Dean Witter Reynolds, Inc. v. Hartman

• Decision Date: 04 March 1996
• Docket Number: No. 95SC57,95SC57
• Citation: 911 P.2d 1094
• Parties: DEAN WITTER REYNOLDS, INC., and Norwest Bank Colorado Springs, N.A., f/k/a United Bank Of Colorado Springs, N.A., Petitioners, v. Laurence C. HARTMAN, Respondent.
• Court: Colorado Supreme Court

Page 1094

911 P.2d 1094

DEAN WITTER REYNOLDS, INC., and Norwest Bank Colorado Springs, N.A., f/k/a United Bank Of Colorado Springs, N.A., Petitioners, v. Laurence C. HARTMAN, Respondent.

No. 95SC57.

Supreme Court of Colorado En Banc.

March 4, 1996.

Brega & Winters, P.C., Charles F. Brega, Wesley B. Howard and Carla B. Minckley, Denver, for Petitioner Dean Witter Reynolds, Inc.

Braden, Frindt, Stinar & Stageman, L.L.C., C. Brian Renfro, Douglas M. Stimple and Suzanne Tillitt Peloquin, Colorado Springs, for Petitioner Norwest Bank Colorado Springs.

David B. Savitz, Denver, for Respondent.

Justice KOURLIS delivered the Opinion of the Court.

We granted certiorari in Hartman v. Dean Witter Reynolds, Inc., 897 P.2d 842 (Colo.App. 1994), to determine whether the court of appeals erred in finding that the equitable tolling doctrine applies to defeat the statute of limitations where a litigant waited to bring action against the defendants until he had a positive result in a related action against a third party. ¹ We find that since neither the actions of the defendants nor the lawsuit against the third party in any way impeded the litigant's right to file suit against the defendant, the doctrine of equitable tolling does not prevent the statute of limitations from running and therefore we reverse the judgment of the court of appeals.

I

In 1981, Laurence Hartman and Norman Vaux II opened a joint account with Dean Witter Reynolds, Inc. (Dean Witter) in association with a real estate transaction between Hartman and Vaux. They deposited $50,000 in earnest money into the account and executed a letter of instruction as part of the agreement with Dean Witter, providing that authorization of both Hartman and Vaux was required before any withdrawal could be made from the account.

A dispute then arose between Hartman and Vaux, resulting in Vaux's suit against Hartman for fraud in the inducement of a contract. In 1984, while the Vaux action was pending, Vaux allegedly withdrew the earnest money and interest from the Dean Witter account without Hartman's authorization. Dean Witter issued the funds in the form of two checks made payable to both Hartman and Vaux. Vaux allegedly forged Hartman's indorsement and presented the checks to United Bank of Colorado Springs, N.A., now part of Norwest Bank Colorado Springs, N.A. (Norwest Bank), which allegedly accepted and negotiated the checks. Hartman claims that he discovered Vaux had withdrawn the money from the Dean Witter account approximately four months later, in August of 1984. He alleges he discovered that Vaux had deposited the money into Norwest Bank in December of 1984.

The trial court in the action between Hartman and Vaux entered judgment for Vaux in October of 1984, awarding him the amount of the funds from the joint account, including earned interest, and $60,233 in damages on the fraud in the inducement claim. Hartman appealed and in June of 1988 the court of appeals reversed and remanded the case to the trial court. In 1990, the trial court found that Vaux had ratified the contract and awarded Hartman damages on his counterclaim in the amount of the earnest money plus interest.

Three years later, in 1993, Hartman brought action against Dean Witter and Norwest Bank. His claims against Dean Witter were based on breach of contract and negligence in issuing the checks. His claims against Norwest Bank were based on negligence, conversion and violation of section 4-3-116(b), 2 C.R.S. (1973) (current version at section 4-3-110(d), 2 C.R.S. (1995 Supp.)), of the Colorado Uniform Commercial Code, in negotiating the checks without proper indorsement. Both Dean Witter and Norwest Bank raised the statute of limitations as affirmative defenses, specifically, section 13-80-110(1)(d), 6 C.R.S. (1973) (current version at section 13-80-101(1)(a), 6A C.R.S. (1995 Supp.)), limiting the period in which to bring a contract claim to six years, and section 13-80-110(1)(g), 6 C.R.S. (1973) (current version at section 13-80-102(1)(a), 6A C.R.S. (1995 Supp.)), limiting the period in which to bring a negligence claim to six years as well. ²

Hartman argued that the statute of limitations had been equitably tolled by the action involving Vaux from October of 1984, when the trial court decided the case adversely to him, until November 30, 1990, when the trial court decision in that action became final. Hartman argued that he was precluded from pursuing his claims against Dean Witter and Norwest Bank because the trial court in the Vaux action had initially determined that he did not have a legal interest in the escrow money.

