Charles Lester Newland, A/K/A Charles L. Newland v. Clifford A. Newland, Defendant-Cross v. The First National Bank in Goodland, Goodland, Kansas Jerry D. Fairbanks, Defendants-Cross Claim

Citations: 82 F.3d 338; 1996 U.S. App. LEXIS 8771Docket: 94-3327

Court: Court of Appeals for the First Circuit; April 19, 1996; Federal Appellate Court

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Charles L. Newland, the plaintiff-appellant, filed a diversity action against the former administrator of his deceased father's estate and the administrator's attorney, asserting claims including breach of trust, gross negligence, conversion, fraud, and breach of fiduciary duty. The United States District Court for the District of Kansas granted summary judgment in favor of the defendants-appellees, primarily concluding that Newland's claims were barred by statutes of limitations. Additionally, the court ruled on the merits but the appellate court affirmed solely on the statute of limitations issue.

Lester Newland died intestate in Kansas on November 8, 1982, leaving behind four sisters and one brother. After his death, the sisters claimed that Charles, Lester's son, was unreachable, prompting the court to appoint The First National Bank in Goodland as the estate's administrator, represented by attorney Jerry D. Fairbanks. Despite diligent efforts, including hiring private investigators, the appellees could not locate Charles and deemed him presumed dead under Kansas probate law. Consequently, they filed a petition for final settlement, which the court approved on March 23, 1984, distributing the estate solely to Lester's siblings after settling fees and costs.

Charles initially filed a motion to set aside the final estate settlement following the erroneous reports of his death after his father passed away. Although the state district and appellate courts denied his petition, the Kansas Supreme Court later granted it, stating that the presumption of death statute was not self-executing and that the district court's actions constituted an unlawful taking of Charles' property. The court ordered the district court to recognize Charles as the sole heir.

Despite this ruling, the Appellees did not redistribute the estate to Charles. Three years later, he petitioned the state district court to compel the Bank to hold a final settlement hearing, which was granted. At the hearing, the Appellees denied any obligation to redistribute the estate. The district court acknowledged Charles as the sole heir but declined to order the repayment of distributed funds. The Kansas Court of Appeals subsequently overturned this decision, instructing the district court to restore Charles to his rightful position prior to the erroneous settlement; this matter remains unresolved.

On October 2, 1991, Charles filed a federal lawsuit against the Appellees for multiple claims, including breach of trust and fraud. However, on August 24, 1994, the district court granted summary judgment to the Appellees, stating that Charles' claims were either meritless or barred by the statute of limitations. Charles is appealing this decision. The summary judgment is reviewed de novo, assessing whether any genuine issues of material fact exist and if the moving party is entitled to judgment as a matter of law.

The district court ruled that Charles' complaint, filed on October 2, 1991, was time-barred by Kansas statutes of limitations because it was over seven years after the final settlement of the estate on March 23, 1984, and his entry into probate proceedings on May 22, 1984. The applicable statutes included a one-year limit for statutory penalties (Kan. Stat. Ann. 60-514(c)), a two-year limit for personal property claims (Kan. Stat. Ann. 60-513(a)), and a three-year limit for claims based on statutory liabilities (Kan. Stat. Ann. 60-512). On appeal, Charles argued that the district court violated the law of the case doctrine and that the statute of limitations for his tort claims should have been tolled due to ongoing legal proceedings. 

The appellate court found these arguments unmeritorious. Charles contended that the federal district court ignored a Kansas Court of Appeals mandate from Newland II, which required a state district court to recover Charles' inheritance. He asserted that under Kansas law, the law of the case doctrine limits trial courts to issues already decided in appeals. However, the appellate court clarified that the doctrine applies only within the same proceeding and to the same issues. Since the federal tort action was distinct from the state probate case and involved different issues, the law of the case doctrine was not applicable. The issues in the state appeal focused on probate administration, while the federal case introduced new tort claims not previously addressed.

The Kansas Court of Appeals ruling in Newland II did not consider the statute of limitations relevant to Charles' current tort action. Even if the law of the case doctrine applied, it wouldn't affect the statute of limitations in this case, as established in Guidry v. Sheet Metal Workers Int'l Ass'n Local 9. The district court determined that Charles' tort action was untimely under Kansas statutes, specifically Kan. Stat. Ann. 60-513(b), which states that a tort claim does not accrue until substantial injury occurs or is reasonably ascertainable. The court concluded that Charles' claim accrued in 1984 when he participated in probate proceedings and recognized potential negligence. Although Charles argued that the statute of limitations was tolled during the Newland I and II proceedings, citing Kansas law on legal malpractice claims, the Appellees countered that an exception to tolling applied. Under Kansas law, the statute of limitations does not toll if the plaintiff has incurred injury that is clearly attributable to the defendant's actions, as illustrated in Dearborn Animal Clinic, P.A. v. Wilson. In that case, the court ruled that the statute of limitations resumed once the plaintiffs acknowledged in interrogatories their understanding of the injury resulting from their attorney's actions.

Appellees assert that the Kansas Supreme Court's ruling in Newland I on December 5, 1986, which determined that the heirship decision violated Kansas intestate succession law, effectively ended the tolling of the statute of limitations. They argue that Charles should have been aware of his injuries stemming from Appellees' wrongful actions at that time. Charles admitted that after the Newland I decision, Appellees did not act to follow the court's directives, and he claimed the Bank's inaction was due to self-interest, fearing a deficiency judgment if they pursued the siblings. As a result, it became "reasonably ascertainable" that Charles' injury was due to Appellees' negligence, allowing him to file a lawsuit for wrongful estate distribution against them. However, Charles did not file until October 2, 1991, nearly five years post-Newland I, leading to the conclusion that his claims regarding negligence or fraud by Fairbanks and the Bank were barred by the two-year statute of limitations under Kan. Stat. Ann. 60-513(a). Claims for statutory damages and penalties were also barred by applicable limitations statutes (Kan. Stat. Ann. 60-512, 514(c)). Consequently, the judgment of the district court is affirmed. Additionally, the Bank's argument regarding federal jurisdiction based on comity was rejected, as the court found no interference with state probate proceedings when an independent tort claim is involved. The document also clarifies that various Kansas statutes establish specific limitations periods for different types of claims, confirming that Charles’ action was beyond any reasonable accrual period.