only one violation or act of conversion alleged
here, not a recurring set of wrongs. Moreover, such a contortion
of the continuing violation doctrine would never provide repose
in these types of cases.
The plaintiffs next claim that the statute of limitations did
not begin until they "discovered" the cause of action in January,
2000, when they learned that Mr. Binosi's claims were dismissed.
Generally, statutes of limitation begin to run as soon as a
person suffers injury. Hermitage Corp. v. Contractors Adjustment
Co., 166 Ill.2d 72, 77, 209 Ill.Dec. 684, 651 N.E.2d 1132 (Ill.
1995). Illinois courts have adopted a discovery rule to delay the
commencement of the statute of limitations until the plaintiff
knows or reasonably should know that he has been injured and that
his injury was wrongfully caused. See Jackson Jordan, Inc. v.
Leydig Voit & Mayer, 158 Ill.2d 240, 198 Ill.Dec. 786,
633 N.E.2d 627, 631 (1994). It is not clear that the discovery rule
applies to actions in conversion in Illinois. See e.g. American
Heavy Trading, Inc. v. General Electric Co., No. 93 C 3609, 1996
WL 556742 (N.D.Ill., Sept.27, 1996). Even assuming, arguendo,
that it does, the plaintiffs either knew or should have known
that an injury
occurred as early as February 1989. According to the complaint,
Mr. Nelson was sufficiently aware of Sotheby's wrongful conduct
to continually demand the return of his painting; this appears to
be actual knowledge. Moreover, a companion rule to the discovery
rule places a burden on plaintiffs to investigate should they get
a whiff that wrongdoing exists. In the plaintiffs' second amended
complaint, Mr. Nelson alleges that as soon as Sotheby's informed
him it was holding the painting, he immediately complained and
demanded its return as the rightful owner. Therefore, according
to his own pleadings, as early as February 1989, he was aware
that he was injured by defendant's alleged conversion and that
such injury may have been wrongfully caused. In addition, Mr.
Binosi's lawsuit was commenced in the state in which the
plaintiffs reside and could have easily been discovered,
particularly since Mr. Price is a former attorney. The plaintiffs
should have discovered their injury more than five years before
this action was filed.
Finally, the plaintiffs attempt to invoke the tolling doctrines
of fraudulent concealment and equitable estoppel or tolling. The
plaintiffs complain that Sotheby's failure to initiate an
interpleader action and return the painting after Mr. Nelson's
demands and again after Mr. Binosi's lawsuit was dismissed acted
to toll the limitations period. The statute of limitations is
tolled if a party can prove that some fraud prevented the
discovery of the cause of action. See Ill.Rev.Stat. ch. 110,
par. 13-215. Generally, it is necessary to show affirmative acts
designed to prevent the discovery of the action; Kenroy,
78 Ill.2d 555, 37 Ill.Dec. 291, 402 N.E.2d 181. Silence alone does
not ordinarily constitute fraudulent concealment, unless the
person occupies a fiduciary relationship to plaintiff. Hagney v.
Lopeman, 147 Ill.2d 458, 463, 168 Ill.Dec. 829, 590 N.E.2d 466
(1992). No such relationship is here alleged. Mr. Nelson claims
alleges that Sotheby's ignored his repeated attempts to recover
his painting; its silence cannot toll the statute of limitations
absent an affirmative act or representation designed to prevent
discovery of the cause of action. Hauk v. Reyes, 246 Ill. App.3d 187,
194, 186 Ill.Dec. 405, 616 N.E.2d 358 (1993); Waters v.
Reingold, 278 Ill. App.3d 647, 660, 215 Ill.Dec. 376,
663 N.E.2d 126 (1996).
Equitable tolling is a doctrine that allows a plaintiff to
avoid the bar of the statute of limitations if he has been unable
to obtain vital information bearing on the existence of his claim
notwithstanding his diligent inquiry. Smith v. City of Chicago
Hts., 951 F.2d 834, 839 (7th Cir. 1992). In this case, the
plaintiffs do not allege that they made any type of reasonable
inquiry or investigation and were faced with an abundance of
evidence of wrongdoing.*fn3 Therefore, equitable tolling is
Equitable estoppel, the federal equivalent to fraudulent
concealment, in contrast, applies if the defendant actively
prevents the plaintiff from suing in time. Id. at 840. This
doctrine "is wholly independent of the limitations period and
takes its life, not from the language of the statute, but from
the equitable principle that no man will be permitted to profit
from his own wrongdoing in a court of justice." Bomba v. W.L.
Belvidere, Inc., 579 F.2d 1067, 1070 (7th Cir. 1978). This
doctrine, too, requires that the plaintiff plead improper conduct
by the defendant and harm to the ...