Both defendants moved to dismiss or, in the alternative, for summary judgment on the statute of limitations grounds. The trial court refused to apply the doctrine of equitable tolling to Hartman's claims. Instead, the district court granted summary judgment to both Dean Witter and Norwest Bank. Hartman appealed and the court of appeals reversed the trial court, holding that equitable tolling did apply. We granted certiorari and now reverse and remand to the court of appeals with directions to reinstate the trial court order granting summary judgment to Dean Witter and Norwest Bank.

II

Statutes of limitation are enacted to promote justice, discourage unnecessary delay, and forestall prosecution of stale claims. Rosane v. Senger, 112 Colo. 363, 369, 149 P.2d 372, 375 (1944). At times, however, equity may require a tolling of the statutory period where flexibility is required to accomplish the goals of justice. See Garrett v. Arrowhead Improvement Ass'n, 826 P.2d 850, 853 (Colo.1992), and cases cited therein.

We have applied the doctrine of equitable tolling where the defendant's wrongful conduct prevented the plaintiff from asserting his or her claims in a timely manner. See, e.g., Garrett, 826 P.2d 850 (tolling statute of limitations period where defendant employer failed to provide employee with report needed to file petition for workers compensation); First Interstate Bank v. Piper Aircraft Corp., 744 P.2d 1197 (Colo.1987) (holding statute of limitations period subject to equitable tolling for fraudulent concealment of facts underlying wrong); Strader v. Beneficial Finance Co., 191 Colo. 206, 551 P.2d 720 (1976) (tolling statute of limitations where defendant-lender knowingly withheld statutorily required disclosure of true interest rate to plaintiff-borrower); Klamm Shell v. Berg, 165 Colo. 540, 441 P.2d 10 (1968) (applying equitable tolling where plaintiff's mental incapacity, resulting from defendant's assault and battery, prevented timely filing of assault and battery charges). The principle underlying equitable tolling in these circumstances is that a person should not be permitted to benefit from his or her own wrongdoing. Garrett, 826 P.2d at 854.

Other jurisdictions have applied equitable tolling in a second category of cases where extraordinary circumstances make it impossible for the plaintiff to file his or her claims within the statutory period. See, e.g., Hanger v. Abbott, 73 U.S. (6 Wall.) 532, 18 L.Ed. 939 (1867) (finding extraordinary circumstances tolling statute of limitations where courts in southern states were closed during Civil War); Seattle Audubon Soc'y v. Robertson, 931 F.2d 590 (9th Cir.1991) (applying equitable tolling where district court's erroneous enforcement of an unconstitutional statute barred plaintiff from filing claims in a timely manner), rev'd on other grounds, 503 U.S. 429, 112 S.Ct. 1407, 118 L.Ed.2d 73 (1992); Osbourne v. United States, 164 F.2d 767 (2d Cir.1947) (holding plaintiff's internment by Japan during World War II tolled limitations period on his claim arising immediately prior to his internment). The reasoning underlying these cases is that it is unfair to penalize the plaintiff for circumstances outside his or her control, so long as the plaintiff makes good faith efforts to pursue the claims when possible.

III

In the case before us, Hartman failed to file his claims against Dean Witter and Norwest Bank within the time allowed by section 13-80-110(1)(d) and section 13-80-110(1)(g). Hence, absent some basis for avoiding the application of the statute, Hartman's claims against the defendants are time-barred.

We find that Hartman's case fails to invoke equitable tolling of the statute of limitations under the test accepted in Colorado and does not present circumstances in which a new or expanded test should be adopted. Neither Dean Witter nor Norwest Bank acted in any way to impede Hartman from bringing an action against them. The facts show no fraudulent concealment by either institution, but instead show that Hartman was aware of the defendants' actions in allowing the money to be withdrawn without approval of both Hartman and Vaux and in negotiating the forged checks well over six years before he filed this suit. Hartman could have brought his claims against Dean Witter and Norwest Bank the moment he learned of Vaux's actions. His failure to do so creates no reason in equity for a tolling of the statute of limitations.

Hartman argues that there are unusual circumstances surrounding his case which prevented him from bringing action against Dean Witter and Norwest Bank within the statutory period. He asserts, therefore, that general fairness requires a tolling of the statute of limitations. We disagree and find no extraordinary circumstances that prevented Hartman from filing his action within the statutory period.

Hartman cites the original decision by the trial court in the Vaux action awarding the escrow money to Vaux as the circumstances that prevented him from suing the defendants. He argues that this decision left him with no damages claim against the defendants and that without damages he had no cause of action.

The trial court initially entered judgment for Vaux in October of 1984 in the amount of all funds deposited in the joint account and $60,233 representing damages found to have been...